Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Kirkland Lake Gold Inc. - Exhibit 10.1

P.O. Box 370

  Kirkland Lake, Ontario P2N 3J7, Canada

	August 3, 2007 	Symbol – TSX & AIM: KGI 

KIRKLAND LAKE TO TERMINATE ITS U.S. REPORTING

  OBLIGATIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934

Kirkland Lake Gold Inc. (the “Company”) announced today
that its board of directors has authorized the deregistration and termination of
the Company’s reporting obligations under Sections 13(a) and 15(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”). The deregistration
is expected to substantially reduce the Company’s regulatory compliance costs
while maintaining the liquidity of its common shares through the two principal
stock markets on which the shares trade, the Toronto Stock Exchange
(“TSX”) and the Alternative Investment Market of the London Stock
Exchange of the London Stock Exchange (“AIM”).

“Given that the Company never listed its shares on any U.S.
stock exchange we believe the Company derives very little benefit from
continuing to comply with additional regulatory requirements in the U.S.” stated
Brian Hinchcliffe, Company President and CEO.

The Company’s board of directors made this decision based on
its assessment that: (a) continued compliance with the rules of the US
Securities and Exchange Commission (the “SEC”) and the Exchange Act, in
particular Section 404 of the Sarbanes-Oxley Act of 2002, would be excessively
burdensome for the Company relative to the limited benefits it might realise
from such compliance, and (b) all investors of its common shares are protected
by applicable Canadian and UK securities legislation and the Company’s listing
on, and continued compliance with the rules of, the TSX and AIM.

In accordance with the applicable SEC rules, the Company
intends to promptly file a Form 15F with the SEC to deregister and terminate its
reporting obligations under the Exchange Act. Upon the filing of the Form 15F
the Company’s reporting obligations under the Exchange Act will immediately be
suspended. Deregistration will be effective 90 days after the filing. The
Company reserves the right to delay or withdraw the filing of the Form 15F for
any reason prior to its effectiveness.

The Company will post on its website at www.klgold.com links to all information that it has
made or is required to make public under Canadian law and stock exchange rules,
filed or is required to file with the TSX and AIM, or distributed or is required
to distribute to shareholders, in each case promptly after such information is
required to be made public. 

For further information, please contact:

	Brian Hinchcliffe 	Scott Koyich 
	President 	Investor Relations 
	Phone 1 705 567 5208 	Phone 1 403 215 5979 
	Fax 1 705 568 6444 	E-mail: info@klgold.com 
	E-mail: bhinchcliffe@klgold.com 	  
	  	  
	Chelsea Hayes 	NOMAD: Canaccord Adams Limited 
	Pelham Public Relations 	Email: Robin.Birchall@canaccordadams.com 
	Phone +020 7743 6675 	  

E-mail: chelsea.hayes@pelhampr.com

Website- www.klgold.com

  Neither the Toronto Stock Exchange nor the AIM Market of the
  London Stock Exchange plc has reviewed or accepts responsibility for the adequacy
  or accuracy of this news release.Filed by Automated Filing Services Inc. (604) 609-0244 - Park Place Energy Corp. - Exhibit 10.1

	BOUNTY DEVELOPMENTS LTD.
      

	1250, 340 – 12 Ave. S.W. 
Calgary, AB 
T2R 1L5 
	  	Tel (403) 264-4994 
	  	Fax (403) 266-6031 

May 30, 2006 

Park Place Energy Inc., 
1220-666 Burrard St.,

Vancouver, B.C. V6C 2X8 

Attention:         David
Stadnyk 

Dear Sir: 

	Re: 	FARMOUT AGREEMENT
    
	  	NE 26-22-7 W4M
  
	  	ATLEE-BUFFALO, ALBERTA
      
	 	OUR FILE: AC-212-003
    

Bounty Developments Ltd. (“Bounty”) is the holder of the title
documents covering the Farmout Lands described in Schedule “A” and has agreed to
farmout a portion of its interests in the Farmout Lands to Park Place Energy
Inc. on the following terms and conditions: 

1.      DEFINITIONS 

Each capitalized term used in this Head Agreement will have the
meaning given to it in the Farmout and Royalty Procedure, and in addition: 

	a) 	
      “Contract Depth” means a measured subsea depth of 450
      metres or 15 metres below the base of the Medicine Hat formation,
      whichever occurs first;

	 	 
	b) 	
      “Farmee” means Park Place Energy Inc.;

	 	 
	c) 	
      “Farmor” means Bounty Developments Ltd. (as to an
      undivided 100% working interest in the Farmout Lands);

	 	 
	
      d) 
	
      “Mutual Interest Lands” means any interest in any parcel
      of petroleum and natural gas rights falling within one mile around NE
      Section 26, Twp. 22, Rge. 7, W4M.

2.      SCHEDULES 

The following Schedules are attached hereto and made part of
this Agreement: 

	a) 	
      Schedule “A” which describes the Title Documents, the
      Farmout Lands, and the Encumbrances and all renewals, extensions,
      continuations or documents of titles issued in substitution for
    same;

	 	 
	b) 	
      Schedule “B”, which is the election sheet for the 1997
      CAPL Farmout & Royalty Procedure (the “Farmout and Royalty Procedure”)
      which procedure, along with the elections, is incorporated by reference
      into this agreement as fully as if it were attached hereto;

	 	 
	c) 	
      Schedule”C”, which is the election sheet for the 1990
      CAPL Operating Procedure (the “Operating Procedure”) and the 1996 PASC
      Accounting Procedure (the “Accounting Procedure”) which procedures, along
      with the elections, are incorporated by reference into this agreement as
      fully as if they were attached hereto;

	 	 
	d) 	
      Schedule “D” which specifies the types of drilling
      information required to be supplied pursuant to the Farmout & Royalty
      Procedure; and

	 	 
	e) 	
      Schedule “E” which is a copy of the Gross Overriding
      Royalty Agreement with Bright Spark Enterprises
Inc.

3.      FARMEE’S CASH PAYMENT

In consideration of the Farmee being granted the opportunity to
earn an interest in the Farmout Lands under the terms of this agreement and in
recognition of land acquisition and related costs which the Farmor has incurred,
the Farmee shall make a payment to the Farmor in the amount of $35,849 which
payment shall be unconditional and non-refundable. If the Farmee fails to make
this payment by 5 p.m. on June 2, 2006, then the Farmee’s right to earn an
interest in the Farmout Lands shall terminate and it shall have no further
rights under this agreement. 

4.      TEST WELLS 

a)      Farmee shall
spud 2 test wells (collectively the “Test Wells”; individually the “Test Well”),
at locations to be selected by the Farmor on the Farmout Lands, as soon as
reasonably practicable but no later than October 1, 2007. Farmee shall then
diligently and continuously drill each of the Test Wells to Contract Depth at
its sole cost, as specified below. In the event surface access to the drill site
cannot be reasonably obtained by the required date because of surface 

2

conditions, weather conditions, rig availability or regulatory
approval, there shall be an extension to the commencement date which shall be
reasonable under the circumstances. For each of the Test Wells, if production of
petroleum substances in paying quantities is indicated, the Farmee shall equip
this Test Well and thereafter use its best efforts to produce and dispose of the
said substances. 

b)      The Farmee
shall be solely responsible for the costs to drill, complete, evaluate, equip
and tie in or abandon each of the Test Wells. 

c)      Upon the
requirements for the Test Wells as set out above and in Article 3.00 of the
Farmout and Royalty Procedure being fulfilled, the Farmee will earn the
following interest in the Farmout Lands, to the base of the deepest formation
penetrated and fully logged in the Test Well: 

	 	(i) 	
      100% of Farmor’s 100% Working Interest in the Farmout
      Lands, subject to the Farmor’s Overriding Royalty reserved in Article 5.00
      of the Farmout and Royalty Procedure which Overriding Royalty would be
      convertible to a 50% Working Interest after
Payout.

d)      If it is only
possible to obtain regulatory approval to drill one of the Test Wells, the
Farmee shall not be required to spud, drill and fulfill its other obligations
with respect to the other Test Well, and upon fulfilling these requirements as
set out above with regard to one Test Well, the Farmee shall earn that interest
in the Farmout Lands specified in sub-clause 4(c) above. 

5.      OPERATORSHIP AND OPERATIONS

The Farmor, as agent for the Farmee, shall act as the initial
Operator for all operations contemplated by this Agreement. The operations and
this agreement shall be governed by the Farmout and Royalty Procedure, the
Operating Procedure and the Accounting Procedure, subject to the elections
herein incorporated and this head agreement. Notwithstanding Schedule “C”
hereof, and in addition to any charges permitted thereunder, Farmor shall be
entitled to charge an administrative fee of 10% on the monthly costs of
operating the Test Wells which fee shall not exceed $100 in any one month. 

6.      AREA OF MUTUAL INTEREST

Article 8.00 of the Farmout & Royalty Procedure will be in
effect for the Mutual Interest Lands from the Effective Date until the end of
one year after the drilling rig release date of the last of the Test Wells.
Subject to Article 8.00 the Parties will have the right to participate in an
acquisition of Mutual Interest Lands in the following percentages: 

3

Farmor-50% 

Farmee-50% 

The 1% N/C GORR to Bright Spark Enterprises Inc. included in
the Encumbrances will apply to the Mutual Interest Lands and shall be paid by
the Parties in proportion to their participating interest. 

7.      AMENDMENT TO THE
LIMITATIONS ACT 

The two year period for seeking a remedial order under section
3(1)(a) of the Limitations Act, R.S.A. 2000, c. L-12, as amended, for any
claim (as defined in that Act) arising in connection with this Agreement
is extended to: 

a. for claims disclosed by an audit, two years after the time
this agreement permits that audit to be performed ; or 

b. for all other claims, four years. 

8.      ADDRESSES FOR
NOTICES 

The parties’ addresses for notices are:

Bounty Developments Ltd.

1250, 340 – 12th Avenue S.W. 
Calgary, AB
T2R 1L5

fax # (403) 266-6031 

Attention: Jon Clark 

Park Place Energy Inc

1220-666 Burrard St., 
Vancouver, B.C. V6C 2X8 
Fax# (604) 688-5390

Attention: David Stadnyk 

9.      MISCELLANEOUS

	 	a) 	
      Each of the parties represents and warrants that it now
      has or is entitled to have good right, full power and absolute authority
      to enter

4

	 		
      into this Agreement.

	 	 	 
	 	b) 	
      In the event of a conflict between any term or condition
      of this Head Agreement and any Schedule attached hereto, the term or
      condition of this Head Agreement shall prevail.

	 	 	 
	 	c) 	
      Any reference in this Head Agreement to “hereunder”,
      “herein” and “hereof” refer to the provision of this Head Agreement and
      unless otherwise stated, any reference to a clause, subclause, or Schedule
      refers to the clauses, subclauses or Schedule of this Head
    Agreement.

	 	 	 
	 	d) 	
      This Agreement supersedes all other agreements,
      documents, writings and verbal understandings among the parties, or any of
      them, relating to the Farmout Lands.

	 	 	 
	 	e) 	
      This agreement enures to the benefit of the Parties and
      their respective successors and assigns.

10.     
COUNTERPART EXECUTION 

This Agreement may be executed in counterpart. All of those
executed counterpart pages when taken together will constitute the Agreement.

If this reflects your understanding of the terms and conditions
agreed upon respecting this Agreement please sign and return one counterpart
execution page to complete our copy of the Agreement. 

Yours truly, 
BOUNTY DEVELOPMENTS LTD. 

/s/ Paul S. Clark 
Paul S. Clark 
Land Manager

Agreed to this 30th day of May, 2006. 

PARK PLACE ENERGY INC. 

Per: /s/ David Stadnyk 

5

Schedule “A” 

Attached to and forming part of a Farmout Agreement dated
May 30, 2006 between Bounty Developments Ltd. (Farmor) and Park Place Energy
Inc. (Farmee) 

Farmout Lands 

NE Section 26, Twp. 22, Rge. 7, W4M 
Petroleum and Natural
Gas to the base of the Medicine Hat SD as designated in DRRZD 12 
Interval: 1
312.00 -1 582.00 Feet 
Key Well: 00/06-30-014-04W4/0 
Log Type: Induction
Gamma Ray 

Title Documents

Alberta Crown PNG Lease No. 0405060367

Term Commencement Date: June 16, 2005 

Encumbrances 

1% N/C GORR – Bright Spark Enterprises Inc. 

Crown Lessor Royalty 

6

Schedule “B”

Attached to and forming part of a Farmout Agreement dated
May 30, 2006 between Bounty Developments Ltd. (Farmor) and Park Place Energy
Inc. (Farmee) 

1997 CAPL FARMOUT & ROYALTY PROCEDURE ELECTIONS AND
AMENDMENTS 

	Subclause 1.01 (f) 	- 	Effective
      Date                  
       -                   
      May 17, 2006 
	 	 	 
	Subclause 1.01 (t) 	- 	Payout
      -                  
      Alternate          
           A 
	(if Article 6.00 applies) 	  	 
	 	 	 
	Subclause 1.01 (bb) 	- 	Delete the following from the definition:

	 	 	 
			“which area will be determined as of the
      drilling rig release date of that Earning Well” 
	 	 	 
	Clause 1.02 	- 	Incorporation of Provisions from 1990 CAPL
      Operating Procedure 
	 	 	 
	  	  	(i)             
      Insurance (311) Alternate     B 
	 	 	 
	Article 4.00 (Option Wells) 	 	will_____ /will not    X
      apply. 
	 	 	 
	Article 5.00 (Overriding Royalty) 	 	                   
      will X /will not ______ apply. 

Subclause 5.01A, Quantification of Overriding Royalty
(if applicable). 

	 	(i) 	Crude oil
      (a)          
       -          
      Alternate    1 
	 	  	If Alternate 1 applies, 15 %
  
	 	  	If Alternate 2 applies, N/A

	 	  	 
	 	(ii) 	Other
      (b)                
       -          
      Alternate    1
	 	  	If Alternate 1 applies, 15
      % 
	 	  	If Alternate 2 applies, n/a
      % in 
	 	  	(i) and n/a % in (ii)
  

Subclause 5.04B, Permitted Deductions (if applicable).
Alternate 1 only

Article 6.00 (Conversion of Overriding Royalty) will X
/will not_____ apply. 
Conversion to 50% of Working Interest in Subclause
6.04A

7

Schedule “C” 

Attached to and forming part of a Farmout Agreement dated
May 30, 2006 between Bounty Developments Ltd. (Farmor) and Park Place Energy
Inc. (Farmee) 

	CAPL OPERATING PROCEDURE - 1990 	 
	Clause 311 	Insurance
      Election:                                                            
      B 
	  	 
	Clause 604 	Marketing
      Fee:                                                      
                   A
    
	  	 
	Clause 903 	Casing Point
      Election:                                                       
      A 
	  	 
	Clause 1007 	Penalty for Independent Operations: 
	  	1.               
      Development
      Wells:                                       
      300% 
	  	2.               
      Exploratory
      Wells:                               
                  500%
    
	  	 
	Clause 1010 	Exceptions to Clause
      1007:                                 
                     
      (iv)               
      180 days 
	  	 
	Clause 2202 	Address for
      Notices:                                                           
      Set out in Head 
	  	                                                                                 
                      Agreement
    
	  	 
	Clause 2401 	Disposition of
      Interests:                                                      
      A 
	  	 
	Clause 2404 	Recognition Upon Assignment: 
	  	CAPL Assignment Procedure to take precedence
  
	  	 
	1996 PASC ACCOUNTING PROCEDURE 	 
	Clause 105. 	Operating Fund 10% 
	  	 
	Clause 110. Approvals 	Clause n/a; 2 ; 75 %

	  	 
	Clause 112. Expenditure Limitations 	(a) excess of
      $25,000.00                                                     
      (c) excess of 
	  	                                                                                                 
      $25,000.00 
	  	 
	Clause 202. Employee Benefits 	(b) exceed 25% 
	  	 
	Clause 213. Camp & Housing 	(b) shall _____/shall not X 
	  	 
	Clause 216. Warehouse Handling 	5% 
	  	 
	Clause 221. Allocation Options 	n/a 
	  	 
	Clause 302.
      Overhead Rates: 	(a)
      Exploration Project: n/a percent OR 
	  	1.               
      5% ; $50,000. 
	  	2.               
      3% ; $100,000. 
	  	3.               
      1% 
	  	(b) Drilling of a Well: n/a percent OR
    
	  	1.               
      5%; $ 50,000. 
	  	2.               
      3%; $l00,000. 
	  	3.               
      1% 
	  	(c) Initial Construction Project: n/a percent
      OR 
	  	1.               
      5%; $ 50,000. 
	  	2.               
      3%; $100,000. 
	  	3.               
      1% 
	  	(d) Construction Project: n/a percent OR
    
	  	1.               
      5% of the first $ 50,000. 
	  	2.               
      3% of the next $100,000. 
	  	3.               
      1% 
	  	(e) Operation and Maintenance:
  

8

	  	              
      1.               
      n/a; 
	  	              
      2.               
      $250 per Producing well per month; or 
	  	              
      3.               
      n/a 
	  	 
	Clause 406. Dispositions 	$25,000.00 

9

Schedule “D”

Attached to and forming part of a Farmout Agreement dated
May 30, 2006 between Bounty Developments Ltd. (Farmor) and Park Place Energy
Inc. (Farmee) 

WELL REQUIREMENTS 

	PRIOR TO SPUD
      	# COPIES 	 	AFTER DRILLING 	# 
	COPIES 	  	 	  	  
	  	  	 	  	  
	Geological Program 	1 	 	Drill Stem Test Reports 	2 
	Drilling Program 	1 	 	Final Analysis 	1 
	Survey Plan 	1 	 	Final Prints of Logs 	1 
	Application to Drill 	1 	 	Final Geological Report 	1 
	Well License 	1 	 	Final Drilling Report 	1 
	  	  	 	(Plus Diskettes if available) 	  

	DURING DRILLING
      	# COPIES 	 	COMPLETION & PRODUCTION 	 
	# COPIES 	  	 	  	  
	  	  	 	  	  
	Daily Drilling Reports 	1 	 	Completion Program 	1 
	Sample Descriptions 	1 	 	Daily Completion Records 	1 
	Core Descriptions 	1 	 	Final Completion/Workover 	  
	Report 	1 	 	  	  
	Preliminary Analysis 	1 	 	Final Prints of Logs 	1 
	Field Prints 	1 	 	Initial Production Logs 	1 

Note: Sample cuttings are not required unless otherwise
specified, provided the Operator’s set will be available for examination. 

	DAILY DRILLING REPORTS: 	Fax daily - 266-6071 
	  	e-mail to jonclark@bountydev.com
      and bounty@bountydev.com 
	 	 
	DAILY GEOLOGICAL REPORTS: 	Fax daily - 
	  	e-mail to jonclark@bountydev.com
      and bounty@bountydev.com 
	  	 
	DAILY COMPLETION REPORTS: 	Fax daily - 266-6031 
	  	e-mail to jonclark@bountydev.com
      and bounty@bountydev.com 

NOTICE OF INTENTION TO ABANDON MAY BE DIRECTED TO: 

10

Kelly Adams 

ALL WELL DATA MAY BE FORWARDED
TO:                            
Kelly Adams 

11

Schedule “E” 

Attached to and forming part of a Farmout Agreement dated
May 30, 2006 between Bounty Developments Ltd. (Farmor) and Park Place Energy
Inc. (Farmee) 

OVERRIDING ROYALTY AGREEMENT 

THIS AGREEMENT made as of the 16th day of June, 2005

BETWEEN: 

  
    
      
        BRIGHT SPARK ENTERPRISES INC. a body corporate,
          having an office at the City of Calgary in the Province of Alberta (hereinafter
          referred to as the "Royalty Owner") 

      

    

  

OF THE FIRST PART 

- and - 

  
    
      
        BOUNTY DEVELOPMENTS LTD., a body corporate,
          having an office at the City of Calgary in the Province of Alberta (hereinafter
          referred to as the "Grantor") 

      

    

  

OF THE SECOND PART 

          WHEREAS
the Grantor holds an interest in the Royalty Lands and Leases as hereinafter
defined; and WHEREAS, in consideration of good and valuable consideration
received, the Grantor has agreed to grant and to pay to the Royalty Owner an
Overriding Royalty effective as of the date hereof, the terms and conditions of
which are provided for in this agreement. 

          NOW
THEREFORE this Agreement witnesseth that in consideration of the mutual
covenants and agreements set forth and contained herein, the parties agree as
follows: 

1.      DEFINITIONS 

In this Agreement, including this clause, unless the context
otherwise requires: 

	(a) 	
      "Condensate" means a mixture of mainly pentanes and
      heavier hydrocarbons that may be contaminated with sulphur compounds, that
      is

12

		
      recovered or is recoverable at a Well from an underground
      reservoir and that may be gaseous in its virgin reservoir state but is
      liquid at the condition under which its volume is measured or
      estimated;

	 	 
	(b) 	
      "Crude Oil" means a mixture mainly of pentanes and
      heavier hydrocarbons that may be contaminated with sulphur compounds, that
      is recovered or is recoverable at a Well from an underground reservoir and
      that is liquid at the conditions under which its volume is measured or
      estimated, and includes all other hydrocarbon mixtures so recovered or
      recoverable except natural gas or Condensate;

	 	 
	(c) 	
      "Current Market Value" means the price at which Petroleum
      Substances are sold by the Grantor calculated at the Royalty Determination
      Point, which price is not unreasonable having regard to market conditions
      applicable to similar production in arm's length transactions at the time
      of such disposition including, without restricting the generality of the
      foregoing, such factors as the volumes available, the kind and quality of
      Petroleum Substances to be sold, the effective date of the sale, the term
      of the sale agreement, the point of sale of the Petroleum Substances and
      the type of transportation service available for the delivery of the
      Petroleum Substances to be sold;

	 	 
	(d) 	
      "Leases" means the respective documents of title and any
      extension or renewal of such documents pursuant to which the Grantor holds
      an interest in the Royalty Lands;

	 	 
	(e) 	
      "Overriding Royalty" means the overriding royalty granted
      pursuant to Clause 2 hereof;

	 	 
	(f) 	
      "Petroleum Substances" means Crude Oil, Condensate,
      natural gas and related hydrocarbons and all other substances produced in
      association therewith but only to the extent that the same are granted by
      the Leases;

	 	 
	(g) 	
      "Raw Gas" has the meaning prescribed by the
      Regulations;

	 	 
	(h) 	
      "Regulations" means all statutes, laws, rules, orders,
      regulations or directives in effect from time to time and made by any
      governmental authority having jurisdiction over the Royalty Lands and the
      operations to be conducted thereon;

	 	 
	(i) 	
      "Royalty Determination Point" means the first point of
      measurement downstream from the wellhead after the initial treatment of
      the produced substances for the separation and removal of basic sediment
      and water from the Petroleum Substances;

13

	(j) 	
      "Royalty Lands" means the specified undivided working
      interest(s) in the lands set forth in Schedule "A";

	 	 
	(k) 	
      "Spacing Unit" means the area allocated to a Well (or the
      area which would be allocated to a well, but for a plan of unitization)
      pursuant to the Regulations for the purpose of producing Petroleum
      Substances; and

	 	 
	(l) 	
      "Well" means any well on the Royalty Lands or on lands
      pooled with the Royalty Lands.

2.      GRANT OF OVERRIDING
ROYALTY 

Grantor hereby grants to the Royalty Owner an interest in
respect of the Petroleum Substances within, upon or under the Royalty Lands
equal to one (1%) percent of the gross monthly production produced from the
Royalty Lands. 

3.      QUANTIFICATION OF
OVERRIDING ROYALTY 

If Royalty Owner does not take possession of and separately
dispose of its share of Petroleum Substances, the Overriding Royalty shall be
quantified and paid on the gross proceeds of the sale of such Petroleum
Substances without any deductions, except the following, namely: 

	(a) 	
      with respect to Crude Oil and Condensate, a proportionate
      share of the actual costs of transportation from the Royalty Determination
      Point to market connection;

	 	 
	(b) 	
      with respect to Petroleum Substances other than Crude Oil
      and Condensate, a proportionate share of the cost of transportation,
      gathering and processing, providing that such costs are no greater than
      those allowed from time to time by the Crown in the right of the Province
      of Alberta in calculating its royalty.

4.      OVERRIDING ROYALTY
TAKEN IN KIND 

	(a) 	
      The Royalty Owner shall have the right to take in kind
      the Royalty Owner's share of Petroleum Substances. Such right may be
      exercised separately with respect to Condensate, Crude Oil, Raw Gas, and
      any other individual Petroleum Substance. In the case of Crude Oil and
      Condensate, such right when exercised shall be done on a minimum of thirty
      (30) days notice to the Grantor. In the case of all other Petroleum
      Substances such right when exercised shall be done on a minimum of six (6)
      months notice to the Grantor. If the Royalty Owner, however, signifies in
      writing its consent to the sale of any of the Royalty Owner's share of
      Petroleum Substances under a contract made by the Grantor providing for a
      minimum term in excess of the said respective notice periods, the Royalty
      Owner's right to

14

		
      take in kind any Petroleum Substances subject to such
      contract shall be suspended during the term of such contract. The Royalty
      Owner may cease to take in kind any Petroleum Substances upon giving the
      Grantor the same minimum notice as provided above for the Royalty Owner to
      take such Petroleum Substances in kind as aforesaid. The right to take in
      kind or to cease to take in kind may be exercised from time to time
      subject only to the foregoing provisions of this Subclause.

	 	 
	(b) 	
      When the Royalty Owner is taking in kind the Royalty
      Owner's share of any Petroleum Substances, the Grantor shall at no cost to
      the Royalty Owner remove basic sediment and water therefrom in accordance
      with good oilfield practice, and:

	 	(i)	
      in respect to Crude Oil and Condensate: the Grantor shall
      deliver the Royalty Owner's share to the Royalty Owner, or its nominee, at
      the tank outlets, or comparable delivery point, in accordance with usual
      and customary pipeline and shipping practice, free and clear of all
      charges whatsoever except to the extent that the Royalty Determination
      Point is an earlier point in which case the costs of moving product from
      the Royalty Determination Point to the delivery point will be deductible
      by the Grantor from the Overriding Royalty. The Royalty Owner shall have
      the right to use free of charge a share of the Grantor's lease tankage and
      storage facilities to store a maximum of ten (10) days accumulation of the
      Royalty Owner's share of Crude Oil and Condensate; and

	 	 	 
	 	(ii) 	
      in respect to Raw Gas: the Grantor shall deliver the
      Royalty Owner's share to the Royalty Owner, or its nominee, at the Royalty
      Determination Point of the relevant well, provided that to the extent the
      Royalty Owner so requests on reasonable notice to the Grantor and the
      Grantor can reasonably comply with such request, the Grantor shall gather,
      compress, transport, treat and process such share of Raw Gas along with
      the Grantor's share of Raw Gas from the applicable well or wells and
      deliver to the Royalty Owner at their relevant plant outlet, the Royalty
      Owner's Overriding Royalty share of marketable gas and other Petroleum
      Substances obtained from such share of Raw Gas, in which event, the
      Royalty Owner shall be responsible for:

	 	A. 	
      its proportionate share of the costs of gathering,
      compressing, transporting, treating and processing such Raw Gas where the
      Grantor or an Affiliate thereof does not own such facilities;
  or

15

	 	B. 	
      where the Grantor or an Affiliate thereof owns such
      facilities, such fee as may be agreed upon by the Grantor and the Royalty
      Owner for the use of such facilities to make marketable the Royalty
      Owner's Overriding Royalty share of Raw Gas.

5.      CONDUCT OF OPERATIONS

	(a) 	
      Grantor shall be entitled to use a proportionate share of
      the Royalty Owner's share of Petroleum Substances as may be reasonably
      necessary for its drilling and production operations with respect to the
      Royalty Lands, excluding Petroleum Substances used for tertiary recovery
      operations. Grantor shall not be liable to Royalty Owner for Petroleum
      Substances which are unavoidably lost. Petroleum Substances so used or
      lost shall be excluded when quantifying the Overriding Royalty.

	 	 
	(b) 	
      The Grantor shall have the right to commingle Petroleum
      Substances produced from the Royalty Lands with Petroleum Substances
      produced from other lands, provided reasonable methods are used to
      determine the proper measurement of production of Petroleum Substances
      from the Royalty Lands.

	 	 
	(c) 	
      Nothing contained in this Agreement shall be a deemed or
      implied covenant by the Grantor to develop the Royalty Lands.

	 	 
	(d) 	
      The Grantor shall carry on (or cause to be carried on)
      all operations on the Royalty Lands diligently and in a good and
      workmanlike manner consistent with good oilfield
  practice.

6.      MAINTENANCE OF LEASES

Grantor shall comply with all the covenants and conditions
contained in the Leases insofar as they relate to the Royalty Lands and shall do
all things necessary to maintain the Leases in full force and effect during the
term of this Agreement including, without limitation, timely payment of all
rentals, all renewal and extension fees, all taxes, all payments in lieu of
actual production and royalties due or becoming due in respect of the Royalty
Lands and the Leases. 

7.      POOLING 

The Grantor shall have the authority to pool the Petroleum
Substances in a zone underlying all or a portion of the Royalty Lands to the
extent required to form a Spacing Unit in such zone, but only if such pooling
allocates to that portion of the Royalty Lands included in the Spacing Unit that
proportion of the total production of Petroleum Substances from the Spacing Unit
which the surface area of that 

16

portion of the Royalty Lands placed in the Spacing Unit bears
to the total surface area of the Spacing Unit. The Grantor shall thereafter give
written notice to the Royalty Owner describing the extent to which the Royalty
Lands are being pooled and describing the Spacing Unit with respect to which
they are so pooled. 

8.      UNITIZATION 

The Grantor shall not include the Royalty Lands or any part or
parts thereof in a Unit Agreement or a Unit Operating Agreement for the unitized
development and/or operation thereof with other lands without the consent of the
Royalty Owner, which shall not be unreasonably withheld. Upon any such
unitization, the Overriding Royalty shall be quantified on the basis of the
production allocated to each Spacing Unit on the Royalty Lands under the plan of
unitization and not upon the basis of actual production from the Royalty Lands.
Further, each Spacing Unit for which production is allocated shall be deemed to
have on Well thereon, regardless of the actual number of Wells. 

9.      BOOKS AND RECORDS

	(a) 	
      The Grantor shall keep true and current books, records
      and accounts showing the quantity of Petroleum Substances produced from or
      allocated to the Royalty Lands and the sales and disposition made thereof
      from time to time. The books, records, vouchers and accounts maintained by
      the Grantor shall be open to inspection at all reasonable times during
      business hours by any officer, agent or employee appointed or authorized
      by the Royalty Owner, in writing, to examine the same. All information
      obtained by the Royalty Owner pursuant to this clause shall be treated as
      confidential and shall not be disclosed to third persons without the prior
      written consent of the Grantor.

	 	 
	(b) 	
      By the last day of each month, beginning with the first
      month following the month in which production of Petroleum Substances from
      the Royalty Lands is obtained after the date hereof, Grantor shall submit
      to Royalty Owner a statement showing the quantity and kind of Petroleum
      Substances produced, deemed to be produced or allocated to, saved and sold
      from or used off the Royalty Lands in the immediately preceding calendar
      month, together with a quantification of Royalty Owner's share of
      Petroleum Substances for such immediately preceding calendar month. When
      Royalty Owner does not take and separately dispose of its share of
      Petroleum Substances, the said statement shall also include the sale price
      for such Petroleum Substances and the gross proceeds received therefrom,
      accompanied by a cheque payable to Royalty Owner for its share of such
      proceeds. A copy of Grantor's governmental production statement for the
      month for which the Overriding Royalty is quantified as aforesaid and
      also, with respect to Crown Leases, a copy of the government royalty
      statement with respect to the Leases, shall

17

		
      accompany each royalty statement to Royalty Owner. Any
      information contained in such governmental production statement or royalty
      statement need not be repeated in the statement to Royalty
Owner.

	 	 
	(c) 	
      Royalty Owner, upon notice to Grantor, shall have the
      right to audit Grantor's accounts and records for any given calendar year,
      insofar as they relate to any matter or item relating to this Agreement
      bearing on the Overriding Royalty, within the twenty-four (24) month
      period following the end of that calendar year. any payment made or
      statement rendered by Grantor hereunder which is not disputed by Royalty
      Owner on or before the last day of the twenty-sixth (26th) month following
      the end of the calendar year shall be deemed to be
  correct.

10.      ASSIGNMENT BY GRANTOR

The Grantor may assign any legal or equitable interest in this
Agreement, the Royalty Lands, the Leases or any portion or portions thereof and
in the event of such assignment, the Grantor shall continue to be bound by all
of the conditions and provisions of this Agreement as if there had been no
assignment until such time as the Royalty Owner shall have been served with a
written undertaking by the assignee (or assignees) directly enforceable by the
Royalty Owner, to perform and be bound thereafter by all of the terms and
provisions of this Agreement to the same extent and degree with respect to the
interest which has been assigned to it, as it would have been if such assignee
(or assignees) had been a party to this Agreement instead of the Grantor. 

11.      ASSIGNMENT BY ROYALTY
OWNER 

The Royalty Owner may at any time assign its interest in the
Overriding Royalty upon notice thereof to the Grantor, provided that if at any
time the Overriding Royalty should become owned by more than one party, the
Grantor shall have the right to require the assignees of the Overriding Royalty
to appoint in writing an agent to represent all of the assignees of the
Overriding Royalty and to receive all statements and payments (if any) of the
Overriding Royalty. If the assignees of the Overriding Royalty fail to appoint
an agent hereunder within thirty (30) days of any request to do so by Grantor,
Grantor may withhold the Overriding Royalty until such time as an agent is
appointed. 

12.      ROYALTY OWNER'S LIEN

	(a) 	
      The Royalty Owner shall be entitled to and shall have a
      first and paramount lien upon the Grantor's share of all Petroleum
      Substances from time to time produced from the Royalty Lands to secure the
      payment of the Overriding Royalty. Such lien shall not operate to release
      the Grantor from personal liability for monies due to the Royalty Owner.
      Such lien shall not attach to the Grantor's share of Petroleum Substances
      sold or

18

		
      otherwise disposed of from the Royalty Lands, but
      immediately upon default occurring in payment by the Grantor of monies
      payable to the Royalty Owner such lien shall operate as an assignment to
      the Royalty Owner of the consideration thereafter payable to the Royalty
      Owner for the Petroleum Substances sold, up to the amount owed to the
      Royalty Owner and not so paid by the Grantor.

	 	 
	(b) 	
      Service of a copy of this agreement upon any purchaser of
      Petroleum Substances together with written notice from the Royalty Owner
      shall constitute written authorization on the part of the Grantor for such
      purchaser to pay the Royalty Owner the proceeds from any sale or sales of
      the Grantor's share of Petroleum Substances up to the amount owed to the
      Royalty Owner by the Grantor, and such purchaser is authorized to rely
      solely upon the statement of the Royalty Owner as to the amount owed to
      the Royalty Owner by the Grantor.

13.      NOTICES 

	(a) 	
      Whether or not so stipulated herein, delivery of all
      notices and communications (hereinafter called "notices") required or
      permitted hereunder shall be in writing. Notices may be given:

	 	 	 
		(i) 	
      personally, by delivering the notice to the party on whom
      it is to be served at that Party's address for service, which notice shall
      be deemed received by the addressee when actually delivered as aforesaid
      if such delivery is during normal business hours provided that if a notice
      is not delivered during the addressee's normal business hours, such notice
      shall be deemed to have been received by such party at the commencement of
      the next ensuing business day following the date of delivery; or

	 	 	 
		(ii) 	
      by facsimile (or by any other like method by which a
      written or recorded message may be sent) directed to the party on whom it
      is to be served at that party's address for service, which notice shall be
      deemed received by the respective addressees thereof: (i) when actually
      received by it, if received within normal business hours; or (ii) at the
      commencement of the next ensuing business day following transmission
      thereof, if such notice is not received during such normal business hours;
      or

	 	 	 
		(iii) 	
      by mailing them first class mail (air mail if to or from
      a location outside Canada) double registered post, postage prepaid,
      directed to the party on whom it is to be served, at that party's address
      for service, which notice shall be

19

deemed to be received by the addressee
at noon, local time, on the earlier of the actual date of receipt or the fourth
(4th) day (excluding Saturdays, Sundays and statutory holidays) following the
mailing thereof; provided that, if postal service is interrupted or operating
with unusual or imminent delay, notice shall not be served by such means during
such interruption or period of delay. 

	(b) 	
      Where, in this Agreement, a time period is established
      within which a party must respond, elect or otherwise communicate with
      respect to a notice so received the time shall commence to run when the
      notice is deemed to be received as hereinbefore provided. Any time period
      which expires on a Saturday, Sunday or statutory holiday shall be extended
      to expire on the next normal business day.

	 	 
	(c) 	
      The address of each of the respective parties hereto
      shall be as follows:

Bounty Developments Ltd. 
1250, 340
- 12 Avenue S.W. 
Calgary, Alberta 
T2R 1L5 

Bright Spark Enterprises Inc. 
72
Calandar Rd N.W. 
Calgary, Alberta 
T2L 0P7 

	(d) 	
      Any party may change its address for service by notice to
      the other parties.

14.      TERM 

This Agreement shall remain in force and effect so long as the
Grantor or any successor in interest retains an interest in the Royalty Lands.

15.      GENERAL 

	 	(a) 	
      The parties will from time to time and at all times
      hereafter, without further consideration, do such further acts and deliver
      all such further assurances, deeds and documents as shall reasonably be
      required in order to fully perform and carry out the terms of this
      Agreement.

	 	 	 
	 	(b) 	
      This Agreement constitutes the entire agreement between
      the parties with respect to the subject matter of this Agreement
  and

20

	 		
      supersedes all prior contracts, agreements and
      understandings between the parties in this regard. No modification or
      alteration of this Agreement shall be binding unless executed in writing
      by these parties. There are no representations, warranties, collateral
      agreements or conditions affecting this transaction other than as are
      expressed or referred to herein in writing.

	 	 	 
	 	(c) 	
      The terms and conditions of this Agreement shall be
      binding upon and shall enure to the benefit of the parties hereto and
      their respective successors and assigns.

	 	 	 
	 	(d) 	
      Time is of the essence of this Agreement.

	 	 	 
	 	(e) 	
      The headings contained in this Agreement are intended for
      convenience of reference only and shall form no part of this
    Agreement.

	 	 	 
	 	(f) 	
      The words herein contained which impart the singular
      number or the masculine gender shall be read and construed as applying to
      the plural and each and every corporate, male or female party thereto and
      to its and their heirs, executors, administrators, successors and assigns,
      as the case or context requires.

	 	 	 
	 	(g) 	
      This Agreement shall be governed by and interpreted in
      accordance with the laws of the Province of Alberta. The parties hereby
      irrevocably attorn to the jurisdiction of the Courts of the Province of
      Alberta for the determination of all matters arising hereunder.

	 	 	 
	 	(h) 	
      The Schedules attached to this Agreement are incorporated
      by reference as fully as though contained in the body hereof. Wherever any
      term or condition, expressed or implied, of such Schedules conflicts or is
      at variance with any terms or conditions of this Agreement, such term or
      condition of this Agreement shall prevail.

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

	BOUNTY DEVELOPMENTS LTD. 	BRIGHT SPARK ENTERPRISES INC. 
	 	 
	/s/ Jon Clark 	/s/ Kelly Adams

21

Schedule "A" 

Attached to and Forming Part of Gross Overriding Royalty
Agreement dated June 16, 2005 between Bounty Developments Ltd. and Bright Spark
Enterprises Inc. 

	LEASES 	ROYALTY LANDS 	INTEREST 
	  	  	  
	Alberta Crown PNG Lease 	NE/4 Sec 26 Twp 22 Rge 7 	100%, subject to 
	No. 0405060367 	W4M 	Crown Lessor 
	  	Atlee Buffalo Area, AB 	Royalty 

22

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