Document:

Exhibit 4.2
                               WARRANT NO. WIP -2

                   To Purchase 366,667 Shares of Common Stock
                                       of
                        EL CAPITAN PRECIOUS METALS, INC.
                             (a Nevada corporation)
                                 ---------------

      This Warrant and the  Securities  issuable  upon  exercise of this Warrant
have not been  registered  under the  Securities Act of 1933 (the "1933 Act") or
under any state  securities  or "Blue Sky" laws ("Blue Sky Laws").  No transfer,
sale, assignment,  pledge, hypothecation or other disposition of this Warrant or
the  Securities  issuable upon exercise of this Warrant or any interest  therein
may be made except (a) pursuant to an effective registration statement under the
1933 Act and any  applicable  Blue Sky Laws or (b) if the  Corporation  has been
furnished  with an opinion of counsel for the holder,  which opinion and counsel
shall be  reasonably  satisfactory  to the  Corporation,  to the effect  that no
registration  is  required  because of the  availability  of an  exemption  from
registration under the 1933 Act and applicable Blue Sky laws.

      THIS  CERTIFIES  THAT,  for  good  and  valuable   consideration  Whitebox
Intermarket  Partners,  L.P., a British Virgin Islands limited  partnership (the
"Holder"),  or the Holder's registered assigns, is entitled to subscribe for and
purchase  from El Capitan  Precious  Metals,  Inc.,  a Nevada  corporation  (the
"Corporation"),  at any time on or after  January  20,  2006,  to and  including
January 20,  2011  (subject  to the  limitations  provided in Section 10 below),
366,667 fully paid and  nonassessable  shares of Common Stock of the Corporation
at the price of $0.60 per share (the "Warrant Exercise  Price"),  subject to the
anti-dilution and price protection provisions of this Warrant.

      The  shares  which may be  acquired  upon  exercise  of this  Warrant  are
referred to herein as the "Warrant  Shares." As used herein,  the term  "Holder"
means the  Holder,  any party who  acquires  all or a part of this  Warrant as a
registered  transferee  of the  Holder,  or any record  holder or holders of the
Warrant  Shares  issued  upon  exercise,  whether  in whole  or in part,  of the
Warrant.  The term "Common  Stock" means the common stock,  $0.001 par value per
share,  of the  Corporation.  Capitalized  terms  used  herein,  which  are  not
otherwise  defined herein,  shall have the meanings as set forth in the Purchase
Agreement dated October 28, 2005 between the Corporation and the Holder.

      This Warrant is subject to the following provisions, terms and conditions:

1. Exercise; Transferability.

      (a) The rights  represented by this Warrant may be exercised by the Holder
hereof,  in whole or in part (but not as to a fractional share of Common Stock),
by written  notice of exercise (in the form  attached  hereto)  delivered to the
Corporation at the principal  office of the Corporation  prior to the expiration
of this  Warrant and  accompanied  or preceded by the  surrender of this Warrant
along with a check in payment of the  Warrant  Exercise  Price for such  Warrant
Shares.

<PAGE>

      (b) Except as provided in Section 7 hereof,  this Warrant may not be sold,
transferred,  assigned,  hypothecated  or divided  into two or more  Warrants of
smaller denominations, nor may any Warrant Shares issued pursuant to exercise of
this Warrant be  transferred.  In no event may this Warrant be  transferred  and
divided (without any exercise hereof) into any  denomination(s) of less than 100
Warrant Shares.

2. Exchange and Replacement. Subject to Sections 1 and 7 hereof, this Warrant is
exchangeable  upon the surrender  hereof by the Holder to the Corporation at its
office for new Warrants of like tenor and date representing in the aggregate the
right to purchase the number of Warrant Shares  purchasable  hereunder,  each of
such new  Warrants to  represent  the right to  purchase  such number of Warrant
Shares (not to exceed the aggregate total number purchasable hereunder) as shall
be designated by the Holder at the time of such  surrender.  Upon receipt by the
Corporation  of  evidence  reasonably  satisfactory  to it of the  loss,  theft,
destruction  or  mutilation  of this  Warrant,  and,  in case of loss,  theft or
destruction,  of indemnity or security  reasonably  satisfactory to it, and upon
surrender and cancellation of this Warrant,  if mutilated,  the Corporation will
make and  deliver a new  Warrant of like tenor,  in lieu of this  Warrant.  This
Warrant shall be promptly  canceled by the Corporation upon the surrender hereof
in connection  with any exchange or replacement.  The Corporation  shall pay all
expenses,  taxes (other than stock transfer taxes), and other charges payable in
connection with the preparation, execution, and delivery of Warrants pursuant to
this Section 2.

3. Issuance of the Warrant Shares.

      (a) The Corporation agrees that the Warrant Shares shall be and are deemed
to be issued to the Holder as of the close of business on the date on which this
Warrant shall have been surrendered and the payment made for such Warrant Shares
as  aforesaid.  Subject to the  provisions  of paragraph  (b) of this Section 3,
certificates  for the Warrant  Shares so  purchased  shall be  delivered  to the
Holder  within a reasonable  time after the rights  represented  by this Warrant
shall have been so  exercised,  and,  unless  this  Warrant has  expired,  a new
Warrant representing the right to purchase the number of Warrant Shares, if any,
with respect to which this Warrant shall not then have been exercised shall also
be delivered to the Holder.

      (b) Notwithstanding the foregoing,  however,  the Corporation shall not be
required to deliver any  certificate  for Warrant  Shares upon  exercise of this
Warrant except in accordance  with  exemptions  from the  applicable  securities
registration  requirements or registrations  under  applicable  securities laws.
Except as described in Section 9, nothing herein shall obligate the  Corporation
to effect registrations under federal or state securities laws. If registrations
are not in effect and if exemptions  are not available  when the Holder seeks to
exercise the Warrant, the Warrant exercise period will be extended,  if need be,
to prevent the Warrant from  expiring,  until such time as either  registrations
become effective or exemptions are available,  and the Warrant shall then remain
exercisable  for a  period  of at  least  30  calendar  days  from  the date the
Corporation  delivers to the Holder written notice of the  availability  of such
registrations  or  exemptions.  The Holder agrees to execute such  documents and
make such  representations,  warranties and agreements as may be required solely
to  comply  with  the  exemptions  relied  upon  by  the  Corporation,   or  the
registrations made, for the issuance of the Warrant Shares.

                                       2
<PAGE>

4. Covenants of the Corporation.  The Corporation  covenants and agrees that all
Warrant  Shares  will,  upon  issuance  pursuant  to the terms  hereof,  be duly
authorized and issued, fully paid, non-assessable and free from all taxes, liens
and charges with respect to the issue thereof. The Corporation further covenants
and agrees that during the period  within which the rights  represented  by this
Warrant may be exercised,  the Corporation will at all times have authorized and
reserved for the purpose of issue or transfer upon exercise of the  subscription
rights  evidenced by this Warrant a sufficient  number of shares of Common Stock
to provide for the exercise of the rights represented by this Warrant.

5.  Anti-dilution  Adjustments.  The  provisions  of this Warrant are subject to
adjustment as provided in this Section 5.

      (a) Stock Splits,  Dividends and Combinations.  The Warrant Exercise Price
shall be  adjusted  from time to time such  that in case the  Corporation  shall
hereafter:

            (i) pay any  dividends  on any  class of  stock  of the  Corporation
payable in Common Stock or securities convertible into Common Stock;

            (ii)  subdivide its then  outstanding  shares of Common Stock into a
greater number of shares; or

            (iii)   combine    outstanding    shares   of   Common   Stock,   by
reclassification or otherwise;

then, in any such event, the Warrant Exercise Price in effect  immediately prior
to  such  event  shall  (until  adjusted  again  pursuant  hereto)  be  adjusted
immediately  after such event to a price  (calculated  to the nearest full cent)
determined  by  dividing  (A) the number of shares of Common  Stock  outstanding
immediately  prior  to such  event,  multiplied  by the  then  existing  Warrant
Exercise  Price,  by (B) the total number of shares of Common Stock  outstanding
immediately  after  such event  (including  in each case the  maximum  number of
shares of Common Stock  issuable in respect of any securities  convertible  into
Common Stock), and the resulting quotient shall be the adjusted Warrant Exercise
Price per share.  An adjustment  made pursuant to this  Subsection  shall become
effective  immediately  after  the  record  date in the  case of a  dividend  or
distribution and shall become effective  immediately after the effective date in
the case of a subdivision,  combination or reclassification.  If, as a result of
an  adjustment  made  pursuant  to this  Subsection,  the Holder of any  Warrant
thereafter  surrendered  for exercise shall become entitled to receive shares of
two or more classes of capital stock or shares of Common Stock and other capital
stock of the Corporation,  the Board of Directors (whose  determination shall be
conclusive)  shall  determine the  allocation of the adjusted  Warrant  Exercise
Price  between or among  shares of such  classes  of capital  stock or shares of
Common Stock and other capital stock.  All  calculations  under this  Subsection
shall be made to the  nearest  cent or to the nearest  1/100 of a share,  as the
case may be. In the event  that at any time as a result  of an  adjustment  made
pursuant to this Subsection,  the holder of any Warrant  thereafter  surrendered
for  exercise  shall  become  entitled to receive any shares of the  Corporation
other than shares of Common Stock, thereafter the Warrant Exercise Price of such
other  shares so  receivable  upon  exercise of any Warrant  shall be subject to
adjustment  from time to time in a manner and on terms as nearly  equivalent  as
practicable  to the  provisions  with respect to Common Stock  contained in this
Section.

                                       3
<PAGE>

      (b) Mechanics of Adjustment for Stock Splits,  Dividends and Combinations.
Upon each  adjustment  of the Warrant  Exercise  Price  pursuant to Section 5(a)
above,  the  Holder  of  each  Warrant  shall  thereafter  (until  another  such
adjustment) be entitled to purchase at the adjusted  Warrant  Exercise Price the
number of shares,  calculated to the nearest full share, obtained by multiplying
the number of shares  specified  in such Warrant (as adjusted as a result of all
adjustments in the Warrant Exercise Price in effect prior to such adjustment) by
the Warrant  Exercise Price in effect prior to such  adjustment and dividing the
product so obtained by the adjusted Warrant Exercise Price.

      (c)  Consolidations,  Mergers and  Reorganization  Events.  In case of any
consolidation  or merger to which the Corporation is a party other than a merger
or consolidation in which the Corporation is the continuing  corporation,  or in
case of any sale, transfer or other disposition to another corporation of all or
substantially  all of the  assets  of the  Corporation,  or in the  case  of any
statutory  exchange  of  securities  with  another  corporation  (including  any
exchange  effected in connection with a merger of a third  corporation  into the
Corporation),  there shall be no adjustment under Subsection (a) of this Section
5; but the  Holder  of each  Warrant  then  outstanding  shall  have  the  right
thereafter  to convert  such Warrant into the kind and amount of shares of stock
and other securities and property which the Holder would have owned or have been
entitled to receive  immediately  after such  consolidation,  merger,  statutory
exchange,  sale or transfer had such Warrant been converted immediately prior to
the effective date of such consolidation,  merger,  statutory exchange,  sale or
transfer and, in any such case, if necessary,  appropriate  adjustment  shall be
made in the application of the provisions set forth in this Section with respect
to the rights and interests thereafter of any Holders of the Warrant, to the end
that the provisions set forth in this Section shall  thereafter  correspondingly
be made applicable, as nearly as may reasonably be, in relation to any shares of
stock and other securities and property  thereafter  deliverable on the exercise
of the Warrant.  The  provisions of this  Subsection  shall  similarly  apply to
successive consolidations, mergers, statutory exchanges, sales or transfers.

      (d) Adjustments for Diluting Issues. In addition to the adjustments of the
Warrant  Exercise  Price  provided  above,  the Warrant  Exercise Price shall be
subjected to further adjustment from time to time as follows (the main operative
provision hereof is in Section 5(d)(iii) below):

            (i) Special Definitions:

                                       4
<PAGE>

                  (A) "Options"  shall mean rights,  options or warrants  (other
than as excluded by Section  5(d)(i)(D)  below) to  subscribe  for,  purchase or
otherwise  acquire  either Common Stock or  Convertible  Securities  (as defined
herein).

                  (B) "Original Issue Date" shall mean the date hereof.

                  (C) "Convertible Securities" shall mean securities (other than
as  excluded  by Section  5(d)(i)(D)  below)  convertible,  either  directly  or
indirectly, into or exchangeable for Common Stock.

                  (D) "Additional  Shares of Common Stock" shall mean all shares
of Common Stock issued (or,  deemed to be issued) by the  Corporation  after the
Original  Issue Date other than shares of Common  Stock  issued (or deemed to be
issued):

                        1. to employees,  consultants  or directors  pursuant to
stock  option,  stock grant,  stock  purchase or similar  plans or  arrangements
approved by the Corporation's Board of Directors;

                        2. as a dividend  or other  distribution  in  connection
with which an adjustment to the Warrant Exercise Price is made;

                        3. in a merger,  consolidation,  acquisition  or similar
business combination that is approved by the Corporation's Board of Directors;

                        4.  pursuant  to  credit,   lease  or  other  commercial
financing arrangements with parties not affiliated with the Corporation that are
approved by the Corporation's Board of Directors;

                        5. in exchange for technology or other  non-cash  assets
as approved by the Corporation's Board of Directors;

                        6. pursuant to any rights or agreements  outstanding  on
the Original Issue Date; or

                        7. if the  Holder  agrees in  writing  that such  shares
shall not constitute Additional Shares of Common Stock.

            (ii) Deemed Issue of Additional  Shares of Common  Stock.  Except as
otherwise  provided in Section 5(d), in the event the Corporation at any time or
from time to time  after the  Original  Issue Date  shall  issue any  Options or
Convertible  Securities or shall fix a record date for the  determination of any
holders  of any class of  securities  entitled  to receive  any such  Options or
Convertible  Securities,  then the maximum number of shares (as set forth in the
instrument  relating thereto without regard to any provisions  contained therein
for a subsequent  adjustment  of such number) of Common Stock  issuable upon the
exercise of such Options or, in the case of  Convertible  Securities and Options
therefor,  the conversion or exchange of such Convertible  Securities,  shall be
deemed to be  Additional  Shares of Common  Stock  issued as of the time of such
issue or, in case such  record  date shall have been  fixed,  as of the close of
business on such record date, provided that in any such case in which Additional
Shares of Common Stock are deemed to be issued:

                                       5
<PAGE>

                  (A) no further  adjustment in the Warrant Exercise Price shall
be made upon the subsequent  issue of such  Convertible  Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;

                  (B) if such Options or  Convertible  Securities by their terms
provide, with the passage of time or otherwise,  for any increase or decrease in
the consideration  payable to the Company, or increase or decrease in the number
of shares of Common Stock  issuable  upon the  exercise,  conversion or exchange
thereof,  the Warrant Exercise Price computed upon the original issue thereof or
upon the  occurrence of a record date with respect  thereto,  and any subsequent
adjustments  based thereon,  shall,  upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease;

                  (C) upon the  expiration  of any such  Option or any rights of
conversion or exchange under such  Convertible  Securities  which shall not have
been  exercised,  the Warrant  Exercise  Price  computed upon the original issue
thereof  or upon  occurrence  of a record  date with  respect  thereto,  and any
subsequent adjustments based thereon, shall, upon such expiration:

                        1. in the case of Convertible  Securities or Options for
Common Stock, be recomputed as though the only Additional Shares of Common Stock
issued were shares of Common Stock, if any, actually issued upon the exercise of
such Options or the conversion or exchange of such Convertible  Securities,  and
the consideration  received therefor was the consideration  actually received by
the Company for the issue of all such Options,  whether or not  exercised,  plus
the consideration  actually  received by the Company upon such exercise,  or for
the  issue of all such  Convertible  Securities,  whether  or not  converted  or
exchanged, plus the additional  consideration,  if any, actually received by the
Company upon such conversion or exchange; and

                        2. in the case of Options for Convertible Securities, be
recomputed as though only the Convertible  Securities,  if any,  actually issued
upon the  exercise  thereof were issued at the time of issue of such Options and
the  consideration  received by the Company for the Additional  Shares of Common
Stock deemed to have been then issued was the consideration actually received by
the Company for the issue of all such Options,  whether or not  exercised,  plus
the consideration  deemed to have been received by the Company upon the issue of
the  Convertible  Securities  with respect to which such  Options were  actually
exercised.

                  (D) no  readjustment  pursuant to Section  5(d) shall have the
effect of increasing  the Warrant  Exercise Price to an amount which exceeds the
Warrant  Exercise Price existing  immediately  prior to the original  adjustment
with  respect to the  issuance of such  Options or  Convertible  Securities,  as
adjusted  for any  Additional  Shares of Common  Stock  issued  (or deemed to be
issued) between such original adjustment date and such readjustment date; and

                                       6
<PAGE>

                  (E) in the case of any  Option or  Convertible  Security  with
respect to which the  maximum  number of shares of Common  Stock  issuable  upon
exercise or conversion or exchange thereof is not determinable, no adjustment to
the Warrant Exercise Price shall be made until such number becomes determinable.

            (iii) Adjustments for Issuance of Additional Shares of Common Stock.
If the Company, at any time after the issuance of this Warrant,  shall issue any
Additional  Shares of Common Stock  (otherwise  than as provided in the Sections
5(a) and 5(c)  above)  at a price per share  less  than the  applicable  Warrant
Exercise  Price then in effect or  without  consideration,  then the  applicable
Warrant  Exercise  Price upon each such issuance shall be adjusted to that price
(rounded to the nearest cent)  determined by multiplying the applicable  Warrant
Exercise Price then in effect by a fraction, (i) the numerator of which shall be
equal  to the sum of (A) the  number  of  shares  of  Common  Stock  outstanding
immediately prior to the issuance of such Additional Shares of Common Stock plus
(B) the number of shares of Common  Stock  (rounded to the nearest  whole share)
which the aggregate consideration for the total number of such Additional Shares
of  Common  Stock so issued  would  purchase  at a price per share  equal to the
applicable  Warrant  Exercise Price then in effect,  and (ii) the denominator of
which  shall be equal to the  number  of  shares  of  Common  Stock  outstanding
immediately after the issuance of such Additional Shares of Common Stock.

            The provisions of this Section  5(d)(iii)  shall not apply under any
of the  circumstances for which an adjustment is provided in Sections 5(a), 5(b)
or 5(c) above. No adjustment of the applicable  Warrant  Exercise Price shall be
made under this  Section  5(d) upon the  issuance  of any  Additional  Shares of
Common Stock which are issued pursuant to any Options or Convertible  Securities
if  upon  the  issuance  of  such  Options  or  Convertible  Securities  (x) any
adjustment  shall have been made  pursuant to Section  5(d)(ii)  above or (y) no
adjustment was required pursuant to this Section 5(d)(iii). No adjustment of the
applicable  Warrant Exercise Price shall be made under this Section 5(d)(iii) in
an amount  less than $.01 per share,  but any such  lesser  adjustment  shall be
carried  forward  and  shall  be made at the  time  and  together  with the next
subsequent  adjustment,  if any, which together with any  adjustments so carried
forward shall amount to $.01 per share or more; provided, however, that upon any
adjustment of the applicable  Warrant Exercise Price as a result of any dividend
or  distribution  payable  in  Common  Stock or  Convertible  Securities  or the
reclassification,  subdivision  or combination of Common Stock into a greater or
smaller number of shares, the foregoing figure of $.01 per share (or such figure
as last adjusted) shall be adjusted (to the nearest one-half cent) in proportion
to the adjustment in the applicable Warrant Exercise Price.

            (iv)  Determination of  Consideration.  For purposes of this Section
5(d), the consideration received by the Corporation for any Additional Shares of
Common Stock issued (or deemed to be issued) shall be computed as follows:

                  (A) Cash and Property. Such consideration shall:

                        (1) insofar as it  consists of cash,  be computed at the
aggregate amount of cash received by the Company;

                                       7
<PAGE>

                        (2) insofar as it consists of  securities  and the value
of such securities is not determinable by reference to a separate agreement, (A)
if the  securities  are then  traded on a national  securities  exchange  or the
Nasdaq Stock Market (or a similar  national  quotation  system),  then the value
shall be computed  based on the average of the closing  prices of the securities
on such exchange or system over the thirty (30)-day period ending on the date of
receipt  by  the  Corporation,   (B)  if  the  securities  are  actively  traded
over-the-counter,  then the value shall be computed  based on the average of the
closing bid prices over the thirty (30) day ending on the date of receipt by the
Corporation,  and (C) if there is no active public market,  then the value shall
be computed based on the fair market value thereof on the date of receipt by the
Corporation, as determined in good faith by the Board of Directors;

                        (3) insofar as it  consists of property  other than cash
and securities, be computed at the fair market value thereof at the time of such
issuance, as determined in good faith by the Board of Directors; and

                        (4) if Additional  Shares of Common Stock are issued (or
deemed to be issued) together with other shares or securities or other assets of
the  Corporation for  consideration  which cover both, by the proportion of such
consideration  so received,  computed as provided in the  immediately  preceding
Sections  5(d)(iv)(A)(1),  5(d)(iv)(A)(2) and  5(d)(iv)(A)(3),  as determined in
good faith by the Board of Directors.

                  (B)  Options and  Convertible  Securities.  The  consideration
received by the Corporation for Additional Shares of Common Stock deemed to have
been  issued  pursuant  to  Section  5(d)  relating  to Option  and  Convertible
Securities,  shall  be the sum of (x) the  total  amount,  if any,  received  or
receivable by the Corporation as consideration  for the issue of such Options or
Convertible  Securities,  plus (y) the minimum  aggregate  amount of  additional
consideration (as set forth in the instruments relating thereto,  without regard
to  any  provision  contained  therein  for  a  subsequent  adjustment  of  such
consideration)  payable to the Corporation  upon the exercise of such Options or
the  conversion or exchange of such  Convertible  Securities,  or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities.

      (e) Certificate as to Adjustments.  Upon the occurrence of each adjustment
or readjustment of the Warrant  Exercise Price or the number of Warrants covered
hereby  pursuant  to this  Section 5, the  Corporation,  at its  expense,  shall
promptly  compute such  adjustment or  readjustment in accordance with the terms
hereof and furnish to the Holder a certificate  setting forth such adjustment or
readjustment  and  showing in detail the facts  upon  which such  adjustment  or
readjustment is based.  The Corporation  shall,  upon the written request at any
time of the  Holder,  furnish  or cause  to be  furnished  to the  Holder a like
certificate  setting  forth (i) such  adjustments  and  readjustments,  (ii) the
Warrant Exercise Price at the time in effect,  and (iii) the number of shares of
Common Stock and the amount,  if any, of other  property which at the time would
be received upon the exercise of this Warrant.

                                       8
<PAGE>

6. No Voting  Rights.  This  Warrant  shall not entitle the Holder to any voting
rights or other rights as a stockholder of the Corporation.

7. Notice of Transfer of Warrant or Resale of the Warrant Shares.

      (a)  Subject  to the sale,  assignment,  hypothecation  or other  transfer
restrictions set forth in Section 3 hereof,  the Holder,  by acceptance  hereof,
agrees  to give  written  notice to the  Corporation  before  transferring  this
Warrant or transferring any Warrant Shares of such Holder's  intention to do so,
describing briefly the manner of any proposed transfer.  Promptly upon receiving
such  written  notice,  the  Corporation  shall  present  copies  thereof to the
Corporation's  counsel.  If in the opinion of such counsel the proposed transfer
may be effected  without  registration  or  qualification  (under any federal or
state  securities  laws),  the  Corporation,  as promptly as practicable,  shall
notify the Holder of such  opinion,  whereupon  the Holder  shall be entitled to
transfer this Warrant or to dispose of Warrant Shares received upon the previous
exercise  of this  Warrant,  all in  accordance  with the  terms  of the  notice
delivered by the Holder to the Corporation;  provided that an appropriate legend
may be endorsed on this  Warrant or the  certificates  for such  Warrant  Shares
respecting  restrictions  upon  transfer  thereof  necessary or advisable in the
opinion  of counsel  and  satisfactory  to the  Corporation  to prevent  further
transfers  which  would  be in  violation  of  Section  5 of the  1933  Act  and
applicable  state  securities  laws; and provided  further that the  prospective
transferee   or  purchaser   shall   execute  such   documents   and  make  such
representations,  warranties and agreements as may be required  solely to comply
with  the  exemptions  relied  upon  by the  Corporation  for  the  transfer  or
disposition of the Warrant or Warrant Shares.

      (b) If, in the opinion of the Corporation's counsel, the proposed transfer
or disposition  of this Warrant or such Warrant Shares  described in the written
notice given pursuant to this Section 7 may not be effected without registration
or qualification of this Warrant or such Warrant Shares,  the Corporation  shall
promptly give written  notice  thereof to the Holder,  and the Holder will limit
its activities in respect to such transfer or disposition  as, in the opinion of
such counsel, are permitted by law.

8. Fractional Shares. Fractional shares shall not be issued upon the exercise of
this Warrant,  but in any case where the holder would, except for the provisions
of this  Section,  be entitled  under the terms  hereof to receive a  fractional
share, the Corporation  shall, upon the exercise of this Warrant for the largest
number of whole  shares then  called for,  pay a sum in cash equal to the sum of
(a) the excess,  if any, of the Market Price of such  fractional  share over the
proportional  part of the Warrant Exercise Price  represented by such fractional
share,  plus (b) the proportional part of the Warrant Exercise Price represented
by such fractional share. For purposes of this Section,  the term "Market Price"
with  respect  to shares of Common  Stock of any class or series  means the last
reported sale price or, if none,  the average of the last  reported  closing bid
and asked  prices on any national or regional  securities  exchange or quoted in
the National  Association of Securities  Dealers,  Inc.'s  Automated  Quotations
System  ("Nasdaq"),  or if not  listed  on a  national  or  regional  securities
exchange or quoted in Nasdaq,  the average of the last reported  closing bid and
asked prices as reported by  bigcharts.com  (or if this service is discontinued,
such other reporting service  acceptable to the Holder),  or if no quotations in
such  Common  Stock  are  available,  the fair  market  value of the  shares  as
determined in good faith by the Board of Directors of the Corporation.

                                       9
<PAGE>

9. Registration  Rights.  Holder shall have registration  rights for the Warrant
Shares as described in the Registration Rights Agreement dated October 28, 2005.

10. Limitation of Exercise of this Warrant.  Despite anything to the contrary in
this Warrant,  the Holder may not exercise  this Warrant  during the time period
and to the extent that the shares of Common Stock that the Holder could  acquire
upon the exercise hereof would cause Holder's  Beneficial  Ownership (as defined
below) of the Corporation's  Common Stock to exceed 4.99%.  These limitations on
the right to exercise  this Warrant,  the Warrant  issued to Holder on the First
Closing Date (and any similar  limitations set forth in other warrants issued to
the Holder) shall first reduce, in the priority determined by Holder in its sole
discretion,  the Holder's Beneficial Ownership of the Corporation's Common Stock
before limitation of the Holder's  conversion rights, or the Corporation's right
to make payments in Common Stock, under the Note dated of even date herewith and
the Secured  Convertible  Promissory  Note dated  October 28, 2005.  The parties
shall compute the Holder's "Beneficial  Ownership" of Common Stock in accordance
with U.S. Securities and Exchange Commission Rule 13d-3. The Holder will, at the
request of the  Corporation,  from time to time,  notify the  Corporation of the
Holder's computation of Holder's Beneficial Ownership.  By written notice to the
Corporation,  the Holder may waive the  provisions  of this  Section 10, but any
such waiver will not be effective until the 61st day after delivery thereof.

11. No Waiver by Holder.  Neither the consummation of the Second Closing nor any
representation,   warranty  or  covenant   contained  in  this  Warrant  or  any
certificate,  document or other writing  delivered in connection with the Second
Closing  shall be construed as a waiver by Holder of any of its rights under the
Transaction  Documents or a consent by Holder of an  extension of  Corporation's
registration obligations under the Registration Rights Agreement.

      IN WITNESS  WHEREOF,  El Capitan  Precious  Metals,  Inc.  has caused this
Warrant to be signed by its duly authorized officer and this Warrant to be dated
January 20, 2006.

                                        EL CAPITAN PRECIOUS METALS, INC.

                                        By           /s/ Stephen J. Antol
                                            ------------------------------------
                                            Stephen J. Antol, President and
                                            Chief Financial Officer

                                       10
<PAGE>
                                 EXERCISE FORM

   (To Be Executed by the Registered Holder in Order to Exercise the Warrant)

To:      El Capitan Precious Metals, Inc.

The undersigned  hereby  irrevocably  elects to exercise the attached Warrant to
purchase for cash,  ________________ of the shares issuable upon the exercise of
such Warrant,  and requests that  certificates  for such shares (together with a
new Warrant to purchase the number of shares, if any, with respect to which this
Warrant is not exercised) shall be issued in the name of:

                   NAME:
                                   --------------------------------------------

                   SOC. SEC. or
                   TAX I.D. NO.
                                   --------------------------------------------

                   ADDRESS:
                                   --------------------------------------------

Date: _________, 20__.             ---------------------------------------------

                                                              Signature *

   *     The signature on the Notice of Exercise of Warrant must correspond to
         the name as written upon the face of the Warrant in every particular
         without alteration or enlargement or any change whatsoever. When
         signing on behalf of a corporation, partnership, trust or other entity,
         please indicate your position(s) and title(s) with such entity.

<PAGE>

                                 ASSIGNMENT FORM

   (To be Executed by the Registered Holder in Order to Transfer the Warrant)

To:      El Capitan Precious Metals, Inc.

      FOR VALUE RECEIVED,  the undersigned hereby sells,  assigns, and transfers
unto  ______________________________  the right to purchase the securities of El
Capitan Precious  Metals,  Inc. to which the within Warrant relates and appoints
_______________________,  attorney,  to  transfer  said right on the books of El
Capitan Precious Metals, Inc. with full power of substitution in the premises.

Date: _________, 20__.             ---------------------------------------------Exhibit 10.1

                               SECURITY AGREEMENT

      THIS SECURITY  AGREEMENT (this  "Agreement") is made effective October 28,
2005 by and between El Capitan  Precious  Metals,  Inc., a Delaware  corporation
("El Capitan - Delaware"),  and Whitebox Intermarket  Partners,  L.P., a British
Virgin Islands limited partnership ("WIP").

                                    RECITALS

      A. El Capitan -  Delaware  is the wholly  owned  subsidiary  of El Capitan
Precious Metals, Inc., a Nevada corporation ("El Capitan - Nevada").

      B. El Capitan and WIP entered into a Purchase  Agreement dated October 28,
2005 (the  "Purchase  Agreement"),  pursuant  to which WIP  purchased  a secured
convertible  promissory note in the aggregate  principal amount of $750,000 (the
"Note") and a warrant to purchase  shares of El Capitan - Nevada's  Common Stock
(the  "Warrant")  in  consideration  of a  $750,000  loan (the  "Loan").  WIP is
referred to herein as the "Secured Party."

      C. As part of the Purchase  Agreement,  El Capitan - Nevada has granted to
WIP and its affiliates an option to purchase an additional  secured  convertible
promissory note in the aggregate  principal  amount of $550,000 (the "Additional
Note") and an  additional  warrant to  purchase  Common  Stock (the  "Additional
Warrant"). WIP exercised this option on January 11, 2006.

      C. As a condition  to making the Loan and the  purchase of the  Additional
Note and  Additional  Warrant,  El  Capitan -  Delaware  has agreed to pledge to
Secured Party all of its assets, subject to no other security interest.

      NOW, THEREFORE,  in consideration of the agreements herein and in reliance
upon the  representations  and  warranties  set forth  herein and  therein,  the
parties agree as follows:

                                   ARTICLE 1.
                                  DEFINED TERMS

      1.1  DEFINITIONS.  Unless  otherwise  defined herein or unless the context
otherwise  requires,  terms used in this  Agreement,  including its preamble and
recitals, have the meanings provided in the Uniform Commercial Code in effect in
the State of Delaware (the "UCC"). In addition, the following terms when used in
this  Agreement,  including its preamble and recitals,  shall have the following
meanings:

      "Loan  Documents"  means  (a)  this  Agreement,  (b)  the  Notes,  (c) the
Warrants,  (d) a Registration Rights Agreement dated October 28, 2005 between El
Capitan - Nevada  and WIP (the  "Registration  Rights  Agreement"),  and (e) the
Purchase Agreement.

<PAGE>

      "Notes" means each of the Note and the Additional Note.

      "Obligations"  means the payment and other  performance  obligations under
the Loan Documents.

      "Warrants" means each of the Warrant and the Additional Warrant.

                                   ARTICLE 2.
                                SECURITY INTEREST

      2.1  GRANT  OF  SECURITY  INTEREST.  To  secure  the  timely  payment  and
performance  in full of the  Obligations,  El  Capitan -  Delaware  does  hereby
assign,  grant and pledge to Secured Party,  subject to no other secured rights,
all of the estate,  right, title and interest of El Capitan - Delaware in and to
the Collateral as more fully described on Exhibit A hereto, whether now owned or
later acquired or created, and including all proceeds of the Collateral, whether
cash or non-cash (the "Collateral").

      2.2 FINANCING STATEMENTS.

            (a) El Capitan - Delaware  hereby  authorizes  Secured Party to file
all financing statements,  continuation statements,  assignments,  certificates,
and other documents and instruments  with respect to the Collateral  pursuant to
the UCC and  otherwise as may be necessary  or  reasonably  requested by Secured
Party to perfect or from time to time to publish notice of, or continue or renew
the security  interests granted hereby  (including,  such financing  statements,
continuation statements,  certificates,  and other documents as may be necessary
or  reasonably  requested  to  perfect a  security  interest  in any  additional
property  rights  hereafter  acquired  by  El  Capitan  -  Delaware  or  in  any
replacements,  products or proceeds thereof), in each case in form and substance
satisfactory to Secured Party.

            (b) Secured Party will pay the cost of filing the same in all public
offices where filing is necessary or  reasonably  requested by Secured Party and
will pay any and all  recording,  transfer  or filing  taxes  that may be due in
connection with any such filing.  El Capitan - Delaware grants Secured Party the
right,  at any  time  and at  Secured  Party's  option,  to file any or all such
financing statements,  continuation statements,  and other documents pursuant to
the UCC and  otherwise  as  Secured  Party  reasonably  may  deem  necessary  or
desirable.

            (c) El  Capitan  -  Delaware  hereby  authorizes  the  filing of any
financing  statements or  continuation  statements,  and amendments to financing
statements,  or any similar  document in any  jurisdictions  and with any filing
offices as Secured Party may reasonably  determine are necessary or advisable to
perfect  the  security  interests  granted  to  Secured  Party.  Such  financing
statements may describe the Collateral in the same manner as described herein or
may contain an  indication or  description  of collateral  that  describes  such
property  in any other  manner as  Secured  Party may  reasonably  determine  is
necessary,  advisable  or  prudent  to ensure  the  perfection  of the  security
interest in the Collateral granted to Secured Party herein.

      2.3 DEBTOR REMAINS LIABLE.

                                       2
<PAGE>

            (a) Anything herein  contained to the contrary  notwithstanding,  El
Capitan - Delaware shall remain liable under any contracts, agreements and other
documents  included  in the  Collateral,  to  perform  all  of  the  obligations
undertaken by it  thereunder,  all in accordance  with and pursuant to the terms
and  provisions  thereof,  and  Secured  Party  shall  have  no  obligations  or
liabilities under any such contracts, agreements or other documents by reason of
or  arising  out of this  Agreement,  nor shall  Secured  Party be  required  or
obligated  in any manner to perform or fulfill any  obligations  of El Capitan -
Delaware  thereunder  or to make any  payment,  or to make any inquiry as to the
nature or  sufficiency  of any  payment  received by them or present or file any
claim, or take any action to collect or enforce the payment of any amounts which
may have been  assigned  to them or to which they may be entitled at any time or
times.

            (b) If  any  default  by El  Capitan  -  Delaware  under  any of the
contracts,  agreements or other documents  shall occur,  Secured Party shall, at
its option, be permitted (but shall not be obligated) to remedy any such default
by giving  written  notice of such  intent to El Capitan -  Delaware  and to the
parties to such contract, agreement or other document. Any cure by Secured Party
of El Capitan - Delaware's  default under any such contract,  agreement or other
document  shall  not be  construed  as an  assumption  by  Secured  Party of any
obligations,  covenants or agreements of El Capitan - Delaware contained in such
contract,  agreement or other  document,  and Secured  Party shall not incur any
liability  to El  Capitan  -  Delaware  or any  other  person as a result of any
actions  undertaken  by Secured  Party in curing or  attempting to cure any such
default.  This Agreement  shall not be deemed to release or to affect in any way
the obligations of El Capitan - Delaware under any of such contracts, agreements
or other documents.

      2.4  DELIVERY OF  CERTIFICATES.  All  certificates  and other  instruments
representing  or  evidencing  El  Capitan -  Delaware's  ownership  of shares of
capital stock of El Capitan,  Ltd., an Arizona  corporation or any other entity,
including any  subsidiary of El Capitan - Delaware  (collectively,  the "Pledged
Equity  Interests")  shall be  delivered  to and held by or on behalf of Secured
Party, or its designee in the manner set forth in Section 4.12 below.

      2.5 INTENTIONALLY OMITTED.

      2.6 VOTING  RIGHTS;  DIVIDENDS.  As long as no Event of Default,  or event
which with the giving of notice or lapse of time  would  constitute  an Event of
Default shall have occurred and be continuing:

            (a) El Capitan - Delaware  shall be entitled to exercise any and all
voting or consensual  rights  relating to the Pledged  Equity  Interests for any
purpose not inconsistent  with the terms of this Agreement;  provided,  however,
that El Capitan - Delaware  shall not  exercise or refrain from  exercising  any
such right if such action would have a material  adverse  effect on the value of
the Collateral; and

            (b) El Capitan - Delaware  shall be  entitled  to receive and retain
any and all ordinary  cash  dividends  payable in respect of the Pledged  Equity
Interests.

                                   ARTICLE 3.
                    REPRESENTATIONS AND WARRANTIES OF DEBTOR

      El Capitan - Delaware makes the following  representations  and warranties
to  and in  favor  of  Secured  Party  as of  January  20,  2006.  All of  these
representations  and warranties shall survive the execution and delivery of this
Agreement:

                                       3
<PAGE>

      3.1 ORGANIZATION. El Capitan - Delaware:

            (a) is a corporation  duly  incorporated and validly existing and in
good standing under the laws of the State of Delaware;

            (b) is  duly  qualified,  authorized  to do  business  as a  foreign
corporation  in each U.S. and foreign  jurisdiction  where the  character of its
properties or the nature of its activities makes such  qualification  necessary;
and

            (c) has the  corporate  power  (A) to carry on its  business  as now
being  conducted and as proposed to be conducted by it, (B) to execute,  deliver
and  perform  this  Agreement,  (C) to take all  action as may be  necessary  to
consummate the transactions  contemplated hereunder,  and (D) to grant the liens
and security interests provided for in this Agreement.

      3.2 OFFICES,  LOCATION OF COLLATERAL.  The chief executive office or chief
place of  business  of El  Capitan - Delaware  is  located  at 14301  North 87th
Street, Scottsdale, Arizona, 85260.

      3.3 TITLE AND LIENS. El Capitan - Delaware has good, valid, and marketable
title to the Collateral,  free from all liens and encumbrances of any kind. As a
result of this  Agreement,  Secured  Party will have a first  priority  security
interest in the Collateral, subordinate to no other security interest.

      3.4 AUTHORIZATION; NO CONFLICT. El Capitan - Delaware has duly authorized,
executed and delivered this Agreement, and El Capitan - Delaware's execution and
delivery hereof and its consummation of the transactions contemplated hereby and
the compliance with the terms thereof:

            (a)  does  not  or  will  not  contravene  any  legal   requirements
applicable  to or binding on El Capitan - Delaware  which  could  reasonably  be
expected  to have a  material  adverse  effect  upon the  Collateral  or Secured
Party's rights therein;

            (b) does not or will not  contravene  or result in any  breach of or
constitute  any  default,  or result in or require the creation of any lien upon
any of El Capitan - Delaware's  property,  under any  agreement or instrument to
which El Capitan - Delaware  is a party or by which it or any of its  properties
may be bound or affected; and

            (c) does not or will not  require  the  consent or  approval  of any
third party which has not already been obtained.

      3.5  ENFORCEABILITY.   This  Agreement  is  a  legal,  valid  and  binding
obligation  of Secured  Party,  enforceable  against  El  Capitan - Delaware  in
accordance  with its terms,  except to the  extent  that  enforceability  may be
limited by applicable  bankruptcy,  insolvency,  moratorium,  reorganization  or
other similar laws  affecting  the  enforcement  of creditors'  rights or by the
effect of general equitable principles.

                                       4
<PAGE>

      3.6 UCC  ARTICLE 8. All shares of common  stock of El  Capitan,  Ltd.,  an
Arizona  corporation,  owned by the El  Capitan-Delaware,  and shares of capital
stock of any  subsidiary  of the El Capitan - Delaware or of any other entity in
which El Capitan - Delaware owns an interest,  that are part of the  Collateral,
are securities governed by Article 8 of the UCC.

                                   ARTICLE 4.
                               COVENANTS OF DEBTOR

  El Capitan - Delaware covenants to and in favor of Secured Party as follows:

      4.1 COMPLIANCE WITH  OBLIGATIONS.  El Capitan - Delaware shall perform and
comply in all material  respects with all obligations and conditions on its part
to be performed with respect to the Collateral.

      4.2  INFORMATION  CONCERNING  COLLATERAL.  El  Capitan -  Delaware  shall,
promptly upon request,  provide to Secured  Party all  information  and evidence
they it reasonably requests concerning the Collateral to enable Secured Party to
enforce the provisions of this Agreement.

      4.3 DEFENSE OF COLLATERAL. El Capitan - Delaware shall defend its title to
the  Collateral  and the  interests of Secured Party in the  Collateral  pledged
hereunder against the claims and demands of all third parties whomsoever.

      4.4 MAINTENANCE OF COLLATERAL. El Capitan - Delaware shall not (i) fail to
deliver to Secured Party a copy of each demand or notice received or given by it
relating to any  contract or  agreement of El Capitan - Delaware or to any other
Collateral  which could reasonably be expected to have a material adverse effect
upon the  Collateral  or  Secured  Party's  rights  therein,  or (ii)  except as
otherwise permitted herein, sell, contract to sell, assign,  transfer or dispose
of any of the Collateral, except in the ordinary course of business, or with the
consent of Secured Party, which consent will not be unreasonably withheld.

      4.5 EVENTS OF DEFAULT.  El Capitan - Delaware  shall give to Secured Party
prompt notice of any material default with respect to the Collateral of which El
Capitan - Delaware has knowledge or has received notice.

      4.6  PRESERVATION  OF VALUE;  LIMITATION  OF LIENS.  El Capitan - Delaware
shall not take any action in connection  with the Collateral  which would impair
in any material respect the interests or rights of Secured Party therein or with
respect thereto, except as expressly permitted hereby;  provided,  however, that
nothing in this  Agreement  shall  prevent El Capitan -  Delaware,  prior to the
exercise  by Secured  Party of any rights  pursuant  to the terms  hereof,  from
undertaking  El  Capitan  -  Delaware's  operations  in the  ordinary  course of
business.  El Capitan - Delaware shall not directly or indirectly create, incur,
assume or suffer to exist any liens on or with respect to all or any part of the
Collateral  (other  than the lien  created  by this  Agreement).  El  Capitan  -
Delaware  shall at its own cost and expense  promptly take such action as may be
necessary to discharge any such liens.

                                       5
<PAGE>

      4.7 NO OTHER FILINGS. El Capitan - Delaware shall not file or authorize to
be filed in any jurisdiction any financing  statements under the UCC or any like
statement relating to the Collateral.

      4.8  MAINTENANCE OF RECORDS.  El Capitan - Delaware  shall,  at all times,
keep  accurate and  complete  records of the  Collateral.  El Capitan - Delaware
shall permit  representatives of Secured Party, upon reasonable prior notice, at
any time during  normal  business  hours of El Capitan - Delaware to inspect and
make abstracts from El Capitan - Delaware's books and records  pertaining to the
Collateral.  Upon the  occurrence  and during the  continuation  of any Event of
Default,  at Secured  Party's  request,  El Capitan -  Delaware  shall  promptly
deliver copies of any and all such records to Secured Party.

      4.9 PAYMENT OF TAXES. El Capitan - Delaware shall pay or cause to be paid,
before  any  fine,  penalty,  interest  or cost  attaches  thereto,  all  taxes,
assessments and other governmental or non-governmental  charges or levies (other
than  those  taxes  that it is  contesting  in  good  faith  and by  appropriate
proceedings,  and in respect of which it has established  adequate  reserves for
such taxes) now or hereafter  assessed or levied against the Collateral  pledged
by them hereunder and shall retain copies of, and, upon request,  permit Secured
Party to examine receipts showing payment of any of the foregoing.

      4.10 NAME; JURISDICTION OF ORGANIZATION.  El Capitan - Delaware shall give
Secured Party at least 30 days prior written notice before El Capitan - Delaware
changes its name,  jurisdiction  of organization or entity type and shall at the
expense  of El Capitan - Delaware  execute  and  deliver  such  instruments  and
documents as may be required by Secured Party or applicable  legal  requirements
to maintain a first perfected security interest in the Collateral.

      4.11 PROCEEDS OF  COLLATERAL.  Except as otherwise  specified  herein,  El
Capitan - Delaware shall,  at all times,  keep pledged to Secured Party pursuant
hereto all Collateral and all dividends, distributions,  interest, principal and
other proceeds  received by El Capitan - Delaware with respect thereto,  and all
other  Collateral and other  securities,  instruments,  proceeds and rights from
time to time received by or distributable to El Capitan - Delaware in respect of
any Collateral,  and shall not permit any issuer of such Collateral to issue any
shares of stock or other equity  interests which shall not have been immediately
duly pledged to Secured Party hereunder.

      4.12 DELIVERY OF PLEDGED  EQUITY  INTERESTS.  Certificates  or instruments
representing  or evidencing the Pledged Equity  Interests  shall be delivered to
and held by or on behalf of Secured Party pursuant hereto. All such certificates
or instruments  shall be in suitable form for transfer by delivery,  or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance  acceptable to Secured Party. Secured Party shall have the
right,  at any time in its  discretion  and without prior notice to El Capitan -
Delaware,  following the occurrence and during the  continuation  of an Event of
Default,  to transfer  to or to register in the name of Secured  Party or any of
its  nominees  any or  all  of the  Pledged  Equity  Interests  and to  exchange
certificates or instruments  representing or evidencing Pledged Equity Interests
for  certificates or instruments of smaller or larger  denominations;  provided,
however,  that once such Event of Default  has been  cured,  Secured  Party will
promptly  transfer to or register in the name or cause its  nominees to transfer
to or to register in the name of El Capitan - Delaware all such  Pledged  Equity
Interests.  In furtherance of the foregoing, El Capitan - Delaware shall further
execute and deliver to Secured Party stock powers in the form attached hereto as
Exhibit B.

                                       6
<PAGE>

                                   ARTICLE 5.
                               RIGHTS AND REMEDIES

      5.1 EVENT OF DEFAULT  DEFINED.  Any failure of El Capitan - Delaware or El
Capitan - Nevada to  materially  comply with any  covenant,  agreement,  term or
provision   contained  in  this  Agreement,   the  Purchase   Agreement  or  the
Registration  Rights  Agreement  or any event of default  under any of the Notes
(incorporating any applicable cure periods)  (including events of non-compliance
with this  Agreement as described  in the Notes) shall  constitute  an "Event of
Default"  hereunder.  Without  limiting the  foregoing,  it is intended that any
event of default under the Additional  Note will  constitute an event of default
under the Note.

      5.2 REMEDIES UPON EVENT OF DEFAULT.

            (a) During any period  during  which an Event of Default  shall have
occurred and be continuing,  Secured Party may (but shall be under no obligation
to), directly or by using an agent or broker:

                  (i) proceed to protect and enforce the rights  vested in it by
this Agreement and under the UCC;

                  (ii) cause all moneys and other  property  pledged as security
to be paid and/or  delivered  directly to it, and demand,  sue for,  collect and
receive any such moneys and property;

                  (iii)  cause  any  action  at law or suit in  equity  or other
proceeding to be instituted and prosecuted to collect or enforce any Obligations
of El Capitan - Delaware or rights included in the  Collateral,  or for specific
enforcement  of any covenant or  agreement  contained  herein,  or in aid of the
exercise  of any  power  therein  or  herein  granted,  or for  any  foreclosure
hereunder and sale under a judgment or decree in any judicial proceeding,  or to
enforce any other legal or equitable  right vested in it by this Agreement or by
law;

                  (iv)  foreclose  or  enforce  any  other  agreement  or  other
instrument  by or under or  pursuant  to which the  Obligations  of El Capitan -
Delaware are issued or secured;

                  (v)  subject  to  Section  5.2(b),  sell,  lease or  otherwise
dispose of any or all of the Collateral,  in one or more  transactions,  at such
prices as Secured  Party may deem best,  and for cash or on credit or for future
delivery,  without  assumption of any credit risk,  at any broker's  board or at
public or private sale,  without demand of performance or notice of intention to
sell, lease or otherwise dispose of, or of time or place of disposition  (except
such notice as is required by applicable statute and cannot be waived), it being
agreed that Secured  Party may be  purchasers  or lessees on their own behalf at
any such sale and that  Secured  Party or anyone else who may be the  purchaser,
lessee or  recipient  for value of any or all of the  Collateral  so disposed of
shall,  upon such  disposition,  acquire all of El Capitan -  Delaware's  rights
therein.  Secured Party may adjourn any public or private sale or cause the same
to be adjourned  from time to time by  announcement  at the time and place fixed
for the same, and such sale may, without further notice or publication,  be made
at any time or place to which the same may be so  adjourned.  If  Secured  Party
sells any of the  Collateral  upon credit,  after  reasonable  inquiry as to the
credit worthiness of the purchaser,  El Capitan - Delaware will be credited only
with  payments  actually  made by the  purchaser,  received by Secured Party and
applied to the  indebtedness of the purchaser.  In the event the purchaser fails
to pay for the  Collateral,  Secured  Party may  resell  the  Collateral  and El
Capitan - Delaware shall be credited with the proceeds of the sale;

                                       7
<PAGE>

                  (vi) incur expenses,  including  reasonable  attorneys'  fees,
consultants'  fees, and other costs  appropriate to the exercise of any right or
power under this Agreement;

                  (vii)  perform  any   obligation  of  El  Capitan  -  Delaware
hereunder and make payments,  purchase,  contest or compromise any  encumbrance,
charge, or lien, and pay taxes and expenses;

                  (viii) make any  reasonable  compromise or  settlement  deemed
desirable  with respect to any or all of the  Collateral  and extend the time of
payment, arrange for payment installments, or otherwise modify the terms of, any
or all of the Collateral;

                  (ix) secure the appointment of a receiver of any or all of the
Collateral;

                  (x)  exercise  any  other or  additional  rights  or  remedies
granted  to  Secured  Party  under  any other  provision  of this  Agreement  or
exercisable by a secured party under the UCC,  whether or not the UCC applies to
the affected  Collateral,  or under any other  applicable law and take any other
action  which  Secured  Party deem  necessary or desirable to protect or realize
upon their security interests in the Collateral or any part thereof; and/or

                  (xi) appoint a third party (who may be an employee, officer or
other  representative of Secured Party) to do any of the foregoing,  or take any
other action permitted hereunder, on behalf of Secured Party.

            (b) If, pursuant to any law, prior notice of any action described in
Section  5.2(a) is required  to be given to El Capitan - Delaware,  El Capitan -
Delaware hereby  acknowledges  that the minimum time required by such law, or if
no minimum is specified, ten days, shall be deemed a reasonable notice period.

            (c) Any action or proceeding to enforce this  Agreement may be taken
by Secured  Party either in El Capitan - Delaware's  name or in Secured  Party's
name, as Secured Party may deem necessary.

            (d) All rights of  marshalling  of assets of El Capitan -  Delaware,
including any such right with respect to the Collateral, are hereby waived by El
Capitan - Delaware.

            (e) Secured  Party shall incur no  liability as a result of the sale
of any or all of the  Collateral at any private sale pursuant to Section  5.2(a)
conducted in a  commercially  reasonable  manner.  El Capitan - Delaware  hereby
waives any claims  against  Secured Party arising by reason of the fact that the
price at which any or all of the Collateral may have been sold at such a private
sale was less than the price that might have been  obtained  at a public sale or
was less than the  aggregate  amount of the  Obligations,  even if Secured Party
accepts the first offer  received and does not offer the Collateral to more than
one offeree.

                                       8
<PAGE>

      5.3  ATTORNEY-IN-FACT.  Upon the occurrence and during the continuation of
an Event of Default,  El Capitan - Delaware hereby  irrevocably  constitutes and
appoints  Secured Party as its true and lawful  attorney-in-fact  to enforce all
rights of El Capitan - Delaware  with respect to the  Collateral,  including the
right to give appropriate receipts, releases and satisfactions for and on behalf
of and in the name of El Capitan - Delaware or, at the option of Secured  Party,
in the name of  Secured  Party,  with the same  force and effect as El Capitan -
Delaware could do if this Agreement had not been made. If Secured Party shall so
elect after the  occurrence and during the  continuation  of an Event of Default
hereunder,  Secured  Party  shall  have  the  right  at  all  times  to  settle,
compromise, adjust, or liquidate all claims or disputes directly with El Capitan
-  Delaware  or any  obligor  of El  Capitan  -  Delaware  upon  such  terms and
conditions as Secured Party may determine in its sole discretion,  and to charge
all  costs  and  expenses  thereof  (including  reasonable  attorneys'  fees and
charges) to El Capitan - Delaware's  account and to add them to the  Obligations
whereupon such costs and expenses  shall be and become part of the  Obligations.
This  power  of  attorney  is a power  coupled  with an  interest  and  shall be
irrevocable.

      5.4  EXPENSES;  INTEREST.  All costs and  expenses  (including  reasonable
attorneys'  fees and  expenses)  incurred by Secured  Party in  connection  with
exercising any actions taken under Article 5, together with interest thereon (to
the extent  permitted  by law)  computed at a rate of 10% per annum (or if less,
the maximum rate permitted by law) from the date on which such costs or expenses
are  invoiced  to and become  payable by El Capitan -  Delaware,  to the date of
payment  thereof,  shall  constitute  part of the  Obligations  secured  by this
Agreement  and shall be paid by El Capitan - Delaware to Secured Party within 10
days after written demand.

      5.5 NO  IMPAIRMENT OF REMEDIES.  If under  applicable  law,  Secured Party
proceeds by either judicial  foreclosure or by non-judicial sale or enforcement,
Secured Party may, at its sole option, determine which of its remedies or rights
to pursue without affecting any of its rights and remedies under this Agreement.
If, by exercising any right and remedy,  Secured Party forfeits any of its other
rights or remedies,  including any right to enter a deficiency  judgment against
El Capitan - Delaware or any third party (whether  because of any applicable law
pertaining  to  "election  of  remedies"  or the  like),  El  Capitan - Delaware
nevertheless  hereby  consents  to such action by Secured  Party.  To the extent
permitted by  applicable  law, El Capitan - Delaware also waives any claim based
upon such  action,  even if such  action by Secured  Party  results in a full or
partial  loss of any rights of  subrogation,  indemnification  or  reimbursement
which El  Capitan - Delaware  might  otherwise  have had but for such  action by
Secured Party or the terms herein. Any election of remedies which results in the
denial or impairment of the right of Secured Party to seek a deficiency judgment
against any third party shall not, to the extent  permitted by  applicable  law,
impair El Capitan - Delaware's obligations  hereunder.  If Secured Party bids at
any  foreclosure  or trustee's  sale or at any private sale  permitted by law or
this  Agreement,  Secured  Party  may bid all or less  than  the  amount  of the
Obligations.  To the  extent  permitted  by  applicable  law,  the amount of the
successful bid at any such sale, whether Secured Party or any other party is the
successful bidder,  shall be conclusively  deemed to be the fair market value of
the  Collateral  and the  difference  between such bid amount and the  remaining
balance of the Obligations shall be conclusively  deemed to be the amount of the
Obligations.

                                       9
<PAGE>

                                   ARTICLE 6.
                                 CERTAIN WAIVERS

      6.1  MODIFICATION  OF  OBLIGATIONS.  El  Capitan  -  Delaware's  liability
hereunder shall not be reduced, limited,  impaired,  discharged or terminated if
Secured  Party at any time with El  Capitan -  Delaware  s consent  (or,  to the
extent permissible by the terms of the Loan Documents and law, without notice to
or demand of El Capitan - Delaware):

            (a) renews, extends, accelerates, increases the rate of interest on,
or otherwise changes the time, place, manner or terms, or otherwise modifies any
of the Obligations (including any payment terms);

            (b)  extends  or  waives  the  time  for  El  Capitan  -  Delaware's
performance of, or compliance with, any term,  covenant or agreement on its part
to be performed or observed under the Loan Documents, or waives such performance
or compliance or consents to a failure of, or departure from,  such  performance
or compliance;

            (c)  settles,  compromises,  releases or  discharges,  or accepts or
refuses any offer of performance with respect to, or  substitutions  for, any of
the  Obligations  or any agreement  relating  thereto  and/or  subordinates  the
payment of the same to the payment of any other  obligations;  (d)  requests and
accepts other  guaranties of any of the Obligations and takes and holds security
for the payment hereof or any of the Obligations;

            (e)  releases,  surrenders,  exchanges,  substitutes,   compromises,
settles,  rescinds,  waives, alters,  subordinates or modifies,  with or without
consideration,  any  security for payment of any of the  Obligations,  any other
guaranties of any of the Obligations, or any other obligation of any third party
with respect to any of the Obligations;

            (f) to the  extent  permitted  by  law,  enforces  and  applies  any
security,  if any, now or hereafter  held by or for the benefit of Secured Party
in respect hereof or any of the  Obligations  and directs the order or manner of
sale thereof, or exercises any other right or remedy that Secured Party may have
against any such  security,  in each case as Secured Party in its discretion may
determine,  including  foreclosure  on any  collateral  pursuant  to one or more
judicial or nonjudicial  sales,  whether or not every aspect of any such sale is
commercially reasonable; or

            (g) exercises any other rights available to it under any of the Loan
Documents, at law or in equity.

      6.2  SECURITY  INTERESTS  ABSOLUTE.  All rights of  Secured  Party and the
security  interests  hereunder,  and all  obligations  of El  Capitan - Delaware
hereunder, shall be absolute and unconditional irrespective of:

                                       10
<PAGE>

            (a) any  failure or omission  to assert or enforce or  agreement  or
election not to assert or enforce, or the stay or enjoining,  by order of court,
by operation of law or otherwise,  of the exercise or enforcement  of, any claim
or  demand  or any  right,  power or  remedy  (whether  arising  under  any Loan
Document, at law, in equity or otherwise) with respect to any of the Obligations
or any agreement  relating thereto,  or with respect to any other guaranty of or
security for the payment of any of the Obligations;

            (b) any rescission,  waiver,  amendment or  modification  of, or any
consent to departure from, any of the terms or provisions  (including provisions
relating  to events  of  default)  hereof,  in any other  Loan  Document  or any
agreement or instrument  executed pursuant thereto,  or of any other guaranty or
security for any of the Obligations,  in each case, whether or not in accordance
with the terms hereof or any other Loan  Document or any  agreement  relating to
such other guaranty or security;

            (c) the application of payments received from any source (other than
payments  received from the proceeds of any security for any of the Obligations,
except to the extent such security also serves as  collateral  for  indebtedness
other  than the  Obligations)  to the  payment of  indebtedness  of El Capitan -
Delaware to Secured Party other than the Obligations,  even though Secured Party
might have elected to apply such payment to any part or all of the Obligations;

            (d)  Secured  Party's  consent  to  the  change,  reorganization  or
termination of the corporate structure or existence of El Capitan - Delaware and
to any corresponding restructuring of any of the Obligations;

            (e) any other act or thing or omission, or delay to do any other act
or thing,  which may or might in any manner or to any extent vary the risk of El
Capitan - Delaware as an obligor in respect of any of the Obligations;

            (f) any Obligations or any agreement  relating thereto,  at any time
being found to be illegal, invalid or unenforceable in any respect

            (g) any  defenses,  set-offs  or  counterclaims  which El  Capitan -
Delaware  may  allege  or  assert  against  Secured  Party  in  respect  of  the
Obligations; and

            (h) whether  Secured Party makes,  or does not or fails to make, any
additional loan to El Capitan - Delaware subsequent to the date hereof.

      6.3 CERTAIN  WAIVERS.  Except as provided  in Section  7.16,  El Capitan -
Delaware  hereby  waives any and all  defenses  afforded to a surety,  including
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Obligations and this Agreement and any requirement that Secured Party
protect,  secure,  perfect  or insure  any  security  interest  or lien,  or any
property  subject  thereto,  or exhaust any right or take any action  against El
Capitan - Delaware or any other third party or entity or any collateral securing
any of the Obligations, as the case may be.

                                       11
<PAGE>

      6.4 POSTPONEMENT OF SUBROGATION. El Capitan - Delaware agrees that it will
not  exercise  any rights  which it may acquire by way of rights of  subrogation
under this  Agreement,  by any payment made  hereunder or otherwise,  while this
Agreement  is in effect,  unless  such action is required to stay or prevent the
running of any applicable statute of limitations.  Any amount paid to El Capitan
- Delaware on account of any such subrogation rights prior to such time shall be
held in trust for Secured Party and shall  immediately  be paid to Secured Party
and credited and applied against the Obligations.  Any time after this Agreement
has terminated and if El Capitan - Delaware has made payment to Secured Party of
all of the  Obligations,  or if an action is  required  to stay or  prevent  the
running  of any  applicable  statute  of  limitations,  then,  at El  Capitan  -
Delaware's  request,  Secured  Party will  execute  and  deliver to El Capitan -
Delaware appropriate  documents (without recourse and without  representation or
warranty)  necessary  to evidence the  transfer by  subrogation  to El Capitan -
Delaware of an interest in the  Obligations  resulting  from such  payment by El
Capitan - Delaware .

                                   ARTICLE 7.
                                  MISCELLANEOUS

      7.1  NOTICES.  Any  communications,  including  notices and  instructions,
between the parties hereto or notices  provided  herein to be given may be given
to the following addresses:

            (a)   if to El Capitan - Delaware, at:

                  El Capitan Precious Metals, Inc.
                  14301 North 87th Street, Suite 216
                  Scottsdale, Arizona 85260
                  Attention: Charles C. Mottley, President and
                  Chief Executive Officer
                  Facsimile: (480) 607-7193

                  with a copy to:

                  Maslon Edelman Borman & Brand, LLP
                  90 South Seventh Street, Suite 3300
                  Minneapolis, Minnesota  55402
                  Attention: William M. Mower, Esq.
                  Facsimile: (612) 642-8358

            (b)   if to the Secured Party, in care of:

                  Whitebox Advisors, LLC
                  3033 Excelsior Boulevard, Suite 300
                  Minneapolis, Minnesota  55416
                  Attention: Jonathan Wood, Chief Financial Officer
                  Facsimile: (612) 253-6151

                  with a copy to:

                  Messerli & Kramer P.A.
                  150 South Fifth Street, Suite 1800
                  Minneapolis, Minnesota  55402
                  Attention: Jeffrey C. Robbins, Esq.
                  Facsimile: (612) 672-3777.

                                       12
<PAGE>

      All  notices or other  communications  required or  permitted  to be given
hereunder  shall be made in writing and shall be considered  given (a) when made
if made by hand  delivery,  (b) one business day after being  deposited  with an
overnight courier if made by a courier guaranteeing  overnight delivery,  (c) on
the date indicated on the notice of receipt if made by first-class United States
mail,  with  return  receipt  requested,  and (d) upon  confirmation  if made by
telecopier.  Any party  shall  have the right to change its  address  for notice
hereunder to any other location within the  continental  United States by giving
of notice to the other parties in the manner set forth hereinabove.

      7.2 DELAY AND WAIVER; REMEDIES CUMULATIVE.  No failure or delay by Secured
Party in  exercising  any right or power  hereunder  shall  operate  as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any  abandonment  or  discontinuance  of steps to enforce such a right or power,
preclude  any other or further  exercise  thereof or the  exercise  of any other
right or power. Any waiver, permit, consent or approval of any kind or character
on the part of Secured Party of any breach or default under the Agreement or any
waiver  on the part of  Secured  Party of any  provision  or  condition  of this
Agreement  must be in writing and shall be effective  only to the extent in such
writing  specifically set forth. No right, power or remedy herein conferred upon
or reserved to Secured Party  hereunder is intended to be exclusive of any other
right,  power or remedy,  and every such right,  power and remedy shall,  to the
extent  permitted  by law, be  cumulative  and in addition to every other right,
power and remedy  given  hereunder  or now or  hereafter  existing  at law or in
equity  or  otherwise.  The  assertion  or  employment  of any  right or  remedy
hereunder,  or  otherwise,   shall  not  prevent  the  concurrent  assertion  or
employment  of any  other  appropriate  right or  remedy.  Resort  to any or all
security now or hereafter  held by Secured  Party may be taken  concurrently  or
successively and in one or several  consolidated or independent judicial actions
or lawfully taken nonjudicial proceedings, or both.

      7.3 ENTIRE  AGREEMENT.  This  Agreement  and any  agreement,  document  or
instrument  referred to herein integrate all the terms and conditions  mentioned
herein or  incidental  hereto  and  supersede  all oral  negotiations  and prior
writings in respect of the subject matter hereof.

      7.4 GOVERNING  LAW. This  Agreement  shall be governed by and construed in
accordance with the laws of the State of Delaware,  exclusive of its conflict of
laws rules.

      7.5 SEVERABILITY.  In case any one or more of the provisions  contained in
this Agreement should be invalid,  illegal or unenforceable in any respect,  the
validity,  legality and enforceability of the remaining  provisions shall not in
any way be affected or impaired thereby.

      7.6 HEADINGS. Paragraph headings have been inserted in this Agreement as a
matter of  convenience  for reference  only and it is agreed that such paragraph
headings  are  not a part  of  this  Agreement  and  shall  not be  used  in the
interpretation of any provision of this Agreement.

                                       13
<PAGE>

      7.7  WAIVER  OF JURY  TRIAL.  EL  CAPITAN  -  DELAWARE  HEREBY  KNOWINGLY,
VOLUNTARILY,  AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY  LITIGATION  BASED  HEREON,  OR ARISING OUT OF,  UNDER,  OR IN
CONNECTION  WITH,  THIS  AGREEMENT OR ANY COURSE OR CONDUCT,  COURSE OF DEALING,
STATEMENTS  (WHETHER  VERBAL OR  WRITTEN),  OR ACTIONS OF  SECURED  PARTY.  THIS
PROVISION IS A MATERIAL INDUCEMENT FOR SECURED PARTY TO MAKE THE LOAN.

      7.8  CONSENT TO  JURISDICTION.  Each party  hereto  agrees  that any legal
action or  proceeding  with respect to or arising out of this  Agreement  may be
brought in or removed to the federal or state courts located in Hennepin County,
Minnesota,  as Secured  Party may  elect.  By  execution  and  delivery  of this
Agreement,  each party hereto  accepts,  for  themselves and in respect of their
property,  generally  and  unconditionally,  the  jurisdiction  of the aforesaid
courts.  Each of the  parties  hereto  irrevocably  consents  to the  service of
process out of any of the aforementioned  courts in any manner permitted by law.
Nothing  herein shall affect the right of Secured Party to bring legal action or
proceedings in any other competent jurisdiction. Each party hereto hereby waives
any right to stay or dismiss  any action or  proceeding  under or in  connection
with this Agreement  brought  before the foregoing  courts on the basis of forum
non-conveniens.

      7.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the  benefit  of the  parties  hereto  and their  respective  successors  and
permitted assigns.

      7.10 COUNTERPARTS. This Agreement may be executed in one or more duplicate
counterparts  and  when  signed  by all  of  the  parties  listed  below,  shall
constitute a single binding agreement. Delivery of an executed signature page of
this Agreement by facsimile  transmission shall be as effective as delivery of a
manually executed counterpart thereof.

      7.11 BENEFIT OF AGREEMENT.  Nothing in this Agreement, express or implied,
shall give or be construed to give, any person other than the parties hereto and
their  respective  permitted  successors,  transferees  and assigns any legal or
equitable  right,  remedy or claim under this Agreement,  or under any covenants
and provisions of this Agreement, each such covenant and provision being for the
sole benefit of the parties hereto and their  respective  permitted  successors,
transferees and assigns.

      7.12 AMENDMENTS AND WAIVERS.  No amendment,  modification,  termination or
waiver of any provision of this Agreement or consent to any departure  therefrom
shall be effective unless the same shall be in writing and signed by each of the
parties  hereto.  Each amendment,  modification,  termination or waiver shall be
effective only in the specific  instance and for the specific  purpose for which
it was given.

      7.13  SURVIVAL OF  AGREEMENTS.  The  provisions  regarding  the payment of
expenses and indemnification  obligations shall survive and remain in full force
and effect  regardless of the termination of this Agreement  pursuant to Section
7.14.

                                       14
<PAGE>

      7.14 RELEASE AND SATISFACTION.  Upon the indefeasible  payment (whether in
cash and/or other  consideration which is satisfactory to Secured Party in their
sole discretion) and performance in full of the Obligations,  (i) this Agreement
and the security interests created hereby shall terminate and Secured Party will
return the Collateral,  including all documentation  evidencing or affecting the
Collateral,  and (ii) upon  written  request of El Capitan -  Delaware,  Secured
Party  shall  execute  and  deliver  to El Capitan -  Delaware,  at El Capitan -
Delaware  's expense and  without  representation  or warranty by or recourse to
Secured  Party,   releases  and  satisfactions  of  all  financing   statements,
mortgages, notices of assignment and other registrations of security.

      7.15  REINSTATEMENT.  This Agreement  shall continue to be effective or be
automatically  reinstated,  as the  case  may be,  if at any  time  any  payment
pursuant  to this  Agreement  is  rescinded  or must  otherwise  be  restored or
returned upon the  insolvency,  bankruptcy,  reorganization,  liquidation  of El
Capitan - Delaware or upon the  dissolution of, or appointment of any intervenor
or conservator of, or trustee or similar  official for, El Capitan - Delaware or
any substantial  part of El Capitan - Delaware's  assets,  or otherwise,  all as
though such payments had not been made.

      7.16  LIMITATION ON DUTY OF SECURED PARTY WITH RESPECT TO THE  COLLATERAL.
The  powers  conferred  on Secured  Party  hereunder  are solely to protect  its
interest in the Collateral and shall not impose any duty on Secured Party or any
of its  designated  agents to  exercise  any such  powers.  Except  for the safe
custody  of any  Collateral  in its  possession  and the  accounting  for monies
actually received by it hereunder, Secured Party shall have no duty with respect
to any Collateral  and no implied duties or obligations  shall be read into this
Agreement against Secured Party. Secured Party shall be deemed to have exercised
reasonable  care  in the  custody  and  preservation  of the  Collateral  in its
possession  if the  Collateral  is  accorded  treatment  that  is  substantially
equivalent  to that which  Secured  Party  accords  its own  property,  it being
expressly  agreed,  to the maximum  extent  permitted by  applicable  law,  that
Secured Party shall have no responsibility for (a) taking any necessary steps to
preserve rights against any parties with respect to any Collateral or (b) taking
any action to protect against any diminution in value of the Collateral, but, in
each case,  Secured  Party may do so and all  expenses  reasonably  incurred  in
connection therewith shall be part of the Obligations.

                                       15
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be executed and delivered as of the date first written above.

El Capitan - Delaware:                        Secured Party:

El Capitan Precious Metals, Inc.,   Whitebox Intermarket Partners, L.P.,
a Delaware corporation              a British Virgin Islands Limited Partnership

By       /s/ Stephen J. Antol       By       /s/ Jonathon Wood
  ----------------------------        ------------------------------------------
Its       CFO/ Treasurer            Its      CFO/ Director
   ---------------------------         -----------------------------------------

                                       16
<PAGE>

                                    EXHIBIT A
                 DESCRIPTION OF EL CAPITAN - DELAWARE COLLATERAL

      All assets of El Capitan  Precious  Metals,  Inc., a Delaware  corporation
(the "Company"), including without limitation, the following:

      Inventory:  All  inventory  of the  Company as that term is defined in the
Uniform Commercial Code, whether now owned or hereafter acquired or in which the
Company  obtains  rights,  whether  consisting  of whole  goods,  spare parts or
components,  supplies or materials whether acquired, held or furnished for sale,
for lease, for participation,  revenue-sharing or other similar arrangements, or
under  contracts or for  manufacture or  processing,  and wherever  located,  to
include,  without  limitation,  all gold,  silver and other precious  metals and
minerals, as extracted, now owned or hereafter acquired by the Company;

      Equipment:  All  equipment of the Company,  whether now owned or hereafter
acquired,  including  all present  and future  machinery,  vehicles,  furniture,
fixtures,  office and recordkeeping  equipment,  parts, tools,  supplies and all
other  goods  (except  inventory)  used or bought for use by the Company for any
business or  enterprise  and including  specifically  (without  limitation)  all
accessions thereto, all substitutions and replacements  thereof, and all like or
similar  property  now owned or hereafter  acquired by the  Company,  and all of
which is owned by the Company, and all deposits made on any such equipment;

      Deposit  Accounts and Other Cash:  All deposits and deposit  accounts with
any bank, savings and loan association,  credit union or like organization,  and
all funds and amounts  therein,  and whether or not held in trust, or in custody
or safekeeping,  or otherwise restricted or designated for a particular purpose,
and all other cash or marketable  securities  on hand,  whether held in-vault or
otherwise;

      Receivables:  Each and every right of the Company to the payment of money,
whether such right to payment now exists or hereafter arises, whether such right
to payment  arises out of a sale,  lease or other  disposition of goods or other
property,  out of a rendering of services,  or of a loan, out of the overpayment
of taxes or other liabilities,  or any other transaction or event,  whether such
right to payment is created, generated or earned by the Company or by some other
person who  subsequently  transfers  his,  her or its  interest to the  Company,
whether such right to payment is or is not already  earned by  performance,  and
howsoever such right to payment may be evidenced, together with all other rights
and  interests  (including  all liens and other  security  interests)  which the
Company may at any time have by law or agreement  against any account  debtor or
other  person  obligated  to make such  payment or against any  property of such
account debtor or other persons  including,  but not limited to, all present and
future accounts,  contract rights,  chattel paper,  bonds,  notes and other debt
instruments, and rights to payment in the nature of general intangibles;

      General  Intangibles:  All general  intangibles of the Company whether now
owned or hereafter  acquired,  including  (without  limitation)  all present and
future patents, patent applications,  copyrights, trademarks, trade names, trade
secrets,   customer  or  supplier  lists  and  contracts,   manuals,   operating
instructions,  permits,  franchises,  the right to use the Company's  name,  the
Company's  internet  domain names and address and the goodwill of the  Company's
business; and

<PAGE>

      Securities:  All  securities,  joint  venture and other  equity  interests
(including mining claims and mineral  exploration rights) now owned or hereafter
acquired by the Company, including (a) the Company's ownership interest, if any,
in the (i) El Capitan mine, located in Lincoln County, New Mexico (near Capitan,
New Mexico), (ii) COD mine located in Mohave County,  Arizona, (iii) Weaver mine
located in Maricopa  County,  Arizona (near Congress,  Arizona) and (iv) Rainbow
Valley mine located in Maricopa County, Arizona (near Mobile,  Arizona); (b) all
shares of common stock of El Capitan, Ltd., an Arizona corporation, owned by the
Company  and  (c)  any  shares  of  capital   stock  of  any   wholly-owned   or
partially-owned  subsidiary  of the  Company  or any  other  entity in which the
Company  owns an interest;  all  certificates,  receipts  and other  instruments
evidencing  any of interests or securities  described in the  foregoing  clauses
(a),  (b), and (c), and all  dividends,  cash,  earnings,  securities  and other
property received or otherwise  distributed in respect of or in exchange for any
or all of  such  interests  or  securities;  and  all  additional  interests  or
securities  described  above in  clauses  (a),  (b),  and (c) from  time to time
acquired  by the  Company in any  manner,  and all  dividends,  cash,  earnings,
securities and other property received or otherwise distributed in respect of or
in exchange for any or all of such interests or securities.

      The Collateral  shall include (i) all substitutes and replacements for and
proceeds  of any  and  all of the  foregoing  property,  and in the  case of all
tangible Collateral, all accessions, accessories,  attachments, parts, equipment
and repairs now or hereafter  attached or affixed to or use in  connection  with
any such  goods  and (ii) all  warehouse  receipts,  bills of  lading  and other
documents of title now or hereafter covering such goods.

<PAGE>

                                    EXHIBIT B

                                   STOCK POWER

      For value received,  the undersigned has bargained,  sold,  assigned,  and
transferred,  and by these presents does bargain, sell, assign and transfer unto
Whitebox   Intermarket   Partners,   L.P.,  a  British  Virgin  Islands  limited
partnership,  4,000  shares of Common  Stock of El  Capitan,  Ltd.,  an  Arizona
corporation (the  "Company"),  standing in its name on the books of the Company,
represented  by  share  Certificate  No.  3 of the  Company  herewith  and  does
constitute  and  appoint  the  Company  its  true and  lawful  attorney-in-fact,
IRREVOCABLY,  and in its name and stead, to sell, assign, transfer and set over,
all or any part of the said stock,  and for that purpose to make and execute all
necessary acts of assignment and transfer, and one or more persons to substitute
with like full power, hereby ratifying and confirming all that any said attorney
or its substitute or substitutes shall lawfully do by virtue hereof.

      Date: ___________________

                                 El Capitan Precious Metals, Inc.,
                                 a Delaware corporation

                                 By: ___________________________________________
                                 Its:  _________________________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}]]