Document:

EXHIBIT 4.(C)1

              ECI Telecom Ltd. Employee Share Incentive Plan 2002,
                         as last amended March 4, 2004.

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               ECI TELECOM LTD. EMPLOYEE SHARE INCENTIVE PLAN 2002
                           (as amended July 30, 2003)

                               A. NAME AND PURPOSE

1.    NAME: This plan, as amended from time to time,  shall be known as the "ECI
      Telecom Ltd. Employee Share Incentive Plan 2002" (the "Plan").

2.    PURPOSE:  The purpose and intent of the Plan is to provide  incentives  to
      employees  and  directors  of ECI Telecom  Ltd.  (the  "Company")  and any
      subsidiary or affiliate  thereof,  and other  beneficiaries,  by providing
      them with options  ("OPTIONS") to purchase  Ordinary Shares (nominal value
      NIS 0.12 per share) in the Company ("Shares"),  pursuant to (i) a plan (or
      plans)  approved by the Board of Directors  of the Company  (the  "Board")
      which is (are)  designed to benefit  from,  and is (are) made pursuant to,
      the  provisions of Section 102 of the Israeli  Income Tax  Ordinance  [New
      Version],  1961 (the  "Ordinance") and any regulations,  rules,  orders or
      procedures  promulgated  thereunder (a "Qualified Plan"),  and/or (ii) any
      other   share   incentive   plan  which  is   approved  by  the  Board  (a
      "Non-Qualified  Plan"),  provided that any Qualified Plan or Non-Qualified
      Plan  (individually - a "Sub-Plan" and  collectively - "Sub-Plans")  shall
      not contain any provisions which are  inconsistent  with the general terms
      and conditions  contained herein below (the term "Plan" shall,  unless the
      context  requires  otherwise,  include  any  and  all  Sub-Plans  then  in
      existence).

                   B. GENERAL TERMS AND CONDITIONS OF THE PLAN

3.    ADMINISTRATION:

3.1   The Plan will be administered by the Board or by a Remuneration  Committee
      (the  "Committee"),  if permitted by applicable law, which will consist of
      such number of Directors of the Company (not less than two in number),  as
      may be fixed from time to time by the Board.  The Board shall  appoint the
      members of the  Committee,  may from time to time remove  members from, or
      add members to, the  Committee  and shall fill  vacancies in the Committee
      however caused.  The Board may make grants in accordance with the Plan and
      otherwise  administer the Plan without having received  recommendations on
      such matters from the Committee.  If a Committee is not  appointed,  or to
      the extent that the Board acts in accordance  with the Plan without having
      received   recommendations  from  the  Committee,  the  term  "Committee,"
      whenever used herein, shall mean the Board.

3.2   The  Committee  shall  select one of its members as its Chairman and shall
      hold its meetings at such times and places as it shall determine.  Actions
      taken by a majority of the members of the Committee  present and voting at
      a meeting of the Committee at which a majority of its members are present,
      or  acts  reduced  to,  or  approved  in  writing  by all  members  of the
      Committee,  shall be the valid acts of the  Committee.  The  Committee may
      appoint a  Secretary,  shall keep  records of its  meetings and shall make

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      such rules and  regulations  for the  conduct of its  business as it shall
      deem advisable.

3.3   Subject to applicable  law and to the general terms and conditions of this
      Plan and subject to any special provisions of any Sub-Plan,  the Committee
      shall have full authority in its discretion,  from time to time and at any
      time,  to  determine  (i) the  persons  to whom  Options  shall be granted
      ("Grantees"),  (ii) the  number of Shares to be  covered  by each  Option,
      (iii)  the  time or times at which  the same  shall be  granted,  (iv) the
      schedule and  conditions  on which such  Options may be  exercised  and on
      which  such  Shares  shall be paid for,  (v)  subject to  applicable  law,
      whether or not the Options will be granted  pursuant to Section 102 of the
      Ordinance ("102  Options"),  (vi) with regard to Section 102 as amended in
      amendment  132 of the Ordinance - whether the Options will be granted to a
      trustee  under  Section  102(b) of the  Ordinance  and the election of the
      "Work Income Route"  according to Section  102(b)(1) of the Ordinance (the
      "Work  Income  Route") or the "Capital  Gains Route"  according to Section
      102(b)(2) of the Ordinance (the "Capital  Gains Route"),  or - whether the
      Options will not be granted to a trustee, as detailed in Section 102(c) of
      the  Ordinance,  and/or  (vii)  any other  matter  which is  necessary  or
      desirable for, or incidental to, the administration of the Plan.

3.4   The Committee may from time to time adopt such rules and  regulations  for
      carrying  out the Plan as it may deem  best.  No member of the Board or of
      the Committee shall be liable for any action or determination made in good
      faith with respect to the Plan or any Option granted thereunder.

3.5   The  interpretation  and construction by the Committee of any provision of
      the Plan or of any Option  thereunder shall be final and conclusive unless
      otherwise determined by the Board.

4.    ELIGIBLE GRANTEES:

4.1   Options  may be granted  (i) under a Qualified  Plan to any  officer,  key
      employee or other  employee of the  Company,  whether or not a Director of
      the  Company  ("Employee")  and  (ii)  under a  Non-Qualified  Plan to any
      Employee,  director,  consultant  or  contractor  of the Company.  For the
      purpose  of the  Plan  and  subject  to any  limitation  contained  in any
      Sub-Plan,  the term "Employee" shall include  employees of subsidiaries of
      the Company.  Anything in this Plan to the contrary  notwithstanding,  the
      authorization and implementation of all grants of Options to "Nosei Misra"
      (Office  Holders  of the  Company),  as such term is defined in the Israel
      Companies  Law,  1999  (the  "Companies  Law"),  shall be  subject  to the
      provisions of applicable law.

4.2   The grant of an Option to a Grantee hereunder,  shall neither entitle such
      Grantee to  participate,  nor  disqualify him from  participating,  in any
      other grant of options  pursuant to this Plan or any other share incentive
      or stock option plan of the Company or any of its subsidiaries.

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5.    GRANT OF OPTIONS AND ISSUANCE OF SHARES IN TRUST:

5.1   The  effective  date of the grant of an Option (the "Date of Grant") shall
      be the date the Committee  resolved to award the Option,  unless specified
      otherwise by the Committee.  The Committee shall promptly give the Grantee
      written  notice (the  "Notice of Grant") of the grant to the Grantee of an
      Option.

5.2   Anything herein to the contrary notwithstanding, Options granted under the
      Plan  may be  granted  by  the  Company  to a  trustee  designated  by the
      Committee and, with respect to 102 Options, to the trustee approved by the
      Israel  Commissioner of Income Tax (the "Trustee"),  and the Trustee shall
      hold each such Option and the Shares issued upon exercise thereof in trust
      (the  "Trust")  for the  benefit  of the  Grantee  in respect of whom such
      Option was granted (the "Beneficial Grantee").  In accordance with Section
      102 of the Ordinance and the rules and regulations promulgated thereunder,
      102 Options and any Shares  received  upon exercise of such Options may be
      locked  up and held by the  Trustee  for a period of at least (i) one year
      from the end of the tax year in which the 102 Options are granted,  if the
      Company  elects the Work Income  Route,  or (ii) two years from the end of
      the tax year in which the 102 Options are granted,  if the Company  elects
      the Capital  Gains Route,  or (iii) such other period as shall be approved
      by the Israel  Commissioner of Income Tax. All  certificates  representing
      Shares  issued to the Trustee  under the Plan shall be deposited  with the
      Trustee, and shall be held by the Trustee until such time that such Shares
      are released from the Trust as herein provided.  If under the terms of any
      Sub-Plan, Options and/or Shares are to be held in trust, the Trustee shall
      hold the same  pursuant to the Company's  instructions  from time to time.
      The Trustee  shall not use the voting  rights of any such Shares and shall
      not exercise said rights in any way whatsoever.

5.3   After the Options have vested,  the  following  provisions  shall apply in
      respect of any Options or Shares in trust, as follows:

      (a)   Upon the  written  request of any  Beneficial  Grantee,  the Trustee
            shall release from the Trust the Options granted,  and/or the Shares
            issued,  on behalf of such  Beneficial  Grantee,  by  executing  and
            delivering  to the  Company  such  instrument(s)  as the Company may
            require,  giving  due  notice  of such  release  to such  Beneficial
            Grantee,  provided,  however, that the Trustee shall not release any
            such Options  and/or Shares to such  Beneficial  Grantee  unless the
            latter,  prior to, or concurrently with, such release,  provides the
            Trustee with  evidence,  satisfactory  in form and  substance to the
            Trustee,  that all  taxes,  if any,  required  to be paid  upon such
            release have, in fact, been paid.

      (b)   Alternatively,  provided the Shares have been  registered on a stock
            exchange or admitted to trading on an electronic  securities trading
            system (such as the Nasdaq Stock  Market) or an exemption  from such
            registration  is  available,  upon the written  instructions  of the
            Beneficial  Grantee  to sell any  Shares  issued  upon  exercise  of
            Options, the Trustee shall use his reasonable efforts to effect such
            sale  and  shall  transfer  such  Shares  to the  purchaser  thereof
            concurrently  with  the  receipt,  or  after  having  made  suitable
            arrangements  to secure the payment of, the proceeds of the purchase
            price in such  transaction.  The Trustee  shall  withhold  from such
            proceeds  any and all taxes  required  to be paid in respect of such

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            sale,  shall  remit the amount so withheld  to the  appropriate  tax
            authorities  and  shall  pay the  balance  thereof  directly  to the
            Beneficial Grantee,  reporting to such Beneficial Grantee and to the
            Company the amount so withheld and paid to said tax authorities.

5.4   DIVIDEND: All Shares issued upon the exercise of Options granted under the
      Plan shall entitle the Beneficial  Grantee thereof to receive dividends in
      respect thereof.  For so long as Shares issued to the Trustee on behalf of
      a  Beneficial  Grantee  are  held  in the  Trust,  the  dividends  paid or
      distributed  in respect  thereof  shall be remitted to the Trustee for the
      benefit of such Beneficial Grantee or directly to the Beneficial  Grantee,
      as determined by the Board.

6.    RESERVED  SHARES:  The  Company has  reserved  29,760,700  authorized  but
      unissued Shares for purposes of the Plan and the Company's  previous Share
      Incentive  Plans,  subject to adjustment as provided in Section 11 hereof.
      Notwithstanding the aforesaid,  the Committee shall have full authority in
      its discretion to determine  that the Company may issue,  for the purposes
      of this Plan, previously issued Shares which are held by the Company, from
      time to time, as Dormant  Shares (as such term is defined in the Companies
      Law).  Any Shares under the Plan, in respect of which the right  hereunder
      of a Grantee to purchase the same shall for any reason  terminate,  expire
      or otherwise  cease to exist,  shall again be available  for grant through
      Options under the Plan.

7.    GRANT OF OPTIONS:

7.1    The Committee in its discretion may award to Grantees Options to purchase
       Shares available under the Plan. Options may be granted at any time after
       this Plan has been  approved by the  Shareholders  of the Company and the
       Shares  reserved  for the Plan  effectively  created,  but not later than
       December 31, 2012.

7.2    Anything herein to the contrary  notwithstanding,  Options may be granted
       under  the  Plan  prior to the date of any  approval  regarding  the Plan
       required of the  Shareholders  of the Company,  provided such Options are
       made subject to such approval.

7.3    The Notice of Grant of an Option shall state,  inter alia,  the number of
       Shares  covered  thereby,  the Vesting  Period (as  hereinafter  defined)
       thereof, the dates when it may be exercised,  the exercise price, whether
       the Option is a 102 Option and the Route the Company has elected for such
       102 Option, if applicable,  the schedule on which such Shares may be paid
       for  and  such  other  terms  and  conditions  as  the  Committee  at its
       discretion may prescribe, provided that they are consistent with (i) this
       Plan and (ii) the specific  provisions  of the  Sub-Plan  under which the
       Option is awarded.

7.4    Without  derogating  from the rights and  powers of the  Committee  under
       Section 7.3 hereof,  unless  determined  otherwise by the Committee,  the
       schedule  pursuant to which Options granted under the Plan shall vest and
       the Grantee  thereof  shall be entitled to pay for and acquire the Shares
       (the  "Vesting  Period"),  shall be such that the Options  shall be fully
       vested on the first  business day following the passing of four (4) years
       from the  Date of Grant as  follows:  12.5% of such  Options  shall  vest
       following  the  elapse  of six (6)  months  from the  Adoption  Date (the
       "ADOPTION  DATE" for the  purpose of this Plan means the Date of Grant or

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       any other date  determined by the Committee for a given grant of Options)
       and a further  6.25% of such  Options  shall vest on the last day of each
       quarter,  during fourteen (14) consecutive quarters  thereafter.  Vesting
       Period of an  Option  shall  mean,  for the  purpose  of the Plan and its
       related instruments, the period between the Date of Grant and the date on
       which the Grantee may  exercise the rights  awarded  pursuant to terms of
       the Option.

7.5    Anything  herein  to the  contrary  in  this  Plan  notwithstanding,  the
       Committee shall have full authority to determine any provisions regarding
       the  acceleration of the Vesting Period of any Option or the cancellation
       of all or any portion of any outstanding restrictions with respect to any
       Option or Share upon certain events or  occurrences,  and to include such
       provisions  in the  Notice of Grant on such terms and  conditions  as the
       Committee shall deem appropriate.

8.     EXERCISE  PRICE:  The exercise price per Share covered by an Option shall
       be as determined solely by the Committee.

9.     EXERCISE OF OPTIONS:

9.1    Options shall be exercisable  pursuant to the terms under which they were
       awarded and subject to the terms and  conditions  of this Plan and of the
       Sub-Plan under which they were awarded.

9.2    Options  granted  pursuant  to  the  Plan  shall  be  exercisable  by the
       Grantee's  signing and returning to the Company at its  principal  office
       (or,  with  respect  to  Options  held  in the  Trust,  by the  Trustee's
       delivering  upon  receipt of  written  instructions  from the  Beneficial
       Grantee),  a "Notice of Exercise"  specifying  the number of Shares to be
       purchased, accompanied by the payment therefor, and containing such other
       terms and conditions as the Committee shall prescribe from time to time.

9.3    Anything herein to the contrary  notwithstanding,  but without derogating
       from the  provisions  of Section  10  hereof,  if any Option has not been
       exercised  and the shares  covered  thereby  not paid for within ten (10)
       years after the Date of Grant (or any other relevant  period set forth in
       the Notice of Grant),  such  Option and the right to acquire  such Shares
       shall  terminate,  all  interests and rights of the Grantee in and to the
       same shall  ipso  facto  expire,  and,  in the event  that in  connection
       therewith  any Options are held in Trust as  aforesaid,  such Trust shall
       ipso facto  expire.  Such  Options  will return to the  unallocated  pool
       stated in section 6 until  instructed  by the Company that some or all of
       such Options are again to be held in trust for one or more Grantees.

9.4    Each  payment for Shares shall be in respect of a whole number of Shares,
       shall be effected in cash or by a cashier's or certified check payable to
       the order of the Company,  or such other method or payment  acceptable to
       the Company.

9.5   (a)   In the event of any Change in Control (as hereinafter defined), each
            outstanding Option not yet vested shall, unless otherwise determined
            by the Board,  automatically  vest in full so that each such  Option
            shall,  immediately  prior to the  effective  date of the  Change in
            Control,  become  fully  exercisable  for all of the  Shares  of the
            Company  underlying  such  Option.  Each such  Option  shall  remain

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            exercisable  for Shares in the Company  existing after the Change of
            Control until the original  expiration or sooner  termination of the
            Option.

      (b)   CHANGE IN CONTROL shall mean a change in ownership or control of the
            Company effected through any of the following transactions:

            (i)   the  acquisition,  directly  or  indirectly  by any  person or
                  related  group  of  persons   (other  than  Clal   Electronics
                  Industries Ltd., Koor Industries Ltd. and/or their affiliates)
                  of  beneficial  ownership of securities  possessing  more than
                  thirty-five  percent (35%) of the total combined  voting power
                  of the Company's outstanding securities;

            (ii)  a change  in the  composition  of the  Board  over a period of
                  thirty-six  (36)  consecutive  months  or  less  such  that  a
                  majority of the members of the Board ceases,  by reason of one
                  or more contested  elections to the Board,  to be comprised of
                  individuals  who either (x) have been  members of the Board of
                  Directors  continuously  since the beginning of such period or
                  (y) have been elected or nominated  for election as members of
                  the Board  during  such  period by at least a majority  of the
                  shareholders of the Company prior to such change;

            (iii) a merger or consolidation  or a similar business  combination,
                  in which securities  possessing fifty percent (50%) or more of
                  the total combined  voting power of the Company's  outstanding
                  securities are  transferred  to a person or persons  different
                  from the persons holding those securities immediately prior to
                  such transaction; or

            (iv)  the   sale,   transfer   or  other   disposition   of  all  or
                  substantially all of the Company's assets.

10.    TERMINATION OF EMPLOYMENT:

10.1   IN  GENERAL:  Subject to the  provisions  of Section  10.2  hereof,  if a
       Grantee should, for any reason,  cease to be employed by the Company or a
       subsidiary  thereof,  all of his  rights,  if any,  in respect of (i) all
       Options  theretofore  granted  to such  Grantee  under  the  Plan and not
       exercised  (to the extent  that they are  exercisable)  within the Notice
       Period,  as defined below,  and/or (ii) all Shares which may be purchased
       by such  Grantee  under the Plan and not fully paid for within the Notice
       Period,  shall  ipso  facto  terminate.  In the event of  resignation  or
       discharge  of a Grantee  from the employ of the  Company or a  subsidiary
       thereof, for the purposes of this Section 10.1, the "Notice Period" shall
       be the  period  which  ends 30 days  after the date on which the  Grantee
       actually  ceases to be employed by the Company or a  subsidiary  thereof.
       The transfer of a Grantee from the employ of the company to the employ of
       a subsidiary  of the Company,  or from the employ of a subsidiary  of the
       Company  to the  employ  of the  Company  or  another  subsidiary  of the
       Company,  shall not be deemed a termination  of  employment  for purposes
       hereof. Whether an authorized leave of absence on military,  governmental
       or public  service or  otherwise,  or  termination  of  employment  under

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       certain  conditions,  shall constitute  termination of employment for the
       purposes hereof shall be conclusively determined by the Committee.

10.2   CESSATION  OF  EMPLOYMENT  FOR  CAUSE:  Anything  herein to the  contrary
       notwithstanding,  if the  Grantee  should  cease  to be  employed  by the
       Company or a subsidiary  thereof due to (i) breach of the Grantee's  duty
       of loyalty  towards the Company,  or (ii) breach of the Grantee's duty of
       care towards the Company, or (iii) the Grantee has committed any flagrant
       criminal  offense,  or (iv) the Grantee has  committed a  fraudulent  act
       towards the Company, or (v) the Grantee caused  intentionally,  by act or
       omission, any financial damage to the Company, or (vi) if the Company may
       terminate the Grantee's  employment  without severance pay,  according to
       the Israel  Severance Pay Law, 1963, all Options  theretofore  granted to
       such  Grantee  under the Plan,  whether  vested or not,  shall ipso facto
       expire immediately and be of no legal effect.

10.3   DEATH, DISABILITY, RETIREMENT:   Anything herein to the contrary
       notwithstanding:

      (a)   If a Grantee  should  die while in the  employ of the  Company  or a
            subsidiary  thereof,  his estate, to the extent that it has acquired
            by will  and/or  by  operation  of law the  rights  of the  deceased
            Grantee in  connection  with the  purchase  of any shares  under the
            Plan, shall have, subject to the specific provisions, if any, of the
            relevant  Sub-Plan,  the right,  for a period of twelve  (12) months
            from the date of death of such  Grantee,  to exercise such rights of
            the deceased Grantee not theretofore  exercised,  to the same extent
            (but only to the extent) that the deceased  Grantee  could have done
            so during or at the end of such 12-month  period had he survived and
            had he continued his employment with the Company or its subsidiary.

      (b)   If a  Grantee,  while in the employ of the  Company or a  subsidiary
            thereof, should be incapacitated by reason of accident or illness or
            other  cause  approved  by the  Committee,  and by  virtue  of  such
            incapacity  should,  in the judgment of the  Committee,  be rendered
            unable to continue to be so employed,  the Committee  shall have the
            right in its discretion, subject to the specific provisions, if any,
            of the relevant  Sub-Plan,  to permit such Grantee (or his guardian)
            to  continue  to  enjoy  rights  under  the Plan on such  terms  and
            conditions,  with such limitations and subject to such requirements,
            as the Committee in its discretion may determine,  subject, however,
            to such specific limitations,  if any as are imposed by the relevant
            Sub-Plan.  In exercising  its judgment as  aforesaid,  the Committee
            may,  but shall not be required  to, take into  account the economic
            situation  of the  Grantee,  his  ability  to obtain  other  gainful
            employment and such other factors as the Committee in its discretion
            may deem relevant.

      (c)   If a Grantee should retire, he shall, subject to the approval of the
            Committee, continue to enjoy such rights, if any, under the Plan and
            on such terms and conditions,  with such  limitations and subject to
            such  requirements as the Committee in its discretion may determine,
            subject,  however,  to such  specific  limitations,  if any,  as are
            imposed by the relevant Sub-Plan.

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10.4   DETERMINATION  OF  DISABILITY  OR  RETIREMENT:  Whether the  cessation of
       employment of a particular  Grantee is by reason of "disability"  for the
       purposes of Section 10.3(b) hereof or by virtue of  "retirement"  for the
       purposes of Section 10.3(c) hereof,  on the one hand, or is a termination
       of employment  otherwise than by reason of such disability or retirement,
       on the other hand,  shall be finally and  conclusively  determined by the
       Committee in its absolute discretion.

10.5   DIRECTORS,  CONSULTANTS OR SERVICE PROVIDERS: In the event that a Grantee
       who is a director,  consultant,  contractor or other service  provider of
       the Company or a subsidiary thereof,  ceases, for any reason, to serve as
       such,  all  of his  rights,  if  any,  in  respect  of  (i)  all  Options
       theretofore  granted to such Grantee under the Plan and not exercised (to
       the  extent  that they are  exercisable)  within the  Notice  Period,  as
       defined  below,  and/or (ii) all Shares  which may be  purchased  by such
       Grantee  under the Plan and not fully paid for within the Notice  Period,
       shall  ipso  facto  terminate.  In the  event of  cessation  of  services
       provided by the Grantee to the Company or a subsidiary  thereof,  for the
       purposes of this Section  10.5,  the "Notice  Period" shall be the period
       which ends on:

      (a)   with regard to directors, 30 days after the date on which a director
            submits  notice of  resignation  from the Board or the date on which
            the  shareholders of the Company or the  subsidiary,  as applicable,
            remove such director from the Board; and

      (b)   with regard to consultants,  contractors or other service providers,
            30 days after the date on which the services  agreement between such
            consultant,  contractor or service provider, as applicable,  and the
            Company or the subsidiary, as applicable, terminates; or the date on
            which either of the parties to such agreement sends the other notice
            of its intention to terminate said agreement.

10.6   Notwithstanding  the  foregoing   provisions  of  this  Section  10,  the
       Committee  may  provide,  either  at the time an  Option  is  granted  or
       thereafter,  that such Option may be exercised after the periods provided
       for in this Section 10, but in no event beyond the term of the Option (as
       specified in Section 9.3 hereto).

11.    CHANGES IN CAPITALIZATION AND CORPORATE TRANSACTIONS:

11.1   DEFINITIONS:

       "SALE OF ALL OF THE COMPANY'S  ASSETS" means the sale,  transfer or other
       disposition of all or substantially all of the Company's assets.

       "MERGER"  means  a  merger  or   consolidation   or  a  similar  business
       combination, in which securities possessing more than fifty percent (50%)
       of  the  total  combined  voting  power  of  the  Company's   outstanding
       securities  are  transferred  to a person or persons  different  from the
       persons holding those securities immediately prior to such transaction.

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11.2   Subject to any action by the  shareholders of the Company  required under
       applicable law, the number of Shares covered by each outstanding  Option,
       and the number of Shares which have been  authorized  for issuance  under
       the Plan but as to which no Options  have yet been  granted or which have
       been returned to the Plan upon  cancellation  or expiration of an Option,
       as well as the price per share of Shares covered by each such outstanding
       Option, shall be proportionately adjusted for any increase or decrease in
       the number of issued Shares  resulting from a stock split,  reverse stock
       split, stock dividend,  combination or  reclassification of the Shares or
       the payment of a stock dividend (bonus shares) with respect to the Shares
       or any other increase or decrease in the number of issued Shares effected
       without receipt of consideration by the Company; provided,  however, that
       conversion  of any  convertible  securities  of the Company  shall not be
       deemed to have been "effected  without  receipt of  consideration".  Such
       adjustment  shall be made by the Committee,  whose  determination in that
       respect  shall be final,  binding  and  conclusive.  Except as  expressly
       provided  herein,  no issuance by the Company of shares of any class,  or
       securities  convertible  into shares of any class,  shall affect,  and no
       adjustment by reason thereof shall be made with respect to, the number or
       price of Shares subject to an Option.

11.3   Unless  otherwise  provided  by the Board,  in the event of the  proposed
       dissolution or liquidation of the Company,  all outstanding  Options will
       terminate  immediately prior to the consummation of such proposed action.
       In such case,  the Committee may declare that any Option shall  terminate
       as of a date fixed by the  Committee  and give each  Grantee the right to
       exercise his Option,  including  any Option which would not  otherwise be
       exercisable.

11.4   If, upon a Merger or Sale of all of the Company's  Assets (as hereinafter
       defined),  the consideration  received (the "Consideration") shall be the
       exchange of the  securities of the Company for the  securities of another
       corporation or a parent or subsidiary of such other corporation  (each, a
       "Successor  Entity"),  then,  each Option shall, at the sole and absolute
       discretion of the Committee, either:

      (a)   be  substituted  for  options to  purchase  shares of the  Successor
            Entity,  and appropriate  adjustments  shall be made in the exercise
            price per share to reflect such exchange; or

      (b)   be  assumed  by the  Successor  Entity  such  that the  Grantee  may
            exercise  the Options for such number of shares of the Other  Entity
            or amount of other securities thereof,  and appropriate  adjustments
            shall  be made in the  purchase  price  per  share to  reflect  such
            exchange.

       Anything herein to the contrary  notwithstanding,  the provisions of this
       Section 11.4 shall be subject to all the terms and provisions of the Plan
       remaining in full force and effect.

11.5   In the event that all or substantially  all of the issued and outstanding
       share  capital of the Company is to be sold (the  "Sale"),  each  Grantee
       shall be obligated to  participate in the Sale and sell his or her Shares
       and/or Options in the Company, provided, however, that each such Share or
       Option  shall be sold at a price  equal to that of any other  Share  sold
       under the Sale (minus the applicable  exercise  price),  while accounting
       for changes in such price due to the respective terms of any such Option,
       and subject to the absolute discretion of the Board.

<PAGE>

11.6   The Committee shall  determine the specific  adjustments to be made under
       this Section 11 or in any event of a change in  capitalization  or in the
       event of a corporate transaction which is not detailed in this Section 11
       (spin-off, spin-up, etc.), and its determination shall be conclusive.

12.    ASSIGNABILITY AND  TRANSFERABILITY:  No Option and no Shares  purchasable
       hereunder  which  were  not  fully  paid  for,  shall  be  assignable  or
       transferable by the Grantee;  and during the lifetime of the Grantee each
       and all of his rights to purchase  shares  hereunder shall be exercisable
       only by him. At the request of a Grantee,  Shares  purchased and paid for
       following  the  exercise  of an Option may be issued  in, or  transferred
       into,  the name of the Grantee and another  person jointly with the right
       of  survivorship,  or in the name of a bank or broker either for the sole
       account of the  Grantee or for the account of the  Grantee  jointly  with
       another person.

13.    AGREEMENT TO PURCHASE FOR INVESTMENT:

13.1   By exercise of an Option  hereunder,  the Grantee  agrees that any Shares
       purchased  thereunder  shall be purchased for  investment  and not with a
       view to their  distribution  as that  term is used in the  United  States
       Securities  Act of 1933, as amended,  unless in the opinion of counsel to
       the Company,  such  distribution is in compliance with or exempt from the
       registration and prospectus requirements of that Act; and, if required by
       the Company,  the Grantee shall sign a certificate  to that effect at the
       time or times he  exercises  such  Option.  The Company does not obligate
       itself to register the shares under the United States  Securities  Act of
       1933, as amended.

13.2   The Company may place a legend on any share certificate  delivered to the
       Grantee  to the  effect  that such  shares are  acquired  pursuant  to an
       investment  representation  without  registration  of the  Shares and are
       subject to restrictions under this Section 13.

14.    TERM AND AMENDMENT OF THE PLAN:

14.1   The Plan was adopted by the Board of  Directors of the Company on October
       7, 2002 (subject to approval by the Shareholders of the Company not later
       than December 31, 2002), and shall expire on December 31, 2012 (except as
       to Options  outstanding on that date).  Such expiration  shall not affect
       the  instructions  contained herein or in any applicable law with respect
       to the Options and Shares held in the Trust at such time of expiration.

14.2   Subject to  applicable  law, the Board of Directors  may, at any time and
       from  time to time,  terminate  or amend the Plan in any  respect  except
       that,  without the approval of the  Shareholders of the Company:  (i) the
       total  number  of Shares  which  may be issued  under the Plan may not be
       increased (except by adjustment pursuant to Section 11 hereof);  (ii) the
       provisions of Section 4 regarding eligibility may not be modified;  (iii)
       the provisions of Section 8, regarding the exercise price at which Shares
       may be offered pursuant to Option awards,  may not be modified (except by
       adjustment  pursuant to Section 11 hereof);  and (iv) the expiration date
       of the  Plan  may not be  extended.  In no event  may any  action  of the
       Company  alter or impair the rights of a Grantee,  without  his  consent,
       under any Option previously granted to him.

<PAGE>

15.    CONTINUANCE  OF  EMPLOYMENT:  Neither the Plan nor the grant of an Option
       thereunder  shall  impose any  obligation  on the Company or a subsidiary
       thereof,  to continue any Grantee in its employ,  and nothing in the Plan
       or in any Option granted  pursuant  thereto shall confer upon any Grantee
       any right to  continue  in the  employ  of the  Company  or a  subsidiary
       thereof, or restrict the right of the Company or a subsidiary thereof, to
       terminate such employment at any time.

16.    GOVERNING  LAW:  The Plan and all  instruments  issued  thereunder  or in
       connection therewith, shall be governed by, and interpreted in accordance
       with, the laws of the State of Israel.

17.    APPLICATION OF FUNDS: The proceeds  received by the Company from the sale
       of Shares  pursuant  to Options  granted  under the Plan will be used for
       general corporate purposes of the Company or any subsidiary thereof.

18.    TAX CONSEQUENCES:  Any tax consequences and any obligations regarding any
       compulsory  payments  arising  from the grant or  exercise of any Option,
       from the payment for, or the  subsequent  disposition  of, Shares covered
       thereby or from any other  event or act (of the  Company or the  Grantee)
       hereunder, shall be borne solely by the Grantee. Furthermore, the Grantee
       shall  indemnify  the  Company  and the  Trustee  and hold them  harmless
       against and from any and all liability for any such tax  consequences  or
       compulsory payments, or interest or penalty thereon,  including,  without
       limitation, liabilities relating to the necessity to withhold, or to have
       withheld, any such tax from any payment made to the Grantee.

19.    MULTIPLE  AGREEMENTS:  The terms of each  Option  may  differ  from other
       Options  granted  under the Plan at the same time,  or at any other time.
       The  Committee  may also grant  more than one  Option to a given  Grantee
       during the term of the Plan,  either in addition  to, or in  substitution
       for, one or more Options previously granted to that Grantee. The grant of
       multiple Options may be evidenced by a single Notice of Grant or multiple
       Notices of Grant, as determined by the Committee.

20.    NON-EXCLUSIVITY  OF THE PLAN:  The  adoption of the Plan by the Board and
       the  Shareholders  of the Company  shall not be  construed  as  amending,
       modifying or rescinding any previously approved incentive  arrangement or
       as  creating  any   limitations  on  the  power  of  the  Board  and  the
       Shareholders of the Company to adopt other incentive arrangements as they
       may deem desirable,  including, without limitation, the granting of stock
       options  otherwise  than  under the Plan,  and such  arrangements  may be
       either applicable generally or only in specific cases.EXHIBIT 10.6

         THIS AGREEMENT dated effective the 7th day of July 2002,

BETWEEN:

         HINTON SYNDICATE, a syndicate formed by Richard Ewing ("Ewing"),  James
         Smith  ("Smith")  and Robert  Wagner  ("Wagner") to acquire and explore
         mineral  claims in the Yukon  Territory  (Ewing,  Smith and  Wagner are
         hereinafter collectively referred to as "Hinton")

                                     - and -

         YUKON GOLD CORP., a corporation  formed pursuant to the laws of Ontario
("Yukon Gold")

AND REFERENCED AS THE:

                           HINTON/YUKON GOLD AGREEMENT

WITNESSETH THAT:

         WHEREAS Hinton owns certain  unpatented,  mineral properties located in
the area of Mt. Hinton in the Mayo Mining District of the Yukon Territory, which
mineral  properties  are more  particularly  described  in Schedule A,  attached
hereto, and are hereinafter collectively referred to as the "Property";

         AND  WHEREAS  Smith has  assigned a portion of his  interest to another
party the  details of which and the  percentage  interest  held by each party is
described in Schedule C attached hereto;

         AND  WHEREAS  Hinton has agreed that Yukon Gold may acquire an interest
in  the  Property,   subject  to  the  terms  of  this  written  agreement  (the
"Agreement");

         NOW,  THEREFORE,  the parties hereby do evidence  their  agreement with
respect to the  Property as follows,  in  consideration  of the premises and the
mutual covenants hereinafter set out.

1.       REPRESENTATIONS AND WARRANTIES

1.1      YUKON GOLD'S REPRESENTATIONS AND WARRANTIES

                  Yukon Gold hereby represents and warrants to Hinton that:

         (a)      it is a  company  duly  incorporated  under  the  laws  of the
                  Province  of  Ontario,  and it is duly  organized  and validly
                  subsisting  under  such  laws  and is  qualified  to  carry on
                  business in the Yukon Territory;

<PAGE>

                                       -2-

         (b)      it has the power and  capacity to carry on its business and to
                  enter into this  Agreement  and any  agreement  or  instrument
                  referred to or contemplated by this Agreement and to carry out
                  and perform all of its  obligations  and duties  hereunder and
                  thereunder;

         (c)      it has duly  obtained all necessary  corporate  authorizations
                  for the execution,  delivery and performance of this Agreement
                  and  such   execution,   delivery  and   performance  and  the
                  consummation of the transactions  herein contemplated will not
                  contravene any  applicable  laws and will not conflict with or
                  result in any breach of any covenants or agreements  contained
                  in, or constitute a default  under,  or result in the creation
                  of any encumbrance, lien or charge under the provisions of its
                  constating   documents  or  any  shareholders'  or  directors'
                  resolution  or any  indenture,  agreement or other  instrument
                  whatsoever  to  which it is a party or by which it is bound or
                  to which it or the Property may be subject; and

         (d)      this  Agreement has been duly executed and delivered by it and
                  is valid and binding upon it in accordance with its terms.

1.2      HINTON'S REPRESENTATIONS AND WARRANTIES

         Each of Ewing, Smith and Wagner, on his own behalf and not on behalf of
any of the others, hereby represents and warrants to Yukon Gold that:

         (a)      he has the right, power,  authority and capacity to enter into
                  this Agreement and any agreement or instrument  referred to or
                  contemplated  by this  Agreement  and to carry out and perform
                  all of his obligations and duties hereunder and thereunder;

         (b)      this Agreement has been duly executed and delivered by him and
                  is valid and binding upon him in accordance with its terms;

         (c)      (i)      Ewing and Wagner are the  beneficial  and recorded or
                           registered owners of a 100% right, title and interest
                           in and  to  the  mineral  properties  comprising  the
                           Property  and  no  person  has  any   proprietary  or
                           possessory interest in the Property other than Ewing,
                           Smith and Wagner, and

                  (ii)     no person has any entitlement to any royalty or other
                           payment  in the  nature  of  rent or  royalty  on any
                           minerals,  metals or  concentrates  or any other such
                           products  removed from the Property,  except as shown
                           in Schedule A, attached hereto;

         (d)      the Property is properly and accurately  described in Schedule
                  A,  attached  hereto,  and,  each  of  the  unpatented  claims
                  embraced  within  the  Property  (the  "Claims")  (A) has been
                  properly  located and recorded in the Yukon  Territory and (B)
                  is in good standing under all applicable  laws and regulations
                  with respect to the  incurrence  of any  expenditures  and the
                  payment  of any  monies or taxes  and will  remain so until at
                  least the date set out as the expiry date  opposite each claim
                  on Schedule A;

<PAGE>

                                      -3-

         (e)      the  Property  is free and  clear of all  liens,  charges  and
                  encumbrances,  recorded  or,  to the best of his  information,
                  knowledge and belief, unrecorded;

         (f)      there are no outstanding  or, to the best of his  information,
                  knowledge and belief,  proposed,  threatened  or  contemplated
                  actions or suits which,  if successful,  would or could affect
                  the market  value or  ownership of the Property or any portion
                  thereof;

         (g)      he is not a non-resident  of Canada for the purpose of section
                  116 of the Income Tax Act (Canada);

         (h)      conditions  on and relating to the Property are in  compliance
                  with all applicable  laws,  regulations and orders relating to
                  environmental  matters,  including,  but not limited to, waste
                  disposal and storage;

         (i)      there are no outstanding work orders or actions required to be
                  taken  relating  to  the  condition  of the  Property,  or any
                  operations thereon, as of the date hereof;

         (j)      Hinton has made available to Yukon Gold all information in its
                  possession or control relating to work done on or with respect
                  to the Property;

1.3       DURATION AND EFFECT OF REPRESENTATIONS AND WARRANTIES

         (a)      Ewing,  Smith and Wagner each acknowledge and agree that Yukon
                  Gold  is  entering  into  this  Agreement   relying  upon  the
                  representations  and  warranties  made  to it  herein  and the
                  correctness  of each such  representation  and  warranty  is a
                  condition   upon  which  Yukon  Gold  is  entering  into  this
                  Agreement,  each of which conditions may be waived in whole or
                  in part solely by Yukon Gold and all such  representations and
                  warranties   shall   survive  the   execution,   delivery  and
                  termination of this Agreement, the acquisition of any interest
                  in the Property by a party and the commencement and completion
                  of any of the transactions contemplated herein.

         (b)      Yukon Gold  acknowledges  and  agrees  that  Ewing,  Smith and
                  Wagner are each entering into this Agreement  relying upon the
                  representations  and  warranties  made to them  herein and the
                  correctness  of each such  representation  and  warranty  is a
                  condition  upon  which  each of  Ewing,  Smith  and  Wagner is
                  entering into this Agreement,  each of which conditions may be
                  waived in whole or in part solely by an  instrument in writing
                  signed  by  each of  Ewing,  Smith  and  Wagner  and all  such
                  representations  and  warranties  shall survive the execution,
                  delivery and termination of this Agreement, the acquisition of
                  any interest in the  Property by a party and the  commencement
                  and completion of any of the transactions contemplated herein.

         (c)      Ewing,  Smith and Wagner each jointly and  severally  agree to
                  indemnify  and hold  harmless  Yukon  Gold  from  all  claims,
                  actions,  damages and losses  arising out of or in  connection

<PAGE>
                                      -4-

                  with a breach of any representation or warranty made by Ewing,
                  Smith and Wagner contained herein.

         (d)      Yukon  Gold  agrees to  indemnify  and hold  harmless  each of
                  Ewing, Smith and Wagner from all claims, actions,  damages and
                  losses  arising out of or in  connection  with a breach of any
                  representation  or  warranty  made  by  Yukon  Gold  contained
                  herein.

2.       OPTION

2.1      GRANT OF OPTION

         Hinton  hereby  grants to Yukon Gold the sole and  exclusive  right and
option to acquire up to an undivided 75% (the "Earned  Interest")  right,  title
and interest in and to the Property (the "Option") in accordance  with the terms
of this Agreement.

2.2      TERMS OF OPTION

         To exercise the Option and thereby earn an undivided  75% right,  title
and interest in and to the Property,  Yukon Gold shall incur costs in respect of
the Property and its exploration and development ("Costs"),  or related thereto,
aggregating $5,600,000, in accordance with the following schedule:

     PROPERTY PAYMENTS

         a.  On execution of this Agreement                           $   25,000
         b.  On the first anniversary of this Agreement               $   75,000
         c.  On the second anniversary of this Agreement              $  150,000
         d.  On the third anniversary of this Agreement               $  150,000
         e.  On the fourth anniversary of this Agreement              $  200,000
                                             TOTAL                    $  600,000

     WORK PROGRAM

         a.  During  2002$  150,000
         b.  During  2003$  250,000
         c.  During  2004$  325,000
         d.  During 2005$1,500,000
         e.  During 2006                                              $2,775,000
                                             TOTAL                    $5,000,000

     EARNED INTEREST

            Yukon Gold shall have earned a:
            25% interest upon the Work Program expenditures of $1,500,000
            50% interest upon the Work Program expenditures of $2,500,000
            75% interest upon the Work Program expenditures of $5,000,000

<PAGE>
                                      -5-

provided,  however  that:  (a) funding for each  calendar  year Work  Program is
available  by July 7 in 2004 and by May 15 of the  following  calendar  years in
which the expenditure is to be incurred;  (b) Costs shall be deemed to have been
incurred  when Yukon  Gold has  contractually  obligated  itself to pay for such
Costs or such Costs have been paid,  whichever  should  first  occur;  (c) Costs
incurred in a particular period that exceed the Costs required to be incurred in
order to maintain the Option in good  standing  beyond such period (the "Prepaid
Costs")  shall be credited  as Costs  incurred  in the next  subsequent  period,
provided  that Yukon  Gold may,  at any time,  increase  its  Prepaid  Costs and
accelerate  its interest  earned;  (d) that in  calculating  the amount of Costs
incurred,  Yukon Gold shall be entitled to include therein an overhead fee which
shall equal 10% of the first $250,000 and 5% for additional  Costs over $250,000
incurred in the exploration and development of the Property,  or related thereto
(other than general corporate  overhead costs); and (e) each of Ewing, Smith and
Wagner may, subject to receipt of all necessary regulatory approvals,  by notice
to Yukon Gold, elect to receive their pro-rata portion of the Property  Payments
in  respect  of a  particular  year in  common  shares  of  Yukon  Gold  (or its
successor)  issued at a price equal to 10% less than the market  price as of the
date of receipt by Yukon Gold of the notice given hereunder.

         Costs shall  include  cost of work on the Property to  accomplish  site
work,  such  as  labour,  materials,   consultants,  workers  on  the  Property,
sub-contracts, room and board for site personnel, but shall exclude travel costs
to the Yukon,  costs of non-working  visiting  consultants and public relations.
The initial proposed work programme will be submitted for approval by Yukon Gold
to Hinton prior to the execution of this Agreement.

2.3      TITLE

         (a)      The parties hereto  acknowledge that title to the Property has
                  been transferred to Yukon Gold and that additional claims have
                  been included in the Property in accordance  with Article 5.4.
                  The  Property  now  consists of the claims set out in Schedule
                  A1.

         (b)      Subject  to the  foregoing,  each  of  the  parties  shall  be
                  entitled to record and register  evidence of its right,  title
                  and interest in and to the Property or any portion thereof, at
                  any time  and from  time to time,  and each  party  agrees  to
                  execute and deliver all necessary documents to facilitate such
                  recordings and registrations.

2.4      DEFAULT AND TERMINATION

         (a)      All costs  specified  in section  2.2 hereof may or may not be
                  incurred  by  Yukon  Gold,  at its  option  and  in  its  sole
                  discretion.  Subject to section 2.4(d), should Yukon Gold fail
                  to incur any of the costs  specified in section 2.2 within the
                  specified   corresponding   periods,   this  Agreement   shall
                  terminate.

         (b)      This Agreement may be terminated by Yukon Gold, at any time by
                  Yukon Gold giving notice to Hinton to that effect and, in such
                  event,  the  termination  shall be  effective on the date such
                  notice is received by Hinton.

         (c)      Should this Agreement be terminated pursuant to the provisions
                  of this  section  2.4:  (i) Yukon Gold shall retain the right,
                  title or interest in or to the Earned  Interest  HELD by Yukon
                  gold as of the date of termination, provided that if when this

<PAGE>
                                      -6-

                  Agreement is  terminated  Yukon Gold holds a 50% right,  title
                  and  interest  in or to  the  Property,  Yukon  Gold's  Earned
                  Interest in the  Property  shall  automatically  be reduced to
                  45%;  (ii) Yukon Gold shall  cause to be  executed,  within 60
                  days  of  such  termination,   any  documentation   reasonably
                  requested by Hinton in order to evidence the forfeiture of its
                  unearned right, title and interest in and to the Property and,
                  if applicable, to retransfer the Property to Hinton to be held
                  in  accordance  with  Section 2.3 (a);  (iii) Yukon Gold shall
                  advance  sufficient  funds to governmental  authorities,  file
                  sufficient  work for assessment work credit and take all other
                  reasonable  steps  to  ensure  that  the  Property  is in good
                  standing for a period of at least 1 year following the date of
                  such  termination;  (iv)  Yukon  Gold  shall  ensure  that the
                  Property  is  free  and  clear  of  all  liens,   charges  and
                  encumbrances  arising from its activities  hereunder;  and (v)
                  Yukon Gold shall  have the right to remove  from the  Property
                  all machinery, equipment, buildings,  structures, supplies and
                  other  property  placed  thereon  by Yukon  Gold or its agents
                  within a period of twelve  (12) months  following  the date of
                  such  termination,  provided,  however,  that Yukon Gold shall
                  remove any such property at Yukon Gold's cost if  specifically
                  requested by Hinton within such twelve (12) month period.

         (d)      In the event Yukon Gold: (i) holds at least a 25% right, title
                  and interest in the Property;  (ii) is unable to meet its next
                  year's payments and  expenditures as set out in section 2.2 of
                  this  Agreement;  and (iii) has not  previously  extended  its
                  obligations  under  section 2.2 of the  Agreement  pursuant to
                  this  section  2.4(d),  Yukon  Gold may  postpone  each of the
                  remaining  years'  payments  set  out in  section  2.2 of this
                  Agreement by a period of time not to exceed one year by giving
                  notice to Hinton to such effect.

2.5      EXCLUSION OF CLAIMS

         (a)      During the Option  Period,  should  Yukon Gold wish to abandon
                  or, with  respect to a Claim,  held by Hinton or Yukon Gold in
                  trust pursuant to section 2.3(a),  exclude from the definition
                  of Property  any of the Claims,  then  comprising  part of the
                  Property (the "Abandoned Property"),  the following provisions
                  shall  apply.  Yukon Gold shall give  Hinton 30 days notice of
                  its  intention to abandon or exclude such  property and Hinton
                  may thereafter  give notice to Yukon Gold electing to have all
                  of  Yukon  Gold's  right,  title  and  interest  in and to the
                  Abandoned Property  transferred to it. Should Hinton give such
                  notice to Yukon Gold, Yukon Gold shall forthwith  execute,  at
                  its cost, any  documentation  necessary to transfer all of its
                  right,  title and interest in and to the Abandoned Property to
                  Hinton and Yukon Gold shall take such action as is  reasonably
                  necessary,  at its cost, to ensure that the Abandoned Property
                  will remain in good  standing  for a period of at least 1 year
                  from the date of Yukon  Gold's  notice.  If Hinton does not so
                  elect or fails to respond to Yukon Gold's  notice  within such
                  30 day  period,  then  Yukon Gold may  abandon or exclude  the
                  Abandoned Property.

         (b)      Subsequent  to the  abandonment,  transfer or  exclusion of an
                  Abandoned  Property,  or  interest  therein,  pursuant to this
                  section 2.5, the  definition  of Property  hereunder  shall no
                  longer  include the  Abandoned  Property  and Yukon Gold shall

<PAGE>
                                      -7-

                  have no further  obligations or responsibilities in respect of
                  the  Abandoned  Property,  except  for those  obligations  and
                  responsibilities  in respect of environmental laws and arising
                  in respect of operations conducted by Yukon Gold prior to such
                  abandonment,  transfer or  exclusion  irrespective  of whether
                  costs in  respect  of such  obligations  and  responsibilities
                  accrued  before  or  after  such   abandonment,   transfer  or
                  exclusion.

2.6      OPTION PERIOD RIGHTS AND OBLIGATIONS

         (a)      During the Option  Period:  (i) Yukon Gold shall  perform  and
                  file assessment work necessary to maintain, and otherwise keep
                  the Property in good standing,  provided  however,  that Yukon
                  Gold shall file all drilling and other qualified  expenditures
                  for  assessment  work credit even if not necessary to keep the
                  Property in good  standing;  (ii) Yukon Gold shall be entitled
                  to  all  income  and  other  tax  deductions,  allowances  and
                  credits,  and  to  all  incentive  grants  or  other  benefits
                  available  pursuant  to  exploration   incentive  programs  or
                  similar   programs,   insofar   as  such   work,   deductions,
                  allowances,   credits,  grants  and  benefits  relate  to  the
                  Property;  (iii) Yukon Gold shall have the exclusive  right to
                  conduct  exploration and development work on the Property with
                  the right to remove mineral samples therefrom,  including bulk
                  mineral samples,  for the purpose of assays and tests provided
                  that any excess  revenue from the  disposition of such samples
                  shall be shared by Hinton as to 25% and Yukon  Gold as to 75%;
                  (iv)Yukon  Gold  shall  have the  right to  erect,  bring  and
                  install all such buildings,  machinery, equipment and supplies
                  on the Property as Yukon Gold shall deem necessary and proper;
                  and (v) all work done by Yukon Gold on the  Property  shall be
                  done in accordance with good mining practice and in compliance
                  with the applicable laws of the Yukon Territory.

         (b)      During the Option Period:  (i) Hinton shall have access to the
                  Property  and to the records of Yukon  Gold,  at its sole risk
                  and expense,  to review work being carried out on the Property
                  or to review  results  obtained  from work  carried out on the
                  Property,   as  the  case  may  be,  provided  however,   that
                  reasonable  notice  is given and that  such  access  shall not
                  unduly interfere with or disrupt the activities of Yukon Gold;
                  (ii)  Ewing,  Smith and Wagner  shall be entitled to carry out
                  any work  required  on the  Property  if the  price  for their
                  proposed work is  competitive  to that typical in the industry
                  for  work  done on  properties  substantially  the same as the
                  Property;  (iii)  Equipment  work  provided  by Ewing is to be
                  based on Third  Party  Equipment  Rental  Rates  for the Yukon
                  Territory  Government,  with allowance for off-road work (i.e.
                  mountain)  and  this  entitlement  shall  continue  after  the
                  formation of the joint venture;  (iv) Yukon Gold shall provide
                  Hinton  with  monthly  reports  indicating  the status of work
                  being conducted on the Property, along with an estimate of the
                  costs incurred during such month, provided, however, that such
                  reports  shall not be required  during those  periods in which
                  there is no work being  conducted in respect of the  Property;
                  and (v) Yukon Gold shall  provide  Hinton with annual  reports
                  disclosing any significant  technical data learned or obtained
                  in connection with work in respect of the Property, as well as
                  a breakdown  of the costs  incurred in carrying out such work,
                  provided,  however,  that annual  reports shall be provided in

<PAGE>
                                      -8-

                  respect of a calendar year on or before the first day of April
                  following the end of such calendar year.

         (c)      Yukon Gold shall  indemnify  and save  harmless each of Ewing,
                  Smith and Wagner from and against all suits, claims,  demands,
                  losses and  expenses  which they may each  suffer by reason of
                  any act or thing done or omitted to be done  during the Option
                  Period  by or on  behalf  of  Yukon  Gold in  relation  to its
                  exploration  and  development   operations  on  the  Property,
                  including any  consequences  arising from the  non-payment  of
                  workmen and wage earners  employed by it or its contractors on
                  or in  connection  with the Property or suppliers of materials
                  purchased in connection  therewith.  During the Option Period,
                  Yukon Gold shall keep the Property free from claims for liens,
                  charges and encumbrances  and, in the event of a lien,  charge
                  or encumbrance  being recorded,  it will on this fact becoming
                  known to it  forthwith  take  proceedings  to have such  lien,
                  charge or encumbrance removed as soon as possible.  Yukon Gold
                  may,  however,  dispute and contest any suit,  claim,  demand,
                  loss or  expense  which  forms the basis of a  recorded  lien,
                  charge or encumbrance.

2.7      EXERCISE OF OPTION

         (a)      If Yukon Gold should incur payments in respect of the Property
                  and  exploration  and  development  costs thereon  aggregating
                  $5,600,000,  in accordance  with section 2.2, Yukon Gold shall
                  have  exercised the Option and thereby earned an undivided 75%
                  right,  title and interest in and to the Property.  Yukon Gold
                  may thereupon  give notice to Hinton that it has exercised the
                  Option. Yukon Gold and Hinton shall be deemed to have formed a
                  joint   venture   (the  "Joint   Venture")   for  the  further
                  exploration  and  development of the Property,  which shall be
                  governed by Article 3 of this  Agreement  upon the exercise of
                  the Option.

         (b)      Yukon  Gold  Shall  be  entitled,  at any  time  prior  to the
                  formation of the Joint  Venture,  to put forward a proposal to
                  put the Property  into  production (a  "Production  Decision")
                  provided  (i)  such  Production  Decision  is  supported  by a
                  feasibility  study  prepared by an independent  engineer;  and
                  (ii) the  operation of the portion of the Property  covered by
                  the  Production  Decision shall continue as a Joint Venture as
                  set out in  section  3; and  (iii)  Yukon  Gold  shall  not be
                  relieved  of  continuing  to incur  Costs in  accordance  with
                  section 2.2 with Work  Programs  being carried out on areas of
                  the Property that are not included in the Production Decision;
                  and (iv) Yukon Gold and Hinton  shall  share  costs and income
                  from productions as to 75% Yukon Gold and 25% Hinton.

                  Provided  Hinton  may  elect  not to  contribute  to the costs
                  related to the Production Decision and Hinton shall not suffer
                  and dilution subject to:

                  (i)      Yukon  Gold  shall be  entitled  to apply  the  costs
                           incurred  on  Hinton's  behalf to the  balance of any
                           amount it is  required  to spend on Work  Programs in
                           section 2.2; OR

                  (ii)     Hinton may elect to allow Yukon Gold to recover  150%
                           of the  cost  funded  on  Hinton's  behalf  from  the
                           production  revenue  before  Hinton  is  entitled  to

<PAGE>
                                      -9-

                           receive  its share of  production  revenue  and Yukon
                           Gold shall  continue to incur the Work Program  costs
                           in accordance with section 2.2.

                  (iii)    Once  Yukon Gold has paid or  incurred  all the Costs
                           Hinton  shall  be  subject  to all of the  terms  and
                           conditions of section 3.

         (c)      Upon the Joint Venture  being  formed,  each party shall have,
                  subject  to the  terms of this  Agreement  and its  respective
                  undivided  right,  title and  interest in and to the  Property
                  (the  "Participating  Interest"),  the right to participate in
                  the Joint  Venture and the  corresponding  obligation  to fund
                  further  exploration  and  development  of the  Property.  The
                  Participating  Interests,  at the time of the formation of the
                  Joint Venture, shall be:

                               Yukon Gold           75%, and
                               Hinton               25%,

                  provided,  however,  that should  Yukon Gold incur and pay for
                  costs in  respect of the Work  Programs  on the  Property,  or
                  related thereto,  prior to the formation of the Joint Venture,
                  in excess of  $5,000,000,  then Yukon Gold may give  notice to
                  Hinton to such effect  prior to or upon the  formation  of the
                  Joint  Venture  and,  upon  receipt of such  notice by Hinton,
                  Yukon Gold's deemed costs  pursuant to section 3.4(d) shall be
                  equal to Yukon Gold's  incurred  costs and,  within 90 days of
                  Hinton's  receipt of such  notice,  Hinton  shall  provide the
                  funds  required  (the  "Required  Funds")  so that  when:  the
                  Required  Funds are added to its deemed costs of $1,666,666 as
                  set forth in section 3.4(d) (such result hereinafter  referred
                  to as the  "Total"),  the  Total  is  divided  by the  product
                  obtained  when Yukon Gold's  deemed costs  pursuant to section
                  2.7(a)  are  divided by 0.75 (such  result  hereinafter  being
                  referred to as the "Total Division") and the Total Division is
                  expressed as a percentage (such result hereinafter referred to
                  as the "Resulting  Percentage"),  the Resulting  Percentage is
                  25% and, in such event,  Hinton's  deemed costs shall be equal
                  to the product  obtained when the Required  Funds are added to
                  $1,666,666;  otherwise  Hinton shall be subject to dilution in
                  accordance with the provisions of section 3.4(d).

3.       THE JOINT VENTURE

3.1      JOINT VENTURE RELATIONSHIP

         Except as  provided  in this  Agreement,  the  parties  shall share all
benefits,  costs, expenses,  liabilities and obligations in respect of the Joint
Venture severally in proportion to their respective  Participating  Interests at
the time that such benefits,  costs, expenses,  liabilities and obligations were
earned,  received or  incurred,  as the case may be. The parties  agree that the
relationship  between them shall be governed  solely by the  provisions  of this
Agreement.

3.2      JOINT VENTURE COMMITTEE

         (a)      Upon formation of the Joint Venture, a joint venture committee
                  shall   be   forthwith    established    consisting   of   one
                  representative  of each of Yukon Gold and Hinton  (the  "Joint
                  Venture  Committee").  Each of the parties shall also nominate

<PAGE>
                                      -10-

                  an alternate representative to the Joint Venture Committee who
                  shall   represent   it  in  the   absence   of  an   appointed
                  representative.  Either of the  parties may give notice to the
                  other  party and  replace  any of its  representatives  to the
                  Joint  Venture   Committee,   from  time  to  time,  and  such
                  replacement  shall  be  effective  on the  date of such  other
                  party's receipt of such notice.

         (b)      The Joint Venture Committee shall be responsible for approving
                  work plans and budgets  (the "Work Plans" and  "Budgets")  and
                  shall  determine  the general  policies  and  direction  to be
                  adopted by the  operator  (the  "Operator")  in the conduct of
                  operations  in  respect  to the  Property.  Each Work Plan and
                  Budget  shall be prepared in respect of a period of time which
                  is equal to or less than one year,  shall  contain an itemized
                  projection  of  costs to be  incurred  thereunder,  and  shall
                  detail the  nature of the work to be  performed  thereby,  the
                  expected schedule of  implementation  thereof and the expected
                  schedule  of  payments  thereunder.   The  Operator  shall  be
                  entitled to submit,  and the Joint Venture  Committee shall be
                  entitled  to  approve,  phased Work Plans and Budgets in which
                  the  implementation  of  successive  phases shall be dependent
                  upon the results of previous phases.

         (c)      The Joint Venture Committee shall meet on 20 days notice given
                  by the Operator and on 30 days notice given by the party which
                  is not the Operator (the "Non-Operator") and the Joint Venture
                  Committee  shall meet at least once in each calendar year. Any
                  notice in respect of such meeting  shall  include an agenda of
                  items to be  discussed  at the  meeting.  Upon receipt of such
                  notice, a party may give notice to the other party of items to
                  be added to the agenda,  provided,  however,  that an item may
                  not be added to the  agenda,  unless  such  notice to add such
                  item is  given  on or  before  the  tenth  day  prior  to such
                  meeting. Except by a unanimous vote of both parties, the Joint
                  Venture  Committee  shall not decide upon matters at a meeting
                  not included in the agenda for such meeting.

         (d)      Decisions of the Joint Venture  Committee shall be by majority
                  vote. Each party's  representative shall be entitled to a vote
                  equal to the  percentage  Participating  Interest held by such
                  party.  In the event of a deadlocked  vote, the Operator shall
                  cast a deciding vote.

3.3      OPERATOR

         (a)      Yukon  Gold  shall  be  the  Operator  of  the  Property  upon
                  formation of the Joint  Venture.  After Yukon Gold has had its
                  full opportunity to earn the 75% interest, if the Non-Operator
                  holds a greater  Participating  Interest than the Operator, it
                  shall be entitled to give notice to the  Operator  and replace
                  the Operator,  provided,  however, that such replacement shall
                  not be effective  until the 30th day  following the receipt of
                  such notice by the Operator.

         (b)      The Operator shall have exclusive charge of all operations and
                  shall conduct such  operations  in accordance  with Work Plans
                  and Budgets approved by the Joint Venture Committee,  provided
                  that  Ewing,  Smith and Wagner  shall be entitled to carry out
                  any work  required  on the  Property  if the  price  for their
                  proposed work is  competitive  to that typical in the industry

<PAGE>
                                      -11-

                  for  work  done on  properties  substantially  the same as the
                  Property.  All work done by the Operator on the Property shall
                  be  done  in  accordance  with  good  mining  practice  and in
                  compliance with all applicable laws and regulations.

         (c)      (i)      The  Operator  shall be  entitled  to include in each
                           Work Plan and Budget and charge to the Joint  Venture
                           Account an overhead  fee for the  performance  of its
                           obligations   and  the  discharge  of  its  functions
                           hereunder,  which  shall  equal  5% of all  costs  in
                           respect of the Property.

                  (ii)     In the event that commercial  production is commenced
                           upon  the   Property,   the  overhead  fee  shall  be
                           negotiated  by  the  parties  based  upon  the  usual
                           business practice for an operating mine, it being the
                           intention  of the parties  that the  Operator  should
                           neither  procure  a  profit  nor  suffer  a loss as a
                           result of its acting as Operator hereunder.

         (d)      The Operator  shall submit Work Plans and Budgets to the Joint
                  Venture  Committee for approval  within 90 days  subsequent to
                  the   formation  of  the  Joint  Venture  or  within  90  days
                  subsequent to the  expiration of the Work Plan and Budget last
                  in effect,  as the case may be. If the Joint Venture Committee
                  should  fail to approve  the Work Plan and Budget  proposed by
                  the Operator or the Operator should fail to submit a Work Plan
                  and Budget within such 90 day time period,  then a party which
                  is not the  Operator  may,  not more than 60 days  thereafter,
                  propose  a Work  Plan  and  Budget  for the  ensuing  year for
                  consideration  and  approval by the Joint  Venture  Committee.
                  Should the Joint Venture  Committee  approve the Work Plan and
                  Budget proposed by such party, then the party which is not the
                  Operator  shall  temporarily  replace  the  Operator  for  the
                  purpose  of  forthwith  implementing  and  carrying  out  such
                  approved Work Plan and Budget.

         (e)      A party that  temporarily  replaces the  Operator  pursuant to
                  section 3.3(d) (the "Temporary  Operator")  shall be deemed to
                  be the  Operator  during  the  currency  of the Work  Plan and
                  Budget in respect  of which the  Temporary  Operator  is first
                  operating  (the  "Temporary  Operator's  First  Work  Plan and
                  Budget")  and  shall  perform  all of the  obligations  of the
                  Operator  during such period,  including the obligation of the
                  Operator to submit a Work Plan and Budget to the Joint Venture
                  Committee  for  approval  within  90  days  subsequent  to the
                  expiration  of the  Temporary  Operator's  First Work Plan and
                  Budget. The provisions of this section 3.3 shall apply mutatis
                  mutandis  after the  expiration  of the  Temporary  Operator's
                  First  Work  Plan  and  Budget  with  the  Temporary  Operator
                  continuing  to  act  as  the  Operator   unless   replaced  in
                  accordance with the provisions of this section 3.3.

         (f)      The  Operator  shall  provide the  Non-Operator  with  monthly
                  reports  during  the  term of this  Agreement  indicating  the
                  status of the work being conducted on the Property,  provided,
                  however,  that such reports shall not be required during those
                  periods in which there is no work being  conducted  in respect
                  of the Property.  The Operator shall provide the  Non-Operator
                  with reports within 70 days subsequent to the end of each Work

<PAGE>
                                      -12-

                  Plan summarizing  significant  information acquired or learned
                  as a result of such Work Plan.  Such reports  shall  include a
                  statement  of costs  incurred  and monies  spent in respect of
                  such Work  Plan.  In the  event  that the  Operator  receives,
                  obtains  or  discovers  any  information  in  respect  of  the
                  Property  that  would  significantly  affect  the value of the
                  Property, such information shall be forthwith disclosed to the
                  Non-Operator. After the commencement of commercial production,
                  the  Operator  shall  provide the  Non-Operator  with  monthly
                  statements  of ore and  minerals,  if any,  produced  from the
                  Property  together with ores or minerals,  if any, in storage.
                  Such  reports  shall  indicate  the  share of  production  and
                  production in storage attributable to each party.

         (g)      The Non-Operator  shall have access to the Property and to the
                  records  of the  Operator,  at its sole risk and  expense,  to
                  review  work being  carried  out on the  Property or to review
                  results obtained from work carried out on the Property, as the
                  case may be,  provided,  however,  that  reasonable  notice is
                  given to the  Operator  and that such access  shall not unduly
                  interfere with or disrupt the activities of the Operator.

         (h)      The Operator shall pay all fees,  annual rentals,  assessments
                  and  taxes,  other  than  income  taxes,  in  respect  of  the
                  Property,  which shall be accounted  for in the Work Plans and
                  Budgets,  and shall keep the Property in good  standing,  free
                  and clear of all liens,  charges and encumbrances arising from
                  its activities and shall take and continue such proceedings as
                  are  reasonable  in the  circumstances  to remove  any  liens,
                  charges and encumbrances not arising from its activities.  The
                  Operator   shall  also   maintain  such   insurance   coverage
                  protecting  the  parties  from  third  party  claims as may be
                  required by the Joint Venture  Committee,  provided,  however,
                  that should the Joint  Venture  Committee  fail to require the
                  Operator to maintain  any  particular  insurance  coverage the
                  Operator shall maintain  insurance coverage in accordance with
                  normal industry standards and practice  specifying the parties
                  as named insured.

         (i)      The  Non-Operator   shall  indemnify  and  save  harmless  the
                  Operator  from  and  against  a  portion  of all  third  party
                  liabilities,  in accordance with its Participating Interest at
                  the time such liabilities are incurred.  Such  indemnification
                  and saving  harmless of the Operator  shall not be provided in
                  respect  of  losses or  damages  arising  from the  Operator's
                  failure to maintain such insurance coverage as may be required
                  in  accordance  with  section  3.3(h) or arising  from the bad
                  faith,  wilful misconduct or gross negligence of the Operator,
                  provided,  however,  that  the  Operator  shall in no event be
                  considered   to  be  grossly   negligent  in  respect  of  the
                  interpretation  of any results in respect of a Work Plan.  The
                  reduction  or  conversion  to a royalty  interest of a party's
                  Participating  Interest shall not relieve a party of its share
                  of such third  party  liabilities  arising  out of  operations
                  conducted  prior to such  reduction or  conversion,  including
                  long term reclamation or remediation obligations, irrespective
                  of whether costs in respect of such liabilities accrued before
                  or after such reduction or conversion.  A party's share of any
                  such liability shall be equal to its Participating Interest at
                  the time that such liability was incurred.

<PAGE>
                                      -13-

3.4      PARTICIPATION, DILUTION AND CONVERSION

         (a)      Each  party  shall  elect,  within  30 days of  receipt  of an
                  approved Work Plan and Budget,  whether or not to  participate
                  in the Work Plan and  Budget  and fund its share of the costs.
                  Failure  to  elect  within  such 30 day time  period  shall be
                  deemed to be an election not to participate.

         (b)      The Operator shall provide,  on a quarterly  basis at least 30
                  days in advance,  monthly  expenditure  projections under each
                  Work  Plan  and  Budget  to  the  Non-Operator,  provided  the
                  Non-Operator  has elected to  contribute to such Work Plan and
                  Budget. Each party that has elected to contribute to such Work
                  Plan and Budget  (the  "Participating  Party")  shall  advance
                  funds representing its share of the projected  expenditures to
                  a separate  and new account to be  designated  by the Operator
                  (the "Joint  Venture  Account")  on or before the later of the
                  first day of the month in which such funds are scheduled to be
                  expended and the expiry of the 30 day advance  notice  period.
                  Failure by a Participating  Party to provide its share of such
                  funds by such date shall  result in such party being deemed to
                  have elected not to  participate  in the current Work Plan and
                  Budget and to have not  advanced  any funds in respect of such
                  Work  Plan  and  Budget.  The  expenditure  projections  shall
                  include a  description  of the work being  proposed as well as
                  the estimated costs required to fully complete such work.

         (c)      If the Operator should incur expenditures in a month exceeding
                  the  expenditure  projection  for that month then the Operator
                  shall provide an account of such overrun to the  Non-Operator,
                  provided  the  Non-Operator  is a  Participating  Party.  Upon
                  receipt  of such  account,  the  Participating  Parties  shall
                  advance to the Joint Venture  Account,  within 30 days,  funds
                  representing their share of such overrun,  provided,  however,
                  that any  expenditures  made by the Operator in excess of 120%
                  of the  total  expenditure  projection  for the Work  Plan and
                  Budget then in effect (the "Excess Expenditures") shall be the
                  sole  responsibility  of,  and for the sole  account  of,  the
                  Operator  unless  approved  pursuant to this  section  3.4(c).
                  Excess  Expenditures  shall be  deemed to be  approved  if (i)
                  unanimously  approved  by the Joint  Venture  Committee,  (ii)
                  pertaining to a Development Work Plan and Budget as defined in
                  section 3.5(d) or (iii) resulting from  expenditures  relating
                  to matters that were  unanticipated or not certain to arise at
                  the  time of  preparation  of the  applicable  Work  Plan  and
                  Budget,  including  expenditures  relating to environmental or
                  safety  concerns and  litigation  with respect to  contractors
                  retained by the Operator but excluding  expenditures  relating
                  to changes in a Work  Program  that have not been  approved by
                  the Joint  Venture  Committee.  Excess  Expenditures  approved
                  pursuant  to this  section  3.4(c)  shall be  included  in the
                  calculations provided for under section 3.4(d).

         (d)      If  either  party  (the  "Defaulting  Party")  elects  not  to
                  participate or is deemed to have elected not to participate in
                  a Work Plan and Budget  then the  Defaulting  Party shall have
                  its  Participating  Interest  diluted,  in accordance with the
                  following  formula,  and  such  party  shall  be  entitled  to
                  participate  in subsequent  Work Plans and Budgets only to the
                  extent  of  its  Participating   Interest  at  the  time  such
                  subsequent  Work Plans and Budgets  are  approved by the Joint
                  Venture  Committee.  A party's  Participating  Interest can be

<PAGE>
                                      -14-

                  calculated by dividing A by B and  expressing  the result as a
                  percentage, where A is the total of all funds advanced by that
                  party in respect of Work Plans and  Budgets  and such  party's
                  deemed  expenditures  and B is the total of all funds advanced
                  by both  parties in respect of Work Plans and Budgets and such
                  parties'  deemed  expenditures.  Subject to section  2.7,  the
                  parties  deemed  expenditures  upon  formation  of  the  Joint
                  Venture shall be as follows:

                               Yukon Gold:          $5,000,000
                               Hinton:              $1,666,666

         (e)      Notwithstanding  section 3.4(d), if a Defaulting Party had the
                  right to elect to  participate  and elected not to participate
                  or was deemed to have  elected  not to  participate  in a Work
                  Plan and Budget and, upon  completion  of such Work Plan,  the
                  Operator has not incurred  expenditures  equal to at least 80%
                  of  the  Budget,  the  Operator  shall  forthwith  notify  the
                  Defaulting  Party of the  Operator's  failure  to  incur  such
                  minimum  expenditures  under such Work Plan and Budget and the
                  Defaulting  Party shall be  entitled to pay its  proportionate
                  share of the expenditures  incurred by the Operator under such
                  Work Plan and  Budget  in  accordance  with its  Participating
                  Interest  prior to the  implementation  of such  Work Plan and
                  Budget. If such proportionate share of such expenditures under
                  such Work  Plan and  Budget  is paid by the  Defaulting  Party
                  within  30  days  of its  receipt  of  such  notice  from  the
                  Operator,  the  dilution  suffered  by  the  Defaulting  Party
                  pursuant to the provisions of section  3.4(d),  as a result of
                  the  Defaulting  Party's  election or deemed  election  not to
                  participate  in such Work Plan and  Budget  shall be deemed to
                  have never occurred and the  Defaulting  Party shall be deemed
                  to have  paid,  and the  Operator  shall be deemed not to have
                  paid, such proportionate share of such expenditures under such
                  Work Plan and Budget.

         (f)      Should Ewing,  Smith and Wagner,  collectively,  or Yukon Gold
                  have its  Participating  Interest reduced to a percentage less
                  than 10%, then:

                  (i)      such  party  (the  "Royalty  Holder")  shall have its
                           Participating   Interest  converted  to  a  1.0%  net
                           smelter  returns royalty to be calculated and paid in
                           accordance   with  the   provisions  of  Schedule  B,
                           attached  hereto,  provided  that a decision has been
                           made to put the Property into production;

                  (ii)     the  non-converting  party (the "Owner") shall become
                           the owner of a 100% right,  title and interest in and
                           to the Property, subject only to the Royalty Holder's
                           1.0% net  smelter  returns  royalty,  Hinton's 2% net
                           smelter  returns royalty as set out in section 4.1 of
                           the Agreement; and

                  (iii)    the Joint  Venture  shall be dissolved  and the Joint
                           Venture Committee shall be disbanded,  as of the date
                           of such conversion.

3.5      PROPERTY MATTERS

         (a)      Each party waives and renounces the benefit of all  provisions
                  of law, as now in effect or as enacted in the future, relating
                  to actions of  partition of real and  personal  property,  and

<PAGE>
                                      -15-

                  agrees  that it will not  resort to any  actions  in law or in
                  equity to partition the real and personal  property subject to
                  this Agreement.  In addition, each party acknowledges (i) that
                  dilution and conversion of a Participating  Interest is a fair
                  means  of  measuring  the   anticipated   economic  impact  of
                  non-participation in the applicable  circumstances referred to
                  herein and (ii) that  conversion  to a royalty  can lead to an
                  interest   of   greater   value  than  the   originally   held
                  Participating Interest.

         (b)      The   parties   shall  be   entitled   to  (i)  record   their
                  Participating  Interests  in respect to the Claims  comprising
                  the Property and (ii) register their  Participating  Interests
                  in the Property.  The parties shall execute such documentation
                  as  may be  required,  from  time  to  time,  to  effect  such
                  transfers of title.

         (c)      Should  the  Operator  wish  to  abandon  any  of  the  Claims
                  comprising the Property, it shall give the Non-Operator notice
                  of its intention to do so and the  Non-Operator may thereafter
                  give notice to the Operator,  within 30 days of the Operator's
                  notice, electing to have such Claims transferred to it. Should
                  the  Non-Operator  make such an election,  the Operator  shall
                  forthwith execute any documentation necessary to transfer such
                  Claims to the Non-Operator  and such mineral  properties shall
                  be in good  standing for a period of at least 90 days from the
                  date of the Operator's  notice.  If the Non-Operator  does not
                  make such an election within such 30 day period,  the Operator
                  may abandon such mineral properties. Subsequent to such 30 day
                  period,  the definition of Property shall exclude such Claims,
                  and  the  Operator  shall  have  no  further   obligations  or
                  responsibilities in respect of such mineral properties, except
                  for those  obligations  and  responsibilities  in  respect  of
                  environmental laws arising in respect of operations  conducted
                  by the Operator prior to such abandonment or transfer.

         (d)      Notwithstanding  any other  provision of this  Agreement,  the
                  following provisions of this section 3.5(d) shall apply in the
                  event the Operator  recommends to the Joint Venture Committee,
                  at  any  time,   to  place  any  part  of  the  Property  into
                  production.   In   the   event   the   Operator   makes   such
                  recommendation,  the  Operator  shall  make  available  to the
                  Non-Operator  all of the data and  information  relied upon by
                  the  Operator  in  making  such  recommendation  and the Joint
                  Venture  Committee shall meet to consider such  recommendation
                  within  a period  which is not less  than 30 days and not more
                  than  120  days  after  the  date  on  which  the   Operator's
                  recommendation is received by the Joint Venture Committee. The
                  Joint  Venture  Committee  shall either  approve or disapprove
                  such  recommendation  or direct  that  further  study into the
                  matter be  undertaken  by the  Operator.  If the Joint Venture
                  Committee should approve such recommendation then:

                  (i)      the Joint Venture Committee shall forthwith determine
                           and  approve  a Work  Plan and  Budget  that  appears
                           adequate for  purposes of bringing the Property  into
                           commercial production (the "Development Work Plan and
                           Budget"), and

<PAGE>
                                      -16-

                  (ii)     each  party  shall  have 90 days from the date of the
                           meeting of the Joint  Venture  Committee of which the
                           Development  Work Plan and Budget was  determined  to
                           elect whether or not to contribute to the Development
                           Work Plan and Budget.

                     If a party  elects  not to  participate  or  fails to elect
                     within such 90 day period to  contribute  to a  Development
                     Work Plan and  Budget,  then such party  shall be deemed to
                     have   withdrawn   as  a   Participating   Party   and  its
                     Participating  Interest  shall be  converted  to a 1.0% net
                     smelter  returns  royalty  to be  calculated  and  paid  in
                     accordance  with the  provisions  of  Schedule  B  attached
                     hereto.   Should  a  party  elect  to   participate   in  a
                     Development Work Plan and Budget and subsequently  become a
                     Defaulting  Party  pursuant  to  section  3.4(d),   then  a
                     Participating  Party may  elect (A) to have the  Defaulting
                     Party's Participating  Interest diluted, in accordance with
                     section 3.4(d),  (B) to give notice to the Defaulting Party
                     insisting upon  participation  by the Defaulting  Party, in
                     which event the  Participating  party (1) shall have a lien
                     and charge on the Defaulting  Party's share of all products
                     produced  from the Property and on the  Defaulting  Party's
                     Participating  Interest  to the  extent  of the  Defaulting
                     Party's share of the  applicable  Budget (the "Debt"),  (2)
                     shall have the right to  collect  the Debt as a debt by any
                     procedure   authorized  by  law,  including  the  right  of
                     foreclosure,  and (3) shall be paid  interest  on the Debt,
                     which  shall  form  part of the  Debt,  at a rate per annum
                     equal to the rate of interest  (the "Prime Rate") from time
                     to  time  quoted  by  the  Toronto  Dominion  Bank  as  the
                     reference rate of interest used by it to determine rates of
                     interest  chargeable  on Canadian  dollar loans to its best
                     commercial customers payable on demand, plus 2% until paid,
                     and the Prime Rate for each  month  shall be deemed for the
                     entire  month to be the Prime Rate on the first day of such
                     month  or  (C)  to  have  the  fair  market  value  of  the
                     Defaulting Party's Participating  Interest determined by an
                     independent  appraiser appointed by mutual agreement of the
                     parties or, failing such agreement, by arbitration pursuant
                     to the  Arbitration  Act  (Ontario)  and to  purchase  such
                     interest,  if satisfied that such  determination is fair in
                     the Participating Party's sole discretion.

(e)                  Each  party  shall own and have the  right,  privilege  and
                     power to take in kind and  separately  dispose of a portion
                     of all products  produced from the Property,  in accordance
                     with  its  Participating   Interest.   The  Operator  shall
                     designate  and  notify  the  Non-Operator  of the points of
                     delivery   situate  on  the   Property   for  the  parties'
                     respective  shares of such product and all costs in respect
                     of such  product  shall  be for the  joint  account  of the
                     parties,  until such  product is  delivered to such points.
                     After such  product is  delivered to such points each party
                     shall pay its own costs in  respect  of such  product.  The
                     Operator  shall use its best  efforts  to ensure  that each
                     party receives product of like quality.

3.6      WITHDRAWAL FROM JOINT VENTURE

         (a)      Either Yukon Gold or Hinton (the "Withdrawing  Party") may, at
                  any time during the currency of the Joint Venture, voluntarily
                  withdraw from the Joint  Venture and forfeit its right,  title
                  and  interest in and to the Property and its rights under this
                  Agreement by giving written  notice of such  withdrawal to the
                  other  party  (the  "Remaining  Party"),  which  notice  shall

<PAGE>
                                      -17-

                  indicate an effective date for such  withdrawal of not earlier
                  than 90 days  subsequent  to the delivery of such  notice.  In
                  such event, subject to section 3.6(b).

                  (i)      The Withdrawing Party shall:

                           (A)      remain  liable for its share of all  amounts
                                    chargeable  to it,  as well as its  share of
                                    any  liabilities  and  obligations  incurred
                                    hereunder  by the  Operator on behalf of the
                                    Joint  Venture up to the  effective  date of
                                    the withdrawal,

                           (B)      secure to the  satisfaction of the Remaining
                                    Party its  share of the costs of  reclaiming
                                    the Property,  as estimated at the effective
                                    date   of   withdrawal    considering    all
                                    applicable  laws  and  regulations  and  the
                                    policies of any governmental,  regulatory or
                                    other body having jurisdiction,

                           (C)      remain  obligated  under  section  5.2 for a
                                    period of two years after the effective date
                                    of the withdrawal,

                           (D)      remain obligated to execute and deliver such
                                    documents  as may be  necessary  to evidence
                                    the forfeiture of its Participating Interest
                                    to the Remaining Party, and

                           (E)      not be entitled to any royalty hereunder;

                                    (i)      the  Remaining  Party shall  become
                                             the  owner of a 100%  right,  title
                                             and interest in and to the Property
                                             as of  the  effective  date  of the
                                             withdrawal; and,

                                    (ii)     the   Joint    Venture   shall   be
                                             terminated  and the  Joint  Venture
                                             Committee shall be disbanded, as of
                                             the    effective    date   of   the
                                             withdrawal,

                                    (iii)    provided    if    Hinton   is   the
                                             Withdrawing  Party and  provided it
                                             has satisfied the provisions of 3.6
                                             (a) (i) (A) and  (B),  it  shall be
                                             entitled   to  retain  the  2%  net
                                             smelter royalty set out in Schedule
                                             B hereto as long as it continues to
                                             honour any other provisions of this
                                             agreement    that   extend   beyond
                                             withdrawal.

         (b)      Upon  receipt of a notice of  withdrawal  pursuant  to section
                  3.6(a), the Remaining Party may give notice to the Withdrawing
                  Party prior to the effective date of the  withdrawal  electing
                  to join in the  withdrawal,  in which event the Joint  Venture
                  shall  be   terminated  on  receipt  of  such  notice  by  the
                  Withdrawing  Party,  the assets of the Joint  Venture shall be
                  forthwith  liquidated  and the  proceeds  obtained  from  such
                  liquidation shall be distributed in proportion to each party's
                  Participating Interest.

<PAGE>
                                      -18-

4.       MISCELLANEOUS

4.1      HINTON ROYALTY

         Hinton shall retain a 2.0% net smelter returns royalty to be calculated
and paid in accordance with the provisions of Schedule B attached hereto.

4.2      YUKON GOLD BOARD OF DIRECTORS

         While this  Agreement  remains in effect,  Hinton  shall be entitled to
recommend for  appointment not less than one member to the board of directors of
Yukon Gold.

5.       GENERAL PROVISIONS

5.1      NATURE OF RELATIONSHIP

                     In every  case,  the  obligations  of each party under this
         Agreement  shall be  several  and shall not be  construed  to be either
         joint or joint and several and nothing  herein  shall be  construed  as
         creating a partnership between the parties. Subject to sections 5.7 and
         5.9(a), nothing contained in this Agreement shall be construed so as to
         constitute a party an agent or legal  representative  of another party.
         Except as otherwise  specifically  provided in this Agreement,  a party
         shall not have any authority to act for, or to assume any obligation or
         responsibility  on behalf  of,  any other  party.  Except as  expressly
         provided  in this  Agreement,  each  party  shall  have  the  free  and
         unrestricted  right to  independently  engage in and  receive  the full
         benefits of any and all business  endeavours of any sort whatsoever not
         related  to the  Property  and the  area of  interest,  whether  or not
         competitive with the endeavours contemplated herein, without consulting
         or inviting or allowing  the other party any  interest  therein and the
         legal doctrines of "corporate  opportunity"  or "business  opportunity"
         sometimes  applied  to joint  venturers  shall not apply in the case of
         such other  endeavours,  as all fiduciary duties arising from the Joint
         Venture  and  owed by one  party  to  another  have  been  specifically
         outlined in this Agreement

5.2      AREA OF INTEREST

         The area of  interest  shall be deemed to  comprise  that area which is
included  within ten (10)  kilometres of the  outermost  boundary of the mineral
properties, which constitute the Property.

5.3      ADDITIONAL ACQUISITION

         If at any time during the  subsistence  of this Agreement any party (in
this Article only called the "Acquiring Party") stakes directly or indirectly or
purchases any mining claim, licence, lease, grant,  concession,  permit, patent,
or other  mineral  property  (in this  Article 5 a "Mineral  Property")  located
wholly or partly  within the area of interest  referred to in Section  5.2,  the
Acquiring Party shall forthwith give notice to the other parties of that staking
or  acquisition  and proof of the cost thereof and all details in the possession
of that  party  with  respect  to the  nature  of the  property  and  the  known
mineralization.

<PAGE>
                                      -19-

5.4      ELECTION TO ACQUIRE

         Each  other  party  may,  within  thirty  (30) days of  receipt  of the
Acquiring  Party's notice,  elect, by notice to the Acquiring  Party, to require
that the Mineral Property which was staked or otherwise  acquired be included in
and thereafter form part of the Property for all purposes of this Agreement.  If
the election is made, all the other parties shall  reimburse the Acquiring Party
for that  portion of the cost of staking or  acquiring  which is  equivalent  to
their  respective  Interests.  If no other party makes the election  within that
period of thirty (30) days, the Mineral  Property,  which was staked or acquired
shall not form part of the  Property  and the  Acquiring  Party  shall be solely
entitled  thereto.  Should any party acquire mineral claims that fall within the
Area of Interest prior to Yukon Gold earning a 75% interest in the Property, and
should  Yukon  Gold  elect  to have the  claims  included  and form  part of the
Property if acquired by other parties, the cost shall be born 100% by Yukon Gold
and shall be part of the Work Program Costs.

5.5      CONFIDENTIAL INFORMATION

         All data and  information  provided to or received by the parties  with
respect to the  Property  shall be treated as  confidential.  A party  shall not
disclose such  information  to third parties  whether by way of press release or
otherwise,  unless the  disclosure is required by law, stock exchange rules or a
regulatory  authority  having  jurisdiction or the disclosure is consented to by
the other party (the  "Non-Disclosing  Party");  consent of such  Non-Disclosing
Party  shall not be  unreasonably  withheld  or delayed in view of the  parties'
timely   disclosure   obligations.   Without   limiting   the   foregoing,   the
Non-Disclosing  Party may  reasonably  withhold its consent to the issuance of a
press  release where it has not been provided with an advance draft copy of such
press  release.  Where  disclosure is required by law, stock exchange rules or a
regulatory  authority having  jurisdiction,  a party shall, if permitted by such
law,  stock  exchange  rule or regulatory  authority,  use its  reasonable  best
efforts to provide a copy of the  information to be disclosed  (the  "Disclosure
Statement")  to the  Non-Disclosing  Party in advance of its disclosure and make
reasonable  changes to such  Disclosure  Statement  as may be  requested  by the
Non-Disclosing Party.

5.6      GEOLOGICAL INTERPRETATIONS

         No party (the "Reporting  Party") shall be liable to another party (the
"Receiving  Party") in respect of any opinions,  findings,  conclusions or other
non-factual  information  included by the Reporting Party in any report or other
document  provided to the  Receiving  Party,  whether  included by negligence or
otherwise.  Each party hereby  indemnifies and saves harmless the other from and
against all suits,  claims,  demands,  losses and expenses arising in respect of
the release by a Receiving Party of such non-factual  information in such report
or other  document to third  parties,  irrespective  of whether such release was
consented to by the Reporting Party.

5.7      GST

         Although each of the parties to this  Agreement  recognizes  that it is
responsible to separately account and, where necessary, register for the federal
Goods and Services Tax (the  "GST"),  it is agreed and the parties  hereto elect
that the  Operator  shall be the  registrant  for the GST with  respect  to this
Agreement and shall account for the GST on all properties, mineral interests and

<PAGE>
                                      -20-

goods and services  acquired or supplied pursuant to the terms of this Agreement
with all such  actions  deemed to have been made by the  Operator.  The  parties
hereto  authorize the Operator to do such acts and execute such  documents,  and
shall  themselves  do such  further  acts and execute and deliver  such  further
documents,  as may be  reasonably  necessary and desirable to give effect to the
election contained in this section 5.7.

5.8      TIME

         This  Agreement  shall be effective  from and as of the 30th day of May
2002.

5.9      ASSIGNEES, SUCCESSORS AND RELEASES

         (a)      (i)      No party shall sell,  transfer,  assign or  otherwise
                           dispose  of (the  "Sell")  all or any  portion of its
                           right,  title and  interest in and to the Property or
                           its rights and obligations  under this Agreement (the
                           "Interest") except:

                           (A)      pursuant  to  an   agreement  in  which  the
                                    consideration  is expressed wholly in lawful
                                    money of Canada;

                           (B)      as a  single  transaction  not  directly  or
                                    indirectly   part  of  some  other  sale  or
                                    purchase   or   agreement   of  any   nature
                                    whatsoever; and,

                           (C)      otherwise  in  accordance  with this section
                                    5.9.

                  (ii)     If any of  Ewing,  Smith  or  Wagner  (the  "Sellor")
                           receives a bona fide offer from a third party to Sell
                           all or any  portion  of its  Interest  (the  "Offered
                           Interest")  and  intends  to accept  such  offer (the
                           "Offer"),  the Sellor,  prior to accepting the Offer,
                           shall  give  notice  in  writing  to Yukon  Gold (the
                           "Purchaser") of the Offer together with a copy of the
                           Offer,  which  shall be in written  form (the  "Offer
                           Notice").  Ewing,  Smith and  Wagner may sell to each
                           other without complying with this provision.

                  (iii)    An Offer  Notice  shall be  deemed to  constitute  an
                           offer  (the  "1st   Offer")  by  the  Sellor  to  the
                           Purchaser  to Sell the Offered  Interest on the terms
                           and  conditions set out in the Offer Notice and shall
                           be open for  acceptance by the Purchaser for a period
                           of 60  days  from  the  date  of its  receipt  by the
                           Purchaser.  Such Offer Notice shall clearly  identify
                           the  person or persons  making the Offer and  include
                           such information as is known by the Sellor about such
                           person or persons.

                  (iv)     If the Purchaser  gives notice to the Sellor electing
                           to accept  the 1st Offer  within  the 60 day  period,
                           such acceptance shall constitute a binding  agreement
                           of  purchase  and sale  between  the  Sellor  and the
                           Purchaser  in respect of the Offered  Interest on the
                           terms and conditions set out in the Offer Notice.

                  (v)      If the Purchaser does not accept the 1st Offer within
                           the 60 day period, the Sellor may complete a sale and
                           purchase  of the  Offered  Interest  to the person or
                           persons  making the Offer on the terms and conditions
                           set  out  in the  Offer  Notice  and  such  sale  and

<PAGE>
                                      -21-

                           purchase  shall be  completed  within 100 days of the
                           expiration  of the right of the  Purchaser  to accept
                           the 1st Offer  provided for in this  section  5.9(a),
                           failing  which the Sellor must again  comply with the
                           provisions  of this  section  5.9(a) in  respect to a
                           sale and purchase of the Offered Interest.

                  (vi)     The  Sellor  may  Sell  all  or  any  portion  of its
                           Interest to an affiliate of the Sellor.  For purposes
                           of  clarity,  such  sale,  transfer,   assignment  or
                           disposal is not subject to section 5.9(a),  provided,
                           however,  that if  control  over  such  affiliate  is
                           immediately  transferred  to a third party or if such
                           transaction  is merely an  attempt  at  avoiding  the
                           provisions of section  5.9(a) then the  provisions of
                           section  5.9(a)  shall  be  deemed  to  apply to such
                           transaction  and  such  transaction   shall  have  no
                           effect, unless the Purchaser subsequently declines to
                           exercise  its right to acquire the  Offered  Interest
                           pursuant to section 5.9(a).

                  (vii)    For purposes of this  Agreement,  "affiliate" is used
                           to indicate a relationship  between: (A) corporations
                           where  one  of  them  owns  or  holds,   directly  or
                           indirectly,  voting securities carrying a majority of
                           the voting rights attached to all outstanding  voting
                           securities  of the  other  (if two  corporations  are
                           affiliated with another  corporation by reason of the
                           percentage of their voting  securities held or owned,
                           directly or  indirectly,  by such other  corporation,
                           then they shall be deemed to be affiliated  with each
                           other);  (B) a person  and a  corporation  where  the
                           person, the person's spouse or, if living in the same
                           home  as the  person,  the  person  or  the  spouse's
                           relative,  beneficially owns, directly or indirectly,
                           voting  securities  carrying a majority of the voting
                           rights attached to all outstanding  voting securities
                           of the  corporation;  and (C) one person and  another
                           person where the other  person is the spouse,  or any
                           relative of the person or the spouse where the spouse
                           or relative has the same home as the person.

         (b)      This Agreement  shall be binding upon and enure to the benefit
                  of the parties' successors and permitted assignees,  provided,
                  however,  that  any  assignment  by the  Sellor  of all or any
                  portion of its rights or obligations hereunder shall include a
                  provision  whereby the New Party  agrees to abide by the terms
                  of this  Agreement,  including the  provisions of this section
                  5.9, and assume all of the  liabilities and obligations of the
                  Sellor  under  this  Agreement,  whether  accruing  before  or
                  becoming due after such  assignment.  The Sellor and New Party
                  shall   execute  such   agreements  or  documents  as  may  be
                  reasonably  required in this regard by the other party to this
                  Agreement (the "Other Party").

         (c)      No  assignment  shall serve to release or discharge the Sellor
                  from any of the said liabilities or obligations, unless all of
                  the rights and obligations of the Sellor have been assigned to
                  the New Party and the Other Party has released the Sellor.

         (d)      Nothing  in this  section  5.9  shall  prevent  a  party  from
                  soliciting offers from third parties to purchase its Interest.
                  Notwithstanding  the foregoing part of this section 5.9(d) and

<PAGE>
                                      -22-

                  for purposes of clarity,  neither Yukon Gold nor any of Ewing,
                  Smith or Wagner shall make offers to third parties to sell its
                  Interest  if the  effect  of such an  offer  would  avoid  the
                  application of the provisions of section 5.9(a).

5.10     FORCE MAJEURE

         (a)      No party  hereto  shall be  liable  under  this  Agreement  to
                  another   party  for  any   failure  to  perform  any  of  its
                  obligations caused by or arising out of any act not within the
                  control of the party,  excluding lack of funds, but including,
                  without  limitation,  acts of God, strikes,  lockouts or other
                  industrial  disputes,  acts of a public  enemy,  riots,  fire,
                  storm, flood, explosion,  government  restriction,  failure to
                  obtain any  approvals  required from  regulatory  authorities,
                  including environmental protection agencies, unavailability of
                  equipment,  interference of persons primarily  concerned about
                  environmental  or native  rights  issues and any other  cause,
                  whether of the kind  enumerated  above or otherwise,  which is
                  not reasonably  within the control of the party (the "Event of
                  Force Majeure").

         (b)      No right of a party shall be  affected,  and no party shall be
                  found in default,  under this Agreement by the failure of such
                  party to meet any term or  condition of this  Agreement  where
                  such  failure is caused by an Event of Force  Majeure  and, in
                  such  event,  all  times  specified  or  provided  for in this
                  Agreement shall be extended by a period  commensurate with the
                  period  during  which the Event of Force  Majeure  causes such
                  failure.

         (c)      A party  affected by an Event of Force  Majeure shall take all
                  reasonable  steps  within its  control  to remedy the  failure
                  caused  by  such  event,   provided,   however,  that  nothing
                  contained  in this  section  5.10 shall  require  any party to
                  settle  any  labour  or  industrial  dispute  or to  test  the
                  constitutionality  of any law  enacted by any  Legislature  or
                  Parliament of or within Canada.

         (d)      Any party relying on the provisions of this section 5.10 shall
                  forthwith  give notice to the other party of the  commencement
                  of an Event of Force Majeure and of its end.

5.11     NOTICES

         (a)      Any notice,  direction or other  communication  (the "Notice")
                  given  hereunder,  irrespective  of  whether  such  Notice was
                  required,  permitted or otherwise  provided  pursuant to or in
                  respect of this Agreement, shall be in writing and:

                  (i)      if delivered,  shall be deemed to have been given and
                           received on the day it was delivered;

                  (ii)     if  mailed,  shall be deemed  to have been  given and
                           received on the seventh  business day  following  the
                           day of mailing,  except in the event of disruption of
                           postal  services in which event such Notice  shall be
                           deemed to have  been  given  and  received  only when
                           actually received;

<PAGE>
                                      -23-

                  (iii)    if sent by telefacsimile shall be deemed to have been
                           given and received on the day it was so sent,  except
                           where sent  outside of normal  business  hours  (9:00
                           a.m.  to  5:00  p.m.  local  time  at  the  place  of
                           receipt),  in which event such Notice shall be deemed
                           to have been given and received on the next following
                           business day; and

                  (iv)     for  greater  clarity,  Hinton will be deemed to have
                           been given and  received  Notice  effective  upon the
                           first of Ewing,  Smith and  Wagner  receiving  Notice
                           pursuant to this section 5.11.

         (b)      Notices in each case shall be addressed as follows:

                  (i)      IF TO YUKON GOLD, AT:

                               Yukon Gold Corp.
                               Suite 408, 347 Bay Street
                               Toronto, Ontario, M5H 2R7
                               Attention:  President
                               Fax: (416) 865-1250

                               WITH A COPY TO:

                               Macleod Dixon LLP
                               Suite 3900, Canada Trust Tower
                               BCE Place, 161 Bay Street
                               Toronto, Ontario M5J 2S1

                               Attention: Richard Lachcik
                               Fax: (416) 360-8277

                  (ii)     if to Hinton, to each of:

                               Richard Ewing
                               Box 111
                               Mayo, Yukon M0B 1M0
                               Fax: (867) 996-2927

                               James B. Smith
                               2726 Mara Drive
                               Coquitlam, BC V3C 5R9
                               Fax: (604) 942-3905

                               Robert Wagner
                               Site 1, Box 7
                               Keno City, Yukon Y0B 1J0
                               Fax: (867) 995-2892

<PAGE>
                                      -24-

                  Any party may give,  at any  time,  notice in  writing  to the
                  other party of any change of address of the party  giving such
                  Notice  and,  from and after the  giving of such  Notice,  the
                  address or addresses  therein  specified shall be deemed to be
                  the  address  of such party for the  purpose of giving  Notice
                  hereunder.

         (c)      Any Notice  given  hereunder  to the Joint  Venture  Committee
                  shall be in writing and shall be delivered,  mailed or sent to
                  Yukon Gold and Hinton, in accordance with this section 5.11.

5.12     INTERPRETATION

         (a)      This Agreement shall be interpreted and governed  according to
                  the laws of the Province of Ontario. The parties hereby attorn
                  to the  jurisdiction  of the courts of the Province of Ontario
                  and agree to submit any disputes in respect of this  Agreement
                  to the courts of the Province of Ontario.

         (b)      All  references  in this  Agreement  to  monetary  amounts are
                  expressed in Canadian currency.

         (c)      In this  Agreement,  headings  have been  inserted for ease of
                  reference and may not accurately  describe the provisions that
                  follow  them.  Consequently,  headings  shall  not be used for
                  purposes of interpreting this Agreement.

         (d)      In this  Agreement,  the singular  encompasses  the plural and
                  vice versa,  and the  masculine  encompasses  the feminine and
                  vice versa.

         (e)      In this Agreement, mining properties, rights or interests into
                  which any of the  Claims  are  converted  by process of law or
                  otherwise are included in the definition of Property.

5.13     OPTION TO PURCHASE

         At anytime  following  the formation of the Joint Venture as defined in
         Article hereof and provided Yukon Gold has a 75% Earned Interest in the
         Property,  Yukon Gold shall have the option to purchase  the  remaining
         25% interest held by the Hinton Syndicate.

         The purchase price shall be $5,000,000 and the Hinton  Syndicate's  NSR
         shall be  increased  from 2% to 3% following  the buy out.  This option
         shall remain in effect until the Hinton Syndicate is required to commit
         to funding their interest in the Joint Venture at which time Yukon Gold
         must  exercise the option or it shall expire and be of no further force
         or effect.

5.14     WHOLE AGREEMENT AND FURTHER ASSURANCES

         (a)      This letter,  including  Schedules  [A, A1, B, and C] attached
                  hereto,   constitutes   the  whole  of  this   Agreement   and
                  encompasses the entire agreement between Yukon Gold and Hinton
                  pertaining  to the Property.  This  Agreement  supersedes  all
                  prior    agreements,    understandings,    negotiations    and
                  discussions,  whether oral or written,  between Yukon Gold and

<PAGE>
                                      -25-

                  Hinton, and there are no warranties,  representations or other
                  agreements  between Yukon Gold and Hinton in  connection  with
                  the Property, except as specifically set forth herein.

         (b)      The parties  agree to execute  and cause to be  executed  such
                  other  documents,  and take and cause to be taken  such  other
                  actions, as are reasonably  necessary:  (i) to secure and give
                  effect to the  rights  and  obligations  granted  and  assumed
                  hereunder; and (ii) to maintain the Property in good standing.

5.15     ENVIRONMENTAL RECLAMATION

         (a)      Notwithstanding any other provision in this Agreement,  Hinton
                  shall remain  liable and Yukon Gold shall have no  obligations
                  in respect of environmental liabilities incurred or arising as
                  a result of the state or condition  of the  Property  prior to
                  the effective date of this Agreement.

         (b)      For  purposes of section  5.14(a),  environmental  liabilities
                  shall mean any and all damages  (including  but not limited to
                  exemplary  and punitive  damages),  losses,  costs,  expenses,
                  liabilities  and  obligations  of whatsoever  kind,  direct or
                  indirect  (including  but not  limited  to  fines,  penalties,
                  interest,  lawyers'  fees and  expenses,  damages for personal
                  injury,  death,  property damage and economic loss,  including
                  but not limited to  reduction in the value of the Property (or
                  any other person's  property)) incurred or arising as a result
                  of the state or condition  of the  Property,  including  costs
                  relating to the  removal,  treatment,  storage and disposal of
                  hazardous   substances   and   the   remediation,    clean-up,
                  restoration,  abatement,  reclamation  or  other  securing  or
                  remedial  action  in  respect  of the  Property  (or any other
                  person's property) under or for breach of or failure to comply
                  with any and all environmental  laws,  whether  statutory,  in
                  contract  or  in  tort,   including   negligence   and  strict
                  liability, or howsoever otherwise arising.

         (c)      For purposes of sections 2.5(b), 3.5(c) and 5.14(b):

                  (i)      environmental  laws shall  mean any and all  federal,
                           provincial   and   local   laws,   statutes,   rules,
                           regulations,  ordinances,  bylaws,  orders,  permits,
                           licences,  approvals,  policies  and consents and the
                           common  law to the extent  that any of the  foregoing
                           regulate,   ascribe,   provide   for  or  pertain  to
                           liabilities   or   obligations  in  relation  to  the
                           existence, use, production, manufacture,  processing,
                           distribution,    production,   transport,   handling,
                           storage,  removal,  treatment,   disposal,  emission,
                           discharge,  migration,  seepage, leakage, spillage or
                           release of hazardous  substances or the construction,
                           alteration,   use   or   operation,   demolition   or
                           decommissioning  of any  facilities  or other real or
                           personal property in relation to the

<PAGE>
                                      -26-

                           foregoing or otherwise in relation to the  protection
                           of the life,  health or safety of persons,  or to the
                           protection of property or the environment,  including
                           but not limited to air, soil,  surface water,  ground
                           water, biota, wildlife and personal or real property;
                           and

                  (ii)     hazardous substances shall mean any substance that:

                           (A)      when released to the natural  environment is
                                    likely to cause or does  cause,  immediately
                                    or at some  future  time,  material  harm or
                                    degradation  to the natural  environment  or
                                    any  risk  to  human  health  and,   without
                                    restricting the generality of the foregoing,
                                    includes any pollutant,  contaminant,  waste
                                    or  hazardous   waste,   or  any  "dangerous
                                    goods",  "hazardous  chemical",   "hazardous
                                    substance" or "hazardous  waste",  as may be
                                    defined by environmental laws; or

                           (B)      exhibits  characteristics  of  flammability,
                                    corrosivity, reactivity or toxicity.

5.16     COUNTERPARTS

         This Agreement may be executed in multiple counterparts,  each of which
shall be deemed an original,  and all of which together shall constitute one and
the same  instrument.  Execution  and delivery of this  Agreement by exchange of
facsimile copies bearing facsimile signature of a party shall constitute a valid
and binding  execution  and  delivery  of this  Agreement  by such  party.  Such
facsimile copies shall constitute enforceable original documents.

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

ON HIS OWN BEHALF AND ON BEHALF OF THE                  YUKON GOLD CORP.
HINTON SYNDICATE:

               /s/ Richard Ewing             by:        /s/ Peter Slack
-----------------------------------------        -------------------------------
Richard Ewing                                           Peter Slack
                                                        President

               /s/ James Smith               by:        /s/ Stafford Kelley
-----------------------------------------       --------------------------------
James Smith                                             Stafford Kelley
                                                        Treasurer

               /s/ Robert Wagner
Robert Wagner

               /s/ J. Malcolm Slack
-----------------------------------------
J. Malcolm Slack

<PAGE>
                                      -27-

                                   SCHEDULE A
                                       TO
                          HINTON / YUKON GOLD AGREEMENT
                               DATED JULY 7, 2002

                        DESCRIPTION OF HINTON PROPERTIES

<TABLE>
<CAPTION>
CLAIM NAME       CLAIM NO.          RECORD NO.       EXPIRY DATE
----------       ---------          ----------       -----------

<S>              <C>                <C>              <C>
Hinton           Claims 1 - 34      YC00401-434      Richard Ewing - Exp. 2002/09/10

Hinton 35                           YC01091          Richard Ewing - Exp. 2002/09/10

Hinton II        Claims 1 - 26      YC01126-151      Robert Wagner - Exp. 2002/09/10

Hinton III       Claims 1 - 14      YC01152-165      Robert Wagner - Exp. 2002/09/10

Hinton IV        Claims 1 - 6       YC01424-429      Robert Wagner - Exp. 2002/09/10

Hinton V         Claims 1 - 7       YC01417-423      Robert Wagner - Exp. 2002/09/10

A TOTAL OF 88 CLAIMS
</TABLE>

<PAGE>

                                   SCHEDULE A1

                                 NEW CLAIMS LIST

<TABLE>
<CAPTION>
CLAIM STATUS REPORT                                        29 OCTOBER 2003
CLAIM NAME AND NBR          GRANT NO.                 EXPIRY DATE     REGISTERED OWNER        % OWNED          NTS #'S
<S>  <C>                    <C>                       <C>             <C>                     <C>              <C>
R    Hinton 1 - 2           YC00401 - YC00402         2011/11/01      Yukon Gold Corp         100.00           105M14 F
R    Hinton 3 - 30          YC00403 - YC00430         2011/11/01      Yukon Gold Corp         100.00           105M14
R    Hinton 31 - 32         YC00431 - YC00432         2007/11/01      Yukon Gold Corp         100.00           105M14 F
R    Hinton 33 - 34         YC00433 - YC00434         2007/11/01      Yukon Gold Corp         100.00           105M14
R    Hinton 35              YC01091                   2011/11/01      Yukon Gold Corp         100.00           105M14 P
R    Hinton II 1 - 11       YC01126 - YC01136         2011/11/01      Yukon Gold Corp         100.00           105M14
R    Hinton II 12           YC01137                   2010/11/01      Yukon Gold Corp         100.00           105M14
R    Hinton II 13 - 22      YC01138 - YC01147         2011/11/01      Yukon Gold Corp         100.00           105M14
R    Hinton II 23           YC01148                   2010/11/01      Yukon Gold Corp         100.00           105M14
R    Hinton II 24 - 26      YC01149 - YC01151         2011/11/01      Yukon Gold Corp         100.00           105M14
R    Hinton III 1 - 7       YC01152 - YC01158         2008/11/01      Yukon Gold Corp         100.00           105M14
R    Hinton III 8           YC01159                   2007/11/01      Yukon Gold Corp         100.00           105M14
R    Hinton III 9 - 14      YC01160 - YC01165         2008/11/01      Yukon Gold Corp         100.00           105M14
R    Hinton IV 1            YC01424                   2009/11/01      Yukon Gold Corp         100.00           105M14
R    Hinton IV 2 - 6        YC01425 - YC01429         2008/11/01      Yukon Gold Corp         100.00           105M14
R    Hinton V 1 - 4         YC01417 - YC01420         2008/11/01      Yukon Gold Corp         100.00           105M14
R    Hinton V 5             YC01421                   2008/11/01      Yukon Gold Corp         100.00           105M14 P
R    Hinton V 6             YC01422                   2008/11/01      Yukon Gold Corp         100.00           105M14
R    Hinton V 7             YC01423                   2007/11/01      Yukon Gold Corp         100.00           105M14
R    Key 1 - 10             YC10609 - YC10618         2012/11/01      Yukon Gold Corp         100.00           105M14
R    Key 11 - 12            YC10619 - YC10620         2011/11/01      Yukon Gold Corp         100.00           105M14
R    Key 13                 YC10621                   2012/11/01      Yukon Gold Corp         100.00           105M14
R    Key 14                 YC10622                   2011/11/01      Yukon Gold Corp         100.00           105M14
R    Key 15                 YC10623                   2012/11/01      Yukon Gold Corp         100.00           105M14
R    Key 16                 YC10624                   2009/11/01      Yukon Gold Corp         100.00           105M14
R    Key 17                 YC10625                   2012/11/01      Yukon Gold Corp         100.00           105M14
R    Key 18                 YC10626                   2009/11/01      Yukon Gold Corp         100.00           105M14
R    Key 27 - 28            YC10627 - YC10628         2009/11/01      Yukon Gold Corp         100.00           105M14
R    Key 29                 YC10629                   2010/11/01      Yukon Gold Corp         100.00           105M14
R    Key 30                 YC10630                   2009/11/01      Yukon Gold Corp         100.00           105M14
R    Key 31 - 34            YC10631 - YC10634         2012/11/01      Yukon Gold Corp         100.00           105M14
R    Key 35 - 42            YC10635 - YC10642         2009/11/01      Yukon Gold Corp         100.00           105M14
R    Key 43                 YC10643                   2011/11/01      Yukon Gold Corp         100.00           105M14
R    Key 44                 YC10644                   2012/11/01      Yukon Gold Corp         100.00           105M14
R    Key 45                 YC10645                   2011/11/01      Yukon Gold Corp         100.00           105M14
R    Key 46                 YC10646                   2012/11/01      Yukon Gold Corp         100.00           105M14
R    Key 47                 YC10647                   2011/11/01      Yukon Gold Corp         100.00           105M14
R    Key 48                 YC10648                   2012/11/01      Yukon Gold Corp         100.00           105M14
R    Key 49 - 50            YC10649 - YC10650         2011/11/01      Yukon Gold Corp         100.00           105M14
                                                                                               Total claims selected: 186
</TABLE>

Left column indicator legend:
R - Indicates the claim is on one or more pending renewal(s).
P - Indicates the claim is pending.

Right column indicator legend:
L - Indicates the Quartz Lease.
F - Indicates Full Quartz fraction (25+ acres)
P - Indicates Partial Quartz fraction (<25 acres)
D - Indicates Placer Discovery
C - Indicates Placer Codiscovery
B - Indicates Placer Fraction

                                   PAGE 1 OF 2

<PAGE>

<TABLE>
<CAPTION>
CLAIM STATUS REPORT                                            29 OCTOBER 2003
CLAIM NAME AND NBR          GRANT NO.                 EXPIRY DATE     REGISTERED OWNER        % OWNED          NTS #'S
<S>                         <C>                       <C>             <C>                     <C>              <C>
R Key 57 - 62               YC10651 - YC10656         2011/11/01      Yukon Gold Corp         100.00           105M14
R Key 63 - 82               YC10657 - YC10676         2012/11/01      Yukon Gold Corp         100.00           105M14
R Key 89                    YC10677                   2011/11/01      Yukon Gold Corp         100.00           105M14
R Key 90 - 92               YC10678 - YC10680         2012/11/01      Yukon Gold Corp         100.00           105M14
R Key 100 - 101             YC10693 - YC10694         2012/11/01      Yukon Gold Corp         100.00           105M14 F
R Key 102 - 103             YC10695 - YC10696         2012/11/01      Yukon Gold Corp         100.00           105M14
R Key 104                   YC10697                   2012/11/01      Yukon Gold Corp         100.00           105M14 F
Moon 1  YC10957                                       2004/09/09      Yukon Gold Corp         100.00           105M14 F
Moon 2 - 12                 YC10958 - YC10968         2004/09/09      Yukon Gold Corp         100.00           105M14
Red 1 - 9                   YC10948 - YC10956         2004/09/09      Yukon Gold Corp         100.00           105M14

CRITERIA(S) USED FOR SEARCH:

CLAIM STATUS: ACTIVE & PENDING                 OWNER(S): YUKON GOLD CORP                      REGULATION TYPE: QUARTZ

                                                                                             Total claims selected: 186
</TABLE>

Left column indicator legend:
R - Indicates the claim is on one or more pending renewal(s).
P - Indicates the claim is pending.

Right column indicator legend:
L - Indicates the Quartz Lease.
F - Indicates Full Quartz fraction (25+ acres)
P - Indicates Partial Quartz fraction (<25 acres)
D - Indicates Placer Discovery
C - Indicates Placer Codiscovery
B - Indicates Placer Fraction

                                   PAGE 2 OF 2

<PAGE>

                                   SCHEDULE B
                                       TO
                          HINTON / YUKON GOLD AGREEMENT
                               DATED JULY 7, 2002

                           NET SMELTER RETURN ROYALTY

1.       The NSR which may be payable to a party (the  "PAYEE")  by a party (the
         "PAYOR") shall be calculated  and paid to the Payee in accordance  with
         the terms of this Schedule.

2.       The NSR shall be calculated on a calendar quarterly basis.

3.       The following words shall have the following meanings:

         3.1      "GROSS  REVENUE"  shall mean the  aggregate  of the  following
                  amounts received in each quarterly period:

                  (a)      (i)      all  revenue  received  by the Payor in such
                                    quarter  from  arm's  length  purchasers  of
                                    mineral products, or

                           (ii)     the  fair   market   value  of  all  mineral
                                    products  sold by the Payor in such  quarter
                                    to persons not dealing at arm's  length with
                                    the Payor; and

                  (b)      any  proceeds of  insurance  received in such quarter
                           due to  losses  or  damages  in  respect  to  mineral
                           products.

         3.2      "PERMISSIBLE  DEDUCTIONS"  shall  mean  the  aggregate  of the
                  following  charges (to the extent not  previously  deducted or
                  accrued  in  computing  Gross  Revenue)  that are paid in each
                  quarterly period:

                  (a)      sales charges levied by any sales agent in respect to
                           the sale of mineral products;

                  (a)      all  costs,   expenses  and  charges  of  any  nature
                           whatsoever  which are either  paid or incurred by the
                           Payor   in   connection   with  the   refinement   or
                           beneficiation  of mineral  products after leaving the
                           Property,  including all weighing, sampling, assaying
                           and  representation  costs,  metal losses, any umpire
                           charges and any penalties  charged by the  processor,
                           refinery or smelter, and;

                  (b)      all  other  insurance  costs in  respect  of  mineral
                           products;

                  provided:   (i)  that  where  a  cost  or  expense   otherwise
                  constituting a Permissible  Deduction is incurred by the Payor
                  in a  transaction  with a party with whom it is not dealing at
                  arm's  length  (as that term is  defined in the Income Tax Act
                  (Canada)), such costs or expenses may be deducted, but only as
                  to the lesser of the actual cost incurred by the Payor and the

<PAGE>
                                      -2-

                  fair  market  value  thereof  considering  the  time  of  such
                  transaction and under all the circumstances  thereof; and (ii)
                  transportation  costs and milling costs at another site, prior
                  to the  smelting  and  refining  shall not be  included in the
                  definition of Permissible Deductions.

         3.3      "NET   SMELTER   RETURNS"   shall  mean  Gross   Revenue  less
                  Permissible Deductions in respect to such quarter.

         3.4      "NSR" shall mean Net Smelter Returns.

4.       The NSR shall be  calculated  and paid  within 30 days after the end of
         each  calendar  quarter  ending  March 31,  June 30,  September  30 and
         December 31 of each year.  Smelter  settlement  sheets,  if any,  and a
         statement  setting forth  calculations in sufficient detail to show how
         the payment was derived (the  "STATEMENT")  shall be submitted with the
         payment.

5.       In the event that final amounts required for the calculation of the NSR
         are not available  within the time period referred to in paragraph 4 of
         this Schedule,  then provisional amounts shall be established,  the NSR
         shall be paid on the basis of such provisional  amounts and positive or
         negative  adjustments  shall be made to the  payment in the  succeeding
         quarter, as necessary.

6.       All NSR payments shall be considered final and in full  satisfaction of
         all  obligations  of the Payor with respect  thereto,  unless the Payee
         delivers  to the  Payor  a  written  notice  (the  "OBJECTION  NOTICE")
         describing  and setting forth a specific  objection to the  calculation
         thereof within 60 days after receipt by the Payee of the Statement.  If
         the Payee  objects to a particular  Statement as herein  provided,  the
         Payee shall,  for a period of 60 days after the Payor's receipt of such
         Objection  Notice,  have the  right,  upon  reasonable  notice and at a
         reasonable  time, to have the Payor's  accounts and records relating to
         the  calculation of the NSR in question  audited by the auditors of the
         Payor. If such audit  determines that there has been a deficiency or an
         excess in the payment made to the Payee, such deficiency or excess will
         be resolved by adjusting  the next  monthly NSR payment due  hereunder.
         The Payee shall pay all the costs and  expenses of such audit  unless a
         deficiency  of 2 1/2% or more of the amount due is determined to exist.
         The  Payor  shall  pay  the  costs  and  expenses  of such  audit  if a
         deficiency  of 2 1/2% or more of the amount due is determined to exist.
         All books and records used and kept by the Payor to  calculate  the NSR
         due  hereunder  shall be kept in  accordance  with  Canadian  generally
         accepted  accounting  principles.  Failure  on the part of the Payee to
         make claim  against the Payor for  adjustment  in such 60 day period by
         delivery  of an  Objection  Notice  shall  conclusively  establish  the
         correctness and sufficiency of the Statement and NSR payment in respect
         of the applicable quarter.

7.       All  profits  and  losses  resulting  from the  Payor  engaging  in any
         commodity futures trading,  option trading,  metals trading, gold loans
         or any combination  thereof,  and any other hedging  transactions  with
         respect to mineral products (collectively,  "HEDGING TRANSACTIONS") are
         specifically  excluded  from  calculations  of the NSR pursuant to this
         Schedule,  it being  understood  by the parties that both the Payor and
         Payee may engage in speculative  hedging  trading  activities for their
         own account.  All Hedging  Transactions by the Payor and all profits or
         losses  associated  therewith,  if any, shall be solely for the Payor's
         account,  irrespective of whether or not mineral products are delivered
         in fulfilment of such obligations. When necessary to give effect to the

<PAGE>
                                      -3-

         provisions  of this  paragraph 7, Gross  Revenue from mineral  products
         subject  to  Hedging  Transactions  by the  Payor  shall be  determined
         pursuant to subclause 3.1(a)(ii), rather than 3.1(a)(i) hereof.

8.       Fair market value shall be determined by using, for gold, the quarterly
         average  price of gold which shall be calculated by dividing the sum of
         all London Bullion Market Association P.M. Gold Fix prices reported for
         the  calendar  quarter in question by the number of days for which such
         prices were  quoted and,  for silver and other  metals,  the  quarterly
         average  price which shall be calculated by dividing the sum of all New
         York Commodity  Exchange  ("COMEX")  prices reported for silver and the
         other  metal  quoted by and at the  closing  of COMEX for the  calendar
         quarter  in  question  by a number of days for which such  prices  were
         quoted,  less,  in each case,  an amount  reasonably  equivalent to the
         deductions permitted by clause 3.2 hereof.

<PAGE>

                                   SCHEDULE C

           PERCENTAGE INTEREST OF THE MEMBERS OF THE HINTON SYNDICATE

Richard Ewing                                                             51%

James Smith                                                               16%

Robert Wagner                                                             17%

J. Malcolm Slack 16%

TOTAL                                                                    100%

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}]]