Document:

exv10w4

 

Exhibit
10.4

	 	 	 	 	 	 	 
	CONTRATO DE CESIÓN DE DERECHOS QUE OTORGA, POR
UNA PARTE, MINERA KENNECOTT, S.A. DE C.V.,
REPRESENTADA EN ESTE ACTO POR EL SR. DAVE F. SIMPSON
Y, POR LA OTRA, MINERA PEÑASQUITO, S.A. DE C.V.,
REPRESENTADA EN ESTE ACTO POR EL LIC. JOSE MARIA
GALLARDO TAMAYO, DE ACUERDO CON LAS SIGUIENTES:	 	CONTRACT FOR ASSIGNMENT OF RIGHTS GRANTED, BY MINERA
KENNECOTT, S.A. DE C.V. REPRESENTED IN THIS AGREEMENT
BY MR. DAVE F. SIMPSON, AND MINERA PEÑASQUITO, S.A. DE
C.V., REPRESENTED IN THIS AGREEMENT BY ATTORNEY, JOSE
MARIA GALLARDO TAMAYO, IN AGREEMENT WITH THE FOLLOWING
	 
	 	 	 	 	 	 
	D E C L A R A C I O N E S
	 	DECLARATIONS

	 
	 	 	 	 	 	 
	Declaran las partes en que, para los efectos de este 

Contrato, las abreviaturas utilizadas se entenderán 

por:	 	The parties declare that for the purposes of this
Contract, the following definitions shall have the
following meanings:
	 
	 	 	 	 	 	 
	KENNECOTT:

	 	Minera Kennecott, S.A. de
C.V., así como sus
causahabientes y cesionarios, y
cualesquiera personas, sociedad
o entidad jurídica, nacional o
extranjera, que ésta designase
para el ejerciclo de cualquiera
de los derechos derivados de
este Contrato y que se
encuentre legalmente
capacitada para ello.
	 	KENNECOTT:
	 	Minera Kennecott, S.A. de C.V.,
as well as its successors and
assigns, and any other persons,
companies, or any legal, domestic
or foreign entity, authorized to
exercise any of the rights derived
from this Contract and which
possess the legal capacity for such
exercise.
	 
	 	 	 	 	 	 
	PEÑASQUITO:

	 	Minera Peňasquito, S.A. de
C.V., así como sus
causahabientes y cesionarios, y
cualesquiera personas, sociedad
o entidad jurídica, nacional o
extranjera, que ésta designase
para el ejercicio de cualquiera
de los derechos derivados de
este Contrato y que se encuentre
legalmente capacitada para ello.
	 	PEÑASQUITO:
	 	Minera Peñasquito, S.A. de C.V.,
as well as its successors and
assigns, and any other persons,
companies, or any legal, domestic
or foreign entity, authorized to
exercise any of the rights derived
from this Contract and which
possess the legal capacity for such
exercise.
	 
	AFILIADOS:

	 	Cualquier persona, sociedad o
entidad jurídica que, directa o
indirectamente, controle a
KENNECOTT o
PEÑASQUITO, o sea
controlada por las mismas,
según sea el caso,
entendiéndose por “control” el
derecho ha hacer valer más del
50 % de los derechos de
votación correspondientes a las
acciones de la parte controlada.
En el caso de KENNECOTT,
se considerara como
AFILIADOS a cualquier
	 	AFFILIATES:
	 	Any person, company, partnership
or legal entity that directly or
indirectly controls KENNECOTT
or PEÑASQUITO, or is
controlled by the same, as the case
may be, understanding that
“control” means the right to direct
more than 50% of voting rights
corresponding to the stock of the
controlled party. In the case of
KENNECOTT, AFFILIATES
are considered as any person,
company, or legal entity,
independent of its location, for
which Rio Tinto Corporation PLC

Page 1 

 

	 	 	 	 	 	 	 
	 

	 	persona, sociedad o entidad
jurídica que,
independientemente de su
ubicación, Rio Tinto
Corporation PLC posea o
controle tales derechos de
votación.
	 	 	 	possesses or controls such voting
rights.
	 
	 	 	 	 	 	 
	LOS LOTES:

	 	Las Concesiones Mineras con
respecto a los lotes descritos en
el inciso c) de las
Declaraciones de
KENNECOTT en este
documento, y las que de ellas
se deriven.
	 	THE LAND:
	 	The Mining Concessions with
respect to the land described in
paragraph c) of the Declarations of
KENNECOTT in this document
and the rights that are derived
therefrom.
	 
	 	 	 	 	 	 
	LOS DERECHOS:

	 	Derechos derivados de los
Títulos de Concesión Minera
con respecto a LOS LOTES.
	 	THE RIGHTS:
	 	Rights derived from Mining
Concession Deeds with respect to
THE LAND.
	 
	 	 	 	 	 	 
	REGISTRO:

	 	El Registro Público de Minería.
	 	REGISTRY:
	 	The Public Mining Registry
	 
	 	 	 	 	 	 
	LOS CONTRATOS:

	 	Los siguientes Contratos de
Cesión de Derechos:
	 	THE CONTRACTS:
	 	The following Assignment
Agreements:
	 
	 	 	 	 	 	 
	 

	 	a) Celebrado entre Minera
Catasillas, S.A. de C.V. y
KENNECOTT, registrado
bajo el número 108, a fojas 79
frente y vuelta, del volumen 5,
del libro de Actos, Contratos y
Convenios Mineros del
REGISTRO, el 26 de Febrero
de 1997.
	 	 	 	a) Agreed to between Minera
Catasillas, S.A. de C.V. and
KENNECOTT, registered under
number 108, page 79 front and
back volume 5, of the Mining
Acts, Contracts and Agreements
book of the REGISTRY, dated
February 26, 1997.
	 
	 	 	 	 	 	 
	 

	 	b) Celebrado entre el Lic. José
Guadalupe Durón Santillán y
KENNECOTT, registrado
bajo el número 244, a fojas 172
vuelta a 173 frente, del
volumen 7, del libro de Actos,
Contratos y Convenios Mineros
del REGISTRO, el 30 de
Septiembre de 1998.
	 	 	 	b) Agreed to between José
Guadalupe Durón Santillán, Esq.,
and KENNECOTT, registered
under number 244, page 172 and
continuing to 173, of volume 7 of
the Mining Acts, Contracts and
Agreements book of the
REGISTRY, dated September 30,
1998.
	 
	 	 	 	 	 	 
	 

	 	c) Celebrado entre el Ing.
Rafael Gaytán Monroy y
KENNECOTT, registrado
bajo el número 10, a fojas 7
vuelta a 8 frente, del volumen
9, del libro de Actos, Contratos
y Convenios Mineros del
REGISTRO, el 23 de Octubre
de 1998.
	 	 	 	c) Agreed to between Engineer,
Rafael Gaytán Monroy and
KENNECOTT, registered under
number 10, page 7 and continuing
to 8, of volume 9 of the Mining
Acts, Contracts and Agreements
book of the REGISTRY, dated
October 23, 1998.

Page 2 

 

	 	 	 	 	 	 	 
	LEY:

	 	La Ley Minera.
	 	LAW:
	 	The Mining Law
	 
	 	 	 	 	 	 
	REGLAMENTO:

	 	Reglamento de la Ley Minera.
	 	REGULATIONS:
	 	Regulations of the Mining Law
	 
	 	 	 	 	 	 
	IVA:

	 	Impuesto al Valor Agregado.
	 	VAT:
	 	Value Added Tax
	 
	 	 	 	 	 	 
	ISR:

	 	Impuesto Sobre la Renta.
	 	IT:
	 	Income Taxes
	 
	 	 	 	 	 	 
	LIR:

	 	Ley del Impuesto Sobre la
Renta.
	 	ITL:
	 	Income Tax Law
	 
	 	 	 	 	 	 
	LFD:

	 	Ley Federal de Derechos.
	 	FRL:
	 	Federal Rights Law

	 	 	 
	I. Declara el representante de
KENNECOTT:

	 	I. Declares the representative of
KENNECOTT:
	 
	 	 
	a) Que su representada es una sociedad
minera, mexicana, constituída conforme
a las Leyes de los Estados Unidos
Mexicanos, registrada baja el Numero
104, a Fojas 89 Frente y Vuelta, del
Volumen XXIX del Libro General de
Sociedades del REGISTRO el 12 de Julio
de 1991, con Registro Federal de
Causantes MKE-910228-AQA y que, de
acuerdo con su objeto social, está
capacitada para dedicarse a la
exploración y explotación de sustancias
concesibles, ser titular de concesiones
mineras, así como para celebrar
contratos que tengan por objeto
transferir derechos derivados de dichas
concesiones y, por lo tanto, capacitada
para celebrar este Contrato de Cesión
de Derecheos.

	 	a) That he represents a Mexican mining
company organized under the laws of
Mexico, registered under number 104, page
89 front and back, of volume XXIX of the
General Book of Companies of the REGISTRY,
dated July 12, 1991, with the Federal
Entity Register of MKE-910228-AQA, and in
accordance with its corporate purpose, has
the capacity to engage in the exploration
and exploitation of concessionable
substances, to be the holder of of mining
concessions, as well as to execute
contracts transferring rights derived from
such concessions, and as a result, has the
capacity to execute this Contract for
Assignment of Rights.
	 
	 	 
	b) Que tiene facultades suficientes
para actuar en nombre y representación
de KENNECOTT, obligándola en los
términos de este Contrato, facultades
que a la fecha de la firma de este
documento no le han sido revocadas o
modificadas en forma alguna, como
consta en la Escritura Pública número
60724, de fecha 15 de Mayo de 1998,
otorgada ante el licenciado Armando
Gálvez Pérez Aragón, Notario Público
103 del Distrito Federal, además de
estar inscrita en el Registro Único de
Personas Acreditadas bajo el Número de
Acreditamiento 49795/73971, expedido el
7 de Septiembre de 1999.`

	 	b) That he has sufficient authority to act
in the name of and to represent KENNECOTT,
obligating it to the terms of this
Contract, authority that upon the date
this document is signed has not been
revoked or modified in any form, as
confirmed in Public Deed number 60724,
dated May 15, 1998, singed before Armando
Gálvez Pérez Aragón, Notary Public 103 of
the Federal District, in addition to being
written in the Exclusive Register of
Accredited Persons under Accreditation
Number 49795/73971, sent September 7,
1999.
	 
	 	 
	c) Que su representada es titular de 

las derechos derivados de las 

Concesiones Mineras con respecto a los 

lotes que se describen a continuación:

	 	c) That the party he represents is the
holder of the rights derived from the
Mining Concessions with respect to the
land described as follows:

Page 3 

 

	 	 	 	 	 	 	 	 	 	 	 
	1)
	 	Nombre de la Concesión:	 	“EL PEÑASQUITO”	 	1)	 	Name of the Concession:	 	“EL PEÑASQUITO”
	 
	 	Tipo de Concesión:	 	Explotación	 	 	 	Type of Concession:	 	Exploitation
	 
	 	Expediente:	 	321.43/885	 	 	 	Record:	 	321.43/885
	 
	 	Título:	 	196289	 	 	 	Title:	 	196289
	 
	 	Superficie:	 	2.0000 Hectáreas	 	 	 	Area:	 	2.0000 Hectacres
	 
	 	Fecha de Registro:	 	16 de Julio de 1993	 	 	 	Date of Registry:	 	July 16, 1993
	 
	 	Número:	 	149	 	 	 	Number:	 	149
	 
	 	Fojas:	 	75	 	 	 	Pages:	 	75
	 
	 	Volumen:	 	271	 	 	 	Volume:	 	271
	 
	 	Libro:	 	Concesiones Mineras	 	 	 	Book:	 	Mining Concessions
	 
	 	Vigencia a:	 	11 de Junio de 2011Cesión de Derechos	 	 	 	Term:	 	June 11, 2011 Assignment of Rights
	 
	 	Inscrita en el Acta:	 	108	 	 	 	Inscribed in the Record:	 	108
	 
	 	Fojas:	 	79 frente y vuelta	 	 	 	Pages:	 	79 front and back
	 
	 	Volumen:	 	5	 	 	 	Volume:	 	5
	 
	 	Libro:	 	Actos, Contratos y 
Convenios Mineros	 	 	 	Book:	 	Mining Deeds, Contracts and Agreements
	 
	 	Fecha de inscripción:	 	26 de Febrero de 1997	 	 	 	Date of inscription:	 	February 26, 1997
	 
	 	 	 	 	 	 	 	 	 	 
	2)
	 	Nombre de la Concesión:	 	“LA PEÑA”	 	2)	 	Name of the Concession:	 	“LA PEÑA”
	 
	 	Tipo de Concesión:	 	Explotación	 	 	 	Type of Concession:	 	Exploitation
	 
	 	Expediente:	 	7/1.3/547	 	 	 	Record:	 	7/1.3/547
	 
	 	Título:	 	203264	 	 	 	Title:	 	203264
	 
	 	Superficie:	 	58.0000 Hectáreas	 	 	 	Area:	 	58.0000 Hectacres
	 
	 	Fecha de Registro:	 	28 de Junio de 1996	 	 	 	Date of Registry:	 	June 28, 1996
	 
	 	Número:	 	284	 	 	 	Number:	 	284
	 
	 	Fojas:	 	142	 	 	 	Pages:	 	142
	 
	 	Volumen:	 	290	 	 	 	Volume:	 	290
	 
	 	Libro:	 	Concesiones Mineras	 	 	 	Book:	 	Mining Concessions
	 
	 	Vigencia a:	 	27 de Junio de 2046	 	 	 	Term:	 	June 27, 2046
	 
	 	Cesión de Derechos	 	 	 	 	 	Assignment of Rights	 	 
	 
	 	inscrita en el Acta:	 	108	 	 	 	Inscribed in the Record:	 	108
	 
	 	Fojas:	 	79 frente y vuelta	 	 	 	Pages:	 	79 front and back
	 
	 	Volumen:	 	5	 	 	 	Volume:	 	5
	 
	 	Libro:	 	Actos, Contratos y 

Convenios Mineros	 	 	 	Book:	 	Mining Deeds, Contracts and Agreements
	 
	 	Fecha de inscripción:	 	26 de Febrero de 1997	 	 	 	Date of inscription:	 	February 26, 1997

Page 4 

 

	 	 	 	 	 	 	 	 	 	 	 
	3)
	 	Nombre de la Concesión:	 	“LAS PEÑAS”	 	3)	 	Name of the Concession:	 	“LAS PEÑAS”
	 
	 	Tipo de Concesión:	 	Exploración	 	 	 	Type of Concession:	 	Exploration
	 
	 	Expediente:	 	07/13065	 	 	 	Record:	 	07/13065
	 
	 	Título:	 	195327	 	 	 	Title:	 	195327
	 
	 	Superficie:	 	40.0000 Hectáreas	 	 	 	Area:	 	40.0000 Hectacres
	 
	 	Fecha de Registro:	 	15 de Septiembre de 1992	 	 	 	Date of Registry:	 	September 15, 1992
	 
	 	Número:	 	147	 	 	 	Number:	 	147
	 
	 	Fojas:	 	38	 	 	 	Pages:	 	38
	 
	 	Volumen:	 	269	 	 	 	Volume:	 	260
	 
	 	Libro:	 	Concesiones Mineras	 	 	 	Book:	 	Mining Concessions
	 
	 	Vigencia a:	 	18 de Septiembre de 1998	 	 	 	Term:	 	September 18, 1998
	 
	 	Expediente Explotación:	 	8-1.3/983	 	 	 	Exploitation Record:	 	8-1.3/983
	 
	 	Fecha de solicitud:	 	7 de Septiembre de 1998	 	 	 	Date of Application:	 	September 7, 1998
	 
	 	Cesión de Derechos	 	 	 	 	 	Assignment of Rights	 	 
	 
	 	inscrita en eI Acta:	 	108	 	 	 	Inscribed in the Record:	 	108
	 
	 	Fojas:	 	79 frente y vuelta	 	 	 	Pages:	 	79 front and back
	 
	 	Volumen:	 	5	 	 	 	Volume:	 	5
	 
	 	Libro:	 	Actos, Contratos y 

Convenios Mineros	 	 	 	Book:	 	Mining Deeds, Contracts and Agreements
	 
	 	Fecha de inscripción:	 	26 de Febrero de 1997	 	 	 	Date of inscription:	 	February 26, 1997
	 
	 	 	 	 	 	 	 	 	 	 
	4)
	 	Nombre de la Concesión:	 	“ALFA”	 	4)	 	Name of the Concession:	 	“ALFA”
	 
	 	Tipo de Concesión:	 	Explotación	 	 	 	Type of Concession:	 	Exploitation
	 
	 	Expediente:	 	7/1.3/485	 	 	 	Record:	 	7/1.3/485
	 
	 	Título:	 	201997	 	 	 	Title:	 	201997
	 
	 	Superficie:	 	1,100.0000 Hectáreas	 	 	 	Area:	 	1,1000.0000 Hectacres
	 
	 	Fecha de Registro:	 	11 de Octubre de 1995	 	 	 	Date of Registry:	 	October 11, 1995
	 
	 	Número:	 	97	 	 	 	Number:	 	97
	 
	 	Fojas:	 	49	 	 	 	Pages:	 	49
	 
	 	Volumen:	 	287	 	 	 	Volume:	 	287
	 
	 	Libro:	 	Concesiones Mineras	 	 	 	Book:	 	Mining Concessions
	 
	 	Vigencia a:	 	10 de Octubre de 2045	 	 	 	Term:	 	October 10, 2045
	 
	 	Cesión de Derechos	 	 	 	 	 	Assignment of Rights	 	 
	 
	 	inscrita en el Acta:	 	244	 	 	 	Inscribed in the Act:	 	244
	 
	 	Fojas:	 	172 vuelta a 173 frente	 	 	 	Pages:	 	172 continuing to front of 173
	 
	 	Volumen:	 	7	 	 	 	Volume:	 	7
	 
	 	Libro:	 	Actos, Contratos y 

Convenios Mineros	 	 	 	Book:	 	Mining Deeds, Contracts and Agreements
	 
	 	Fecha de inscripción:	 	30 de Septiembre de 1998	 	 	 	Date of inscription:	 	September 30, 1998

Page 5 

 

	 	 	 	 	 	 	 	 	 	 	 
	5)
	 	Nombre de la Concesión:	 	“BETA”	 	5)	 	Name of the Concession:	 	“BETA”
	 
	 	Tipo de Concesión:	 	Exploración	 	 	 	Type of Concession:	 	Exploration
	 
	 	Expediente:	 	7/13187	 	 	 	Record:	 	7/13187
	 
	 	Tßtulo:	 	198921	 	 	 	Title:	 	198921
	 
	 	Superficie:	 	2,054.7609 Hectáreas	 	 	 	Area:	 	2,054.7609 Hectacres
	 
	 	Fecha de Registro:	 	31 de Enero de 1994	 	 	 	Date of Registry:	 	January 31, 1994
	 
	 	Número:	 	261	 	 	 	Number:	 	261
	 
	 	Fojas:	 	131	 	 	 	Pages:	 	131
	 
	 	Volumen:	 	278	 	 	 	Volume:	 	278
	 
	 	Libro:	 	Concesiones Mineras	 	 	 	Book:	 	Mining Concessions
	 
	 	Vigencia a:	 	30 de Enero de 2000	 	 	 	Term:	 	January 30, 2000
	 
	 	Cesión de Derechos	 	 	 	 	 	Assignment of Rights	 	 
	 
	 	inscrita en el Acta:	 	10	 	 	 	Inscribed in the Record:	 	10
	 
	 	Fojas:	 	7 vuelta a 8 frente	 	 	 	Pages:	 	7 continuing to front of 8
	 
	 	Volumen:	 	9	 	 	 	Volume:	 	9
	 
	 	Libro:	 	Actos, Contratos y 

Convenios Mineros	 	 	 	Book:	 	Mining Deeds, Contracts and Agreements
	 
	 	Fecha de inscripción:	 	23 de Octubre de 1998	 	 	 	Date of inscription:	 	October 23, 1998

	 	 	 
	Sin perjuicio de tercero que mejor derecho tenga.

	 	Without prejudice of a third party who may
have better rights.
	 
	 	 
	d) Continúa declarando KENNECOTT que LOS
DERECHOS que en este acto cede a favor de
PEÑASQUITO son los derivados de LOS LOTES,
además de las obligaciones derivadas de LOS
CONTRATOS.

	 	d) KENNECOTT continues declaring that THE
RIGHTS that in this deed are assigned in
favor of PEÑASQUITO are those derived from
THE LAND in addition to the obligations
derived from THE CONTRACTS.
	 
	 	 
	e) Que los derechos y capacidad legal de
KENNECOTT, respecto de LOS LOTES, no han sido
limitados, ni revocados, y que no se encuentra
en conocimiento de oposición alguna de cualquier
tercero, respecto de la firma de este documento.

	 	e) That the rights and legal capacity of
KENNECOTT, with respect to THE LAND, have
not been limited, or revoked, and that it
is not aware of any opposition from any
third party with respect to the signing of
this document.
	 
	 	 
	f) Que desea ceder a PEÑASQUITO, en las términos
de este instrumento, LOS DERECHOS.

	 	f) That it wishes to assign to PEÑASQUITO,
according to the terms of this instrument,
THE RIGHTS.
	 
	 	 
	II. Declara el representante de PEÑASQUITO:

	 	II. Declares the representative of
PEÑASQUITO
	 
	 	 
	a) Que su representada es una sociedad minera,
mexicana, constituída conforme a las Leyes de
los Estados Unidos Mexicanos, con solicitud de
inscripción al REGISTRO bajo el Número
610/32177, de fecha 13 de Octubre de 1999, con
Registro Federal de Causantes MPE — 990122 — 137
y que, de acuerdo con su objeto social, está
capacitada para dedicarse a la exploración y
explotación de sustancias concesibles, ser
titular de concesiones mineras, así como para
celebrar contratos que tengan por objeto
adquirir derechos derivados de dichas
concesiones y, por lo tanto, capacitada para
celebrar este Contrato de Cesión de Derechos.

	 	a) That he represents a Mexican mining
company organized according to the laws of
Mexico, with an application of a record to
the REGISTRY under number 610/32177, dated
October 13, 1999, with the Federal Entity
Register of MPE-990122-137 and that in
accordance with its corporate purpose, has
the capacity to engage in the exploration
and exploitation of concessionable
substances, to be the holder of mining
concessions, as well as to execute
contracts to acquire rights derived from
such concessions, and, as a result, has the
capacity to execute this Contract for
Assignment of Rights.

Page 6 

 

	 	 	 
	b) Que tiene facultades suficientes para actuar
en nombre y representación de PEÑASQUITO,
obligándoIa en los términos de este Contrato,
facultades que a la fecha de la firma de este
documento no le han sido revocadas o modificadas
en forma alguna, como consta en la Escritura
Pública número 44,340, de fecha 21 de Enero de
1999, otorgada ante el licenciado Jorge Robles
Farías, Notario Público número 12 de
Guadalajara, Jalisco.

	 	b) That he has sufficient authority to act
in the name of and to represent PEÑASQUITO,
binding it to the terms of this Contract,
authority that upon the date this document
is signed have not been revoked or modified
in any form, as confirmed in Public Deed
number 44,340, dated January 21, 1999,
signed before the attorney, Jorge Robles
Farías, Notary Public number 12 of
Guadalajara, Jalisco.
	 
	 	 
	c) Que PEÑASQUITO conoce LOS LOTES y LOS
CONTRATOS, y los acepta en las condiciones
establecidas en las Declaraciones de KENNECOTT,
y que desea recibir LOS DERECHOS por parte de
KENNECOTT, en los términos de este instrumento,
dando continuidad al cumplimiento de LOS
CONTRATOS.

	 	c) That PEÑASQUITO is familiar with THE
LAND and THE CONTRACTS, and accepts them
under the established conditions as set
forth in the Declarations of KENNECOTT, and
that it desires to receive THE RIGHTS on
behalf of KENNECOTT according to the terms
of this instrument, giving continuity to
the fulfillment of THE CONTRACTS.
	 
	 	 
	En virtud de lo anterior, las partes celebran el
presente Contrato conforme a las siguientes:

	 	In witness to the foregoing, the parties
enter into the present Contract in
accordance with the following:
	 
	 	 
	C L A U S U L A S

	 	CLAUSES
	 
	 	 
	PRIMERA. KENNECOTT cede a PEÑASQUITO, y ésta
acepta la cesión, adquiriendo LOS DERECHOS,
además de todas las obligaciones pactadas por
KENNECOTT en LOS CONTRATOS, obligandose
PEÑASQUITO desde ahora al total cumplimiento de
las mismas.

	 	FIRST. KENNECOTT assigns to PEÑASQUITO,
and PEÑASQUITO accepts the assignment,
acquiring THE RIGHTS in addition to all of
the obligations agreed to by KENNECOTT in
THE CONTRACTS, and PEÑASQUITO covenants
from this day forward to comply completely
with the same.
	 
	 	 
	SEGUNDA. Por la cesión de LOS DERECHOS antes
mencionada, KENNECOTT, recibirá como
contraprestación por parte de PEÑASQUITO,
siempre y cuando ésta lleve a cabo trabajos de
explotación en LOS LOTES, una regalía sobre
liquidaciones netas sobre fundición como se
define en el ANEXO 1 que se acompaña a este
documento, teniéndose aquí como integramente
reproducido, formando parte integrante del
mismo, igual al 2 % (dos por ciento), por las
ventas de minerales provenientes de LOS LOTES,
sin incluir subsidio alguno o devoluciones de
impuestos que el Gobierno Federal pudiese
otorgar a PEÑASQUITO par cualquier motivo, de
acuerdo con lo estipulado en el ANEXO 1 antes
mencionado.

	 	SECOND. As a result of the assignment of
THE RIGHTS aforementioned, KENNECOTT will
receive as consideration from PEÑASQUITO,
if and when it carries out exploitation
activities in THE LAND, net smelter
returns royalties, as defined in ANNEX 1,
an accurate copy of which is attached to
this document, and forms an integrated part
of the same, equal to 2% (two percent), of
the mineral sales originating from THE
LAND, without including any subsidies or
reimbursements of taxes that the Federal
Government may grant PEÑASQUITO for any
reason in accordance with that stipulated
in the aforementioned ANNEX 1.
	 
	 	 
	Las partes están de acuerdo en que a los pagos
anteriores se les agregará eI IVA
correspondiente a tales cantidades, las cuales
podrán ser cubiertas en su equivalente en Moneda
Nacional, al tipo de cambio para solventar
obligaciones denominadas en moneda extranjera
pagaderas en la República Mexicana que publique
eI Banco de México en el Diario Oficial de la
Federación en la fecha del pago.

	 	The parties agree that to the payments
previously mentioned will be added VAT
corresponding to such amounts, which can be
covered in its equivalent in pesos, at an
exchange rate to settle obligations
denominated in foreign currency payable in
the Mexican Republic published by the Bank
of Mexico in the Official Journal of the
Federation on the date of payment.

Page 7 

 

	 	 	 
	TERCERA. Las partes convienen en que, con
excepción del derecho de KENNECOTT a percibir
las regalías antes mencionadas, a partir de la
fecha en que ambas partes firmen y ratifiquen
este documento ante notario público, todos los
derechos y obligaciones, anteriores, presentes y
futuras, que se deriven de las Concesiones
Mineras con respecto a LOS LOTES y de LOS
CONTRATOS, serán a favor y a cargo de
PEÑASQUITO, la cual asumirá y llevará a cabo, a
su propio costo y riesgo, todas las obligaciones
relacionadas con LOS LOTES y LOS CONTRATOS, e
indemnizará y liberará a KENNECOTT de cualquier
responsabilidad, costo o gasto relacionado con
las actividades de PEÑASQUITO en LOS LOTES.

	 	THIRD. The parties agree that, with the
exception of KENNECOTT’s right to receive
the aforementioned royalties, from the date
both parties sign and ratify this document
before a notary public, all the past,
present and future rights and obligations
derived from the Mining Concessions with
respect to THE LAND and THE CONTRACTS will
be the rights and responsibilities of
PEÑASQUITO, which will assume and carry
out, at its own expense and at its own
risk, all of the obligations related to THE
LAND and THE CONTRACTS, and will indemnify
and hold harmless KENNECOTT from any
responsibility, cost or expense related to
PEÑASQUITO’s activities on THE LAND.
	 
	 	 
	CUARTA. Las partes se reconocen mutuamente
capacidad y personalidad para celebrar este
Contrato.

	 	FOURTH. The parties mutually recognize that
they have the capacity and legal status to
execute this Contract.
	 
	 	 
	QUINTA. PEÑASQUITO se obIiga expresamente a
inscribir este Contrato en el REGISTRO, para lo
cual, KENNECOTT se compromete a cooperar con
PEÑASQUITO en todo lo que fuese necesario para
que la mencionada inscripción se lleve a cabo
sin contratiempos.

	 	FIFTH. PEÑASQUITO expressly agrees to
record this Contract in the REGISTRY, and
KENNECOTT agrees to cooperate with
PEÑASQUITO with all that is necessary to
carry out the aforementioned inscription
without delay.
	 
	 	 
	SEXTA. KENNECOTT se obliga a proporcionar a
PEÑASQUITO toda la información que se le
solicite, así como firmar, acreditar y cumplir
cualquier otro requisito necesario, a fin de que
este última ejercite los derechos que aquí se le
confieren.

	 	SIXTH. KENNECOTT agrees to provide
PEÑASQUITO with all requested information,
as well as to execute, authorize, and
comply with any other necessary condition,
in order to bestow the rights herein
conferred.
	 
	 	 
	SÉPTIMA. Mientras exista el derecho de
KENNECOTT a recibir la regalía sobre
liquidaciones netas sobre fundición pactada en
la Clausula SEGUNDA de este documento,
PEÑASQUITO se obliga a garantizar la existencia,
legitimidad y disponibilidad de LOS DERECHOS,
incluyendo el solicitar oportunamente la
solicitud de concesión minera de explotación con
respecto a LOS LOTES cuyo vencimiento llegase a
ocurrir, y a no incurrir en ninguna de las
causas de nulidad, canceIación, suspensión e
insubsistencia de derechos a que se refieren los
Artículos correspondientes de la LEY y eI
REGLAMENTO, de lo contrario, desde ahora, se
compromete, en su caso, a reparar los daños y
perjuicios que el incumplimiento a alguna de sus
obligaciones hubiese ocasionada a KENNECOTT, sin
embargo, KENNECOTT, sí así lo decide, podrá
coadyuvar con PEÑASQUITO en la defensa de LOS
DERECHOS, en el entendido de que los honorarios
y demás gastos que esto genere serán cubiertos
por esta última.

	 	SEVENTH. While KENNECOTT’s right to receive
net smelter returns royalties as agreed to
in the SECOND Clause of this document
exists, PEÑASQUITO agrees to guarantee the
existence, legitimacy and availability of
THE RIGHTS, including applying for an
exploitation mining concession in a timely
manner with respect to THE LAND when they
mature, and to not incur any of the causes
of nullities, cancellation, suspension or
baseless rights as referred in the
applicable Articles in the LAW and the
REGULATIONS, from this day forward, in the
event the contrary occurs, PEÑASQUITO
agrees to repay any damages and costs as a
result of noncompliance with its
obligations which may affect KENNECOTT,
nevertheless KENNECOTT, in its discretion,
may assist PEÑASQUITO in defending THE
RIGHTS, with the understanding that the
fees and additional costs generated shall
be borne by the latter.

Page 8 

 

	 	 	 
	Asimismo, en caso de que PEÑASQUITO decida
solicitar el desistimiento o reducción de la
superficie concesionada que ampara LOS LOTES,
deberá notificar a KENNECOTT dicha decisión,
esta última tendrá un plazo de 30 (treinta) dias
naturales para dar respuesta por escrito a
PEÑASQUITO otorgando su conformidad con el
desistimiento o reducción que PEÑASQUITO
pretenda efectuar, o bien, solicitando a
PEÑASQUITO le ceda los derechos derivados del
título de concesión minera con respecto a alguno
de LOS LOTES del cual pretenda desistirse, o la
superficie de alguna de LOS LOTES que pretenda
abandonar, previa división que se haga del lote
de que se trate.

	 	Similarly, in the event that PEÑASQUITO
decides to solicit the abandonment or to
reduce the area protected by the
concessions in THE LAND, it shall notify
KENNECOTT of its decision, and KENNECOTT
shall have 30 (thirty) days to submit a
written response to PEÑASQUITO granting its
approval of abandonment or reduction that
PEÑASQUITO seeks to effect, or requesting
that PEÑASQUITO assign to KENNECOTT the
rights derived from the mining concession
deeds with respect to any of THE LAND which
it intends to abandon or the area of THE
LAND that it intends to abandon, prior to
dividing the affected lproperty.
	 
	 	 
	Transcurrido el plaza de 30 (treinta) dias
naturales a que se refiere el párrafo anterior,
si que medie contestación de KENNECOTT,
PEÑASQUITO podrá libremente desistirse o reducir
la superficie de que se trate, sin
responsabilidad ante KENNECOTT.

	 	After the passage of 30 (thirty) days as
mentioned in the previous paragraph, if
KENNECOTT intervenes and contests,
PEÑASQUITO may freely abandon or reduce the
area in question without responsibility to
KENNECOTT.
	 
	 	 
	OCTAVA. PENASQUTIO se obliga a cumplir con la
ejecución y con la comprobación de obras o
trabajos de exploración y demás obligaciones a
que se refieren los Artículos 27, 28, 29 y demás
aplicables de la LEY y del REGLAMENTO,
incluyendo el pago de los derechos sobre minería
que establece la LFD con respecto a LOS LOTES.

	 	EIGHTH. PEÑASQUITO agrees to comply with
the execution and with verification of
exploration works or projects and the rest
of the obligations referred to in Articles
27, 28, 29 and also applicable to the LAW
and REGULATIONS, including the payment of
mining rights established in the FRL with
respect to THE LAND.
	 
	 	 
	NOVENA. Todos los avisos y notificaciones que
las partes deban darse conforme al presente
Contrato, se harán mediante carta certificada,
con acuse de recibo, enviada a los siguientes
domicilios:

	 	NINTH. All notices and demands the parties
are required to give each other in
accordance with the present Contract will
be done pursuant to certified letter, with
acknowledgment of receipt, sent to the
following addresses:
	 
	 	 
	“KENNECOTT”

	 	“KENNECOTT”
	MINERA KENNECOTT, S.A. DE C.V.

	 	MINERA KENNECOTT, S.A. DE C.V.
	NEBULOSA 3019

	 	NEBULOSA 3019
	COL. JARDINES DEL BOSQUE

	 	COL. JARDINES DEL BOSQUE
	GUADALAJARA, JALISCO 44520

	 	GUADALAJARA, JALISCO 44520
	TEL. (3) 647-9131

	 	TEL. (3) 647-9131
	FAX (3) 122-0367

	 	FAX (3) 122-0367
	 
	 	 
	Atención Sr. Dave F. Simpson

	 	Attention: Mr. Dave F. Simpson
	 
	 	 
	“PEÑASQUITO”

	 	“PEÑASQUITO”
	MINERA PEÑASQUITO, S.A. DE C.V.

	 	MINERA PEÑASQUITO, S.A. DE C.V.
	RICARDO FLORES MAGON NO. 67, INT. 8 - G

	 	RICARDO FLORES MAGON NO. 67, INT. 8 - G
	COL. CENTRO

	 	COL. CENTRO
	H. DEL PARRAL, CHIHUAHUA 33800

	 	H. DEL PARRAL, CHIHUAHUA 33800
	TEL. Y FAX (152) 2-22-93

	 	TEL. and FAX (152) 2-22-93
	 
	 	 
	Atención Sr. Thomas Charles Patton

	 	Attention Mr. Thomas Charles Patton
	 
	 	 
	Cualquier cambio de domicilio o de
representante, se notificará por escrito,
entregado en forma fehaciente.

	 	Any change in address or in representative
shall be noted in writing, delivered in the
manner set forth above.

Page 9 

 

	 	 	 
	DÉCIMA. Todos los gastos, derechos, honorarios
e impuestos que se causen con motivo del
otorgamiento de este Contrato, convienen las
partes que sean por cuenta de PEÑASQUITO. El ISR
a cargo de KENNECOTT, quien se obliga a expedir
las facturas correspondientes por las cantidades
que llegase a recibir por concepto de las
regalías pactadas en este contrato, en los
términos de la LIR, las que deberán ser
presentadas a PEÑASQUITO a más tardar en la
fecha del pago que le corresponda. Asimismo, las
partes se obligan a dar cumplimiento con todas
las obligaciones que le imponen las Ieyes
fiscales vigentes, en virtud de haber
manifestado en sus Declaraciones estar inscritas
en el Registro Federal de Contribuyentes y que
su actividad preponderante es la que la LIR
califica como Sociedades Mercantiles. Desde
ahora, KENNECOTT, con fundamento en la LIR,
autoriza a PEÑASQUITO para que ésta efectúe las
retenciones necesarias, de conformidad con las
leyes aplicables de la materia, siempre y cuando
procedan dichas retenciones al momento de los
pagos, en cuyo caso se expedirán a satisfacción
de las partes los comprobantes correspondientes,
lo anterior, dado que las Concesiones Mineras
objeto de este Contrato forma parte de la
actividad manifestada.

	 	TENTH. The parties agree that all of the
expenses, rights, fees and taxes resulting
from the grant of this Contract will be
borne by PEÑASQUITO. Income taxes will be
for the account of KENNECOTT, which agrees
to send its corresponding invoices for the
amount it receives for its royalties as
agreed to in this contract, according to
terms of the ITL, which should be presented
to PEÑASQUITO no later than the
corresponding pay date. Similarly, the
parties agree to comply with all
obligations imposed by current fiscal laws,
in accordance with what has been stated in
their Declaration, to be recorded in the
Federal Registry of Taxpayers and that
their predominant activities are those
which the ITL characterized as a Commercial
Corporation. As of today, KENNECOTT, based
on the ITL, authorizes PEÑASQUITO to
effectuate necessary withholdings according
to the applicable laws, provided that said
withholding occurs at the time of payment,
in which case proof of the foregoing will
be provided to the satisfaction of the
parties, given the object of the Mining
Concessions that form the object of this
Contract form a part of the manifested
activity.
	 
	 	 
	DÉCIMA PRIMERA. En eI supuesto de que el
REGISTRO, considerase necesario que este
documento y los que de éI se deriven se
contengan en escritura pública, KENNECOTT,
autoriza a PEÑASQUITO, desde ahora, a elevarlos
a escritura pública ante el Notario Público de
su elección y sin necesidad de la comparecencia
de KENNECOTT.

	 	ELEVENTH. In the event that the REGISTRY
considers it necessary that this document
and those from which it is derived be in
the form of public deeds, KENNECOTT
authorizes PEÑASQUITO, from now on, to make
them part of the public record before a
notary public of choosing without an
appearance by KENNECOTT.
	 
	 	 
	DÉCIMA SEGUNDA. Cualquiera de las partes tendrá
eI derecho, previo consentimiento de la otra
parte, el cual no será negado sin existir causa
razonable, a ceder los derechos y las
obligaciones que de este documento derivan a
favor y a cargo de la misma, en el entendido de
que la cesionaria se subrogará en los derechos y
obligaciones de la parte cedente.

	 	TWELFTH. Anyone of the parties has the
right, with the prior consent of the other
party, which consent will not be withheld
without a reasonable basis, to assign the
rights and obligations derived in this
document for the benefit and burden of the
same upon the understating that the
assignment will subrogate the rights and
obligations to the assignor.
	 
	 	 
	En caso de que la parte que deba otorgar su
consentimiento no manifieste objeción en el
término de 30 (treinta) días naturales
siguientes a la fecha en que se solicite su
consentimiento, se entenderá que otorga dicho
consentimiento.

	 	In the event that the party needing to
grant consent does not object at the end of
30 (thirty) days following the date in
which consent has been requested, it will
be understood that consent has been
granted.

Page 10 

 

	 	 	 
	El derecho de KENNECOTT a la regalía sobre
liquidaciones netas sobre fundición continuará,
aún y cuando se lleve a cabo cualesquier
modificación a cualquiera de las concesiones
mineras con respecto a LOS LOTES, incluyendo la
elevación a explotación, reducciones,
unificaciones, prórrogas de vigencia, o
extensiones de éstas. Esta regalia será parte de
LOS LOTES y será aplicable a cualquier persona
física o moral que explote y comercialice
productos minerales procedentes de los mismos,
por lo que en el caso de que PEÑASQUITO llegase
a ceder sus derechos y obligaciones a un
tercero, este deberá reconocer par escrito este
derecho de KENNECOTT, además de obligarse a
inscribir de inmediato dicho documento en el
REGISTRO, a su propio costo.

	 	KENNECOTT’s right to net smelter returns
royalties shall continue despite any
modification in the mining concessions with
respect to THE LAND, including the
elevation to exploitation, reductions, and
unifications, delays to maturity or
extensions. This royalty shall be part of
THE LAND and will apply to any legal entity
that exploits and commercializes mineral
products deriving from the same, which in
the event that PEÑASQUITO assigns its
obligations to a third party, it will
notify KENNECOTT in addition to agreeing to
immediately inscribe such a document in the
REGISTRY, while bearing the cost.
	 
	 	 
	DÉCIMA TERCERA. Este Contrato será obligatorio
para las partes, sus herederos, causahabientes o
cesionarios. Las partes, no obstante la
naturaleza de este instrumento, declaran
expresamente que en las convenciones objeto del
mismo no existe lesión y, aún cuando la hubiese,
renuncian expresamente al derecho de pedir la
nulidad relativa de que tratan los Artículos
2228 y 2239 del Código Civil para el Distrito
Federal en Materia Común y para toda la
República en Materia Federal y los Artículos
correlativos de los Códigos Civiles de todas las
Entidades de los Estados Unidos Mexicanos.

	 	THIRTEENTH. This Contract is binding on
the parties, their heirs, successors or
assignees. The parties, despite the nature
of this instrument, expressly declare that
no injury exists, and if there was injury,
they expressly renounce the right to seek a
relative nullity of contracts pursuant to
Articles 2228 and 2239 of the Civil Code
for the Federal District in Common Material
and for all the Republic in Federal
Material and the corresponding Articles in
the Civil Codes of all the Entities of
Mexico.
	 
	 	 
	DÉCIMA CUARTA. Este Contrato se celebra en los
términos del Artículo 78 del Código de Comercio,
es de naturaleza mercantil, por lo que, para lo
que no esté expresamente aquí pactado y para la
interpretación y cumplimiento del mismo, se
aplicarán la LEY, el REGLAMENTO y la Legislación
Mercantil, así como, supletoriamente, el Código
Civil para el Distrito Federal en Materia Común
y para toda la República en Materia Federal,
para lo no previsto en las dos primeras
legislaciones. Para la resolución de cualquier
controversia que surgiese con motivo de este
documento, las partes se someten expresamente a
la jurisdicción de los tribunales competentes en
la Ciudad de Guadalajara, Jalisco, renunciando a
cualquier jurisdicción que pudiese
corresponderles en razón de sus actuales o
futuros domicilios o por cualquier otra causa.

	 	FOURTEENTH. This contract is entered into
according to the terms of Article 78 of the
Commercial Code, is of a commercial nature,
such that what is not expressly agreed to
and for the interpretation and compliance
of the same, the LAW, the REGULATIONS and
Commercial Legislation, supplements the
Civil Code for the Federal District in
Common Matters for all of the Republic in
Federal Matters, to what is not foreseen in
the first two legislatures. To resolve any
controversy arising between the parties as
a result of this document, the parties
expressly submit themselves to the
jurisdiction of the competent tribunals in
the City of Guadalajara, Jalisco and waive
any other jurisdiction that might entertain
a cause of action despite the parties’
actual or future locations or any other
cause.
	 
	 	 
	Este documento es hecho en cuatro ejemplares,
uno para cada una de las partes, otro para fines
notariales y el restante para eI REGISTRO y, una
vez Ieído, lo ratifican en todo sus términos y
firman, para debida constancia, el 29 de OCTUBRE
de 1999, en Ciudad de Guadalajara, Jalisco.

	 	Four copies were made of this document, one
for each party, another for notary
purposes, and the remainder for the
REGISTRY, and once read and ratified in
accordance with all its terms and signed,
for due verification, the 29th of OCTOBER
of 1999, in the City of Guadalajara,
Jalisco.

	 	 	 	 	 	 	 
	“KENNECOTT”	 	“PEÑASQUITO”	 	“KENNECOTT”	 	“PEÑASQUITO”
	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	MINERA KENNECOTT, S.A. DE C.V.

	 	MINERA PEÑASQUITO, S.A. DE C.V.
	 	MINERA KENNECOTT, S.A. DE C.V.
	 	MINERA PEÑASQUITO, S.A. DE C.V.
	Dave F. Simpson

	 	Lic. José María Gallardo Tamayo
	 	Dave F. Simpson
	 	Lic. José María Gallardo Tamayo
	Representante legal

	 	Representante legal
	 	Legal Representative
	 	Legal Representaitve

Page 11 

 

	 	 	 
	ANEXO 1

	 	ANNEX 1
	 
	 	 
	De conformidad con el Contrato de Cesión de Derechos al que pertenece
este documento, celebrado entre MINERA KENNECOTT, S.A. DE C.V. (En lo
sucesivo “TITULAR DE LA REGALÍA”) y MINERA PEÑASQUITO, S.A. DE C.V. (En lo
sucesivo “DEUDOR DE LA REGALÍA”), sobre las concesiones mineras que se
mencionan en el inciso c) de las declaraciones de MINERA KENNECOTT, S.A.
DE C.V. en dicho Contrato, descritas como LOS LOTES, esta última tiene
derecho a una regalía equivalente aI 2 % (dos por ciento), conformidad con
la Clausula SEGUNDA del citado Cantrato, sabre las liquidaciones netas
sobre fundición (En lo sucesivo “RSLNSF”) pagadera por MINERA PEÑASQUITO,
S.A. DE C.V.

	 	This document is part of the Contract for Assignment of Rights entered
into between MINERA KENNECOTT, S.A. DE C.V. (known as the ROYALTY HOLDER)
and MINERA PEÑASQUITO, S.A. DE C.V. (known as the ROYALTY PAYOR), over
mining concessions mentioned in paragraph c) in the Declarations of MINERA
KENNCOTT, S.A. DE C.V. in the aforementioned Contract, in which KENNECOTT,
S.A. DE C.V. has a right to a royalty equivalent to 2% (two percent), in
accordance with the SECOND Clause of the aforementioned Contract over
smelter returns (the “NET SMELTER RETURN ROYALTY”) in THE LAND, paid by
MINERA PEÑASQUITO, S.A. DE C.V.

	 	 	 
	1.          RSLNSF

	 	1.           NET SMELTER RETURN ROYALTY
	 
	 	 
	1.1 Es la valuntad de las partes que la RSLNSF
establecida más
adelante en este documento, se calculará en base al valor determinado
dentro de las colindancias de LOS LOTES de los productos minerales
producidos y vendidos, o considerados como vendidos, calculado en
base a los precios publicados para plata, oro y cobre refinados o en
base a los ingresos reales de ventas por otros productos minerales,
como se define a continuación. El TITULAR DE LA REGALÍA reconoce que
puede ser necesario o apropiado el procesar, tratar o mejorar
productos minerales producidos a partir de LOS LOTES antes de que
sean vendidos o se consideren como vendidos, y que para determinar el
valor de dichos productos dentro de las colindancias de LOS LOTES,
todos los costos realizados o que se consideren realizados por el
DEUDOR DE LA REGALÍA después de que los productos minerales abandonen
LOS LOTES serán deducidos de los ingresos recibidos, o que se
consideren haber sido recibidos por el DEUDOR DE LA REGALÍA. La
obligación de pagar la RSLNSF se acumulará tomando en base la
praducción de metales refinados en favor de la cuenta del DEUDOR DE
LA REGALÍA que satisfagan los requisitos de los precios especificos
publicados, o la venta más próxima de metales no refinados, minerales
comerciales, concentrados, minerales u otros productos minerales,
como se define más adelante.

	 	1.1. It is the intention of the ROYALTY PAYOR and the ROYALTY HOLDER that
the NET SMELTER RETURN ROYALTY hereinafter provided be based upon the
value at the boundary of THE LAND of the mineral products produced and
sold or deemed sold, determined by reference to published prices for
refined silver, gold and copper or the actual proceeds of sales for other
mineral products, all as hereinafter provided. The ROYALTY HOLDER
acknowledges it may be necessary or appropriate to process, treat or
upgrade mineral products off THE LAND before they are sold or deemed sold;
and that to determine the value of such mineral products within the
boundaries of THE LAND, all costs incurred or deemed incurred by the
ROYALTY PAYOR after the mineral products leave the THE LAND shall be
deducted from the proceeds received or deemed to be received by the
ROYALTY PAYOR. The obligation to pay the NET SMELTER RETURN ROYALTY shall
accrue upon the outturn of refined metals meeting the requirements of the
specified published price to the ROYALTY PAYOR’s account or the sooner
sale of unrefined metals, dore, concentrates, ores or other mineral
products, as hereinafter provided.

	 
	 	 
	1.2 El DEUDOR DE LA REGALÍA deberá pagar

	 	1.2. The ROYALTY PAYOR shall pay to the

Page 1

 

	 	 	 
	al TITULAR DE LA REGALÍA,
una RSLNSF equivalente al 2 % (dos par ciento), de conformidad con la
Clausula SEGUNDA del Cantrato al que se anexa eI presente documento,
del Valor Neto de todos los minerales, metales y materiales extraídos
y obtenidos dentro del perimetro de LOS LOTES que sean vendidos, a
que se consideren como vendidos, por o para el DEUDOR DE LA REGALÍA.

	 	ROYALTY HOLDER a NET SMELTER
RETURN ROYALTY equal to 2% (two percent), in accordance with the SECOND
Clause of the Contract, of which this anex is part, of the Net Value of
all ores, minerals, metals and materials mined and removed from THE LAND
and sold or deemed to have been sold by or for the ROYALTY PAYOR.

	 
	 	 
	1.3 Para efectos del presente Anexo, se entenderá por
Valor Neto, eI
Valor Bruto de dichos minerales metálicos, minerales, metales a
materiales, deduciendo todos los costos, cargos y gastos pagados o
incurridos por el DEUDOR DE LA REGALÍA con respecto a dichos
productos pagados o que se consideren incurridos por el DEUDOR DE LA
REGALÍA, después de que dichos productos abandonen LOS LOTES,
incluyendo los siguientes, descritos en forma enunciativa más no
limitativa:

	 	1.3. As used herein, “Net Value” means the Gross Value of such ores,
minerals, metals or materials, less all costs, charges and expenses paid
or incurred by the ROYALTY PAYOR with respect to such products paid or
deemed incurred by the ROYALTY PAYOR after such products leave THE LAND,
including, but not limited to:

	 
	 	 
	1.3.1  Cargos por tratamiento en at proceso de fundición y
refinación (Incluyenda los costos por el manejo,
procesamiento, intereses y cuotas provisionales de
liquidación, muestreos, ensayes y gastos de representación
así como castigos y cualesquiera otras deducciones
atribuibles a su procesamiento).

	 	1.3.1.  Charges for treatment in the smelting and refining process
(including handling, processing, interest and provisional settlement fees,
sampling, assaying and representation costs, penalties and other process
deductions);

	 
	 	 
	1.3.2  Costos reales de transportación (Incluyendo fletes,
seguro, vigilancia, impuestos por operación, manejo,
almacenaje, retrasos y gastos subsecuentes que sean
incurridos par razón de o en el transcurso de dicha
transportación) de minerales comerciales, concentrados u
otros productos, desde LOS LOTES al lugar de tratamiento y,
posteriormente, al lugar de venta;

	 	1.3.2.  Actual costs of transportation (including freight, insurance,
security, transaction taxes, handling, port, demurrage, delay and
forwarding expenses incurred by reason of or in the course of such
transportation) of ores, minerals, concentrates or other products from THE
LAND to the place of treatment and then to the place of sale;

	 
	 	 
	1.3.3  Costos reales de venta y correduria relacionados con
los minerales comerciales crudos y otros minerales para los
cuales se debe calcular la RSLNSF en base a los ingresos
recibidos por el TITULAR DE LA REGALÍA, como se establece
en los subincisos 1.4.4 y 1.4.5 siguientes y, una cantidad
fija por los costos razanables de ventas y costos por
correduría por metales refinados objeto de la RSLNSF,
establecidos en los subincisos 1.4.1, 1.4.2 y 1.4.3
siguientes; y

	 	 1.3.3.  Actual sales and brokerage costs on raw commercial ores and other
minerals for which the NET SMELTER RETURN ROYALTY is based on proceeds
received by the ROYALTY HOLDER as hereinafter provided in subsections
1.4.4 and 1.4.5 below, and a fixed allowance for reasonable sales and
brokerage costs for refined metals subject to the NET SMELTER RETURN
ROYALTY hereinafter provided in subsections 1.4.1, 1.4.2 and 1.4.3 below;
and

Page 2

 

	 	 	 
	1.3.4  Impuestos sobre producción de minerales, venta, uso,
finiquito e impuestos ad valorem, así como cualquier otro
impuesto calculado en base a la producción de minerales.

	 	1.3.4.  Taxes over the production of minerals, their sale, use, severance,
and ad valorem taxes, and any other tax on or measured by mineral
production.

	 
	 	 
	1.4 Para efectos de lo señalado en este Anexo, el término “Valor
Bruto” tendrá los siguientes significados para las siguientes
categorias de metales, productos minerales y minerales producidos y
vendidos por el DEUDOR DE LA REGALÍA:

	 	1.4. “Gross Value” shall have the following meanings in this Annex for the
following categories of metals, minerals products and minerals produced
and sold by the ROYALTY PAYOR:

	 
	 	 
	1.4.1  Si el DEUDOR DE LA REGALÍA logra producir oro
refinado (Cumpliendo las especificaciones de la London
Bullion Market Association) extraido de minerales
procedentes de LOS LOTES, para efectos de determinar la
RSLNSF, el oro refinado será considerado como vendido al
Precio Promedio Mensual del Oro para el mes en que se
hubiera producido, y el Valor Bruto se determinará
multiplicando la Producción de Oro durante el mes
calendario de que se trate, por el Precio Promedio Mensual
del Oro. Para los efectos del presente Anexo, se entiende
por “Producción de Oro”, la cantidad de oro refinado
producido en favor de la cuenta del DEUDOR DE LA REGALÍA
por una fundición o refinería independiente, a partir del
oro producido en LOS LOTES durante el mes calendario de que
se trate, ya sea en base a las Iiquidaciones provisionales
o finales. Asimismo, se entenderá por “Precio Premedio
Mensual del Oro”, el promedio del precio establecido por la
London Bullion Market Association P.M. Gold Fix, calculado
al dividir la suma de dichos precios reportados para el mes
calendario de que se trate, entre el número de días para
los que dichos precios fueron reportados.

	 	1.4.1.  If the ROYALTY PAYOR causes refined gold (meeting the
specifications of the London Bullion Market Association) to be produced
from ores mined from THE LAND, for purposes of determining the NET SMELTER
RETURN ROYALTY the refined gold shall be deemed to have been sold at the
Monthly Average Gold Price for the month in which it was produced, and the
Gross Value shall be determined by multiplying Gold Production during the
calendar month by Monthly Average Gold Price. As used herein, “Gold
Production” shall mean the quantity of refined gold outturned to the
ROYALTY PAYOR’s pool account by an independent third-party refinery for
gold produced from THE LAND during the calendar month on either a
provisional or final settlement basis. As used herein, “Monthly Average
Gold Price” shall mean the average London Bullion Market Association P.M.
Gold Fix, calculated by dividing the sum of all such prices reported for
the month by the number of days for which such prices were reported.

	 
	1.4.2  Si el DEUDOR DE LA REGALÍA logra producir plata
refinada (Cumpliendo las especificaciones para la plata
refinada objeta del Precio de la Plata de Nueva York
publicado por Handy & Harman) extraída a partir de
minerales procedentes de LOS LOTES, para efectos de
determinar la RSLNSF, la plate refinada se
considerará como

	 	1.4.2.  If the ROYALTY PAYOR causes refined silver (meeting the
specifications for refined silver subject to the New York Silver Price
published by Handy & Harman) to be produced from ore mined from THE LAND,
for purposes of determining the NET SMELTER RETURN ROYALTY the refined
silver shall be deemed to have been sold at the Monthly Average Silver

Page 3

 

	 	 	 
	vendida al Precio Promedio Mensual de la Plata para el mes
en que fue producida, y el Valor Bruto se determinará
multiplicando la Producción de Plata durante el mes
calendario por el Precio Promedio Mensual de la Plata.
Como “Producción de Plata” se entiende la cantidad de plata
refinada producida en favor de la cuenta del DEUDOR DE LA
REGALÍA por una fundición a refinería independiente, a
partir de la plata producida en LOS LOTES durante el mes
calendario de que se trate, ya sea en una base a las
Iiquidaciones provisionales o finales. Como “Precio
Promedio Mensual de la Plata” se entiende el promedio del
precio establecido por el New York Silver Price publicado
diariamente por Handy & Herman, calculado al dividir la
suma de dichos precios reportados para el mes calendario de
que se trate, entre el número de días para los que dichos
precios fueron reportados.

	 	Price for the month in which it was produced, and the Gross Value shall be
determined by multiplying Silver Production during the calendar month by
the Monthly Average Silver Price. As used herein, Silver Production shall
mean the quantity of refined silver outturned to the ROYALTY PAYOR’s pool
account by an independent third-party refinery for silver produced from
THE LAND during the calendar month on either a provisional or final
settlement basis. As used herein, “Monthly Average Silver Price” shall
mean the average New York Silver Price as published daily by Handy &
Harman, calculated by dividing the sum of all such prices reported for the
calendar month by the number of days for which such prices were reported.

	 
	 	 
	1.4.3  Si el DEUDOR DE LA REGALÍA logra producir cobre
refinado (Cumpliendo las especificaciones para el cobre
refinado sujeto al Precio Comex de Nueva York) que vaya a
ser producido a partir de los minerales extraídas de LOS
LOTES, para los efectos de determinar la RSLNSF, el cobre
refinado se considerará vendido al Precio Promedio Mensual
del Cobre para el mes en que hubiera sido producido, y el
Valor Bruto se determinará multiplicando la Producción de
Cobre durante el mes calendario de que se trate, por el
Precio Promedio Mensual del Cobre. Por “Producción de
Cobre” se entiende la cantidad de cobre refinado producido
en favor de la cuenta del DEUDOR DE LA REGALÍA por una
fundición de cobre independiente, producida a partir del
cobre producido en LOS LOTES, durante el mes calendario de
que se trate, ya sea en base a liquidaciones provisionales
o finales. Para efectos del presente Anexo se entiende por
“Precio Promedio Mensual del Cobre”, el promedio del precio
establecido por el New York Commodities Exchange Price para
cobre de alta ley, publicado diariamente en el Wall Street
Journal, calculado al dividir la suma de dichos precios
reportados para el mes calendario de que se trate, entre eI
número de días para los que dichos precios fueron
reportados.

	 	1.4.3.  If the ROYALTY PAYOR causes refined copper (meeting the
specifications for refined copper subject to the New York Comex Price) to
be produced from ore mined from THE LAND, for the purposes of determining
the NET SMELTER RETURN ROYALTY the refined copper shall be deemed to have
been sold at the Monthly Average Copper Price for the month in which it
was produced, and the Gross Value shall be determined by multiplying
Copper Production during the calendar month by the Monthly Average Copper
Price. As used herein Copper Production shall mean the quantity of
refined copper outturned to the ROYALTY PAYOR’s pool account by an
independent third party smelter for copper produced from THE LAND during
the calendar month on either a provisional or final settlement basis. As
used herein, Monthly Average Copper Price shall mean the average New York
Commodities Exchange Price for high grade copper as published daily in the
Wall Street Journal, calculated by dividing the sum of all such prices
reported for the calendar month by the number of days for which such
prices were reported.

Page 4

 

	 	 	 
	1.4.4  Si el DEUDOR DE LA REGALÍA logra producir metales
refinados o procesados diferentes del oro y plata refinados
a partir de minerales extraídos de LOS LOTES, el Valor
Bruto deberá ser igual a la cantidad de ingresos
efectivamente recibidos por el DEUDOR DE LA REGALÍA durante
el mes calendario de la venta de dichos metales refinados o
procesados.

	 	1.4.4.  If the ROYALTY PAYOR causes refined or processed metals other than
refined gold and refined silver to be produced from ores mined from THE
LAND, the Gross Value shall be equal to the amount of the proceeds
actually received by the ROYALTY PAYOR during the calendar month from the
sale of such refined or processed metals.

	 
	 	 
	1.4.5  En caso de que el DEUDOR DE LA REGALÍA logre vender
minerales no procesados, doré o concentrados producidos de
minerales extraídos de LOS LOTES, entonces eI Valor Bruto
deberá ser igual a la cantidad de ingresos recibidos por el
DEUDOR DE LA REGALÍA durante el mes calendario de la venta
de dichos minerales metálicos en bruto, doré, concentrados
o metales refinados.

	 	1.4.5.  In the event that the ROYALTY PAYOR sells raw ores, or dore or
concentrates produced from ores mined from THE LAND, then the Gross Value
shall be equal to the amount of the proceeds actually received by the
ROYALTY PAYOR during the calendar month from the sale of such raw ore,
dore, concentrates or refined metal.

	 
	 	 
	1.4.6  Cuando la producción de metales refinados sea
efectuada por una refineria o fundición independiente en
forma provisional, el Valor Bruto se basará en la
liquidación provisional, pero deberá ajustarse en las
liquidaciones subsecuentes para completar el total del
mineral refinado que dicha refineria o fundición establezca
en la liquidación final.

	 	1.4.6.  Where outturn of refined metals is made by an independent third
party refinery on a provisional basis, the Gross Value shall be based upon
the amount of such provisional settlement, but shall be adjusted in
subsequent statements to account for the amount of refined metal
established by final settlement by such refinery.

	 
	1.4.7  El DEUDOR DE LA REGALÍA acepta que eI prepósito de
los subincisos 1.4.1, 1.4.2 y 1.4.3 anteriores es el de
pagar al TITULAR DE LA REGALÍA la RSLNSF, teniendo como
base el valor del oro, plata y cobre refinados producidos a
partir de minerales extraídos de LOS LOTES, de acuerdo con
el London Bullion Market Association P.M. Gold Fix para el
oro, el New York Silver Price publicado por Handy & Harman
para la plata y el New York Commodities Exchange Price para
cobre de alta ley publicado por Comex para eI cobre, sin
importar el precio o ingresos recibidos efectivamente por
el DEUDOR DE LA REGALÍA, por o en relación a dichos
metales, o la forma en que se lleve a cabo la venta del
metal

	 	1.4.7.  The ROYALTY HOLDER acknowledges that the purpose of subsections
1.4.1, 1.4.2 and 1.4.3 above is to pay the ROYALTY HOLDER a NET SMELTER
RETURN ROYALTY on the basis of value of the refined gold, silver and
copper produced from minerals mined from THE LAND as established by the
London Bullion Market Association P.M. Gold Fix for gold, the New York
Silver Price as published by Handy & Harman for silver and the New York
High Grade Copper Price as published by Comex, regardless of the price or
proceeds actually received by the ROYALTY PAYOR for or in connection with
such metal or the manner in which a sale of refined metal to a third party
is made by the ROYALTY PAYOR. The ROYALTY HOLDER further

Page 5

 

	 	 	 
	refinado, por parte del DEUDOR DE LA REGALÍA a un
tercero. El TITULAR DE LA REGALÍA acepta que el DEUDOR DE
LA REGALÍA tendrá el derecho a comercializar y vender, o
abstenerse de vender oro, plata, cobre refinados y otros
metales producidos a partir de LOS LOTES, en cualquiera
manera que elija, y que el DEUDOR DE LA REGALÍA tendrá el
derecho de comprometerse en ventas anticipadas, a futuro u
opciones de comercialización, y otras medidas
compensatorias o protectoras de precios, y acuerdos
especulativos (En lo sucesivo “Actividades de Comercio”)
que pueden implicar la posible entrega de oro, plata, cobre
y otros metales producidos a partir de LOS LOTES. El
TITULAR DE LA REGALÍA específicamente reconoce y acepta que
no estará facultado para participar en los ingresos ni
estará obligado a compartir cualesquier pérdida generada
por las prácticas de mercado o de ventas llevadas a cabo
por el DEUDOR DE LA REGALÍA o por sus Actividades de
Comercio.

	 	acknowledges that
the ROYALTY PAYOR shall have the right to market and sell or refrain from
selling refined gold, silver, copper and other metals produced from THE
LAND in any manner it may elect, and that the ROYALTY PAYOR shall have the
right to engage in forward sales, future trading or commodity options
trading, and other price hedging, price protection, and speculative
arrangements (“Trading Activities”) which may involve the possible
delivery of gold, silver, copper or other metals produced from THE LAND.
The ROYALTY HOLDER specifically acknowledges and agrees that the ROYALTY
HOLDER shall not be entitled to participate in the proceeds or be
obligated to share in any losses generated by the ROYALTY PAYOR’s actual
marketing or sales practices or by its Trading Activities.

	 
	 	 
	1.4.8  El DEUDOR DE LA REGALÍA podrá, pero no estará
obligado, a beneficiar, tratar, clasificar, concentrar,
refinar, fundir o, de cualquier otra manera, procesar y
mejorar la calidad de los minerales, concentrados, y otros
productos minerales comerciales producidos de minerales
extraídes a partir de LOS LOTES, con anterioridad a su
venta, transferencia o cesión a un comprador, usuario o
consumidor diferente del DEUDOR DE LA REGALÍA. El DEUDOR DE
LA REGALÍA no será responsable por las pérdidas de valores
minerales en dichos procesos realizados bajo prácticas
aceptables.

	 	1.4.8.  The ROYALTY PAYOR may, but is not obligated to, beneficiate, mill,
sort, concentrate, refine, smelt, or otherwise process and upgrade the
ores, concentrates, and other mineral products produced from ores mined
from THE LAND prior to sale, transfer, or conveyance to a purchaser, user
or consumer other than the ROYALTY PAYOR. The ROYALTY PAYOR shall not be
liable for mineral values lost in such processing under sound practices.

	 
	 	 
	1.4.9  El DEUDOR DE LA REGALÍA tendrá el derecho a vender a
AFILIADOS minerales procedentes de LOS LOTES en forma de
minerales no procesados, doré o concentrados, en el
entendido de que dichas ventas se considerarán, únicamente
para efectos de calcular el Valor Nete, como vendidas a
precios y en términos no menos favorables que aquellos que
se presentarían en circunstancias similares con un tercero
no afiliado.

	 	1.4.9.  The ROYALTY PAYOR shall be permitted to sell minerals from THE LAND
in the form of raw ore, dore, or concentrates to an affiliated party,
provided that such sales shall be considered, solely for the purpose of
computing Net Value, to have been sold at prices and on terms no less
favorable than those which would be extended to an unaffiliated third
party under similar circumstances.

Page 6

 

	 	 	 
	1.4.10  Todos los minerales para los cuales se deba pagar la
RSLNSF deberán ser pesados o medidos por volumen y
analizados en concordancia con las prácticas aceptables en
la industria minero-metalúrgica. Después de dichas
mediciones, el DEUDOR DE LA REGALÍA podrá mezclar o
combinar dichos minerales, materiales o productos con
minerales, materiales o productos de otras propiedades.

	 	1.4.10.  All minerals for which a NET SMELTER RETURN ROYALTY is payable
shall be weighed or measured, sampled and analyzed in accordance with
sound mining and metallurgical practices. After such measurement, the
ROYALTY PAYOR may mix or commingle such minerals, materials or products
with ores, materials or products from other THE LAND.

	 
	 	 
	1.4.11  Los pagos relacianados con la RSLNSF tendrán
vencimiento y serán liquidados en pagos trimestrales a más
tardar el último día natural del mes siguiente de cada
trimestre que se trate. Estos pagos deberán acampañarse de
los comprobantes que demuestren a detalle y claramente la
cantidad y calidad de los metales refinados, doré,
concentrados, u otros productos minerales producidos y
vendidos, o considerados como vendidos, por el DEUDOR DE LA
REGALÍA, por el trimestre precedente; el precio promedio
mensual determinado en la forma anteriormente establecida
para los metales refinados por los que se debe pagar la
RSLNSF; los ingresos de ventas de otros productos minerales
por los que se deba dicha regalía; costos y otros
deducciones; y demás información pertinente con el detalle
suficiente para explicar la manera en que se calculó el
pago de la RSLNSF.

	 	1.4.11.  NET SMELTER RETURN ROYALTIES shall become due and payable
quarterly on the last day of each month following the last day of the
calendar quarter in which the same accrued. NET SMELTER RETURN ROYALTY
payments shall be accompanied by a statement showing in reasonable detail
the quantities and grades of the refined metals, dore, concentrates, or
other mineral products produced and sold or deemed sold by the ROYALTY
PAYOR in the preceding calendar quarter; the average monthly price
determined as herein provided for refined metals on which the NET SMELTER
RETURN ROYALTY is due; the proceeds of sale for other mineral products on
which the royalty is due; costs, and other deductions; and other pertinent
information in sufficient detail to explain the calculation of the NET
SMELTER RETURN ROYALTY payment.

	 
	 	 
	Dichos reportes trimestrales deberán también enumerar la cantidad y
calidad de cualquier doré de oro, plata, a cátodo de cobre que haya
sido retenido en inventario por más de 60 (Sesenta) días naturales.
El TITULAR DE LA REGALÍA tendrá 15 (Quince) días naturales después
de la recepción de cada reporte trimestral para: (i) solicitar que
eI doré se considere vendido en ese decimoquinto día natural, como
se establece en los subincisos 1.4.1 y 1.4.2 anteriores, en en base
al peso y ley calculados en la mina para dicho doré, y utilizando
un cargo previsto por todas las deducciones que se especifican en
los subincisos 1.1 y 1.3 anteriores, los cuales deberán basarse en
los cargos más recientes hechos al DEUDOR DE LA REGALÍA por dichos
servicios por un tercero no afiliado, o (ii) elegir esperar hasta
el momento en que el oro o la plata refinada de dicho doré a cátodo
de cobre sea efectivamente entregado al DEUDOR DE LA REGALÍA, o
dicho doré sea vendido por el

	 	Such quarterly statements shall also list the quantity and quality of any
gold and silver dore, or copper cathode which has been retained as
inventory for more than sixty (60) days. The ROYALTY HOLDER shall have
fifteen (15) days after receipt of the statement to either (1) request
that the dore be deemed sold as provided in subsections 1.4.1 and 1.4.2
above as of such fifteenth day utilizing the mine weights and assays for
such dore and utilizing a deemed charge for all deductions specified in
subsections 1.1 and 1.3 above which shall be based upon the most recent
charges to the ROYALTY PAYOR for such services by an unaffiliated third
party, or (2) elect to wait until the time that refined gold or silver
from such dore or copper cathode is actually outturned to the ROYALTY
PAYOR or such dore is sooner sold by the ROYALTY PAYOR. The failure of
the ROYALTY HOLDER to respond within such time shall be deemed to be an
election under (2) above. No royalty shall be due with respect to
stockpiles of ores or

Page 7

 

	 	 	 
	DEUDOR DE LA REGALÍA. El
incumplimiento por parte del TITULAR DE LA REGALÍA para responder
dentro de dicho plazo se considerará como una elección en los
términos del inciso (ii) anterior. No se deberá ninguna regalía con
respecto a los inventarios de minerales o concentrados a menos y
hasta que dichos mineralos o concentrados sean efectivamente
vendidos.

	 	concentrates unless and until such ores or
concentrates are actually sold.

	 
	 	 
	Todas los pagos relacionados con la RSLNSF se considerarán finales y en
pleno cumplimiento de todas las obligaciones del DEUDOR DE LA REGALÍA con
respecto a las mismas, a menos que el TITULAR DE LA REGALÍA proporcione al
DEUDOR DE LA REGALÍA una notificación por escrito describiendo y
estableciendo una objeción específica a los cálculos de las mismas dentro
de los 120 (Ciento veinte) días naturales después de que el TITULAR DE LA
REGALÍA hubiesen recibido el reporte trimestral antes mencionado. Si el
TITULAR DE LA REGALÍA objeta un reporte trimestrel en particular, de
acuerde a lo establecido anteriormente, el TITULAR DE LA REGALÍA, por un
período de 30 (Treinta) días naturales después de la recepción de la
notificación por parte del DEUDOR DE LA REGALÍA de dicha objeción, tendrá
el derecho en y durante un tiempo razonable, para tener acceso a los
libros del DEUDOR DE LA REGALÍA, y a los registros relacionados con el
cálculo del reporte de la regalía en cuestión, y auditar mediante un
contador público titulado aprobado por el TITULAR DE LA REGALÍA y por el
DEUDOR DE LA REGALÍA. Si en dicha auditoria se determina que ha habido una
deficiencia o un excedente en el pago efectuado al TITULAR DE LA REGALÍA,
dicha deficiencia o excedente deberá compensarse ajustando el pago
correspondiente en eI siguiente trimestre en que haya que pagarse la
RSLNSF, conforme a los términos establecidos en el presente Anexo. El
TITULAR DE LA REGALÍA pagará los gastos incurridos por dicha auditoria, a
menos que se determine una deficiencia del 5% (Cinco por ciento) o más,
con respecto de la cantidad que debía haber sido pagada. El DEUDOR DE LA
REGALÍA deberá pagar los gastos de dicha auditoria si se determina la
existencia de una deficiencia del 5% (Cinco por ciento o más, respecto de
la cantidad que debió haber sido pagada. Todos las libros y registros en
pleados por el DEUDOR DE LA REGALÍA para calcular las regalías pagaderas
bajo los terminos aqui establecidos, así como los pagos de dichas
regalías, se mantendrán conforme a los principios de contabilidad
generalmente aceptados. La falta de objeción por parte del TITULAR DE LA
REGALÍA hacia el DEUDOR DE LA REGALÍA en relación a ajustes en los pagos
de regalías dentro del período de los 120 (Ciento veinte) días naturales
antes mencionados, dará lugar, a partir de ese momento, a la prescripción
del derecho para establecer excepciones o reclamaciones en relación a
ajustes a los pagos de que se trate.

	 	All NET SMELTER RETURN ROYALTY payments shall be considered final and in
full satisfaction of all obligations of the ROYALTY PAYOR with respect
thereto, unless the ROYALTY HOLDER gives the ROYALTY PAYOR written notice
describing and setting forth a specific objection to the calculation
thereof within one hundred twenty (120) days after receipt by the ROYALTY
HOLDER of the quarterly statement herein provided for. If the ROYALTY
HOLDER objects to a particular quarterly statement as herein provided, the
ROYALTY HOLDER shall, for a period of thirty (30) days after the ROYALTY
PAYOR’s receipt of notice of such objection, have the right, upon
reasonable notice and at a reasonable time, to have the ROYALTY PAYOR’s
accounts and records relating to the calculation of the Situation Royalty
in question audited by a certified public accountant acceptable to the
ROYALTY HOLDER and to the ROYALTY PAYOR. If such audit determines that
there has been a deficiency or an excess in the payment made to the
ROYALTY HOLDER such deficiency or excess shall be resolved by adjusting
the next quarterly NET SMELTER RETURN ROYALTY payment due hereunder. The
ROYALTY HOLDER shall pay all costs of such audit unless a deficiency of 5%
(five percent) or more of the amount due is determined to exist. The
ROYALTY PAYOR shall pay the costs of such audit if a deficiency of five
percent or more of the amount due is determined to exist. All books and
records used by the ROYALTY PAYOR to calculate royalties due hereunder
shall Royalty payment due hereunder shall be kept in accordance with
generally accepted accounting principles. Failure on the part of the
ROYALTY HOLDER to make claim on the ROYALTY PAYOR for adjustment in such
120 (one-hundred twenty) — day period shall establish the correctness and
preclude the filing of exceptions thereto or making of claims for
adjustment thereon.

Page 8

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2.          GENERALES.	 	 	 	2.          GENERALITIES.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.1	 	 	A menos de que se especifique de otra forma, los términos en
mayúscula en este Anexo tendrán los mismos significados establecidos
en el Contrato al que pertenece.
	 	 	 	 	2.1	 	 	Unless specified in another form, the capitalized terms in this Annex
shall have the same meaning established in the Contract to which it
pertains.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.2	 	 	El derecho a la RSLNSF continuará, aún y cuando se lleve a cabo
cualesquier modificación a cualquiera de las concesiones mineras con
respecto a LOS LOTES, incluyendo las elevaciones a explotación,
prórrogas de vigencia, o extensiones de éstas, pero sin incluir los
terrenos abandonados por las reducciones de superficie y
desistimientos autorizados de LOS LOTES. Esta regalía sobre estas
concesiones será parte de éstas y será aplicable a cualquier persona
fisica o moral que explote y comercialice productos minerales
procedentes de estas concesiones.
	 	 	 	 	2.2	 	 	The right to the NET SMELTER RETURN ROYALTY shall continue despite any
modification to any of the mining concessions with respect to THE LAND,
including the elevation to exploitation, reductions, and unifications,
delays to maturity or extensions. This royalty shall be part of THE LAND
and will apply to any legal entity that exploits and commercializes
mineral products deriving from the same, which, in the event that
PEÑASQUITO assigns its obligations to a third party, it will notify
KENNECOTT in addition to agreeing to immediately inscribe such a document
in the REGISTRY, while bearing the cost.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.3	 	 	Todas las comunicaciones que se hagan las partes con relación a
este Anexo serán conforme a lo establecido en la Cláusula NOVENA del
Contrato al que pertenece este documento.
	 	 	 	 	2.3	 	 	All of the communications made between the parties with respect to
this Annex shall be in accordance with the terms set forth in the NINTH
Clause of the Contract to which this document pertains.

	 	 	 	 	 	 	 
	“KENNECOTT”

	 	“PEÑASQUITO”
	 	“KENNECOTT”
	 	“PEÑASQUITO”
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	MINERA KENNECOTT, S.A. DE C.V.

	 	MINERA PEÑASQUITO, S.A. DE C.V.
	 	MINERA KENNECOTT, S.A. DE C.V.
	 	MINERA PEÑASQUITO, S.A. DE C.V.
	Dave F. Simpson

	 	Lic. José María Gallardo Tamayo
	 	Dave F. Simpson
	 	Lic. José María Gallardo Tamayo
	Representante Legal

	 	Representante Legal
	 	Legal Representative
	 	Legal Representative

Page 9

 

	 	 	 	 	 
	RATIFICACIÓN

	 	 	 	CONFIRMATION
	 
	 	 	 	 
	ACTA NUMERO: 1,421 MIL CUATROCIENTOS VEINTIUNO.

	 	 	 	DEED NUMBER: 1,421 ONE-THOUSAND FOUR-HUNDRED TWENTY-ONE
	 
	 	 	 	 
	LIBRO DE REGISTRO DE ACTAS Y PÓLIZAS.

	 	 	 	BOOK OF REGISTERY FOR DEEDS AND POLICIES
	 
	 	 	 	 
	     En la ciudad de Guadalajara, Jalisca a
los 29 veintinueve días de Octubre de
1999 mil novecientos noventa y nueve
ante mí Licenciado Diego Robles Farias,
Corredor Público número veinte de la
Plaza Jalisco, comparecieron:

	 	 	 	     In the city of Guadalajara, Jalisco on 29 twenty-nine
days of October of 1999, nineteen hundred and
ninety-nine, before me, the attorney, Diego Robles
Farias, Public Agent number twenty of Plaza Jalisco,
made an appearance:
	 
	 	 	 	 
	     1.- Por una parte el señor DAVE FRANK
SIMPSON KRIEDERS en representación de
la empresa “MINERA KENNECOTT”, SOCIEDAD
ANÓNIMA DE CAPITAL VARIABLE, como
Cedente.

	 	 	 	     1.- On behalf of one of the parties, Mr. DAVE FRANK
SIMPSON KRIEDERS as representative of the company
“MINERA KENNECOTT,” CORPORATION WITH VARIABLE CAPITAL,
as the Assignor.
	 
	 	 	 	 
	     2.- Por otra parte el Licenciado JOSÉ
MARÍA GALLARDO TAMAYO en representación
de la empresa “MINERA PEÑASQUITO”,
SOCIEDAD ANÓNIMA DE CAPITAL VARIABLE en
calidad de cesionaria del contrato de
Cesión de Derechos que antecede a la
presente.

	 	 	 	     2. – On behalf of the other party, JOSÉ MARÍA GALLARDO
TAMAYO as representative of the company “MINERA
PEÑASQUITO,” CORPORATION WITH VARIABLE CAPITAL appearing
as the assignee of the preceding Contract for Assignment
of Rights
	 
	 	 	 	 
	     I.- Que para todos los efectos legales
a que haya Iugar, ratifican en este
acto el contenido del contrato de
cesión de Derechos que antecede, por
ser la fiel expresión de sus
voluntades.

	 	 	 	     I. To give legal effect to the terms of the contract,
the representatives hereby certify that the terms are
accurate and that they voluntarily consent to the terms
of the preceding Contract for Assignment of Rights.
	 
	 	 	 	 
	     II.- Que reconocen como suyas las
firmas que lo calzan, por haber sido
puestas de su puño y letra y ser las
mismas que usan en todos sus asuntos y
negocios.

	 	 	 	     II. – They verify that the signatures given by their
hand and writing are the same signatures used in all of
their business and transactions.
	 
	 	 	 	 
	     III.- Los señores DAVE FRANK SIMPSON
KRIEDERS y JOSÉ MARÍA GALLARDO TAMAYO,
declaran que sus representadas tienen
capacidad legal y que la representación
que ostentan no les ha sido revocada ni
limitada, encontrándose vigente a la
fecha de la presente ratificación.

	 	 	 	     III. – Misters DAVE FRANK SIMPSON KRIEDERS and JOSE
MARIA GALLARDO TAMAYO declare that their clients have
legal capacity and that their representation of these
clients and the authority bestowed upon them by these
clients has not been revoked nor limited, and that their
authority is valid on the date of this ratification.
	 
	 	 	 	 
	POR LO ANTES EXPUESTO, EL CORREDOR QUE SUSCRIBE DOY
FE:

	 	 	 	ACCORDING TO THE AFOREMENTIONED DECLARATIONS, THE
SUBSCRIBING AGENT CERTIFIES:
	 
	 	 	 	 
	     PRIMERO.- De que conozco a los
comparecientes, a quienes conceptúo con
capacidad legal para contratar y
obligarse, pues no encuentro en ellos
manifestaciones evidentes de
incapacidad ni he tenido noticias de
que estén sujetos a interdicción; y
quienes además se identificaron con los
documentos que me presentan y de los
cuales agrego copia a mi archivo.

	 	 	 	     FIRST. – That I know the people appearing before me,
whom I know as having the legal capacity to contract and
to obligate themselves, and I see no evidence of
incapacity, nor has it come to my knowledge that they
are prohibited from signing; and who have identified
themselves with the documents they have presented, which
I will copy and to my archives.
	 
	 	 	 	 
	     SEGUNDO.- Que por sus generales, los
comparecientes manifestaron ser: DAVID
FRANK SIMPSON KRIEDERS, de nacionalidad
Norteamericana, casado, profesionista,
originario de la ciudad de Boulder,
Colorado, Estados Unidos de América en
donde nació el día 2

	 	 	 	     SECOND. — Those appearing before me are: DAVID FRANK
SIMPSON KRIEDERS, of American nationality, a married
professional, originally from Boulder, Colorado, in the
United States of America, who was born November 2, 1956,
nineteen hundred fifty-six, who lives at 3019 Nebulosa,

Page 1

 

	 	 	 	 	 
	dos de Noviembre
de 1956 mil novecientos cincuenta y
seis, y con domicilio en la calle
Nebulosa número 3019 tres mil
diecinueve, en el Fraccionamiento
Jardines del Bosque de esta ciudad, y
quien me acredita su legal estancia en
el país con su documento migratorio de
no inmigrante visitante con salidas
múltiples número 514882 cinco, uno,
cuatro, ocho, ocho, dos expedido por la
Secretaria do Gobernación de
Guadalajara, Jalisco. El señor JOSÉ
MARÍA GALLARDO TAMAYO, mexicano,
casado, originario de Jiquilpan,
Michoacán en donde nació el dia 21
veintiuno de enero de 1966 mil
novecientos sesenta y seis, de
ocupación Abogado, con domicilio en la
calle Privada del Niño número 676
seiscientos setenta y seis, en el
Fraccionamiento Camino Real de esta
ciudad.

	 	 	 	in the Fraccionamiento Jardines del Bosque, of this
city, and who verifies he is in this country legally
with his immigration papers, which permit frequent
ingress and egress, number 514882, five, one, four,
eight, eight two, issued by the Secretary of State of
Guadalajara, Jalisco. Mr. JOSÉ MARÍA GALLARDO TAMAYO,
married, Mexican, originally from Jiquilpan, Michoacán,
who was born January 21, 1966, nineteen hundred
sixty-six, who is a lawyer and lives at 676 Privada del
Niño, in the Fraccionamiento Camino Real of this city.
	 
	 	 	 	 
	     TERCERO.- El señor DAVE FRANK SIMPSON
KRIEDERS, me acredita la legal
constitución de “MINERA KENNECOTT”,
Sociedad Anónima de Capital Variable
y el carácter de Apoderado de la
misma con los siguientes documentos
que me presenta y doy fe de tener a
la vista, de los cuales agregare una
copia a mi archivo con el número de
la presente acta y la letra que le
corresponda y relaciono a
continuación:

	 	 	 	     THIRD. – Mr. DAVE FRANK SIMPSON KRIEDERS, verifies the
legal creation of “MINERA KENNECOTT,” Corporation with
Variable Capital and the character of the General Agent
of the same with the following documents that he
presents to me, and I certify having seen them, of which
I will file a copy in my archives containing the number
and text of the present and corresponding deed.
	 
	 	 	 	 
	     a).- CONSTITUCIÓN.- La sociedad
“MINERA SANTA VERÓNICA”, Sociedad
Anónima de Capital Variable se
constituyo en la escritura pública
número 11,863 once mil ochocientos
sesenta y tres de fecha 3 tres de
Julio de 1981 mil novecientos ochenta
y uno otorgada ante el Licenciado
Adrián Iturbide Galindo, Notario
Público número 139 ciento treinta y
nueve de la ciudad de México,
Distrito Federal, de la cual se
desprende que es una sociedad regular
constituida legalmente bajo las leyes
de la República Mexicana, y con
capacidad para realizar a cesión de
derechos quo antecede.

	 	 	 	     a). – CREATION. – The Corporation “MINERA SANTA
VERÓNICA,” Corporation with Variable Capital, was
created in public deed number 11,863 eleven thousand,
eight hundred and sixty-three, dated July 3, 1981,
granted before the attorney Adrián Iturbide Galindo,
Notary Public number 139 one hundred thirty-nine of
Mexico City, of which resulted a regular corporation
legally organized under the laws of the Mexican Republic
and with authority to realize the assignment of rights
aforementioned.
	 
	 	 	 	 
	     DATOS DE REGISTRO.- La escritura
anterior se encuentra inscrita con el
número 25-26 veinticinco guión
veintiséis del tomo 47 cuarenta y
siete del Libro Primero del Registro
Público de Comercio de esta
Municipalidad.

	 	 	 	     DATES OF REGISTRY. – The preceding writing can be found
registered as number 25-26 twenty-five, hyphen,
twenty-six of page 47 forty-seven in the First Book of
the Commercial Public Registry of this City.
	 
	 	 	 	 
	     b).- CAM BlO DE DENOMINACIÓN.- En
escritura pública número 14,824
catorce mil ochocientos veinticuatro
de fecha 28 veintiocho de febrero de
1991 mil novecientos noventa y uno,
otorgada ante el Licenciado Armando
Galvez Pérez Aragón, Notario Público
número 103 ciento tres de la ciudad
de México, Distrito Federal se
protocolizo el acta de asamblea de
accionistas en la que se acordó
cambiar la denominación de la
sociedad por la de “MINERA
KENNECOTT”, Sociedad Anónima de
Capital Variable.

	 	 	 	     b). – CHANGE OF NAME. – In public deed number 14,824
fourteen thousand, eight hundred twenty-four, dated
February 28, 1991,before the attorney Armando Galvez
Pérez Arragón, Notary Public number 103 one hundred
three of Mexico City, the shareholders’ agreement
containing the name change of the corporation to “MINERA
KENNECOTT,” Corporation with Variable Capital, was
recorded.
	 
	 	 	 	 
	     DATOS DE REGISTRO.- La escritura
anterior so encuentra registrada con
el número 326 trescientos veintiséis,
del tomo 388 trescientos ochenta y
ocho del libro primero del Registro
Público de Comercio de esta
Municipalidad.

	 	 	 	     DATES OF REGISTRY. – The preceding writing can be found
registered as number 326 three hundred twenty-six of
page 388 three hundred eighty-eight in the First Book of
the Commercial Public Registry of this City.

Page 2

 

	 	 	 	 	 
	     c).- REFORMA INTEGRAL DE ESTATUTOS.-
En escritura pública número 40,160
cuarenta y mil ciento sesenta, de
fecha 24 veinticuatro de marzo de
1995 mil novecientos noventa y cinco
otorgada ante el Licenciado Armando
Galvez Pérez Aragón, Notario Público
número 103 ciento tres de la ciudad
de México, Distrito Federal se
formalizó el acta de asamblea de
accionistas de la empresa en la que
se acordó la reforma total de los
estatutos de la sociedad, conservando
la denominación de “MINERA
KENNECOTT”, Sociedad Anonima de
Capital Variable.

	 	 	 	     c). – REVISION OF THE BYLAWS – In public writing number
40,160 forty thousand, one hundred and sixty, dated
March 24, 1995 nineteen hundred and ninety-five, before
the attorney, Armando Galvez Pérez Arragón, Notary
Public number 103 one hundred three of Mexico City, the
shareholders adopted the minutes of the shareholders’
meeting, which approved the complete restatement of the
company’s articles of association and preservation of
the name “MINERA KENNECOTT” Corporation with Capital
Variable was formalized.
	 
	 	 	 	 
	     DATOS DE REGISTRO.- La escritura
anterior se encuentra registrada con el
número 195 ciento noventa y cinco del
tomo 627 seiscientos veintisiete del
Libro Primero del Registro Público de
Comercio de esta Municipalidad.

	 	 	 	     DATES OF REGISTRY. – The preceding writing can be found
registered as number 195 one hundred ninety-five, page
627 six hundred twenty-seven in the First Book of the
Commercial Public Registry of this City.
	 
	 	 	 	 
	     d).- FACULTADES.- En escritura pública
número 60,724 sesenta mil setecientos
veinticuatro de fecha 15 quince de Mayo
del 998 mil novecientos noventa y ocho
otorgada ante el Licenciado Armado
Galvez Pérez Aragón, Notarie Público
número 103 ciento tres del Distrito
Federal, se le confirieron al señor
Dave Frank Simpson Krieders, las
facultades suficientes para comparecer
a la presente firma en representación
de la empresa “MINERA KENNECOTT”,
Sociedad Anónima de Capital Variable, y
al efecto eI mismo manifiesta bajo
protesta de decir verdad que las mismas
no le han sido revocadas o limitadas a
la fecha.

	 	 	 	     d). AUTHORITY – In public writing number 60,724
sixty-thousand, seven hundred twenty-four, dated May 15,
1998 nineteen hundred and ninety-eight and granted
before the attorney Armado Galvez Pérez Aragón, Notary
Public number 103 one hundred and three of the Federal
District, it was confirmed that Mr. Dave Frank Simpson
Krieders, had sufficient capability to appear and
represent “MINERA KENNECOTT,” Corporation with Variable
Capital, and he declared under oath that at present, his
authority had not been revoked or limited.
	 
	 	 	 	 
	     DATOS DE REGISTRO.- La escritura
anterior se encuentra registrada con el
número 96 noventa y seis del tomo 678
seiscientos setenta y ocho del Libro
Primero del Registro Público de
Comercio de esta Municipalidad.

	 	 	 	     DATES OF THE REGISTRY. – The preceding writing can be
found registered as number 96 ninety-six, page 678 six
hundred sixty-eight in the First Book of the Commercial
Public Registry of this City.
	 
	 	 	 	 
	     CUARTO.- El Licenciado JOSÉ MARÍA
GALLARDO TAMAYO me acredita su carácter
de Apoderado General y la legal
existencia de su representada “MINERA
PEÑASQUITO”, Sociedad Anónima de
Capital Variable, con el siguiente
documento que me presenta y doy fe de
tener a la vista, del cual agregare una
copia a mi archivo con el número de la
presente acta y la letra que le
corresponda y relaciono a continuación:

	 	 	 	     FOURTH. – The attorney JOSÉ MARÍA GALLARDO TAMAYO
verifies his character as a General Agent and the legal
status of the party he represents, “MINERA PEÑASQUITO,”
Corporation with Variable Capital, with the following
document, which I certify having viewed, of which I will
add a copy to my archives containing the number and text
of the present and corresponding deed.
	 
	 	 	 	 
	     a).- CONSTITUCIÓN Y FACULTADES.- En
escritura pública número 44,340
cuarenta y cuatro mil trescientos
cuarenta, de fecha 21 veintiuno de
enero de 1999 mil novecientos noventa y
nueve, otorgada ante el Licenciado
Jorge Robles Farias, Notario Público
Adscrito y Asociado al Titular número
12 doce de esta Municipalidad, se
constituyo la sociedad “MINERA
PEÑASQUITO”, Sociedad Anónima de
Capital Variable, y de la misma
escritura se desprende que la empresa
es una sociedad regular legalmente
constituida bajo las leyes de la
República Mexicana; en la misma
escritura constan las facultades
conferidas al Licenciado Gallardo
Tamayo, quien manifiesta bajo protesta
de decir verdad que las misma no le han
sido revocada o limititadas a al fecha.

	 	 	 	     a). – CREATION AND AUTHORITY. In public writing 44,340
forty-four thousand three hundred and forty, dated
January 21, 1999 nineteen hundred and ninety-nine, it is
granted before Attorney Jorge Robles Farias, Notary
Public Assigned and Associated with Title number 12
twelve of this City, that the corporation “MINERA
PEÑASQUITO,” Corporation with Variable Capital was
created, and in the same writing it is noted that the
business is a regular company legally created under the
laws of the Mexican Republic; in the same writing the
authority conferred to the Attorney Gallardo Tamayo, who
declares under oath that he is being truthful and that
at present his authority has not been limited or
revoked.

Page 3

 

	 	 	 	 	 
	     DATOS DE REGISTRO.- La escritura
anterior se encuentra inscrita con el
número 204-205 doscientos cuatro guión
doscientos cinco del tomo 698
seiscientos noventa y ocho del Libro
Primero del Registro Público de
Comercio de esta Municipalidad.

	 	 	 	     DATES OF REGISTRY. – The preceding writing can be found
registered as number 204-205 two hundred and four,
hyphen, two hundred and five of page 698 six hundred
ninety-eight six hundred and ninety-eight in the First
Book of the Commercial Public Registry of this City.
	 
	 	 	 	 
	     QUINTO.- De que los comparecientes
ratifican en este acto el contenido del
contrato mencionado en el punto (I)
uno, de este documento, así como las
firmas que lo calzan, por lo que
certifico su voluntad y autenticidad de
sus firmas.

	 	 	 	     FIFTH. – Those appearing confirm this deed contained in
the aforementioned contract at point (1) one, of this
document by signing, and I verify that they voluntarily
signed and the authenticity of their signatures.
	 
	 	 	 	 
	     SEXTO.- Leído por los comparecientes el
presente instrumento y explicado su
valor y consecuencias legales,
terminaron de firmarlo de conformidad,
en presencia y union del suscrito
Corredor Público Número veinte de esta
plaza, a las 12:30 doce horas con
treinta minuetos del dia de su fecha.

	 	 	 	     SIXTH. – Having read and reviewed the present instrument
and reviewed the legal consequences, those appearing
before me were in agreement and signed in the presence
of Public Agent Number twenty at this location, at 12:30
twelve thirty on this date.
	 
	 	 	 	 
	     DOY FE.

	 	 	 	     CERTIFIED.

	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	MINERA KENNECOTT, Sociedad

Anonima de Capital Variable
representatda por

Dave Frank Simpson

	 	MINERA PEÑASQUITO, Sociedad

de Capital Variable representada
por el Licenciado

José María Gallardo Tamayo
	 	MINERA KENNECOTT,

Corporation with Varibale Capital
represented by Dave Frank Simpson
	 	MINERA PEÑASQUITO, S.A. DE

C.V. represented by

Lic. José María Gallardo Tamayo

	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Ante Mi

	 	 	 	Before Me	 	 
	Lic. Diego Robles Farias

	 	 	 	Lic. Diego Robles Farias	 	 
	Corredor Publico number 20

	 	 	 	Public Agent number 20	 	 
	Plaza Jalisco

	 	 	 	Plaza Jalisco	 	 

Page 4

 

	 	 	 	 	 
	DIRECCION GENERAL DE MINAS

	 	 	 	GENRAL DIRECTION OF MINES
	 
	 	 	 	 
	REGISTRO PUBLICO DE MINERIA

	 	 	 	PUBLIC MINING REGISTER
	 
	 	 	 	 
	1/10783

	 	 	 	1/07/83
	 
	 	 	 	 
	     Registrado bajo el
número 256 a fojas 169
frente y vuelta del
volumen 10 del libro de
Actos, Contratos y
Convenios Mineros.

	 	 	 	     Registered under number 256, page 169
front and back of volume 10 in the book
of Mining Deeds, Contracts and
Agreements.
	 
	 	 	 	 
	México, D. F., 21 de Febrero de 2000.

	 	 	 	     Mexico, D.F., February 21, 2000
	 
	 	 	 	 
	EL REGISTRADOR

	 	 	 	     THE RECORDER
	 
	 	 	 	 
	LIC. MA. OLGA GALLARDO MONTOYA

	 	 	 	     LIC. MA. OLGA GALLARDO MONTOYA

Page 5

 

	 	 	 	 	 	 	 
	COORDINACION GENERAL DE MINERIA

DIRECCION GENERAL DE MINAS

DIRECCION DEL CATASTRO MINERO

SUBDIRECCION DEL REGISTRO

PUBLICO DE MINERIA

	 	 	 	GENERAL MINING COORDINATION

GENERAL DIRECTION OF MINING

DIRECTION OF MINING PROPERTY

SUBDIRECTION OF THE PUBLIC MINING REGISTER

	 
	 	 	 	 	 	 
	610.9

	 	 	 	610.9	 	 
	 
	 	 	 	 	 	 
	16441

	 	 	 	16441	 	 
	 
	 	 	 	 	 	 
	EXP. – 1/10783

	 	 	 	EXP. – 1/10783

	 
	 	 	 	 	 	 
	ASUNTO: Se deveulve documento registrado (50900)

	 	 	 	REGARDGING: Return of registered documents (50900)

	 
	 	 	 	 	 	 
	México D.F., a 27 JUN. 2000

	 	 	 	Mexico, D.F., June 27, 2000

	 
	 	 	 	 	 	 
	CERTIFICADO CON 

ACUSE DE RECIBO

	 	 	 	CERTIFICATE WITH ACKNOWLEDGMENT OF RECEIPT

	 
	 	 	 	 	 	 
	MINERA KENNECOTT, S.A. DE C.V.

	 	 	 	MINERA KENNECOTT, S.A. DE C.V.

	A/C LIC. FRANCISCO HEIRAS MANCERA

	 	 	 	c/o LIC. FRANCISCO HIERAS MANCERA

	AVE. OCAMPO NO. 3806

	 	 	 	AVE. OCAMPO NO. 3806

	COL. BELLAVISTA

	 	 	 	COL. BELLAVISTA

	C.P. 031030 CHIHUAHUA, CHIH.

	 	 	 	C.P. 031030 CHIHUAHUA, CHIH.

	 
	 	 	 	 	 	 
	Adjunto al presente se le envía debidamente
registrados el o (los) original (es) del o
(los) siguientes documentos:

	 	 	 	Enclosed with the following, we are sending you
original(s) of the duly registered document(s):

	 
	 	 	 	 	 	 
	El contrato celebrado el veintinueve de octubre
de mil novecientos noventa y nueve, por medio
del cual su representada cede en favor de
Minera Peñasquito, S.A. DE C.V., representada
por José Maria Gallardo Tamayo, entre otros,
los derechos derivados de la concesión minera
denominada “EL PEÑASQUITO” titulo ciento
noventa y seis mil doscientos ochenta y nueve,
ubicada en el Municipio de Mazapil, Zacatecas.

	 	 	 	The contract certified on October 29, 1999, in
which your client assigns to Minera PEÑASQUITO,
S.A. DE C.V., and represented by José Maria
Gallardo Tamayo, among other things, the rights
derived from the mining concession called “EL
PEÑASQUITO,” title one hundred ninety-six
thousand, two hundred and eighty-nine, located in
the city of Mazapil, Zacatecas.

	 
	 	 	 	 	 	 
	A T E N T A M E N T E

	 	 	 	SINCERELY

	 
	 	 	 	 	 	 
	SUFRAGIO EFECTIVO. NO REELECCION
LA SUBDIRECTORA DEL REGISTRO
PUBLICO DE MINERIA.

	 	 	 	EFFECTIVE SUFFRAGE, NO REELECTION
THE SUBDIRECTOR OF THE PUBLIC MINING REGISTER

	 
	 	 	 	 	 	 
	LIC. MA. OLGA GALLARDO MONTOYA

	 	 	 	LIC. MA. OLGA GALLARDO MONTOYA

	 
	 	 	 	 	 	 
	UN ANEXO

	 	 	 	AN ANNEX

	 
	 	 	 	 	 	 
	199909RPM34008

	 	 	 	199909PRM34008

Page 6exv10w5

 

Exhibit 10.5

SECOND AMENDED AND RESTATED LOAN AGREEMENT

among

ROYAL GOLD, INC.,

HIGH DESERT MINERAL RESOURCES, INC.

and

HSBC BANK USA, NATIONAL ASSOCIATION

Dated as of January 5, 2007

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 
	 	 	 	 	Page
	ARTICLE I
	 	          DEFINITIONS	 	 	1	 
	 
	1.1
	 	Definitions	 	 	1	 
	1.2
	 	Accounting Principles	 	 	12	 
	 
	ARTICLE II
	 	          LOAN FACILITY	 	 	13	 
	 
	2.1
	 	The Loan	 	 	13	 
	2.2
	 	Promissory Note	 	 	13	 
	2.3
	 	Interest	 	 	14	 
	2.4
	 	Repayment of the Loan	 	 	14	 
	2.5
	 	Permanent Reduction of Maximum Credit Amount	 	 	15	 
	2.6
	 	Fees	 	 	15	 
	2.7
	 	Miscellaneous	 	 	16	 
	2.8
	 	Taxes	 	 	17	 
	2.9
	 	Illegality; Capital Requirements; Increased Costs; Indemnity for Breakage Costs	 	 	17	 
	2.10
	 	Borrowing Base Determination	 	 	19	 
	 
	ARTICLE III
	 	      COLLATERAL SECURITY	 	 	21	 
	 
	3.1
	 	Collateral Agreements	 	 	21	 
	3.2
	 	Perfection and Maintenance of Collateral Agreement Liens	 	 	21	 
	3.3
	 	Collateral Account	 	 	21	 
	 
	ARTICLE IV
	 	      CONDITIONS PRECEDENT	 	 	22	 
	 
	4.1
	 	Conditions Precedent to the Initial Advance	 	 	22	 
	4.2
	 	Conditions Precedent to All Advances	 	 	24	 
	 
	ARTICLE V
	 	       REPRESENTATIONS AND WARRANTIES	 	 	24	 
	 
	5.1
	 	Due Organization, Good Standing and Authority	 	 	25	 
	5.2
	 	Due Authorization; Non-Contravention	 	 	25	 
	5.3
	 	No Approvals	 	 	25	 
	5.4
	 	Validity	 	 	25	 
	5.5
	 	Financial Statements	 	 	25	 
	5.6
	 	Litigation	 	 	25	 
	5.7
	 	Disclosure	 	 	26	 
	5.8
	 	Title to Royalty Interests; Liens	 	 	26	 

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	 	 	 	 	Page
	5.9
	 	Royalty Agreements	 	 	26	 
	5.10
	 	Project Permits	 	 	26	 
	5.11
	 	Payment of Taxes	 	 	27	 
	5.12
	 	Agreements	 	 	27	 
	5.13
	 	Compliance with Laws	 	 	27	 
	5.14
	 	Events of Default	 	 	27	 
	 
	ARTICLE VI
	 	      AFFIRMATIVE COVENANTS	 	 	27	 
	 
	6.1
	 	Notice to the Lender	 	 	28	 
	6.2
	 	Financial Statements, Calculations and Information	 	 	28	 
	6.3
	 	Maintenance of Existence	 	 	29	 
	6.4
	 	Compliance with Laws	 	 	29	 
	6.5
	 	Payment of Indebtedness	 	 	29	 
	6.6
	 	Taxes	 	 	29	 
	6.7
	 	Books and Records; Right to Inspection	 	 	30	 
	6.8
	 	Insurance	 	 	30	 
	6.9
	 	Maintenance of Liens	 	 	30	 
	6.10
	 	Defend Title	 	 	31	 
	6.11
	 	Compliance with ERISA	 	 	31	 
	6.12
	 	Financial Covenants	 	 	31	 
	6.13
	 	Delivery of Royalty Interest Proceeds	 	 	31	 
	6.14
	 	Maintenance of Credit Balances in the Collateral Account	 	 	32	 
	6.15
	 	Further Assurances	 	 	32	 
	 
	ARTICLE VII
	 	      NEGATIVE COVENANTS	 	 	32	 
	 
	7.1
	 	Indebtedness	 	 	32	 
	7.2
	 	Liens	 	 	32	 
	7.3
	 	Liquidation; Merger	 	 	33	 
	7.4
	 	Asset Sales	 	 	33	 
	7.5
	 	Guarantees/Assumptions	 	 	33	 
	7.6
	 	Change in Business	 	 	33	 
	7.7
	 	Changes in Constituting Documents or Capital Structure	 	 	33	 

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	 	 	 	 	Page
	7.8
	 	Metals Sales	 	 	33	 
	7.9
	 	Modification of Material Agreements	 	 	33	 
	7.10
	 	Maintenance of Royalty Interests	 	 	34	 
	7.11
	 	Restrictive and Inconsistent Agreements	 	 	34	 
	7.12
	 	Amount Outstanding	 	 	34	 
	 
	ARTICLE VIII
	 	      EVENTS OF DEFAULT	 	 	34	 
	 
	8.1
	 	Events of Default	 	 	34	 
	8.2
	 	Remedies Upon Event of Default	 	 	36	 
	 
	ARTICLE IX
	 	      MISCELLANEOUS	 	 	37	 
	 
	9.1
	 	Notices	 	 	37	 
	9.2
	 	Amendments, etc.	 	 	37	 
	9.3
	 	No Waiver; Cumulative Remedies	 	 	38	 
	9.4
	 	Costs and Expenses	 	 	38	 
	9.5
	 	Application of Collateral Account; Right of Set-off	 	 	38	 
	9.6
	 	Usury Savings; Limitation on Interest	 	 	39	 
	9.7
	 	Binding Effect; Assignment of Rights	 	 	39	 
	9.8
	 	Consent to Jurisdiction	 	 	40	 
	9.9
	 	Governing Law	 	 	41	 
	9.10
	 	Counterparts; Signatures	 	 	41	 
	9.11
	 	Confidentiality; Public Announcements	 	 	41	 
	9.12
	 	Joint and Several Liability	 	 	41	 
	9.13
	 	Entire Agreement	 	 	42	 

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SCHEDULES

	 	 	 
	Schedule 1.1(a)

	 	Projects; Project Managers
	Schedule 1.1(b)

	 	Royalty Agreements
	Schedule 1.1(c)

	 	Royalty Interests
	Schedule 5.6

	 	Litigation
	Schedule 5.7

	 	Disclosures
	Schedule 5.9

	 	Royalty Agreement Disclosures
	Schedule 5.10

	 	Project Permit Exceptions
	Schedule 5.12

	 	Material Agreements
	Schedule 5.13

	 	Compliance with Laws
	Schedule 6.8

	 	Insurance

EXHIBITS

	 	 	 
	Exhibit A

	 	Form of Request for Advance
	Exhibit B

	 	Form of Borrowers’ Omnibus Certificate
	Exhibit C

	 	Form of Second Amended and Restated Promissory Note
	Exhibit D

	 	Form of Mortgage Amendments
	Exhibit E

	 	Form of Proceeds Agreement
	Exhibit F

	 	Form of Ratification and Confirmation Agreement
	Exhibit G

	 	Form of Royalty Payment Confirmation
	Exhibit H

	 	Form of Mortgage
	Exhibit I

	 	Form of Irrevocable Payment Instructions

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SECOND AMENDED AND RESTATED LOAN AGREEMENT

     This SECOND AMENDED AND RESTATED LOAN AGREEMENT is entered into as of January 5, 2007, among
ROYAL GOLD, INC., a corporation incorporated under the laws of the State of Delaware, as a borrower
(“Royal Gold”), HIGH DESERT MINERAL RESOURCES, INC., a corporation incorporated under the laws of
the State of Delaware, as a borrower (“High Desert”, with each of Royal Gold and High Desert
individually referred to herein as a “Borrower” and collectively referred to herein as the
"Borrowers”), and HSBC BANK USA, NATIONAL ASSOCIATION a national banking association organized
under the laws of the United States (the “Lender”).

Recitals

     A. Royal Gold and the Lender entered into that certain Amended and Restated Loan Agreement
dated as of December 14, 2005 (as amended, modified, continued or restated prior to the date
hereof, the “Existing Agreement”). Royal Gold and the Lender desire to (i) add High Desert as a
Borrower for all purposes hereunder, (ii) extend the maturity date of the Existing Agreement, (iii)
increase the Maximum Credit Amount under the Existing Agreement, (iv) add Collateral to support the
Obligations and (v) to otherwise amend, restate, modify and continue the Existing Agreement as
provided in this Agreement and to continue any Loans under the Existing Agreement as Loans under
this Agreement.

     B. This Agreement and the Loans made pursuant hereto are secured by Liens on the Collateral in
favor of the Lender, which Liens, and the associated Collateral Agreements, shall be ratified,
continued and affirmed. Each of the Borrowers shall be jointly and severally liable for the
payment and performance of all obligations hereunder and under the other Loan Documents.

     C. The Existing Agreement is hereby amended, continued and restated in its entirety as set
forth in this Agreement.

Agreement

     NOW, THEREFORE, the parties agree as follows:

ARTICLE I

DEFINITIONS

     1.1 Definitions. When used in this Agreement the following terms have the following
meanings:

     “Advance” means an advance of a Loan by the Lender to the Borrowers in accordance with
Section 2.1.

 

 

     “Agreement” means this Second Amended and Restated Loan Agreement, as it may be amended,
supplemented, restated or otherwise modified in accordance herewith and in effect from time to
time.

     “Amount Cancelled” means the aggregate amount from time to time by which the Maximum Credit
Amount has been reduced by the Borrowers in accordance with Section 2.5(a).

     “Amount Outstanding” means the total principal amount of the Loans outstanding on any date of
determination (which shall be a Business Day), from time to time.

     “April Calculation” shall have the meaning specified in Section 2.10(b) hereof.

     “Authorized Officer” means any officer of a Borrower who has been duly authorized to act on
behalf of such Borrower with respect to the applicable matters by appropriate resolution of the
board of directors of such Borrower, and any other person duly authorized in writing by any such
officer by notice to the Lender.

     “Availability Period” means the period commencing on the date on which all conditions
precedent to the Advance are satisfied pursuant to Section 4.1 and ending on the Maturity
Date.

     “Bald Mountain Royalty” means Royal Gold’s undivided fifty percent interest in the sliding
scale Net Smelter Return Royalty, as described in that certain Settlement Agreement dated effective
January 1, 1986 among Yvonne D. Hager (Individually and as Executrix of the Estate of Edward H.
Hager), Robert R. Hager and Harold S. Hager, collectively as Owners, and Placer U.S. Inc., a
memorandum of which is recorded in the official records of White Pine County, Nevada in Book 94 at
Page 1. Royal Gold received its undivided interest pursuant to a conveyance from Stephen D. Damele
and Pauline S. Damele, husband and wife, by means of that certain Royalty Deed and Assignment,
dated March 13, 1998, and recorded in the official record of White Pine county, Nevada in Book 281
at Page 115. Royal Gold’s interest in the sliding scale royalty is further described in
Schedule 1.1(c).

     “Borrower” and “Borrowers” have the meanings given thereto in the preamble of this Agreement.

     “Borrowers’ Account” means a demand deposit account in the name of Royal Gold with the Lender,
which is Account Number 66C-00355 (as of the Closing Date), or any successor account.

     “Borrowing Base” means, as of any date of determination, an amount approved by the Lender,
which is equal to (x) one hundred percent (100%) multiplied by (y) Projected Facility Term Revenue.
The Lender’s determination of the Borrowing Base shall be conclusively presumed to be correct save
for manifest error.

     “Borrowing Base Metals Price” shall mean (a) for Gold, the lesser of (x) $400 per Ounce of
Gold or (y) 90% of the then Spot Price in Dollars per Ounce of Gold maintained by the Lender on any
date of determination; and (b) for Copper, the lesser of (x) $1.50 per pound of

-2 -

 

Copper or (y) 90%
of the then Spot Price in Dollars per pound of Copper maintained by the Lender on any date of
determination;

     “Borrowing Period” shall have the meaning given thereto in Section 2.3(b).

     “Borrowing Rate” means an interest rate per annum equal to the sum of LIBOR plus the Interest
Margin.

     “Business Day” means any day other than a Saturday, Sunday or holiday on which banks in New
York City, London and Denver, Colorado are open to conduct their usual business.

     “Cash Equivalent” means, at any time:

	 	(a)	 	any Government Security;
	 
	 	(b)	 	commercial paper, maturing not more than nine months from the
date of issue, which is (i) rated at least A-1 by Standard & Poor’s Rating
Group and P-1 by Moody’s Investors Service, Inc., (ii) issued by a corporation
or company other than a Borrower and (iii) in certificated form; or
	 
	 	(c)	 	any negotiable certificate of deposit or banker’s acceptance,
maturing not more than one year after the purchase thereof, which is issued
(or, in the case of a banker’s acceptance, accepted) by a commercial banking
institution organized under the laws of an Organization for Economic
Cooperation and Development member country that has combined capital and
surplus and undivided profits of not less than $1,000,000,000;

     which in any case is purchased with funds standing to the credit of any account of a Borrower.

     “Closing Date” means the date hereof.

     “Code” means the Internal Revenue Code of 1986, and the rules and regulations thereunder, each
as amended or modified from time to time.

     “Collateral” means all property, assets, rights and interests of any Borrower subject or
intended to be subject from time to time to any Lien pursuant to a Collateral Agreement, consisting
initially of (i) the GSR #1 Royalty, (ii) the GSR #3 Royalty, (iii) the NVR #1 Royalty, (iv) the SJ
Claims Royalty, (v) the Leeville Royalty, (vi) the Bald Mountain Royalty, (vii) the Robinson
Royalty, (viii) all rights and interests of each Borrower related to the interests described in
clauses (i) through (vii) inclusive, whether now owned or hereafter acquired, and (ix) the Collateral Account, together with, from time to
time, all additional Royalties, real property rights or interests or other rights, properties or
interests, of any kind or character whatsoever, that are included in or covered by a Collateral
Agreement as security for the Obligations.

-3 -

 

     “Collateral Account” means a demand deposit account of Royal Gold located at and controlled by
the Lender and in which the Lender has a security interest, as provided for in Section 3.3,
which shall initially be the Borrowers’ Account, and all successor accounts.

     “Collateral Agreements” means, collectively, each Mortgage, each Mortgage Amendment, the
Proceeds Agreement, the Ratification and Confirmation, the Irrevocable Payment Instructions and
each other Instrument delivered from time to time to secure the Obligations under this Agreement
and the other Loan Documents or to perfect such interests, as any of the foregoing may be amended,
modified, extended, supplemented, continued or restated in accordance with their respective terms.

     “Collateral Royalties” means, initially, (i) the GSR #1 Royalty, (ii) the GSR #3 Royalty and
(iii) the NVR #1 Royalty, (iv) the SJ Claims Royalty, (v) the Leeville Royalty, (vi) the Bald
Mountain Royalty, (vii) the Robinson Royalty, together with, from time to time hereafter, each
other Royalty Interest approved by the Lender for inclusion in calculation of the Royalty Metals as
set forth in Section 2.10(e) hereof.

     “Commitment Fee” has the meaning set forth in Section 2.6(b) hereof.

     “COMEX”, formerly known as the Commodity Exchange, means the division of the New York
Mercantile Exchange on which commodities, futures and options are traded.

     “Copper” means high grade copper upon which the COMEX spot price is based.

     “Cortez Royalty Agreement” means, collectively, (1) the Royalty Agreement dated as of April 1,
1999 by and among The Cortez Joint Venture, a joint venture formed under and governed by the laws
of Nevada and comprised of Placer Cortez Inc., a Delaware corporation, and Kennecott Explorations
(Australia) Ltd., a Delaware corporation; Placer Dome U.S. Inc., a California corporation; Royal
Gold, and Royal Crescent Valley Inc., a Nevada corporation; (2) the First Amended Memorandum of
Grant of Royalty dated as of April 1, 1999 by and among the same Persons as are identified in (1)
above; (3) the Second Amended Memorandum of Grant of Royalty dated as of December 8, 2000, and (4)
all amendments, modifications, extensions and renewals of the Instruments identified in (1), (2)
and (3) above in accordance with the terms thereof.

     “Date of Default” has the meaning set forth in Section 8.2(a) hereof.

     “Debt” means as to any Person: (a) indebtedness, present or future, actual or contingent, of
such Person for borrowed money or other assets or for the deferred purchase price of property or
services (other than obligations under agreements for the purchase of goods and services in the
normal course of business which are not more than 60 days past due); (b) obligations of such Person
under capital leases, conditional sale agreements or any other financing transaction; and (c)
obligations of such Person under any direct or indirect guaranty in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of any other Person of the kinds referred
to in clause (a) or (b) above.

-4 -

 

     “Default Rate” means an interest rate per annum equal to the prevailing Borrowing Rate plus
two and one-half percent (2.5%).

     “Deliverable Copper” means such quantity of Copper, if any, actually delivered for sale, after
smelting and refining, to the account of a Borrower.

     “Dollar(s)” or “$” means, unless otherwise expressly provided, United States dollars.

     “Environmental Laws” means all federal, state, local and foreign laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated, approved or entered thereunder
applicable to the Projects, the Project Properties, the Products or any other assets of either
Borrower and relating to pollution or protection of the environment, including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, surface water, ground water, land surface
or subsurface strata) or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes; expressly including all applicable Federal and
State of Nevada, county or municipal environmental laws.

     “ERISA” means the Employee Retirement Income Security Act of 1974, and the rules and
regulations thereunder, each as amended or modified from time to time.

     “ERISA Affiliate” means any Person who together with a Borrower or any of its Subsidiaries are
treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b) of ERISA.

     “Establishment Fee” shall have the meaning specified in Section 2.6(a) hereof.

     “Event of Default” means those events specified in Section 8.1 hereof.

     “Existing Agreement” shall have the meaning specified in Recital A hereto.

     “GAS Claims” means 200 unpatented lode mining claims situated in Lander County, Nevada with
the following names and corresponding Nevada BLM Serial Numbers: GAS #17-101, NMC Numbers
403024-403108; GAS #102-130, NMC Numbers 410529-410557; GAS #131-211, NMC Numbers 429207-429287;
and GAS #12-16, NMC Numbers 403019-403023, including any relocations, modifications or amendments
thereof, all patented mining or millsite claims that may be issued based thereon or on lands
previously covered by those lode mining claims, and all lands subject to those lode mining claims.

     “Gold” means gold of minimum 0.995 fineness in gold bars conforming in all respects with the
requirements for good delivery on the London Bullion Market.

     “Government Security” means, at any time, any security maturing not more than one year after
the purchase thereof, issued by the United States Treasury that is maintained in book entry form on
the records of a Federal Reserve Bank in the United States.

-5 -

 

     “Governmental Authority” means the government of any nation and the state, provincial,
territorial, divisional, county, city and political subdivisions thereof, in which any Borrower or
any Royalty Interest or other property right or interest of a Borrower is located, or which
exercises valid jurisdiction over any such property, or in which a Borrower conducts business or is
otherwise present, and any entity, court, agency, department, commission, board, bureau or
instrumentality of any of them exercising executive, legislative, judicial, regulatory or
administrative functions, and any securities exchange to which a Borrower is subject. Governmental
Authority shall also include any regulatory agency and the rules and regulations of said
governmental agency with which a Borrower must comply.

     “GSR #1 Royalty” means the sliding-scale gross smelter returns royalty over seventy-nine
mining and millsite claims that encompass all of the reserves at the Pipeline Project as of April
1, 1999, established pursuant to the Cortez Royalty Agreement, which sliding-scale royalty ranges
from 0.40% when the price of Gold is less than $210 per Ounce up to 5.00% when the price of Gold is
more than $470 per Ounce, with such royalty rates described in Schedule 1.1(c).

     “GSR #3 Royalty” means the gross smelter returns royalty over approximately four hundred
sixty-one mining and millsite claims, including the seventy-nine mining and millsite claims that
encompass all of the reserves at the Pipeline Project as of April 1, 1999, established pursuant to
the GSR #3 Royalty Deeds, which is currently equal to 0.7125% of the value of production from such
claims.

     “GSR #3 Royalty Deeds” means the nine Special Warranty Deeds that are more particularly
identified on Schedule 1.1(b) and 1.1(c)

     “High Desert” means High Desert Mineral Resources, Inc., a corporation organized and existing
under the laws of the State of Delaware and a wholly-owned subsidiary of Royal Gold.

     “Instrument” means any contract, agreement, indenture, mortgage, document, writing or other
instrument (whether formal agreement, letter or otherwise) under which any obligation is
evidenced, assumed or undertaken, or any Lien (or right or interest therein) is granted or
perfected.

     “Interest Margin” means one and one-half percent (1.5%) per annum.

     “Irrevocable Payment Instructions” means irrevocable payment instructions from certain
counterparties in respect of cash payments owing to a Borrower, with such instructions to be in the
form attached hereto as Exhibit I.

     “Leeville Royalty” means a 1.8% carried working interest owned by High Desert, equivalent to a
1.8% net smelter return royalty, as described in the Carried Interest and Operating Agreement,
dated as of May 3, 1999, between Newmont Mining Company and High Desert, which is recorded in the
records of Eureka County, Nevada, in Book 327 at Page 217, and that Royalty Assignment and
Agreement dated December 26, 2002. The Leeville Royalty is further described in Schedule
1.1(c).

-6 -

 

     “Lender” means HSBC Bank USA, National Association, a national banking association organized
under the laws of the United States.

     “LIBOR” means the rate per annum (rounded upwards if necessary to the nearest whole
one-sixteenth of one percent (1/16%)) equal to (a) the average of the offered rates as of 11:00
a.m., London time, on the date of determination appearing on the display designated as page “LIBO”
on the Reuter Monitor Money Rates Service (or such other page as may replace the LIBO page on that
service for the purpose of displaying London interbank offered rates of major banks) for Dollar
deposits for the relevant period of time, or (b) if fewer than two offered rates appear on the
display referred to in clause (a) above, the rate determined by the Lender (which
determination shall be conclusive in the absence of manifest error) to be the average of the rates
at which banks are offered Dollar deposits for the relevant period of time in the interbank
Eurodollar market at about 11:00 a.m., London time.

     “Lien” means, as to any Person, any mortgage, lien, pledge, hypothecation, charge, assignment,
security interest, preferential purchase right or other encumbrance in or on, or any interest or
title of any vendor, lessor, lender or other secured party to, or of such Person under any
conditional sale or other title retention agreement or capital lease with respect to, any property
or asset owned or held by such Person, or the signing or filing of a financing statement or other
instrument or document for filing which names such Person as debtor, or the signing of any security
agreement, pledge or other instrument authorizing any other party as the secured party thereunder
to file any financing statement or other instrument. A Person shall be deemed to be the owner of
any assets that it has placed in trust for the benefit of the holders of its indebtedness
which indebtedness is deemed to be extinguished under generally accepted accounting principles in
the United States, but for which such Person remains legally liable, and such trust shall be deemed
to be a Lien.

     “Loan” and “Loans” means the funds Advanced from time to time by the Lender to the Borrowers,
on a joint and several liability basis, pursuant to this Agreement.

     “Loan Documents” means this Agreement, the Note, each Request for Advance, the Collateral
Agreements, the Royalty Payment Confirmations, the Ratification and Confirmation and all other
Instruments contemplated hereby or executed in connection herewith, and all amendments,
modifications, supplements, restatements, continuations and extensions of any of the foregoing in
accordance with their terms.

     “London Bullion Market” means the market in London known as the “London Bullion Market” and on
which members of the London Bullion Market Association, amongst others, quote prices for the buying
and selling of Gold and Silver.

     “London Gold Fixing” means a p.m. gold price fixing meeting among the gold fixing members for
the time being of the London Bullion Market.

     “London Gold Fixing Price” means the price per ounce of Gold established at a London Gold
Fixing.

-7 -

 

     “Material Adverse Effect” means a material adverse effect on the business or financial
condition of a Borrower or on such Borrower’s ability to perform any of its material obligations
under any of the Loan Documents. In determining whether any individual event would result in a
Material Adverse Effect, notwithstanding that such event does not itself have such effect, a
Material Adverse Effect shall be deemed to have occurred if the cumulative effect of such event and
all other then-existing events would result in a Material Adverse Effect.

     “Maturity Date” means the date on which the Loans are payable in full by the Borrowers, being
the first to occur of (a) any date on which the Lender accelerates the due date of any of the Loans
by reason of an Event of Default pursuant to Section 8.1, or (b) the Scheduled Maturity
Date.

     “Maximum Availability” means the lesser of the Maximum Credit Amount and the Borrowing Base.

     “Maximum Credit Amount” shall mean $80,000,000 on the date hereof, and thereafter shall mean
the lesser of the amounts to which it has been reduced from time to time pursuant to Section
2.5(a).

     “Mortgages” mean (a) the Mortgage, Deed of Trust, Security Agreement, Pledge and Financing
Statement dated as of December 18, 2000 made by Royal Gold for the benefit of the Lender with
Stewart Title of Northeastern Nevada as trustee, as amended effective December 14, 2005 by a Mortgage Amendment, each of which was filed in the official
records of Lander County, Nevada on January 10, 2001 at Book 485, Pages 131-154, and on October 30,
2006 at Book 564, Pages 713-738, respectively; (b) the Mortgage, Deed of Trust, Security Agreement,
Pledge and Financing Statement dated as of December 14, 2005 made by Royal Gold for the benefit of
the Lender with Stewart Title of Northeastern Nevada as trustee, which was filed in the official
records of Eureka County, Nevada on                      at Book                      at Pages                     ; (c) the
Mortgage, Deed of Trust, Security Agreement, Pledge and Financing Statement dated as of January 5,
2007 made by Royal Gold for the benefit of the Lender with Stewart Title of Northeastern Nevada as
trustee, to be filed in the official records of White Pine County, Nevada, substantially in the
form of Exhibit H hereto; and (d) the Mortgage, Deed of Trust, Security Agreement, Pledge
and Financing Statement dated as of January 5, 2007 made by High Desert for the benefit of the
Lender with Stewart Title of Northeastern Nevada as trustee, to be filed in the official records of
Eureka County, Nevada, substantially in the form of Exhibit H hereto, as each of the
foregoing has been or may be amended, modified, supplemented, continued or restated from time to
time in accordance with their respective terms.

     “Mortgage Amendments” means, collectively, each of the amendments and supplements to the
Mortgages to be delivered by either Borrower, or one or more subsidiaries of a Borrower,
substantially in the form of Exhibit D hereto.

     “Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to
which any Borrower or any ERISA Affiliate is making, or is accruing an obligation to make, or has
accrued, an obligation to make contributions within the preceding six (6) years.

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     “Net Profits” means, for any period, the gross revenues for such period for the Borrowers on a
consolidated basis, minus the expenses and other proper charges against income (including taxes on
income to the extent actually imposed) of the Borrowers on a consolidated basis and eliminating all
other items required to be eliminated in accordance with the same United States generally accepted
accounting principles as were used in the preparation of Royal Gold’s financial statements referred
to in Sections 5.5 and 6.2 hereof.

     “Net Worth” means Royal Gold’s consolidated tangible net worth determined in accordance with
the same United States generally accepted accounting principles as were used in the preparation of
Royal Gold’s financial statements referred to in Sections 5.5 and 6.2 hereof.

     “Note” means the Second Amended and Restated Promissory Note in the form of Exhibit C
attached hereto issued by the Borrowers on a joint and several liability basis and payable to the
order of the Lender.

     “NVR #1 Royalty” means the fixed rate royalty equal to 0.39% of the net value of all
production from the GAS Claims, which are located on a portion of the Pipeline Project.

     “Obligations” means all obligations of each Borrower with respect to the repayment of
principal, interest, fees and other amounts when due hereunder and the performance of all
obligations (monetary or otherwise) of each of the Borrowers arising under or in connection with
this Agreement and each other Loan Document, whether joint or several, direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter arising and however arising.

     “October Calculation” shall have the meaning specified in Section 2.10(b) hereof.

     “Ounce” means a fine ounce troy weight.

     “Other Taxes” has the meaning set forth in Section 2.8 hereof.

     “Payable Copper” means Copper subject to the Robinson Royalty or to any other Royalty
Agreement for which cash payments are made to Royal Gold.

     “PBGC” means the Pension Benefit Guaranty Corporation or any successor agency.

     “Person” means an individual, partnership, corporation, limited liability company, trust,
unincorporated association, joint venture, governmental agency or other entity of whatever nature.

     “Pipeline Project” means the Project relating to the Pipeline Project Properties.

     “Pipeline Project Properties” means the unpatented mining and millsite claims located in
Lander County, Nevada identified as the “Reserve Claims” in the Cortez Royalty Agreement and
subject to the terms and conditions of the Cortez Royalty Agreement, together with all relocations,
modifications or amendments thereof, all patented mining claims which may be issued based thereon,
and all lands subject thereto.

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     “Plans” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to
the provisions of Title IV of ERISA or Section 412 of the Code and which (a) is maintained for the
employees of any Borrower or any ERISA Affiliates or (b) has at any time within the preceding six
(6) years been maintained for the employees of any Borrower or any of its current or former ERISA
Affiliates.

     “Potential Event of Default” means any event which with the giving of notice or lapse of time
or both, based on reasonable projections, would become an Event of Default.

     “Proceeding” has the meaning set forth in Section 9.8(a) hereof.

     “Proceeds Agreement” means, individually and collectively, each Proceeds Agreement by and
among a Borrower, the Lender and Johnson Matthey or any other purchaser from a Borrower of any
portion of its share of mineral production from the Project Properties, which Instrument shall be
substantially in the form of Exhibit E hereto, as the same may be amended, modified,
supplemented, continued or restated from time to time in accordance with its terms, and any
confirmation of such agreement.

     “Products” means without limitation all ore, minerals, concentrate, doré bar and refined Gold,
silver or other metals produced on behalf of, or payable to, a Borrower pursuant to a Royalty
Interest from the Project Properties, but excluding Copper.

     “Projects” means all of the mining projects in which a Borrower has or acquires a Royalty
Interest, including, without limitation, the Pipeline Project, with the Projects in effect on the
date hereof described with greater particularity on Schedule 1.1(a) hereto.

     “Project Managers” means the operator or manager of each Project, with the Project Managers
for each Project in effect on the date hereof set forth in Schedule 1.1(a) hereto.

     “Project Properties” means all of the real property rights or interests, now owned or
hereafter acquired, included in each of the Projects which are burdened with a Royalty Interest,
including all unpatented mining claims which are identified in any Royalty Agreement, together with
all relocations, modifications or amendments thereof, all patented mining claims which may be
issued based thereon, and all lands subject thereto.

     “Projected Facility Term Revenue” means an amount approved by the Lender, which shall be equal
to the Royalty Metals multiplied by the applicable Borrowing Base Metals Price. The Lender’s
determination of Projected Facility Term Revenue shall be conclusively presumed to be correct save
for manifest error.

     “Ratification and Confirmation” means the Ratification and Confirmation Agreement of even date
herewith in the form set forth in Exhibit F hereto.

     “Request for Advance” means the irrevocable request by the Borrowers for an Advance of a Loan,
in the form set forth in Exhibit A hereto, signed by an Authorized Officer of each
Borrower.

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     “Requirements of Law” means, as to any Person, any law, statute, code, treaty, ordinance,
order, rule or regulation, decree, injunction, franchise, permit, certificate, license or
authorization, or determination of an arbitrator or a court or other governmental agency, in each
case applicable to or binding upon such Person or any of its properties or to which such Person or
any of its properties is subject, and specifically including, without limitation, Environmental
Laws.

     “Reserve Amount” shall have the meaning given thereto in Section 3.3.

     “Robinson Royalty” means the net smelter returns royalty created by the Mining Lease dated
March 4, 1985 between Kennecott Corporation (“Kennecott”) and Silver King Mines, Inc., et al., as
amended by the Stipulation filed December 20, 1989 in the Second Judicial District in and for
Washoe County, Nevada; and as subsequently conveyed by Kennecott to Royal Gold by Deed and
Assignment of Royalty, dated effective as of December 28, 2005, and recorded in the records of
White Pine County, Nevada, in Book 437 at Page 48. The Robinson Royalty is further described on
Schedule 1.1(c).

     “Royalties” means any share of mineral production, including, without limitation, gross
smelter returns royalties, net smelter returns royalties, overriding royalties, non-participating
royalties, production payments, net profit interests and all other mineral royalties of every type
and characterization, whether constituting a real property or a personal property interest.

     “Royalty Agreements” means, collectively, (i) the Cortez Royalty Agreement, (ii) each of the
other royalty agreements set forth on Schedule 1.1(b) hereto, (iii) any other agreement
with or for the benefit of a Borrower pursuant to which a Borrower receives or is entitled to
receive any Royalties, whether now or hereafter in existence, which is acquired by a Borrower in
whole or in part with proceeds of the Loans, and (iv) all amendments, modifications, extensions and
renewals of the Instruments identified in (i), (ii) and (iii) above in accordance with the terms
thereof.

     “Royalty Interests” means all Royalties now owned or hereafter acquired by or for the benefit
of a Borrower, in or relating to a Project, as set forth with greater particularity in Schedule
1.1(c) hereto, and all Products and Copper received or receivable with respect thereto, now
held or hereafter acquired by a Borrower, whether pursuant to a Royalty Agreement or otherwise.

     “Royalty Metals” means an amount approved by the Lender, which shall be equal to the aggregate
ounces of Product and pounds of Payable Copper projected to be payable to the Borrowers (in cash or
in kind) from the date of determination through the Scheduled Maturity Date with respect to the
Collateral Royalties, which shall be based on current, commercially reasonable projections of
production from the Pipeline Project and each other applicable Project Property. Calculations of
Royalty Metals for the GSR #1 Royalty, the GSR #3 Royalty and the NVR #1 Royalty shall be based on
the reserve reports set forth in the then-current mine plan for the Cortez Joint Venture.
Calculations of Royalty Metals to be included as Collateral Royalties from Projects either not in
production at the Closing Date or acquired by a Borrower after the Closing Date and accepted by the
Lender as Collateral Royalties for the purpose of calculating

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the Borrowing Base shall be based on
the reserve report set forth in the applicable then-current mine plan for such Project, unless the
Lender, in its sole discretion, elects to audit the information contained in the reserve report set
forth in the applicable mine plan for such Project, develop its own conclusions based on its
independent analysis of such information and estimate the Royalty Metals for such Project, in which
event the Lender’s determination shall be conclusive. Calculations of Royalty Metals shall include
all reasonable deductions for shipping, smelting, contractual and other standard deductions
(which deductions shall be described with reasonable specificity in the Borrowers’ calculations).

     “Royalty Payment Confirmations” means the letters substantially in the form of Exhibit
G hereto.

     “Scheduled Maturity Date” means December 31, 2010.

     “Semi-Annual Calculations” shall have the meaning specified in Section 2.10(b) hereof.

     “Silver” means silver of minimum 0.999 fineness in silver bars conforming in all respects with
the requirements for good delivery on the London Bullion Market.

     “SJ Claims Royalty” means the 0.9% net smelter returns royalty owned by High Desert pursuant
to the Royalty, Assignment, Confirmation, Amendment, and Restatement of Royalty, and Agreement,
dated as of November 30, 1996, between Barrick Bullfrog Inc., et al., and Royal Hal Co. and that
certain Royalty Assignment and Agreement dated December 26, 2002. The SJ Claims Royalty is further
described in Schedule 1.1(c).

     “Special Calculation” shall have the meaning specified in Section 2.10(b) hereof.

     “Spot Price” means: (i) with respect to Gold, the P.M. price fixing for gold by the London
Bullion Association as reported in The Wall Street Journal or any other agreed upon successor
publication for the applicable time or time period; and (ii) with respect to Copper, the spot
Copper COMEX price as reported in The Wall Street Journal or any other agreed upon successor
publication for the applicable time or time period.

     “Title Opinions” means legal opinions from counsel to the Borrowers pertaining to the
Collateral Royalties and the respective Borrower’s right, title and interest in and to such
Collateral Royalties, in form and substance acceptable to the Lender.

     1.2 Accounting Principles. All accounting terms not otherwise defined herein shall be
construed, all financial computations required under this Agreement shall be made, and all
financial information required under this Agreement shall be prepared, in accordance with generally
accepted accounting principles in effect in the United States applied on a consistent basis (except
where such inconsistencies are disclosed in the notes to the audited financial statements provided
to the Lender under Section 6.2), except as specifically provided herein.

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ARTICLE II

LOAN FACILITY

     2.1 The Loan.

          (a) General. The Lender agrees, on the terms and conditions hereinafter set forth, to
Advance Loans to the Borrowers from time to time during the Availability Period on a joint and
several liability basis, as requested by the Borrowers; provided, that the aggregate Amount
Outstanding (after giving effect to any amount requested) shall not exceed the Maximum
Availability. Subject to the terms and conditions hereof, the Borrowers may borrow, repay and
reborrow funds hereunder until termination of the Availability Period.

          (b) Loan Advance; Request for Advance. Not less than three Business Days prior to the
desired date of an Advance of a Loan, the Borrowers shall submit to the Lender a Request for
Advance. The Request for Advance will specify (i) the amount of the Advance, which shall be in an
aggregate principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof, (ii)
the Borrowing Period for such Advance and (iii) the Business Day on which the Advance is requested
to be made. Subject to the Borrowers’ satisfaction of the conditions precedent set forth in
Article IV, and on the terms and conditions stated herein, no later than five Business Days
after the Lender’s receipt of a Request for Advance, the Lender shall Advance the Loan to the
Borrowers’ Account on the Business Day specified by the Borrowers in the Request for Advance. The
Request for Advance shall be irrevocable and binding on the Borrowers and in respect of the Loan
amount specified therein, the Borrowers shall indemnify the Lender against any loss or expense
incurred by the Lender as a result of any failure to fulfill on or before the date specified for
such Loan the applicable conditions set forth in Article IV hereof, including, without
limitation, any loss (including loss of anticipated profits) or expense incurred by reason of the
liquidation or reemployment of funds or deposits acquired or borrowed by the Lender to fund the
Loan to be made by the Lender when the Loan, as a result of such failure, is not made on such date.
A certificate as to such amounts sufficient to compensate the Lender under such indemnification
obligation submitted by the Lender to the Borrowers shall, in the absence of manifest error, be
presumed to be correct and binding for all purposes.

          (c) Use of Proceeds. The Borrowers may utilize the proceeds of the Loans for general
corporate purposes, including, without limitation, the acquisition of Royalties.

          (d) Amendment, Restatement and Continuance. This Agreement amends, restates,
continues and replaces the Existing Agreement and nothing contained in this Agreement shall be
deemed or construed to be a repayment, satisfaction or novation of the Obligations or to release,
terminate, novate or in any way impair any Lien or Collateral Agreement that secures the payment
and performance of the Obligations.

          2.2 Promissory Note. The Loans shall be evidenced by the Note, representing the
obligation of the Borrowers to repay the Amount Outstanding of the Loans, together with interest as
set forth herein. The Borrowers authorize the Lender to endorse the date and amount of the Advance
and each repayment on the schedule annexed to and constituting a part of the Note,

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which
endorsement shall constitute prima facie evidence of the accuracy of the information endorsed, in
the absence of manifest error. The failure so to record any such amount or any error in so
recording any such amount shall not, however, limit or otherwise affect the obligations of the
Borrowers hereunder or under the Note to repay the Amount Outstanding of the Loans together with
all interest accruing thereon and fees accruing with respect thereto.

     2.3 Interest.

          (a) General. The Borrowers shall pay interest on the Amount Outstanding calculated on
a 360-day year basis. Except as provided in Section 2.7(b), interest shall accrue at the
Borrowing Rate and shall be payable by the Borrowers at the end of each Borrowing Period (defined
below) except that, with respect to a Borrowing Period of 90 days or more which extends beyond the
last day of a calendar quarter, on such last day of the calendar quarter.

          (b) Borrowing Periods. The Borrowers may select borrowing periods (a “Borrowing
Period”) for each Loan of 30, 60, 90 or of a longer period of days if available (or of such other
period of days agreed to by the Lender) on a 360-day year basis; provided, however, that the
Borrowers may not select a Borrowing Period if the Lender determines that Dollar deposits are not
being offered in the London interbank Dollar market for such Borrowing Period in accordance with
customary practice (in which event the Borrowers must select another Borrowing Period which does
not present such problems). The Borrowers will select the initial Borrowing Period for each Loan
by giving the Lender notice thereof in the Request for Advance. After the Advance, the Borrowers
may select Borrowing Periods by giving notice to the Lender at least three Business Days prior to
the expiration of a Borrowing Period then in effect. If at any time the Borrowers fail to give
timely notice of its selection, then the Borrowers shall be deemed to have selected a Borrowing
Period of 30 days. The Lender shall not be required to maintain more than four different Borrowing
Periods hereunder at any one time.

     2.4 Repayment of the Loan.

          (a) Principal Payments. The Borrowers agree to repay the Loans as provided herein.
The Borrowers shall repay the outstanding principal amount of the Loans as amortized by the Lender
on a monthly basis from the date of Advance through the Scheduled Maturity Date. Subject to the
other terms hereof pertaining to mandatory repayment of the Loans, the Borrowers shall repay the
Loans in full, together with accrued interest thereon, on the Maturity Date.

          (b) Mandatory Repayments. If at any time the Amount Outstanding shall exceed the
Maximum Credit Amount, the Borrowers shall immediately prepay the Loans in an amount sufficient to
eliminate such excess. If at any time the Amount Outstanding is less than the Maximum Credit
Amount but in excess of the Borrowing Base, then the Borrowers shall immediately prepay the Loans
in an amount sufficient to eliminate such excess over the Borrowing Base.

          (c) Voluntary Repayments. The Borrowers may repay any Amount Outstanding of the Loans
in integral multiples of $1,000,000 at the end of any Borrowing Period,

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without penalty or premium
by providing the Lender not less than five Business Days’ prior written notice. Upon the giving of
such notice, which shall be irrevocable, the amount to be repaid, as set forth in said notice,
together with interest thereon, shall be due and payable on the date set forth therein.

          (d) Priority of Prepayments. All payments made pursuant to this Section 2.4
shall be applied first to accrued, outstanding and unpaid fees and expenses (including costs and
expenses identified in Section 9.4), then to any accrued and unpaid interest on the Loan as
of the end of the most recent Borrowing Period, then to principal.

     2.5 Permanent Reduction of Maximum Credit Amount.

          (a) Voluntary Reduction. The Borrowers shall have the right at any time and from time
to time, upon at least five (5) Business Days prior written notice from the Borrowers to the
Lender, to permanently reduce the Maximum Credit Amount by an aggregate principal amount not less
than $1,000,000, plus any whole multiples of $1,000,000 in excess thereof or any amount in excess
thereof which would reduce the Maximum Credit Amount to the Amount Outstanding.

          (b) Commitment Reduction Repayment. Upon the giving of notice set forth in
Section 2.5(a), which shall be irrevocable, each permanent reduction in the Maximum Credit
Amount permitted pursuant to this Section 2.5 and any amounts due as a result thereof shall
be due and payable on the date set forth therein by a payment of principal sufficient to eliminate
any excess of the Amount Outstanding over the Maximum Credit Amount as so reduced.

     2.6 Fees.

          (a) Establishment Fee. The Borrowers agree to pay the Lender a total fee (the
"Establishment Fee”) in the amount of $120,000 for the establishment of this loan facility, which
shall be due and payable concurrently with the Borrowers’ execution hereof (minus the $40,000
advance on the Establishment Fee that the parties acknowledge the Lender has been paid by the
Borrowers prior to the date of this Agreement). No portion of the Establishment Fee will be
refundable by the Lender to the Borrowers under any circumstances, including an election by the
Borrowers not to submit a Request for Advance hereunder or the failure of the Borrowers to satisfy,
or the failure of the Lender to waive satisfaction of, the conditions to any Advance set forth in Article
IV hereof.

          (b) Commitment Fee. The Borrowers agree to pay to the Lender a fee (the “Commitment Fee”) in
an amount determined daily during the period beginning on the Closing Date and ending on the
Maturity Date at the rate of one-half of one percent (0.50%) per annum of the difference between
the Amount Outstanding and the Maximum Availability. The Commitment Fee will be payable in arrears
to the Lender on the fifth Business Day of each calendar quarter following conclusion of the
calendar quarter in which the Commitment Fee is accrued.

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     (c) Agent’s Fee. In the event that the Lender assigns or grants participations
in the Loans, or any part thereof, and the Loan Documents, then, in order to compensate the Lender
for structuring and managing any such syndication or participation of the Loans and for its
obligations hereunder, the Borrowers agree to pay to the Lender, for its account, an agent’s fee in
the amount of $10,000 per annum payable on the date that the Lender makes such assignment or grants
a participation and on each anniversary of such date during the term hereof.

     2.7 Miscellaneous.

          (a) Same-day Funds. All payments by the Borrowers to the Lender hereunder and under
any other Loan Document, whether for principal, interest, fees, expenses or other amounts, shall be
made without set-off, recoupment, deduction or counterclaim in immediately available funds to such
account as the Lender shall specify from time to time by not later than 12:00 p.m. Eastern time on
the date when due.

          (b) Penalty Interest.

               (i) The Borrowers shall pay to the Lender, on demand, interest on any amount which is
not paid by the Borrowers when due at the Default Rate.

               (ii) Without prejudice to the rights of the Lender under the foregoing provisions of
this Section 2.7(b), the Borrowers shall indemnify the Lender against any loss or
expense which it may sustain or incur as a result of the failure by the Borrowers to pay
when due any Amount Outstanding of the Loan, to the extent that any such loss or expense is
not recovered pursuant to such foregoing provisions. A certificate or other notice of the
Lender setting forth the basis for the determination of the interest due on overdue
principal and of the amounts necessary to indemnify the Lender in respect of such loss or
expense, submitted to the Borrowers by the Lender, shall constitute prima facie evidence of
the accuracy of the information contained therein in the absence of manifest error and,
absent notice from the Borrowers of such error, shall be conclusive and binding for all
purposes.

          (c) Lender’s Counsel’s Fees. The Borrowers shall pay to the Lender such amount as
invoiced to the Lender by the Lender’s counsel, Davis Graham & Stubbs LLP, for such firm’s fees and
charges incurred in connection with the transactions contemplated by the Loan Documents.
Alternatively, with such counsel’s consent, payment may be made by the Borrowers directly to such
counsel.

          (d) Lender’s Other Expenses. On the Closing Date, the Borrowers shall pay the Lender
all of the Lender’s costs incurred to date (as reasonably detailed in advance) in connection with
the transactions contemplated by the Loan Documents in accordance with Section 9.4 hereof
and thereafter the Borrowers shall pay the Lender all of the Lender’s subsequent and additional
costs in connection with the transactions contemplated by the Loan Documents within 30 days of
receipt from the Lender of a reasonably detailed invoice therefor in accordance with Section
9.4 hereof.

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     2.8 Taxes.

          (a) Other Taxes. The Borrowers agree to pay any present or future stamp or
documentary taxes or any other excise, mortgage, or property taxes, charges or similar levies
(exclusive of income taxes) which arise from any payment made hereunder or under the Note or from
the execution, delivery, recordation or registration of, or otherwise with respect to, this
Agreement or the Note or the Collateral Agreements or any other Loan Documents (hereinafter
referred to as “Other Taxes”). The Borrowers will indemnify the Lender for and hold it harmless
from the full amount of Other Taxes (including, without limitation, any Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.8) paid by the Lender or any liability
(including penalties, interest and expenses) arising therefrom or with respect thereto, whether or
not such Other Taxes were correctly or legally asserted;
provided, however, that the Borrowers
shall have the right to contest in good faith any such tax levied upon the Lender. This
indemnification shall be made within thirty days from the date the Lender makes written demand
therefor, unless the Borrowers are contesting the tax in good faith, in which event the foregoing
indemnification shall not be triggered until the final determination of such contest or proceeding
and the exhaustion of all applicable appeals.

          (b) Withholding Tax; Gross-up. All payments to be made by the Borrowers to any Person
hereunder shall be made free and clear of and without deduction for or on account of any present or
future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by
or on behalf of any governmental authority having the power to tax;
provided, however, that if the
Borrowers are required to make such a payment subject to the deduction or withholding of such tax,
duty, assessment or governmental charge (exclusive of income taxes), then the sum payable by the
Borrowers in respect of which such deduction or withholding is required to be made shall be
increased to the extent necessary to ensure that, after the making of such deduction or
withholding, the Person receiving the payment receives a net sum equal to the sum which it would
have received and so retained had no such deduction or withholding been made or required to be
made.

          (c) Survival. Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained in this Section
2.8 shall survive the payment in full of the Loan.

     2.9 Illegality; Capital Requirements; Increased Costs; Indemnity for Breakage Costs.

          (a) Illegality. If after the date hereof, the introduction of, or any change in, any
applicable law or any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Lender with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency, shall make it unlawful or
impossible for the Lender to honor its obligations hereunder to make or maintain the Loan based on
a LIBOR rate, the Lender shall promptly give notice thereof to Borrowers. Thereafter, subject to
paragraph (e) below, until the Lender notifies the Borrowers that such circumstances no
longer exist (which notification shall be given within thirty (30) days after the

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Lender obtains
actual knowledge that such circumstances no longer exist), (i) the obligations of
the Lender to make the Loan based on a LIBOR rate shall be suspended and thereafter the
Borrowers may borrow only at an annual rate equal to the Lender’s prime rate plus a margin of one
and one half percent (1.5%) (the “Prime Borrowing Rate”), and (ii) if the Lender may not lawfully
continue to maintain the Loan based on a LIBOR rate to the end of the then current Borrowing Period
applicable thereto, shall immediately be converted to a Loan based on the Prime Borrowing Rate for
the remainder of such Borrowing Period.

          (b) Capital Requirements. If, subsequent to the date of this Agreement, either (i)
the establishment of, or any change in, or in the interpretation of, any applicable Requirement of
Law or (ii) compliance with any guideline or request from any central bank or comparable agency or
other governmental authority (whether or not having the force of law), has or would have the effect
of reducing the rate of return on the capital of, or would affect the amount of capital required to
be maintained by, the Lender or any corporation controlling the Lender in connection with the Loan
or its commitment to extend the Loan thereunder, below the rate which the Lender or such other
corporation could have achieved but for such establishment or introduction, change or compliance,
then within fifteen (15) Business Days after written demand of the Lender, subject to paragraph
(e) below, the Borrowers shall pay to the Lender from time to time as specified by the Lender
additional amounts sufficient to compensate the Lender or other corporation for such reduction. A
certificate as to such amounts shall be submitted to the Borrowers by the Lender as soon as
practicable following an event covered by this Section 2.9(b), and shall, in the absence of
manifest error, be presumed to be correct and binding for all purposes.

          (c) Increased Costs. If, after the date hereof, the establishment or introduction of,
or any change in, any applicable Requirement of Law, or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Lender with any request or directive
(whether or not having the force of law) of such authority, central bank or comparable agency:

               (i) shall subject the Lender to any tax, duty or other charge with respect to the Loan
or the Note, or shall change the basis of taxation of payments to the Lender of the
principal of or interest on the Loan or the Note, or any other amounts due under this
Agreement in respect thereof (except for changes in the rate of tax on the overall net
income of the Lender imposed by the jurisdiction in which the Lender is organized or is or
should be qualified); and

               (ii) shall impose, modify or deem applicable any reserve (including, without
limitation, any imposed by the Board of Governors of the Federal Reserve System), special
deposit, insurance or capital or similar requirement against assets of, deposits with or for
the account of, or credit extended by the Lender or shall impose on the Lender or the
foreign exchange and interbank markets any other condition affecting the Loan or the Note;

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and the result of any of the foregoing is to increase the costs to the Lender of maintaining the
Loan or to reduce the yield or amount of any sum received or receivable by the Lender under this
Agreement or under the Note in respect of the Loan, then the Lender shall promptly notify the
Borrowers of such fact and demand compensation therefor and, subject to paragraph (e)
below, within fifteen (15) days after such notice by the Lender, the Borrowers shall pay to the
Lender such additional amount or amounts as will compensate the Lender for such increased cost or
reduction. The Lender will promptly notify the Borrowers of any event of which it has knowledge
which will entitle the Lender to compensation pursuant to this Section 2.9(c). A
certificate of the Lender setting forth the basis for determining such additional amount or amounts
necessary to compensate the Lender shall be conclusively presumed to be correct save for manifest
error.

          (d) Indemnity for Breakage Costs. Each Borrower hereby indemnifies the Lender against
any loss or expense which may arise or be attributable to the Lender’s obtaining, liquidating or
employing deposits or other funds acquired to effect, fund or maintain the Loan (i) due to any
failure of the Borrowers to borrow on a date specified therefor in the Request for Advance or (ii)
due to any payment or prepayment of the Loan on a date other than the last day of the Borrowing
Period therefor. The Lender’s calculations of any such loss or expense shall be furnished to the
Borrowers and shall be conclusive, absent manifest error.

          (e) Cancellation of Commitment as a Result of Increased Costs. If the Borrowers have
received a notice of increased costs under paragraphs (a), (b) or (c)
above, in lieu of paying such increased amounts the Borrowers may provide notice to the Lender that
it elects to prepay the Loan, in which case the Borrowers shall pay to the Lender any loss or
expense of the Lender due to the prepayment of the Loan on a date other than the last day of the
Borrowing Period therefor.

     2.10 Borrowing Base Determination.

          (a) The Borrowers shall calculate the Royalty Metals, the Projected Facility Term Revenue and
the Borrowing Base in accordance with the requirements of this Agreement, using their good faith
best efforts, and the Borrowers shall then provide such amounts and calculations to the Lender by
written notice. The Lender may request such clarifications, explanations, supporting data,
documents, calculations, re-calculations or other information as it reasonably deems appropriate,
all of which shall be promptly provided by the Borrowers. The final determination of the Royalty
Metals, the Projected Facility Term Revenue and the Borrowing Base shall be made by the Lender,
using its commercially reasonable discretion, and no calculation of the Borrowing Base, the
Projected Facility Term Revenue or the Royalty Metals shall be used, or otherwise be deemed final
and effective, until approved in writing by the Lender. The Lender, using its commercially
reasonable discretion, may decide to undertake its own calculation of the Borrowing Base, the
Projected Facility Term Revenue and the Royalty Metals at any time and from time to time and shall
promptly notify the Borrowers of the results of such calculations. The Lender’s determination of
the Borrowing Base, the Projected Facility Term Revenue and the Royalty Metals, at any time and
from time to time, whether based on the Borrowers’ calculations or its own calculations, shall be
made by the Lender, using its commercially reasonable discretion, and shall be used for all
purposes under this Agreement.

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          (b) The Borrowers shall calculate the Royalty Metals, the Projected Facility Term Revenue and
the Borrowing Base (i) semi-annually, with written notice of such calculations to be delivered to
the Lender by not later than April 15 of each year (the “April
Calculation”) and by not later than October 15 of each year (the “October Calculation”, and
together with the April Calculation, the “Semi-Annual Calculations”) and (ii) at any other time
reasonably requested by the Lender, with written notice of such calculations to be delivered to the
Lender within five (5) Business Days of such Lender request (each, a “Special Calculation”). The
Lender may request a Special Calculation, or a re-calculation of any of the foregoing amounts, at
any time, and from time to time, while any Loans are outstanding or prior to the Advance of any
Loan.

          (c) Each Semi-Annual Calculation shall include a separate calculation of the Royalty Metals,
the Projected Facility Term Revenue and the Borrowing Base as of the end of then-current calendar
quarter and each of the subsequent two calendar quarters (for the purpose of clarification, the
April Calculation shall include projected calculations for each of the 2nd,
3rd and 4th calendar quarters and the October Calculation shall include
projected calculations for each of the 4th, 1st and 2nd calendar
quarters). Each Special Calculation shall include a calculation of the Royalty Metals, the
Projected Facility Term Revenue and the Borrowing Base as of the date of determination as well as a
calculation of the projected Royalty Metals, Projected Facility Term Revenue and Borrowing Base as
of the end of the then-current calendar quarter and the subsequent two calendar quarters. All
calculations of future, projected amounts shall use commercially reasonable assumptions with
respect to such projections.

          (d) The Lender’s determination of the Borrowing Base, whether based on actual numbers as of a
date of determination or as projected as of the end of a future calendar quarter, shall remain
effective for all purposes under this Agreement until a subsequent Semi-Annual Calculation or
Special Calculation is completed and the Lender makes a determination of the Borrowing Base based
on such calculations.

          (e) From time to time, the Borrowers may provide the Lender with a written request to include
other Royalty Interests of a Borrower as Collateral Royalties and Royalty Metals for the purposes
of determining the Borrowing Base, which request shall include appropriate data, documentation and
information about such Royalty Interest and the Project and Project Properties related thereto.
Upon receipt of such request from the Borrowers, the Lender may request such additional data,
documentation and information about such Royalty Interest, Project and Project Properties as it
deems necessary or appropriate, which the Borrowers shall promptly provide. The Lender shall have
a period of forty-five (45) days from the Lender’s receipt of such request to either accept or
reject the Borrowers’ request, which the Lender may do in its sole discretion reasonably exercised.
The Lender shall provide the Borrowers with written notice of its decision. The failure of the
Lender to provide a written notice of acceptance of such additional Royalty Interests as Royalty
Metals shall be deemed a rejection of the Borrowers’ request.

          (f) Upon the Lender’s written acceptance of the inclusion of new or additional Royalty
Interests as Royalty Metals and Collateral Royalties, the Borrowers shall re-calculate the Royalty
Metals, the Projected Facility Term Revenue and the Borrowing Base in

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accordance with the
requirements of this Agreement. Any re-calculation of the Borrowing Base including new or
additional Royalty Interests shall not be effective until (i) the Lender has provided written
approval of such calculation, (ii) the appropriate Borrower has granted, and the Lender has
obtained, a first priority, perfected Lien over such new or additional Royalty Interests
free from other Liens and (iii) the Lender has received both a Title Opinion confirming such
Borrower’s right, title and interest in such new or additional Royalty Interests and a supplemental
legal opinion with respect thereto confirming the inclusion of such Royalty Interests as part of
the Collateral and the perfection of the Lender’s security interest therein, with each such opinion
to be in form and content satisfactory to the Lender.

ARTICLE III

COLLATERAL SECURITY

          3.1 Collateral Agreements. All of the Obligations are secured by the Collateral
Agreements. The Collateral Agreements and the Liens on the Collateral to secure the payment and
performance of all Obligations are continuing and have been ratified and confirmed by the Borrowers
pursuant to the Ratification and Confirmation.

          3.2 Perfection and Maintenance of Collateral Agreement Liens. Each Borrower hereby
authorizes the Lender to file such UCC Financing Statements in such jurisdictions as it determines
to be desirable and to take such other actions as it determines to be necessary or desirable to
perfect and maintain the perfection of first priority Liens in the Collateral Account and all other
Collateral identified in the Collateral Agreements. Each Borrower agrees to cooperate with the
Lender in completing all such recording and filing, to promptly execute such other Instruments, and
to promptly take all such other actions, as the Lender may reasonably determine to be necessary or
appropriate to confirm, perfect and maintain the perfection of such Liens. Prior to any Advance of
a Loan hereunder, each Mortgage and each Mortgage Amendment shall have been filed and recorded in
the appropriate records of the Clerk and Recorder of each of Lander County, Eureka County and White
Pine County, Nevada, as applicable, and in such other jurisdictions necessary to perfect the Liens
granted therein.

          3.3 Collateral Account. The Borrowers have established, and until this Agreement has
been repaid in full and cancelled the Borrowers shall maintain, the Collateral Account with the
Lender. Such Collateral Account is subject to the custody, control and right of set-off of the
Lender and constitutes part of the Collateral. Commencing prior to the initial Advance of a Loan
hereunder and continuing until the termination of this Agreement, the Borrowers shall promptly
deposit or cause to be deposited in the Collateral Account all cash amounts received by any
Borrower from or with respect to (i) all existing Royalty Interests, and (ii) all Royalty Interests
purchased or otherwise acquired using Loan proceeds after the date of this Agreement. The balance
in the Collateral Account at all times shall be not less than an amount equal to the aggregate of
any payments of principal, interest, fees and expenses payable with respect to the Loans and the
Loan Documents and due at any time during the then current calendar quarter and the next succeeding
calendar quarter, which amount shall be determined by the Lender in its commercially reasonable
discretion, including with reference to the Borrowing Base applicable to such period of time (said
aggregate payment amounts for such two calendar quarters

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hereinafter being described as the
“Reserve Amount”). Each Borrower hereby grants to the Lender a continuing security interest in and
lien upon the Collateral Account, all cash balances from time to time credited to the Collateral
Account and any and all proceeds of any thereof, whether now or hereafter existing or arising. So
long as no Potential Event of Default or Event of Default has occurred and is continuing, the
Lender will promptly disburse to the Borrowers, in
accordance with written instructions provided by either Borrower to the Lender (which
instructions such Borrower may revise upon five days written notice to the Lender), any credit
balances in the Collateral Account which are in excess of the Reserve Amount from time to time.

ARTICLE IV

CONDITIONS PRECEDENT

     4.1 Conditions Precedent to the Initial Advance. The obligation of the Lender to make
the initial Advance of a Loan is subject to satisfaction (or waiver by the Lender in its sole
discretion) of each of the following conditions precedent.

          (a) Receipt of Instruments. The Lender or its counsel shall have received each of the
following Instruments:

               (i) this Agreement, duly executed by an Authorized Officer of each Borrower;

               (ii) the Note, duly executed by an Authorized Officer of each Borrower;

               (iii) the Mortgages, the Mortgage Amendments, the Ratification and Confirmation, and
each of the other Collateral Agreements, together with appropriate UCC financing statements
relating thereto, duly executed by an Authorized Officer of each Borrower, as appropriate,
and by all other Persons parties thereto;

               (iv) an Omnibus Certificate of Royal Gold, substantially in the form of Exhibit
B hereto, duly executed by an Authorized Officer of Royal Gold;

               (v) an Omnibus Certificate of High Desert, substantially in the form of Exhibit
B hereto, duly executed by an Authorized Officer of High Desert;

               (vi) legal opinions from legal counsel for the Borrowers, in form and content
reasonably acceptable to the Lender and substantially in the form of the legal opinion
delivered to the Lender in connection with the Existing Agreement;

               (vii) Title Opinions from Nevada legal counsel to the Borrowers, in form and content
reasonably acceptable to the Lender;

               (viii) copies of each of the Mortgages and Mortgage Amendments, as filed with the
appropriate county office to perfect the Liens described therein, together with a
supplemental legal opinion from Nevada legal counsel to the Borrowers, in form

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and content
reasonably acceptable to the Lender, confirming the perfection in favor of the Lender of
enforceable first priority Liens on the Collateral Royalties and on the other property
rights and interests of each Borrower subject to the Collateral Agreements, substantially in
the form of the security legal opinion delivered to the Lender in connection with the
Existing Agreement;

               (ix) certificates from the Secretary of State of Delaware confirming the good standing
of each Borrower in that State;

               (x) certificates from the Secretaries of State of Colorado and Nevada confirming the
good standing of each Borrower in each of such States;

               (xi) Royalty Payment Confirmations and Proceeds Agreements (or confirmations thereof)
duly executed by an Authorized Officer of the applicable Borrower and each other Person a
party thereto;

               (xii) Irrevocable Payment Instructions from each Person owing payments to a Borrower
pursuant to a Collateral Royalty.

               (xiii) a certificate from an Authorized Officer of each Borrower setting forth a
calculation of the Royalty Metals, the Projected Facility Term Revenue and the Borrowing
Base as of (a) September 30, 2006, (b) December 31, 2006, (c) March 31, 2007 and (d) June
30, 2007; and

               (xiv) such other approvals, opinions, documents or Instruments as the Lender may
reasonably request.

          (b) Additional Conditions. Each of the following shall be correct:

               (i) since the date of the financial statements of Royal Gold most recently delivered to
the Lender (referred to in Section 5.5), there has been no adverse change in the
financial condition, operations or business of the Borrowers which would constitute a
Material Adverse Effect;

               (ii) there is no pending or overtly threatened action or proceeding affecting any
Borrower, the Royalty Interests, the Pipeline Project Properties or the Pipeline Project
before any court, governmental agency or arbitrator, which could be reasonably expected to
have a Material Adverse Effect;

               (iii) each Borrower shall have performed and complied with all agreements, conditions
and Obligations herein and in the other Loan Documents required to be performed and complied
with on or prior to the date of the Advance;

               (iv) there shall exist no Event of Default or Potential Event of Default;

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               (v) all representations and warranties made by each Borrower herein and in any other
Loan Document or other certificate or Instrument delivered in connection herewith shall be
true and correct on the date of the Advance;

               (vi) all Instruments that are necessary to perfect the security interests of the Lender
in the Collateral described in the Collateral Agreements shall have been received by the
Lender and the Lender shall have received evidence reasonably satisfactory to the Lender
that upon filing and recording such Instruments, the security
interests represented thereby will constitute valid and perfected Liens subject only to
Permitted Liens; and

               (vii) there shall be a current credit balance of not less than the Reserve Amount in
the Collateral Account.

     4.2 Conditions Precedent to All Advances. The obligation of the Lender to make each
Advance of Loans (including the initial Advance) is subject to satisfaction (or waiver by the
Lender in its sole discretion) of each of the following conditions precedent:

          (a) the Lender shall have received a Request for Advance, duly executed by an Authorized
Officer of each Borrower;

          (b) the Lender shall have received an Irrevocable Payment Instruction from each Person owing
payments to a Borrower pursuant to a Collateral Royalty.

          (c) on the date of such Advance, the Lender shall have received such approvals, opinions,
documents or Instruments as the Lender may reasonably request;

          (d) such Advance shall not cause the Amount Outstanding to exceed the Maximum Availability;

          (e) there shall exist no Potential Event of Default or Event of Default;

          (f) each of the conditions precedent to the initial Advance set forth in Section 4.1
is and remains satisfied; and

          (g) all representations and warranties made by each Borrower shall be true and correct on the
date of such Advance except for those changes disclosed to the Lender in writing and acceptable to
the Lender in its sole discretion.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

     In order to induce the Lender to enter into this Agreement, each Borrower represents and
warrants to the Lender that:

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     5.1 Due Organization, Good Standing and Authority. Each Borrower is duly organized,
validly existing and in good standing under the laws of Delaware and is qualified to do business in
Colorado and Nevada and every other jurisdiction where necessary in light of its business and
properties. Each Borrower has full power, authority and legal right (a) to own or lease its assets
and properties and to conduct its business as now being conducted, and (b) to incur its obligations
under this Agreement and each other agreement, document and instrument executed or to be executed
by it pursuant hereto or in connection herewith and to perform the terms hereof and thereof
applicable to it.

     5.2 Due Authorization; Non-Contravention. The execution and delivery by the Borrowers
of this Agreement and the other Loan Documents, and the performance of all transactions
contemplated hereby and thereby, and the fulfillment of and compliance with the respective terms of
this Agreement and the other Loan Documents by each Borrower are within such Borrower’s powers,
have been duly authorized by all necessary action corporate or otherwise and do not and will not
(a) conflict with or result in a breach of the terms, conditions or provisions of, (b) constitute a
default under, (c) result in the creation of any Lien (except pursuant to the Loan Documents) upon
capital stock or assets pursuant to, (d) give any third party any right to accelerate any
obligation under, (e) result in a violation of, or (f) require any authorization, consent,
approval, exemption or other action by or notice to any Governmental Authority pursuant to (i) the
Articles of Incorporation or Bylaws of any Borrower, (ii) any Requirement of Law applicable to any
Borrower or their respective properties, or (iii) any agreement, instrument, order, judgment or
decree to which a Borrower is subject or by which their respective properties are bound;

     5.3 No Approvals. No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority is required for the due execution, delivery and
performance by each Borrower of this Agreement, or any other Loan Document, except for filings
necessary to perfect Liens pursuant to the Loan Documents.

     5.4 Validity. This Agreement is, and the other Loan Documents, when delivered
hereunder will be, legal, valid and binding obligations of each Borrower enforceable against each
Borrower in accordance with their respective terms, subject to bankruptcy and insolvency laws
affecting rights of creditors generally and rules of equity.

     5.5 Financial Statements. The audited consolidated financial statements of Royal Gold
for the twelve-month period ending June 30, 2006, which have been furnished to the Lender, have
been prepared in accordance with generally accepted accounting principles in the United States
consistently applied (except as disclosed in the notes thereto) and present fairly and fully the
financial position and results of operations of the Borrowers as of the latest date and for the
periods specified therein. Subsequent to the respective dates as of which information is given in
such financial statements, there has been no change resulting in a Material Adverse Effect.

     5.6 Litigation. Except as set forth in Schedule 5.6 hereto, no Borrower is a
party to any action, suit or proceeding at law or in equity, by or before any Governmental
Authority or arbitral tribunal now pending (or, to the knowledge of either Borrower, threatened in
writing) against or affecting any Borrower, the Royalty Interests, the Project Properties or any
Project or

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which may have a Material Adverse Effect, or which may affect the legality, validity or
enforceability of this Agreement or any other Loan Document. Except as set forth in Schedule
5.6, to the knowledge of each Borrower, without duty of further inquiry, there is no action,
suit or proceeding at law or in equity, by or before any Governmental Authority or arbitral
tribunal now pending or threatened against or, with direct and specific application, affecting,
either Borrower, the Royalty Interests, the Project Properties or any Project which may have a
Material Adverse Effect, or which may affect the legality, validity or enforceability of this
Agreement or any other Loan Document.

     5.7 Disclosure. Except as set forth in Schedule 5.7 hereto, this Agreement,
the other Loan Documents and the schedules, attachments, written statements, documents,
certificates or other items prepared by either Borrower and provided to the Lender do not contain
any untrue statements of a material fact or omit a material fact necessary to make the statements
contained herein or therein not misleading. Each Borrower represents and warrants that there is no
fact which it has not disclosed to the Lender in writing and of which any of its officers or
directors are aware which could reasonably be anticipated to constitute a Material Adverse Effect.

     5.8 Title to Royalty Interests; Liens. Schedule 1.1(a) and Schedule
1.1(c), respectively, set forth a complete and accurate listing and description of each of the
Projects and the Royalty Interests as of the date hereof. Each Borrower has good and marketable
title to the Royalty Interests owned by it, free and clear of any claims or rights of title and
free and clear of all Liens except (a) Liens established pursuant to the Collateral Agreements, (b)
Liens for taxes not yet due and payable, (c) inchoate Liens established by statute arising in the
ordinary course of business securing obligations that are not overdue for a period of more than 20
days and (d) Liens and title defects reflected in the Title Opinion.

     5.9 Royalty Agreements. Schedule 1.1(b) sets forth a complete and accurate
list of all Royalty Agreements of each Borrower in effect as of the Closing Date; each Royalty
Agreement is a legal, valid and binding obligation of the Borrower that is a party thereto, and to
each Borrower’s knowledge, each other party thereto. Other than as set forth in Schedule
5.9, each such Royalty Agreement is, and after giving effect to the transactions contemplated
by the Loan Documents will be, in full force and effect in accordance with the terms thereof. The
Borrowers have delivered or made available to the Lender a true and complete copy of each Royalty
Agreement required to be listed on Schedule 1.1(b). No Borrower is in breach of or in
default under any Royalty Agreement. No Borrower has alleged that any Royalty Agreement
counterparty has breached or defaulted under any Royalty Agreement. To the knowledge of each
Borrower, no counterparty to any Royalty Agreement is in breach of or in default of any Royalty
Agreement.

     5.10 Project Permits. To the knowledge of each Borrower, without duty of further
inquiry, except as set forth in Schedule 5.10, and except for matters that do not or would
not have a material adverse effect on such Projects, the Project Managers of each of the Projects
have obtained all material licenses, operating and reclamation bonds, permits and approvals from
all governmental commissions, boards and other agencies required to operate such Projects as
currently being operated in accordance with the then effective mine plan therefor, and such Project
Managers are operating the Projects in material compliance therewith.

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     5.11 Payment of Taxes. Each Borrower has filed, or caused to be filed, all federal,
state and local tax returns which, to the knowledge of each Borrower, are required to be filed and
has paid or caused to be paid all taxes as shown on such returns or any assessment received by each
Borrower to the extent that such taxes or assessments have become due, except such as may be
diligently contested in good faith and by appropriate proceedings or as to which a bona fide
dispute may exist and for which adequate reserves are being maintained. Each Borrower has
established reserves which are reasonably believed by the officers and representatives of such
Borrower to be adequate for the payment of such taxes.

     5.12 Agreements. Except as set forth in Schedule 5.12 hereto, no Borrower is
a party to any material agreement or instrument or subject to any charter or other corporate
restriction which has a Material Adverse Effect. No Borrower is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions contained in the
Royalty Agreements or any other agreement or instrument to which it is a party, the effect of which
would constitute a Material Adverse Effect.

     5.13 Compliance with Laws. Except as set forth in Schedule 5.13 hereto, (a)
each Borrower has complied in all material respects with all Requirements of Law, and (b) with
respect to the Project Properties and operations thereon and the Projects, to the knowledge of each
Borrower, without duty of further inquiry, the Project Managers have complied in all material
respects with, and the Projects and Project Properties are in material compliance with, all
Requirements of Law relating to the operation of each Project, and no Borrower is aware of any
investigation (other than a routine inspection) underway by any local, state or federal agency with
respect to enforcement of such Requirements of Law. The Borrowers have no knowledge (except as
disclosed to the Lender in Schedule 5.13) of any past or existing violations of any such
Requirements of Law or notices thereof issued by any Governmental Authority with respect to a
Borrower that would constitute a Material Adverse Effect, and the Borrowers have no knowledge
(except as disclosed to the Lender in Schedule 5.13) of any past or existing violations of
any Requirements of Law or notices thereof issued by any Governmental Authority with respect to any
Project or any Project Property that would have a material adverse effect on such Project, Project
Property or any Royalty Interest.

     5.14 Events of Default. No event has occurred and is continuing, or would result from
the incurring of obligations by the Borrowers under this Agreement, which constitutes an Event of
Default or a Potential Event of Default.

ARTICLE VI

AFFIRMATIVE COVENANTS

     Each Borrower covenants and agrees from the date hereof, so long as any portion of the Loans
remain outstanding and unpaid, in whole or in part, or any other amount is owing to the Lender
under this Agreement or any other Loan Document that, unless the Lender shall otherwise consent in
writing:

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     6.1 Notice to the Lender. The Borrowers will promptly give notice to the Lender as
soon as any Borrower becomes aware of:

          (a) Any Event of Default or Potential Event of Default;

          (b) Any default under, breach of or event which, with notice or lapse of time or both, would
become a material default under or breach of any other Loan Document;

          (c) Any loss or damage to the Collateral in excess of $100,000, exclusive of diminution in
value caused solely by changes in the price of Gold, Silver or Copper from time to time;

          (d) The consummation by any Borrower of any purchase or acquisition of a Royalty Interest,
whether a new Royalty Interest or an addition to or increase in an existing Royalty Interest;

          (e) Any additional interests in the Project Properties acquired by a Borrower which are not
included in the Collateral;

          (f) Every default or other adverse claim, demand or litigation made by any Person which would,
if successful, constitute a Material Adverse Effect, or with respect to any Royalty Interest or any
other Collateral could have a material adverse effect on such Royalty Interest or Collateral;

          (g) Every notice, and the contents thereof, received by a Borrower in relation to any renewal
of any rights with respect to, or having a material adverse effect upon any Royalty Interest or
Project including (without limitation) notices pertaining to the loss of or a failure to obtain or
a failure to be able to renew such interest in a material part of such Project, together with a
copy of such notice if in writing;

          (h) Every press release issued by a Borrower together with a copy of such press release, and
any other occurrence, matter, event or thing (other than changes in the price of Gold) constituting
a Material Adverse Effect, together with a reasonably detailed explanation of such other
occurrence, matter, event or and thing; and

          (i) Each material memorandum, letter or report received by a Borrower from any Project Manager
concerning any Royalty Interest or Project, including (to the extent received by a Borrower and not
subject to confidentiality restrictions that prevent such Borrower from disclosure thereof) the
annual strategic business plan for the Pipeline Project and all reserve, mine plan and/or operating
reports for the Projects or the Project Properties, together with a copy of such plans and reports.

     6.2 Financial Statements, Calculations and Information.

          (a) As soon as practicable (and in any event not later than 90 days after each fiscal year and
60 days after each fiscal quarter), the Borrowers shall furnish the Lender annual (audited) and
quarterly (unaudited) consolidated financial statements, which shall include all of

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the information
contained in the statements heretofore furnished to the Lender and referred to in Section
5.5 hereof, together with a certificate of an Authorized Officer of each Borrower to the effect
that such financial statements have been prepared in accordance with generally accepted accounting
principles in the United States consistently applied and present fairly the financial position and
results of the operations of the Borrowers, on a consolidated basis, as of the respective dates and
for the respective periods specified therein.

          (b) Within 60 days after each fiscal quarter, the Borrowers shall cause an Authorized Officer
of each Borrower to deliver to the Lender a certificate as to the Borrowers’ compliance with the
financial covenants provided in Section 6.12 hereof.

          (c) By not later than April 15 and October 15 of each year, the Borrowers shall provide to the
Lender the Semi-Annual Calculations of the Royalty Metals, the Projected
Facility Term Revenue and the Borrowing Base together with all supporting information,
documentation and materials, for the Lender’s review and approval, as further described in
Section 2.10 hereof.

          (d) Each Borrower shall deliver to the Lender such other information (in form reasonably
acceptable to the Lender) regarding the conditions or operations, financial or otherwise, of each
Borrower, the Royalty Interests, the Projects, the Project Properties or any other properties or
activities of a Borrower as the Lender may reasonably request from time to time to the extent such
information is in the possession or control of a Borrower and not subject to confidentiality
restrictions that prevent the Borrowers’ disclosure thereof.

     6.3 Maintenance of Existence. Each Borrower will preserve and maintain its legal
existence and all of its rights, privileges and franchises necessary for the proper conduct of its
business and will qualify and remain qualified to do business in Nevada and Colorado and in each
jurisdiction where necessary in light of its business and properties.

     6.4 Compliance with Laws. Each Borrower shall comply with all Requirements of Law,
including, without limitation, any Environmental Law (except any noncompliance or violation which,
in the judgment of the Lender, could not reasonably be expected to constitute a Material Adverse
Effect).

     6.5 Payment of Indebtedness. Each Borrower will pay, discharge or otherwise satisfy
at or before maturity or before they become delinquent, as the case may be, all of its Debts and
other material obligations of whatever nature, except for any Debts or other material obligations
which are being contested in good faith and by appropriate proceedings if (a) reserves in
conformity with generally accepted accounting principles with respect thereto are maintained on its
books, and (b) such contest does not involve any material risk of the sale, forfeiture or loss of
any part of the Collateral.

     6.6 Taxes. Each Borrower shall pay and discharge all federal, state and local taxes
imposed on it or on any of its property prior to the date on which penalties attach thereto, and
all lawful claims which, if unpaid, might become a Lien upon the Collateral. Each Borrower shall
have the right, however, to contest in good faith the validity or amount of any such taxes by

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proper proceedings timely instituted, and may permit the taxes so contested to remain unpaid during
the period of such contest if: (a) it diligently prosecutes such contest, (b) it sets aside on its
books adequate reserves in conformity with generally accepted accounting principles with respect to
the contested items, (c) during the period of such contest, the enforcement of any contested item
is effectively stayed, (d) such contest does not involve any material risk of the sale, forfeiture
or loss of any part of the Collateral and provided such non-payment is permitted by the appropriate
taxing legislation. Each Borrower will promptly pay or cause to be paid any valid final judgment
enforcing any such taxes and cause the same to be satisfied of record.

     6.7 Books and Records; Right to Inspection. Each Borrower shall keep proper books of
record in accordance with generally accepted accounting principles and permit representatives of
the Lender to examine the books of record and accounts and to discuss the affairs, finances and
accounts of each Borrower with such Borrower’s principal officers, engineers, technical staff and
independent accountants, all at such reasonable times during
business hours and at such intervals as the Lender may desire; provided,
however, that the Lender shall provide such Borrower with at least five Business Days’
notice of any visit and shall use commercially reasonable efforts not to disrupt such Borrower’s
business during any such visits. Upon any request by the Lender to visit and inspect any Project
Property, each Borrower will use commercially reasonable efforts to make arrangements with the
Project Manager for such a visit to and inspection of such Project Property by the Lender or its
representatives.

     6.8 Insurance. Each Borrower shall maintain insurance coverage, with responsible and
reputable insurance companies or associations, in respect of its properties, assets, and business
against such risks and in such amounts as are customarily maintained in accordance with good
industry practice for a company in the Borrower’s business and as may be required by Requirements
of Law. Such insurance policies shall name the Lender as an additional insured or loss payee, as
appropriate, and shall provide that the policies cannot be cancelled, allowed to lapse or terminate
by the insurer without at least ten (10) days prior written notice to the Lender. Attached as
Schedule 6.8 hereto is a detailed list and description of all such insurance maintained by
or for the benefit of each Borrower as of the Closing Date, in form reasonably satisfactory to the
Lender. From time to time after the Closing Date each Borrower shall deliver to the Lender upon
its request a detailed list of the insurance then in effect, stating the names of the insurance
companies, the amounts and rates of the insurance.

     6.9 Maintenance of Liens. Each Borrower will take all action required or desirable to
maintain and preserve the Lender’s Liens on the Collateral and the first priority thereof. Each
Borrower, at no cost to the Lender, shall from time to time execute, deliver, file and record, and
each Borrower authorizes the Lender to file and record, any and all further Instruments (including
financing statements, continuation statements and similar statements with respect to any of the
Collateral Agreements) reasonably requested by the Lender for such purposes, including such as may
be necessary to include within the Collateral (a) any additional real property interests or other
increase in the Collateral Royalties and (b) any other or additional Royalty Interests included or
added as a Collateral Royalty.

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     6.10 Defend Title. Each Borrower shall, at its own cost and expense, warrant and
defend the title to the Royalty Interests and the other Collateral against the claims and demands
of all Persons whomsoever, except as permitted in writing by the Lender and except for matters
disclosed in the Title Opinion and not objected to by the Lender.

     6.11 Compliance with ERISA. Each Borrower will (a) comply with all applicable
provisions of ERISA and the regulations and published interpretations thereunder with respect to
all Plans, (b) not take any action or fail to take any action the result of which could be a
liability to the PBGC or to a Multiemployer Plan, (c) not participate in any prohibited transaction
that would result in any civil penalty under ERISA or tax under the Code, (d) operate each Plan in
such a manner that will not incur any tax liability under Section 4980B of the Code or any
liability to any qualified beneficiary as defined in Section 4980B of the Code and (e) furnish to
the Lender upon the Lender’s request such additional information about any Plan as may be
reasonably requested by the Lender.

     6.12 Financial Covenants.

          (a) Tangible Net Worth. The Borrowers, on a consolidated basis, shall at all times
maintain a Net Worth of not less than the sum of $100,000,000 plus 50% of the Borrowers’
Net Profits for each completed fiscal quarter (excluding any fiscal quarter in which the Borrowers’
Net Profits are negative) beginning with the fiscal quarter ended December 31, 2006 on a cumulative
basis.

          (b) Current Ratio. The Borrowers, on a consolidated basis, shall not permit the ratio
of their (x) consolidated assets properly classified as current assets under United States
generally accepted accounting principles, to (y) consolidated liabilities properly classified as
current liabilities under United States generally accepted accounting principles, at any time, to
be less than 1.5 to 1.0.

          (c) Minimum Cash Balance. Royal Gold shall at all times maintain a minimum balance of
cash and Cash Equivalents in demand deposit accounts of $5,000,000.

     6.13 Delivery of Royalty Interest Proceeds.

          (a) Delivery and Sale of Products. Each Borrower shall cause all Products produced
from the Project Properties, to which a Borrower is entitled pursuant to the Royalty Interests, to
be delivered by the Project Managers directly to the Lender’s account for the credit of the
Borrowers at Johnson Matthey in Salt Lake City, Utah, or such other locations approved by the
Lender. Each Borrower hereby irrevocably agrees to sell all such Products to counterparties
approved from time to time, in writing, by the Lender (which approval shall not be unreasonably
withheld) forthwith upon transfer of such Products into such Borrower’s control, with such Products
to be sold at the then applicable Spot Price. Immediately following trade settlement, the proceeds
of such sales shall be delivered directly by such counterparties into the Collateral Account
pursuant to Irrevocable Payment Instructions.

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          (b) Delivery of Cash Royalties. Each Borrower shall cause all cash to which a
Borrower is entitled pursuant to a Royalty Interest to be deposited by the Project Managers
directly to the Collateral Account, pursuant to a Royalty Payment Confirmation.

     6.14 Maintenance of Credit Balances in the Collateral Account. The Borrowers will
maintain at all times in the Collateral Account a credit balance which is not less than the Reserve
Amount.

     6.15 Further Assurances. The Borrowers shall execute, acknowledge and deliver to the
Lender such other and further documents and Instruments and do or cause to be done such other acts
as the Lender reasonably determines to be necessary or desirable to effect the intent of the
parties to this Agreement or otherwise to protect and preserve the interests of the Lender
hereunder, promptly upon request of the Lender.

ARTICLE VII

NEGATIVE COVENANTS

     From the date hereof, so long as any portion of the Loans remain outstanding and unpaid, in
whole or in part, or any other amount is owing to the Lender under this Agreement or any other Loan
Document, each Borrower unconditionally covenants and agrees that, unless the Lender shall
otherwise consent in writing, it will not:

     7.1 Indebtedness. Incur any Debt except for (a) the Loans, (b) items of accrued taxes
prior to the date on which such items are due and payable, (c) capital lease or rental arrangements
if the payments thereon, in the aggregate, do not exceed $250,000 in any fiscal year, (d) trade
payables incurred in the ordinary course of business which are not evidenced by a promissory note
or other evidence of indebtedness and which are not the subject of a genuine dispute or are not
more than ninety (90) days past due, (e) unsecured Debt not to exceed $1,000,000 in the aggregate
principal amount at any time outstanding, (f) obligations existing or arising under any swap
contract or other hedging agreement entered into for the purpose of mitigating risk associated with
liabilities, commitments, investments, assets or property held or reasonably anticipated by a
Borrower, or (g) guarantees by Royal Gold of performance obligations of its subsidiaries not to
exceed $1,000,000 in the aggregate.

     7.2 Liens. Directly or indirectly, create, incur, assume or suffer to exist any Lien
upon any of its property, assets, income or profits, including, without limitation, the Royalty
Interests, the Collateral Account or any Collateral, whether now owned or hereafter acquired, or
enter into any agreement or option with respect to any of the foregoing, except for (a) Liens for
taxes not yet due and payable, (b) inchoate Liens established by statute arising in the ordinary
course of business securing obligations, (c) attachments, appeal bonds, judgments and other similar
Liens arising in connection with court proceedings, for sums not exceeding $1,000,000 in the
aggregate, and (d) easements, rights of way, restrictions, minor defects in title and other similar
Liens that do not interfere in any material respect with the ordinary conduct of the business of
such Borrower.

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     7.3 Liquidation; Merger. Liquidate or dissolve, or, without the prior written consent
of the Lender, not unreasonably withheld, enter into any consolidation or merger, or enter into any
partnership, joint venture or other combination where such combination involves a contribution by a
Borrower of all or a substantial portion of its assets, or sell, lease or dispose of its business
or assets as a whole or in an amount which constitutes a substantial portion thereof.

     7.4 Asset Sales. Without the Lender’s prior written consent not to be unreasonably
withheld, convey, sell, lease, assign, transfer or otherwise dispose of any material portion of its
property, business or assets, including, without limitation, the Royalty Interests or any portion
thereof, individually or in the aggregate, whether now owned or hereafter acquired, except for
conveyances, sales, leases, assignments and transfers of property or assets, other than Collateral,
entered into in the ordinary course of business, which do not exceed $250,000 in the aggregate per
year.

     7.5 Guarantees/Assumptions. Directly or indirectly, assume, guarantee, endorse or
otherwise become directly or contingently liable (including, without limitation, liable by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment, to supply funds
to or otherwise invest in the debtor or otherwise to assure the creditor against loss) in
connection with any Debt of any other Person, except guarantees by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary course of business.

     7.6 Change in Business. Engage in any business activities or operations substantially
different from the business of ownership of non-executory interests in mining properties; provided,
however, that each Borrower shall be permitted to enter into exploration agreements with respect to
mining properties owned by it and into joint venture agreements or other similar business
arrangements pursuant to which its executory or ownership interests are convertible into Royalties.

     7.7 Changes in Constituting Documents or Capital Structure. Without the Lender’s
prior written consent not to be unreasonably withheld, amend or otherwise modify its articles of
incorporation or bylaws or its capital structure, other than issuances of Royal Gold common stock
or rights to purchase Royal Gold common stock.

     7.8 Metals Sales. Enter into any agreement or any Instrument for any sale,
assignment, transfer or delivery of Gold, other Products, or Copper, except as provided in
Section 6.13.

     7.9 Modification of Material Agreements. Without the Lender’s prior written consent
not to be unreasonably withheld, allow any modification or amendment to any Royalty Agreement or
other agreement or Instrument material to a Borrower or allow any modification or amendment to any
confidentiality agreements or provisions to which a Borrower is a party or otherwise subject. With
respect to any confidentiality agreement that either Borrower may execute with respect to (i) any
existing Royalty Interest or Project or properties underlying such Royalty Interest or (ii) any
Royalty Interest or Project or properties underlying such Royalty Interest acquired after the date
hereof with the proceeds of a Loan, such Borrower shall use commercially reasonable efforts to
include appropriate provisions in such confidentiality agreement authorizing the Borrowers to
provide to the Lender information obtained by such Borrower pursuant to such confidentiality
agreement.

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     7.10 Maintenance of Royalty Interests. Without the Lender’s prior written consent not
to be unreasonably withheld, enter into any agreement or undertaking, or otherwise act to sell,
assign, transfer or create or suffer the creation of rights of any Person other than a Borrower or
the Lender in or with respect to the Royalty Interests, Gold, other Products or Copper accruing to
the account of a Borrower pursuant thereto.

     7.11 Restrictive and Inconsistent Agreements. No Borrower will enter into any
agreement, Instrument or undertaking or incur or suffer any obligation prohibiting or inconsistent
with the performance by such Borrower of the Obligations or its obligations under any Royalty
Agreement.

     7.12 Amount Outstanding. Allow the Amount Outstanding to be greater than the Maximum
Availability at any time.

ARTICLE VIII

EVENTS OF DEFAULT

     8.1 Events of Default. The occurrence of any one or more of the following events
(whether or not in the control of a Borrower) shall constitute an Event of Default:

          (a) Nonpayment. Any Borrower shall (i) fail to pay when due any payment of principal,
or (ii) within five (5) Business Days of the date when due, fail to pay any payment of interest,
costs, fees or any other sums due under this Agreement.

          (b) Covenant Defaults. Any Borrower shall fail to observe or perform any covenants
contained in this Agreement, other than the covenants referred to in paragraph (a) above,
and such Borrower shall have not remedied such default within 10 days after written notice of such
default has been given by the Lender to the Borrowers.

          (c) Representation or Warranty. Any representation, warranty or statement made or
deemed to be made by a Borrower herein or in any other Loan Document given hereunder shall prove to
have been untrue in any material respect as of the time made or deemed made.

          (d) Cross-Default. A default shall occur under any Loan Document, any Royalty
Agreement or any agreement pertaining to Debt permitted hereunder; or any Borrower shall fail to
pay any Debt with a value in excess of Fifty Thousand Dollars ($50,000) (excluding Debt evidenced
by the Note), or any interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable
grace period, if any, specified in the Instrument relating to such Debt; or any other default under
any Instrument relating to any such Debt, or any other event, shall occur and shall continue after
the applicable grace period, if any, specified in such Instrument, if the effect of such default or
event is to accelerate, or to permit the acceleration of,

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the maturity of such Debt; or any such
Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof.

          (e) Insolvency. Any Borrower shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or (i) any Borrower shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order
for relief entered with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, wind-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any substantial part of its assets, or
(ii) there shall be commenced against any Borrower any such case, proceeding or other action
referred to in clause (i) above which (A) results in the entry of an order for relief or
any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or any Borrower shall take any other action to authorize any of the actions set
forth in this paragraph (e).

          (f) Involuntary Liens. Any involuntary Lien or Liens for amounts then due in the
aggregate sum of Fifty Thousand Dollars ($50,000) or more, of any kind or character shall attach to
any assets or property of any Borrower if such Lien or Liens are not discharged or bonded pending
proceedings to release such Lien or Liens within sixty (60) days after the date of attachment or
unless such Lien or Liens are being contested in good faith.

          (g) Judgments. Any judgment or order for the payment of money in excess of One
Hundred Thousand Dollars ($100,000) shall be rendered against any Borrower and there shall be a
period of 30 consecutive days during which such judgment or order shall not have been discharged or
a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect.

          (h) Condemnation. Any of the Collateral Royalties are taken by power of expropriation
or eminent domain or sold under threat of such taking, or possession of any material portion of the
Project Properties is taken through exercise of such power.

          (i) Regulatory Action. Any Governmental Authority shall commence an investigation or
take any action with respect to any Borrower or any Project or the Collateral, which would result
in a Material Adverse Effect on any Borrower, unless such action is set aside, dismissed or
withdrawn within ninety (90) days of its institution or such action is being contested in good
faith and its effect is stayed during such contest.

          (j) Title to Royalty Interests and Mining Properties. There shall exist a defect or
deficiency in title to the Royalty Interests or the Project Properties (other than as identified in
the Title Opinion) which results in a Material Adverse Effect, and the Borrowers shall have not
remedied such default within 10 days after written notice of default has been given by the Lender
to the Borrowers.

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          (k) Collateral Security. Any of the Liens established or purported to be established
by the Collateral Agreements shall fail to be first priority perfected Liens in the Collateral, or
any Borrower shall so state in writing, and the Borrowers shall have not remedied such default
within 10 days after written notice of default has been given by the Lender to the Borrowers.

          (l) Adverse Changes to the Pipeline Project. Any event or change occurs with respect
to the Pipeline Project, including, without limitation, the abandonment or termination or the
taking by power of expropriation or eminent domain of all or any material portion thereof, which
has a Material Adverse Effect.

          (m) Amount Outstanding in Excess of Maximum Availability. The Amount Outstanding
shall exceed the Maximum Availability at any time, as the Maximum Availability is determined from
time to time, and the Borrowers shall have not remedied such default within ten (10) days after
written notice of default has been given by the Lender to the Borrowers.

          (n) Redirection of Royalties. Any payment or delivery of cash, Products, Deliverable
Copper, proceeds or other amounts owing to any Borrower with respect to the Royalty Interests shall
be paid or delivered to any Person other than as required hereby, and the
Borrowers shall have not remedied such default within ten (10) days after written notice of
default has been given by the Lender to the Borrowers.

          (o) Collateral Account. The Borrowers shall fail to maintain in existence the
Collateral Account or shall fail to maintain therein at all times the Reserve Amount, and the
Borrowers shall not have remedied such default within 60 days after written notice of default has
been given by the Lender to the Borrowers.

     8.2 Remedies Upon Event of Default.

          (a) Upon the occurrence of an Event of Default specified in Section 8.1(e) hereof or,
in the case of any other Event of Default, upon notice by the Lender to the Borrowers of the
Lender’s election to declare the Borrowers in default, the obligations of the Lender hereunder
including, without intending any limitation, the Lender’s obligation to lend shall terminate. The
date on which such notice is sent or, in the case of an Event of Default specified in Section
8.1(e) hereof the date of such Event of Default, shall be the “Date of Default.”

          (b) On the Date of Default, (i) there shall immediately be due and payable to the Lender an
amount equal to the total principal Amount Outstanding of the Loan plus interest, fees, expenses,
and all other amounts owed by any Borrower pursuant to this Agreement and the other Loan Documents
shall immediately become due and payable, and (ii) the commitment of the Lender to Advance Loans
hereunder shall terminate.

          (c) Upon the occurrence of an Event of Default, all of the remedies provided to the Lender in
all of the Collateral Agreements shall immediately become available to the Lender, and the Lender
shall have all other rights and remedies available at law or in equity. The

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enumeration of the
rights and remedies of the Lender set forth in this Agreement and the other Loan Documents is not
intended to be exhaustive and the exercise by the Lender of any right or remedy shall not preclude
the exercise of any other rights and remedies, all of which shall be cumulative and shall be in
addition to any other right or remedy given hereunder or under the other Loan Documents or that may
now or hereafter exist at law or in equity or by suit or otherwise.

          (d) Except as expressly provided above in this Section 8.2, presentment, demand,
protest and all other notices of any kind are hereby expressly waived. From and after the Date of
Default, interest shall accrue at the Default Rate and shall be payable on demand.

ARTICLE IX

MISCELLANEOUS

     9.1 Notices. All notices, requests, demands, consents or other communications in
connection with or pursuant to this Agreement shall be in writing and shall be delivered by hand or
sent by registered or certified mail or by facsimile (such facsimile followed by a registered or
certified letter) addressed to the parties as set forth below (or to such other address as the
parties may designate by notice):

               If to the Lender:

HSBC Bank USA, National Association

452 Fifth Avenue

New York, New York 10018

Attention: Ted Kavanagh

Facsimile No.: (212) 525-6581

               If to any Borrower:

Royal Gold, Inc.

1660 Wynkoop Street, Suite 1000

Denver, Colorado 80202-1132

Attention: Chief Financial Officer

Facsimile No.: (303) 595-9385

A notice delivered by hand to a party shall be deemed received when delivered. A notice sent by
mail shall be deemed received on the fifth Business Day after mailing. A notice sent by facsimile
shall be deemed received upon receipt of the relevant confirmation or answer back. Notices
received after 4:00 p.m. local time shall be deemed received on the following day.

     9.2 Amendments, etc. No amendment or waiver of any provision of this Agreement or the
Note, nor consent to any departure by the Borrowers therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Lender, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for which given.

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     9.3 No Waiver; Cumulative Remedies. No failure on the part of the Lender to exercise,
and no delay in exercising, any right hereunder or under any Note shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.

     9.4 Costs and Expenses.

          (a) The Borrowers agree to pay on demand all costs and expenses in connection with the
preparation, negotiation, execution, delivery, registration and administration of this Agreement,
the Note and the other Loan Documents and any amendments to any thereof including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel and of technical advisors and
consultants for the Lender with respect thereto and with respect to advising the Lender as to its
rights and responsibilities under this Agreement. The Borrowers further agree to pay on demand all
losses, costs and expenses, if any (including reasonable counsel fees and expenses), in connection
with the preservation of any rights of the Lender under, or the enforcement of, or legal advice in
respect of the rights or responsibilities of the Lender under, this Agreement, the Note and the
other Loan Documents, including, without limitation, losses, costs and expenses sustained by the
Lender as a result of any failure by any Borrower to perform or observe its obligations contained
herein or in the Note held by the Lender or in connection with any refinancing or restructuring of
the Loan in the nature of a “workout.”

          (b) If, due to acceleration of the maturity of the Note pursuant to Article VIII
hereof or due to any other reason, the Lender receives payments of principal of any Loan other than
on the last day of a Borrowing Period relating to such Loan, the Borrowers shall, upon demand by
the Lender, pay to the Lender any amounts required to compensate the Lender for any additional
losses, costs or expenses which it may reasonably incur as a result of such payment, including,
without limitation, any loss (including loss of anticipated profits) cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by the Lender to fund
or maintain such Loan.

     9.5 Application of Collateral Account; Right of Set-off. Upon the occurrence and
during the continuance of any Event of Default, the Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to apply the credit balances of the
Collateral Account and to set-off and apply any and all deposits or other obligations (general or
special, time or demand, provisional or final) at any time held and other indebtedness at any time
owing by the Lender to or for the credit or the account of the Borrowers against any and all of the
obligations of the Borrowers now or hereafter existing under this Agreement, the Note and the other
Loan Documents, irrespective of whether or not the Lender shall have made any demand under this
Agreement or otherwise and although such obligations may be unmatured. The Lender agrees promptly
to notify the Borrowers after any such set-off and application made by the Lender, provided that
the failure to give such notice shall not affect the validity of such set-off and application. The
rights of the Lender under this Section are in addition to other rights and remedies (including,
without limitation, other rights to set-off) which the Lender may have.

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     9.6 Usury Savings; Limitation on Interest. It is the intention of the parties hereto
to contract in strict compliance with applicable usury law from time to time in effect. In
furtherance thereof the parties stipulate and agree that none of the terms and provisions contained
herein and in the other Loan Documents shall ever be construed to create a contract for the use,
forbearance or detention of money, or a contract to pay interest, in excess of the maximum amount
of interest permitted to be charged by applicable law from time to time in effect. Neither the
Borrowers nor any future guarantors or other parties hereafter becoming liable for payment of the
Borrowers’ indebtedness to the Lender shall ever be required to pay interest thereon in excess of
the maximum interest that may be lawfully charged or contracted for under applicable law from time
to time in effect, and the provisions of this Section 9.6 shall control over all other
provisions hereof or of the other Loan Documents which may be in conflict or apparent conflict
herewith. If the maturity of the Borrowers’ indebtedness to the Lender or any part thereof shall
be accelerated for any reason, any amounts held to constitute interest, which are then unearned and
have theretofore been collected by the Lender or any other holder of such indebtedness, shall be
applied to reduce the principal balance thereof then outstanding. In the event that the Lender or
any other holder of the Borrowers’ indebtedness to the Lender shall collect monies that are deemed
to constitute interest which would otherwise increase the effective interest on the Borrowers’
indebtedness to the Lender or any part thereof to an amount in excess of that permitted to be
charged by applicable law then in effect, all such sums deemed to constitute interest in excess of
such legal limit shall be either immediately returned to the Borrowers or other payor thereof upon
such determination or applied as a credit against the then unpaid principal of the Borrowers’
indebtedness, at the option of the Lender or other holder. In determining whether or not the
interest paid or payable under any specific contingency exceeds the maximum amount permitted under
applicable law, the Borrowers (and any other payor
thereof) and the Lender shall, to the greatest extent permitted under applicable law (a)
characterize any non-principal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate or
spread the total amount of interest throughout the entire contemplated term of the instruments
evidencing the Borrowers’ indebtedness to the Lender in accordance with the amounts outstanding
from time to time thereunder and the maximum legal rate of interest from time to time in effect
under applicable law in order to lawfully charge the maximum amount of interest permitted under
applicable law. Upon any such determination, to the extent permitted by law, the Lender or other
holder shall not be subject to any penalty provided for charging, receiving or contracting for
interest in excess of any such maximum legal rate, regardless of when or the circumstances under
which such refund or application was made.

     9.7 Binding Effect; Assignment of Rights. This Agreement shall become effective when
it shall have been executed by the parties hereto and thereafter shall be binding upon and inure to
the benefit of the Borrowers and the Lender and their respective successors, transferees and
assigns; provided that the Borrowers shall not have the right to transfer or assign any of
their rights or obligations hereunder or any interest herein without the prior written consent of
the Lender. The Lender may at any time, without the consent of the Borrowers, assign or transfer
by way of assignment, participation or novation to any branch or affiliate of the Lender or to any
financial institution all or any part of, or any interest in the Lender’s rights and benefits and
obligations hereunder and under the Note issued to it hereunder or the other Loan Documents;

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provided that such transfer or assignment does not diminish the rights or increase the
obligations of the Borrowers, and to the extent of such assignment such assignee shall have the
same rights and benefits vis-a-vis the Borrowers as it would have had if it were the Lender
hereunder, and all references in this Agreement to the Lender shall thereafter be construed as a
reference to the Lender and its transferee or transferees or, in the case of a transfer of all of
its rights, benefits and obligations, to its transferee or transferees alone. For the purposes
hereof, the Lender may disclose to a potential transferee such information about the Borrowers,
their businesses, assets and financial condition as the Lender shall consider appropriate. Nothing
contained herein shall be construed to prevent the Lender from granting by way of sub-participation
(being a right to share in the financial effects of this Agreement without any rights against the
Borrowers) or risk participation in all or any of its rights and benefits hereunder to any person
without the consent of the Borrowers; provided that such transfer or assignment does not
diminish the rights or increase the obligations of the Borrowers, and that such transfer is done in
compliance with applicable laws; provided, further, that upon any such assignment
the Lender will act as agent and will be the sole party with whom the Borrowers are required to
have dealings when no Event of Default is outstanding.

     9.8 Consent to Jurisdiction.

          (a) EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
SITTING IN NEW YORK, NEW YORK OVER ANY SUIT, ACTION OR PROCEEDING (A “PROCEEDING”) ARISING OUT OF
OR RELATING TO THIS AGREEMENT, THE NOTE OR THE COLLATERAL AGREEMENTS AND EACH BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH STATE COURT OR, TO THE EXTENT PERMITTED BY LAW,
IN SUCH FEDERAL COURT. EACH BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM OR IMPROPER VENUE TO THE MAINTENANCE OF ANY
SUCH PROCEEDING. EACH BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
SUCH PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH BORROWER AT ITS ADDRESS REFERRED
TO IN SECTION 9.1 HEREOF. EACH BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE EXECUTED UPON AND ENFORCED IN OTHER JURISDICTIONS BY SUIT
ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

          (b) NOTHING IN THIS SECTION 9.8 SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE LENDER TO BRING ANY SUIT,
ACTION OR PROCEEDING AGAINST A BORROWER OR ITS PROPERTY IN THE COURTS OF OTHER JURISDICTIONS. THE
TAKING OF ANY PROCEEDINGS IN ANY ONE OR MORE JURISDICTIONS SHALL NOT PRECLUDE THE TAKING OF ANY
PROCEEDINGS IN ANY OTHER JURISDICTION.

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          (c) EACH BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE, THE COLLATERAL
AGREEMENTS AND ANY OTHER LOAN DOCUMENTS REFERRED TO HEREIN OR THE OBLIGATIONS UNDER ANY THEREOF.

     9.9 Governing Law. THIS AGREEMENT, AND ANY INSTRUMENT OR AGREEMENT REQUIRED
HEREUNDER, UNLESS OTHERWISE SPECIFICALLY PROVIDED HEREIN OR THEREIN, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, PROVIDED, HOWEVER,
THAT THE MORTGAGES SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEVADA AND ANY
FINANCING STATEMENTS FILED PURSUANT HERETO SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE
STATE IN WHICH THEY ARE FILED.

     9.10 Counterparts; Signatures. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and all of such counterparts together shall constitute
one and the same instrument. This Agreement may be validly executed and delivered by facsimile or
other electronic transmission, and a signature by facsimile or other electronic transmission shall
be as effective and binding as an original signature.

     9.11 Confidentiality; Public Announcements.

          (a) The Lender agrees to use best efforts to ensure that any information concerning the
Borrowers, the Royalty Interests or the Projects obtained by the Lender or any of the Lender’s
authorized agents or representatives which is not contained in a report or other document filed
with a securities commission or regulatory authority, distributed by the Borrowers to their
shareholders or otherwise available to the public generally (other than by the
Lender’s breach of these confidentiality obligations) will, to the extent permitted by law and
except as may be required by valid subpoena (including rules and regulations of the United States
Securities Exchange Commission), any governmental authority having jurisdiction over the Lender or
other external reporting requirements, be treated confidentiality by the Lender’s employees, agents
or representatives who have a reasonable need to know such information. These confidentiality
obligations shall survive the term of this Agreement by one year.

          (b) Public announcements or reports by any Borrower of information relating to this Agreement
or the Lender’s financing provided for herein (whether given to stock exchanges or otherwise) shall
be made only on the basis of agreed texts approved by the Lender in advance of issuance, except to
the extent required by Requirements of Law, applicable court order or rules of an applicable stock
exchange.

     9.12 Joint and Several Liability. Each of the Borrowers acknowledges that (i) it is a
co-borrower hereunder and shall be jointly and severally, with the other Borrower, directly and
primarily liable for the payment and performance of the Note and the Obligations, regardless of
which Borrower actually receives Loans or the amount of such Loans received, (ii) each of the
Borrowers shall have the obligation of a co-maker and shall be a primary obligor with respect to

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the Loans, the Note and the other Obligations, it being agreed that the Loans to each Borrower
inure to the benefit of both Borrowers, and (iii) the Lender is relying on such joint and several
liability of the Borrowers in entering into this Agreement and extending the Loans. Each Borrower
hereby unconditionally and irrevocably agrees that upon default in the payment when due of any
principal, interest, fee or other amount hereunder, it will forthwith pay the same, without notice
of demand. The Lender shall be entitled to rely upon any notice, request or communication received
by it from any Borrower on behalf of both Borrowers, and shall be entitled to treat its giving of
any notice hereunder pursuant to Section 9.1 hereof as notice to each and all Borrowers.

     9.13 Entire Agreement. This Agreement, the Schedules and Exhibits hereto and the
other Loan Documents, constitute the entire agreement between the Lender and the Borrowers with
respect to the various commitments by the Lender to the Borrowers and indebtedness of the Borrowers
to the Lender to be incurred under this Agreement; and no other agreements, promises,
representations and warranties (express or implied), except those expressly set forth herein have
been relied upon by the Borrower or have been made by the Lender. This Agreement restates,
replaces and supersedes all prior agreements and understandings, both written and oral, between the
parties, with respect to the subject matter hereof.

[ REMAINDER OF THIS PAGE INTENTIONALLY BLANK ]

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     IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed and
delivered by its respective duly authorized officers as of the day and year first above written.

LENDER:

	 	 	 	 	 
	 	HSBC BANK USA, NATIONAL ASSOCIATION

 	 
	 	By:  	/s/
William S. Edge III	 
	 	 	William S. Edge, III  	 
	 	 	Managing Director 	 
	 
	 	 	 
	 	By:  	/s/ P. E. Kavanagh	 
	 	 	P. E. Kavanagh  	 
	 	 	Senior Vice President 	 
	 

BORROWERS:

	 	 	 	 	 
	 	ROYAL GOLD, INC.

 	 
	 	By:  	 	/s/
Tony Jensen	 
	 	 	Name:  	Tony Jensen	 
	 	 	Title:  	President & CEO	 
	 
	 	HIGH DESERT MINERAL RESOURCES, INC.

 	 
	 	By:  	 	/s/
Tony Jensen	 
	 	 	Name:  	Tony Jensen	 
	 	 	Title:  	President	 
	 

Second Amended and Restated Loan Agreement

Signature Page

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