Document:

Exhibit 10.26

 

	
  

  	
  7005 Taschereau Blvd

  Suite 340

  Brossard, Québec

  J4Z 1A7

  Telephone: (450) 678-8882

  Toll free: 1-877-678-8882

  Fax: (450) 678-8119

  www.diagnos.ca

  

 

November 23,
2007

 

Mr
Robert McEwen

Chairman & CEO

U.S. Gold

99 George St., 3rd Floor

Toronto, Ontario

M5A 2N4

 

Subject:  Services contract based on the DIAGNOS’
CARDS application to be used

on Tonkin and Limo properties and large scale regional area, in North

Central Nevada, for gold, silver and copper

 

Dear
Rob,

 

As
per our last conversations, it is my pleasure to submit to you this proposal
regarding your Tonkin and Limo properties and the regional signatures for gold,
silver and copper. We reviewed the check list of data you kindly provided
us.  With the information we gathered
from the conversations we had, we were able to evaluate the amount of time that
will be needed and the work to be done.

 

The
service we will provide will result in prospecting maps and a detailed anomaly
report based on MAP INFO or OASIS software, outlining the potential targets for
gold, silver and copper discoveries on your properties:  Tonkin and Limo and large scale regional area
in North Central Nevada.

 

CARDS
application service

 

CARDS
assist scientists and professionals in their search for natural resources.  CARDS use MCubiX-KE’s artificial intelligence
and pattern recognition algorithms to learn the “signatures” or “finger prints”
of high-potential resources areas and automatically detect similar sites across
unexploited regions.  The result is this
powerful tool that allows prospectors to concentrate time and exploration
budgets to search in high-potential areas.

 

The
use of CARDS is simple.  CARDS requires
two types of data sets: a training set, used to discover the signature or
fingerprints of highly profitable regions (compared to unprofitable ones), and
one or many surveys describing the territory that is prospected.  The final output is a map or layer that
indicates the regions where economical resources are likely to be found.

 

 

Benefits

 

·                 Significantly reduce your decision cycle time

·                  Derive increased knowledge from your survey data investment

·                  Continuously learn from your prospecting efforts

·                  Make better use of your exploration funds

·                  Significantly reduce your drilling activities thus saving your joint venture
major expenses

 

Business
Contract

 

DIAGNOS
will run the CARDS application on the data provided by US Gold with a view to
identifying mineral targets on the properties. This right to use service fee is
based on a one time cost of $195,000 CDN for two properties and the regional
signatures (3 signatures – 1 regional and two specifics) in North Central
Nevada of which $75,000 CDN will be paid up front and is non refundable, the
remaining $120,000 CDN will be paid by US Gold prior to the final delivery of
the report. Furthermore, 100,000 common shares of US Gold will be paid as a
success bonus to DIAGNOS on every new economical discovery on DIAGNOS targets (Economic discovery is defined
as the positive feasibility study of the property).

 

If
US Gold’s intention is to acquire claims outside its owned claimed area then
DIAGNOS would also receive an additional success bonus in the form of a 2% NSR
on all unclaimed stakes acquired using the DIAGNOS technology. US Gold will
have the opportunity at all time to buy back 1% (representing half of the NSR)
for $1 000 000 CDN.  If US Gold should
acquire properties that have already NSR attached to them or if US Gold should
joint-venture with other companies on properties with those conditions, the
bonus on economical discovery will be in shares and of 500 000 common shares.

 

Process

 

1)                  Step 1-CARDS will
be run on the area of study (approximately 15,000 square kilometres property
package) giving you a regional signature for the three metals: copper, gold and
silver.

2)                  Step 2- CARDS will
then be ran on Tonkin and Limo (640 square kilometres) that will give a local
signature on each of your properties.

 

Delivery
date:  on or before February 28th,
2008, if the contract is signed within ten days.

 

Terms and
conditions for CARDS usage

 

·                  Right to use for
the forecasting of target selection for your property (claims) in North Central
Nevada based on technical data owned by US Gold

·                  DIAGNOS will securely load the data on a temporary server at the DIAGNOS
office

·                  All services are payable before delivery of target results

·                  You can also buy a server that will be delivered to you after the work
has been completed

 

2

 

Additional
consulting services

 

DIAGNOS
can offer additional consulting services than CARDS if required:

 

·                  Manage all your data processing requirements

·                  Custom prediction application

·                  Production of maps

·                  Validation of geological reports for
acquisition of new claims

·                  Participation in new claims identification

·                  Data recovery and storage

·                  Server acquisition for your data set

·                  Project management (Full sub contracting
services for geological personnel and related services at all levels of the
exploration program)

 

CARDS
services warrantty

 

a)              At all time DIAGNOS’
liability shall be limited to a second time reprocess of client data using CARDS
software application.

 

b)             DIAGNOS makes no express or
implied warranties whatsoever regairding the capabilities of the CARDS software
application in respect of finding for the distributor or its clients any
minerals, oil, gas or any other substance whatsoever, the output value or
quality of any mineral discovery, the accuracy of any prediction or output
results, merchantability, or fitness for a particular purpose. DIAGNOS shall
not be responsible for consequential damage or expenses by any client of
DIAGNOS services or consequential loss in value or delays suffered by clients
actions based on a DIAGNOS delivered report or predictions data or map,
incidental or punitive damages, including, but not limited to, loss of profits
or damages to business or business relations. This warranty is in lieu of all
other warranties.

 

We
thank you for choosing DIAGNOS in helping US Cold identify selected drilling
targets based on our CARDS application and our team of specialists.

 

 

André Larente

Chairman &
CEO

 

 

	
  Signed
  by and Dated; November 23, 2007

  	
   

  
	
   

  	
   

  
	
  US
  GOLD

  	
  DIAGNOS
  Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  

  	
   

  	
  

  	
   

  
	
   

  	
   

  
	
  Mr
  Robert McEwen

  	
  Andre
  Larente

  
	
  Chairman &
  CEO

  	
  Chairman &
  President

  
	
   

  	
  November 23th,
  2007

  
				

 

3Exhibit 10.27

 

PAT CANYON MINERAL LEASE

 

THIS PAT CANYON MINERAL LEASE (hereinafter “Lease”) is made and entered
into on the 25th day of May 2004, “Effective Date” by and
between Bertha C. Johnson, Trustee of The Lyle F. Campbell Trust under an
Agreement of Trust dated August 5, 1986 and amended on May 21, 1987, August 19,
1987, April 19, 1991, and May 19, 1998, and Julian E. Simpson and
Jean C. Simpson, husband and wife, hereinafter called “Lessor” and Nevada
Pacific Gold (US), Inc., a Nevada corporation, hereinafter called “Lessee.”

 

RECITALS

 

NOW, THEREFORE, in consideration of the mutual benefits to be enjoyed
by Lessor and Lessee pursuant to this Lease, Lessor and Lessee hereby agree as
follows:

 

WITNESSETH:

 

1.                                       Grant
Reservation.  Lessor, for and in consideration
of the royalties hereinafter reserved and of the agreements of Lessee herein
contained, to the extent vested with legal right to do so, hereby grants,
demises, leases and lets exclusively unto Lessee, except for Lessor’s right of
inspection, the properties owned by Lessor or in which Lessor has an interest,
all as more particularly described in Exhibit “A” attached hereto and made
a part hereof, and any additions thereto under Article 8 (hereinafter
called “Pat Canyon Mineral Prospect”), for the purpose of, including, but not
limited to, surveying, sampling, investigating, exploring for, prospecting for,
drilling for, developing, mining by any method (whether or not now known and
including, but not limited to, open pit, strip, underground and solution
methods), producing, saving, taking, milling, treating, transporting,
stockpiling, handling and marketing all minerals or any valuable products of
any nature whatsoever in, on or under the Pat Canyon Mineral Prospect,
including, but not limited to, any ores, concentrates, dore ingots, bullion,
carbon, precipitates, slag or any other material produced from the Pat Canyon
Mineral Prospect which contain any recoverable valuable product of any nature,
but excluding oil, gas, hydrocarbons and geothermal resources (hereinafter
called “Leased Substances”), together with all of Lessor’s rights, privileges,
water rights (if any) and easements (if any) useful for Lessee’s operations
hereunder on the Pat Canyon Mineral Prospect and adjacent lands, including, but
not limited to, the rights to look for, test, work, mine, excavate, raise,
clean, stockpile on the Pat Canyon Mineral Prospect only, carry away and sell
Leased Substances, to excavate pits, to sink shafts, make, use and occupy
openings, adits, tunnels, raises, rooms, stapes, slopes, 

 

 

winzes and underground passages (now existing or hereafter opened),
strip seams, lodes, veins and beds, and erect, use and maintain on the Pat
Canyon Mineral Prospect such buildings, tipples, headframes, refineries,
gasification plants, power plants, engines, machinery, appliances, devices,
walls, wells, presently appurtenant (if any) or newly established water rights,
roadways, housing, railroad tracks, shops, ditches, dams, ponds, reservoirs,
pipes, power communication lines and, without limitation except as may be
required by duly authorized regulatory agencies or government, all other
necessary structures and facilities (hereinafter “Improvements”).  From time to time, Lessee may relocate all or
any part of said Improvements as Lessee may deem desirable or necessary in its
operations on the Pat Canyon Mineral Prospect. 
Provided, however, that Lessor shall be notified in writing by certified
or registered mail of Lessee’s intention to make such relocation at least
twenty (20) days prior to commencing such relocation unless an emergency
condition exists.

 

There is reserved to the Lessor the right, subject to governmental
approval, to a mutually acceptable reasonable portion of the surface on the Pat
Canyon Mineral Prospect for the purpose of locating an inspection station to
exercise Lessor’s rights hereunder.

 

2.                                       Term
Rule Against Perpetuities and Severability of Paragraphs.  Subject to the other provisions herein
contained, this Lease shall remain in force for a “Term” of ten (10) years
from the Effective Date hereof and renewable by Lessee in five (5) year
increments thereafter provided that there is production of one or more Leased
Substances from the Pat Canyon Mineral Prospect, or any operations permitted
hereunder are being conducted on the Pat Canyon Mineral Prospect at the time of
renewal or this Lease is continued in force by reason of any of the provisions
hereof; provided, however, the term of this Lease shall not exceed ninety-nine
(99) years in any event.  During any
period of extension beyond the first ten (10) years of the Term all of the
terms and conditions of this Lease shall remain in full force and effect.

 

The Term of this Lease is not intended to violate the Rule Against
Perpetuities.  In the event the Term of
this Lease is determined to violate the Rule Against Perpetuities by a
Court of competent jurisdiction, the Term shall, by this Article 2, be
automatically reduced to the maximum number of years determined to comply with
the Rule Against Perpetuities.  Each
of the Articles in this Lease is severable from each of the other Articles in
this Lease.  In the event an Article in
this Lease is determined to be invalid, void, or unenforceable, then all
remaining Articles shall remain in full force and effect.  In the further event that this Article 2
is construed in such a manner as to eliminate a definitive Term of this Lease,
then the parties agree that the Term shall be a reasonable period of time
sufficient to accomplish the purposes of this Lease.

 

2

 

3.                                       Funds
for Payment; Advance Minimum Royalty; Royalty Credit; Amount of Royalties Paid;
Dollar Equivalent.

 

A.                                   Payment
Funds.  Any and all payments required
to be paid to Lessor pursuant to the terms of this Lease shall be made in U.S.
currency, or as in-kind payments in accord with Article 4, Production
Royalty.

 

B.                                     Advance
Minimum Royalty.  Lessee shall pay to
Lessor Advance Minimum Royalties in the amounts and at the times listed below;
provided, however, that if this Lease is terminated prior to the due date for
the payment of any such Advance Minimum Royalty, Lessee shall have no
obligation to make any further Advance Minimum Royalty payments, the due dates
of which occur after such termination.

 

	
  Due Date of Advance

  Minimum Royalty Payment

  	
   

  	
  Amount of Advance

  Minimum Royalty Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On signing

  	
   

  	
  $

  	
  10,000

  	
   

  
	
  Between January 1st and 5th
  of 2005

  	
   

  	
  $

  	
  10,000

  	
   

  
	
  Between January 1st and 5th
  of 2006

  	
   

  	
  $

  	
  20,000

  	
   

  
	
  Between January 1st and 5th
  of 2007

  	
   

  	
  $

  	
  30,000

  	
   

  
	
  Between January 1st and 5th
  of 2008 and annually thereafter during the term of the lease

  	
   

  	
  The greater
  of $50,000 or the dollar equivalent of 130 ounces of gold

  	
   

  
	
   

  

 

If this Lease is terminated for any reason, including but not limited
to, partial payment or nonpayment after thirty (30) days written notice as
provided in Article 6 at any time during the calendar year, Lessee shall
be obligated to pay the full amount of Advance Minimum Royalty as required to
be paid in this Article 3.B during the calendar year of the termination,
and for any prior calendar years during the term of this Lease for which
Advance Minimum Royalty has not been paid.

 

C.                                     Royalty
Credit for Advance Minimum Royalty Payments Paid.  All Advance Minimum Royalties paid by Lessee
to Lessor shall constitute prepayment of and advance against Production
Royalties thereafter accruing to Lessor under Article 4 during the term of
this Lease.  Within any one calendar
year, Lessee may use one hundred percent (100%) of that calendar year’s Advance
Minimum Royalty payment as credit against Production Royalties due Lessor
within that calendar year.  If the total
dollar amount of Production Royalties due Lessor within that calendar year
exceed the dollar amount of the Advance Minimum Royalty payment due Lessor
within that calendar year, Lessee can credit all uncredited Advance Minimum
Royalty payments made in previous years against fifty percent (50%) of the
Production Royalties due Lessor within that calendar year.

 

3

 

D.                                    Amount
of Royalties Paid.  The royalties
payable by Lessee to Lessor under this Lease shall be the greater of either:

 

(1)                                  the Advance Minimum
Royalty, as provided in Article 3.B hereof; or

 

(2)                                  the Production
Royalty determined in accordance with Article 4 hereof less any credit
under Article 3.C hereof.

 

E.                                      Dollar
Equivalent.  For the purpose of this
Lease, the “U. S. Dollar Equivalent” referred to in Article 3 shall be for
gold that is at least ninety-nine and ninety-five-one-hundredths percent
(99.95%) pure, and shall be determined by the average of the London afternoon
fixing as published in the Wall Street Journal (or its recognized
successor in the publication of gold and silver quotations) for the third
calendar quarter preceding January 1 of the year in which the Advance
Minimum Royalty payment is due.  If,
however, gold payment clauses are declared to be unenforceable or violations of
public policy, then the “U.S. Dollar Equivalent” shall be for silver that is
ninety-nine and nine-tenths percent (99.9%) pure.

 

The method of calculating the “Dollar Equivalent” for Advance Minimum
Royalty using silver shall be the same as that for calculating the “Dollar
Equivalent” using gold above in Article 3, using the appropriate base
price for silver.

 

4.                                       Production
Royalty: Stockpiling of Leased Substances.  Lessee shall pay Lessor a royalty (“Production
Royalty”) for all Commercially Recoverable Valuable Produces) contained in the
Leased Substances sold or deemed sold from the Pat Canyon Mineral Prospect.  Commercially Recoverable Valuable Produces)
shall be defined, for the purposes of this agreement, as any valuable produces)
contained in Leased Substances which are 1) sold to a buyer, 2) deemed sold by
production of dore under this Article 4, or 3) deemed sold per subsequent
agreement to this Mineral Lease, such as a commingling agreement.

 

Lessee shall pay Lessor a Production Royalty as follows:

 

	
  Price of Gold

  	
   

  	
  Percentage

  	
   

  
	
  Less than $300 per ounce

  	
   

  	
  3.0% GPR

  	
   

  
	
  Between $300 and $400 per ounce

  	
   

  	
  3-1/2% GPR

  	
   

  
	
  Greater than $400 per ounce

  	
   

  	
  4% GPR

  	
   

  

 

of the Dollar Value or Gross sales price of any commercially
Recoverable Valuable Product of gold, silver, platinum or palladium contained
in Leased Substances sold or deemed sold from the Pat Canyon Mineral Prospect
and two percent (2%) of the gross sales price of any other Commercially
Recoverable Valuable Product contained in Leased Substances sold or deemed sold
from the Pat Canyon Mineral 

 

4

 

Prospect.  The Production Royalty
due Lessor shall be calculated, as applicable, using the provisions of Articles
4.A(1), Article 4.A(2), or Article 4.A(3).  Production Royalty shall be calculated on the
amounts of Commercially Recoverable Valuable Products contained in Leased
Substances before any deductions whatsoever excepting only the deduction for
any royalty credit under Article 3.C, and federal royalties based upon the
production of Commercially Recoverable Products.

 

4.A(1)                                       Whenever gold,
silver, platinum or palladium are recovered from Leased Substances in the form
of dore ingots produced from (1) minesite pours or (2) pours at
custom recovery facilities (which provide recovery services only and do not
purchase the recovered products), such pour will be a deemed sale and Lessee
shall pay to Lessor a Production Royalty as set out in Paragraph 4.  The Dollar Value of the ounces of gold,
silver, platinum or palladium (“Precious Metals”) contained in the dore shall
be calculated as described below.

 

The dollar value of any given Precious Metal produced in dore during a
calendar quarter shall be the average price per troy ounce of that Precious
Metal for the calendar quarter multiplied by the sum of troy ounces of the
given Precious Metal contained in dore produced during the calendar quarter as
shown on the Refiner’s Settlement documents pertaining to the dore.  Such average price is defined as the
arithmetic mean of the daily London afternoon fixing for the calendar quarter.  If two or more dore bars produced from the
Pat Canyon Mineral Prospect are shipped together to the refinery and those dore
bars are refined together, resulting in one settlement, the Precious Metal
price used to determine the dollar value of the Production Royalty will be a
weighted average, and calculated as follows:

 

	
  weighted average precious metal price =

  	
  v + v

  
	
   

  	
   

  	
  1    2

  	
   

  
	
   

  	
  w + w

  
	
   

  	
  1     2

  
				

 

where v equals the weight of each dore bar in Troy ounces (as
determined from samples of the dore collected prior to shipment to the
refinery) multiplied by the fineness, expressed as a decimal fraction, of that
dore bar (as determined from samples of me dore collected prior to shipment to
the refinery) multiplied by the cash base price per Troy ounce assigned to that
dore bar, as defined above, w is equal to the weight of each dore bar in Troy
ounces (as determined from samples of the dore collected prior to shipment to
the refinery) multiplied by the fineness of that dore bar (as determined from
samples of the dore collected prior to shipment to the refinery).

 

Lessee shall report to Lessor within five (5) days of a dore pour
the date, identification of the facilities used to pour, weight of the pour and
disposition of the dore pour.  Lessee
shall deliver to Lessor a Dore Pour Report, providing the information in the
form shown below within five (5) days of the dore pour.

 

5

 

“DORE POUR REPORT”

 

	
   

  	
  Pour No.                       

  

 

	
  Date:

  	
   

  
	
   

  	
   

  
	
  Time:

  	
   

  
	
   

  	
   

  
	
  Weight (ounces)

  	
   

  
	
   

  	
   

  
	
  Pour Facility Location

  	
   

  
	
   

  	
   

  
	
  1.     Source (property)

  	
   

  
	
   

  	
   

  
	
  2.     Operator (Lessee)

  	
   

  
	
   

  	
   

  
	
  3.     Owner

  	
   

  
	
   

  	
   

  
	
  4.     Royalty (for example, 5% of gross sales
  price)

  	
   

  
	
   

  	
   

  
	
  5.     Intended destination of dore (refinery or
  other facility as indicated)

  	
   

  
											

 

NOTE;                                   within five (5) days
of this pour date, an exact copy (Xerox or carbon paper) will be sent by
Express Mail to the Lyle F. Campbell Trust, P. O. Box 7377, Reno, Nevada 89510.

 

 

	
  Signature of refiner (person in charge of making pour)

  	
   

  
	
  Lettered name 

  	
   

  
	
  Lettered title 

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature of person witnessing pour 

  	
   

  
	
  Lettered name 

  	
   

  
	
  Lettered title 

  	
   

  
					

 

4.A(2)               With
the specific exceptions of Commercially Recoverable Valuable Products of Gold,
Silver, Platinum or Palladium contained in dore under subsection 4.A(1) of
this Agreement, Lessee shall pay a Production Royalty on all Commercially
Recoverable Valuable Products of Gold, Silver, Platinum or Palladium contained
in Leased Substances which are sold or deemed sold from the Pat Canyon Mineral 

 

6

 

Prospect.  The Production Royalty
under this subsection 4.A(2) shall be calculated as the percentage of the
gross sales price received by Lessee as shown on the buyer’s settlement sheet
as follows:

 

For gold, silver, platinum or palladium produced from the Property:

 

	
  Price of Gold

  	
   

  	
  Percentage

  	
   

  
	
  Less than $300 per ounce

  	
   

  	
  3% GPR

  	
   

  
	
  Between $300 and $400 per ounce

  	
   

  	
  3-1/2% GPR

  	
   

  
	
  Greater than $400 per ounce

  	
   

  	
  4% GPR

  	
   

  

 

	
   

  	
   

  	
   

  	
   

  
	
  For minerals other than gold, silver,
  platinum or palladium produced from the Property:

  	
   

  	
   

  	
   

  
	
  Two percent (2.0%)

  	
   

  	
   

  	
   

  

 

4.A(3)               Lessee
shall pay a Production Royalty on all Commercially Recoverable Valuable
Products contained in Leased Substances, other than gold, silver, platinum or
palladium, which are sold or deemed sold from the Pat Canyon Mineral Prospect.  The Production Royalty under this subsection
4.A(3) shall be calculated on the gross sales price received by Lessee as
shown on the buyer’s settlement sheet using the percentages set out above.

 

4.B.                            In
the event the United States or other public authority imposes the payment of
any new royalty on production from the Pat Canyon Mineral Prospect, whether a
gross, net smelter returns, net proceeds or similar type of royalty, the dollar
amount of such imposed royalty or, if applicable, the gold, silver, platinum or
palladium equivalent of such imposed royalty shall be deducted from the Dollar
Value of the ounces of gold, silver, platinum and palladium contained in the
dore under Section 4.A(1) or the buyer’s settlement sheet under Section 4.A(2),
as applicable, before the Production Royalty is calculated.  In no event shall Lessor’s Production Royalty
be reduced below one percent (1%) of the Dollar Value of dore as calculated in
accordance with Article 4.A or gross sales price for Commercially Recoverable
Valuable Products of gold, silver, platinum or palladium removed, commingled or
sold from the Pat Canyon Mineral Prospect, as it would have been calculated
without deduction of any new Royalty by the United States or other public
authority.

 

4.C.                            In
addition to the Production Royalties payable under Article 4.A, Lessee
shall pay to Lessor as Production Royalty hereunder a like percentage of the
gross amount paid before any deductions whatsoever of any bonus, subsidy, or
similar payment or allowance made for whatever reason to Lessee by any
governmental agency, ore buyer or others with respect to any production,
transport or sale of 

 

7

 

Leased Substances hereunder.  Gains
and losses experienced by Lessee from speculative “Trading Activities” as
described in 4.G are exempted from this provision.

 

4.D.                           Payment
of Production Royalty, other than Production Royalty taken in kind by Lessor,
shall be made by Lessee to Lessor within one hundred fifty (150) days of minesite
dore pour or within one hundred twenty (120) days of delivery of Leased
Substances to a third party, whichever is earlier.  Each pour or delivery of materials to a third
party shall be identified in a statement with supporting documents attached sufficient
for calculation of contained Leased Substances and royalty in a format
compatible with industry standards.

 

Royalty from separate pours, deliveries and sales may be combined and
paid quarterly.  Such payment shall be
accompanied by a summary “Quarterly Royalty Statement” which clearly identifies
the various components of the Royalty Payment and their separate values
together with the supporting documents (e.g. pour reports, Refiner’s Settlement
Sheets and statements, recovery facility settlements, etc.).

 

4.E.                             Lessor
shall have the right and option to take Production Royalties in kind in the
form in which Lessee sells such Leased Substances.  On or before October 1st of
each calendar year, Lessor shall give Lessee written notice whether Lessor
elects to take its Production Royalty in land throughout the following calendar
year.  If Lessor fails to give such
notice for the first calendar year in which it is eligible to take its
Production Royalty in kind, Lessor shall be deemed to have elected not to take
its Production Royalty in kind for that calendar year.  If Lessor fails to give such notice by October 1st
of any subsequent year, the election then in effect will continue throughout
the following calendar year.  Each
election to take or not to take its Production Royalty in kind shall remain in
effect for calendar year increments and that all persons or entities
constituting the Lessor shall be required to make the same election whether or
not to take in kind.

 

If Lessee enters into an agreement for the sale of Leased Substances from
the Pat Canyon Mineral Prospect, it shall not include in such agreement sale of
that portion of the Leased Substances which Lessor has me right to take in
kind, without the prior written consent of Lessor.

 

If Lessor elects to take its Production Royalty in kind, and if Leased
Substances shipped to third parties include Lessor’s in kind share, such
shipment shall be shipped in the joint names of Lessor and Lessee in a manner
which identifies their respective interests. 
Lessee shall make necessary prior arrangements so that Lessor’s in-kind
interest in the Leased Substances shipped to a refiner shall be recognized by
the refiner.  If Lessor elects to take
its Production Royalty in kind, Lessor shall bear all risks associated with
taking its Production Royalty in kind, and shall bear all additional costs
incurred by Lessee as a result of Lessor’s taking in kind, such as increased
costs due to separate pourings, storage, insurance, security, transportation
and monitoring.  Lessor shall have the
right to inspect procedures used 

 

8

 

by Lessee to make payment in kind, and at its option, Lessor, or its
agent, shall have the right to be present to observe sampling and splitting
procedures and review all records and procedures related to division of Leased
Substances for the purpose of taking in kind. 
Lessee shall have the right, exercisable in its sole and exclusive
discretion, to select its refinery.

 

In the event the purchaser of any of the Leased Substances produced and
sold by Lessee hereunder shall be owned or controlled by Lessee, the purchase
agreement(s) covering such Leased Substances shall be commercially fair
and shall provide that the price to be received by Lessee therefor shall be
commercially fair and shall not be less than the price currently received by
other sellers of Leased Substances of like quality and quantity who sell to the
nearest independent refinery or smelter in the market area where such Leased
Substances are ordinarily sold.  For the
purpose of this Article 4, “owned and controlled” shall mean that Lessee
holds sufficient interest in the purchaser to substantially direct its
operations on a continuing basis.

 

4.F.                             Production
Royalty payments (dollar or in-kind) to Lessor shall be accompanied by a
statement, including but not limited to, smelter or refinery settlement sheets,
agreements, invoices, or their equivalent, showing in reasonable detail the
computation and derivation of such payment. 
If Lessee provides the accounting to support royalty payments in a
columnar form, Lessee shall provide Lessor with a legend which explains the
meaning of the heading of each column and a sample of one of the royalty
calculations so Lessor can confirm Lessee’s royalty calculations.

 

Lessor shall have the legal right to monitor and confirm in an ongoing
and timely fashion that Lessee has kept correct and legible records in a
minerlike fashion of all matters related to timely Production Royalty payments
under this Lease.  Lessee acknowledges
and agrees it will provide Lessor with copies of all documentation reasonably
necessary for the Lessor to verify accurate and timely payment of Production
Royalty by the Lessee.  Further, Lessee
agrees it shall provide Lessor the right at all reasonable times to make
inspections upon five (5) business days’ prior notice or with less notice
at the option of the mine manager of all of the Lessee’s facilities used in
mineral production or accounting for production under this Lease.  These inspections shall be allowed as long as
they are reasonably related to the Lessor’s purpose of verification of accurate
and timely payment under this Lease.

 

4.G.                            Lessee
shall have the right to sell or refrain from selling Commercially Recoverable
Valuable Products in any manner it may elect. 
Lessee shall have the right to engage in forward sales, future trading
or commodity options trading and other price hedging, price protection, gold
and silver loans, financing and speculative arrangements which may involve the
possible delivery of Commercially Recoverable Valuable Products but does not
result in the actual sale and delivery of Commercially Recoverable Valuable
Products (“Trading Activities”).  Lessee’s
trading activities shall not include any part of Lessor’s share of production
or serve to defer or postpone payment of Lessor’s production 

 

9

 

royalties.  Lessor acknowledges
that the proceeds of Trading Activities shall not be considered part of or
included in the amounts paid to Lessor for the purpose of determining the
production royalties and Lessor shall not be entitled to participate in the
proceeds, or be obligated to share in any losses generated by any Trading
Activities.

 

4.H.                           Lessee
may stockpile Leased Substances on the Pat Canyon Mineral Prospect only after
giving Lessor notice of Lessee’s intention to do so, which notice shall specify
the date such stockpiling is to commence and the proposed location of the
stockpile on the Lessor’s property.  Stockpiling
of Leased Substances in locations other than on the Pat Canyon Mineral Prospect
is prohibited without Lessor’s written consent. 
For the purposes of this Agreement “stockpile” shall mean storage of
mined Leased Substances containing valuable product(s) at or in excess of
Lessee’s operating process cutoff grade for that product which is metallurgically
amenable to the process in use by Lessee in association with the Pat Canyon
Mineral Prospect.  Lessee shall keep
full, complete and minerlike records of the grade and quantity of Leased
Substances so stockpiled, and Lessee shall provide such information to Lessor
within thirty (30) days of determining such information.

 

5.                                       Committed
Work Expenditures and Work Requirement.

 

5.A.                          Work
Requirement.  In order to keep this
Lease in effect, Lessee shall be required to perform yearly work expenditures
in each year for exploration, development and mining of the Pat Canyon Mineral
Prospect as described below.  The yearly
work expenditure items qualified as fulfilling the work requirement shall be
limited to all costs incurred in actual work on the Pat Canyon Mineral Prospect
in drilling, trenching, excavation, mining road building, surveying, mapping,
and geological, geochemical and geophysical programs conducted on the Pat
Canyon Mineral Prospect; all permitting costs, engineering, feasibility related
costs and all reclamation costs, as well as assaying and metallurgical testing
of ores extracted from the Pat Canyon Mineral Prospect which may be conducted
at appropriate facilities off the Pat Canyon Mineral Prospect.  Expenditures shall include wages and salaries
paid to engineers, geologists, laborers and technicians for the actual time
spent in exploration, development and mining of the Pat Canyon Mineral Prospect.  Direct overhead, such as lodging, meals and
travel expenses (but expressly excluding any charge for office or
administrative expenses) shall be limited to ten percent (10%) of the yearly
work requirement.

 

Lessee shall fully comply with 43 C.F.R. Sec. 3809 regulations (Surface
Management of Public Lands under the U.S. Mining Laws) or with 36 C.F.R. Sec.
228 (regulations concerning use of the surface of Forest Service Lands) and any
amendments or revisions thereto.  In the
event assessment work requirements are reinstated, Lessee shall submit an
exploration plan, if required, on a date which will give the Bureau of Land
Management or Forest Service sufficient time for Lessee to execute such plan
and satisfy the yearly work requirement.

 

10

 

In the event assessment work requirements are reinstated, if Lessee
fails to gain Bureau of Land Management or Forest Service approval for any work
plan, it shall be excused from expenditures for that portion of that year’s
work requirement which is disapproved, it being understood and agreed that any
portion of the yearly work requirement which is not expended because of Bureau
of Land Management or Forest Service disapproval shall be added to the
succeeding year’s annual work requirement It is further mutually understood and
agreed that annual assessment work requirements shall not be so excused unless
permission to defer annual assessment work requirements has been granted to
Lessee by the (Bureau of Land Management or other) appropriate government
agency, in which case Lessee shall file all documents required to maintain the
Pat Canyon Mineral Prospect in good standing with the county and the Bureau of
Land Management prior to August 31 of each year and provide Lessor with
proof of such filing prior to November 1st of each year.

 

	
   MINIMUM YEARLY WORK EXPENDITURES

   

 

	
  Work Year

  Work Expenditures

  	
   

  	
  Annual Required

  Work Expenditures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On or before January 1, 2005

  	
   

  	
  $

  	
  50,000

  	
   

  
	
  On or before January 1, 2006

  	
   

  	
  $

  	
  50,000

  	
   

  
	
  On or before January 1, 2007

  	
   

  	
  $

  	
  50,000

  	
   

  
	
  On or before January 1, 2008

  	
   

  	
  $

  	
  50,000

  	
   

  
	
  On or before January 1, 2009 and
  annually thereafter until the commencement of mining on the property

  	
   

  	
  $

  	
  50,000

  	
   

  
	
  After commencement of commercial production

  	
   

  	
  No
  exploration expenditures required

  	
   

  

 

All Required Work Expenditures are to be spent annually and must always
include all fees and claim maintenance costs at a minimum.  If funds are expended in excess of the annual
Work Expenditures, funds in excess of the fees and claim maintenance costs may
be credited to subsequent Required Work Expenditures, provided, however, annual
claim maintenance fees and costs shall always be paid by Lessee.

 

On or before March 1st of each year that this Lease is
in effect and the first year subsequent to termination, Lessee shall provide
Lessor with an organized, legible written narrative report, including table of
contents and list of any exhibits to the report, which describes the operations
conducted on the Pat Canyon Mineral Prospect during the prior calendar year.  With the report shall be furnished legible
true copies of all reports and records made for the Pat Canyon Mineral
Prospect, including, but not limited to, lithologic drilling logs and assays,
maps, cross-sections, assays, metallurgical tests, ore reserve calculations and
geological reports pertaining to the Pat Canyon Mineral Prospect.  Records shall include computer data files, if
any, and instructions to recover them, in addition to but not as replacements
for 

 

11

 

other reports and records.  The
report shall include a legend for all symbols used on maps, cross-sections,
drill logs, columnar presentations, and any other form of document which
requires a legend to make it comprehensible and useful.  With the report shall be furnished an
up-to-date legible drill hole location map or maps at appropriate scales such
that the collar locations and designations of all holes are clearly identified.  Such maps shall be compiled and furnished on
an annual basis to depict the locations and current status of all known drill
holes in Pat Canyon Mineral Prospect Upon Lessor’s request and, if available,
Lessee shall provide copies of the above data in reproducible form such as
mylars or sepias.  It is agreed between
Lessor and Lessee that during the Term of this Lease, Lessor shall keep all
information furnished to Lessor by Lessee strictly confidential and Lessor or
any other person to whom Lessor furnishes such information at such time as it
becomes permissible to do so shall specifically indemnify and save harmless
Lessee from any action resulting from reliance upon such information furnished
to Lessor by Lessee.

 

Lessee shall provide to the Lessor its interpretive data, reports and
information.  However, all such
interpretive data shall be delivered to the Lessor with an express written
disclaimer as to its completeness or accuracy, and the written disclaimer must
accompany any interpretive data that the Lessor discloses to a third party.  The disclaimer shall be generally as follows:

 

Lessee does not make any representation or
warranty, express or implied, of any land or nature whatsoever with respect to
the accuracy, reliability or completeness of this information or matter.  Any use of, or reliance upon, this
information or matter by any person, firm or corporation shall be at his or its
sole risk, liability and responsibility.

 

Prior to March 1st of each year that this Lease is in
effect and the first year subsequent to termination, Lessee shall provide
Lessor documentation from Lessee’s accounting records of the expenditures
claimed as minimum yearly work requirements upon the Pat Canyon Mineral
Prospect.  At reasonable times and
places, during normal business hours, Lessor shall have access to, with a
minimum of five (5) business days’ advance notice given by Lessor, the
original invoices and any other records pertinent and necessary for
substantiating the compliance of Lessee with the provisions of this Lease.

 

6.                                       Manner
of Payment.  All payments to be made
by Lessee to Lessor hereunder, except Production Royalty payments where in-kind
payment is made pursuant to Article 4, shall be made by mailing or
delivering cash or a cashier’s or certified check to Lessor’s address as set
forth in Article 20 hereof, on or before the date such payment shall be
required to be made hereunder, provided, however, that the Advance Minimum
Royalty shall be paid between January 1 and January 5 of each year.  If Lessee fails to pay or shall incorrectly
pay all of any payment or some portion of any payment due hereunder, this Lease
shall terminate absolutely if Lessee, within thirty (30) days after receipt of
written 

 

12

 

notice from Lessor to Lessee of its error or failure with respect to
such payment shall fail to rectify the same. 
All payments not timely received by Lessor shall (if thereafter accepted
by Lessor pursuant to the terms of this Lease) be accompanied with interest
from the date due until the date paid at the Bank of America (or its recognized
successor) prime rate plus two percent (2%) in effect on the date the payment
was due.

 

7.                                       Lessor’s
Title.

 

A.                                   It
is mutually understood and agreed that this Lease is granted only under such
title as Lessor may now hold or hereafter acquire.  Lessee may investigate and in Lessor’s name
take any action it deems necessary to remedy any defects of title to the Pat
Canyon Mineral Prospect.  Lessor agrees
to cooperate with Lessee in investigating and remedying any such defects in
title; however, in the event that Lessor shall hereafter be divested of such
title, Lessor shall not be liable for any damages sustained by Lessee.  Additionally, Lessor shall not be liable in
damages or otherwise, on account of Lessee’s possession thereof being destroyed
or interrupted.  Lessee’s only remedy in
the event of failure of Lessor’s title is specified in the last sentence of Article 7.D
below.

 

B.                                     It
is understood and agreed that in the event of adverse claim or claims affecting
mining claims comprising the Pat Canyon Mineral Prospect or the land covered
thereby, Lessee shall be under no obligation to defend title, nor to contribute
to the defense of title thereto, and it is specifically understood in such
event that Lessor shall be under no obligation to defend title.

 

C.                                     Concerning
possible conflicts with unpatented mining claims of third parties, neither party
is under a specific obligation of title defense; Lessor leases merely whatever
title it might have hi such area of conflict.  To the extent that Lessee desires to enter an
area of conflict and endeavor to prove upon the title to Lessor’s claims,
Lessee does so at its own risk and expense. 
Lessor represents that it has no knowledge of claims of third
parties.  Nothing in this agreement is
intended nor shall it be construed to require that Lessee pay Production
Royalty to Lessor for mineral production from property which is determined not
to belong to Lessor.

 

D.                                    It
is expressly agreed that Lessor does not warrant title to the Pat Canyon Mineral
Prospect.  To the best of Lessor’s
knowledge, all of the claims listed in Exhibit “A” for the Mineral
Prospect were located, monumented and recorded with the appropriate government entities
as required by law and have been continuously maintained since location or
relocation by assessment work or payment of claim maintenance fees and
filing/recording of evidentiary documents as required by law.  Lessor does, however, represent that the Pat
Canyon Mineral Prospect is free and clear of all liens and encumbrances,
including any leases, rights, or licenses granted to third parties by, through,
or under Lessor, except taxes not yet payable and matters of record in Eureka
County, Nevada, if any; the consummation of this Agreement will not result in or
constitute a default or an event that, with notice or lapse of time or both, 

 

13

 

would be a default, breach or violation of any contract, commitment or
arrangement to which Lessor is a party or by which it is bound; provided,
however, that the unpatented mining claims constituting the Pat Canyon Mineral
Prospect are acknowledged to be subject to the paramount title of the United
States.  Lessee’s sole and exclusive
remedy for any breach or default by Lessor under this Article 7.D is to
terminate this Lease and release its possession of the Pat Canyon Mineral
Prospect.

 

E.                                      Lessor
shall not create, permit or suffer any liens or encumbrances, reservations,
restrictions and easements on the Pat Canyon Mineral Prospect unless expressly
subordinated to Lessee’s rights hereunder; that Lessee may, at its option,
discharge such claims and thereby be subrogated to any liens or encumbrances on
the Pat Canyon Mineral Prospect as to all rights of the holder thereof, and Lessee
may recover any amounts so paid from any amounts otherwise due to Lessor.

 

8.                                       New
Mining Claims.  Either party shall
have the right at any time to locate, by new location or by filing amended
locations, any mining claims that constitute open fractions of claims that are
discovered and which are contiguous to the Pat Canyon Mineral Prospect.  The foregoing described area shall be known as
the Area of Interest.

 

A.                                   If
such mining claims are located by Lessee, Exhibit “A” hereto shall be modified
and amended to include the same, and Lessee shall assign said claim, without warranty,
to Lessor prior to recording such claim with the Bureau of Land Management.

 

B.                                     If
such mining claim is located by Lessor, then Lessor shall, within thirty (30)
days of recording the same with the County, give Lessee written notice thereof
setting forth the description of such mining claim and the facts upon which
Lessor bases its conclusions that Leased Substances might exist therein.  Within forty-five (45) days after receipt of
such notice, Lessee shall have the right to reject any interest in such mining
claim by giving Lessor written notice of such rejection; if not so rejected, Exhibit “A”
hereto shall be modified and amended by Lessee to incorporate such mining claim
in the Pat Canyon Mineral Lease within fifteen (15) days of acceptance of such
claim or claims by Lessee.

 

C.                                     If
any portion of a claim located by either Lessor or Lessee lies within the Pat
Canyon Mineral Prospect Boundary, the entire claim shall become a part of the
Pat Canyon Mineral Prospect, and Exhibit “A” shall be modified and amended
by Lessee to include such mining claim in accord with Articles 8.A and 8.B.

 

D.                                    If
Lessor locates mining claims within the Pat Canyon Mineral Prospect area and
subsequently offers such mining claims to Lessee, if Lessee accepts those
claims, it will pay actual expenses incurred by Lessor in connection with the
acquisition.

 

Any modification or amendment to Exhibit “A” hereto as herein
provided shall not serve in any manner to extend the Pat Canyon Mineral
Prospect boundary.  In the event Exhibit “A”
is amended 

 

14

 

pursuant to this Article 8, Lessee may record an amended Exhibit “A”
in accordance with provisions of Article 31.

 

9.                                       Claim
Rental, Fee/Assessment Work — Unpatented Mining Claims.  During the Term of this Lease, subject to the
provision of Section 15, Lessee agrees to timely pay all fees and to file
and record documents and to perform all work necessary to hold and maintain the
mining claims subject to this Lease in good standing, provided that such work
is required pursuant to then current federal or state laws and regulations.

 

If during the term of this Lease, federal rules and regulations
are changed to require the performance of assessment work in addition to
payment of claim rental fees on unpatented mining claims, Lessee agrees to
timely perform labor or make improvements on or for the benefit of each of the
unpatented mining claims comprising the Pat Canyon Mineral Prospect
(hereinafter “Assessment Work”).  Lessee
further agrees that said labor or improvements made to satisfy the annual
assessment work shall be performed only upon the claims lying within the Pat
Canyon Mineral Prospect and work performed on contiguous claims lying outside
the boundary of the Pat Canyon Mineral Prospect covered by this Lease shall not
be used to satisfy such requirement.  Lessee
shall perform assessment work in accordance with good mining practices and all
applicable state and federal mining laws, statutes, rules and regulations
and shall provide Lessor with basic documentation to substantiate labor
affidavits.  The parties hereto agree to
cooperate to the fullest extent to enable Lessee to comply with the
requirements of this Article 9 to prepare, record and file in a timely
manner all required proofs of assessment work or Notices of Intention to Hold
in the manner required by applicable law. 
Lessee shall record Notices of Intention to Hold and Affidavits of
Assessment Work with the County and file Notices of Intention to Hold and
Affidavits of Assessment Work with the Bureau of Land Management office having
jurisdiction in a timely fashion.  Lessee
shall provide Lessor with record-stamped copies of County recorded documents
and file-stamped copies of Bureau of Land Management filed documents no later
than fifteen (15) days prior to the due date of such recordation and filing.

 

Lessee shall have the right, upon thirty (30) days’ notice to give
notice to Lessor in writing that the claim or claims specified in said notice
shall no longer be subject to this Lease; and upon giving such notice, and
provided such notice is given at least sixty (60) days prior to the end of the
claim rental/assessment year, such claim or claims shall be deemed stricken
from this Lease, and Lessee’s responsibilities and obligations for claim rental
fee/assessment work and other fees, filing and recording duties as to said
claim or claims shall end.  In the event
that such notice is given less man sixty (60) days prior to the end of the
rental fee/assessment year, the Lessee shall perform all work necessary to hold
and maintain such claims for the then current rental/assessment year.  Notwithstanding the release of any claim or
claims from the operation thereof, this Lease shall continue in full force and
effect with respect

 

15

 

to all parts of the Pat Canyon Mineral Prospect not specified in such
notice.  Further, such release shall not
cause or result in any diminution of Lessee’s obligations regarding
confidentiality, Advance Minimum Royally, Production Royalty or Work Requirements
described below.  Lessee shall, at the
time of giving such notice, provide Lessor with all data regarding work which
has been done for that year by or for Lessee upon any of such claims so
released.

 

In the event Lessee shall terminate this Lease in its entirety prior to
the end of the then current claim rental/assessment year, Lessee shall be
obligated to pay claim rental fees and/or perform assessment work, pay all fees
and perform all necessary filing and recording for the following claim rental/assessment
year as to each of the claims then subject to this Lease, unless such
termination is at least sixty (60) days prior to the end of the then current
claim rental/assessment year.  In any
event, Lessee shall be responsible for obligations incurred prior to such
termination and those which survive in accord with Article 12.

 

10.                                 Relocation
and Amendment of Unpatented Mining Claims. 
Subject to tie prior written consent of Lessor, which consent shall not
be unreasonably withheld, Lessee, in the name of Lessor, shall have the right,
but not the obligation, to amend the locations of any one or more of the mining
claims included within the Pat Canyon Mineral Prospect and Lessor agrees to
execute promptly any documents necessary for that purpose.  If the location of any such mining claim was
for any reason defective, Lessee shall have the right, but shall not be
required, to locate such defective mining claim or claims in the name of Lessor
for the purpose of curing such defect. 
In order to insure that Lessor agrees with Lessee’s plan to cure
perceived defects in title, Lessor shall be notified in writing by certified or
registered mail at least twenty (20) days prior to Lessee’s commencing with
relocation or amendment unless an emergency exists and time is of the essence.

 

11.                                 Liens.  Lessee shall pay in full for all labor
performed upon or material furnished to the Pat Canyon Mineral Prospect and
shall keep the whole thereof free and clear from any and all liens of
whatsoever nature or kind created by Lessee, except for Lessee’s grant of a
security interest for financial purposes under Article 22.C; provided,
however, that if Lessee, in good faith, disputes the validity or amount of any
claim, lien or liability assessed against it with respect to the Pat Canyon
Mineral Prospect, Lessee shall not be required to pay or discharge the same
until the amount and validity thereof have been finally determined upon the
condition that Lessee obtains a bond within fifteen (15) days of receiving
notice of said lien as is provided by N.R.S. Section 108.2413, et seq. and as
amended, to effect the release of said lien. 
However, in no event shall Lessee allow or permit title to the Pat
Canyon Mineral Prospect to be lost, jeopardized or otherwise unreasonably’ encumbered
as a result of its non-payment of any claim, lien or liability for which Lessee
is responsible.  Lessee shall notify
Lessor immediately, either by telegram or facsimile transmission followed by
hard copy, on the occasion of being served notice of any

 

16

 

lien regardless of whether Lessee disputes the validity of the lien for
any reason.  It is mutually agreed that
concurrent with execution of the Lease, Lessor and Lessee will execute and
acknowledge a “Notice of Non-Responsibility for Labor or Materials Furnished
Mineral Prospect” which Lessor shall file with the Eureka County Recorder in
compliance with N.R.S. 108.234 and as amended. 
When the recorded copy of the “Notice of Non-Responsibility” has been
received by Lessor, it shall furnish a copy of same to the Lessee which Lessee
shall post within ten (10) days and keep posted upon the Pat Canyon
Mineral Prospect during the Term of this Lease.

 

12.                                 Laws
and Regulations - Indemnification of Lessor.  It is the policy of Lessor to comply fully
and in all respects with all environmental reclamation and land use permitting
regulations and laws.  Lessor represents
that it has no knowledge of any conditions on the Pat Canyon Mineral Prospect
existing prior to the Effective Date of this agreement which constitute
violation of any laws or regulations including, but not limited to,
environmental, reclamation and land use permitting regulations.  Lessee’s responsibility for reclamation or
acceptance of environmental and permitting liabilities on the Pat Canyon
Mineral Prospect shall be limited specifically to any disturbance that may be
caused by Lessee’s own activities on the Pat Canyon Mineral Prospect and Lessee
agrees to indemnify and hold Lessor harmless from and against such
liability.  Liability for reclamation of
all disturbances existing on the Pat Canyon Mineral Prospect prior to the
Effective Date shall be the exclusive responsibility of Lessor and Lessor
agrees to indemnify and hold Lessee harmless from and against such
liability.  Lessee shall at all times and
its own expense comply in all respects with all county, state and federal laws,
statutes, ordinances, rules and regulations relating to Lessee’s actions
under this Lease on or about the Pat Canyon Mineral Prospect.  Lessee shall also at all times and at its own
expense timely pay any and all fees or costs required to be paid to any
governmental agency to keep the title to the mining claims in good standing.

 

Lessee shall provide workmen’s compensation insurance and such other
insurance to cover its personnel and all of its operations upon the Pat Canyon
Mineral Prospect in the amount and form as may be required by applicable
law.  At Lessor’s written request, Lessee
shall provide Lessor with copies of the declarations page of all such
policies as may be in effect (from time to time).  Lessee assumes full and sole responsibility
for the operation and direction of the work done under this Lease on the Pat
Canyon Mineral Prospect and no employee or agent furnished by Lessee shall
under any circumstances be deemed to be an employee or agent of Lessor Lessee
shall indemnify and hold Lessor harmless of and from any and all claims,
demands or liabilities arising out of or in connection with the operations or
activities of Lessee hereunder and Lessee shall acquire a comprehensive general
liability insurance policy covering such operations and activities with limits
of not less than One Million Dollars ($1,000,000.00) for each accident or
occurrence.  Lessee shall provide Lessor
with written proof of compliance prior to commencing operations on the Pat
Canyon Mineral Prospect.  Lessee shall
provide Lessor with copies of 

 

17

 

such insurance policy, certificate or rider naming Lessor as an
additional insured on such policy within fifteen (15) days of the date of
execution of this Lease.  Nothing in this
agreement is intended nor shall it be construed as to require the Lessee to
indemnify and hold Lessor harmless of and from any claim, demand or liability
arising out of or in connection with the operations or activities of Lessor or
the activities of operators other than Lessee on the properly prior to the
execution of this agreement.

 

Lessee shall notify Lessor verbally within twenty-four (24) hours after
the occurrence of any event on the property which poses a substantial risk of
environmental liability and shall give Lessor detailed notification in writing
within ten (10) days.  Such
occurrence will include but shall not be limited to cyanide or other toxic
chemical or mineral leaks, spills or contaminations or any episode or
occurrence resulting in killing of wildlife which was caused by said spills,
leaks or contaminations.

 

Lessee shall provide Lessor with copies of all plans, maps and all
other documents submitted in compliance with government regulations and all
agreements with any government agency pertaining to the Pat Canyon Mineral
Prospect, including but not limited to, Notices of Intent to Operate, Plans of
Operation, Environmental Impact Statements, reclamation statements, and all
government agency communications sent to any such agency or received by Lessee
from any such agency which are related to such submissions or agreements,
within thirty (30) days of sending to or receiving from the government agency
such material.  In the event any
government sending to or receiving from the government agency such
material.  In the event any government
agency requires the riling of a bond to insure Lessee’s performance, Lessee
agrees to provide such bond at its own cost and expense.

 

13.                                 Taxes.  During the Term of this Lease, Lessee shall
timely pay all taxes levied or assessed against the Pat Canyon Mineral
Prospect, all taxes levied or assessed against Lessee’s personal properly or
improvements, all taxes levied or assessed against any improvements presently
on the Pat Canyon Mineral Prospect, and all taxes levied or assessed upon the
operations which are related to disposition of Leased Substances by Lessee on
or in relation to the Pat Canyon Mineral Prospect, exclusive of any taxes
levied, assessed or measured on the royalty paid to Lessor.  Lessor shall, within fifteen (15) days of
receipt by Lessor, transmit to Lessee any notices or documents pertaining to
any such taxes which are the responsibility of Lessor to pay.  If Lessor fails to pay any taxes payable by
Lessor, other than taxes levied, assessed or measured on royalty paid to
Lessor, which pertain to the Pat Canyon Mineral Prospect, unless Lessor is
contesting the same, Lessee may at its option pay Lessor’s proportionate share
of taxes when due and may deduct all such sums from subsequent payments to be
made to Lessor hereunder.  Lessee or
Lessor shall have the right to contest in the courts or otherwise the validity
or amount of any taxes or assessments which the respective party may be
required to pay hereunder if it deems the same unlawful, unjust, unequal or
excessive or to take such other steps or proceedings as it may deem necessary
to secure a cancellation, reduction, readjustment or equalization

 

18

 

thereof before it shall be required to pay the same.  In the event of termination of this Lease,
taxes, which are the responsibility of Lessee but will be the responsibility of
Lessor after termination, shall be prorated on the relevant tax year basis for
the tax year in which this Lease is terminated.

 

It is mutually agreed that Lessor shall be solely responsible for
payment of its own taxes attributable to Advance Minimum Royalty payments or
Production Royalty payments to Lessor under this agreement.

 

14.                                 Default.  If Lessor considers that Lessee has not
complied with any of the covenants, conditions or obligations hereunder,
whether express or implied, Lessor shall notify Lessee, in writing, by
certified mail, setting out specifically in what respects it is claimed that
Lessee has breached this Lease. The receipt of such notice by Lessee and the
lapse of thirty (30) days thereafter without Lessee’s curing or commencing and
diligently pursuing such action which is necessary to cure the alleged breaches
shall be a default hereunder.  Upon such
default, Lessor may, at its option, terminate this Lease.  Whether or not Lessor so terminates this
Lease, Lessor has all of its rights and remedies under the law and this Lease
with respect to such default.

 

Notwithstanding any contrary provision in the foregoing paragraph, if
Lessee fails to make any of the payments due under Articles 3, 4, 6 or 9 herein
within thirty (30) days after receipt of notice of such failure from Lessor,
this Lease shall terminate absolutely; provided, however, that any termination
for whatever reason shall not excuse Lessee from performing all obligations
incurred under the terms of this Lease prior to such termination.

 

In the event that Lessee, in good faith, contests the default by court
action within thirty (30) days after receipt of such notice by Lessee, and
Lessee continues to pay the payments required and perform the other obligations
of this Lease, this Lease shall not be terminated until a final decision has
been reached that a default exists; Lessee shall have thirty (30) days within
which to cure or commence and diligently pursue such actions necessary to cure
the default or such other reasonable time as the parties shall mutually agree
or the court shall determine.

 

In the event of termination under this Article 14, Lessee shall
have the right to remove, pursuant to Article 16, its property and
equipment from the Pat Canyon Mineral Prospect, as hereinafter provided, but
only after Lessee has performed all of its accrued obligations under this
Lease.  Until such performance by Lessee,
Lessor shall have a lien upon all of Lessee’s property and improvements located
on the Pat Canyon Mineral Prospect.

 

15.                                 Termination.

 

A.                                   Partial
Termination by Lessee.  Lessee shall
have the right, from time to time and at any time, to terminate this Lease as
to any portion of the Pat Canyon Mineral Prospect by giving written notice to
Lessor specifying the portion of the Pat Canyon Mineral Prospect to which such 

 

19

 

termination applies.  Upon the
effective date of such notice, as set forth in Article 20 hereof, all
right, title and interest of Lessee hereunder shall terminate as to the portion
of the Pat Canyon Mineral Prospect specified in such notice and thereafter the
term “Pat Canyon Mineral Prospect” shall be deemed to refer to only the
portions of the Pat Canyon Mineral Prospect remaining subject to this Lease.  Upon such termination, Lessee shall have no
further obligations concerning the portion of the Pat Canyon Mineral Prospect
to which such termination applies, except as to obligations (1) the due
dates or incurrence of which occur prior to such termination, (2) are
created pursuant to obligations in Articles 12 and 16 hereof relating to the
condition of the Pat Canyon Mineral Prospect, or (3) are otherwise
required to be performed by Lessee subsequent to termination.  Promptly following such termination, Lessee
shall deliver to Lessor a quitclaim deed, in recordable form, quitclaiming to
Lessor all right, title and interest of Lessee to that portion of the Pat
Canyon Mineral Prospect to which such partial termination applies.  No partial termination under this Article 15
shall, however, cause a reduction in the amounts of any of the Advance Minimum
Royalty and Production Royalty payments set forth in Article 3 and 4 or
the Work Requirements set forth in Article 5.

 

B.                                     Complete
Termination by Lessee.  Lessee shall
have the right to terminate this Lease in its entirety at any time by giving
notice thereof to Lessor.  Upon the
giving of such notice, all right and interest of Lessee under this Lease and in
the Pat Canyon Mineral Prospect shall terminate on the date of the notice and
Lessee shall not be required to make any further payments or expenditures, or
to perform any further obligations hereunto, except as to payments,
expenditures or obligations the due dates or incurrence of which occur prior to
the date of such termination; such excepted obligations include, but are not
limited to, Lessee’s obligations under Articles 12 and 16 hereof.  Within ten (10) days following such
termination, Lessee shall deliver to Lessor a quitclaim deed in recordable form
quitclaiming to Lessor all right; title and interest of Lessee to the Pat
Canyon Mineral Prospect.

 

C.                                     Data
After Termination.  Upon termination
of this Lease as to all or any portion of the Pat Canyon Mineral Prospect,
Lessee agrees that it will not furnish any exploration or development data
generated by Lessee in its exploration and/or development of the Pat Canyon
Mineral Prospect, including, but not limited to, drilling logs, assay results,
survey information, maps and cross-sections to third parties without first
obtaining written consent therefor from Lessor.

 

16.                                 Removal
of Improvements: Condition of Mineral Prospect.  Whenever this Lease shall be terminated in
whole or in part, for any reason whatsoever, Lessee shall deliver up the
terminated portion of the Pat Canyon Mineral Prospect to Lessor in reasonably
good and safe condition and in compliance with all laws, statutes, ordinances,
rules, regulations, permits and plans of operation.  Lessee shall, however, subject to any laws, rules or
regulations which may be applicable at the time and the requirements of
Articles 12 and 16, have the right to remove any or all of the Improvements
placed by it 

 

20

 

on or within the terminated portion of the Pat Canyon Mineral Prospect;
provided, however, Lessee shall leave in place all track, pipe, including any
improvements which were affixed to the property for the purpose of using the
water rights, timber, chutes and ladders without any warranty as to condition
or fitness for use except for the Lessee’s duties to secure openings as set
forth in the last sentence of this Article 16.  Within thirty (30) days after complete
termination, Lessee shall assign to Lessor any assignable water rights acquired
and perfected by Lessee during the Term of this Lease which are situated on the
Pat Canyon Mineral Prospect and any water rights which are situated off the Pat
Canyon Mineral Prospect but which were acquired for the purpose of conducting
work on the Pat Canyon Mineral Prospect. 
Lessee shall have the right to effect the removal of such improvements,
other than those specified above to be left in place, prior to such termination
of this Lease or within one hundred twenty (120) days thereafter with the
specific exceptions of property and Improvements on which Lessor has a lien
pursuant to Article 14, and property and Improvements required for Lessee
to fulfill its obligations to government entities or under the Lease which
survive termination of the Lease.  Any
improvements not removed prior to termination or within three hundred
sixty-five (365) days following such termination shall be deemed affixed to the
terminated portion of the Pat Canyon Mineral Prospect and shall become and
remain the property of the Lessor, except property and Improvements which have
been left in place in order for Lessee to fulfill its obligations which survive
this Lease.  Lessee shall have three
hundred sixty-five (365) days after satisfaction of a given obligation to remove
equipment and improvements required in connection with fulfillment of that
obligation and policy.  In the event of
termination under Article 14, Lessee shall have three hundred sixty-five
(365) days to remove its property and Improvements after Lessor has released
any lien on them.  Upon partial or
complete termination, Lessor shall retain title to all water rights acquired
and perfected by Lessee during the Term of this Lease which are situated on the
Pat Canyon Mineral Prospect and any water rights which are situated off the Pat
Canyon Mineral Prospect but which were acquired for the purpose of conducting
work on the Pat Canyon Mineral Prospect, improvements, stockpiles, dumps and
tailings, including heap leach remnants, generated from mining and treating
ores from or on the Pat Canyon Mineral Prospect.

 

Within one hundred eighty (180) days after the partial or complete
termination, Lessee shall comply, or shall be in the process of diligently and
in good faith complying with all applicable environmental, restoration and
reclamation laws, statutes, ordinances, rules, regulations, permits and plans
of operation pertaining to the Pat Canyon 

 

21

 

Mineral Prospect.  Lessee is
solely responsible for any governmental requirements and liability related to
Lessee’s operations and actions under this Lease and even if the Lessee has
complied with governmental requirements and has completed the restoration work
to the satisfaction of government agencies upon termination of the Lease, if a
governmental agency shall require some additional work at a future date
resulting from Lessee’s operations on the Pat Canyon Mineral Prospect, the
Lessee shall be liable to perform same. 
Lessee shall indemnify and hold Lessor harmless from any such
responsibility.  Further, within one
hundred eighty (180) days of partial or complete termination, Lessee shall
secure all openings in accordance with federal and state regulations to
eliminate access by the public to any and all shafts, mines, tunnels, adits,
winzes, man ways, excavations, air lines, and/or vent tubes after consulting
with Lessor regarding Lessor’s requirements for access.

 

17.                                 Books
and Accounts.  Lessee shall maintain
on a current basis complete and accurate records and books of account in
accordance with generally accepted accounting principles consistently applied
covering all matters necessary to the proper computation of the Production
Royalty described in Article 4 hereof and the proof of having made
approved yearly expenditures under Article 5 hereof.  True copies of said records and books of
account shall be kept either in the vicinity of the Pat Canyon Mineral Prospect
or elsewhere within the State of Nevada at Lessee’s option, and shall be open
to inspection by Lessor or its authorized agents with a minimum five (5) business
days’ notice advance notice given by Lessor or with shorter notice at the
discretion of the mine manager at any reasonable time during normal business
hours, provided such inspections do not unduly interfere with or hamper the
managerial or accounting staffs of Lessee. 
Within sixty (60) days after the end of each calendar year during the
term hereof, Lessee shall furnish to Lessor an unaudited “Year-End Statement”
showing the amount of Production Royalty paid to Lessor by Lessee during said
year and the basis thereof.  All
statements so furnished shall be conclusively presumed true and correct after
the expiration of twelve (12) months from the date of receipt by Lessor, unless
within said twelve (12) month period Lessor gives written notice of exception
to Production Royalty computations or the listing which shows the description
and extent of yearly work expenditures, specifying with particularity the
components excepted to and the grounds for such exception.  Lessor shall be entitled to an annual
independent audit of the matters covered by said statement, at Lessor’s sole
expense, provided Lessor selects for such audit an accounting firm of
recognized standing, at least one of whose members is a member of the American
Institute of Certified Public Accountants.

 

18.                                 Data
Inspection.  Lessee shall furnish
Lessor with copies of any agreements (including, but not limited to, haulage,
milling, refining, extracting, and ore and concentrate purchase agreements),
and any amendments thereto, which in any way relate to the determination of
Production Royalties and Work Expenditures under this Lease.  Said documents shall be furnished by Lessee
to Lessor within thirty (30) days after executing such agreements or
amendments.  This article shall not
obligate Lessee to furnish consulting and employment agreements, software and
technology licensing agreements and any other agreements under which Lessee is
obligated to maintain confidentiality or which constitute Lessee’s trade secret
information.  Lessee shall furnish Lessor
with copies of all settlement sheets or statements which in any way relate to
the sale or other disposition of Leased Substances produced from, the Pat 

 

22

 

Canyon Mineral prospect within thirty (30) days after receiving such
sheets or statements.  Lessee shall
furnish Lessor with full, true and accurate information in response to any
request with respect to the condition of mine workings on the Pat Canyon
Mineral Prospect, or with respect to the grade, quantity or quality of Leased
Substances found in drilling, exposed in mining the Pat Canyon Mineral Prospect
or mined, processed or shipped by Lessee. 
Lessee shall keep full and accurate records of all operations conducted
on the Pat Canyon Mineral Prospect, including assays, drilling records, drill
hole location maps and mine maps which shall be open to inspection by Lessor or
Lessor’s agent with a minimum five (5) business days’ advance notice given
by Lessor or its authorized agents or with shorter notice at the discretion of
the mine manager during regular business hours and upon reasonable notice with
the provision that copies of any of these materials shall on request be
furnished to Lessor by Lessee at Lessor’s expense.  If records of operations are being stored and
maintained as computer files, computer-ready copies of the computer files and
instructions to retrieve data from them shall be furnished to Lessor by Lessee
upon Lessor’s request and at Lessor’s expense. 
Such computer files shall be in addition to and not as replacements for
hard copies of data which shall be available for inspection and study on media
other than computer files.  Lessor, at
Lessor’s sole risk and expense, shall have the right to enter upon and into all
parts of the Pat Canyon Mineral Prospect from time to time, and at all
reasonable times and hours with a minimum five (5) business days’ advance
notice given by Lessor or its authorized agents or with shorter notice at the
discretion of the mine manager, for the purpose of inspecting or surveying the
same, or taking reasonable samples of Leased Substances therefrom.  Lessee agrees to prepare chiptrays
sequentially soon after acquisition of chip samples and as drilling
progresses.  It is Lessor’s responsibility
to provide adequate storage facilities for chiptrays and splits of all rotary
drill cuttings provided to Lessor and Lessor and Lessee agree to cooperate in
taking reasonable steps necessary to insure that drill core, chiptrays and
drill cuttings, chiptrays and/or core will not be exposed to the weather or be
accessible to intrusion or vandalism by the public.  Lessee agrees to give Lessor adequate advance
warning of the need for storage space for large quantities of splits, drill
cuttings and chiptrays.  Lessee shall not
be obligated to provide separate chiptrays for Lessor.  Lessor hereby indemnifies and agrees to hold
Lessee harmless from and against any liability arising from personal injury,
death or property damage when such is caused by Lessor’s actions on the Pat
Canyon  Mineral Prospect.

 

If this Lease is terminated for any reason, Lessee shall, within thirty
(30) days thereafter, furnish Lessor with legible, true copies of all
exploration and development data generated by Lessee in its exploration and/or
development of the Pat Canyon Mineral Prospect which has not been previously
delivered to Lessor including, but not limited to, legible copies of drilling
logs, assay results, survey information, maps and cross-sections including
geologic interpretive data and including reproducible mylars or sepias which
may have been prepared by Lessee.  If
data and calculations from the Pat Canyon

 

23

 

Mineral Prospect are stored as computer files, computer-ready copies of
the files and instructions to retrieve the data contained in them shall be
furnished to Lessor.  Delivery of such
computer files does not excuse or release Lessee from delivering all of the
other data required under this Lease. 
Drill hole chiptrays and/or core samples shall be included as data and
transported to Lessor’s designated storage facility.  Lessor shall not disclose to the public
during the term of this Lease, without a prior written consent of Lessee, any
information furnished to or made available to Lessor by Lessee regarding any
portion of the Pat Canyon Mineral Prospect while such portion is subject to the
terms of this Lease except as may be required by law or securities rules or
regulations.

 

Promptly following execution of this Lease, and at anytime during the
Term hereof, Lessor shall make available to Lessee, at Lessee’s sole expense,
copies of all technical, title and recording information and data relating to
the Pat Canyon Mineral Prospect in the possession of Lessor.

 

19.                                 Commingling.  As a matter of policy, the Lessor does not
permit ores or other containing Leased Substances from its properties to be
commingled with such materials from other properties.  However, Lessor and Lessee mutually agree
that if commingling is objectively reasonable and necessary for the development
of a viable mining operation or of demonstrable economic benefit to a mining
operation, they will work together in good faith to devise a procedure which
will permit commingling of ores from the Pat Canyon Mineral Prospect with those
from adjacent lands, such that all monies derived from the commingled
properties are paid to the rightful owners.

 

20.                                 Notices.  Unless otherwise herein provided, notice or
payment hereunder shall be deemed sufficiently given or made when personally
delivered or on the third day after deposit in the United States mail, first
class, postage prepaid, registered or certified, return receipt requested, and
addressed as follows:

 

	
  TO LESSOR:

  	
  The Lyle F. Campbell Trust 

  P.O. Box 7377 

  Reno, Nevada 89510 

  Fax: (775) 331-4515

  
	
   

  	
   

  
	
  TO LESSEE:

  	
  Nevada Pacific Gold (US) Inc. 

  P.O. Box 548 

  Suite 208 

  275 Third Street 

  Elko, Nevada 89803

  Fax: (775) 753-4397

  

 

or to such other person or address as either party may designate by
proper written notice.

 

21.                                 Force
Majeure.  Except for the payments and
the time requirements with respect thereto set forth in Articles 3, 4, 6, 8, 9,
12, 13 and 18 hereof, whenever the time for performance of any act

 

24

 

hereunder is limited and the performance thereof is hindered, prevented
or delayed by any factor or circumstance beyond the reasonable control of
Lessee and which Lessee is obliged to perform and which Lessee could not have
avoided by the timely use of due diligence and adequate planning, such as acts
of God, fire, floods, strike or labor troubles, breakage of machinery,
inability to obtain necessary materials, supplies or labor, interruptions in
delivery or transportation, shortage of railroad cars, insurrections or mob
violence, regulations, orders or requirements of the government, embargoes, war
or other disabling causes, whether similar or different, then the time for the
performance of any such act or obligation shall be extended for a period equal
to the time between Lessee’s notification of existence and the termination of
force majeure.  Lessee shall immediately
notify Lessor in writing of the existence of a force majeure, and Lessee shall
use due diligence to remove the force majeure and shall promptly notify Lessor
when the declaration of force majeure is terminated.  It is expressly understood that litigation or
arbitration in which Lessee is a party shall not constitute a condition of
force majeure hereunder.

 

22.                                 Assignment:
Sublease: Joint Operations: Transfers. 
The subject matter of this Lease includes unpatented mining claims.  The parties recognize the uncertain and
tenuous nature of title to unpatented mining claims.  Further, the parties recognize the critical
importance of complying with state and federal regulations and statutes in
preserving said title.  The parties
expressly agree that part of the material consideration for this agreement is
Lessor’s confidence in Lessee’s ability and commitment to perform its duties
hereunder, such duties include but are not limited to performance of annual
assessment work and perfection of proof thereof as provided in Article 9;
development of all necessary exploration, operation, reclamation and bonding
plans as provided in Article 5; compliance with all local, state and
federal laws, statutes, ordinances, rules and regulations as provided in Article 12;
payment of all taxes as provided in Article 13; and application of the
highest level of its professional, technical and financial ability and
willingness to explore and operate the Pat Canyon Mineral Prospect in
compliance with all of the terms of the Lease, all of which are necessary to
protect Lessor’s rights and title in the Pat Canyon Mineral Prospect.

 

Lessee expressly agrees (in view of the material considerations listed
immediately above) that it shall not assign, sublease, enter a joint operating
agreement, or otherwise transfer (hereinafter “transfer”) all or any part of
its rights or duties under this Lease without performance of the following express
conditions:

 

A.                                   Prior
to execution of any documents effecting such a transfer, Lessee shall provide
Lessor with a copy of the proposed transfer documents together with all
exhibits and attachments thereto not less than fifteen (15) days prior to Lessee’s
execution thereof.

 

B.                                     Lessee
shall not execute any transfer documents or obligate itself to make any such
transfer without obtaining the prior written consent of Lessor.  Lessor agrees that its prior written consent 

 

25

 

to any such transfer shall not be unreasonably withheld.  Notwithstanding the provisions under Article 22.C,
Lessor’s rejection of Lessee’s request for consent to a proposed transfer shall
not be deemed unreasonable if the proposed transfer would have material adverse
effect on Lessor’s rights in the Pat Canyon Mineral Prospect or Lessor’s rights
under this Lease.  Within fifteen (15)
days after Lessor’s receipt of me proposed transfer documents, Lessor shall
inform Lessee that Lessor consents to the transfer or rejects Lessee’s request
for consent to the transfer.  If Lessor
does not within fifteen (15) days after Lessor’s receipt of a copy of the
proposed transfer documents notify Lessee of Lessor’s decision, Lessor shall be
deemed to have irrevocably released and waived Lessor’s right to require
Lessor’s consent to the proposed transfer. 
If within fifteen (15) days after Lessor’s receipt of a copy of the
proposed transfer documents Lessor notifies Lessee that Lessor rejects Lessee’s
request for consent to the proposed transfer, Lessor shall deliver with
Lessor’s notice a detailed written statement of Lessor’s reasons for rejection
of Lessee’s request for consent to the proposed transfer.

 

C.                                     Lessee
shall expressly guarantee performance of all of the duties of Lessee under this
Lease whether said duties accrue before or after transfer of the Lease by
Lessee.  Said guarantee shall be express
in the documents which effect such sale, loan, sublease, assignment, joint
venture agreement or other transfer, and no refusal by Lessor to consent to any
transfer shall be unreasonable if Lessee fails or refuses to guarantee the
obligations of the transferee in the same instrument; or if the same instrument
does not obligate the transferee to be bound by the terms and conditions of
this Lease to the same extent as the transferor (Lessee).  If the transfer is the grant of a security
interest in or other encumbrance of all or any part of Lessor’s interest
hereunder in order to secure a loan to Lessee, the instrument documenting the
transfer shall recite that it is subject to the terms and conditions of this
Lease and that upon any foreclosure of or other enforcement of rights in the
encumbrance the foreclosing party shall assume the position of Lessee hereunder
and shall comply with and be bound by all terms and conditions of this
Lease.  No transfer by Lessee hereunder
shall relieve Lessee from any obligation which accrues or attached prior to the
effective date of the transfer.

 

D.                                    Lessee
agrees that this Article 22 shall be expressly incorporated, and not
incorporated by reference, in any sale, assignment, sublease, joint operation
agreement, or other document effecting such a transfer, and in any and all
subsequent sales, assignments, subleases, joint operating agreements, or any
other documents effecting a transfer of its rights or duties under this Lease.

 

It is expressly agreed that should Lessee enter into any sale, loan
instrument, assignment; sublease, joint operating agreement or other transfer
of Lessee’s rights or duties hereunder without prior performance of conditions
A, B, C and D listed immediately above, such transfer shall be void and such
transfer shall constitute a material breach of this Lease by Lessee.

 

26

 

Lessor agrees that its prior written consent to any such transfer shall
not be unreasonably withheld.  Lessor may
without any consent and without any prior notice to Lessee sell, encumber or
otherwise transfer its rights under this Lease. 
Lessor shall deliver a true and correct copy of any documents evidencing
such a sale, encumbrance or transfer to Lessee within fifteen (15) days after
execution thereof.

 

Lessee agrees to provide Lessor, after its written consent thereto,
with a counterpart original of any sale, loan instrument, assignment; sublease,
joint venture agreement, or other transfer documents complete with all
supporting documents, attachments, and exhibits within fifteen (15) days after
execution thereof.

 

23.                                 Purchase
Right.  If Lessor wishes to sell part
or all of its interest in this Agreement and receives a bona fide written offer
for such interest, Lessor shall provide this offer to Lessee, in writing, and
Lessee shall have sixty (60) days to purchase this interest on the same terms
offered.

 

24.                                 First
Right of Refusal.  Lessor shall give
Lessee a first right of refusal to negotiate a new lease for any property
currently under lease by Lessor to third parties within three (3) miles of
the Pat Canyon Mineral Prospect if any such property or any part thereof should
become available during the term of this lease. 
Lessee shall have sixty (60) days after delivery of written notice from
Lessor to serve notice of exercise of this first right of refusal and to
execute a standard form Lyle F. Campbell Trust Lease for the property.  During said sixty (60) days Lessor and Lessee
shall negotiate the term and the financial terms which shall be applicable to
the lease, including, but not limited to, Advance Minimum Royalty, Production
Royalty, and minimum yearly work expenditures.

 

25.                                 Governing
Law.  This Lease shall be governed by
the laws of the State of Nevada and in any litigation action between Lessor and
Lessee, the parties shall submit to the jurisdiction of the courts of Nevada with
a venue in Reno, Nevada.

 

26.                                 Press
Releases by Lessee.  On the date of
Lessee’s making or issuing any public announcement, press release or similar
publicity or disclosure with respect to this Lease, a full, true and accurate
copy of the publicity release shall be sent to the Lessor.  For any disclosure required by law, role,
regulation or ordinance, the disclosing party shall advise the other party of
such disclosure and send the other party a full, true and accurate copy
thereof.

 

27.                                 Titles
of Articles.  The titles to the
Articles hereof have been inserted for convenience only.  Such titles are not to be considered as
limiting or expanding or modifying in any other fashion the language of the Article following
the same.

 

28.                                 Attorneys’
Fees.  The prevailing party in any
litigation or other form of dispute resolution mutually acceptable to the
parties hereto concerning this Lease shall be entitled to its reasonable
attorneys’ fees and court costs.

 

27

 

29.                                 No
Waiver.  No waiver by either party of
any right herein shall be construed as a waiver of any such right in the future
or any other right in this Lease.

 

30.                                 Binding
Effect.  Subject to the provisions of
Article 22, this Lease shall extend to and be binding upon and every
benefit hereof shall inure to the parties hereto, their respective heirs,
executors, administrators, successors, and assigns.

 

31.                                 Memorandum.  Lessee and Lessor shall execute a Memorandum
of this Lease in a recordable form under the laws of the State of Nevada to
give notice to third parries of the rights granted hereunder.  Either party may record such memorandum.  Neither of the parries hereto shall or may record
this Lease.

 

32.                                 Obligation
of Good Faith.  All obligations and
covenants set forth in this Lease shall be subject to an obligation of good
faith by both Lessor and Lessee in the performance or enforcement thereof.  It is mutually understood and agreed that
“Good Faith” means honesty in fact in the conduct or transaction concerned.

 

33.                                 Sole
Agreement Time of Essence.  This
Lease constitutes the sole understanding of the parties with respect to me
subject matter hereof.  All prior written
or oral agreements or understandings between the parties hereto are
incorporated in and superseded by this Lease. 
No modification or alteration of the terms of this Lease shall be
binding unless such modification or alteration shall be in writing and executed
subsequent to the date hereof by Lessee and Lessor.  In the event such modification or alteration
alters the rights granted hereunder, the parties may execute an amended
Memorandum of this Lease in a recordable form sufficient under the laws of the
State of Nevada to provide notice to third parties.  Time is of the essence of this Lease.

 

34.                                 Further
Assurances.  Lessor and Lessee agree
that they shall take from time to time such actions and execute such additional
instruments as may be reasonably necessary or convenient to implement and carry
out the intent and purpose of this Lease.

 

35.                                 Authority.  Lessor hereby represents and warrants that
the Lyle F. Campbell Trust is an entity duly created and validly existing in
accordance with the laws of the State of Nevada, and that under the Agreement
of Trust, the Trustee(s) has the necessary power and authority to lawfully
authorize the execution and delivery of this Lease and the other instruments to
be executed and delivered in connection herewith and to undertake the
performance of its obligations hereunder. 
This Lease, and the other instruments to be executed and delivered in
connection herewith, when executed and delivered by Lessor, the Trustee and the
Lyle F. Campbell Trust; shall constitute valid and binding obligations of both
enforceable against them in accordance with their respective terms, and will
not result in any violation of the trust agreement or laws applicable thereto.

 

28

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Lease as
of the day and year first above written.

 

	
  LESSOR:

  	
  LESSEE:

  
	
   

  	
   

  
	
  THE LYLE F. CAMPBELL TRUST

  	
  NEVADA PACIFIC GOLD (US), INC. A Nevada 

  Corporation

  
	
   

  	
   

  
	
  By

  	
       /s/Bertha C. Johnson

  	
   

  	
  By

  	
  /s/Joe Kajszo

  
	
   

  	
  Trustee

  	
   

  	
   

  	
   Joe Kajszo, Director

  
	
   

  	
   

  	
   

  
	
  /s/Julian E. Simpson  

  	
   

  	
   

  
	
  Julian E. Simpson

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/Jean C. Simpson  

  	
   

  	
   

  
	
  Jean C. Simpson

  	
   

  

 

 

	
  State of Nevada

  	
  )

  	
   

  	
   

  
	
   

  	
  ) ss

  	
   

  	
   

  
	
  County of Washoe

  	
  )

  	
   

  	
   

  

 

On this 20th day of May, 2004, before me, the undersigned, a
Notary Public in and for the State aforesaid, personally appeared Bertha C.
Johnson, known or identified to me to be the Trustee of the LYLE F. CAMPBELL
TRUST, and the person authorized to and the person who did execute the
foregoing instrument on behalf of said Trust, and acknowledged to me that such
Trust executed the same.

 

 

	
   

  	
  /s/Notary Public

  

 

29

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