Document:

Exhibit 10.86(d)

 

Notice of [YEAR] Stock Option Award Granted Under the 
 Amended and Restated Tree.com, Inc. 2008 Stock and Annual Incentive Plan

 

	
Award   Recipient:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
[YEAR]   Stock Option Award:
    	
 
    	
Under   the Amended and Restated Tree.com, Inc. 2008 Stock and Annual Incentive   Plan (the “Amended 2008 Plan”):

 

1)    Stock options to acquire   xxx shares of   Tree.com common stock at an exercise price of $xxx   per share (“Stock Options”);

 

2)    Stock options to acquire   xxx shares of   Tree.com common stock at an exercise price of $xxx   per share (“Stock Options”); and

 

3)    Stock options to acquire   xxx shares of   Tree.com common stock at an exercise price of $xxx   per share (“Stock Options”);
    
	
 
    	
 
    	
 
    
	
Award   Date
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vesting   Schedule:
    	
 
    	
Subject   to your continued employment with Tree.com or its Subsidiaries, your Stock   Options shall, subject to the provisions of the Amended 2008 Plan, vest and   no longer be subject to any restriction in  three equal annual installments on the   anniversary of your Award Date, beginning [DATE].
    
	
 
    	
 
    	
 
    
	
Expiration   Date:
    	
 
    	
Once   vested, your Stock Options will expire upon the earlier of (i) the   expiration of the 12-month period following your Termination of Employment   for any reason other than death, Disability or Retirement, (ii) the   expiration of the one-year period following your Termination of Employment   due to death, Disability or Retirement or (iii) 10 years from your Award   Date (the “Expiration Date”), except as otherwise provided in the Amended   2008 Plan or the attached Terms and Conditions.

 

If   you do not exercise your vested Stock Options before the Expiration Date,   your Stock Options will be forfeited and canceled in their entirety.
    
	
 
    	
 
    	
 
    
	
Impact   of a Termination of Employment:
    	
 
    	
Except   as otherwise provided in the Amended 2008 Plan, and any employment agreement   between you and Tree, all of your unvested Stock Options will be forfeited   and canceled in their entirety upon a Termination of Employment by Tree.com.
    
	
 
    	
 
    	
 
    
	
Terms   and Conditions:
    	
 
    	
Capitalized   terms used (but not defined) in this Award Notice shall have the meanings set   forth in the Amended 2008 Plan.

 

Your   Stock Options are subject to the Terms and Conditions attached hereto and to   the Amended 2008 Plan, which are posted on www.benefitaccess.com and   incorporated herein by reference, and any employment agreement between you   and Tree. Copies of these documents are also available upon request from your   Human Resources Department. In the event of a conflict between the Terms and   Conditions and this Notice, this Notice shall control.

 

Without   a complete review of these documents, you will not have a full understanding   of all the material terms of your Stock Options.Pan American Lithium Corp. - Exhibit 4.16 - Filed by newsfilecorp.com

MINING EARN-IN AND JOINT VENTURE AGREEMENT 

THIS AGREEMENT made as of the 2nd day of May, 2012
(the “Effective Date”) by and between Pan American Lithium Corp, a
British Columbia corporation, (“PALC”), through its 99% -owned
subsidiary, Sociedad South American Lithium Company S.A.C. (“Salico”),
and Sociedad Gareste Limitada, a Chilean limited liability company
(“Gareste”). 

RECITALS 

A.         
Gareste owns certain Assets located in Atacama Region III, Chile, which are
located in the Salar de Maricunga. 

B.          PALC
and Gareste entered into a Letter of Intent dated February 14, 2011 (the “LOI”),
which, among other things, allows PALC to earn an interest in and to the Assets
and requires the parties to enter into this Mining Joint Venture Agreement to
govern the rights and obligations of the parties relative to the Assets. 

C.          Prior
to the LOI, Gareste, on behalf of Salico, submitted certain applications for
Water Rights at the Salar de Maricunga. 

D.         
Gareste and PALC (through Salico) wish to jointly participate in the
exploration, evaluation, development and mining of the Assets or any other
properties acquired pursuant to the terms of this Agreement. 

NOW THEREFORE, in consideration of the covenants and
agreements contained herein, PALC/Salico, and Gareste agree as follows: 

ARTICLE 1 

  DEFINITIONS 

1.1       “Accounting
Procedure” means the procedures set forth in Exhibit B. 

1.2       “Affiliate”
means any person, partnership, join venture, corporation or other form of
enterprise which directly controls, is controlled by, or is under common control
with, a Participant. For purposes of the preceding sentence, “control”
means possession, directly or indirectly, of the power to direct or cause
direction of management and policies through ownership of voting securities,
contract, voting trust or otherwise. 

1.3       “Agreement”
means this Mining Earn-In and Joint Venture Agreement, including all amendments
and modifications thereof, and all schedules and exhibits, which are
incorporated herein by this reference. 

1.4       “Area of
Interest” means the area described in Exhibit A. 

- 2 - 

1.5       “Assets” means
the Properties, Mineral Rights, Water Rights, Products and all other real and
personal property, both tangible and intangible that relates to the Properties,
Mineral Rights Water Rights and Products, held for the benefit of the
Participants hereunder. 

1.6       “Budget” means a
detailed estimate of all costs to be incurred by the Participants with respect
to a Program and a schedule of cash advances to be made by the Participants.

1.7       “Costs” means
all costs and expenses whatsoever, direct or indirect, properly incurred with
respect to Operations and recorded by the Manager in accordance with this
Agreement. 

1.8       “Development”
means all preparation for the removal and recovery of Products, including the
construction or installation of a mill or any other improvements to be used for
the mining, handling, milling, processing or other beneficiation of Products.

1.9       “Encumbrance”
means any mortgage, charge, pledge, hypothecation, security interest,
assignment, lien (statutory or otherwise), charge, title retention agreement or
arrangement, royalty, restrictive covenant or other encumbrance of any nature.

1.10     “Exchange” means the TSX
Venture Exchange. 

1.11     “Initial Contribution”
means that contribution each Participant has made or agrees to make pursuant to
Article 4. 

1.12     “Joint Account” means the
account maintained in accordance with the Accounting Procedure showing the
charges and credits accruing to the Participants. 

1.13     “Joint Venture” means the
business arrangement of the Participants under this Agreement. 

1.14     “Letter of Intent” means
the binding letter of intent dated February 14, 2011 between the Parties. 

1.15     “Management Committee”
means the committee established under Article 8. 

1.16     “Manager” means the person
or entity appointed under Article 9 to manage Operations, or any successor
Manager. 

1.17     “Market Price” has the
meaning set out in the policies of the Exchange. 

1.18     “Mining” means the mining,
extracting, producing handling, milling or other processing of Products. 

1.19     “Net Proceeds” means
certain amounts calculated as provided in Exhibit D, which may be payable to a
Participant under Section 7.7. 

1.20     “Notice of Intention” means
the notice provided by PALC/Salico to Gareste as contemplated in Article 3 in
the form attached as Schedule 1.20. 

- 3 - 

1.21     “Minerals” means any and
all ores, and concentrates or metals derived therefrom, containing precious,
base and industrial minerals and which are found in, on or under the Properties
and may lawfully be explored for, mined and sold pursuant to the Mineral Rights
and other instruments of title under which the Properties are held. 

1.22     “Mineral Rights” means the
mineral claims, leases, tenures and other rights to minerals, or to work upon
lands for the purpose of searching for, developing or extracting minerals under
any forms of mineral title recognized under applicable laws or any subdivision
thereof, whether contractual, statutory or otherwise. 

1.23     “Operations” means the
activities carried out under the Agreement. 

1.24     “Operative Date” means
the date on which the Joint Venture if formed in accordance with this Agreement.

1.25     “Option” means the option
granted to PALC/Salico to acquire the Participating Interest as provided in
Article 3. 

1.26     “Option Period” means the
period during which the Option remains in effect under this Agreement. 

1.27     “Participant” and
“Participants” and “Parties” mean the person, persons, entity or
entities that from time to time have Participating Interests. 

1.28     “Participating Interest”
means the percentage interest representing the beneficial interest of a
Participant in the Assets, and all other rights and obligations arising under
this Agreement, as such interest may from time to time be adjusted hereunder.
Participating Interests shall be calculated to three decimal places and rounded
to two (e.g., 1.519% would be rounded to 1.52%) . Decimals of 0.005 or more
shall be rounded up to 0.01, decimals of less than 0.005 shall be rounded down.
The initial Participating Interests of the Participants are set forth in Article
3. 

1.29     “Permitted Encumbrances”
means the Encumbrances applicable to the Assets as set out in Schedule 1.29.

1.30     “Prime Rate” means the
interest rate quoted as “Prime” by Bank of America, at its head office, as said
rate may change from day to day (which quoted rate may not be the lowest rate at
which Bank of America loans funds.). 

1.31     “Products” means all ores,
mineral and mineral resources produced from the Properties under this Agreement.

1.32     “Program” means a
description in reasonable detail of Operations to be conducted and objectives to
be accomplished by the Manager for a year or any longer period. 

1.33     “Properties” means those
interests in real property described in Schedule 1 and all other interests in
real property within the Area of Interest which are acquired and held subject to
this Agreement.

- 4 - 

1.34     “Proportionate Share”
means, for any Participant, that share which is equal to its Participating
Interest, expressed as a percentage. 

1.35     “Shares” means the common
shares in the capital of PALC. 

1.36     “Transfer” means sell,
grant, assign, encumber, pledge or otherwise commit or dispose of. 

1.37     “Water Rights” means all
applications and submissions for and grants or approvals from the Direccion
General de Aguas (“DGA”) or other appropriate Chilean governmental or legal
authority of the rights to explore for and/or use or exploit waters. 

ARTICLE 2 

  REPRESENTATIONS, WARRANTIES AND COVENANTS 

2.1       General
representations, warranties of the Parties. In order to induce the
parties to enter into and consummate this Agreement, each party hereby
represents and warrants to the other party, with the intent that the other party
will rely thereon in entering into this Agreement and in concluding the
transactions contemplated herein, that: 

	 	(a) 	
      each party is qualified to do business in those
      jurisdictions where it is necessary to fulfill each of its obligations
      under this Agreement, and each party has the full power and authority to
      enter into this Agreement and any agreement or instrument referred to or
      contemplated by this Agreement;

	 	 	 
	 	(b) 	
      each party has the requisite power, authority and
      capacity to fulfill its obligations under this Agreement;

	 	 	 
	 	(c) 	
      the execution and delivery of this Agreement and the
      agreements contemplated hereby have been duly authorized by all necessary
      action on behalf of each party;

	 	 	 
	 	(d) 	
      this Agreement constitutes a legal, valid and binding
      obligation of each of the parties enforceable against it in accordance
      with its terms, except as enforcement may be limited by laws of general
      application affecting the rights of creditors;

	 	 	 
	 	(e) 	
      each party has obtained all authorizations, approvals, or
      waivers that may be necessary or desirable in connection with the
      transactions contemplated in this Agreement, and other actions by, and
      have made all filings with, any and all regulatory authorities from whom
      any such authorization, approval or other action is required to be
      obtained or to be made in connection with the transactions contemplated
      herein, and all such authorizations, approvals and other actions will be
      in full force and effect, and all such filings will have been accepted by
      each of the parties who will be in compliance with, and have not committed
      any breach of, any securities laws, regulations or policies of any
      regulatory authority to which each party, or any of the mineral property
      interests comprising the Assets may be
subject;

- 5 - 

	 	(f) 	
      except for regulatory approval (if needed) and approval
      from the Exchange of this Agreement, there are no other consents,
      approvals or conditions precedent to the performance of this Agreement
      which have not been obtained;

	 	 	 	 
	 	(g) 	
      each of the parties is in material compliance with all
      applicable laws, ordinances, statutes, regulations, by-laws, orders or
      decrees to which it is subject or which apply to such party;

	 	 	 	 
	 	(h) 	
      no proceedings are pending for, and the parties are
      unaware of, any basis for the institution of any proceedings leading to
      the placing of any of the parties in bankruptcy or subject to any other
      laws governing the affairs of insolvent persons;

	 	 	 	 
	 	(i) 	
      the parties have not received, nor have the Parties
      requested or do the Parties require to receive, any offering memorandum or
      similar document describing the business and affairs of that party in
      order to assist the Parties in entering into this Agreement and in
      consummating the transactions contemplated herein;

	 	 	 	 
	 	(j) 	
      except as otherwise provided for herein, the Parties have
      not retained, employed or introduced any broker, finder or other person
      who would be entitled to a brokerage commission or finder’s fee arising
      out of the transactions contemplated hereby;

	 	 	 	 
	 	(k) 	
      the Parties are not, nor will the Parties be, in breach
      of any provision or condition of, nor have the Parties done or omitted to
      do anything that, with or without the giving of notice or lapse or both,
      would constitute a breach of any provision or condition of, or give rise
      to any right to terminate or cancel or accelerate the maturity of any
      payment under, any deed of trust, contract, certificate, consent, permit,
      license or other instrument to which either of the Parties is a party, by
      which either of the Parties is bound or from which any of the Parties
      derives benefit, any judgment, decree, order, rule or regulation of any
      court or governmental authority to which any of the Parties is subject, or
      any statute or regulation applicable to any of the Parties, to an extent
      that, in the aggregate, has a material adverse affect on either of the
      Parties or the Assets;

	 	 	 	 
	 	(l) 	
      the making of this Agreement and the completion of the
      transactions contemplated hereby and the performance of and compliance
      with the terms hereof does not and will not:

	 	 	 	 
	 		(i) 	
      conflict with or result in a breach of or violate any of
      the terms, conditions or provisions of any law, judgment, order,
      injunction, decree, regulation or ruling of any court or governmental
      authority, domestic or foreign, to which any of the Parties is subject, or
      constitute or result in a default under any agreement, contract or
      commitment to which any of the Parties is a party,

	 	 	 	 
	 		(ii) 	
      give to any party the right of termination, cancellation
      or acceleration in or with respect to any agreement, contract or
      commitment to which any of the Parties is a
party,

- 6 - 

	 	(iii) 	
      give to any government or governmental authority, or any
      municipality or any subdivision thereof, including any governmental
      department, commission, bureau, board or administration agency, any right
      of termination, cancellation or suspension of, or constitute a breach of
      or result in a default under, any permit, license, control or authority
      issued to any of the Parties which is necessary or desirable in connection
      with the conduct and operations of each party’s business and the ownership
      or leasing of each party’s business assets, or

	 	 	 
	 	(iv) 	
      constitute a default by any of the Parties, or any event
      which, with the giving of notice or lapse of time or both, might
      constitute an event of default, under any agreement, contract, indenture
      or other instrument relating to any indebtedness of any of the Parties
      which would give any party to that agreement, contract, indenture or other
      instrument the right to accelerate the maturity for the payment of any
      amount payable under that agreement, contract, indenture or other
      instrument; and

	 	(m) 	
      neither this Agreement nor any other document,
      certificate or statement furnished by or on behalf of the Parties in
      connection with the transactions contemplated hereby knowingly or
      negligently contains any untrue or incomplete statement of material fact
      or omits to state a material fact necessary in order to make the
      statements therein not misleading which would likely affect the decision
      of the other party to enter into this Agreement.

2.2       Representations
and warranties of Gareste respecting the Assets. In order to induce
PALC/Salico to enter into and consummate this Agreement, Gareste hereby
represents and warrants to PALC/Salico, with the intent that PALC/Salico will
rely thereon in entering into this Agreement and in concluding the transactions
contemplated herein, that: 

	 	(a) 	
      Except as described in Schedule 2.2(a) attached hereto,
      Gareste is the legal and beneficial owner of and has good and marketable
      title to all of the mineral property interests comprising the Assets, the
      particulars of which are described in Schedule 2.2(a);

	 	 	 
	 	(b) 	
      Gareste is authorized to hold the right to explore and
      develop and has all rights of ingress and egress to each of the mineral
      property interests comprising the Assets;

	 	 	 
	 	(c) 	
      Except as described in Schedule 2.2(a), Gareste is in
      exclusive possession of and owns such Properties free and clear of all
      defects, liens and Encumbrances;

	 	 	 
	 	(d) 	
      No other person, firm or corporation has any written or
      oral agreement, option, understanding or commitment, or any right or
      privilege capable of becoming an agreement, for the purchase from Gareste
      of any interest in and to any of the mineral property interests comprising
      the Assets;

	 	 	 
	 	(e) 	
      the mineral property interests comprising the Assets have
      been duly and validly located, constituted, and recorded in a good and
      minerlike manner pursuant to applicable Chilean
laws;

- 7 - 

	 	(f) 	
      Except as set forth in Schedule 2.2(f), all permits and
      licenses covering the mineral property interests comprising the Assets are
      in good standing by the proper doing and filing of assessment or other
      work and the payment of all fees, taxes and rentals in accordance with the
      requirements of applicable mining laws and the performance of all other
      actions necessary in that regard;

	 	 	 
	 	(g) 	
      Except as set forth in Schedule 2.2(g) or as exist under
      the laws of the Republic of Chile, the Properties are not subject to any
      mining or other royalties or similar charges or levies;

	 	 	 
	 	(h) 	
      all conditions on and relating to the mineral property
      interests comprising the Assets and the operations conducted thereon by or
      on behalf of Gareste are in material compliance with all applicable laws,
      regulations or orders and including, without limitation, all laws relating
      to environmental matters, waste disposal and storage and
    reclamation;

	 	 	 
	 	(i) 	
      there are no outstanding orders or directions relating to
      environmental matters requiring any work, repairs, construction or capital
      expenditures with respect to any of the mineral property interests
      comprising the Assets and the conduct of the operations related
      thereto;

	 	 	 
	 	(j) 	
      there is no adverse claim or challenge against or to the
      ownership of or title to any of the mineral property interests comprising
      the Assets or which may impede the development of any of the mineral
      interests comprising the Assets, nor, to the best of the knowledge,
      information and belief of Gareste, after having made due inquiry, is there
      any basis for any potential claim or challenge, and, to the best of the
      knowledge, information and belief of Gareste, after having made due
      inquiry, no person has any royalty, net profits or other interests
      whatsoever in any production from any of the mineral property interests
      comprising the Assets;

	 	 	 
	 	(k) 	
      there are no actions, suits, proceedings or
      investigations (whether or not purportedly against or on behalf of
      Gareste), pending or threatened, which may affect, without limitation, the
      rights of any of the Parties to transfer any interest in and to the
      mineral property interests comprising the Assets at law or in equity, or
      before or by any federal, state, provincial, municipal or other
      governmental department, commission, board, bureau, agency or
      instrumentality, domestic or foreign, and, without limitation, there are
      no claims or potential claims under any relevant family relations
      legislation or other equivalent legislation affecting any of the mineral
      property interests comprising the Assets and Gareste is not now aware of
      any existing ground on which any such action, suit or proceeding might be
      commenced with any reasonable likelihood of success;

	 	 	 
	 	(l) 	
      Gareste has delivered to PALC/Salico all material
      documentation in Gareste’s possession or control relating to the mineral
      property interests comprising the Assets together with copies of all
      permits, permit applications and applications for exploration and
      exploitation rights respecting any of the mineral property interests
      comprising the Assets;

- 8 - 

	 	(m) 	
      Gareste possesses valid rights to, claims valid rights
      to, and currently has authority to take and use all water necessary to
      support the current or historical operation of the Properties;
  and

	 	 	 
	 	(n) 	
      Gareste holds or has filed in a timely manner
      applications or renewals for all governmental authorizations, permits or
      consents required for the conduct of it operations relative to the Assets
      as now conducted, the parties are in material compliance with such
      authorizations and there is no reasonable ground to believe that any of
      the authorizations will not be renewed upon their
  expiration.

2.3      
Disclosures. Each of the Participants represents and warrants to
the other that it is unaware of any material facts or circumstances which have
not been disclosed in this Agreement, which should be disclosed to the other
Participant in order to prevent the representations in this Article 2 from being
materially misleading. 

2.4       Survival of
Representations and Warranties. The representations and
warranties contained in this Agreement are conditions on which the Parties have
relied upon in entering into this Agreement and will survive the execution
hereof and the acquisition of any interest in the Assets by PALC/Salico
hereunder. Each Party will indemnify and save the other harmless from all loss,
damage, costs, actions and suits arising out of or in connection with any breach
of any representation, warranty, covenant, agreement or condition made by them
and contained in this Agreement. A Party may waive any of such representations,
warranties, covenants, agreements or conditions in whole or in part at any time
without prejudice of its right in respect of any other breach of the same or any
other representation, warranty, covenant, agreement or condition. 

2.5       Mutual
Covenants. Each Party will provide by written notice within five (5)
days, the particulars of: 

	 	(a) 	
      each occurrence within that party’s knowledge after the
      Effective Date of this Agreement that, if it had occurred before the
      Effective Date, would have been contrary to any of the representations or
      warranties contained herein; and

	 	 	 
	 	(b) 	
      each occurrence or omission within that party’s knowledge
      after the Effective Date that constitutes a breach of any of the covenants
      contained in this Agreement.

2.6       Gareste Covenant.
PALC/Salico and Gareste will undertake all reasonable efforts to
deliver, or caused to be delivered, as soon as reasonably possible after the
Effective Date, , a title opinion or opinions respecting the mineral property
interests comprising the Assets in the form reasonably required by PALC/Salico
and its legal counsel, all as addressed to PALC/Salico and prepared in
accordance with applicable mining industry standards, together with such other
documentation as may be required in order to seek and obtain any needed
regulatory approval for each of the transactions contemplated by this Agreement.

- 9 - 

ARTICLE 3 

  OPTION 

3.1       Grant of
Option. Gareste hereby grants to PALC/Salico the sole and exclusive
right and option, in accordance with the other provisions of this Article 3, to
acquire in five stages up to an undivided 90% right, title and interest in and
to the Assets (10% in the first stage, an additional 20% in the optional second
stage, an additional 40% in the optional third stage, an additional 10% in the
optional fourth stage, and an additional 10% in the optional fifth stage), free
and clear of all Encumbrances except for the Permitted Encumbrances described in
Schedule 3.1. 

3.2       First Stage of
Option. The first stage of the Option will be deemed to be exercised by
PALC/Salico upon the following actions of PALC/Salico: 

	 	(a) 	
      allotting and issuing 200,000 PALC Shares to Gareste at
      the Market Price per Share upon receipt of all regulatory approvals of
      this Agreement and final approval of this Agreement from the
    Exchange;

	 	 	 
	 	(b) 	
      allotting and issuing 100,000 PALC Shares to Gareste at
      the Market Price per Share on or before the first anniversary following
      the Effective Date;

	 	 	 
	 	(c) 	
      allotting and issuing 100,000 PALC Shares to Gareste at
      the Market Price per Share on or before the second anniversary following
      the Effective Date;

	 	 	 
	 	(d) 	
      allotting and issuing 100,000 PALC Shares to Gareste at
      the Market Price per Share on or before the third anniversary following
      the Effective Date;

	 	 	 
	 	(e) 	
      delivering a cash payment of $100,000 to Gareste on or
      prior to the first anniversary following the Effective Date;

	 	 	 
	 	(f) 	
      delivering a cash payment of $100,000 to Gareste on or
      prior to the second anniversary following the Effective Date;

	 	 	 
	 	(g) 	
      delivering a cash payment of $100,000 to Gareste on or
      prior to the third anniversary following the Effective Date;

	 	 	 
	 	(h) 	
      delivering a scoping study to Gareste with respect to one
      or more of the Properties (the ”Scoping Study”); and

	 	 	 
	 	(i) 	
      allotting and issuing 100,000 PALC Shares to Gareste at
      the Market Price per Share on or before delivery of the Scoping
    Study.

Upon satisfaction of the conditions set out in this section
(which for greater certainty amounts to the allotment and issuance of 600,000
PALC Shares, payment of $300,000 and delivery of the Scoping Study), the first
stage of the Option will be deemed to be exercised, and an undivided 10% right,
title and interest in and to the Assets will automatically vest in PALC/Salico
and Gareste will promptly register such interest in the name of PALC/Salico (or
its designee) in accordance with section 3.10. Upon the exercise of the first
stage of the Option, PALC/Salico shall deliver a duly signed Notice of Intention to Gareste
within 60 days of such exercise, which will set out whether PALC/Salico elects
or does not elect to proceed with the second stage of the Option. Upon electing
not to proceed with the second stage of the Option, PALC/Salico and Gareste will
be deemed to have formed the Joint Venture based upon the Participating
Interests set out in section 4.2. 

- 10 - 

3.3       Second Stage
of Option. Provided the first stage of the option is exercised by
PALC/Salico, the second stage of the Option will be deemed to be exercised by
PALC/Salico upon PALC/Salico: 

	 	(a) 	
      delivering a pre-feasibility study to Gareste with
      respect to one or more of the Properties (the ”PFS”); and

	 	 	 
	 	(b) 	
      allotting and issuing 100,000 PALC Shares to Gareste at
      the Market Price per Share on or before delivery of the
  PFS.

Upon satisfaction of the conditions set out in section 3.3, the
second stage of the Option will be deemed to be exercised, and an additional
undivided 20% right, title and interest in and to the Assets (30% total) will
automatically vest in PALC/Salico and Gareste will promptly register such
interest in the name of PALC/Salico (or its designee) in accordance with section
3.10. Upon the exercise of the second stage of the Option, PALC/Salico will
deliver a duly signed Notice of Intention to Gareste within 60 days of such
exercise, which will set out whether PALC/Salico elects or does not elect to
proceed with the third stage of the Option. Upon electing not to proceed with
the third stage of the Option, PALC/Salico and Gareste will be deemed to have
formed the Joint Venture based upon the Participating Interests set out in
section 4.3. In the event PALC/Salico elected to proceed with the second stage
of the Option but subsequently elects to terminate or abandon the second stage
of the Option and delivers a duly signed Notice of Intention to Gareste
regarding same, the second stage of the Option will terminate and PALC/Salico
and Gareste will be deemed to have formed the Joint Venture based upon the
Participating Interests set out in section 4.2. 

3.4       Third Stage
of Option. Provided the second stage of the option is exercised by
PALC/Salico, the third stage of the Option will be deemed to be exercised by
PALC/Salico upon the following : 

	 	(a) 	
      delivering a cash payment of $100,000 to Gareste on or
      prior to the date that is 180 days after delivery of the PFS;

	 	 	 
	 	(b) 	
      delivering a bankable feasibility study to Gareste with
      respect to one or more of the Properties (the ”BFS”); and

	 	 	 
	 	(c) 	
      allotting and issuing 300,000 PALC Shares to Gareste at
      the Market Price per Share on or before delivery of the
  BFS.

Upon satisfaction of the conditions set out in section 3.4, the
third stage of the Option will be deemed to be exercised, and an additional
undivided 40% right, title and interest in and to the Assets (70% total) will
automatically vest in PALC/Salico and Gareste will promptly register such
interest in the name of PALC/Salico (or its designee) in accordance with section
3.10.

- 11 - 

Upon the exercise of the third stage of the Option, PALC/Salico
will deliver a duly signed Notice of Intention to Gareste within 60 days of such
exercise, which will set out whether PALC/Salico elects or does not elect to
proceed with the fourth stage of the Option. Upon electing not to proceed with
the fourth stage of the Option, PALC/Salico and Gareste will be deemed to have
formed the Joint Venture based upon the Participating Interests set out in
section 4.4. In the event PALC/Salico elected to proceed with the third stage of
the Option but subsequently elects to terminate or abandon the third stage of
the Option and delivers a duly signed Notice of Intention to Gareste regarding
same, the third stage of the Option will terminate and PALC/Salico and Gareste
will be deemed to have formed the Joint Venture based upon the Participating
Interests set out in section 4.3. 

3.5       Fourth Stage
of Option. Provided the third stage of the option is exercised by
PALC/Salico, the fourth stage of the Option will be deemed to be exercised
PALC/Salico upon the following: 

	 	(a) 	
      delivering a cash payment of $100,000 to Gareste on or
      prior to the date that is 180 days after delivery of the BFS;

	 	 	 
	 	(b) 	
      delivering a cash payment of $1,000,000 to Gareste
      immediately upon receipt of funds received by PALC/Salico from project
      debt financing to build a production facility based on the BFS
      (“Project Debt Financing”); and

	 	 	 
	 	(c) 	
      allotting and issuing 1,000,000 PALC Shares to Gareste at
      the Market Price per Share on or before receipt of Project Debt
      Financing.

Upon satisfaction of the conditions set out in section 3.5, the
fourth stage of the Option will be deemed to be exercised, and an additional
undivided 10% right, title and interest in and to the Assets (80% total) will
automatically vest in PALC/Salico and Gareste will promptly register such
interest in the name of PALC/Salico (or its designee) in accordance with section
3.10. Upon the exercise of the fourth stage of the Option, PALC/Salico/Salico
will deliver a duly signed Notice of Intention to Gareste within 60 days of such
exercise, which will set out whether PALC/Salico elects or does not elect to
proceed with the fifth stage of the Option. Upon electing not to proceed with
the fifth stage of the Option, PALC/Salico and Gareste will be deemed to have
formed the Joint Venture based upon the Participating Interests set out in
section 4.5. In the event PALC/Salico elected to proceed with the fourth stage
of the Option but subsequently elects to terminate or abandon the fourth stage
of the Option and delivers a duly signed Notice of Intention to Gareste
regarding same, the fourth stage of the Option will terminate and PALC/Salico
and Gareste will be deemed to have formed the Joint Venture based upon the
Participating Interests set out in section 4.4. 

3.6       Fifth Stage of
Option. Provided the fourth stage of the option is exercised by
PALC/Salico, the fifth stage of the Option will be deemed to be exercised
PALC/Salico receiving funds for complete construction of the project, including
  any equity financing needed from (1) a reputable lending institution(s) or
  capable strategic partner(s) in the mining or mining finance industry, or (2)
  from an election by PALC/Salico to self-fund the complete project (the
  “Full Project Financing”). 

- 12 - 

Upon satisfaction of the conditions set out in section 3.6, the
fifth stage of the Option will be deemed to be exercised, and an additional
undivided 10% right, title and interest in and to the Assets (90% total) will
automatically vest in PALC/Salico. In each case, Gareste will promptly register
such interest in the name of PALC/Salico (or its designee) in accordance with
section 3.10. Upon the deemed exercise of the fifth stage of the Option,
PALC/Salico and Gareste will be deemed to have formed the Joint Venture based
upon the Participating Interests set out in section 4.6. In the event
PALC/Salico elected to proceed with the fifth stage of the Option but
subsequently elects to terminate or abandon the fifth stage of the Option and
delivers a duly signed Notice of Intention to Gareste regarding same, the fifth
stage of the Option will terminate and PALC/Salico and Gareste will be deemed to
have formed the Joint Venture based upon the Participating Interests set out in
section 4.5. 

3.7       Securities
Law. All certificates for Shares issuable hereunder shall carry a legend
as required by applicable securities laws and regulations and the policies of
the Exchange. Gareste acknowledges that the Shares are being issued in
accordance with an exemption from the prospectus requirements of applicable
securities laws pursuant to section 2.13 of National Instrument 45-106. 

3.8       PALC/Salico’s
Election to Terminate the Option. For greater certainty, the making of
option payments, allotment and issuance of Shares and delivery of specified
reports set forth in this Article 3 are within the sole discretion of
PALC/Salico, who may elect at any time to terminate the Option, subject to any
project interests earned by PALC/Salico as of the date of termination. 

3.9       PALC/Salico’s
Right of Entry. Throughout the Option Period, PALC/Salico and its
employees, agents and independent contractors will have the exclusive right in
respect of the Assets to 

	 	(a) 	
      enter thereon;

	 	 	 
	 	(b) 	
      have exclusive and quiet possession thereof;

	 	 	 
	 	(c) 	
      carry out exploration, development and evaluation
      activities including, without limitation, the removal of Minerals for
      exploration purposes; and

	 	 	 
	 	(d) 	
      bring upon and erect upon the Properties such structures
      and other facilities as may be necessary or advisable to carry out
      exploration, development and evaluation
activities.

The Optionee’s rights pursuant to this Section 3.9 will at all
times be subject to any restrictions that may be required by applicable laws or
by regulatory authority and to reasonable rights of entry and access reserved to
Gareste hereunder. 

3.10     Registered Title.
Gareste will remain the registered holder of the Assets, as they exist on
the date hereof until the exercise of the first stage of the Option. Upon
PALC/Salico acquiring a Participating Interest in the Assets, and if instructed
by PALC/Salico in writing, Gareste shall as soon as practicable, and in any
event within five (5) days thereafter, register the Participating Interest of
PALC/Salico (or its designee) and complete such transfer of the interest from Gareste to PALC/Salico (or its designee), and PALC/Salico
(or its designee) shall become a recorded holder of the Assets. Gareste or
PALC/Salico, to the extent that it is the recorded holder of any Mineral Rights
comprised in the Properties, will hold title to the Properties subject to this
Agreement. In the event PALC/Salico does not require registration of the
Participating Interest, Gareste shall hold such Participating Interest as
trustee in trust for the benefit of PALC/Salico. 

- 13 - 

3.11     Activities during Option
Period. Notwithstanding any term contained herein to the contrary,
PALC/Salico shall control all exploration and Development of the Properties at
all times during the Option Period until formation of the Joint Venture. 

ARTICLE 4 

  INTERESTS AND INITIAL CONTRIBUTIONS 

4.1       Formation of
Joint Venture. The Joint Venture shall be deemed to be formed in
accordance with Article 3 to be governed by the terms and conditions of this
Agreement. 

4.2       Initial Interests
and Contributions – First Stage. Upon the formation of the Joint Venture
in accordance with section 3.2, PALC/Salico will have an initial Participating
Interest of 10% and Gareste will have an initial Participating Interest of 90%,
and each of them will have initial, actual and deemed initial contributions as
follows: 

	 	(a) 	
      PALC/Salico: $300,000 plus the deemed value of the
      600,000 Shares issued in accordance with section 3.2 plus the actual out
      of pocket cost incurred by PALC/Salico in connection with the preparation
      of the Scoping Study (the “First Stage JV Value”) multiplied by
      10%.

	 	 	 
	 	(b) 	
      Gareste: the First Stage JV Value multiplied by
      90%.

4.3       Initial Interests
and Contributions – Second Stage. Upon the formation of the Joint
Venture in accordance with section 3.3, PALC/Salico will have an initial
Participating Interest of 30% and Gareste will have an initial Participating
Interest of 70%, and each of them will have initial, actual and deemed initial
contributions as follows: 

	 	(a) 	
      PALC/Salico: First Stage JV Value plus the deemed
      value of the 100,000 Shares issued in accordance with section 3.3 plus the
      actual out of pocket cost incurred by PALC/Salico in connection with the
      preparation of the PFS (the “Second Stage JV Value”) multiplied by
      30%.

	 	 	 
	 	(b) 	
      Gareste: the Second Stage JV Value multiplied by
      70%.

4.4       Initial Interests
and Contributions – Third Stage. Upon the formation of the Joint Venture
in accordance with section 3.4, PALC/Salico will have an initial Participating
Interest of 70% and Gareste will have an initial Participating Interest of 30%,
and each of them will have initial, actual and deemed initial contributions as
follows: 

	 	(a) 	
      PALC/Salico: Second Stage JV Value plus $100,000
      plus the deemed value of the 300,000 Shares issued in accordance with
      section 3.4 plus the actual out of pocket cost incurred by PALC/Salico in connection with
      the preparation of the BFS (the ”Third Stage JV Value”) multiplied
    by 70%.

- 14 - 

	 	(b) 	
      Gareste: the Third Stage JV Value multiplied by
      30%.

4.5       Initial Interests
and Contributions – Fourth Stage. Upon the formation of the Joint
Venture in accordance with section 3.5, PALC/Salico will have an initial
Participating Interest of 80% and Gareste will have an initial Participating
Interest of 20%, and each of them will have initial, actual and deemed initial
contributions as follows: 

	 	(a) 	
      PALC/Salico: Third Stage JV Value plus $1,100,000
      plus the deemed value of the 1,000,000 Shares issued in accordance with
      section 3.5 (the ”Fourth Stage JV Value”) multiplied by
  80%.

	 	 	 
	 	(b) 	
      Gareste: the Fourth Stage JV Value multiplied by
      20%.

4.6       Initial Interests
and Contributions – Fifth Stage. Upon the formation of the Joint Venture
in accordance with section 3.6, PALC/Salico will have an initial Participating
Interest of 90% and Gareste will have an initial Participating Interest of 10%,
and each of them will have initial, actual and deemed initial contributions as
follows: 

	 	(a) 	
      PALC/Salico: Fourth Stage JV Value plus the out of
      pocket actual cost incurred by PALC/Salico in connection with entering
      into the Term Sheet and obtaining Project Financing in accordance with
      section 3.6 (the ”Fifth Stage JV Value”) multiplied by
  90%.

	 	 	 
	 	(b) 	
      Gareste: the Fifth Stage JV Value multiplied by
      10%.

4.7       Additional Cash
Contributions. Following such time as PALC/Salico has contributed the
amount of its initial contribution in accordance with this Article 4, the
Participants, subject to any election permitted by section 7.5, shall contribute
funds to adopted Programs and Budgets in proportion to their respective
Participating Interests. 

ARTICLE 5 

  FORMATION OF JOINT VENTURE 

5.1       Purposes.
Upon the full satisfaction of all conditions to the formation of the Joint
Venture as set out herein, the Participants agree to thereafter associate and
participate in the Joint Venture for the purposes of: 

	 	(a) 	
      exploring within the Area of Interest,

	 	 	 
	 	(b) 	
      acquiring additional Properties within the Area of
      Interest,

	 	 	 
	 	(c) 	
      evaluating the possible Development of the
    Properties,

- 15 - 

	 	(d) 	
      engaging in Development and Mining Operations on the
      Properties,

	 	 	 
	 	(e) 	
      engaging in marketing Products, to the extent permitted
      by Article 12, and

	 	 	 
	 	(f) 	
      performing any other activity necessary, appropriate, or
      incidental to any of the foregoing.

5.2       Name. The
name of this Joint Venture shall be the Maricunga Joint Venture. The Manager
shall accomplish any registration required by applicable assumed or fictitious
name statues and similar statues. 

5.3      
Limitation. Unless the Participants otherwise agree in writing,
the Operations shall be limited to the purposes described in Section 5.1, and
nothing in this Agreement shall be construed to enlarge such purposes. 

5.4       Term. The
term of this Agreement shall be for twenty (20) years from the Effective Date
and for so long thereafter as Products are produced from the Properties, unless
the Agreement is earlier terminated as herein provided. 

ARTICLE 6 

  RELATIONSHIP OF THE PARTICIPANTS 

6.1       No
Partnership. Nothing contained in this Agreement shall be deemed to
constitute either Participant the partner of the other, nor, except as otherwise
herein expressly provided, to constitute either Participant the agent or legal
representative of the other, nor to create any fiduciary relationship between
them. It is not the intention of the Participants to create, nor shall this
Agreement be construed to create, any mining, commercial or other partnership.
Neither Participant shall have any authority to act for or to assume any
obligation or responsibility on behalf of the other Participant, except as
otherwise expressly provided herein. The rights, duties, obligations and
liabilities of the Participants shall be several and not joint or collective.
Each Participant shall be responsible only for its obligations as herein set out
and shall be liable only for its share of the Costs and expenses as provided
herein, it being the express purpose and intention of the Participants that
their ownership of Assets and the rights acquired hereunder shall be as tenants
in common. Each Participant shall indemnify, defend and hold harmless the other
Participant, its directors, officers, employees, agents and attorneys from and
against any and all losses, claims, damages and liabilities arising out of any
act or any assumption of liability by the indemnifying Participant, or any of
its directors, officers, employees, agents and attorneys done or undertaken, or
apparently done or undertaken, or behalf of the other Participant, except
pursuant to the authority expressly granted herein or as otherwise agreed in
writing between the Participants. 

6.2       Federal/National
Tax Elections and Allocations. Without changing the effect of section
6.1, the Participants agree that their relationship shall constitute a tax
partnership within the meaning of Section 761(a) of the United States
Internal Revenue Code of 1954, as amended. Tax elections and allocations
shall be made as set forth in Exhibit C. 

- 16 - 

6.3       State, Provincial
or Local Income Tax. The Participants also agree that, to the extent
permissible under applicable law, their relationship shall be treated for
state/provincial/local income tax purposes in the same manner as it is for
Federal income tax purposes. 

6.4       Tax
Returns. The Tax Matters Partner, as defined in Exhibit C, shall prepare
and shall file, after approval of the Management Committee, any tax returns or
other tax forms required. 

6.5       Other Business
Opportunities. Except as expressly provided in this Agreement, each
Participant shall have the right independently to engage in and receive full
benefits from business activities, whether or not competitive with the
Operations, without consulting the other Participant. The doctrines of
“corporate opportunity” or “business opportunity” shall not be applied to any
other activity, venture, or operation of either Participant, and, except as
otherwise provided in Article 14, neither Participant shall have any obligation
to the other with respect to any opportunity to acquire any property outside the
Area of Interest at any time, or within the Area of Interest after the
termination of this Agreement. Unless otherwise agreed in writing, no
Participant shall have any obligation to mill, beneficiate or otherwise treat
any Products or any other Participant’s share of Products in any facility owned
or controlled by such Participant. 

6.6       Waiver of
Right to Partition. The Participants hereby waive and release all rights
of partition, or a sale in lieu thereof, or any other division of Assets,
including any such rights provided by statute. 

6.7       Transfer or
Termination of Rights to Properties. Except as otherwise provided in
this Agreement, neither Participant shall Transfer all or any part of its
interest in the Assets or this Agreement or otherwise permit or cause such
interests to terminate. 

6.8       Implied
Covenants. There are no implied covenants contained in this Agreement
other than those of good faith and fair dealing. 

ARTICLE 7 

  INTERESTS OF PARTICIPANTS 

7.1       Costs.
Except as otherwise provided in this Agreement, the Participants will bear their
respective Proportionate Share of all Costs and all liabilities arising under
this Agreement and will own the Assets in proportion to their respective
Participating Interests. Notwithstanding the foregoing, for so long as Gareste
is a Participant hereunder, Gareste shall have no obligation to contribute to
Programs and Budgets through the completion of development and construction of
production facilities. After commencement of commercial production, Gareste
shall be deemed a normal Participant hereunder for purposes of Programs and
Budgets, cash calls, dilution and related provisions. 

7.2       Title.
The Mineral Rights and Water Rights, and any personal property comprised in the
Assets will be held in the names of the Participants jointly as tenants in
common, in proportion to their Participating Interests. Title to the Assets
will, unless a Participant requests joint holding of any specific and
substantial Asset, be held in the name of the Manager in trust for the benefit
of the Joint Venture. 

- 17 - 

7.3      
Adjustments. Any adjustment to a Participant’s Interest need not
be evidenced during the term of this Agreement by the execution and delivery of
any instrument, but each Participant’s Interest will be determined from time to
time by using the books of the Joint Venture kept by the Manager. 

7.4       Changes of
Participating Interests. On the Operative Date, the respective
Participating Interests of the Participants will be as set out in Article 3. A
Participant’s Participating Interest shall be subject to adjustment from time to
time as follows: 

	 	(a) 	
      As provided in Section 7.7;

	 	 	 
	 	(b) 	
      Upon an election by a Participant pursuant to Section 7.5
      to contribute less to an adopted Program and Budget than the percentage
      reflected by its Participating Interest;

	 	 	 
	 	(c) 	
      In the event of default by a Participant in making its
      agreed-upon contribution to an adopted Program and Budget, followed by an
      election by the other Participant to invoke Section 7.6(b);

	 	 	 
	 	(d) 	
      Transfer by a Participant of less than all its
      Participating Interest in accordance with Article 16; or

	 	 	 
	 	(e) 	
      Acquisition of less than all of the Participating
      Interest of the other Participant, however
arising.

7.5       Voluntary
Reduction in Participation. A Participant may elect, as provided in
Section 10.4, to limit its contributions to an adopted Program and Budget as
follows: 

	 	(a) 	
      To some lesser amount than its respective Participating
      Interest; or

	 	 	 
	 	(b) 	
      Not at all.

If a Participant elects to contribute to an adopted Program and
Budget some lesser amount than its respective Participating Interest, or not at
all, the Participating Interest of that Participant shall be recalculated at the
time of election by dividing: 

	 	(c) 	
      the sum of:

	 	 	 	 
	 		(i) 	
      the agreed value of the Participant’s Initial
      Contribution under Article 4,

	 	 	 	 
	 		(ii) 	
      the total of all of the Participant’s contributions under
      Section 4.7, and

	 	 	 	 
	 		(iii) 	
      the amount, if any, the Participant elects to contribute
      to the adopted Program and Budget; by

	 	 	 	 
	 	(d) 	
      the sum of (i), (ii) and (iii) above for all
      Participants;

- 18 - 

and then multiplying the result by one hundred. The
Participating Interest of the other Participant shall thereupon become the
difference between 100% and the recalculated Participating Interest. 

7.6       Default in Making
Contributions. 

	 	(a) 	
      If a Participant defaults in making a contribution or
      cash call required by an approved Program and Budget, the non-defaulting
      Participant may advance the defaulted contribution on behalf of the
      defaulting Participant and treat the same, together with any accrued
      interest, as a demand loan bearing interest from the date of the advance
      at the rate provided in Section 11.3. The failure to repay said loan upon
      demand shall be a default. Each Participant hereby grants to the other a
      lien upon its interest in the Properties and a security interest in its
      rights under this Agreement and in its Participating Interest in other
      Assets, and the proceeds therefrom, to secure any loan made hereunder,
      including interest thereon, reasonable attorneys fees and all other
      reasonable costs and expenses incurred in recovering the loan with
      interest and enforcing such lien or security interest, or both. A
      non-defaulting Participant may elect the applicable remedy under this
      Section 7.6(a) or under 7.6(b), or, to the extent a Participant has a lien
      or security interest under applicable law, it shall be entitled to its
      rights and remedies at law and in equity. All such remedies shall be
      cumulative. The election of one or more remedies shall not waive the
      election of any other remedies. Each Participant hereby irrevocably
      appoints the other as its attorney-in-fact to execute, file and record all
      instruments necessary to perfect or effectuate the provisions
    hereof.

	 	 	 	 
	 	(b) 	
      The Participants acknowledge that if a Participant
      defaults in making a contribution, or a cash call, or in repaying a loan,
      as required hereunder, it will be difficult to measure the damages
      resulting from such default. In the event of such default, as reasonable
      liquidated damages, the non-defaulting Participant may, with respect to
      any such default not cured within 30 days after notice to the defaulting
      Participant of such default, elect on of the following remedies by giving
      notice to the defaulting Participant:

	 	 	 	 
	 		(i) 	
      For a default relating exclusively to a Program and
      Budget covering an exploration period that does not cover Development or
      Mining in whole or in part, the non-defaulting Participant may elect to
      have the defaulting Participant’s Participating Interest permanently
      reduced as provided in Section 7.5, and further reduced by multiplying the
      result by the following percentage: 10%. Amounts treated as a loan
      pursuant to Section 7.6(a) and interest thereon shall be included in the
      calculation of defaulting Participant’s reduced Participation Interest.
      The non-defaulting Participant’s Participating Interest shall at such time
      become the difference between 100% and the further reduced Participating
      Interest. Such reductions shall be effective as of the date of the
      default.

- 19 - 

	 	(ii) 	
      For a default relating to a Program and Budget covering
      in whole or in part Development or Mining, at the non-defaulting
      Participant’s election, the defaulting Participant shall be deemed to have
      withdrawn from the Joint Venture and to have automatically relinquished
      its Participating Interest to the non-defaulting Participant; provided,
      however, the defaulting Participant shall have the right to receive only
      from 5% of Net Proceeds, if any, and not from any other source, an amount
      equal to the defaulting Participant’s aggregate contributions pursuant to
      the applicable section from sections 4.1 to 4.6 and section 4.7. Upon
      receipt of such amount, the defaulting Participant shall thereafter have
      no further right, title or interest in Assets or under this
    Agreement.

7.7       Elimination
of Minority Interest. Upon the reduction of its Participating Interest
to less than 5%, a Participant shall be deemed to have withdrawn from this
Agreement and its entire Participating Interest shall be converted into a 5% Net
Proceeds Interest. Such relinquished Participating Interest shall be deemed to
have accrued automatically to the other Participant. 

7.8       Continuing
Liabilities Upon Adjustments of Participating Interests. Any reduction
of a Participant’s Participating Interest under this Article 7 shall not relieve
such Participant of its share of any liability, whether it accrues before or
after such reduction, arising out of Operations conducted prior to such
reduction. For purposes of this Article 7, such Participant’s share of such
liability shall be equal to its Participating Interest at the time such
liability was incurred. The increased Participating Interest accruing to a
Participant as a result of the reduction of the other Participant’s
Participating Interest shall be free of royalties, liens or other encumbrances
arising by, through or under such other Participant, other than those existing
at the time the Properties were acquired or those to which both Participants
have given their written consent. An adjustment to a Participating Interest need
not be evidenced during the term of this Agreement by the execution and
recording of appropriate instruments, but each Participant’s Participating
Interest shall be shown in the books of the Manager. However, either
Participant, at any time upon the request of the other Participant, shall
execute and acknowledge instruments necessary to evidence such adjustment in a
form sufficient for recording in the jurisdiction where the Properties are
located. 

ARTICLE 8 

  MANAGEMENT COMMITTEE 

8.1       Organization and
Composition. Effective on the Operative Date, the Participants shall
establish a Management Committee to determine overall policies, objectives,
procedures, methods and actions under this Agreement. The Management Committee
shall consist of two (2) regular members appointed by PALC/Salico and one (1)
regular member appointed by Gareste. Each Participant may appoint one or more
alternates to act in the absence of a regular member. Appointments shall be made
or changed by notice to the other Participant. 

8.2      
Decisions. Except with respect to decisions requiring unanimity
hereunder, the Management Committee will decide every matter submitted to it by
simple majority (including election of its chairman) with the representative or
representatives of each Participant being entitled to cast collectively that
number of votes which is equal to its Participating Interest. 

- 20 - 

8.3       Meetings.
The Management Committee shall hold regular meetings at least annually at
mutually agreed places. The Manager shall give 60 calendar days’ notice to the
Participants of such regular meetings. Additionally, either Participant may call
a special meeting upon 30 calendar day’s notice to the Manager and the other
Participant. In the case of an emergency, reasonable notice of a special meeting
shall suffice. There shall be a quorum if at least one member representing each
Participant is present. Each notice of a meeting shall include an itemized
agenda prepared by the Manager in the case of a regular meeting, or by the
Participant calling the meeting in the case of a special meeting, but any
matters may be considered with the consent of all Participants. The Manager
shall prepare minutes of all meetings and shall distribute copies of such
minutes to the Participants within 45 calendar days after the meeting. The
minutes, when signed by all Participants, shall be the official record of the
decisions made by the Management Committee and shall be binding on the Manager
and the Participants. If personnel employed in Operations are required to attend
a Management Committee meeting, reasonable costs incurred in connection with
such attendance shall be a Joint Venture cost. All other costs shall be paid by
the Participants individually. 

8.4       Action Without
Management Meetings. In lieu of meetings, the Management Committee may
hold telephone conferences, so long as all decisions are immediately confirmed
in writing by the Participants. 

8.5       Matters
Requiring Approval. Except as otherwise delegated to the Manager in
Section 9.2, the Management Committee shall have exclusive authority to
determine all management matters related to this Agreement. 

8.6       Matters
Requiring Special Approval. Notwithstanding Article 8.5 above, the
following matters shall require a supermajority (>70%) vote of the
Participants: 

	 	(a) 	
      sale, conveyance, transfer, joint venture, or other
      disposition of all or substantially all of the Properties or Assets;
      and

	 	 	 
	 	(b) 	
      incurrence of project debt financing or creation of any
      other material burdens or Encumbrances with respect to the
  Assets.

ARTICLE 9 

  MANAGER 

9.1      
Appointment. The Participants hereby appoint PALC/Salico as the
Manager with overall management responsibility for Operations. PALC/Salico
hereby agrees to serve until it resigns as provided in Section 9.4. 

9.2       Powers and Duties
of Manager. Subject to the terms and provisions of this Agreement, the
Manager shall have the following powers and duties which shall be discharged in
accordance with adopted Programs and Budgets: 

	 	(a) 	
      The Manager shall manage, direct and control
      Operations.

	 	 	 
	 	(b) 	
      The Manager shall implement the decisions of the
      Management Committee, shall make all expenditures necessary to carry out
      adopted Programs, and shall promptly advise the Management Committee if it lacks
      sufficient funds to carryout its responsibilities under this
  Agreement.

- 21 - 

	 	(c) 	
      The Manager shall:

	 	 	 	 
	 		(i) 	
      Purchase or otherwise acquire all material, supplies,
      equipment, water, utility and transportation services required for
      Operations, such purchases and acquisitions to be made on the best terms
      available, taking into account all of the circumstances;

	 	 	 	 
	 		(ii) 	
      Obtain such customary warranties and guarantees as are
      available in connection with such purchases and acquisitions;

	 	 	 	 
	 		(iii) 	
      Keep the Assets free and clear of all liens and
      Encumbrances, except for those existing at the time of, or created
      concurrent with, the acquisition of such Assets, or mechanic’s or
      materialmen’s liens which shall be released or discharged in a diligent
      manner, or liens and encumbrances specifically approved by the Management
      Committee.

	 	 	 	 
	 	(d) 	
      The Manager shall conduct such title examinations and
      cure such title defects as may be advisable in the reasonable judgment of
      the Manager.

	 	 	 	 
	 	(e) 	
      The Manager shall:

	 	 	 	 
	 		(i) 	
      Make or arrange for all payments required by leases,
      licenses, permits, contracts and other agreements related to the
      Assets;

	 	 	 	 
	 		(ii) 	
      Pay all taxes, assessments and like charges on Operations
      and Assets except taxes determined or measured by a Participants sales
      revenue or net income. If authorized by the Management Committee, the
      Manager shall have the right to contest in the courts or otherwise, the
      validity or amount of any taxes, assessments or charges if the Manager
      deems them to be unlawful, unjust, unequal or excessive, or to undertake
      such other steps or proceedings as the Manager may deem reasonably
      necessary to secure a cancellation, reduction, readjustment or
      equalization thereof the Manager shall be required to pay them, but in no
      event shall the Manager permit or allow title to the Assets to be lost as
      the result of the nonpayment of any taxes, assessments or like charges;
      and

	 	 	 	 
	 		(iii) 	
      Shall do all other acts reasonably necessary to maintain
      the Assets.

	 	 	 	 
	 	(f) 	
      The Manager shall:

	 	 	 	 
	 		(i) 	
      Apply for all necessary permits, licenses and
      approvals;

	 	 	 	 
	 		(ii) 	
      Comply with applicable federal, state, provincial and
      local laws and regulations;

- 22 - 

	 	(iii) 	
      Notify promptly the Management Committee of any
      allegations of substantial violation thereof; and

	 	 	 
	 	(iv) 	
      Prepare and file all reports or notices required for
      Operations. The Manager shall not be in breach of this provision if a
      violation has occurred in spite of the Manager’s good faith efforts to
      comply, and the Manager has timely cured or disposed of such violation
      through performance, or payment of fines and
penalties.

	 	(g) 	
      The Manager shall prosecute and defend, but shall not
      initiate without the consent of the Management Committee, all litigation
      or administrative proceedings arising out of Operations. The non-managing
      Participant shall have the right to participate, at its own expense, in
      such litigation or administrative proceedings. The non-managing
      Participant shall approve in advance any settlement involving payments,
      commitments or obligations in excess of $50,000 in cash or
value.

	 	 	 	 
	 	(h) 	
      The Manager shall provide (where applicable and
      available) insurance for the benefit of the Participants as provided in
      Exhibit E.

	 	 	 	 
	 	(i) 	
      The Manager may dispose of Assets, whether by
      abandonment, surrender or Transfer in the ordinary course of business,
      except that Properties may be abandoned or surrendered only as provided in
      Article 15. However, without prior authorization from the Management
      Committee, The Manager shall not:

	 	 	 	 
	 		(i) 	
      Dispose of Assets in any one transaction having a value
      in excess of $50,000;

	 	 	 	 
	 		(ii) 	
      Enter into any sales contracts or commitments for
      Product, except as permitted in Section 12.2;

	 	 	 	 
	 		(iii) 	
      Begin a liquidation of the Joint Venture; or

	 	 	 	 
	 		(iv) 	
      Dispose of all or a substantial part of the Assets
      necessary to achieve the purposes of the Joint Venture.

	 	 	 	 
	 	(j) 	
      The Manager shall have the right to carry out its
      responsibilities hereunder through agents, Affiliates or independent
      contractors.

	 	 	 	 
	 	(k) 	
      The Manager shall perform or cause to be performed during
      the term of this Agreement all assessment, exploration and other work
      required by law in order to maintain the mining claims and concessions,
      permits and water rights included within the Properties. The Manager shall
      have the right to perform the work required hereunder pursuant to a common
      plan of exploration and continued actual occupancy of such claims and
      sites shall not be required. The Manager shall not be liable on account of
      any determination by any court or governmental agency that the work
      performed by manager does not constitute the required annual or other work
      or occupancy for the purposes of preserving or maintaining ownership of
      the claims, concessions and rights, provided that the work done is
    in accordance with an adopted Program and Budget. The
      Manager shall timely record with the appropriate agency and file with the
      appropriate office all required forms attesting to the performance of
      required work or any other necessary filings to maintain the concessions
      and rights, and allocating therein, to or for the benefit of each claim,
      at least the minimum amount required by law to maintain such claim or
  site.

- 23 - 

	 	(l) 	
      The Manager may:

	 	 	 	 
	 		(i) 	
      Locate, acquire, amend, renew or relocate any mining
      claim or concession, water right, or operating permit; and

	 	 	 	 
	 		(ii) 	
      Exchange with or convey to any government authority any
      of the Properties for the purpose of acquiring rights to the land covered
      thereby or other adjacent land.

	 	 	 	 
	 	(m) 	
      The Manager shall keep and maintain all required
      accounting and financial records pursuant to the Accounting Procedure and
      in accordance with customary cost accounting practices in the mining
      industry.

	 	 	 	 
	 	(n) 	
      The Manager shall keep the Management Committee advised
      of all Operations by submitting in writing to the Management
    Committee:

	 	 	 	 
	 		(i) 	
      Quarterly progress reports which include statements of
      expenditures and comparisons of such expenditures to the adopted
      Budget;

	 	 	 	 
	 		(ii) 	
      Periodic summaries of data acquired;

	 	 	 	 
	 		(iii) 	
      Copies of reports concerning Operations;

	 	 	 	 
	 		(iv) 	
      A detailed final report within 60 days after completion
      of each Program and Budget, which shall include comparisons between actual
      and budgeted expenditures and comparisons between the objectives and
      results of Programs; and

	 	 	 	 
	 		(v) 	
      Such other reports as the Management Committee may
      reasonably request.

	 	 	 	 
	 	(o) 	
      At all reasonable times the Manager shall provide the
      Management Committee or the representative of any Participant, upon the
      request of any member of the Management Committee, access to, and the
      right to inspect and copy all maps, drill logs, core tests, reports,
      surveys, assays, analyses, production reports, operations, technical,
      accounting and financial records, and other information acquired during
      Operations. Further, the Manager shall allow the non-managing Participant,
      at the latter’s sole risk and expense, and subject to reasonable safety
      regulations, to inspect the Assets and Operations at all reasonable times,
      so long as the inspecting Participant does not unreasonably interfere with
      Operations.

- 24 - 

	 	(p) 	
      The Manager shall undertake all other activities
      reasonably necessary to fulfill the foregoing.

The Manager shall not be in default of any duty under this
Section 9.2 if its failure to perform results from the failure of the
non-managing Participant to perform acts or to contribute amounts required of it
by this Agreement. 

9.3      Standard of
Care. The manager shall conduct all Operations in a good, workmanlike
and efficient manner, in accordance with sound mining and other applicable
industry standards and practices, and in accordance with the terms and
provisions of leases, licenses, permits, contracts and other agreements
pertaining to the Assets. The Manager shall not be liable to the non-managing
Participant for any act or omission resulting in damage or loss except to the
extent caused by or attributable to the Manager’s willful misconduct or gross
negligence. 

9.4       Resignation;
Deemed Offer to Resign. The Manager may resign upon one month’s prior
notice to the other Participant, in which case the other Participant may elect
to become the new Manager by notice to the resigning Participant within 30 days
after the notice of resignation. If any of the following shall occur, the
Manager shall be deemed to have offered to resign, which offer shall be accepted
by the other Participant, if at all, within ninety (90) days following such
deemed offer: 

	 	(a) 	
      The Participating Interest of the Manager becomes less
      than fifty percent (50%); or

	 	 	 
	 	(b) 	
      The Manager fails to perform a material obligation
      imposed upon it under this Agreement and such failure continues with no
      steps toward cure for a period of sixty (60) days after notice from the
      other Participant demanding performance; or

	 	 	 
	 	(c) 	
      The Manager fails to pay or contest in good faith its
      material bills within sixty (60) days after they are due; or

	 	 	 
	 	(d) 	
      The Manager commences a voluntary case under any
      applicable bankruptcy, insolvency or similar law now or hereafter in
      effect; or consents to the entry of an order for relief in an involuntary
      case under any such law or to the liquidator, assignee, custodian,
      trustee, sequestrator or other similar official of any substantial part of
      its assets; or makes a general assignment for the benefit of creditors; or
      fails generally to pay its or Joint Venture debts as such debts become
      due; or takes corporate or other action in furtherance of any of the
      foregoing; or

	 	 	 
	 	(e) 	
      Entry is made against the Manager of a judgment, decree
      or order for relief affecting a substantial part of its assets by a court
      of competent jurisdiction in an involuntary case commenced under any
      applicable bankruptcy, insolvency or other similar law of any jurisdiction
      now or hereafter in effect.

9.5       Payments To
Manager. The Manager shall be compensated for its services and
reimbursed for its costs hereunder in accordance with the Accounting Procedure.

- 25 - 

9.6       Transactions
With Affiliates. If the Manager engages Affiliates to provide services
hereunder, it shall do so on terms no less favorable than would be the case with
unrelated persons in arm’s-length transactions, unless otherwise authorized in
writing by the other Participants. 

9.7       Activities
During Deadlock. If the Management Committee for any reason fails to
adopt a Program and Budget, subject to the contrary direction of the Management
Committee and to the Receipt of necessary funds, the Manager shall continue
Operations at levels comparable with the last adopted Program and Budget. For
purposes of determining the required contributions of the Participants and their
respective Participating Interests, the last adopted Program and Budget shall be
deemed extended. 

ARTICLE 10 

  PROGRAMS AND BUDGETS 

10.1     Operations Pursuant to
Programs and Budgets. Effective on the Operative Date, and except as
otherwise provided in Section 10.7 and Article 14, Operations shall be
conducted, expenses shall be incurred, and Assets shall be acquired only
pursuant to approved Programs and Budgets. Notwithstanding the foregoing, for so
long as Gareste is a Participant hereunder, Gareste shall have no obligation to
contribute to Programs and Budgets through the completion of development and
construction of production facilities. After commencement of commercial
production, Gareste shall be deemed a normal Participant hereunder for purposes
of Programs and Budgets, cash calls, dilution and related provisions. 

10.2     Presentation of Programs and
Budgets. Proposed Programs and Budgets shall be prepared by the Manager
for a period of one year or any longer period. Each adopted Program and Budget,
regardless of length, shall be reviewed at least once each year at the annual
meeting of the Management Committee. During the period encompassed by any
Program and Budget, and at least three months prior to its expiration, a
proposed Program and Budget for the succeeding period shall be prepared by the
Manager and submitted to the Participants. Each such proposed Program and Budget
shall be in a form and degree of detail substantially similar to Exhibit F.

10.3     Review and Approval of
Proposed Programs and Budgets. Within 60 days after submission of a
proposed Program and Budget, each Participant shall submit to the Management
Committee: 

	 	(a) 	
      Notice that the Participant approves the proposed Program
      and Budget; or

	 	 	 
	 	(b) 	
      Proposed modifications of the proposed Program and
      Budget; or

	 	 	 
	 	(c) 	
      Notice that the Participant rejects the proposed Program
      and Budget.

If a Participant fails to give any of the foregoing responses
within the allotted time, the failure shall be deemed to be an approval by the
Participant of the Manager’s proposed Program and Budget. If a Participant makes
a timely submission to the Management Committee pursuant to Section 10.3(b) or
(c), then the Management Committee shall seek to develop a Program and Budget
acceptable to the Participants. 

- 26 - 

10.4     Election to
Participate. Subject to clause 10.1 above as to Gareste, by notice to
the Management Committee within thirty (30) days after the final vote adopting a
Program and Budget, a Participant may elect to contribute to the Program and
Budget in some lesser amount than its respective Participating Interest, or not
at all, in which case its Participating Interest shall be recalculated as
provided in Article 7. If a Participant fails to so notify the Management
Committee, the Participant shall be deemed to have elected to contribute to such
Program and Budget in proportion to its respective Participating Interest as of
the beginning of the period covered by the Program and Budget. 

10.5     Deadlock on Proposed
Programs and Budgets. If the Participants, acting through the Management
Committee, fail to approve a Program and Budget by the beginning of the period
to which the proposed Program and Budget applies, the provisions of Sections 9.7
and 13.2 shall apply. 

10.6     Budget Overruns; Program
Changes. The Manager shall immediately notify the Management Committee
of any material departure from an adopted Program and Budget. If the Manager
exceeds an adopted Budget by more than ten percent (10%), then the excess over
ten percent (10%), unless directly caused by an emergency or unexpected
expenditure made pursuant to Section 10.7 or unless otherwise authorized by the
Management Committee, shall be for the sole account of the Manager and such
excess shall not be included in the calculations of the Participating Interests.
Subject to clause 10.1 above as to Gareste, Budget overruns of ten percent (10%)
or less shall be borne by the Participants in proportion to their respective
Participating Interests as of the time the overrun occurs. 

10.7     Emergency or Unexpected
Expenditures. In the event of an emergency, the Manager may take any
reasonable action it deems necessary to protect life, limb or property, to
protect the Assets or to comply with law or government regulation. The Manager
may also make reasonable expenditures for unexpected events which are beyond its
reasonable control and which do not result from a breach by it of its standard
of care. The Manager shall promptly notify the Participants of the emergency or
unexpected expenditure, and, subject to clause 10.1 above as to Gareste, the
Manager shall be reimbursed for all resulting costs by the Participants in
proportion to their respective Participating Interests at the time the emergency
or unexpected expenditures are incurred. 

ARTICLE 11 

  ACCOUNTS AND SETTLEMENTS 

11.1     Quarterly
Statements. Effective on the Operative Date, the Manager shall promptly
submit to the Management Committee monthly statements of account reflecting in
reasonable detail the charges and credits to the Joint Account during the
preceding quarter. 

11.2     Cash Calls. On the
basis of the adopted Program and Budget, subject to clause 10.1 above as to
Gareste, the Manager shall submit to each Participant prior to the last day of
each quarter, a billing for estimated cash requirements for the next quarter.
Within fifteen (15) days after the receipt of each billing, each Participant
shall advance to the Manager it proportionate share of the estimated amount.
Time is of the essence of the payment of these billings. The Manager shall at
all times maintain a cash balance which is approximately equal to the rate of
disbursement for up to 15 days. All funds in excess of
immediate cash requirements shall be invested in interest-bearing accounts for
the benefit of the Joint Account. 

- 27 - 

11.3     Failure to Meet Cash
Calls. A Participant that fails to meet cash calls in the amount and at
the times specified in Section 11.2 shall be in default, and the amounts of the
defaulted cash call shall bear interest from the date due at an annual rate
equal to 5 percentage points over the Prime Rate, but in no event shall said
rate of interest exceed the maximum permitted by law. The non-defaulting
Participant shall have those rights, remedies and elections specified in Section
7.4. 

11.4     Audits. Upon the
request made by any Participant within 12 months following the end of any
calendar year (or, if the Management Committee has adopted an accounting period
other that the calendar year, within 12 months after the end of such period),
the Manager shall order an audit of the accounting and financial records for
such calendar year (or other accounting period). All written exceptions to and
claims upon the Manager for discrepancies disclosed by such audit shall be made
not more than three (3) months after the receipt of the audit report. A failure
to make any such exception or claim within the three (3) month period shall mean
the audit is correct and binding upon the Participants. The audits shall be
conducted by a firm of certified public accountants selected by the Manager,
unless otherwise agreed by the Management Committee. 

ARTICLE 12 

  DISPOSITION OF PRODUCTION 

12.1     Taking In Kind. Each
Participant shall take in kind or separately dispose of its share of all
Products in accordance with its Participating Interest. Any extra expenditure
incurred in the taking in kind or separate disposition by any Participant of its
proportionate share of Products shall be borne by such Participant. Nothing in
this Agreement shall be construed as providing, directly or indirectly, for any
joint or cooperative marketing or selling of Products or permitting the
processing of Products of any parties other than the Participants at any
processing facilities constructed by the Participants pursuant to this
Agreement. The Manager shall give the Participants notice at least ten (10) days
in advance of the delivery date upon which their respective shares of Products
will be available. 

12.2     Failure of Participant to
Take In Kind. If a Participant fails to take in kind, the Manager shall
have the right, but not the obligation, for a period of time consistent with the
minimum needs of the industry, but not to exceed one year, to purchase the
Participant’s share for its own account or to sell such share as agent for the
Participant at not less than the prevailing market price for a Product of like
kind and quality. Subject to the terms of any such contracts of sale then
outstanding, during any period that the Manager is purchasing or selling a
Participant’s share of production, the Participant may elect by notice to the
Manager to take in kind. The Manager shall be entitled to deduct from proceeds
of any sale by it for the account of a Participant reasonable expenses incurred
in such a sale. 

- 28 - 

ARTICLE 13 
WITHDRAWAL AND TERMINATION 

13.1     Termination by Expiration or
Agreement. This Agreement shall terminate as expressly provided in this
Agreement, unless earlier terminated by a written agreement of the Participants.

13.2     Termination by
Deadlock. If the Management Committee fails to adopt a Program and
Budget for six (6) months after the expiration of the latest adopted Program and
Budget, either Participant may elect to terminate this Agreement by giving
notice of termination to the other Participant. 

13.3     Withdrawal. A
Participant may elect to withdraw as a Participant from this Agreement by giving
notice to the other Participant of the effective date of withdrawal, which shall
be the later of the end of the then current Program and Budget or at least
thirty (30) days after the date of the notice. Upon such withdrawal, this
Agreement shall terminate, and the withdrawing Participant shall be deemed to
have transferred to the remaining Participant, without cost and free and clear
of royalties, liens or other Encumbrances or rights arising by, through or under
such withdrawing Participant, except those exceptions to title described in
Exhibit A and those to which both Participants have given their written consent
after the date of this Agreement, all of its Participating Interest in the
Assets and in this Agreement. Upon such withdrawal, the withdrawing Participant,
upon request from the other party, shall formally transfer and convey title to
the Assets which it hold to the other Participant. Any withdrawal under this
Section 13.3 shall not relieve the withdrawing Participant of its share of
liabilities to third persons (whether such accrues before or after such
withdrawal) arising out of Operations conducted prior to such withdrawal. For
purposes of this Section 13.3, the withdrawing Participant’s share of such
liabilities shall be equal to its Participating Interest at the time such
liability was incurred. 

13.4     Continuing Obligations
Upon the termination of this Agreement under Section 13.1 or 13.3, the
Participants shall remain liable for continuing obligations hereunder until the
final settlement of all accounts and for any liability, whether it accrues
before or after termination, if it arises out of Operations during the term of
the Agreement. 

13.5     Disposition of Assets on
Termination. Promptly after termination under Section 13.1 or 13.2, the
Manager shall take all action necessary to wind up the activities of the Joint
Venture, and all costs and expenses incurred in connection with their
termination of the Joint Venture shall be expenses chargeable to the Joint
Venture. In accordance with Exhibit C, any Participant that has a negative
Capital Account balance when the Joint Venture is terminated for any reason
shall contribute to the Assets of the Joint Venture an amount sufficient to
raise such balance to zero. The Assets shall first be paid, applied, or
liabilities owed to the Participants. Before distributing any funds or Assets to
Participants, the Manager shall have the right to segregate amounts which, in
the Manager’s reasonable judgment, are necessary to discharge continuing
obligations or to purchase for the account of Participants, bonds or other
securities for the performance of such obligations. The foregoing shall not be
construed to include the repayment of any Participant’s capital contributions or
Capital Account balance. Thereafter, any remaining cash and all other Assets
shall be distributed (in undivided interests unless otherwise agreed) to the
Participants, first in the ratio and to the extent of their respective Capital
Accounts and then in proportion to their respective Participating Interests,
subject to any dilution, reduction, or termination of such Participating
Interests as may have occurred pursuant to the terms of this Agreement. No
Participant shall receive a distribution of any interest in Products or proceeds
from the sale thereof if such Participant’s Participating Interest therein has
been terminated pursuant to this Agreement. To the greatest extent possible, the
Manager shall endeavor to return each of the Assets to the party that originally
contributed them to the Joint Venture. 

- 29 - 

13.6     Non-Compete
Covenants. A Participant that withdraws pursuant to Section 13.3, or is
deemed to have withdrawn pursuant to Section 13.3, or is deemed to have
withdrawn pursuant to Section 7.7, shall not directly or indirectly acquire any
interest in property within the Area of Interest for twelve (12) months after
the effective date of withdrawal. If a withdrawing Participant, or the Affiliate
of a withdrawing Participant, breaches this Section 13.6, such Participant or
Affiliate shall be obligated to offer to convey to the non-withdrawing
Participant, without cost, any such property or interest so acquired. Such offer
shall be made in writing and can be accepted by the non-withdrawing Participant
at any time within forty-five (45) days after it is received by such
non-withdrawing Participant. 

13.7     Right to Data After
Termination. After the termination of this Agreement pursuant to Section
13.1 or 13.2, each Participant shall be entitled to copies of all information
acquired hereunder before the effective date of termination not previously
furnished to it, but a terminating or withdrawing Participant shall not be
entitled to any such copies after any other termination or any withdrawal. 

13.8     Continuing
Authority. Upon the termination of this Agreement under Section 13.1 or
13.2 or the deemed withdrawal of a Participant pursuant to Section 7.6(b)(ii) or
Section 7.7 or the withdrawal of a Participant pursuant to Section 13.3, the
Manager shall have the power and authority, subject to control of the Management
Committee, if any, to do all things on behalf of the Participants which are
reasonably necessary or convenient to: 

	 	(a) 	
      Wind-up Operations; and

	 	 	 
	 	(b) 	
      Complete any transaction and satisfy any obligation,
      unfinished or unsatisfied, at the time of such termination or
      withdrawal,

if the transaction or obligation arises out of Operations prior
to such termination or withdrawal. The Manager shall have the power and
authority to grant or receive extensions of time or change the method of payment
of an already existing liability or obligation, prosecute and defend actions on
behalf of the Participants and the Joint Venture, mortgage Assets, and take any
other reasonable action in any matter with respect to which the former
Participants continue to have, or appear or are alleged to have, a common
interest or a common liability. 

ARTICLE 14 

  ACQUISITIONS WITHIN THE AREA OF INTEREST 

14.1     General. Any
interest or right to acquire any interest in property within the Area of
Interest acquired during the term of this Agreement by or on behalf of a
Participant or any Affiliate shall be subject to the terms and provisions of
this Agreement. 

- 30 - 

14.2     Notice to Non-acquiring
Participant. Within 15 days after the acquisition of any interest or the
right to acquire any interest in real property wholly or partially within the
Area of Interest (except real property acquired by the Manager pursuant to a
Program or by virtue of an emergency), the acquiring Participant shall notify
the other Participant of such acquisition. The acquiring Participant’s notice
shall describe in detail the acquisition, the lands and minerals covered
thereby, the cost thereof, and the reasons why the acquiring Participant
believes that the acquisition of the interest is in the best interests of the
Joint Venture. In addition to such notice, the acquiring Participant shall make
any and all information concerning the acquired interest available for
inspection by the other Participant. 

14.3     Option Exercised.
If, within 15 days after receiving the acquiring Participant’s notice, the other
Participant notifies the acquiring Participant of its election to accept a
proportionate interest in the acquired interest equal to its election to accept
a proportionate interest in the acquired interest equal to its Participating
Interest, the acquiring Participant shall convey to the other Participant, by
special warranty deed, such a proportionate undivided interest therein. The
acquired interest shall become a part of the Properties for all purposes of this
Agreement immediately upon the notice of such other Participant’s election to
accept the proportionate interest therein. Subject to clause 10.1 above as to
Gareste, such other Participant shall promptly pay to the acquiring Participant
its proportionate share of the latter’s actual out-of-pocket acquisition costs.

14.4     Option Not
Exercised. If the other Participant does not give such notice within the
15 day period set forth in Section 14.3, it shall have no interest in the
acquired interest, and the acquired interest shall not be a part of the
Properties or be subject to this Agreement. 

ARTICLE 15 

  ABANDONMENT AND SURRENDER OF PROPERTIES 

15.1     Surrender or Abandonment of
Property. The Management Committee may authorize the Manager to
surrender or abandon part or all of the Properties. If the Management Committee
authorizes any such surrender or abandonment over the objection of a
Participant, the Participant that desires to abandon or surrender shall assign
to the objecting Participant, and without cost to the surrendering Participant,
all of the surrendering Participant’s interest in the property to be abandoned
or surrendered, and the abandoned or surrendered property shall cease to be part
of the Properties. 

15.2     Reacquisition. If
any Properties are abandoned or surrendered under the provisions of this Article
15, then, unless this Agreement is earlier terminated, or a Participant
withdraws under section 13.3, neither Participant nor any Affiliate thereof
shall acquire any interest in such Properties or a right to acquire such
Properties for a period of two years following the date of such abandonment or
surrender. This prohibition shall not apply to a non-withdrawing Participant
under section 13.3. If a Participant reacquires any Properties in violation of
this Section 15.2, the other Participant may elect by notice to the reacquiring
Participant within forty-five (45) days after it has actual notice of such
reacquisition, to have such properties made subject to the terms of this
Agreement. In the event such an election is made, the reacquired properties
shall thereafter be treated as Properties, and the costs of reacquisition shall
be borne solely by the reacquiring Participant and shall not be included
for purposes of calculating the Participant’s respective Participating Interest. 

- 31 - 

ARTICLE 16 

  TRANSFER OF INTEREST 

16.1     General. During the
Option Period or thereafter during the time in which this Agreement is
operative, a Participant shall have the right to Transfer to any third party all
or any part of its interest in or to this Agreement, its Participating Interest,
or the Assets solely as provided in this Article 16. 

16.2     Limitations on Free
Transferability. The Transfer right of a Participant in Section 16.1
shall be subject to the following terms and conditions: 

	 	(a) 	
      No transferee of all or any part of the interest of a
      Participant in this Agreement, any Participating Interest, or the Assets
      shall have the rights of a Participant unless and until the transferring
      Participant has provided to the other Participant notice of the Transfer,
      and except as provided in Sections 16.2(g) and 16.2(h), the transferee, as
      of the effective date of the Transfer, has committed in writing to be
      bound by this Agreement to the same extent as the transferring
      Participant;

	 	 	 
	 	(b) 	
      . No Participant, without the consent of the other
      Participant, shall make a Transfer which shall cause the termination of
      the tax partnership established by the provisions of Section
6.2;

	 	 	 
	 	(c) 	
      No Transfer permitted by this Article 16 shall relieve
      the transferring Participant of its share of any liability, whether
      accruing before or after such Transfer, which arises out of Operations
      conducted prior to such Transfer;

	 	 	 
	 	(d) 	
      As provided in Exhibit C, Article 4, the transferring
      Participant and the transferee shall bear all tax consequences of the
      Transfer;

	 	 	 
	 	(e) 	
      In the event of a Transfer of less than all of a
      Participating Interest, the transferring Participant and its transferee
      shall act and be treated as one Participant;

	 	 	 
	 	(f) 	
      No Participant shall Transfer any interest in this
      Agreement or the Assets except by Transfer of part or all of its
      Participating Interest;

	 	 	 
	 	(g) 	
      If the Transfer is the grant of a security interest by
      mortgage, deed of trust, pledge, lien or other encumbrance of any interest
      in this Agreement, any Participating Interest or the Assets to secure a
      loan or other indebtedness of a Participant in a bona fide transaction,
      then, unless the parties may otherwise agree, such security interest shall
      be subordinate to the terms of this Agreement and the rights and interests
      of the other Participant hereunder. Upon any foreclosure or other
      enforcement of rights in the security interest the acquiring third party
      shall be deemed to have assumed the position of the
  encumbering Participant with respect to this Agreement and the other
      Participant, and it shall comply with and be bound by the terms and
  conditions of this Agreement;

- 32 - 

	 	(h) 	
      If a sale or other commitment or disposition of Products
      or proceeds from the sale of Products by a Participant upon distribution
      to it pursuant to Article 12 creates in a third party a security interest
      in Products or proceeds therefrom prior to such distribution, such sales,
      commitment or disposition shall be subject to the terms and conditions of
      this Agreement; and

	 	 	 
	 	(i) 	
      If, contrary to Section 16.2(b), a Transfer is made which
      causes the termination of the tax partnership established by Section 6.2,
      the transferring Participant shall indemnify, defend and hold harmless the
      other Participant from and against any and all loss, cost, expense or
      damage arising from such termination.

	 	 	 
	 	(j) 	
      Only United States currency shall be used for Transfers
      for consideration.

16.3     Preemptive Right.
Except as otherwise provided in Section 16.4, if a Participant desires to
Transfer all or any part of its interest in this Agreement, any Participation
Interest, or the Assets, the other Participant shall have a preemptive right to
acquire such interests as provided in this Section 16.3. 

	 	(a) 	
      A Participant intending to Transfer all or any part of
      its interest in this Agreement, any Participating Interest, or the Assets
      shall promptly notify the other Participant of its intentions. The notice
      shall state the price and all other pertinent terms and conditions of the
      intended Transfer, and shall be accompanied by a copy of the offer or
      contract for sale. The other Participant shall have 15 days from the date
      such notice is delivered to notify the transferring Participant whether it
      elects to acquire the offered interest at the same price and on the same
      terms and conditions as set forth in the notice. If it does so elect, the
      Transfer shall be consummated promptly after the notice of such election
      is delivered to the transferring Participant.

	 	 	 
	 	(b) 	
      If the other Participant fails to so elect within the
      period provided for in Section 16.3(a), the transferring Participant shall
      have 10 days following the expiration of such period to consummate the
      Transfer to a third party at a price and on terms no less favorable that
      those offered by the transferring Participant to the other Participant in
      the notice required in Section 16.3(a).

	 	 	 
	 	(c) 	
      If the transferring Participant fails to consummate the
      Transfer to a third party within the period set forth in Section 16.3(b),
      the preemptive right of the other Participant is such offered interest
      shall be deemed to be revived. Any subsequent proposal to Transfer such
      interest shall be conducted in accordance with all of the procedures set
      forth in this Section 16.3.

16.4     Exceptions to Preemptive
Right. Section 16.3 shall not apply to the following: 

	 	(a) 	
      Transfer by a Participant of all or any part of its
      interest in this Agreement any Participating Interest or the Assets to an
      Affiliate;

- 33 - 

	 	(b) 	
      Incorporation of a Participant, or corporate merger,
      consolidation, amalgamation or reorganization of a Participant, by which
      the surviving entity shall possess substantially all of the stock, or all
      of the property rights and interests, and be subject to substantially all
      of the liabilities and obligations of that Participant;

	 	 	 
	 	(c) 	
      The grant by a Participant of a security interest in any
      interest in this Agreement, any Participating Interest, or the Assets by
      mortgage, deed of trust, pledge, lien or other encumbrance; or

	 	 	 
	 	(d) 	
      A sale or other commitment or disposition of Products or
      proceeds from the sale of Products by a Participant upon the distribution
      to it pursuant to Article 12.

ARTICLE 17 

  DISPUTES 

17.1     In the event of a dispute between
the parties under this Agreement, where negotiations between the chief
executives of each Participant or their designated representatives, and
mediation or conciliation attempts, are unsuccessful, all disputes will be
arbitrated in Chile in accordance with the commercial Arbitration Rules of the
United Nations Council on International Trade Law (“UNCITRAL”). Unless
the parties mutually agree on one arbitrator, each party shall select one
qualified arbitrator. Each of these arbitrators shall be a disinterested person
qualified by experience to hear and determine the issues to be arbitrated. The
arbitrators so chosen shall select a neutral arbitrator within ten (10) days of
their selection. These three (3) arbitrators shall then constitute an Arbitrage
Court. If the named arbitrators cannot agree on a neutral arbitrator, the
arbitrators shall make application to the National Mining Society of Peru who
shall select a third disinterested person qualified by experience to hear and
determine the issues to be arbitrated. This Agreement shall be construed and
interpreted according to the laws of the Republic of Chile , without regard to
the application of choice of law principles.

ARTICLE 18 

  CONFIDENTIALITY 

18.1     General. The terms
of this Agreement and all information obtained in connection with the
performance of this Agreement shall be the exclusive property of the
Participants and, except as provided in Section 18.2, shall not be disclosed to
any third party or the public without the prior written consent of the other
Participant, which consent shall not be unreasonable withheld. 

18.2     Exceptions. The
consent required by Section 18.1 shall not apply to a disclosure: 

	 	(a) 	
      To an Affiliate, consultant, contractor or subcontractor
      that has a bona fide need to be informed;

	 	 	 
	 	(b) 	
      To any third party to whom the disclosing Participant
      contemplates a Transfer of all or any part of its in or to this Agreement,
      its Participating Interest, or the Assets; or

- 34 - 

	 	(c) 	
      To a governmental agency or to the public which the
      disclosing Participant believes in good faith is required by pertinent law
      or regulation or the rules of any stock exchange.

In any case to which this Section 18.2 is applicable, the
disclosing Participant shall give notice to the other Participant concurrently
with the making of such disclosure. As to any disclosure pursuant to Section
18.2(a) or (b), only such confidential information as such third party shall
have a legitimate business need to know shall be disclosed and such third party
shall be disclosed and such third party shall first agree in writing to protect
the confidential information from further disclosure to the same extent as the
Participants are obligated under this Article 18. 

18.3     Duration of
Confidentiality. The provisions of this Article 18 shall apply during
the term of this Agreement and for two years following termination of this
Agreement pursuant to Section 13.1 or 13.2, and shall continue to apply to any
Participant who withdraws, who is deemed to have withdrawn, or who Transfers its
Participating Interest, for two years following the date of such occurrence.

ARTICLE 19 

  GENERAL PROVISIONS 

19.1     Notices. All
notices, payments and other required communications (“Notices”) to the
Participants shall be in writing, and shall be addressed respectively as
follows: 

	 	(a) 	
      Pan American Lithium Corp. and Sociedad South American
      Lithium Company S.A. Cerrada 
3040 N. Campbell Avenue, Suite 110
      
Tucson, Arizona USA 85719

	 	 	 
	 		
      Attention: President 
(520) 989-0020

	 		
      Email: abrodkey@kriyah.com

	 	 	 
	 	(b) 	
      Sociedad Gareste Limitada 
208 Van Buren 
Copiapo,
      Chile

	 	 	 
	 		
      (480) 326-3472

	 		
      Email: halchileperu@yahoo.com

All Notices shall be given by either personal delivery to the
Participant, electronic communication, with a confirmation sent by registered or
certified mail return receipt requested, or by registered or certified mail with
return receipt requested. All Notices shall be effective and shall be deemed
delivered: 

	 	(a) 	
      If by personal delivery on the date of delivery if
      delivered during normal business hours, and, if not delivered during
      normal business hours, on the next business day following the
    delivery;

- 35 - 

	 	(b) 	
      If by electronic communication on the next business day
      following the receipt of the electronic communication; and

	 	 	 
	 	(c) 	
      If solely by mail, on the same business day of the actual
      receipt of the Notice.

A Participant may change its address by Notice to the other
Participant. 

19.2     Waiver. The failure
of a Participant to insist on the strict performance of any provision of this
Agreement or to exercise any right, power or remedy upon a breach hereof shall
not constitute a waiver of any provision of this Agreement or limit the
Participant’s right thereafter to enforce any provision or exercise any right.

19.3     Modification. No
modification of this agreement shall be valid unless made in writing and duly
executed by the Participants. 

19.4     Currency. Unless
otherwise explicitly stated otherwise, all monetary amounts set out herein are
stated in United States dollars. 

19.5     Force Majeure.
Except for the obligation to make payments when due hereunder, the obligations
of a Participant shall be suspended to the extent and for the period that
performance is prevented by any cause, whether foreseeable or unforeseeable,
beyond its reasonable control, including, without limitation, labor disputes
(however arising and whether or not employee demands are reasonable or within
the power of the participant to grant); acts of God; laws regulations, orders,
proclamations, instructions or requests of any government or governmental
entity; judgments, decrees or orders of any court; the inability to obtain on
reasonably acceptable terms any public or private license, permit or other
authorization; curtailment or suspension of activities to remedy or avoid an
actual or alleged, present or prospective violation of federal, state or local
environmental standard; acts of war, armed conflict or conditions arising out of
or attributable to war or armed conflict, whether declared or undeclared; riot,
civil strife, insurrection or rebellion; fire, explosion, earthquake, storm,
flood, sink holes or other sudden events of subsidence, drought or other extreme
adverse weather condition; delay or failure by suppliers or transporters of
materials, parts, supplies, services or equipment or by contractors’ or
subcontractors’ shortage of, or an inability to obtain, labor, transportation,
materials, machinery, equipment, supplies, utilities or services; accidents; the
breakdown of equipment, machinery or facilities; or any other cause whether
similar of dissimilar to the foregoing. The affected Participant shall promptly
give notice to the other Participant of the suspension of performance, stating
therein the nature of the suspension, the reasons therefor, and the expected
duration thereof. The affected Participant shall resume performance as soon as
reasonably possible. During the period of suspension the obligations of the
Participants to advance funds pursuant to Section 10.2 shall be reduced to
levels consistent with Operations. 

19.6     Governing Law. This
Agreement shall be governed by and interpreted in accordance with the laws of
the Republic of Chile, except for its rules pertaining to conflicts of laws.

19.7     Rule Against
Perpetuities. Any right or option to acquire any interest in real or
personal property under this Agreement must be exercised, if at all, so as to
vest such interest in the acquirer within twenty-one (21) years after the
effective date of this Agreement. [Chilean/Peruvian counsel to confirm if
statute of limitations applies] 

- 36 - 

19.8      Further
Assurances. Each of the Participants agrees to 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 Agreement. 

19.9      Survival of Terms and
Conditions. The following Sections shall survive the termination of this
Agreement to the full extent necessary for their enforcement and the protection
of the Participant in whose favor they run:

Sections 2.2, 4.5, 6.4, 6.6, 11.3,
13.3, 13.4, 13.6, 13.7 and 13.8. 

19.10     Entire Agreement,
Successors and Assigns. This Agreement contains the entire understanding
of the Participants and supersedes all prior agreements and understandings
between the Participants relating to the subject matter hereof. This Agreement
shall be binding upon and inure to the benefit of the respective successors and
permitted assigns of the Participants. In the event of any conflict between this
main body of this Agreement and any Exhibit attached hereto, the terms of this
main body shall be controlling. 

19.11     Memorandum. At the
request of either Participant, a Memorandum or short form of this Agreement, as
appropriate, which shall not disclose financial information contained herein,
shall be prepared and recorded by the Manager. This Agreement shall not be
recorded.

19.12     Fax and Counterparts.
This Agreement can be executed in counterparts and delivered by
facsimile or other means of electronic transmission including portable document
format (pdf) and shall be deemed effective for all purposes. 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written. 

PAN AMERICAN LITHIUM CORP. 

	Per: 	/s/ Andrew Brodkey 	 
	  	Authorized Signatory 	 
	  	President 	 

SOCIEDAD SOUTH AMERICAN LITHIUM COMPANY, S.A. CERRADA

	Per: 	/s/ Andrew Brodkey 	 
	  	Authorized Signatory 	 
	  	Manager 	 

SOCIEDAD GARESTE LIMITADA 

	Per: 	/s/ Harold W. Gardner 	 

- 37 - 

Authorized Signatory 
Co-Managing
Partner 

SCHEDULE 1--PROPERTIES 

  	Claim Name 	Status 	NORTH 	EAST 	Staking 	Constitution 	Date 	FOJAS 	Number 	Office 	Hectareas 
	MACUNGA UNO 	PEDIMENTOS 	7032500 	494816 	11/5/2010 	  	In revision Sernageomin 	9930 Vta. 	7910 	COPIAPÓ 	300 
	MACUNGA DOS 	PEDIMENTOS 	7033500 	496500 	12/9/2010 	  	In revision Sernageomin 	10900 Vta. 	8662 	COPIAPÓ 	300 
	MACUNGA TRES 	PEDIMENTOS 	7031500 	495500 	11/5/2010 	  	In revision Sernageomin 	9932 Vta. 	7912 	COPIAPÓ 	200 
	MACUNGA CINCO 	PEDIMENTOS 	7030900 	486900 	11/11/2010 	  	In revision Sernageomin 	10033 	7995 	COPIAPÓ 	200 
	MACUNGA SEIS 	PEDIMENTOS 	7032500 	488300 	11/11/2010 	  	In revision Sernageomin 	10034 	7996 	COPIAPÓ 	200 
	MACUNGA TRES DEL 1 AL 5 	MANIFESTACION 	7,031,850 	493,600 	11/11/2010 	  	  	10227 Vta. 	8136 	COPIAPÓ 	20

EXHIBIT A 

Area of Interest: 2 Km outside of the boundaries of the
current water rights solicitud at the Salar de Maricunga, which is shown in a
black outline on the following map: 

 

EXHIBIT B 

Accounting Procedure 

The financial and accounting procedures to be followed by the
Manager and the Participants under the Agreement are set forth below. References
in this Accounting Procedure to Sections and Articles are to those located in
this Accounting Procedure unless it is expressly stated that they are references
to the Agreement. Capitalized terms that are not otherwise defined in this
Accounting Procedure shall have the meanings set out in the Agreement. 

ARTICLE 1 
GENERAL PROVISIONS 

1.1        
General Accounting Records. The Manager shall maintain detailed
and comprehensive cost accounting records in accordance with this Accounting
Procedure and in accordance with International Financial Reporting Standards,
including general ledgers, supporting and subsidiary journals, invoices, checks
and other customary documentation, sufficient to provide a record of revenues
and expenditures and periodic statements of financial position and the results
of operations for managerial, tax, regulatory or other financial reporting
purposes. Such records shall be retained for the duration of the period allowed
by the Participants for audit or the period necessary to comply with tax or
other regulatory requirements. The records shall reflect all obligations,
advances and credits of the Participants. 

1.2         Bank
Accounts. The Manager shall maintain one or more separate bank accounts
for the payment of all expenses and the deposit of all cash receipts for the
Joint Venture. 

1.3        
Statements and Billings. The Manager shall prepare statements and
bill the Participants as provided in Article 11 of the Agreement. Payment of any
such billings by any Participant, including the Manager, shall not prejudice
such Participant’s right to protest or question the correctness thereof for a
period not to exceed twenty-four (24) months following the calendar year during
which such billings were received by the Participant. All written exceptions to
and claims upon the Manager for incorrect charges, billings or statements shall
be made upon the Manager within such twenty-four (24) month period. 

ARTICLE 2 
CHARGES TO JOINT ACCOUNT 

Subject to the limitations hereinafter set forth, the Manager
shall charge the Joint Account with the following: 

2.1        
Rentals, Royalties and Other Payments. All property acquisition
and holding costs, including filing fees, license fees costs of permits and
assessment work, delay and other payments which are due under property
agreements, production royalties, including any required advances, and all other
payments made by the Manager which are necessary to acquire or maintain title to
the Assets. 

B-2 

2.2         Labor
and Employee Benefits. 

	 	(a) 	
      Salaries and wages of the Manager’s employees directly
      engaged in Operations, including salaries or wages of employees who are
      temporarily assigned to and directly employed by same.

	 	 	 
	 	(b) 	
      The Manager’s cost of holiday, vacation, sickness and
      disability benefits, and other customary allowances applicable to the
      salaries and wages chargeable under Sections 2.2(a) and 2.12. Such costs
      may be charged on a “when and as paid basis” or by “percentage assessment”
      on the amount of salaries and wages. If percentage assessment is used, the
      rate shall be applied to wages or salaries excluding overtime and bonuses.
      Such rate shall be based on the Manager’s cost experience and it shall be
      periodically adjusted at least annually to ensure that the total of such
      charges does not exceed the actual cost thereof to the Manager.

	 	 	 
	 	(c) 	
      The Manager’s actual cost of established plans for
      employees’ group life insurance, hospitalization, pension, retirement,
      stock purchase, thrift, bonus (except production or incentive bonus plans
      under a union contract based on actual rates of production, cost savings
      and other production factors and similar non-union bonus plans customary
      in the industry or necessary to attract competent employees, which bonus
      payments shall be considered salaries and wages under Sections 2.2(a) and
      2.12 rather than employees’ benefit plans) and other benefit plans of a
      like nature applicable to salaries and wages chargeable under Sections
      2.2(a) and 2.12, provided that the plans are limited to the extent
      feasible to those customary in the industry.

	 	 	 
	 	(d) 	
      Cost of assessments imposed by governmental authority
      which are applicable to salaries and wages chargeable under Sections
      2.2(a) and 2.12, including all penalties except those resulting from the
      willful misconduct or gross negligence of the
Manager.

2.3        
Materials, Equipment and Supplies. The cost of materials,
equipment and supplies purchased, furnished or otherwise contributed by the
Manager or any Participant as provided in Article 3. The Manager shall purchase
or furnish only so much Material as may be required for immediate use in
efficient and economical Operations. The Manager shall also maintain inventory
levels of Material at reasonable levels to avoid accumulation of surplus stock.

2.4        
Equipment and Facilities Furnished by Manager. The cost of
machinery, equipment and facilities owned by the Manager and used in Operations
or used to provided support or utility services to Operations charged at rates
commensurate with the actual costs of ownership and operation of such machinery,
equipment and facilities. Such rates shall include costs of maintenance,
repairs, other operating expenses, insurance, tales depreciation and interest at
a rate not to exceed eight percent (8%) per annum. Such rates shall not exceed
the average commercial rates currently prevailing in the vicinity of the
Operations. 

2.5        
Transportation. Reasonable transportation costs incurred in
connection with the transportation of employees and material necessary for the
Operations. 

B-3 

2.6         Contract
Services and Utilities. The cost of contract services and utilities
procured from outside sources, other that services described in Sections 2.9 and
2.13. If contract services are performed by the Manager or an Affiliate thereof,
the cost charged to the Joint Account shall not be greater than that for which
comparable services and utilities are available in the open market within the
vicinity of the Operations. The cost of professional consultant services
procured from outside sources in excess of $25,000 shall not be charged to the
Joint Account unless approved by the Management Committee. 

2.7        
Insurance Premiums. Net premiums paid for insurance required to be
carried for Operations for the protection of the Participants. When the
Operations are conducted in an area where the Manager may self-insure for
Worker’s Compensation and/or Employer’s Liability under applicable law, the
Manager may elect to include such risks in its self-insurance program and shall
charge its costs of self-insuring such risks to the Joint Account provided that
such charges shall not exceed published manual rates. 

2.8        
Damages and Losses. All costs in excess of insurance proceeds
necessary to repair or replace damage or losses to any Assets resulting from any
cause other that the willful misconduct or gross negligence of the Manager. The
Manager shall furnish the Management Committee with written notice of damages or
losses as soon as practicable after a report thereof has been received by the
Manager. 

2.9         Legal
and Regulatory Expense. Except as otherwise provided in Section 2.13,
all legal and regulatory costs and expenses incurred in or resulting from the
Operations or necessary to protect or recover the Assets of the Joint Venture.
All attorney’s fees and other legal costs to handle, investigate and settle
litigation or claims including the cost of legal services provided by the
Manager’s legal staff, and amounts paid in settlement of such litigation or
claims in excess of $25,000.00 shall not be charged to the Joint Account unless
approved by the Management Committee. 

2.10       Audit.
The cost of annual audits under Section 11.4 of the Agreement. 

2.11       Taxes.
All taxes (except income taxes) of every kind and nature assessed or levied upon
or in connection with the Assets, the production of Products or Operations,
which have been paid by the Manager for the benefit of the Participants. Each
Participant is separately responsible for income taxes which are attributable to
its respective Participating Interest. 

2.12       Field
Supervision and Expenses. A pro rata portion of: 

	 	(a) 	
      The salaries and expenses of the Manager’s superintendent
      and other employees serving Operations whose time is not allocated
      directly to such Operations,

	 	 	 
	 	(b) 	
      The costs of maintaining and operating an office
      (“Manager’s Project Office”) and any necessary suboffice,
  and

	 	 	 
	 	(c) 	
      All necessary camps, including housing facilities for
      employees, used for Operations.

B-4 

The expense of those facilities, less any revenue therefrom,
shall include depreciation or a fair monthly rental in lieu of depreciation of
the investment. The total of such charges for all properties served by the
Manager’s employees and facilities shall be apportioned to the Joint Account on
the basis of a ratio, the numerator of which is the direct labor costs of the
Operations and the denominator of which is the total direct labor costs incurred
for all activities served by the Manager. 

2.13       Administrative
Charge 

	 	(a) 	
      Each month, the Manager shall charge the Joint Account a
      sum for each phase of Operations as provided below, which shall be a
      liquidated amount to reimburse the Manager for its office overhead and
      general and administrative expenses to conduct each phase of the
      Operations, and which shall be in lieu of any management
  fee:

	 	(i) 	
      Exploration Phase - ____ percent (____%) of
      Allowable Costs up to $ ______, and ____ percent (____%) of ‘Allowable
      Costs over $______.

	 	 	 
	 	(ii) 	
      Development Phase - ____ percent (____%) of
      Allowable Costs up to $ ______, and ____ percent (____%) of ‘Allowable
      Costs over $______.

	 	 	 
	 	(iii) 	
      Major Construction Phase - ____ percent (____%) of
      Allowable Costs up to $ ______, and ____ percent (____%) of ‘Allowable
      Costs over $______.

	 	 	 
	 	(iv) 	
      Mining Phase - ____ percent (____%) of Allowable
      Costs up to $______, and ____ percent (____%) of ‘Allowable Costs over
      $______.

	 	(b) 	
      The term “Allowable Costs” as used in this Section
      2.13 for a particular phase of Operations shall mean all charges to the
      Joint Account excluding:

	 	 	 	 
	 		(i) 	
      the administrative charge referred to herein;

	 	 	 	 
	 		(ii) 	
      the depreciation, depletion or amortization of tangible
      or intangible assets; and

	 	 	 	 
	 		(iii) 	
      amounts charged in accordance with Sections 2.1 and
      2.9.

The Manager shall attribute such
Allowable Costs to a particular phase of Operations by applying the following
guidelines: 

	 	(iv) 	
      The Exploration Phase shall cover those activities
      conducted to ascertain the existence, location, extent or quantity of any
      deposit of ore or mineral. Such phase shall cease when a commercially
      recoverable reserve is determined to exist in accordance with National
      Instrument 43-101.

	 	 	 
	 	(v) 	
      The Development Phase shall cover those activities
      conducted to access a commercially feasible ore body or to extend
      production of an existing ore body, and to construct or install related
      fixed assets.

B-5 

	 	(vi) 	
      The Major construction Phase shall include all activities
      involved in the construction of a mill, smelter, leach or other ore
      processing facilities.

	 	 	 
	 	(vii) 	
      The Mining Phase shall include all other activities not
      otherwise covered above, including reclamation and other activities which
      are conducted after mining operations have
ceased.

	 	(c) 	
      The monthly administration charge determined for each
      phase of Operations shall be equitable apportioned among all of the
      properties served during such monthly period on the basis of a ratio, the
      numerator of which is the direct labor costs charged to a particular
      property and the denominator of which is the total direct labor costs
      incurred for all properties served by the Manager.

	 	 	 	 
	 	(d) 	
      The following is a representative list of items
      comprising the Manager’s principal business office expenses that are
      expressly covered by the administrative charge provided in this Section
      2.13:

	 	 	 	 
	 		(i) 	
      Administrative supervision, which includes services
      rendered by managers, department supervisors, officers and directors of
      the Manager for Operations, except to the extent that such services
      represent a direct charge to the Joint Account, as provided for in Section
      2.2;

	 	 	 	 
	 		(ii) 	
      Accounting, data processing, personnel administration,
      billing and record keeping in accordance with governmental regulations and
      the provisions of the Agreement, and preparation of reports;

	 	 	 	 
	 		(iii) 	
      The services of tax counsel and tax administration
      employees for all tax matters, including any protests, except any outside
      professional fees which the Management Committee may approve as a direct
      charge to the Joint Account;

	 	 	 	 
	 		(iv) 	
      Routine legal services rendered by outside sources and
      the Manager’s legal staff not otherwise charged to the Joint Account under
      Section 2.9 and

	 	 	 	 
	 		(v) 	
      Rentals and other charges for office and records storage
      space, telephone service, office equipment and supplies.

	 	 	 	 
	 	(e) 	
      The Management committee shall annually review the
      administration charges and shall amend the methodology or rates used to
      determine such charges if they are found to be insufficient or
      excessive.

2.14       Other
Expenditures. Any reasonable direct expenditure, other than expenditures
which are covered by the foregoing provisions, incurred by the Manager for the
necessary and proper conduct of Operations. 

B-6 

ARTICLE 3 
BASIS OF CHARGES TO JOINT ACCOUNT

3.1        
Purchases. Material and services which are procured from third
parties shall be charged to the Joint Account by the Manager at invoiced cost
including applicable transfer taxes, less all discounts taken. If any material
is determined to be defective or is returned to a vendor for any other reason,
the Manager shall credit the Joint Account when an adjustment is received from
the vendor. 

3.2        
Material Furnished by or Transferred to the Manager or a
Participant. Any material furnished by the Manager or a Participant from
its stocks or transferred to the Manager or Participant shall be priced on the
following basis: 

	 	(a) 	
      New Material: New material transferred from the
      Manager or Participant shall be priced F.O.B. the nearest reputable supply
      store or railway receiving point where like material of similar condition
      or quality is available, at the current replacement cost of the same kind
      of material, exclusive of any available cash discounts, at the time of the
      transfer (herein called, “New Price”).

	 	 	 	 	 
	 	(b) 	
      Used Material:

	 	 	 	 	 
	 		(i) 	
      Used material in sound and serviceable condition and
      suitable for reuse without reconditioning shall be priced as
    follows:

	 	 	 	 	 
	 			A. 	
      Used material transferred by the Manager or Participant
      shall be priced at seventy-five percent (75%) of the New Price;
  and

	 	 	 	 	 
	 			B. 	
      Used material transferred to the Manager or Participant
      shall be priced either at seventy-five percent (75%) of the New Price if
      such material was originally charged to the Joint Account as new material,
      or at sixty-five percent (65%) of the New Price if such material was
      originally charged to the Joint Account as good used material at
      seventy-five percent (75%) of the New Price.

	 	 	 	 	 
	 		(ii) 	
      Other used material which, after reconditioning will be
      further serviceable for original function as good secondhand material, or
      which is serviceable for original function but not substantially suitable
      for reconditioning shall be priced at fifty percent (50%) of the New
      Price. The cost of any reconditioning shall be borne by the
    transferee.

	 	 	 	 	 
	 		(iii) 	
      All other material, including junk, shall be priced at a
      value commensurate with its use or at prevailing prices. Material no
      longer suitable for its original purpose but usable for some other purpose
      shall be proceed on a basis comparable with items normally used for such
      other purposes.

	 	 	 	 	 
	 	(c) 	
      Obsolete Material: Any material which is
      serviceable and usable for its original function, but its condition is not
      equivalent to that which would justify a price as provided above shall be
      priced by the Management Committee. Such price
shall be set at a level which will result in
a charge to the Joint Account equal to the value of the service to be rendered
by such material. 

B-7 

3.3        
Premium Prices. Whenever material is not readily obtainable at
published or listed prices because of national emergencies, strikes or other
unusual circumstances over which the Manager has no control, the Manager may
charge the Joint Account for the required material on the basis of the Manager’s
direct cost and expenses incurred in procuring such material and making it
suitable for use by the Joint Venture. The Manager shall give written notice of
the proposed charge to the Participants prior to the time when such charge is to
be billed, whereupon any Participant shall have the right, by notifying the
Manager within ten (10) days of the delivery of the notice from the Manager, to
furnish at the usual receiving point all or part of its share of material
suitable for use and acceptable to the Manager. 

3.4         Warranty
of Material Furnished by the Manager or Participants. Neither the
Manager nor any Participant warrants the material furnished beyond any dealer’s
or manufacturer’s warranty and no credits shall be made to the Joint Account for
defective material until adjustments are received by the Manager from the
dealer, manufacturer or their respective agents. 

ARTICLE 4 
DISPOSAL OF MATERIAL 

4.1        
Disposition Generally. The Manager shall have no obligation to
purchase a Participant’s interest in material. The Management Committee shall
determine the disposition of major items of surplus material, provided the
Manager shall have the right to dispose of normal accumulations of junk and
scrap material either by sale or by transfer to the Participants as provided in
Section 4.2. 

4.2        
Distribution to Participants. Any material to be distributed to the
Participants shall be made in proportion to their respective Participating
Interests, and corresponding credits shall be made to the Joint Account on the
basis provided in Section 3.2. 

4.3        
Sales. Sales of Material to third parties shall be credited to the
Joint Account at the net amount received. Any damages or claims by the purchaser
shall be charged back to the Joint Account if and when paid. 

ARTICLE 5 
INVENTORIES 

5.1        
Periodic Inventories, Notice and Representations. At reasonable
intervals not to exceed one year, inventories shall be taken by the Manager,
which shall include all such material as is ordinarily considered controllable
by operators of mining properties and the expense of conduction such periodic
inventories shall be charged to the Joint Account. The Manager shall give
written notice to the Participants of its intent to take any inventory at least
thirty (30) days before such inventory is scheduled to take place. A Participant
shall be deemed to have accepted the results of any inventory taken by the
Manage if the Participant fails to be represented at such inventory. 

B-8 

5.2        
Reconciliation and Adjustment of Inventories. Reconciliation of
inventory with charges to the Joint Account shall be made, and a list of
overages and shortages shall be furnished to the Management Committee within six
(6) months after the inventory is taken. Inventory adjustments shall be made by
the Manager to the Joint Account for overages and shortages. The Manager shall
be held accountable to the Joint Venture only for shortages due to lack of
reasonable diligence. 

EXHIBIT C 

TAX MATTERS 

ARTICLE 1 
TAX MATTERS PARTNER 

1.1        
Designation of Tax Matters Partner. The Manager is hereby
designated tax matters partner (hereinafter “TMP”) as defined in Section
6231(a)(7) of the Internal Revenue Code of 1954, as amended, (hereinafter
“Code” In the event of any change in Manager, the Participant serving as
Manager at the end of a taxable year shall continue as TMP with respect to all
matters concerning such year. The TMP and other Participants shall use their
best efforts to comply with the responsibilities outlined in this Article 1 and
in Sections 6221 through 6233 of the Code (including any Treasury regulations
promulgated thereunder) and in doing so shall incur no liability to any other
Party. 

1.2        
Notice. The Participants shall furnish the TMP with such
information (including information specified in Section 6230(e) of the Code) as
it may reasonably request to permit it to provided the Internal Revenue Service
with sufficient information to allow proper notice to the Participants in
accordance with Section 6223 of the Code. The TMP shall keep each Participant
informed of all administrative and judicial proceedings for the adjustment at
the partnership level of partnership items in accordance with Section 6223(g) of
the Code. 

1.3        
Inconsistent Treatment of Partnership Item. If an administrative
proceeding contemplated under Section 6223 of the Code has begun, and the TMP so
requests, the Participants shall notify the TMP of their treatment of any
partnership item on their federal income tax returns in a manner which is
inconsistent with the treatment of that item on the partnership return. 

1.4        
Extensions of Limitation Periods. The TMP shall not enter into any
extension of the period of limitations as provided under Section 6229 of the
Code without first giving reasonable advance notice to all other Participants of
such intended action and the opportunity to comment on, object to or question
the reason for seeking the extension. 

1.5        
Requests for Administrative Adjustments. No Participant shall
file, pursuant to Section 6227 of the Code, a request for an administrative
adjustment of partnership items for any partnership taxable year without first
notifying all other Participants. If all other Participants agree with the
requested adjustment, the TMP shall file the request for administrative
adjustment on behalf of the partnership. If unanimous consent is not obtained
within thirty (30) days, or within the period required to timely file the
request for administrative adjustment, if shorter, any Participant, including
the TMP, may file a request for administrative adjustment on its own behalf.

1.6        
Judicial Proceedings. Any Participant intending to file a petition
under Section 6226, 6228 or other sections of the code with respect to any
partnership item, or other tax matters involving the partnership, shall notify
the other Participants of such intention and the nature of the contemplated
proceeding. If the TMP is the Participant intending to file such petition, such
notice shall be given within a reasonable time to allow the other Participants
to participate in the choosing of the forum in which such petition will be filed. If
the Participants do not agree on the appropriate forum, then the appropriate
forum shall be decided by majority vote. Each Participant shall have a vote in
accordance with its Participating Interest in the partnership. If a majority
cannot agree, the TMP shall choose the forum. If any Participant intends to seek
review of any court decision rendered as a result of a proceeding instituted
under the preceding part of this Section 1.6, such Participant shall notify the
other Participants of such intended action. 

C-2 

1.7        
Settlements. The TMP shall not bind any other Participant to a
settlement agreement without first obtaining the written concurrence of any such
Participant. Any other Participant who enters into a settlement agreement with
respect to any partnership items, as defined by Section 6231(a)(3) of the Code,
shall notify the other Participants of such settlement agreement and its terms
within ninety (90) days from the date of settlement. 

1.8         Fees
and Expenses. The TMP shall not engage legal counsel, certified public
accountants, or others without the prior written consent of a majority of the
Participants. Any Participant may engage legal counsel, certified public
accountants, or others on its own behalf and at its sole cost and expense. Any
reasonable item of expense, including but not limited to fees and expenses for
legal counsel, certified public accountants, and others which the TMP incurs in
connection with any audit, assessment, litigation, or other proceeding regarding
any partnership item, shall constitute proper charges to the Joint Account and
shall be borne by the Participants as any other item which constitutes a direct
charge to the Joint Account pursuant to the Agreement. Notwithstanding anything
in the Agreement to the contrary, the Joint Account allocation shall be borne by
the Participants as any other item which constitutes a direct charge to the
Joint Account pursuant to the Agreement. 

1.9         Survival.
The provisions of this Article 1, including but not limited to the obligation to
pay fees and expenses contained in Section 1.8, shall survive the termination of
the partnership or the termination of any Participant’s interest in the
partnership and shall remain binding on the Participants for a period of time
necessary to resolve with the Internal Revenue Service or the Department of the
Treasury any and all matters regarding the federal income taxation of the
partnership for the applicable tax year(s). 

ARTICLE 2 
TAX ELECTIONS AND ALLOCATIONS 

2.1         Tax
Partnership Election. 

	 	(a) 	
      It is understood and agreed that the Participants intend
      to create a partnership for United States federal and state income tax
      purposes, and, unless otherwise agreed to hereafter by all Participants,
      no participant shall make an election to be, or have the arrangement
      evidenced hereby, excluded from the application of any provisions of
      Subchapter K of the Code, or any equivalent state income tax provision. It
      is understood and agreed that the Participants intend to create a
      partnership for federal and state and income tax purposes only.

	 	 	 
	 	(b) 	
      The Manager shall file with the appropriate office of the
      Internal Revenue Service, a partnership income tax return covering the
      Operations. The Participants recognize that this Agreement may be subject
      to state income tax statutes. The Manager shall file with the Appropriate
      office of the state agencies any required partnership state income tax
  returns.

C-3 

	 	(c) 	
      Each Participant agrees to furnish to the Manager such
      information which it may have relating to Operations as shall be required
      for proper preparation of such returns. The Manager shall furnish to the
      other Participants for their review a copy of each proposed income tax
      return at least two (2) weeks prior to the date the return is
  filed.

2.2         Tax
Elections 

	 	(a) 	
      The partnership shall make the following elections for
      purposes of all partnership income tax returns:

	 	 	 	 
	 		(i) 	
      To use the accrual method of accounting,

	 	 	 	 
	 		(ii) 	
      Pursuant to the provisions at Section 706(b)91) of the
      Code, to use as its taxable year a year ending December 31,

	 	 	 	 
	 		(iii) 	
      To deduct (or defer & amortize or capitalize)
      currently all exploration and development expenses to the extent
      possible under Section 616 and 291 of the Code,

	 	 	 	 
	 		(iv) 	
      Unless the Participants unanimously agree otherwise, to
      compute the allowance for depreciation in respect of all depreciable
      Assets using the maximum accelerated tax depreciation method and the
      shortest life permissible,

	 	 	 	 
	 		(v) 	
      To treat advance royalties as deductions from gross
      income for the year paid or accrued to the extent permitted by law,
    and

	 	 	 	 
	 		(vi) 	
      To deduct currently qualified reclamation and closing
      costs in accordance with, and to the extent permitted by, Section 468 of
      the Code.

	 	 	 	 
	 	(b) 	
      Any other election required or permitted under the code
      or any state tax law shall be made as determined by the Management
      Committee.

	 	 	 	 
	 	(c) 	
      Each Participant shall elect under Section 617(a) of the
      Code to deduct currently all exploration expenses to the extent
      possible.

2.3        
Allocations to Participants. Allocations for tax purposes shall be
in accordance with the following: 

	 	(a) 	
      Exploration expenses and development cost deductions
      shall be allocated among the Participants in accordance with their
      respective contributions to such costs.

C-4 

	 	(b) 	
      Subject to Subsection 2.3(l) below, depreciation and loss
      deductions with respect to a depreciable Asset shall be allocated among
      the Participants in accordance with their respective contributions to the
      adjusted basis of the Asset which gives rise to the depreciation
      expense.

	 	 	 
	 	(c) 	
      Production and operating cost deductions shall be
      allocated among the Participants in accordance with their respective
      contributions to the qualified investment (as defined in the Code) in such
      Asset.

	 	 	 
	 	(d) 	
      Subject to Subsection 2.3(l) below, cost depletion and
      any loss deduction with respect to a depletable property (as defined in
      Section 614 of the Code) shall be allocated to the Participants in
      accordance with their respective contributions to the adjusted basis of
      the depletable property. Percentage depletion under Section 613 of the
      Code shall be allocated to the Participants in accordance with their
      respective contributions to the adjusted basis of the depletable property.
      Percentage depletion under Section 613 of the Code shall be
    allocated:

	 	(i) 	
      first, in the same manner as cost depletion to the extent
      it does not exceed cost depletion; and

	 	 	 
	 	(ii) 	
      second, to the extent percentage depletion exceeds cost
      depletion, to the Participants in the same proportion as their
      distributive share of gross income from the depletable property (as
      determined under Section 613(c) of the Code) for the year in which such
      depletion is allowable.

	 	(e) 	
      All deductions and losses which are not described in
      Subsections 2.3(a) through (d) above, shall be allocated among the
      Participants in accordance with their respective contributions to the
      costs producing each such deduction or the adjusted basis of the Asset
      producing each such loss.

	 	 	 
	 	(f) 	
      If Section 12.1 of the Agreement (directing that each
      Participant shall take in kind and separately dispose of its share of all
      Products) is interpreted to mean only that a Participant is authorized to
      direct the disposition of its share of Products by the partnership, all
      income, gains, or losses realized by the partnership from such disposition
      shall be allocated to such Participant, and any deductions arising from
      expenditures incurred by such Participant in connection with such
      disposition (to the extent they are attributed to the partnership) shall
      also be allocated to such Participant. If, pursuant to Section 11.2 of the
      Agreement, the Manager purchases a Participant’s share if Product for its
      own account, or sells such share of Product, the net profits or losses
      from such sale (computed after taking into account the reasonable expenses
      incurred) shall be allocated to the Participant.

	 	 	 
	 	(g) 	
      Subject to Subsection 2.3(l) below, any gain recognized
      on the sale or other disposition of a depreciable Asset shall be
      allocated:

	 	(iii) 	
      first, to the extent such gain does not exceed the amount
      of depreciation claimed with respect to such Asset, to the Participants in
      proportion to the amount of such depreciation previously allocated to or
  claimed by, them; and

C-5 

	 	(iv) 	
      second, to the Participants in accordance with their
      Participating Interests.

	 	(h) 	
      Subject to Subsection 2.3(l) below, any gain recognized
      on the sale or other disposition of a depletable property (as defined in
      Section 614 of the Code), shall be allocated:

	 	 	 	 
	 		(i) 	
      first, to the extent such gain does not exceed the total
      Recapturable Deductions (as defined below) with respect to such property,
      to the Participants in proportion to the total Recapturable Deductions
      previously allocated to, or claimed by, them with respect to such property
      (adjusted for any recapture of such deductions previously allocated to, or
      recognized by, the Participants); and

	 	 	 	 
	 		(ii) 	
      second, to the Participants in accordance with their
      Participating Interests.

	 	 	 	 
	 			
      As used in the previous sentence, “Recapturable
      Deductions” means depletion deductions (to the extent reflected in the
      capital accounts of the Participants), exploration expense deductions, and
      development expense deductions attributable to a depletable property,
      reduced (but not below zero) by any prior recapture of such
    deductions.

	 	 	 	 
	 	(i) 	
      Subject to Subsection 2.3(l) below, any recapture of
      exploration expenses under Section 617(b)(1)(A) of the Code, and any
      increase in taxable income realized by reason of the disallowance of
      depletion under Section 617(b)(1)(B) of the Code, shall be allocated to
      the Participants in the same manner as the related exploration expenses
      were allocated to, or claimed by, them.

	 	 	 	 
	 	(j) 	
      Subject to Subsection 2.3(l) below, all other items of
      income and gain shall be allocated to the Participants as
  follows:

	 	 	 	 
	 		(i) 	
      Until the Participants have recovered the amounts set
      forth in Section 12.1 of the Agreement, all such income and gain shall be
      allocated as provided in Section 12.1.

	 	 	 	 
	 		(ii) 	
      Thereafter, all such income and gain shall be allocated
      to the Participants in accordance with their Participating
    Interests.

	 	 	 	 
	 	(k) 	
      All tax credits shall be allocated to the Participants in
      proportion to the allocation of the item of income, gain, loss, or
      deduction generated by the receipt or expenditure giving rise to the
      credit. Any credit recaptures shall be allocated to the Participants in
      the same proportion as the related credit was allocated.

	 	 	 	 
	 	(l) 	
      Notwithstanding the foregoing, if all or substantially
      all the Assets (by value) are sold or otherwise disposed of, any gain or
      loss recognized by the partnership shall be allocated among the
      Participants so that, to the extent possible,
the Participant’s resulting capital account balances are in
      proportion to the Participant’s Participating Interests. Any recapture for
      tax purposes of mining exploration and development expenditures,
      depreciation deductions, and depletion deductions arising by reason of
      such a sale or other disposition shall be allocated, to the extent
      consistent with the allocation of gain originally allocated, or which
  originally claimed, the recapture deduction.

C-6 

	 	(m) 	
      Notwithstanding the foregoing, in accordance with Section
      704(c) of the Code, income, gain, loss, and deduction with respect to
      property contributed to the partnership by a Participant shall be shared
      among the Participants so as to take account of the variation between the
      basis of the property to the partnership and its fair market value at the
      time of contribution.

<>[The below provision is to be used when loan
is obtained on a recourse basis and
both participants are ultimately responsible for
repayment:] 

If the Joint Venture borrows funds to be used in connection
with the Properties (Borrowed Funds), any deductions generated by the
expenditure of such funds (“Borrowed Fund Deductions”)
shall be allocated to the Participants in accordance with their Participating
Interests. For this purpose, if the tax basis of an Asset reflects both amounts
derived from contributions by the Participants and amounts derived from Borrowed
Funds, any depreciation deductions, cost depletion deductions, or percentage
depletion deductions (to the extent reflected in basis) generated by that Asset
shall be treated first as Borrowed Fund Deductions. If the proceeds of the sale
of Products or any Asset are used to repay the principal amount of Borrowed
Funds, any income or gain recognized by reason of such sale shall be allocated
to the Participants in the same proportion as all Borrowed Fund Deductions were
previously allocated to them, up to the amount of such Borrowed Fund Deductions,
and thereafter in accordance with their Participating Interests. Any deductions
arising by reason of the payment of interest on Borrowed Funds, which payments
are funded out of the sale of Products or Assets, and not by contributions from
the Participants, shall be allocated to the Participants in the same manner as
the income or gain from such sale is allocated.] 

ARTICLE 3 
CAPITAL ACCOUNTS, LIQUIDATION 

3.1        
Capital Accounts 

	 	(a) 	
      A separate capital account shall be established and
      maintained for each Participant. Such capital account shall be increased
      by:

	 	 	 	 
	 		(i) 	
      the amount of money contributed by the Participant to the
      partnership;

	 	 	 	 
	 		(ii) 	
      the fair market value of property contributed by the
      Participant to the partnership (net of liabilities securing such
      contributed property that the partnership is considered to assume or take
      subject to); and

C-7 

	 	(iii) 	
      allocations to the Participant of partnership income and
      gain (or items thereof), including income and gain exempt from tax; and
      shall be decreased by:

	 	 	 	 
	 		A. 	
      the amount of money distributed to the Participant by the
      partnership;

	 	 	 	 
	 		B. 	
      the fair market value of property distributed to the
      Participant by the partnership (net of liabilities secured by such
      distributed property and that the Participant is considered to assume or
      take subject to);

	 	 	 	 
	 		C. 	
      allocations of partnership loss and deduction (or items
      thereof)k, excluding items described in _______________ (vi) above, and
      percentage depletion to the extent it exceeds the adjusted tax basis of
      the depletable property to which it is
attributable.

	 	(b) 	
      If the capital accounts of the Participants are computed
      with reference to the book value of any Asset which differs from the
      adjusted tax basis of such Asset, then the capital accounts shall be
      adjusted for depreciation, depletion, amortization, and gain or loss as
      computed for book purposes with respect to such Asset in accordance with
      Treasury Regulation Section 1.704-1(b)(2)(iv)(g).

	 	 	 
	 	(c) 	
      If any interest in the partnership is transferred in
      accordance with the terms of the Agreement, the transferee shall succeed
      to the capital account of the transferor to the extent it relates to the
      transferred interest, except as provided in Treasury Regulation Section
      1.704-1(b)(2)(iv)(l).

	 	 	 
	 	(d) 	
      If property, other than money, is distributed to a
      Participant, the capital accounts of the Participants shall be adjusted to
      reflect the manner in which the unrealized income, gain, loss, and
      deduction inherent in such property (that has not been reflected in the
      capital accounts previously) would be allocated among the Participants if
      there was a taxable disposition of such property for the fair market value
      of such property (taking Section 7701(g) of the Code into account) on the
      date of distribution. For this purpose, the fair market value of the
      property shall be determined as set forth in Paragraph 3.2(a)
  below.

	 	 	 
	 	(e) 	
      The foregoing provisions, and the other provisions of the
      Agreement relating to the maintenance of capital accounts and the
      allocations of income, gain, loss, deduction, and credit, are intended to
      comply with Treasury Regulations Section 1.704-1(b), and shall be
      interpreted and applied in a manner consistent with such Regulations. If
      the Management Committee determines that it is prudent to modify the
      manner in which the capital accounts, or any debits or credits thereto,
      are computed in order to comply with such Regulations, the Management
      Committee may make such modification, provided that the modification is
      not likely to have a material effect on the amount distributable to any
      Participant upon liquidation of the partnership pursuant to Article 3 of
      this Exhibit C.

C-8 

3.2        
Liquidation. If the partnership is “Liquidated” within the
meaning of Treasury Regulation Section 1.704 -1(b)(2)(ii)(g), then,
notwithstanding any other provision of the Agreement to the contrary, the
following steps shall be taken: 

	 	(a) 	
      The capital accounts of the Participants shall be
      adjusted to reflect any gain or loss which would be realized by the
      partnership and allocated to the Participants pursuant to the provisions
      of Article 2 of this Exhibit C if the Assets had been sold at their fair
      market value at the time of liquidation. The fair market value of the
      Assets shall be determined by the Participants; provided, however, that if
      the Participants fail to agree on the fair market value of any Asset, its
      fair market value shall be determined by a nationally recognized
      independent engineering firm or other qualified independent party approved
      by all Participants.

	 	 	 
	 	(b) 	
      Following the adjustments described in the foregoing
      Subsection 3.2(a), any Participant with a negative balance in its capital
      account shall contribute an amount of cash to the partnership sufficient
      to achieve a zero balance in the Participant’s capital account.

	 	 	 
	 	(c) 	
      Following the adjustments described in the foregoing
      Subsections 3.2(a) and (b), if the capital account balance of any
      Participant (stated as a percentage of the capital account balances of all
      Participants) is not equal to the Participant’s Participating Interest,
      then any Participant whose capital account balance is less than its
      Participating Interest shall have the obligation, upon ten (10) days
      notice by the Manager, to contribute a sufficient amount of cash to the
      partnership to cause its capital account balance and Participating
      Interest to be in parity.

	 	 	 
	 	(d) 	
      After making the foregoing adjustments and/or
      contributions, all remaining Assets shall be distributed to the
      Participants in accordance with the balances in their capital accounts.
      Unless otherwise expressly agreed by all Participants, each participant
      shall receive an undivided interest in each and every Asset determined by
      the ratio of the amount of each Participant’s capital account to the total
      of all Participants’ capital accounts. Assets distributed to the
      Participants shall be deemed to have a fair market value equal to the
      value assigned to them pursuant to Subsection 3.2(a), above.

	 	 	 
	 	(e) 	
      Any contribution by a Participant to the partnership to
      restore the capital account of such Participant to zero, and all
      distributions to the Participants with respect to their capital accounts,
      shall be made in accordance with the time requirements of Treasury
      Regulation Sections 1.704-1(b)(2)(ii)(b) and (3).

ARTICLE 4 
SALE OR ASSIGNMENT 

4.1        
Agreement Not to Terminate. The Participants agree that if any one
of them sells or assigns their respective Participating Interest under this
Agreement, such sale or assignment will be structured so as to cause a
termination under Section 708(b) (1)(B) of the Code. If a Section 708(b) (1)(B)
termination is caused, the terminating Participant will indemnify all the
non-

C-9 

terminating Participants and save them harmless on an after tax
basis for any increase in taxes, interest, and penalties or decrease in credits
to the non-terminating Participants caused by the termination of the
partnership. 

ARTICLE 5 
CORRESPONDENCE 

5.1       
 Correspondence. All correspondence relating to the
preparation and filing of the partnership’s income tax return(s) shall be
forwarded to: 

	 	(a) 	
      PALC/Salico:

	 	 	 
	 		
      Pan American Lithium Corp.

	 		
      3040 N. Campbell Avenue, Suite 110 
Tucson, Arizona
      USA 85719

	 	 	 
	 		
      Attention: President

	 		(520) 989-0020
	 		
      Email: abrodkey@kriyah.com

	 	 	 
	 	(b) 	
      Gareste:

	 	 	 
	 		
      Sociedad Gareste Limitada 
208 Van Buren 
Copiapo,
      Chile

	 	 	 
	 		(480) 326-3472
	 		
      Email: halchileperu@yahoo.com

EXHIBIT D 

NET PROCEEDS CALCULATION 

2.          
Income and Expenses. Net Proceeds shall be calculated by deducting
from the gross revenues realized (or deemed to be realized) from the sale (or
deemed sale) of Products, such costs and expenses attributable to Exploration,
Development, Mining, and the marketing of Products as would be deductible under
International Financial Reporting Standards consistently applied as employed by
the Manager of the Properties, including without limitation: 

	 	(a) 	
      All costs and expenses of replacing, expanding,
      modifying, altering or changing from time-to-time the Mining facilities.
      Costs and expenses of improvements (such as haulage ways or mill
      facilities) that are also used in connection with workings other that the
      Properties shall be charged to the Properties only in the proportion that
      their use in connection with the Properties bears to their total
    use.

	 	 	 
	 	(b) 	
      Ad valorem real property and unsecured personal property
      taxes, and all taxes, other than income taxes, applicable to Mining of the
      Properties, including without limitation all state mining taxes, sales
      taxes, severance taxes (taxes based upon the amount of Products produced
      from the Properties), royalties, license fees and governmental levies of a
      similar nature.

	 	 	 
	 	(c) 	
      Allowance for overhead in accordance with Section 2.13 of
      the Accounting Procedure.

	 	 	 
	 	(d) 	
      All expenses incurred relative to the sale of Products
      including an allowance for commissions at rates which are normal and
      customary in the industry.

	 	 	 
	 	(e) 	
      All amounts payable to the Manager of the Properties
      during Mining pursuant to any applicable operating or similar agreement in
      force with respect thereto.

	 	 	 
	 	(f) 	
      The actual cost of investment prior to beginning of
      Mining which shall include all expenditures for Exploration and
      Development of the Properties incurred by the non-withdrawing Participant
      subsequent to the withdrawing Participant acquiring a Net Proceeds
      interest.

	 	 	 
	 	(g) 	
      Interest on monies borrowed or advanced for costs and
      expenses, at an annual rate equal to __ percentage points above the Prime
      Rate, but in no event in excess of the maximum permitted by law.

	 	 	 
	 	(h) 	
      An allowance for reasonable working capital and
      inventory.

	 	 	 
	 	(i) 	
      Reasonably anticipated reclamation
  costs.

It is intended that the Manager of the Properties shall pay
from net cash flow all of the contributions for Exploration, Development,
Mining, and marketing Products before any Net Proceeds are distributed to any
person holding a Net Proceeds interest. Except as required by law, no deduction
shall be made for income taxes, depreciation, amortization or depletion. If in
any year after the beginning of Mining of the Properties an
operation loss relative thereto is incurred, the amount thereof shall be
considered as and be included with outstanding costs and expenses and carried
forward in determining Net Proceeds for subsequent periods. If Products are
processed by the Manager of the Properties, or are sold to an Affiliate of the
Manager, then, for purposes of calculation Net Proceeds, such Products shall be
deemed conclusively to have been sold at a price equal to fair market value to
arm’s length purchasers FOB the ____ for Properties and, Net Proceeds relative
thereto shall be calculated without reference to any profits or losses
attributable to smelting or refining. 

D-2 

3.          
Payment of Net Proceeds. Payments of Net Proceeds shall commence
in the calendar year next following the calendar year in which Net Proceeds are
first realized, and shall be made forty-five (45) days following the end of each
calendar quarter during which Net Proceeds are realized, and shall be subject to
adjustment, if required, at the end of each calendar year. The recipient of such
Net Proceeds payments shall have the right to audit such payments within the
time and in the manner provided in Section 11.4 of this Agreement. 

EXHIBIT E 

INSURANCE 

The Manager shall, at all times while conduction Operations,
comply fully with the applicable worker’s compensation laws and purchase, or
provide through self-insurance, protection for the Participants comparable to
that provided under standard form insurance policies for: 

	 	(a) 	
      Comprehensive public liability and property damage with
      combined limits of $ _________ Dollars for bodily injury and property
      damage;

	 	(b) 	
      Automobile insurance with combined limits of $ _________
      Dollars; and

	 	 	 
	 	(c) 	
      Adequate and reasonable insurance against risk of fire
      and other risks ordinarily insured against in similar operations. If the
      Manager elects to self-insure, it shall charge to the Joint Account an
      amount equal to the premium it would have paid had it secured and
      maintained a policy or policies of insurance on a competitive bid basis in
      the amount of such coverage. Each Participant shall self-insure or
      purchase for its own account such additional insurance as it deems
      necessary

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