Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Nord Resources Corporation - Exhibit 10.78

	Execution Version 
	 

	CREDIT AGREEMENT 
	 
	dated as of June 28, 2007 
	 
	by and among 
	 
	NORD RESOURCES CORPORATION 
	as Borrower, 
	 
	and 
	 
	COCHISE AGGREGATES AND MATERIALS, INC. 
	as Guarantor, 
	  
	THE LENDERS FROM TIME TO TIME PARTY HERETO 
	as Lenders 
	 
	and 
	 
	NEDBANK LIMITED, 
	as Administrative Agent 
	________________________________________ 
	 
	NEDBANK LIMITED, 
	as Sole Lead Arranger 
	 
	 

TABLE OF CONTENTS 

	 	 	  	Page 
	 	 	  	  
	ARTICLE I. DEFINITIONS 	
      1 

	 	Section 1.1. 	Defined Terms 	
      1 

	 	Section 1.2. 	Terms Generally 	
      15 

	 	Section 1.3. 	Accounting Terms; GAAP 	
      15 

	ARTICLE II. THE TERM LOANS 	
      16

	 	Section 2.1. 	Term Loans 	
      16

	 	Section 2.2. 	Borrowings 	
      16 

	 	Section 2.3. 	Requests for Borrowings 	
      16 

	 	Section 2.4. 	Funding of Borrowings 	
      16 

	 	Section 2.5. 	Termination and Reduction of Term Loan Commitments 	
      17 

	 	Section 2.6. 	Repayment of Term Loans 	
      17 

	 	Section 2.7. 	Evidence of Debt 	
      17 

	 	Section 2.8. 	Optional Prepayments of Term Loans 	
      18 

	 	Section 2.9. 	Mandatory Prepayments 	
      19

	 	Section 2.10. 	Fees 	
      20

	 	Section 2.11. 	Interest 	
      21

	 	Section 2.12. 	Alternate Rate of Interest 	
      22

	 	Section 2.13. 	Increased Costs 	
      22

	 	Section 2.14. 	Break Funding Payments 	
      23

	 	Section 2.15. 	Taxes 	
      23

	 	Section 2.16. 	Payments Generally; Pro Rata Treatment; Sharing of Set-offs
      	
      24

	 	Section 2.17. 	Mitigation Obligations 	
      26

	ARTICLE III. REPRESENTATIONS AND WARRANTIES 	
      26

	 	Section 3.1. 	Status and Power 	
      26

	 	Section 3.2. 	Authorization; Enforceability 	
      26

	 	Section 3.3. 	No Conflicts 	
      27

	 	Section 3.4. 	Financial Statements 	
      27

	 	Section 3.5. 	Feasibility Study 	
      27

	 	Section 3.6. 	Litigation, etc 	
      27

	 	Section 3.7. 	Title to Assets 	
      28

i 

TABLE OF CONTENTS 
(continued) 

	 	 	  	Page 
	 	 	  	  
	 	Section 3.8. 	Conduct of Business 	28
	 	Section 3.9. 	Labor and Employment Matters 	28
	 	Section 3.10. 	No Default 	28
	 	Section 3.11. 	Tax Returns and Taxes 	28
	 	Section 3.12. 	Withholding and Other Taxes 	28
	 	Section 3.13. 	Material Contracts 	29
	 	Section 3.14. 	Compliance with Environmental Laws 	29
	 	Section 3.15. 	Solvency 	29
	 	Section 3.16. 	Locations of Tangible Assets 	29
	 	Section 3.17. 	Consents and Approvals for the Project 	29
	 	Section 3.18. 	Consents and Approvals for the Security 	30
	 	Section 3.19. 	Capitalization of the Borrower 	30
	 	Section 3.20. 	Subsidiaries 	30
	 	Section 3.21. 	Mining Properties 	30
	 	Section 3.22. 	Feasibility Study 	30
	 	Section 3.23. 	Financial Model, Construction Schedule and Capital Spending
      Plan	30
	 	Section 3.24. 	Project Information 	31
	 	Section 3.25. 	Intellectual Property 	31
	 	Section 3.26. 	Liens 	31
	 	Section 3.27. 	Insurance 	31
	 	Section 3.28. 	Ranking 	31
	ARTICLE IV. CONDITIONS 	31
	 	Section 4.1. 	Closing Date 	31
	 	Section 4.2. 	Additional Conditions 	34
	ARTICLE V. AFFIRMATIVE COVENANTS 	34
	 	Section 5.1. 	Financial Statements; Ratings Change and Reporting 	34
	 	Section 5.2. 	Notices of Material Events 	37
	 	Section 5.3. 	Existence; Conduct of Business 	37
	 	Section 5.4. 	Payment of Obligations 	37

ii 

TABLE OF CONTENTS 
(continued) 

	 	 	  	Page 
	 	 	  	  
	 	Section 5.5. 	Maintenance of Properties; Insurance 	38
	 	Section 5.6. 	Books and Records; Inspection Rights 	38
	 	Section 5.7. 	Compliance with Laws 	38
	 	Section 5.8. 	Use of Proceeds 	38
	 	Section 5.9. 	Project; Construction; Etc 	38
	 	Section 5.10. 	Updated Financial Model 	38
	 	Section 5.11. 	Further Assurances 	39
	ARTICLE VI. NEGATIVE COVENANTS 	39
	 	Section 6.1. 	Indebtedness 	39
	 	Section 6.2. 	Liens 	40
	 	Section 6.3. 	Fundamental Changes; Dispositions; Subsidiaries; Etc 	40
	 	Section 6.4. 	Investments, Loans, Advances, Guarantees and Acquisitions
      	40
	 	Section 6.5. 	Hedging Agreements 	41
	 	Section 6.6. 	Restricted Payments 	41
	 	Section 6.7. 	Transactions with Affiliates 	41
	 	Section 6.8. 	Restrictive Agreements 	41
	 	Section 6.9. 	Material Contracts 	42
	 	Section 6.10. 	Financial Covenants 	42
	ARTICLE VII. EVENTS OF DEFAULT 	42
	ARTICLE VIII. THE ADMINISTRATIVE AGENT 	44
	ARTICLE IX. GUARANTY 	46
	 	Section 9.1. 	Guaranty 	46
	 	Section 9.2. 	Guaranty Absolute 	46
	 	Section 9.3. 	Waiver 	47
	 	Section 9.4. 	Continuing Guaranty; Assignments 	48
	 	Section 9.5. 	Subrogation 	48
	 	Section 9.6. 	Maximum Obligations 	48
	ARTICLE X. MISCELLANEOUS 	49
	 	Section 10.1. 	Notices 	49
	 	Section 10.2. 	Waivers; Amendments 	49

iii 

TABLE OF CONTENTS 
(continued) 

	 	 	  	Page 
	 	 	  	  
	 	Section 10.3. 	Expenses; Indemnity; Damage Waiver 	50
	 	Section 10.4. 	Successors and Assigns 	51
	 	Section 10.5. 	Survival 	54
	 	Section 10.6. 	Counterparts; Integration; Effectiveness 	54
	 	Section 10.7. 	Severability 	55
	 	Section 10.8. 	Right of Setoff 	55
	 	Section 10.9. 	Governing Law; Jurisdiction; Consent to Service of Process
      	55
	 	Section 10.10. 	WAIVER OF JURY TRIAL 	56
	 	Section 10.11. 	Headings 	56
	 	Section 10.12. 	Confidentiality 	56
	 	Section 10.13. 	Interest Rate Limitation 	57
	 	Section 10.14. 	Know Your Customer Requirements 	57

iv 

	SCHEDULES: 
	 
	Schedule 1.1 -- Material Contracts 
	Schedule 2.1 -- Term Loan Commitments 
	Schedule 6.2 -- Existing Liens 
	 
	EXHIBITS: 
	 
	Exhibit A -- Form of Assignment and
      Assumption 
	Exhibit B -- Form of Term Loan Borrowing Request 
	Exhibit C -- Form of Collateral Account
      Agreement 
	Exhibit D -- Form of Deed of Trust 
	Exhibit E -- Form of Excess Cash Flow
      Certificate 

CREDIT AGREEMENT 

     CREDIT AGREEMENT dated as of June
28, 2007, among NORD RESOURCES CORPORATION, a Delaware corporation (the
“Borrower”), and COCHISE AGGREGATES AND MATERIALS, INC., a Nevada
corporation (“Cochise”, a “Guarantor”), the lenders from time to
time party hereto (each a “Lender” and collectively, the
“Lenders”), and NEDBANK LIMITED, as administrative agent (in such
capacity, the “Administrative Agent”) and as sole lead arranger (in such
capacity, the “Sole Lead Arranger”). 

     WHEREAS the Borrower and
Guarantor have requested the Lenders to provide to the Borrower a term loan
facility to assist in financing the construction, start-up, and operation of
mining and metal operations at the Johnson Camp Mine, a copper mine and
production facility located 65 miles east of Tuscon, Arizona in Cochise County;

     WHEREAS the Lenders are willing
to provide Term Loans in an aggregate amount not to exceed $25,000,000, to the
Borrower upon the terms and conditions contained herein; 

     WHEREAS the Guarantor is willing
to guarantee the obligations of the Borrower under the Loan Documents on the
terms set forth herein; 

     NOW THEREFORE, in consideration
of the mutual agreements contained herein and for other good and valuable
consideration (the receipt and sufficiency of which is hereby acknowledged), the
parties hereto agree as follows: 

ARTICLE I. 
DEFINITIONS 

     SECTION 1.1. Defined
Terms. As used in this Agreement, the following terms have the meanings
specified below: 

     “Administrative Agent”
means Nedbank Limited, in its capacity as administrative agent for the Lenders
hereunder. 

     “Affiliate” means, with
respect to a specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified. 

     “Applicable Law” means all
public laws, statutes, ordinances, decrees, judgments, codes, standards, acts,
orders, by-laws, rules, regulations, Approvals, permits and requirements of any
Governmental Authority, in each case having the force of law and which now or
hereafter may be lawfully applicable to and enforceable against any Loan Party
or its property or any part thereof. 

     “Applicable Percentage”
means, with respect to any Lender, the percentage of the total Term Loan
Commitments represented by such Lender’s Term Loan Commitment. If the Term Loan
Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Term Loan Commitments most recently in effect, giving
effect to any assignments. 

     “Applicable Margin” means
(a) prior to Completion, 3.5% per annum, and (b) after Completion, 3.0% per
annum. 

     “Approvals” means each and
every approval, order in council, authorization, license, permit, consent,
filing and registration by or with any Governmental Authority or other Person
which are required by Applicable Law and necessary to authorize or permit the
development and operation of the Project and the execution, delivery,
performance, validity and enforceability of the Loan Documents or the Material
Contracts. 

     “Assignment and
Assumption” means an assignment and assumption entered into by a Lender and
an assignee (with the consent of any party whose consent is required by Section
10.4), and accepted by the Administrative Agent, in the form of Exhibit A
or any other form approved by the Administrative Agent. 

     “Availability Period”
means the period from and including the Closing Date to but excluding the
earlier of (a) the date of termination of the Term Loan Commitments, (b) the
first Principal Payment Date and (c) June 30, 2008. 

     “Board” means the Board of
Governors of the Federal Reserve System of the United States of America. 

     “Borrower” has the meaning set
forth in the recitals hereto. 

     “Borrowing” means a borrowing
of Term Loans. 

     “Business Day” means any
day that is not a Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to remain closed; provided
that, when used in connection with a Eurodollar Loan, the term “Business
Day” shall also exclude any day on which banks are not open for dealings in
dollar deposits in the London interbank market. 

     “CADS” means, for a
particular period, (a) gross revenues for such period (for any future period,
calculated (i) using the actual hedged price for future hedged production and
(ii) the unhedged price for unhedged production, with the unhedged price being
the Historic Six Month Average Spot Price at such time) less (b) the sum of (i)
the aggregate of Project Development Costs for such period, (ii) cash Tax
Expenses for such period, and (iii) cash Operating Costs for such period, and
(c) adjusted for changes in Working Capital over such period (plus any increases
and minus any decreases). 

     “Capital Expenditures”
means, for a particular period, the aggregate of all expenditures by the
Borrower during such period that, in accordance with GAAP, are classified as
capital expenditures. 

     “Capital Lease
Obligations” of any Person means the obligations of such Person to pay rent
or other amounts under any lease of (or other arrangement conveying the right to
use) real or personal property, or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a balance sheet
of such Person under GAAP, and the amount 

- 2 - 

of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP. 

     “Casualty Event” means,
with respect to any Property of any Person, any loss of or damage to, or any
condemnation or other taking of, such Property for which such Person receives
insurance proceeds, or proceeds of a condemnation award or other compensation.

     “Change of Control” means
(a) Cochise shall cease to be a direct wholly-owned subsidiary of the Borrower;
or (b) the Administrative Agent, for the benefit of the Lenders, shall cease to
have a perfected security interest in Equity Interests of Cochise representing
100% of the aggregate equity value represented by the issued and outstanding
Equity Interests in Cochise. 

     “Change in Law” means (a)
the adoption of any law, rule or regulation after the date of this Agreement,
(b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this
Agreement or (c) compliance by any Lender (or, for purposes of Section 2.13(b),
by any lending office of such Lender or by such Lender’s holding company, if
any) with any request, guideline or directive (whether or not having the force
of law) of any Governmental Authority made or issued after the date of this
Agreement. 

     “Closing Date” means the
second Business Day after which the conditions specified in Section 4.1 are
satisfied (or waived in accordance with Section 10.2) . 

     “Cochise” has the meaning in
the recitals hereto.

     “Code” means the Internal
Revenue Code of 1986, as amended from time to time. 

     “Collateral” means a
collective reference to all real and personal property with respect to which
Liens have been granted in favor of the Administrative Agent pursuant to and in
accordance with the Security Documents. 

     “Collateral Account
Agreement” means the Collateral Account Agreement in the form attached as
Exhibit C hereto. 

     “Collateral Accounts”
shall have the meaning set forth in the Collateral Account Agreement. 

     “Completion” means the
earlier to occur of the date upon which the Borrower has delivered the
Completion Certificates to the Administrative Agent, duly executed by the
Borrower, and verified by the Independent Technical Consultant, and such
certificates shall have been accepted by the Administrative Agent. 

     “Completion Certificates”
shall mean, collectively, the forms of certificates relating to Completion which
shall be in a form satisfactory to the Borrower, the Administrative Agent, and
the Independent Technical Consultant. 

     “Completion Date” means the
date upon which Completion occurs.

- 3 - 

     “Consent Agreements”
means, collectively, the agreements so named, entered into or to be entered into
between the Lenders, the Administrative Agent, the Borrower and each of the
counterparties to each Material Contract with a value in excess of $1,000,000
(as determined by the Administrative Agent in consultation with the Borrower)
pursuant to which, inter alia, such counterparties consent to the Security and
grant to the Lenders or their nominee certain “step-in” rights. 

     “Construction Schedule and
Capital Spending Plan” means the Borrower’s construction schedule and
capital spending plan, dated June 20, 2007, as the same may be modified by the
Borrower and approved by the Required Lenders. 

     “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto. 

     “Debt Issuance” means the
issuance of any Indebtedness by any Loan Party other than the issuance of any
Indebtedness permitted under Section 6.1.

     “Debt Service Charges”
means, for a particular period, the sum of all scheduled principal payments made
or required to have been made by the Borrower hereunder with respect to Term
Loans during such period and interest on such Term Loans paid or required to
have been paid by the Borrower during such period. 

     “Debt Service Coverage
Ratio” means, (a) with respect to a particular Historical Test Period, the
ratio of (i) CADS for such Test Period to (ii) Debt Service Charges for such
Test Period (as determined with respect to the financial statements most
recently delivered pursuant to Section 5.1(a) and (b) hereof); and (b) with
respect to a particular Future Test Period, the ratio of (i) CADS for such Test
Period to (ii) Debt Service Charges for such Test Period (as determined with
respect to the Financial Model then in effect).

     “Debt Service Reserve
Account” has the meaning set forth in the Collateral Account Agreement. 

     “Deed of Trust’ means the
Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing in the
form of Exhibit D, hereto. 

     “Default” means any event
or condition which constitutes an Event of Default or which upon notice, lapse
of time or both would, unless cured or waived, become an Event of Default. 

     “Disclosure Schedule”
means the disclosure schedule that has been prepared by the Borrower, delivered
by the Borrower to the Lender, and dated the date of this Agreement. 

     “Disposition” or
“Dispose” means the sale, transfer, license, lease or other disposition
(including any sale and leaseback transaction) of any property by any Person,
including any sale, assignment, transfer or other disposal, with or without
recourse, of any notes or accounts receivable or any rights and claims
associated therewith. 

- 4 - 

     “dollars” or “$” refers
to lawful money of the United States of America. 

     “EBIT” means, for a
particular period, Net Income for such period plus, to the extent deducted in
determining such Net Income and without duplication, the aggregate of the (a)
Interest Expenses for such period, and (b) Tax Expenses for such period,
determined in each case in accordance with GAAP. 

     “Environmental Laws” means
all laws, rules, regulations, codes, ordinances, orders, decrees, judgments,
injunctions, notices or binding agreements issued, promulgated or entered into
by any Governmental Authority, relating in any way to the environment,
preservation or reclamation of natural resources, the management, release or
threatened release of any Hazardous Material or to health and safety matters.

     “Environmental Liability”
means any liability, contingent or otherwise (including any liability for
damages, costs of environmental remediation, fines, penalties or indemnities),
of the Borrower directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing. 

     “Environmental Plan” means
the Compliance Order dated September 7, 2002 issued by the Arizona Department of
Environmental Quality, as the same may be modified, replaced, or superceded
(including, without limitation, by the appropriate Aquifer Protection Permit).

     “Equity Interests” means
shares of equity interest, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such equity interest.

     “Equity Issuance” means
any issuance by the Borrower to any Person (other than a Loan Party) of shares
of its Equity Interests. 

     “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended from time to time. 

     “ERISA Affiliate” means
any trade or business (whether or not incorporated) that, together with the
Borrower, is treated as a single employer under Section 414(b) or (c) of the
Code or, solely for purposes of Section 302 of ERISA and Section 412 of the
Code, is treated as a single employer under Section 414 of the Code. 

     “ERISA Event” means (a)
any “reportable event”, as defined in Section 4043 of ERISA or the regulations
issued thereunder with respect to a Plan (other than an event for which the
30-day notice period is waived); (b) the existence with respect to any Plan of
an “accumulated funding deficiency” (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section
412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of
the minimum funding standard with respect to any Plan; (d) the 

- 5 - 

incurrence by the Borrower or any of its ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination of any
Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a
plan administrator of any notice relating to an intention to terminate any Plan
or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by
the Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA. 

     “Event of Default” has the
meaning assigned to such term in Article VII. 

     “Excluded Taxes” means,
with respect to the Administrative Agent, any Lender or any other recipient of
any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) income or franchise taxes imposed on (or measured by) its net
income by the United States of America, or by the jurisdiction under the laws of
which such recipient is organized or in which its principal office is located
or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which the Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section 2.17(b)), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender’s failure to comply with Section 2.15(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to such withholding
tax pursuant to Section 2.15(a) . 

     “Excess Cash Flow” means,
at any particular time and from time to time, the amount identified in the
Excess Cash Flow Certificate.

     “Excess Cash Flow
Certificate” means a certificate of a Financial Officer of the Borrower
substantially in the form of Exhibit E hereto. 

     “Existing Bridge Loan
Facility” means the loan evidenced by the $4,900,000 Amended and Restated
Secured Promissory Note dated May 31, 2006 between the Borrower and Nedbank
Limited, as the same may be amended and modified from time to time. 

     “Feasibility Study” means
the Feasibility Study, dated October, 2005, prepared by Winters, Dorsey and
Company LLC.

     “Fee Letter” means the fee
letter dated June 28, 2007 between the Borrower and Nedbank Limited, as the same
may be amended, modified, supplemented or replaced from time to time. 

     “Financial Model” means
the financial model dated June 20, 2007, as the same may be modified from time
to time in accordance with Section 5.10. 

- 6 - 

     “Financial Officer” means
the chief financial officer, principal accounting officer, treasurer or
controller of the Borrower. 

     “Foreign Lender” means any
Lender that is organized under the laws of a jurisdiction other than that in
which the Borrower is located. For purposes of this definition, the United
States of America, each State thereof and the District of Columbia shall be
deemed to constitute a single jurisdiction. 

     “Forward Sale Price Protection
Program” means a hedging program with respect to a specified percentage of
copper output from the Project which shall be entered into prior to the Closing
Date and which shall be in form and substance satisfactory to the Borrower and
the Administrative Agent. 

     “Future Test Periods”
means with respect to any Test Date, the period of four consecutive fiscal
quarters ending on each of the next four succeeding Test Dates.

     “GAAP” means generally
accepted accounting principles in the United States of America. 

     “Governmental Authority”
means the government of the United States of America, any other nation or any
political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government. 

     “Guarantee” of or by any
Person (the “guarantor”) means any obligation, contingent or otherwise,
of the guarantor guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof or (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation; provided, that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. 

     “Guarantor” means Cochise. 

     “Hazardous Materials”
means all explosive or radioactive substances or wastes and all hazardous or
toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law. 

     “Hedging Agreement” means
any present or future swap, hedging, foreign exchange or cash management
agreement or other derivative transaction entered into by any Loan Party 

- 7 - 

which constitutes any copper or commodity hedging transaction,
spot or forward foreign exchange transaction, interest rate swap transaction,
currency swap transaction, forward rate transaction, rate cap transaction, rate
floor transaction, rate collar transaction, and any other exchange or rate
protection transaction, any combination of such transactions or any option with
respect to any such transaction entered into by any Loan Party. 

     “Historic Six Month Average
Spot Price” means, for any day, the average of the closing spot price for
copper on New York Comex for each Business Day over the six-month period ending
on such day.

     “Historical Test Period”
means the period of four consecutive fiscal quarters of the Borrower ending on a
Test Date; provided that for purposes of calculating the Debt Service
Coverage Ratio and Interest Coverage Ratio for each of the first three
applicable Test Dates after Completion, the amount of each of CADS, Debt Service
Charges, EBIT and Interest Expense for purposes of such calculations shall be
determined as follows: (a) for the first Test Date, such amounts shall equal the
amounts for the most recently ended fiscal quarter multiplied by 4, (b) for the
second Test Date, such amounts shall equal the amount for the two most recently
ended fiscal quarters multiplied by 2; and (c) for the third Test Date, such
amounts shall equal the amount for the three most recently ended fiscal quarters
multiplied by 3/4. 

     “Indebtedness” of any
Person means, without duplication, (a) all obligations of such Person for
borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest charges are
customarily paid, (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g)
all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty and (j) all obligations, contingent or otherwise, of such Person in
respect of bankers’ acceptances. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor. 

     “Indemnified Taxes” means Taxes
other than Excluded Taxes. 

     “Independent Technical
Consultant” means the technical engineering consultant as the Administrative
Agent, in consultation with the Borrower, may engage from time to time to
monitor the Borrower’s construction under and compliance with the Construction
Schedule and Capital Spending Plan, certify the passage of the Completion tests
and otherwise carry out the responsibilities of the Independent Technical
Consultant under the Loan Documents. 

- 8 - 

     “Initial Financial Model” has
the meaning set forth in Section 5.10(a) . 

     “Intellectual Property”
shall mean all issued patents and patent applications, industrial design
registrations, trade-marks, registrations and applications therefor, trade-names
and styles, logos, copyright registrations and applications therefor, all of the
foregoing owned by or licensed to the Loan Parties or any of them and used in or
necessary to the operation of the Project. 

     “Interest Coverage Ratio”
means (a) with respect to a particular Historical Test Period, the ratio of (i)
EBIT for such Test Period to (ii) Interest Expense for such Test Period (as
determined with respect to the financial statements most recently delivered
pursuant to Section 5.1(a) and (b) hereof); and (b) with respect to a particular
Future Test Period, the ratio of (i) EBIT for such Test Period to (ii) Interest
Expense for such Test Period (as determined with respect to the Financial Model
then in effect); provided that any such calculation shall be effected
without regard to the effect of any non-cash expense associated with the $23
million equity financing. 

     “Interest Expense” means,
for any particular period, the aggregate amount which would be classified on the
income statement of the Borrower for such period as interest expenses (whether
expensed or capitalized or in respect of synthetic lease obligations), all as
determined in accordance with GAAP. 

     “Interest Payment Date”
means the last Business Day of each of March, June, September and December in
each year. 

     “Interest Period” means,
with respect to any Borrowing, (a) the period from and including the date of
such Borrowing to but excluding the first Interest Payment Date occurring after
such Borrowing, and (b) thereafter, the period from and including the first
Interest Payment Date for such Borrowing, to but excluding the next Interest
Payment Date. 

     “Lenders” has the meaning set
forth in the recitals hereto.

     “LIBOR Rate” means (a) the
rate of interest per annum, calculated on the basis of a year of 360 days,
determined by the Administrative Agent for a particular Interest Period to be
the rate of interest per annum that appears as such on the Telerate Screen Page
3750 at 11:00 a.m. (London time) on the second Business Day prior to the
commencement of such Interest Period, (b) if, for any reason, such rate does not
appear on such Telerate Page, the rate of interest per annum, calculated on the
basis of a year of 360 days, determined by the Administrative Agent for a
particular Interest Period to be the rate of interest per annum that appears as
such on the Reuters Page LIBOR01 at 11:00 a.m. (New York City time) on the
second Business Day prior to the commencement of such Interest Period, or (c)
if, for any reason, such rate does not appear on such Telerate or Reuters Pages,
LIBOR shall mean the rate of interest per annum, calculated on the basis of a
year of 360 days and rounded upwards if necessary to the nearest whole multiple
of 1/16% determined by the Administrative Agent as being the rate of interest at
which the Administrative Agent, in accordance with its normal practices, would
be prepared to offer to leading banks in the London interbank market for
delivery on the first day of each relevant Interest Period for a period equal to
the relevant Interest Period based on the number of days comprised therein,
deposits in U.S. dollars of comparable amounts to the amount of the Term 

- 9 - 

Loan, to be outstanding during the Interest Period, at or about
11:00 am (London time) on the second Business Day prior to the commencement of
such Interest Period. 

     “Lien” means, with respect
to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation,
encumbrance, charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing lease having substantially
the same economic effect as any of the foregoing) relating to such asset and (c)
in the case of securities, any purchase option, call or similar right of a third
party with respect to such securities. 

     “Loan Documents” means this
Agreement, the Security Documents, and the Fee Letter.

     “Loan Party” means each of the
Borrower and the Guarantor. 

     “Material Adverse Effect”
means a material adverse effect on (a) the business, assets, operations,
prospects or condition, financial or otherwise, of the Project or any Loan
Party, (b) the ability of any Loan Party to perform any of its obligations under
this Agreement or (c) the rights of or benefits available to the Lenders under
the Loan Documents. 

     “Material Contracts” means
the material contracts set forth on Schedule 1.1, and any other contract which,
in the event of a breach, could reasonably be expected to result in a Material
Adverse Effect, as determined by the Administrative Agent in consultation with
the Borrower. 

     “Material Indebtedness”
means Indebtedness (other than the Term Loans), or obligations in respect of one
or more Hedging Agreements, of any one or more of any Loan Party in an aggregate
principal amount exceeding $200,000. For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of any Loan Party in
respect of any Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that such Loan Party would be
required to pay if such Hedging Agreement were terminated at such time. 

     “Mining Properties” means
the real property pledged to the Administrative Agent for the benefit of the
Lenders pursuant to the Security Documents. 

     “Moody’s” means Moody’s
Investors Service, Inc. 

     “Multiemployer Plan” means
a multiemployer plan as defined in Section 4001(a)(3) of ERISA. 

     “Net Cash Proceeds” means: 

     (a) with respect to any
Disposition, the excess, if any, of (i) the sum of cash and cash equivalents
received in connection with such Disposition less (ii) the sum of (x) the
out-of-pocket expenses incurred by the Borrower in connection with such
Disposition and (y) taxes reasonably estimated to be actually payable in
connection therewith; 

- 10 - 

     (b) with respect to any Casualty
Event, the excess, if any, of (i) the sum of insurance proceeds or other
condemnation award received (other than any amounts received in connection with
business interruption insurance) in connection with such Casualty Event
less (ii) the sum of any reasonable expenses incurred in connection
therewith; and 

     (c) with respect to any Debt
Issuance, the excess, if any, of (i) all cash received in connection with such
Debt Issuance less (ii) the sum of all reasonable expenses by the
Borrower incurred in connection therewith; 

     “Net Income” means, for a
particular period, the aggregate amount which would be classified on the income
statement of the Borrower for such period as net income, determined in
accordance with GAAP; provided that Net Income shall be inclusive of
extraordinary, unusual and non-recurring items to the extent received or paid in
cash and exclusive of extraordinary, unusual and non-recurring items to the
extent not received or paid in cash. 

     “Obligations” means all
indebtedness, obligations and liabilities, present or future, absolute or
contingent, matured or not, at any time owing by a Loan Party to a Lender or the
Administrative Agent under or in connection with the Loan Documents or any
Hedging Agreement. 

     “Operating Costs” means,
for any period, the sum, computed without duplication, of all consolidated costs
and expenses (including, without limitation, costs relating to corporate
overhead, salaries, insurance, board expenses, legal expenses, deferred
salaries, and expenses in connection with letters of credit) paid directly or
indirectly by the Borrower during such period (or, in the case of any future
period, projected to be paid or payable during such period) in connection with
the operation, maintenance and administration of the Project. 

     “Other Taxes” means any
and all present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement. 

     “Participant” has the meaning
set forth in Section 10.4. 

     “PBGC” means the Pension
Benefit Guaranty Corporation referred to and defined in ERISA and any successor
entity performing similar functions. 

     “Permitted Investments” means:

          (a)
direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States of America), in each case maturing within one year from the
date of acquisition thereof; 

          (b)
investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, the highest credit
rating obtainable from S&P or from Moody’s; 

- 11 - 

          (c)
investments in certificates of deposit, banker’s acceptances and time deposits
maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000; 

          (d)
fully collateralized repurchase agreements with a term of not more than 30 days
for securities described in clause (a) above and entered into with a financial
institution satisfying the criteria described in clause (c) above; and 

          (e)
money market funds that (i) comply with the criteria set forth in Securities and
Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are
rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at
least $5,000,000,000. 

          (f) any
deposits of the type described in clause (d) of “Permitted Liens” 

     “Permitted Liens” means Liens:

          (a)
imposed by law for taxes that are not yet due or are being contested in
compliance with Section 5.4; 

          (b)
carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like
Liens imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are being contested in
compliance with Section 5.4; 

          (c)
pledges and deposits made in the ordinary course of business in compliance with
workers’ compensation, unemployment insurance and other social security laws or
regulations; 

          (d)
deposits to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds, letters of credit and
other obligations of a like nature, in each case in the ordinary course of
business; 

          (e)
judgment liens in respect of judgments that do not constitute an Event of
Default under clause (k) of Article VII; and 

          (g)
easements, zoning restrictions, rights-of-way and similar encumbrances on real
property imposed by law or arising in the ordinary course of business that do
not secure any monetary obligations and do not materially detract from the value
of the affected property or interfere with the ordinary conduct of business of
the Borrower; 

provided that the term “Permitted Liens” shall not
include any Lien securing Indebtedness. 

     “Person” means any natural
person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other entity. 

- 12 - 

     “Plan” means any employee
pension benefit plan (other than a Multiemployer Plan) subject to the provisions
of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in
respect of which the Borrower or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA. 

     “Principal Payment Dates”
means the last Business Day of March, June, September, and December in each
year, starting with the first such date at least 12 months after the first
drawdown (the “First Principal Payment Date”) and ending on the date that
is 48 months after the First Principal Payment Date. 

     “Proceeds Account” has the
meaning set forth in the Collateral Account Agreement. 

     “Project” means the
construction, startup and operation by the Borrower of the Johnson Camp Mine, a
copper mine and production facility located 65 miles east of Tucson, Arizona, as
described in the Feasibility Study and as augmented by the Construction Schedule
and Capital Spending Plan and Financial Model. 

     “Project Development
Costs” means amounts (other than Operating Expenses) spent pursuant to
Material Contracts and the Construction Schedule and Capital Spending Plan. 

     “Register” has the meaning set
forth in Section 10.4. 

     “Related Parties” means,
with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates. 

     “Required Lenders” means,
at any time, Lenders having Term Loans and unused Term Loan Commitments
representing more than 50% of the sum of the total Term Loans and unused Term
Loan Commitments at such time. 

     “Restricted Payment” means
(a) any dividend or other distribution (whether in cash, securities or other
property) with respect to any Equity Interests in the Borrower, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such Equity Interests in the
Borrower or any option, warrant or other right to acquire any such Equity
Interests in the Borrower, and (b) any other expenditures not constituting
Project Development Costs or Operating Costs, including, without limitation, any
amounts expended with respect to (x) exploration at the Coyote Springs site in
an amount in excess of $1,500,000 during the Availability Period, and (y)
exploration at the Mimbres site in an amount in excess of $100,000 during the
Availability Period. 

     “S&P” means Standard &
Poor’s. 

     “Secured Parties” means the
Administrative Agent and the Lenders.

     “Security” means the collateral
security constituted by the Security Documents. 

- 13 - 

     “Security Documents” means
the Deed of Trust, the Collateral Account Agreement, the Consent Agreements and
such other security documents and instruments, including without limitation
Uniform Commercial Code financing statements, as may be executed and/or
delivered by the Loan Parties pursuant to the terms hereunder or any collateral
document which, in each case, shall be deemed executed and delivered for the
benefit of the Administrative Agent and the Lenders. 

     “Solvent” and
“Solvency” mean, with respect to any Person on any date of determination,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such
Person, (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person’s ability to pay such debts and liabilities as they mature,
(d) such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person’s property would
constitute an unreasonably small capital, and (e) such Person is able to pay its
debts and liabilities, contingent obligations and other commitments as they
mature in the ordinary course of business. The amount of contingent liabilities
at any time shall be computed as the amount that, in the light of all the facts
and circumstances existing at such time, represents the amount that can be
reasonably be expected to become an actual or matured liability. 

     “Start-up of Commercial
Production” means the earliest date on which the Borrower has produced at
least three million pounds of saleable copper cathodes. 

     “subsidiary” means, with
respect to any Person (the “parent”) at any date, any corporation,
limited liability company, partnership, association or other entity the accounts
of which would be consolidated with those of the parent in the parent’s
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other corporation, limited
liability company, partnership, association or other entity (a) of which
securities or other ownership interests representing more than 50% of the equity
or more than 50% of the ordinary voting power or, in the case of a partnership,
more than 50% of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that is, as of such date, otherwise Controlled, by
the parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent. 

     “Taxes” means any and all
present or future taxes, levies, imposts, duties, deductions, charges or
withholdings imposed by any Governmental Authority. 

     “Term Loans” has the meaning
set forth in Section 2.1. 

     “Term Loan Borrowing
Request” means a borrowing request substantially in the form Exhibit B. 

     “Term Loan Commitment”
means the commitment of such Lender to make Term Loans hereunder, as such amount
may be reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 10.4. The initial amount of each Lender’s Term
Loan Commitment is set forth on Schedule 2.1, or in the assignment and
assumption 

- 14 - 

pursuant to which such Lender shall have assumed its Term Loan
Commitment, as applicable. The initial aggregate amount of the Term Loan
Commitment is $25,000,000, which amount may be reduced by the Borrower in
accordance with Section 2.5(b) .

     “Test Date” means the last
day of December, March, June, and September of each year, commencing from the
date on which Completion occurs or the first such date at least 12 months after
the first drawdown, whichever is earlier, until the final Principal Payment
Date. 

     “Transactions” means (a)
the execution, delivery and performance by the Loan Parties of (i) the Loan
Documents, the Borrowing and the use of the proceeds thereof, and (ii) the
Material Contracts, and (b) the development of the Project by the Borrower. 

     “Withdrawal Liability”
means liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA. 

     “Working Capital” means,
at any particular time, (a) the amount which would be classified on the balance
sheet of the Borrower at such time as current assets, minus (b) the
amount which would be classified on the balance sheet of the Borrower at such
time as current liabilities (other than the current portion of long-term debt),
in each case determined in accordance with GAAP. 

     SECTION 1.2. Terms
Generally. The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words “include”, “includes” and “including” shall be deemed to
be followed by the phrase “without limitation”. The word “will” shall be
construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights. 

     SECTION 1.3. Accounting Terms;
GAAP. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time; provided that, if the Borrower notifies the
Administrative Agent that the Borrower requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in
GAAP or in the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of 

- 15 - 

whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith. 

ARTICLE II. 
THE TERM LOANS 

     SECTION 2.1. Term Loans.
Subject to the terms and conditions set forth herein, each Lender agrees to make
available to the Borrower during the Availability Period, loans (“Term
Loans”) in an aggregate principal amount that will not result in a Lender
exceeding such Lender’s Term Loan Commitment. The Term Loan is not revolving in
nature, and any portion thereof that is repaid or prepaid cannot be reborrowed.
Borrowings may occur from time to time but not more frequently than once per
calendar month.

     SECTION 2.2. Borrowings.

          (a) Each
Term Loan shall be made as part of a Borrowing consisting of Term Loans made by
the Lenders ratably in accordance with their respective Term Loan Commitments.
The failure of any Lender to make any Term Loan required to be made by it shall
not relieve any other Lender of its obligations hereunder; provided that
the Term Loan Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender’s failure to make Term Loans as required. 

          (b) Each
Lender at its option may make any Term Loan by causing any branch or Affiliate
of such Lender to make such Term Loan; provided that any exercise of such
option shall not affect the obligation of such Lender hereunder to make such
Term Loan or the obligation of the Borrower to repay such Term Loan in
accordance with the terms of this Agreement; and provided further
that any such Lender shall in any event be subject to Section 2.17. 

          (c) Each
Borrowing shall be in an aggregate amount that is an integral multiple of
$100,000 and not less than $2,500,000. 

     SECTION 2.3. Requests for
Borrowings. To request a Borrowing, the Borrower shall provide a Term Loan
Borrowing Request to the Administrative Agent not later than 11:00 a.m., New
York City time, two Business Days prior to the date of the proposed Borrowing.
Promptly following receipt of a Term Loan Borrowing Request in accordance with
this Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender’s Term Loan to be made as part of the
requested Borrowing. 

     SECTION 2.4. Funding of
Borrowings.

          (a) Each
Lender shall make each Term Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds by 12:00 noon, New York
City time, to the account of the Administrative Agent most recently designated
by it for such purpose by notice to the Lenders. The Administrative Agent will
make such Term Loans 

- 16 - 

available to the Borrower by promptly crediting the amounts so
received to the Proceeds Account. 

          (b)
Unless the Administrative Agent shall have received notice from a Lender prior
to the proposed date of any Borrowing that such Lender will not make available
to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation or (ii) in the
case of the Borrower, the interest rate applicable to such Borrowing. If
such Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender’s Term Loan included in such Borrowing. 

     SECTION 2.5. Termination and
Reduction of Term Loan Commitments.

          (a)
Unless previously terminated, the Term Loan Commitments shall terminate on the
last day of the Availability Period. 

          (b) The
Borrower may at any time terminate, or from time to time reduce, the Term Loan
Commitments; provided that each reduction of the Term Loan Commitments
shall be in an amount that is an integral multiple of $100,000 and not less than
$1,000,000. 

     SECTION 2.6. Repayment of Term
Loans. The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of the Term Loan in 16 (sixteen) equal installments on each Principal
Payment Date. 

     SECTION 2.7. Evidence of
Debt.

          (a) Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Term Loan made by such Lender, including the amounts of principal and
interest payable to such Lender hereunder. 

          (b) The
Administrative Agent shall maintain accounts in which it shall record (i) the
amount of each Term Loan made hereunder and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Lender hereunder and (iii) the
amount of any sum received by the Administrative Agent hereunder for the account
of the Lenders and each Lender’s share thereof. 

          (c) The
entries made in the accounts maintained pursuant to paragraph (a) or (b) of this
Section shall be prima facie evidence of the existence and amounts
of the 

- 17 - 

obligations recorded therein; provided that the failure
of any Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Term Loans in accordance with the terms of this Agreement. 

          (d) Any
Lender may request that Term Loans made by it be evidenced by a promissory note.
In such event, the Borrower shall prepare, execute and deliver to such Lender a
promissory note payable to the order of such Lender (or, if requested by such
Lender, to such Lender and its registered assigns) and in a form approved by the
Administrative Agent. Thereafter, the Term Loans evidenced by such promissory
note and interest thereon shall at all times (including after assignment
pursuant to Section 10.4) be represented by one or more promissory notes in such
form payable to the order of the payee named therein (or, if such promissory
note is a registered note, to such payee and its registered assigns). 

     SECTION 2.8. Optional
Prepayments of Term Loans. The Borrower shall have the right at any time and
from time to time to prepay any Term Loan in whole or in part, provided
that: 

          (a) the
Borrower shall notify the Administrative Agent in writing of any prepayment
hereunder not later than 11:00 a.m., New York City time, at least five Business
Days before the date of prepayment; each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each Term Loan or
portion thereof to be prepaid; promptly following receipt of any such notice,
the Administrative Agent shall advise the Lenders of the contents thereof;

          (b) each
prepayment shall be applied to the Term Loans to be prepaid in inverse order of
maturity. Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.11 and any break funding payments required by Section
2.14. 

          (c) the
Debt Service Reserve Account is fully funded; 

          (d) the
Borrower shall be in compliance with the financial covenants set forth in
Section 6.10 after giving effect to any such prepayment (calculated on a
proforma basis with respect to the Historical Test Period and Future Test Period
for the Test Date most recently ended); and 

          (e) so
long as such prepayment is made with the proceeds of internally generated funds
(and not a refinancing) then no prepayment penalty shall apply; provided
that a prepayment penalty in an amount set forth on the following schedule shall
apply with respect to any prepayment made with proceeds of other than internally
generated funds: 

  	Period 	Percentage of Principal Amount Prepaid 
	Closing Date through but 

        excluding the second
      
anniversary of the 

        Closing Date 	3.5% 
	Second anniversary date 

        of the Closing
      Date to 
but excluding the third 	2.5% 

- 18 - 

  	anniversary of the 

        Closing Date 	 
	Third anniversary date of 

        the Closing Date to but
      
excluding the fourth 
anniversary of the 

        Closing Date 	1.5% 
	From and after the fourth 

        anniversary of the
      
Closing Date 	1.0% 

     SECTION 2.9. Mandatory
Prepayments.

          (a)
Excess Cash Flow. After the termination of the Availability Period, on
each date of delivery of financial statements as required by Sections 5.01(a)
and (b), the Borrower shall deliver to the Administrative Agent an Excess Cash
Flow Certificate for the fiscal quarter most recently ended and shall
simultaneously prepay outstanding Term Loans in the aggregate principal amount
equal to 25% of Excess Cash Flow as indicated on such certificate. The
Administrative Agent shall notify the Borrower, within 10 Business Days after
receipt of such certificate, whether it validates and approves such certificate,
and, if it does not validate and approve the certificate, advise the Borrower of
the amount of the Excess Cash Flow as calculated by the Administrative Agent. In
the absence of manifest error on the part of the Administrative Agent, the
Borrower shall adjust the amount to be paid by it on the following Principal
Payment Date by the amount necessary to take account of the discrepancy in such
the certificate, as certified by the Administrative Agent. Any such prepayment
shall be applied in accordance with clause (e) hereof. 

           (b)
Dispositions. The Borrower shall prepay the Term Loans in an amount equal
to 100% of the Net Cash Proceeds of any Disposition or series of Dispositions by
any Loan Party or any Subsidiary of a Loan Party pursuant to Section 6.3(a)(iii)
generating Net Cash Proceeds in excess of $250,000 in the aggregate after the
Closing Date. Each such prepayment shall be due promptly upon receipt by the
such Person of such Net Cash Proceeds and shall be applied as set forth in
clause (e) below. Notwithstanding the foregoing, the Borrower shall not be
required to apply any such proceeds in accordance with clause (e) to the extent
that the Borrower advises the Administrative Agent at the time of the relevant
Disposition that the Borrower intends to use the Net Cash Proceeds thereof to
finance one or more Operating Costs or Project Development Costs permitted by
this Agreement, and such Net Cash Proceeds are in fact so applied (or
contractually committed to be applied) to such expenditures within 180 days of
such Disposition (it being understood that Net Cash Proceeds shall be deemed to
be utilized in the same order in which they are received. Any such Net Cash
Proceeds which are not applied (or contractually committed to be applied) within
such 180 day period as required by the immediately preceding sentence shall
forthwith be applied in accordance with clause (e). Notwithstanding the
foregoing, the Borrower shall not be required to prepay any proceeds realized
form the sale of any Dispositions generated from the sale of assets exclusively
related to the Coyote Springs or Mimbres sites. In addition, the Borrower agrees
that the sale of any 

- 19 - 

drilling equipment no longer used in the business of the
Borrower shall be considered to be Disposition under Section 6.3(a)(iii) .

          (c)
Casualty Events. The Borrower shall prepay the Term Loans in an amount
equal to 100% of the Net Cash Proceeds received by any Loan Party or any
Subsidiary of a Loan Party in connection with any Casualty Event or series of
Casualty Events generating Net Cash Proceeds in excess of $1,000,000 in the
aggregate for any fiscal year. Each such prepayment shall be due promptly upon
receipt by such Person of such Net Cash Proceeds and shall be applied as set
forth in clause (e) below. Notwithstanding the foregoing, the Borrower shall not
be required to apply any such proceeds in accordance with clause (e) to the
extent that the Company advises the Administrative Agent at the time of the
relevant Casualty Event that it intends to use Net Cash Proceeds thereof to
finance the replacement or repair of such affected property, and such Net Cash
Proceeds are in fact so applied (or contractually committed to be applied) to
such affected Property within 360 days of receipt thereof (it being understood
that Net Cash Proceeds shall be deemed to be utilized in the same order in which
they are received). Any such Net Cash Proceeds which are not applied (or
contractually committed to be applied) within such 360 day period as required by
the immediately preceding sentence shall forthwith be applied as set forth in
clause (e) below. 

          (d)
Debt Issuances. The Borrower shall prepay the Term Loans in an amount
equal to 100% of the Net Cash Proceeds received by the Borrower or any
Subsidiary in connection with any Debt Issuance. Each such prepayment shall be
due promptly upon receipt by such Person of such Net Cash Proceeds and shall be
applied as set forth in clause (e) below. 

          (e)
Application. Any such prepayment shall, be applied (i) first, to the Debt
Service Reserve Account until fully funded and (ii) thereafter, pro rata to
installments of the Term Loan in inverse order of maturity until paid in full.

     SECTION 2.10. Fees.

          (a) The
Borrower agrees to pay to the Administrative Agent for the account of each
Lender a facility fee, which shall accrue at 0.250% per annum on the daily
amount of the unused Term Loan Commitment of such Lender during the Availability
Period, subject to the last sentence hereof. Accrued facility fees shall be
payable in arrears on the last day of March, June, September and December of
each year and on the date on which the Term Loan Commitments terminate,
commencing on the first such date to occur after the date hereof. All facility
fees shall be computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day). Such fees shall be payable on an amount of unused commitments for
each day equal to the amount of unused Commitments set forth in the table below
minus the amount of Term Loans outstanding on such day:

  	Period 	Amount of 
unused 

        Commitments 
	From the Closing Date through 
the last day of
      September, 	$ 3,000,000 

- 20 - 

  	2007 	  
	October 2007 	7,500,000 
	November 2007 	12,500,000 
	December 2007 	16,000,000 
	January 2008 	20,500,000 
	February 2008 	22,000,000 
	March 2008 	23,000,000 
	April 2008 through the end of 
the Availability Period
    	25,000,000 

For purposes of illustration, (a) if Term Loans in an amount in
excess of $9,000,000 were outstanding on September 15, 2007, no such fee would
be payable on such day, and (b) if Term Loans in an amount of $2,000,000 were
outstanding on September 15, 2007, such fee would be payable in respect of
$1,000,000 in unused Term Loan Commitments on such day.

           (b) All
fees payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, in the case of facility
fees and participation fees, to the Lenders. Fees paid shall not be refundable
under any circumstances. 

     SECTION 2.11. Interest.

       
   (a) The aggregate principal amount of all outstanding Term
Loans shall bear interest from the date such Term Loan is made until the date
the principal of such Term Loan is repaid at an annual rate equal the LIBOR Rate
for the Interest Period in effect for such Term Loan plus the Applicable Margin.

          (b)
Notwithstanding the foregoing, upon any Event of Default, all principal amounts
hereunder shall bear interest, after as well as before judgment, at a rate per
annum equal to 3% plus the rate otherwise applicable to such Term Loan as
provided in the preceding paragraph of this Section. 

          (c)
Accrued interest on each Term Loan shall be payable in arrears on each Interest
Payment Date; provided that (i) interest accrued pursuant to paragraph
(b) of this Section shall be payable on demand, and (ii) in the event of any
prepayment of any Term Loan, accrued interest on the principal amount prepaid
shall be payable on the date of such prepayment. Notwithstanding the foregoing,
for each Interest Payment Date prior to the first Principal Payment Date, any
interest payable with respect to the Term Loans on such Interest Payment Date
shall be capitalized and shall increase the unpaid principal amount of the Term
Loans, provided that any interest capitalized pursuant to the preceding
sentence shall not reduce amounts available for drawing under Section 2.1. 

- 21 - 

          (d) The
applicable LIBOR Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error. 

     SECTION 2.12. Alternate Rate
of Interest. If prior to the commencement of any Interest Period for any
Term Loan: 

          (a) the
Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining
the LIBOR Rate for such Interest Period; or 

          (b) the
Administrative Agent is advised by the Required Lenders that the LIBOR Rate for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders (or Lender) of making or maintaining their Term Loans (or its Term Loan)
included in such Borrowing for such Interest Period; 

then the Administrative Agent shall give notice thereof to the
Borrower and the Lenders by telephone or telecopy as promptly as practicable
thereafter and, until the Administrative Agent notifies the Borrower and the
Lenders that the circumstances giving rise to such notice no longer exist, (i)
no borrowing request shall be effective, and (ii) the Borrower and the Lenders
shall enter into negotiations in good faith with a view to establish a
satisfactory alternative basis for computing interest on the Term Loans. 

     SECTION 2.13. Increased
Costs.

          (a) If
any Change in Law shall: 

          (i) impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
any Lender; or 

          (ii) impose
on any Lender or the London interbank market any other condition affecting this
Agreement or Term Loans made by such Lender; 

and the result of any of the foregoing shall be to increase the
cost to such Lender of making or maintaining any Term Loan (or of maintaining
its obligation to make Term Loans) or to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender, such additional amount or
amounts as will compensate such Lender for such additional costs incurred or
reduction suffered. 

          (b) If
any Lender determines that any Change in Law regarding capital requirements has
or would have the effect of reducing the rate of return on such Lender’s capital
or on the capital of such Lender’s holding company, if any, as a consequence of
this Agreement or the Term Loans made by, such Lender to a level below that
which such Lender or such Lender’s holding company could have achieved but for
such Change in Law (taking into consideration such Lender’s policies and the
policies of such Lender’s or holding company with respect to capital adequacy),
then from time to time the Borrower will pay to such Lender, as the case may be,
such additional amount or amounts as will compensate such Lender or such
Lender’s holding company for any such reduction suffered. 

- 22 - 

          (c) A
certificate of a Lender setting forth the amount or amounts necessary to
compensate such Lender or its holding company, as the case may be, as specified
in paragraph (a) or (b) of this Section shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay such Lender,
as the case may be, the amount shown as due on any such certificate within 10
days after receipt thereof. 

          (d)
Failure or delay on the part of any Lender to demand compensation pursuant to
this Section shall not constitute a waiver of such Lender’s right to demand such
compensation; provided that the Borrower shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the 270-day period referred
to above shall be extended to include the period of retroactive effect thereof.

     SECTION 2.14. Break Funding
Payments. In the event of (a) the payment of any principal of any Term Loan
other than on the last day of an Interest Period applicable thereto (including
as a result of an Event of Default), (b) the failure to borrow any Term Loan on
the date specified in any notice delivered pursuant hereto, then, in each such
event, the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. Such loss, cost or expense to any Lender shall be
deemed to include an amount determined by such Lender to be the excess, if any,
of (i) the amount of interest which would have accrued on the principal amount
of such Term Loan had such event not occurred, at the LIBOR Rate that would have
been applicable to such Term Loan, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, for the period that would have been the Interest Period for
such Term Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate on demand. 

     SECTION 2.15. Taxes.

          (a) Any
and all payments by or on account of any obligation of the Borrower hereunder
shall be made free and clear of any present and future tax liability and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law. 

- 23 - 

          (b) In
addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law. 

          (c) The
Borrower shall indemnify the Administrative Agent and each Lender, within 10
days after written demand therefor, for the full amount of any Indemnified Taxes
or Other Taxes paid by the Administrative Agent or such Lender, as the case may
be, on or with respect to any payment by or on account of any obligation of the
Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or by the Administrative Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error. 

          (d) As
soon as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent. 

          (e) Any
Foreign Lender that is entitled to an exemption from or reduction of withholding
tax under the law of the jurisdiction in which the Borrower is located, or any
treaty to which such jurisdiction is a party, with respect to payments under
this Agreement shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made without
withholding or at a reduced rate. 

          (f) If
the Administrative Agent or a Lender determines, in its sole discretion, that it
has received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.15, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.15 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided, that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent or such Lender in the event
the Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This Section shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person. 

     SECTION 2.16. Payments Generally;
Pro Rata Treatment; Sharing of Set-offs.

- 24 - 

          (a) The
Borrower shall make each payment required to be made by it hereunder (whether of
principal, interest or fees, or of amounts payable under Section 2.13, 2.14 or
2.15, or otherwise) prior to 12:00 noon, New York City time, on the date when
due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made into account number 2000193000423 maintained by the Administrative
Agent with Wachovia Bank, N.A. located in New York, New York, except that
payments pursuant to Sections 2.13, 2.14, 2.15 and 10.3 shall be made directly
to the Persons entitled thereto. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars. 

          (b) If
at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, interest and fees
then due hereunder, such funds shall be applied (i) first, towards payment of
interest and fees then due hereunder, ratably among the parties entitled thereto
in accordance with the amounts of interest and fees then due to such parties,
and (ii) second, towards payment of principal then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal then
due to such parties. 

          (c) If
any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Term Loans resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Term Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Term Loans of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Term Loans; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Term Loans to any
assignee or participant, other than to the Loan Parties or any Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation. 

          (d)
Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Administrative Agent for
the 

- 25 - 

account of the Lenders hereunder that the Borrower will not
make such payment, the Administrative Agent may assume that the Borrower has
made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to the Lenders, as the case may be, the amount due.
In such event, if the Borrower has not in fact made such payment, then each of
the Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation. 

          (e) If
any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.4(a), 2.16(d) or 10.3(c) , then the Administrative Agent may,
in its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender’s obligations under such Sections until all such
unsatisfied obligations are fully paid. 

     SECTION 2.17. Mitigation
Obligations. If any Lender requests compensation under Section 2.13, or if
the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Term Loans hereunder or to assign its rights
and obligations hereunder to another of its offices, branches or affiliates, if,
in the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as the
case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

ARTICLE III. 
REPRESENTATIONS AND
WARRANTIES 

     Each Loan Party represents and
warrants to the Lenders that: 

     SECTION 3.1. Status and
Power. The Borrower is a corporation duly incorporated and validly existing
under the laws of the State of Delaware. The Guarantor is a corporation duly
incorporated and validly existing under the laws of the State of Nevada. Each
Loan Party is duly qualified, registered or licensed in all jurisdictions where
such qualification, registration or licensing is required except where the lack
of such qualification, registration or licensing could not reasonably be
expected to have a Material Adverse Effect. Each Loan Party has all requisite
corporate capacity, power and authority to own, hold under license or lease its
properties, to carry on its business as now conducted and to otherwise enter
into, and carry out the Transactions. None of the Loan Parties nor any of their
property has any immunity from jurisdiction of any court or from any legal
process (whether through service, notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise). 

     SECTION 3.2. Authorization;
Enforceability. All necessary action, corporate or otherwise, has been taken
to authorize the execution, delivery and performance by each Loan 

- 26 - 

Party of the Loan Documents to which it is a party. Each Loan
Party has duly executed and delivered the Loan Documents to which it is a party.
The Loan Documents to which each Loan Party is a party are legal, valid and
binding obligations of such Loan Party, enforceable against such Loan Party by
the other parties thereto in accordance with their respective terms, except to
the extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance and
other similar laws of general application limiting the enforcement of creditors’
rights generally and the fact that the courts may deny the granting or
enforcement of equitable remedies. 

     SECTION 3.3. No Conflicts.
The execution, delivery and performance by each Loan Party of the Loan Documents
and Material Contracts to which it is a party, and the consummation of the
transactions contemplated herein and therein (i) do not conflict with, result in
any breach or violation of, or constitute a default under the terms, conditions
or provisions of (A) the articles of incorporation or by-laws (or comparable
constituting documents) of, or any shareholder agreement relating to, any Loan
Party or (B) any law, regulation, judgment, decree or order binding on or
applicable to any Loan Party or to which its property is subject or any
agreement, lease, license, permit or other instrument to which any Loan Party is
a party or is otherwise bound or by which any Loan Party benefits or to which
any of its property is subject except, in each case, to the extent that such
conflict does not and could not reasonably be expected to have a Material
Adverse Effect and (ii) do not require the consent or approval of any
Governmental Authority or any other Person which has not been obtained and
provided to the Administrative Agent. 

     SECTION 3.4. Financial
Statements. The Borrower’s unaudited consolidated financial statements
(consisting of a balance sheet, statement of operations, statement of changes in
shareholder’s deficit, and statement of cash flows) for the quarter ended March
31, 2007, were prepared in accordance with GAAP consistently applied (except
that certain information and footnote disclosures normally included in financial
statements prepared in accordance with GAAP have been omitted or condensed and
subject to normal and recurring year-end adjustments which will not be
individually or in the aggregate material) in accordance with past practice and
no Material Adverse Change has occurred since such date. Such financial
statements fairly present the financial condition of the Borrower as at the date
thereof and the financial statements fairly present the results of operations,
cash flow and income of the Borrower during the fiscal period covered thereby.

     SECTION 3.5. Intentionally
Omitted. 

     SECTION 3.6. Litigation,
etc. Except as described in Section 3.6 of the Disclosure Schedule, there
are no actions, suits, investigations, claims or proceedings which have been
commenced or, to the knowledge of any Loan Party, have been threatened in
writing against or affecting any Loan Party before any Governmental Authority
which contest any of the transactions contemplated in any of the Loan Documents
or Material Contracts. There are no actions, suits, investigations, claims or
proceedings which have been commenced or, to the knowledge of any Loan Party,
have been threatened in writing against or affecting any Loan Party before any
Governmental Authority which could reasonably be expected to have a Material
Adverse Effect. 

- 27 - 

     SECTION 3.7. Title to
Assets. Except as described in Section 3.7 of the Disclosure
Schedule, each Loan Party has a good and marketable title to all of its property
and assets which constitute Collateral, free from any Liens other than the
Permitted Liens, and no Person has any agreement or right to acquire any of the
Collateral except as permitted hereunder. 

     SECTION 3.8. Conduct of
Business. No Loan Party is in violation of any mortgage, franchise, license,
certificate of approval, permit, judgment, decree, order, statute, rule or
regulation relating in any way to itself or to the operation of its business or
to its property or assets in a manner which could reasonably be expected to have
a Material Adverse Effect. Except as set forth in Section 3.8 of the Disclosure
Schedule, each Loan Party has all licenses, certificates of approval, permits,
registrations, approvals and consents which are required to own its properties
and assets and to operate its businesses where they are currently being
operated, other than any such items the absence of which could not reasonably be
expected to have a Material Adverse Effect. 

     SECTION 3.9. Labor and
Employment Matters. Except as described in Section 3.9 of the Disclosure
Schedule, there are no material employment agreements covering management
of the Borrower and there are no collective bargaining agreements or other labor
agreements covering any employees of the Borrower. Hours worked by and payment
made to employees of the Borrower have not been in violation of any Applicable
Law dealing with such matters. All payments due and payable from the Borrower on
account of employee health and welfare insurance have been paid or accrued as a
liability on the books of the Borrower. 

     SECTION 3.10. No Default.
No Default or Event of Default exists or would result from the incurring by any
Loan Party of its respective Obligations. No Loan Party is in default under or
with respect to any Material Contract or any other contractual obligation in any
respect which, individually or together with all such defaults, could reasonably
be expected to have a Material Adverse Effect. 

     SECTION 3.11. Tax Returns and
Taxes. Except as described in Section 3.11 of the Disclosure Schedule,
each Loan Party has filed all tax returns and tax reports required by law to
have been filed by it and has paid all taxes and governmental charges thereby
shown to be owing, except any such taxes or charges which are being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its books. 

     SECTION 3.12. Withholding and
Other Taxes. Assuming the Loans are funded by bank branches in London or the
United States, no income, stamp or other taxes or levies, imposts, deductions,
fees, duties, compulsory loans, withholdings or other charges of any nature
whatsoever are or will be, under Applicable Law as in effect on the date hereof,
imposed, assessed, levied or collected by the United States or any political
subdivision or taxing authority thereof or therein on or in respect of
principal, interest or fees payable to the Lenders or the Administrative Agent
hereunder or under any other Loan Document, except, as of the date hereof, tax
payable on net income under the laws of the United States or any State thereof.
To the extent this representation is repeated or deemed repeated pursuant to
this Agreement or other Loan Documents, this representation shall continue to be
true and correct if the Borrower discloses in writing to the Administrative
Agent any change as to this representation.

- 28 - 

     SECTION 3.13. Material
Contracts. The copies of each Material Contract and of any amendments
thereto provided or to be provided by the Loan Parties to the Administrative
Agent are, or when delivered will be, true and complete copies of such
agreements and documents and no consent or other further action is required for
the effectiveness and enforceability of any of such agreements heretofore
provided and each such agreement is, or when executed and delivered will be, in
full force and effect and enforceable by the relevant Loan Party, except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance and other similar
laws of general application limiting the enforcement of creditors’ rights
generally and the fact that the courts may deny the granting or enforcement of
equitable remedies. 

     SECTION 3.14. Compliance with
Environmental Laws. Except as described in Section 3.14 of the Disclosure
Schedule, as of the date hereof, the operations and properties of the
Borrower are in compliance with applicable Environmental Laws, except where (i)
appropriate remedial action acceptable to the Borrower and the applicable
Governmental Authority is (or is in the process of) being taken or (ii) failure
to so comply, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. The Borrower has designed the Project in
compliance in all material respects with applicable Environmental Laws and the
Administrative Agent and the Lenders are fully indemnified by the Loan Parties
against any future liabilities arising under any applicable Environmental Laws.

     SECTION 3.15. Solvency.
After giving effect to the transactions contemplated by this agreement and the
other Loan Documents (including the receipt of equity proceeds as contemplated
by Section 4.1(m)), and before and after giving effect to each Term Loan, each
Loan Party is, and the Loan Parties on a consolidated basis are, Solvent. 

     SECTION 3.16. Locations of
Tangible Assets. The addresses of all locations of the inventory, equipment
and other tangible assets of the Borrower comprising part of the Collateral
(other than inventory in transit) are as set out in Section 3.16 of the
Disclosure Schedule. With respect to inventory located at a public warehouse,
the Borrower has not issued a negotiable document of title with respect thereto.

     SECTION 3.17. Consents and
Approvals for the Project. Except as set forth in Section 3.17 of the
Disclosure Schedule, all Approvals and all concessions, mining rights, water
rights, easements, mining and civil usufructs, surface rights, rights of way,
property rights and other consents between the Borrower and third parties
necessary for the development, construction and operation of the Project and all
licenses or other rights to use technology have been obtained, are in full force
and effect and are sufficient to permit (A) the development and construction of
the Project in all material respects as contemplated by the Construction
Schedule and Capital Spending Plan and the Feasibility Study, (B) the operation
of the Project in all material respects as contemplated by the Feasibility Study
and (C) the execution, delivery and performance by any Loan Party of its
obligations under the Material Contracts, in each case other than those which
(x) are not now necessary and which are expected to be obtained in the ordinary
course of business by the time they are necessary or (y) the failure to have or
to obtain will not now and could not reasonably be expected to have a Material
Adverse Effect. 

- 29 - 

     SECTION 3.18. Consents and
Approvals for the Security. No consents, approvals, acknowledgements,
undertakings, non-disturbance agreements, directions or other documents or
instruments which have not already been provided to the Administrative Agent are
required to be entered into by any Person (i) to make effective the Security
created or intended to be created by the Loan Parties in favor of the
Administrative Agent pursuant to the Security Documents, (ii) to ensure the
perfection and the intended priority of such Security other than financing
statements and other registrations made in connection with such Security or
(iii) to implement the transactions contemplated by the Loan Documents. 

     SECTION 3.19. Intentionally
Omitted. 

     SECTION 3.20. Subsidiaries. The
Borrower has no Subsidiaries, other than Cochise. 

     SECTION 3.21. Mining
Properties. The Mining Properties have been validly granted to and
registered in the name of the Borrower, are owned by the Borrower and are in
full force and effect and in good standing. Except as set forth in Section 3.7
of the Disclosure Schedule, no Person other than the Borrower and, to the extent
provided in the Security Documents, the Administrative Agent, has any right,
title or interest in, to or under the Mining Properties or in the property and
rights encompassed thereby other than Permitted Liens. Taken as a whole, the
Mining Properties are sufficient in duration, scope, content and effect to
permit the Borrower to conduct all activities contemplated in the Feasibility
Study to be conducted by it over the time periods specified therein.

     SECTION 3.22. Feasibility
Study. As of the date hereof, the Feasibility Study (as augmented by the
Construction Schedule and Capital Spending Plan and the Financial Model) does
not, taken as a whole, include any untrue statement of a material fact or omit a
material fact necessary to make the information therein not misleading. As of
the date hereof, the Borrower believes that, taken as a whole, except for the
assumptions relating to metal prices to the extent such prices are not hedged,
interest rates, exchange rates and the rate of inflation (which assumptions
reflect solely a choice of a reasonable manner of calculation and presentation),
(i) the Feasibility Study (as augmented by the Construction Schedule and Capital
Spending Plan and Financial Model), taken as a whole, is fair and reasonable in
light of the Borrower’s expectations as of the date hereof with respect to the
Project, (ii) the assessment of reserves of the Project contained in the
Feasibility Study (as augmented by the Construction Schedule and Capital
Spending Plan and Financial Model) is fair and reasonable, and (iii) the cash
flow calculations contained in the Feasibility Study (as augmented by the
Construction Schedule and Capital Spending Plan and Financial Model) are based
on assumptions which, at the date hereof, are fair and reasonable in light of
the Borrower’s expectations with respect to the Project. 

     SECTION 3.23. Financial Model,
Construction Schedule and Capital Spending Plan. The Borrower believes that,
except for the assumptions relating to metal prices to the extent such prices
are not hedged, interest rates, exchange rates and the rate of inflation (which
assumptions reflect solely a choice of a reasonable manner of calculation and
presentation), (i) the Construction Schedule and Capital Spending Plan, and the
Financial Model, taken as a whole, are fair and reasonable in light of the
Borrower’s expectations and information as of the date hereof with respect to
the Project and (ii) taken as a whole, the cash flow calculations contained 

- 30 - 

in the Financial Model are based on assumptions which, at the
date hereof, are fair and reasonable in light of the Borrower’s expectations and
information with respect to the Project. 

     SECTION 3.24. Project
Information. Except as otherwise expressly provided herein, the information
provided by or on behalf of the Loan Parties in writing to the Administrative
Agent (except to the extent such information relates to Persons other than the
Loan Parties) but excluding metal prices to the extent such prices are not
hedged, interest rates, exchange rates and the rate of inflation (which
assumptions reflect solely a choice of a reasonable manner of calculation and
presentation), taken as a whole, does not contain any untrue statement of
material fact (or omit any material fact or circumstance necessary in order to
make the information contained therein not misleading) known to the Borrower at
the time of execution of this Agreement.

     SECTION 3.25. Intellectual
Property. The Borrower owns or is licensed or otherwise has the right to use
all Intellectual Property that is used in the operation of its business without
conflict with the rights of any other Person (other than any Intellectual
Property the absence of which or any such conflict with respect to which could
not reasonably be expected to have a Material Adverse Effect). The Borrower has
not received any notice of any claim of infringement or similar claim or
proceeding relating to any of the Intellectual Property which if determined
against the Borrower could reasonably be expected to have a Material Adverse
Effect.

     SECTION 3.26. Liens.
Subject to the requisite registrations of the Security Documents or filings
thereof, the Liens granted to the Administrative Agent pursuant to the Security
Documents are fully perfected first priority Liens in and to the Collateral,
subject only to Permitted Liens. 

     SECTION 3.27. Insurance.
All insurance required to be maintained pursuant to Section 5.5 is in full
force and effect. 

     SECTION 3.28. Ranking. The
Term Loans shall rank at least pari passu with all other unsecured
indebtedness of the Loan Parties, except for those which are preferred by
provisions of applicable statutory law.

ARTICLE IV. 
CONDITIONS 

     SECTION 4.1. Closing Date.
The obligations of the Lenders to make Term Loans hereunder shall not become
effective until the second Business Day after the date on which each of the
following conditions is satisfied in a manner satisfactory to the Administrative
Agent (or waived in accordance with Section 10.2): 

          (a) The
Administrative Agent shall have received executed versions of each of the Loan
Documents from each of the parties thereto, including the Borrower. 

          (b) Each
of the Material Contracts set forth on clause (A) of Schedule 1.1 shall be in
form and substance reasonably satisfactory to the Administrative Agent and shall
have been executed by each of the parties thereto and delivered to the
Administrative Agent. Each of 

- 31 - 

the Consent Agreements shall be in form and substance
satisfactory to the Administrative Agent and shall have been executed by each of
the parties thereto and delivered to the Administrative Agent.

          (c) The
Administrative Agent and the Borrower shall have agreed on (i) the Initial
Financial Model, the Construction Schedule and Capital Spending Plan, and the
Environmental Plan and (ii) the operating budgets (which shall include an
operating budget for contract mining or lease payments for mining equipment),
copies of which shall have been delivered to the Administrative Agent (it being
understood that the initial budgets shall be included as part of the Initial
Financial Model). 

          (d)
Evidence that the Existing Bridge Loan Facility has been repaid in full and all
Liens securing the obligations thereunder have been released. 

          (e)
Evidence that the Forward Sale Price Protection Program has been implemented.

          (f) The
Independent Technical Consultant shall have been appointed. 

          (g) The
Administrative Agent and the Borrower shall have agreed on the forms of
Completion Certificates and the tests for Completion for purposes thereof. 

          (h) The
Administrative Agent shall have received a favorable written opinion (addressed
to the Administrative Agent and the Lenders and dated the Closing Date) of (i)
Ballard Spahr Andrews & Ingersoll LLP, Arizona counsel for the Borrower, and
(ii) Bingham McCutchen LLP, New York counsel to the Administrative Agent,
covering such matters relating to the Loan Parties, this Agreement or the
Transactions as the Administrative Agent shall reasonably request. 

          (i) The
Administrative Agent shall have received such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Loan Parties, the authorization
of the Transactions and any other legal matters relating to the Borrower and the
Guarantor, this Agreement or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel, including, but not
limited to: 

      
   (i) a copy of the certificate of incorporation and by-laws or
other founding documentation of each of the Borrower and the Guarantor; 

          (ii) a copy
of the resolutions of the board of directors or other appropriate decision
making body of each of the Borrower and the Guarantor authorizing the conclusion
and execution of each of the Loan Documents; and 

     
    (iii) specimen signatures of each of the authorized
officers of the Borrower for the purposes of implementation of the Loan
Documents. 

          (j) The
Administrative Agent shall have received: 

- 32 - 

          (i)
evidence that all insurance required to be maintained pursuant to the Loan
Documents has been obtained and is in effect, together with evidence that the
Administrative Agent has been named as “additional insured” and “loss payee”
under each policy of insurance; 

          (ii)
evidence that the Borrower has obtained all Approvals necessary to commence
implementation of the Construction Schedule and Capital Spending Plan; 

      
   (iii) to the extent relevant, searches of Uniform Commercial
Code or other similar records or filings in the jurisdiction of formation of the
Borrower, the jurisdiction of the chief executive office of the Borrower and
each jurisdiction where any Collateral is located or where a filing would need
to be made in order to perfect the Administrative Agent’s security interest in
the Collateral, copies of the financing statements on file in such jurisdictions
and evidence that no Liens exist other than Liens permitted by Section
6.2; 

      
   (iv) all certificates evidencing all certificated equity
interests pledged to the Administrative Agent pursuant to the Security
Documents, together with duly executed in blank, undated stock powers attached
thereto; 

      
   (v) in the case of any real property Collateral, a title
insurance policy together with proof of payment of all fees and premiums for
such policy, from the applicable title insurance Loan Party and in amounts
satisfactory to the Administrative Agent, insuring the interest of the
Administrative Agent as mortgagee; 

      
   (vi) all applicable “Know Your Customer” client identification
documentation; 

     
    (vii) in the case of any personal property Collateral
located at a premises leased the Borrower, such estoppel letters, consents and
waivers from the landlords on such real property as may be required by the
Administrative Agent; and 

      
   (viii) the Collateral Accounts shall have been established
with a bank acceptable to the Administrative Agent and the Collateral Account
Agreement shall have been executed by such bank and the Lenders, the
Administrative Agent and the Borrower and delivered to the Administrative Agent.

          (k) The
Lenders shall have completed a due diligence investigation of the Project, the
Borrower and its subsidiaries in scope, and with results, satisfactory to the
Lenders, and shall have been given such access to the management records, books
of account, contract and properties of Borrower and its subsidiaries and shall
have received such financial, business and other information regarding the
Project and each of the foregoing Persons and their businesses as they shall
have reasonably requested.

          (l) The
Administrative Agent shall have received certification that there does not exist
(a) any order, decree, judgment, ruling or injunction which restrains the
consummation of the Loan Documents in the manner contemplated hereby, and (b)
any pending or threatened 

- 33 - 

action, suit, investigation or proceeding which is reasonably
likely to be adversely determined and, if adversely determined, could reasonably
be expected to have a Material Adverse Effect. 

          (m) The
Borrower shall have received additional equity proceeds in an amount not less
than $23,000,000 on terms acceptable to the Administrative Agent. 

          (n) The
Administrative Agent shall have received a certificate, dated the Closing Date
and signed by a Financial Officer, confirming compliance with the conditions set
forth in paragraphs (a) and (b) of Section 4.2. 

          (o) The
Administrative Agent shall have received all fees, costs and expenses and other
amounts due and payable on or prior to the Closing Date in connection with the
Transaction, including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder. 

The Administrative Agent shall notify the Borrower and the
Lenders of the Closing Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Term Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 10.2) at or prior to 3:00 p.m., New
York City time, on September 30, 2007 (and, in the event such conditions are not
so satisfied or waived, the Term Loan Commitments shall terminate at such time).

     SECTION 4.2. Additional
Conditions. The obligation of each Lender to make a Term Loan on the
occasion of any Borrowing is subject to the satisfaction of the following
conditions: 

          (a) The
representations and warranties of the Borrower set forth in this Agreement shall
be true and correct on and as of the date of such Borrowing. 

          (b) At
the time of and immediately after giving effect to such Borrowing no Default
shall have occurred and be continuing. 

Each Borrowing shall be deemed to constitute a representation
and warranty by the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section. 

ARTICLE V. 
AFFIRMATIVE COVENANTS 

     Until the Term Loan Commitments
have expired or been terminated and the principal of and interest on each Term
Loan and all fees payable hereunder shall have been paid in full, the Loan
Parties covenant and agree with the Lenders that: 

     SECTION 5.1. Financial
Statements and Reporting. The Borrower, will furnish the Administrative
Agent and each Lender with the following documents, statements and reports (by
email and in pdf format): 

          (a)
Annual Financial Statements. Within 90 days after the end of each fiscal
year of the Borrower, its audited consolidated balance sheet and related
statements of operations, stockholders’ equity and cash flows as of the end of
and for such year, setting forth, in the case 

- 34 - 

of statements of operations and cash flows, in comparative form
the figures for the previous fiscal year, all reported on by Mayer Hoffman
McCann P.C. or other independent public accountants of recognized national
standing to the effect that such consolidated financial statements present
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated subsidiaries in accordance with
GAAP consistently applied. 

          (b)
Quarterly and Semi-Annual Financial Statements. For the first 3 years
after the Closing Date, 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, and after such 3 year period,
within 45 days after the end of each fiscal half year, the Borrower shall
deliver its consolidated balance sheet and related statements of operations,
stockholders’ equity and cash flows as of the end of and for such fiscal quarter
or half year, as applicable and the then elapsed portion of the fiscal year,
setting forth, in the case of statements of operations and cash flows, in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Borrower and
its consolidated subsidiaries in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of footnotes. 

          (c)
Quarterly Financial Projections. As soon as available, but in any event
at least 30 days prior to the close of each fiscal quarter of the Borrower, a
quarterly projection with respect to the operations of the Borrower for the next
four fiscal quarters. Such projections shall be certified by the Financial
Officer of the Borrower to the effect that such projections have been prepared
on the basis of sound financial planning practice and that such Financial
Officer has no reason to believe that they are misleading in any material
respect based upon the knowledge and information available at the time of
creation, update, and/or certification. 

          (d)
Certificate of Compliance. Concurrently with any delivery of financial
statements under clause (a) or (b) above, a certificate of a Financial Officer
of the Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Section 6.10 and (iii)
stating whether any change in GAAP or in the application thereof has occurred
since the date of the audited financial statements referred to in Section 3.4
and, if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate. 

          (e)
Certificate of Accounting Firm. Concurrently with any delivery of
financial statements under clause (a) above, a certificate of the accounting
firm that reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial statements of
any Default (which certificate may be limited to the extent required by
accounting rules or guidelines). 

          (f)
Construction Progress Reports. As soon as available, but in no event more
than 20 days after the end of each calendar month prior to Completion, a summary
of construction of the Project during such month in a form agreed to by the
Borrower and the Administrative Agent, describing (i) physical progress and
expenditure during such month, (ii) cumulative expenditure through the end of
such month, (iii) variations of such progress and 

- 35 - 

expenditure from that set forth in the Construction Schedule
and Capital Spending Plan, (iv) the Borrower’s then current estimates of total
Project Development Costs and of the date of Start-up of Commercial Production
and the Completion Date and (v) any fact or occurrence of which the Borrower is
aware that (x) may reasonably be expected to increase the aggregate Project
Development Costs above those in the Construction Schedule and Capital Spending
Plan, delay Start-up of Commercial Production or the Completion Date beyond the
then-currently estimated dates therefor or have a Material Adverse Effect on the
performance of the Project when completed or (y) may reasonably be expected to
render unreasonable or inappropriate any material assumption on which the
Financial Model or the Construction Schedule and Capital Spending Plan was
based, and the anticipated manner and timing of actions proposed to be taken by
the Borrower in reaction to any such fact or occurrence. 

          (g)
Operating Reports. As soon as available but in no event more than 20 days
after the end of each fiscal quarter after the earlier of the date of Completion
or Start-up of Commercial Production, a summary of such month’s or such fiscal
quarter’s operations and a summary of the fiscal year-to-date operations in a
form agreed to by the Borrower and the Administrative Agent, in each case
compared to the budgets and forecasts delivered pursuant to clause (h) above,
including information in reasonable detail concerning (i) Project production and
shipment of Project production during such period and variations from the
related projections for such period reflected in the Financial Model, (ii) the
Borrower’s inventory of product at the end of such period, (iii) revenues
generated during such period from the sale of product, (iv) Operating Costs
during such period as compared to the Financial Model, (v) costs constituting
Capital Expenditures during such period as compared to the Construction Schedule
and Capital Spending Plan, (vi) the Borrower’s most recent cash planning
forecast covering at least the next following month or fiscal quarter, as the
case may be, and (vii) any material developments during such period in Project
operation, including material technical problems, discovery of any material
defects in the physical facilities of the Project, material interruptions to
operation or material labor difficulties. 

          (h)
Budget. As soon as available, but in any event at least 30 days prior to
the close of each fiscal year of the Borrower, the Borrower’s budget and
operating plan for the following fiscal year, such budget to be in a form
reasonably satisfactory to the Administrative Agent. 

          (i)
Environmental Compliance. Any material update of the Environmental Plan
within 30 days after such update is available. The Borrower shall promptly, but
in no event later than 5 Business Days after the Borrower obtains knowledge
thereof, deliver written notice to the Administrative Agent (for delivery to
each Lender) of the occurrence of (i) any material environmental accident or
spill affecting the Borrower or the Project, (ii) any other condition, event or
circumstance that results in non-compliance by the Borrower or the Project with
any applicable Environmental Law in any material respect and (iii) any other
material condition, event or circumstance which is listed as a reportable event
under the Environmental Plan then in effect. In addition, the Borrower shall,
upon the request of the Administrative Agent, but in any event no more
frequently than annually (unless an Event of Default shall have occurred and be
continuing) provide a report to the Administrative Agent with regard to the
Borrower’s compliance with applicable Environmental Laws in a form as reasonably
agreed between the Borrower and the Administrative Agent.

- 36 - 

          (j)
Insurance Certification. As soon as available, but in no event more than
30 days after the end of each fiscal year of the Borrower, a certification by
the Borrower’s insurance broker confirming insurance coverage and payment of
premiums.

          (k)
Other Information. Promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of the Borrower, or compliance with the terms of this Agreement, as the
Administrative Agent or any Lender may reasonably request. 

Any delivery required to be delivered by clauses (a) and (b) of
this Section by the Borrower shall be deemed to be delivered to the
Administrative Agent and the Lender upon the filing of such items with the
Securities and Exchange Commission or other applicable securities commission,
provided that such items are readily available for public viewing.

     SECTION 5.2. Notices of
Material Events. The Borrower will furnish to the Administrative Agent and
each Lender prompt written notice of the following: 

          (a) the
occurrence of any Default; 

          (b) the
filing or commencement of any action, suit or proceeding by or before any
arbitrator or Governmental Authority against or affecting the Borrower or any
Affiliate thereof that, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect; 

          (c) the
occurrence of any ERISA Event that, alone or together with any other ERISA
Events that have occurred, could reasonably be expected to result in liability
of the Borrower and its Subsidiaries in an aggregate amount exceeding $250,000;
and 

          (d) any
other development that results in, or could reasonably be expected to result in,
a Material Adverse Effect. 

Each notice delivered under this Section shall be accompanied
by a statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto. 

     SECTION 5.3. Existence;
Conduct of Business. The Borrower will do or cause to be done all things
reasonably necessary to preserve, renew and keep in full force and effect its
legal existence and the rights, licenses, permits, privileges and franchises
material to the conduct of its business. 

     SECTION 5.4. Payment of
Obligations. Each Loan Party shall pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
such Loan Party has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.

- 37 - 

     SECTION 5.5. Maintenance of
Properties; Insurance. Each Loan Party will (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations. 

     SECTION 5.6. Books and
Records; Inspection Rights. Each Loan Party will keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. Each Loan Party will
permit any representatives designated by the Administrative Agent or any Lender,
upon reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at
such reasonable times and as often as reasonably requested. 

     SECTION 5.7. Compliance with
Laws. Each Loan Party will comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. 

     SECTION 5.8. Use of
Proceeds. The proceeds of the Term Loans will be used only for the purposes
of (a) repayment of Existing Bridge Loan Facility (to the extent remaining
unpaid) and (b) costs and expenses in connection with redevelopment of the
Project. No part of the proceeds of the Term Loans will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board of Governors of the Federal Reserve System, including
Regulations T, U and X.

     SECTION 5.9. Project; Construction;
Etc. 

          (a) The
Borrower shall not change in any material respect the purpose or scope of the
Project from that set forth in the Feasibility Study (as augmented by the
Construction Schedule and Capital Spending Plan) unless approved in writing by
the Required Lenders. The physical facilities to be constructed and owned by the
Borrower shall be substantially the same as those described in the Feasibility
Study (as augmented by the Construction Schedule and Capital Spending Plan) and
shall be constructed pursuant to and substantially in accordance with the
Construction Schedule and Capital Spending Plan. 

          (b) The
Borrower shall enforce against the other parties to the Material Contracts any
rights (including warranty rights) under the Material Contracts, except to the
extent non-enforcement thereof could not reasonably be expected to have a
Material Adverse Effect. 

     SECTION 5.10. Updated Financial
Model.

          (a) On
or prior to the date of delivery of financial statements provided for in
Sections 5.1(a) and (b), the Borrower shall deliver to the Administrative Agent
an updated Financial Model. Each updated Financial Model shall (i) be in
substantially the form of, and contain the same type of data, projections,
forecasts, calculations, assumptions and other 

- 38 - 

information as, the Financial Model delivered on the Closing
Date (the “Initial Financial Model”), but shall be updated to
include actual financial results and other current financial information
(including with respect to the price for unhedged copper production) and (ii)
provide an explanation of any deviation in the amount attributed to any line
item specified in such Financial Model where such deviation is 10% or more of
the amount attributed to the same line item in the Initial Financial Model
unless such deviation has been explained and incorporated into a prior Financial
Model; and (iii) include such other information as the Administrative Agent may
reasonably request. 

          (b) The
Administrative Agent shall have 10 days from the date of receipt of an updated
Financial Model to accept or reject such updated Financial Model. In the event
that the Administrative Agent accepts such updated Financial Model, it shall
become the current Financial Model. The Administrative Agent shall promptly
review such updated Financial Model, and if the Administrative Agent does not
accept such updated Financial Model, it shall promptly notify the Borrower
thereof, the Borrower shall, within 10 Business Days and after consultation with
the Administrative Agent as to the reasons therefor, submit an appropriately
revised Financial Model. Following such resubmission, the process shall be
repeated until the Financial Model has been accepted by the Administrative
Agent. To the extent that a fiscal quarter commences without a Financial Model
having been approved in accordance with this Section 5.10, the previously
approved Financial Model shall remain in effect until a revised Financial Model
shall have been approved. 

     SECTION 5.11. Further
Assurances. Each Loan Party will, and will cause each of its Subsidiaries
to, cooperate with the Lenders and the Administrative Agent and execute such
further instruments and documents as the Lenders or the Administrative Agent
shall reasonably request to carry out to their satisfaction the transactions
contemplated by this Agreement and the other Loan Documents. If the Borrower
enters into any Material Contract after the Closing Date, it shall provide a
Consent Agreement to such Material Contract in a form reasonably acceptable to
the Administrative Agent (if such Material Contract has a value in excess of
$1,000,000, as determined by the Administrative Agent in consultation with the
Borrower).

ARTICLE VI.
 NEGATIVE COVENANTS

     Until the Term Loan Commitments
have expired or terminated and the principal of and interest on each Term Loan
and all fees payable hereunder have been paid in full, the Borrower covenants
and agrees with the Lenders that: 

     SECTION 6.1. Indebtedness.
The Loan Parties will not create, incur, assume or permit to exist any
Indebtedness, except

          (a)
Indebtedness created hereunder;

          (b)
Indebtedness in respect of capital leases and purchase money obligations for
fixed or Capital Assets within the limitations set forth in Section 6.2(d);
provided, that the aggregate amount of all such Indebtedness at any one
time outstanding shall not exceed $250,000; and 

- 39 - 

          (c)
Indebtedness in respect of letters of credit issued in connection with
obligations arising under Material Contracts or other vendor accounts payable in
the ordinary course of business.

     SECTION 6.2. Liens. The
Loan Parties will not create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except

          (a)
Permitted Liens;

          (b)
Liens as of the Closing Date and set forth on Schedule 6.2 (provided that
the aggregate amount of Indebtedness or other obligations secured by such Liens
does not exceed $1,000,000);

          (c) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing lease having substantially
the same economic effect as any of the foregoing); and 

          (d)
Liens securing Indebtedness permitted under Section 6.1(b); provided that
(i) such Liens do not at any time encumber any property other than the property
financed by such Indebtedness and (ii) the Indebtedness secured thereby does not
exceed the cost or fair market value, whichever is lower, of the property being
acquired on the date of acquisition. 

     SECTION 6.3. Fundamental Changes;
Dispositions; Subsidiaries; Etc.

          (a) The
Borrower will not merge into or consolidate with any other Person, or permit any
other Person to merge into or consolidate with it, or liquidate or dissolve, or
make any Disposition, provided that the Borrower may make
Dispositions

     (i) of
obsolete or worn out property, whether now owned or hereafter acquired, in the
ordinary course of business,

     (ii) of
inventory in the ordinary course of business, and

     (iii) of
Property which results in an aggregate amount of proceeds not to exceed $250,000
from and after the Closing Date, provided that the Net Cash Proceeds of
any such Dispositions pursuant to this clause (iii) are applied in accordance
with Section 2.9(b) . 

          (b) The
Borrower will not engage in any business or exploration other than the
development of the Project or, in accordance with the terms of this Agreement,
the Coyote Springs or Mimbres sites. 

     SECTION 6.4. Investments,
Loans, Advances, Guarantees and Acquisitions. The Borrower will not
purchase, hold or acquire any Equity Interest, evidences of indebtedness or
other securities (including any option, warrant or other right to acquire any of
the foregoing) of, make or permit to exist any loans or advances to, guarantee
any obligations of, or make or permit to exist any investment or any other
interest in, any other Person (other than Cochise), or 

- 40 - 

purchase or otherwise acquire any assets of any other Person
constituting a business unit, except (a) Permitted Investments, (b) investments
in Coyote Springs and the Mimbres sites, in accordance with the terms of this
Agreement, (c) and other investment in an amount not to exceed $20,000. 

     SECTION 6.5. Hedging
Agreements. The Loan Parties will not enter into any Hedging Agreement with
respect to copper, except the Forward Sale Price Protection Program. 

     SECTION 6.6. Restricted
Payments. The Borrower will not declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment except that

          (a) the
Borrower may make Restricted Payments so long as (i) Completion shall have
occurred, (ii) immediately after making such payment, the Debt Service Coverage
Ratio for any Historical Test Period or Future Test Period shall not be less
than 1.8:1.00, (iii) the Debt Service Reserve Account is fully funded, (iv) the
Borrower shall be in compliance with all financial covenants on a proforma basis
after giving effect to such Restricted Payment or expenditure (calculated on a
proforma basis with respect to the Historical Test Period most recently ended
and Future Test Period from such date), and (v) no Default or Event of Default
exist or shall occur after giving effect to such Restricted Payment;

          (b) the
Borrower may make Restricted Payments relating to exploration expenditures at
the Mimbres and Coyote Springs sites, so long as (i) Completion shall have
occurred, (ii) immediately after making such payment, the Debt Service Coverage
Ratio for any Historical Test Period or Future Test Period shall not be less
than 1.3:1.00, (iii) the Debt Service Reserve Account is fully funded, (iv) the
Borrower shall be in compliance with all financial covenants on a proforma basis
after giving effect to such Restricted Payment or expenditure (calculated on a
proforma basis with respect to the Historical Test Period most recently ended
and Future Test Period from such date), (v) no Default or Event of Default exist
or shall occur after giving effect to such Restricted Payment, (vi) the maximum
amount of all such expenditures made pursuant to this clause (b) relating to the
Mimbres site shall not exceed $2,750,000, and (vii) the maximum amount of all
such expenditures relating to the Coyote Springs site made pursuant to this
clause (b) shall not exceed $2,100,000 in the aggregate; and

          (c) the
Borrower may make Restricted Payments constituting “Liquidity Incentive
Payments” in connection with and as defined under the $23 million equity
financing documentation as such documentation is in effect on the date hereof,
provided that such amounts do not exceed $2,760,000 in the aggregate. 

     SECTION 6.7. Transactions with
Affiliates. The Borrower will not sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Borrower than could be obtained on an
arm’s-length basis from unrelated third parties, and (b) any Restricted Payment
permitted by Section 6.6. 

     SECTION 6.8. Restrictive
Agreements. The Borrower will not enter into, incur or permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any 

- 41 - 

condition upon the ability of the Borrower to create, incur or
permit to exist any Lien upon any of its property or assets; provided
that the foregoing shall not apply to restrictions and conditions imposed by law
or by this Agreement. 

     SECTION 6.9. Material
Contracts. The Borrower shall not amend, modify or waive any material
provision of any Material Contract in any way adverse to the Lenders. 

     SECTION 6.10. Financial
Covenants.

          (a)
Starting with the last day of the first full fiscal quarter after Completion,
the Borrower will not permit the Debt Service Coverage Ratio for any Historical
Test Period or any Future Test Period to be less than 1.5 to 1.00. 

          (b)
Starting with the last day of the first full fiscal quarter after Completion,
the Borrower will not permit the Interest Coverage Ratio for any Historical Test
Period or any Future Test Period to be less than 2.0 to 1.00. 

          (c)
The Borrower will not permit the ratio of (i) Indebtedness of the type described
in clauses (a), (b), and (c) of the definition thereof, to (ii) Shareholders
Equity to exceed 1.3 to 1.00 at any time. For purposes of this clause (c),
“Shareholders Equity” means, as of the date of determination, all items which
would be included under “shareholders equity” on a consolidated balance sheet of
the Borrower and its Subsidiaries in accordance with GAAP, provided that
such amount shall be without regard to the accumulated deficit as of March 31,
2007.

ARTICLE VII.
 EVENTS OF DEFAULT 

If any of the following events (“Events of Default”)
shall occur: 

          (a) the
Borrower shall fail to pay any principal of the Term Loans when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise; 

          (b) the
Borrower shall fail to pay any interest on the Term Loans or any fee or any
other amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of five Business Days;

          (c) any
representation or warranty made or deemed made by or on behalf of any Loan Party
in or in connection with this Agreement or any amendment or modification hereof
or waiver hereunder, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with this Agreement or any
amendment or modification hereof or waiver hereunder, shall prove to have been
incorrect in any material respect when made or deemed made; provided that
any such representation or warranty, if capable of being cured, may be cured by
the Borrower within a ten day period; 

- 42 - 

          (d) the
Borrower shall fail to observe or perform any covenant, condition or agreement
contained in Section 5.2, 5.3 (with respect to the Borrower’s existence) or 5.8
or in Article VI; provided that any Default under Sections 6.10 (a) or
(b) with respect to a calculation of any Future Test Period (but not any
Historical Test Period) shall only be an “Event of Default” hereunder upon a
vote thereof by the Required Lenders; 

          (e) the
Borrower shall fail to observe or perform any covenant, condition or agreement
contained in this Agreement (other than those specified in clause (a), (b) or
(d) of this Article) or any other Loan Document, and such failure shall continue
unremedied for a period of 20 days after notice thereof from the Administrative
Agent to the Borrower (which notice will be given at the request of any Lender);

          (f) any
event or condition occurs that results in any Material Indebtedness becoming due
prior to its scheduled maturity or that enables or permits (with or without the
giving of notice, the lapse of time or both) the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;

          (g) an
involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect of
either Loan Party or its debts, or of a substantial part of its assets, under
any Federal, state or foreign bankruptcy, insolvency, receivership or similar
law now or hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any Loan Party or
for a substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 90 days or an order or decree approving
or ordering any of the foregoing shall be entered; 

          (h) a
Loan Party shall (i) voluntarily commence any proceeding or file any petition
seeking liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (g) of this
Article, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for a Loan Party or for
a substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing; 

      
   (i) a Loan Party shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due; 

          (j) one
or more judgments for the payment of money in an aggregate amount in excess of
$100,000 shall be rendered against a Loan Party and the same shall remain
undischarged for a period of 45 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of a Loan Party to enforce any such
judgment;

- 43 - 

          (k) an
ERISA Event shall have occurred that, in the opinion of Required Lenders, when
taken together with all other ERISA Events that have occurred, could reasonably
be expected to result in liability of the Borrower in an amount exceeding
$250,000 from and after the Closing Date;

          (l)
Completion shall not occur on or prior to the 16 month anniversary of the
Closing Date; or 

          (m) any
Change of Control shall occur; 

then, and in every such event (other than an event with respect
to the Borrower described in clause (g) or (h) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Term Loan Commitments, and thereupon the Term Loan Commitments
shall terminate immediately, and (ii) declare the Term Loans then outstanding to
be due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Term Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event with
respect to the Borrower described in clause (h) or (i) of this Article, the Term
Loan Commitments shall automatically terminate and the principal of the Term
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower. 

ARTICLE VIII. 
THE ADMINISTRATIVE AGENT

     Each of the Lenders hereby
irrevocably appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof,
together with such actions and powers as are reasonably incidental thereto. 

     The bank serving as the
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Loan Parties or other Affiliate thereof as if it were not the Administrative
Agent hereunder. 

     The Administrative Agent shall
not have any duties or obligations except those expressly set forth herein.
Without limiting the generality of the foregoing, (a) the Administrative Agent
shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing, (b) the Administrative Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers 

- 44 - 

expressly contemplated hereby that the Administrative Agent is
required to exercise in writing as directed by the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 10.2), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to any
Loan Party that is communicated to or obtained by the bank serving as
Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.2) or in the absence of its own gross negligence or
willful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent. 

     The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the
proper Person. The Administrative Agent also may rely upon any statement made to
it orally or by telephone and believed by it to be made by the proper Person,
and shall not incur any liability for relying thereon. The Administrative Agent
may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts. 

     The Administrative Agent may
perform any and all its duties and exercise its rights and powers by or through
any one or more sub-agents appointed by the Administrative Agent. The
Administrative Agent and any such sub-agent may perform any and all its duties
and exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with the
syndication of the Term Loan provided for herein as well as activities as
Administrative Agent. 

     Subject to the appointment and
acceptance of a successor Administrative Agent as provided in this paragraph,
the Administrative Agent may resign at any time by notifying the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall have the right,
in consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent 

- 45 - 

which shall be a bank with an office in New York, New York, or
an Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent’s resignation hereunder, the
provisions of this Article and Section 10.3 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent. 

     Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any related agreement or any document furnished hereunder
or thereunder. 

ARTICLE IX.
 GUARANTY 

     SECTION 9.1. Guaranty.
Guarantor hereby unconditionally and irrevocably guarantees to each of the
Lenders the punctual payment, performance in full and observance when due,
whether at stated maturity, by acceleration or otherwise, of the Borrower’s
Obligations (the “Guaranteed Obligations”) now or hereafter existing
under any Loan Document, whether for principal, interest (including, without
limitation, all interest that accrues after the commencement of any bankruptcy
proceeding of the Borrower, whether or not constituting an allowed claim in such
bankruptcy proceeding), fees, commissions, expense reimbursements,
indemnifications or otherwise, and agrees to pay any and all costs, fees and
expenses (including reasonable counsel fees and expenses) incurred by the
Administrative Agent and the Lenders in enforcing any rights under the guaranty
set forth in this Article IX, as they become due from time to time in accordance
with the express provisions of the Loan Documents. The Administrative Agent
shall be entitled to enforce this Guarantee for its own benefit and the ratable
benefit of the Lenders and each Lender shall be entitled to enforce this
Guarantee for its own benefit through the Administrative Agent in respect of the
Guaranteed Obligations owing to it but without duplication. Without limiting the
generality of the foregoing, Guarantor’s liability shall extend to all amounts
that constitute part of the Guaranteed Obligations and would be owed by the
Borrower to the Administrative Agent and the Lenders under any Loan Document but
for the fact that they are unenforceable or not allowable due to the existence
of an bankruptcy proceeding involving the Borrower. 

     SECTION 9.2. Guaranty
Absolute. Guarantor guarantees that the Guaranteed Obligations will
be paid strictly in accordance with the terms of the Loan Documents, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such 

- 46 - 

terms or the rights of the Administrative Agent or the Lenders
with respect thereto. The obligations of Guarantor under this Article IX are
independent of the Guaranteed Obligations, and a separate action or actions may
be brought and prosecuted against Guarantor to enforce such obligations,
irrespective of whether any action is brought against the Borrower or whether
the Borrower is joined in any such action or actions. The liability of Guarantor
under this Article IX constitutes a primary obligation, and not a contract of
surety, and shall be irrevocable, absolute and unconditional irrespective of,
and Guarantor hereby irrevocably waives any defenses it may now or hereafter
have in any way relating to, any or all of the following: 

          (a) any
lack of validity or enforceability of any Loan Document or any agreement or
instrument relating thereto; 

          (b) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Guaranteed Obligations, or any other amendment or waiver of or any
consent to departure from any Loan Document, including, without limitation, any
increase in the Guaranteed Obligations resulting from the extension of
additional credit to the Borrower or otherwise 

          (c) any
taking, exchange, release, subordination or non-perfection of any of the
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed Obligations;

          (d) any
change, restructuring or termination of the corporate structure or existence of
any of the Loan Parties; or 

          (e)
except for payment in full of the Guaranteed Obligations, any other circumstance
(including, without limitation, any statute of limitations) or any existence of
or reliance on any representation by the Administrative Agent or the Lenders
that might otherwise constitute a defense available to, or a discharge of, any
of the Loan Parties or any other guarantor or surety. 

This Article IX shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by the
Administrative Agent or the Lenders or any other Person upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise (and whether as a
result of any demand, settlement, litigation or otherwise), all as though such
payment had not been made. 

     SECTION 9.3. Waiver.
Guarantor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Guaranteed Obligations and this Article
IX and any requirement that the Administrative Agent or the Lenders exhaust any
right or take any action against any of the Loan Parties or any other Person or
any Collateral. Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated herein and that the waiver
set forth in this Section 9.3 is knowingly made in contemplation of such
benefits. Guarantor hereby waives any right to revoke this Article IX, and
acknowledges that this Article IX is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future. 

- 47 - 

     SECTION 9.4. Continuing
Guaranty; Assignments. This Article IX is a continuing guaranty and
shall (a) remain in full force and effect until payment in full of the
Guaranteed Obligations, (b) be binding upon Guarantor, its successors and
assigns and (c) inure to the benefit of and be enforceable by the Administrative
Agent and the Lenders and their successors, pledgees, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Lender may
pledge, assign or otherwise transfer all or any portion of its rights and
obligations under this agreement (including, without limitation, all or any
portion of its Term Loan Commitment and its Term Loans) to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted such Lender herein or otherwise. 

     SECTION 9.5.
Subrogation. Guarantor shall not exercise any rights that it may
now or hereafter acquire against the Borrower or any other guarantor that arise
from the existence, payment, performance or enforcement of Guarantor’s
obligations under this Article IX, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of the Administrative Agent or the
Lenders against any of the Loan Parties or any other guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from any of the Loan Parties or any other guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security solely on account of such claim, remedy or right, unless and
until payment in full of the Guaranteed Obligations; provided, that Guarantor
shall not have any rights hereunder against the Borrower if all or any portion
of the Guaranteed Obligations shall have been satisfied with proceeds from the
exercise of remedies in respect of the Equity Interest of the Borrower pursuant
to any Security Document. In addition, unless and until payment in full of the
Guaranteed Obligations, any indebtedness of the Borrower now or hereafter held
by Guarantor is subordinated in right of payment to the Guaranteed Obligations,
and any such indebtedness collected or received by Guarantor after an Event of
Default has occurred and is continuing but prior to payment in full of the
Guaranteed Obligations, shall be held in trust for Administrative Agent on
behalf of the Administrative Agent and the Lenders and shall forthwith be paid
over to Administrative Agent for the benefit of itself and the Lenders to be
credited and applied against the Guaranteed Obligations. If any amount shall be
paid to Guarantor in violation of the immediately preceding two sentences, such
amount shall be held in trust for the benefit of the Administrative Agent and
the Lenders and shall forthwith be paid to Administrative Agent for the benefit
of the Administrative Agent and the Lenders to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Article IX,
whether matured or unmatured, in accordance with the terms of this Agreement, or
to be held as Security for any Guaranteed Obligations or other amounts payable
under this Article IX thereafter arising. Upon payment in full of the Guaranteed
Obligations, the Administrative Agent and the Lenders will, at the Guarantor’s
request and expense, execute and deliver to the Guarantor appropriate documents,
without recourse and without representation or warranty, necessary to evidence
the transfer by subrogation to Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by Guarantor. 

     SECTION 9.6. Maximum
Obligations. Notwithstanding any provision herein contained to the
contrary, Guarantor’s liability with respect to the Obligations shall be limited
to an amount not to exceed, as of any date of determination, the amount that
could be claimed by the 

- 48 - 

Administrative Agent and the Lenders from Guarantor without
rendering such claim voidable or avoidable under Section 548 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law. 

ARTICLE X. 
MISCELLANEOUS 

     SECTION 10.1. Notices. 

          (a)
Except in the case of notices and other communications expressly permitted to be
given by telephone (and subject to paragraph (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows: 

          (i) if to
the Borrower, to it at 1 West Wetmore, Suite 203, Tuscon, AZ 85705, Attention of
Chief Financial Officer (Telecopy No. 520-292-0268); 

          (ii) if to
the Administrative Agent, to Nedbank Limited, London Branch, 2 Lambert Hill, 1st
Floor, Old Mutual Place, London EC4V, Attention: The Head: Mining and Resources
(Telecopy No. 44-707-002-3408), with a copy to Nedbank Limited, 135 Rivonia
Road, Sandown 2057, Republic of South Africa, Attention: The Head: Specialized
Finance; 

          (iii) if to
any other Lender, to it at its address (or telecopy number) as indicted to the
Administrative Agent. 

          (b)
Notices and other communications to the Lenders hereunder may be delivered or
furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II unless otherwise agreed by the Administrative Agent and
the applicable Lender. The Administrative Agent or the Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications. 

          (c) Any
party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.

     SECTION 10.2. Waivers;
Amendments.

          (a) No
failure or delay by the Administrative Agent or any Lender in exercising any
right or power hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent and the Lenders hereunder are
cumulative and are not exclusive of any rights or remedies that they would 

- 49 - 

otherwise have. No waiver of any provision of this Agreement or
consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Term Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lender may have
had notice or knowledge of such Default at the time. 

          (b)
Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; provided
that no such agreement shall (i) increase the Term Loan Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
the Term Loans or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the scheduled date of payment of the principal amount of the Term
Loans, or any interest thereon, or any fees payable hereunder, or reduce the
amount of, waive or excuse any such payment, or postpone the scheduled date of
expiration of any Term Loan Commitment, without the written consent of each
Lender affected thereby, (iv) change Section 2.16(b) or (c) in a manner that
would alter the pro rata sharing of payments required thereby, without the
written consent of each Lender, or (v) change any of the provisions of this
Section or the definition of “Required Lenders” or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; provided
further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent hereunder without the prior
written consent of the Administrative Agent. 

     SECTION 10.3. Expenses; Indemnity;
Damage Waiver.

          (a) The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of any advisor or counsel for the Administrative Agent or any
Lender (provided that the Borrower shall not be required to pay for more
than one counsel to the Administrative Agent and the Lenders, other than special
local counsel), in connection with the syndication of the Term Loans provided
for herein (which in any event shall be conducted in accordance with Section
10.4(b)), the due diligence, preparation, negotiation and administration of this
Agreement or any amendments, modifications or waivers of the provisions hereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated) and the other Loan Documents and (ii) all out-of-pocket expenses
incurred by the Administrative Agent or any Lender, including the fees, charges
and disbursements of any advisor or counsel for the Administrative Agent or any
Lender, in connection with the enforcement or protection of its rights in
connection with this Agreement, including its rights under this Section, or in
connection with the Term Loans made, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of the
Term Loans. 

          (b) The
Borrower shall indemnify the Administrative Agent and each Lender, and each
Related Party of any of the foregoing Persons (each such Person being called an

- 50 - 

“Indemnitee”) against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of this Agreement or any
agreement or instrument contemplated hereby, the performance by the parties
hereto of their respective obligations hereunder or the consummation of the
Transactions or any other transactions contemplated hereby, (ii) any Term Loan
or the use of the proceeds therefrom, (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by the
Loan Parties, or any Environmental Liability related in any way to the Loan
Parties, or (iv) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee. 

          (c) To
the extent that the Borrower fails to pay any amount required to be paid by it
to the Administrative Agent under paragraph (a) or (b) of this Section, each
Lender severally agrees to pay to the Administrative Agent, such Lender’s
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent in its capacity as such. 

          (d) To
the extent permitted by applicable law, the Borrower shall not assert, and
hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions
or any Term Loan or the use of the proceeds thereof. 

          (e) All
amounts due under this Section shall be payable promptly after written demand
therefor. 

     SECTION 10.4. Successors and
Assigns.

          (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby,
except that (i) the Borrower may not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of each Lender
(and any attempted assignment or transfer by the Borrower without such consent
shall be null and void) and (ii) no Lender may assign or otherwise transfer its
rights or obligations hereunder except in accordance with this Section. Nothing
in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement. 

- 51 - 

          (b) (i)
Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may
assign to one or more assignees all or a portion of its rights and obligations
under this Agreement (including all or a portion of its Term Loan Commitment and
the Term Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld) of: 

          (A) the
Borrower, provided that no consent of the Borrower shall be required for
an assignment to a Lender, an Affiliate of a Lender, or, if an Event of Default
has occurred and is continuing, any other assignee; provided that any such
assignment to an Affiliate shall in all cases be subject to Section 2.17; 

      
   (B) the Administrative Agent, provided that no consent
of the Administrative Agent shall be required for an assignment of any Term Loan
Commitment to an assignee that is a Lender with a Term Loan Commitment
immediately prior to giving effect to such assignment; and 

     (ii)
Assignments shall be subject to the following additional conditions: 

          (A) except
in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Term Loan
Commitment or Term Loans, the amount of the Term Loan Commitment or Term Loans
of the assigning Lender subject to each such assignment (determined as of the
date the Assignment and Assumption with respect to such assignment is delivered
to the Administrative Agent) shall not be less than $5,000,000 unless each of
the Borrower and the Administrative Agent otherwise consent, provided
that no such consent of the Borrower shall be required if an Event of Default
has occurred and is continuing; 

          (B) each
partial assignment shall be made as an assignment of a proportionate part of all
the assigning Lender’s rights and obligations under this Agreement,
provided that this clause shall not be construed to prohibit the
assignment of a proportionate part of all the assigning Lender’s rights and
obligations in respect of one type of Term Loan Commitment or Term Loans;

    
     (C) the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500; and 

    
     (D) the assignee, if it shall not be a Lender,
shall designate to the Administrative Agent one or more Credit Contacts to whom
all syndicate-level information (which may contain material non-public
information about the Loan Parties and their related parties or their respective
securities) will be made available and who may receive such information in
accordance with the assignee’s compliance procedures and applicable laws,
including Federal and state securities laws. 

     (iii) Subject
to acceptance and recording thereof pursuant to paragraph (b)(iv) of this
Section, from and after the effective date specified in each Assignment and 

- 52 - 

Assumption the assignee thereunder
shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 10.3) . Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section 10.4 shall be treated for purposes of
this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section. 

          (iv) The
Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Term Loan Commitment of, and principal amount of the Term
Loan Commitment or Term Loans owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice. 

          (v) Upon
its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an assignee, the processing and recordation fee referred to
in paragraph (b) of this Section and any written consent to such assignment
required by paragraph (b) of this Section, the Administrative Agent shall accept
such Assignment and Assumption and record the information contained therein in
the Register; provided that if either the assigning Lender or the
assignee shall have failed to make any payment required to be made by it
pursuant to Section 2.5(c), 2.6(d) or (e), 2.7(b), 2.16(d) or 10.3(c), the
Administrative Agent shall have no obligation to accept such Assignment and
Assumption and record the information therein in the Register unless and until
such payment shall have been made in full, together with all accrued interest
thereon. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph. 

          (c) (i)
Any Lender may, without the consent of the Borrower or the Administrative Agent,
sell participations to one or more banks or other entities (a
“Participant”) in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Term Loan
Commitment and the Term Loans owing to it); provided that (A) such
Lender’s obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) the Borrower, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to 

- 53 - 

approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
10.2(b) that affects such Participant. Subject to paragraph (c)(ii) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.8 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.16(c) as though it were a
Lender. 

          (ii) A
Participant shall not be entitled to receive any greater payment under Section
2.13 or 2.15 than the applicable Lender would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall
not be entitled to the benefits of Section 2.17 unless the Borrower is notified
of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 2.15(e) as though it were a
Lender. 

          (d) Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Lender,
including without limitation any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto. 

     SECTION 10.5. Survival.
All covenants, agreements, representations and warranties made by the Borrower
herein and in the certificates or other instruments delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by
the other parties hereto and shall survive the execution and delivery of this
Agreement and the making of any Term Loans, regardless of any investigation made
by any such other party or on its behalf and notwithstanding that the
Administrative Agent or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on the Term Loans or any fee or any other
amount payable under this Agreement is outstanding and unpaid and so long as the
Term Loan Commitments have not expired or terminated. The provisions of Sections
2.13, 2.14, 2.15 and 10.3 and Article VIII shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Term Loans and the Term Loan Commitments or the
termination of this Agreement or any provision hereof. 

     SECTION 10.6. Counterparts;
Integration; Effectiveness. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Agreement and any separate letter agreements with respect
to fees payable to the Administrative Agent constitute the entire contract among
the parties relating to the subject 

- 54 - 

matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.1, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement. 

     SECTION 10.7.
Severability. Any provision of this Agreement held to be invalid, illegal
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction. 

     SECTION 10.8. Right of
Setoff. If an Event of Default shall have occurred and be continuing, each
Lender and each of its Affiliates is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other obligations at any time owing by such Lender or Affiliate to
or for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement or
any Hedging Agreement held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement or such Hedging Agreement
and although such obligations may be unmatured. The rights of each Lender under
this Section are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have. 

     SECTION 10.9. Governing Law;
Jurisdiction; Consent to Service of Process.

          (a) This
Agreement shall be construed in accordance with and governed by the law of the
State of New York. 

          (b) The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of
New York sitting in New York County and of the United States District Court of
the Southern District of New York, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Administrative Agent or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement against the Borrower or its
properties in the courts of any jurisdiction. 

          (c) The
Borrower hereby irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now or hereafter

- 55 - 

have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court. 

          (d) Each
party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 10.1. Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other manner
permitted by law. 

     SECTION 10.10. WAIVER OF JURY
TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION. 

     SECTION 10.11. Headings.
Article and Section headings and the Table of Contents used herein are for
convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting, this
Agreement. 

     SECTION 10.12.
Confidentiality.

          (a) Each
of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’ directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent or any Lender
on a nonconfidential basis from a source other than the Borrower. For the
purposes of this Section, “Information” means all information received
from the Borrower relating to the Borrower or its business, other than any such
information that is available to the Administrative Agent or any Lender on a

- 56 - 

nonconfidential basis prior to disclosure by the Borrower;
provided that, in the case of information received from the Borrower
after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information. 

          (b) EACH
LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 10.12(a) FURNISHED TO
IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION
CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES,
AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF
MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC
INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING
FEDERAL AND STATE SECURITIES LAWS. 

          (c) ALL
INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE
BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF
ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY
CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE LOAN PARTIES AND THEIR RELATED
PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO
THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED A CREDIT
CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC
INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.

     SECTION 10.13. Interest Rate
Limitation. Notwithstanding anything herein to the contrary, if at any time
the interest rate applicable to the Term Loans, together with all fees, charges
and other amounts which are treated as interest on the Term Loans under
applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged,
taken, received or reserved by the Lender holding such Term Loan in accordance
with applicable law, the rate of interest payable in respect of such Term Loan
hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Term Loan but were not payable
as a result of the operation of this Section shall be cumulated and the interest
and Charges payable to such Lender in respect of other Term Loans or periods
shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon to the date of repayment, shall
have been received by such Lender. 

     SECTION 10.14. Know Your
Customer Requirements. Each Lender that is subject to “know-your-customer”
requirements of any Governmental Authority, hereby notifies the Borrower that
pursuant to such requirements, it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the 

- 57 - 

Borrower and other information that will allow such Lender to
identify the Borrower in accordance with such requirements. 

[Signature Pages Follow]

- 58 - 

     IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written. 

	 	NORD RESOURCES
      CORPORATION 
	 	 	  
	 	 	  
	 	 By	 /s/ John T. Perry 
	 	 Name: 	John T. Perry 
	 	 Title: 	President 
	 	 	  
	 	 	  
	 	COCHISE AGGREGATES AND
      MATERIALS, 
	 	INC. 
	 	 	  
	 	 	  
	 	 By 	/s/
      John T. Perry 
	 	 Name: 	John T. Perry 
	 	 Title: 	Secretary 

[SIGNATURE PAGES CONTINUED ON NEXT PAGE] 

[SIGNATURE PAGES CONTINUED FROM PREVIOUS PAGE] 

	 	NEDBANK LIMITED, 
	 	       as
      Administrative Agent 
	 	  	  
	 	  	  
	 	By 	 /s/ Harold James Rolstons 
	 	Name: 	 Harold James Rolstons 
	 	Title: 	Head Corporate Banking, London 
	 	  	  
	 	By  	 /s/ Graham Hardy
	 	Name: 	 Graham Hardy 
	 	Title: 	Head of Treasury - London 
	 	  	  
	 	  	  
	 	  	  
	 	NEDBANK LIMITED, London Branch,

	 	       as Lender
    
	 	  	  
	 	  	  
	 	By 	 /s/ Harold James Rolstons 
	 	Name: 	 Harold James Rolstons 
	 	Title: 	Head Corporate Banking, London 
	 	  	  
	 	By  	 /s/ Graham Hardy
	 	Name: 	 Graham Hardy 
	 	Title: 	Head of Treasury - London

EXHIBIT A
to Credit Agreement 

ASSIGNMENT AND ASSUMPTION 

     This Assignment and Assumption
(the “Assignment and Assumption”) is dated as of the Effective Date set
forth below and is entered into by and between [Insert name of Assignor]
(the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by
the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part
of this Assignment and Assumption as if set forth herein in full. 

     For an agreed consideration, the
Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee
hereby irrevocably purchases and assumes from the Assignor, subject to and in
accordance with the Standard Terms and Conditions and the Credit Agreement, as
of the Effective Date inserted by the Administrative Agent as contemplated below
(i) all of the Assignor’s rights and obligations in its capacity as a Lender
under the Credit Agreement and any other documents or instruments delivered
pursuant thereto to the extent related to the amount and percentage interest
identified below of all of such outstanding rights and obligations of the
Assignor under the Term Loan and (ii) to the extent permitted to be assigned
under applicable law, all claims, suits, causes of action and any other right of
the Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and
all other claims at law or in equity related to the rights and obligations sold
and assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the “Assigned Interest”). Such sale and assignment is
without recourse to the Assignor and, except as expressly provided in this
Assignment and Assumption, without representation or warranty by the Assignor.

	1. 	Assignor: 	 
    
	 	 	 
	2. 	Assignee: 	 
    
	  	  	[and is an Affiliate of [identify
      Lender]1 ] 
	 	 	 
	3. 	Borrower: 	Nord Resources Corporation 
	 	 	 
	4. 	Administrative Agent: 	
       Nedbank Limited, as the administrative agent under
      the Credit Agreement 

	  	  	
	5. 	Credit Agreement: 	
      $25,000,000 Credit Agreement dated as of June 28, 2007
      among Nord Resources Corporation, a Delaware corporation (the 

	  	  	

	 	1 	
      Select as applicable.

	 	
      “Borrower”), the guarantor party thereto, the lenders
      party thereto (the “Lenders”), Nedbank Limited, as Administrative Agent,
      and the other agents parties thereto. 

	6. 	
      Assigned Interest:

	Aggregate Amount of 
Term Loan 
Commitment / Term
      
Loans for all Lenders 	Amount of Term Loan 
Commitment / Term
      
Loans Assigned 
	Percentage of 
Assigned Term Loan
      
Commitment / Term 
Loans 2 
	$ 	$ 	 
                         
                       % 
	$ 	$ 	 
                         
                       % 
	$ 	$ 	 
                         
                       %
  

     Effective Date: ________________,
20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE
DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.] 

     The Assignee agrees to deliver to
the Administrative Agent a designation of one or more Credit Contacts to whom
all syndicate-level information (which may contain material non-public
information about the Loan Parties and their Related Parties or their respective
securities) will be made available and who may receive such information in
accordance with the Assignee’s compliance procedures and applicable laws,
including Federal and state securities laws. 

     The terms set forth in this Assignment
and Assumption are hereby agreed to: 

	 	ASSIGNOR 
	 	[NAME OF ASSIGNOR]
  
	 	 	  
	 	 	  
	 	 By:	 
	 	 Title: 	
	 	 	  
	 	ASSIGNEE 
	 	[NAME OF ASSIGNEE]
  
	 	 	  
	 	 	  
	 	 By: 	
	 	 Title: 	

[Consented to and]3 Accepted: 

     2 Set forth, to
at least 9 decimals, as a percentage of the Term Loan Commitment / Term Loans of
all Lenders thereunder. 

     3 To be added
only if the consent of the Administrative Agent is required by the terms of the
Credit Agreement. 

Exhibit A - Assignment and Assumption 
2 

	NEDBANK LIMITED, as
    	 
	Administrative Agent
    	 
	 	  	 
	 	  	 
	 By 		 
	 Title: 		 

Exhibit A - Assignment and Assumption 
3 

ANNEX 1 

STANDARD TERMS AND CONDITIONS FOR 
ASSIGNMENT
AND ASSUMPTION 

     1. Representations and
Warranties. 

     1.1. Assignor. The
Assignor (a) represents and warrants that (i) it is the legal and beneficial
owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of
any lien, encumbrance or other adverse claim and (iii) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment and Assumption and to consummate the transactions contemplated
hereby; and (b) assumes no responsibility with respect to (i) any statements,
warranties or representations made in or in connection with the Credit Agreement
or any other Loan Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or any
collateral thereunder, (iii) the financial condition of the Loan Parties, any of
their Affiliates or any other Person obligated in respect of any Loan Document
or (iv) the performance or observance by the Loan Parties, any of their
Affiliates or any other Person of any of their respective obligations under any
Loan Document. 

     1.2. Assignee. The
Assignee (a) represents and warrants that (i) it has full power and authority,
and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become
a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any,
specified in the Credit Agreement that are required to be satisfied by it in
order to acquire the Assigned Interest and become a Lender, (iii) from and after
the Effective Date, it shall be bound by the provisions of the Credit Agreement
as a Lender thereunder and, to the extent of the Assigned Interest, shall have
the obligations of a Lender thereunder, (iv) it has received a copy of the
Credit Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 5.1 thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or
any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment
and Assumption is any documentation required to be delivered by it pursuant to
the terms of the Credit Agreement, duly completed and executed by the Assignee;
and (b) agrees that (i) it will, independently and without reliance on the
Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender. 

     2. Payments. From and
after the Effective Date, the Administrative Agent shall make all payments in
respect of the Assigned Interest (including payments of principal, interest,
fees and other amounts) to the Assignor for amounts which have accrued to but
excluding the Effective Date and to the Assignee for amounts which have accrued
from and after the Effective Date. 

     3. General Provisions.
This Assignment and Assumption shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which
together shall constitute one instrument. Delivery of an executed counterpart of
a signature page of this Assignment and Assumption by telecopy shall be
effective as delivery of a manually executed counterpart of this Assignment and
Assumption. This Assignment and Assumption shall be governed by, and construed
in accordance with, the law of the State of New York. 

2Filed by Automated Filing Services Inc. (604) 609-0244 - Ireland Inc. - Exhibit 10.1

AMENDMENT AGREEMENT 
TO ASSIGNMENT AGREEMENT 

THIS AMENDMENT AGREEMENT (the "Amendment Agreement") is
dated for reference as of the 8th day of August, 2007. 

BETWEEN: 

NANOMINERALS CORP., a
company duly formed under the laws 
of Nevada, with its registered office at
1905 Southeastern Ave., 
Las Vegas, NV

(hereinafter called "Nano") 

OF THE FIRST PART 

AND: 

IRELAND INC., a
corporation duly formed under the laws of 
Nevada, with its principal office
at 810 Peace Portal Drive, Suite 
201, Blaine, WA 98230 

(hereinafter called the "Company") 

OF THE SECOND PART 

AND: 

LORRIE ARCHIBALD, of 1745
Larkhall Crescent, North 
Vancouver, British Columbia, Canada V7H 2Z3 

(hereinafter called the "Principal
Shareholder") 

OF THE THIRD PART 

WHEREAS: 

A. Nano, the Company and the Principal Shareholder entered into
an Assignment Agreement dated for reference as of March 29, 2007 (the “Original
Agreement”); 

B. Subsequent to the entry by the parties into the Original
Agreement, the Company completed a 4-for-1 split of its common stock (the
“Company Stock Split”); 

C. The parties wish to amend the Original Agreement to account
for the Company Stock Split and to make such other amendments as are set out
herein, 

For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, THE PARTIES HEREBY AGREE AS
FOLLOWS: 

1. Unless otherwise defined in this Amendment Agreement, all
capitalized terms shall have the meanings assigned to them in the Original
Agreement. 

2. Paragraph 1.1 of the Original Agreement is amended by
deleting subparagraphs (b), (j), (k) and (o) in their entirety and replacing
them with the following: 

	 	(b) 	
      “Closing Date” means August 14, 2007 or such other date
      as may be mutually agreed upon by the parties.

	 	 	 
	 	(j) 	
      “Nano Shares” means a total of 30,000,000 post-split
      (7,500,000 pre-split) shares of the Company to be issued to Nano and the
      Nano Nominees.

	 	 	 
	 	(k) 	
      “Principal Shares” means the 18,200,000 post-split
      (4,550,000 pre-split) presently issued restricted shares in the common
      stock of the Company held by the Principal Shareholder to be transferred
      to Nano as described in paragraph 2.5.

	 	 	 
	 	(o) 	
      “Royalty” means the royalty to be granted in favour of
      Nano equal 5% of net smelter returns, as that term is defined in Schedule
      “D,” from the Columbus and Red Mountain Projects and from any other
      mineral projects that may, in the future, be assigned or otherwise
      transferred to the Company by Nano.

3. Paragraphs 2.3, 2.4, 2.5, 2.7, 4.4 and 4.17 of the Original
Agreement are amended by deleting such paragraphs in their entirety and
replacing them with the following: 

	 	2.3 	
      The total number of Nano Shares to be issued by the
      Company to Nano and the Nano Nominees shall be 30,000,000
shares.

	 	 	 	 
	 	2.4 	
      In addition to issuing the Nano Shares to Nano and the
      Nano Nominees, the Company shall, at closing, grant Nano a royalty (the
      “Royalty”) equal to 5% of net smelter returns on the Columbus and Red
      Mountain projects and on any other mineral projects that may, in the
      future, be assigned or otherwise transferred to the Company by
  Nano.

	 	 	 	 
	 	2.5 	
      As further consideration for Nano entering into this
      Agreement and completing the Assignment to the Company, the Principal
      Shareholder shall transfer the Principal Shares to Nano at Closing at and
      for a price of US $0.0025 per share.

	 	 	 	 
	 	2.7 	
      In addition to the consideration set out above, the
      Company shall reimburse Nano for all properly documented expenditures made
      by Nano on the Columbus and Red Mountain Projects.

	 	 	 	 
	 	4.4 	
      The Company will not, without the prior written consent
      of Nano, issue any additional shares from and after the date hereof to the
      Closing Date or create any options, warrants or rights for any person to
      subscribe for any unissued shares in the capital of the Company, other
      than:

	 	 	 	 
	 		(a) 	
      any shares and warrants issued, or to be issued, pursuant
      to a private placement offering of 10,000,000 units at a price of $0.65
      per unit to be completed in accordance with the provisions of Regulation S
      promulgated under the Securities Act and approved by the Company’s board
      of directors on April 24, 2007, or pursuant to a private placement
      offering of an additional 10,000,000 units at a price of $0.65 per unit to
      be completed in accordance with the provisions of Rule 506 of Regulation D
      promulgated under the Securities Act, also approved by the
  Company’s

2 

	 		
       
	board of directors on April 24, 2007, the terms of which
      offerings having been fully disclosed to Nano;and
	 	 	 	 
	 		(b) 	
      options granted by the Company pursuant to the provisions
      of paragraph 7.1.

	 	 	 	 
	 	4.17 	
      The Company is not indebted to any of its directors or
      officers (other than indebtedness arising as a result of unpaid management
      fees or advances made by a director or officer for the payment of ordinary
      business expenses of the Company) nor are any of the Company’s directors
      or officers indebted to the Company.

4. Subparagraph 5.1(e) of the Original Agreement is deleted in
it its entirety. 

5. Schedule “B” of the Original Agreement is amended by
deleting it in its entirety and replacing it with the Schedule “B” attached to
this Amendment Agreement. 

6. Schedule “D” of the Original Agreement is amended by
deleting it in its entirety and replacing it with the Schedule “D” attached to
this Amendment Agreement. 

7. Paragraphs 8.1 to 8.7 of the Original Agreement are
incorporated by reference into this Amendment Agreement and are made a part
hereof. 

-- THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK --

3 

8. This Amendment Agreement may be executed in one or more
counterparts, each of which so executed shall constitute an original and all of
which together shall constitute one and the same agreement.

IN WITNESS WHEREOF the parties hereto have executed this
Amendment Agreement effective as of the day and year first above written. 

	NANOMINERALS CORP. 	 	IRELAND INC. 
	a Nevada corporation by its 	 	a Nevada corporation by its 
	authorized signatory: 	 	authorized signatory: 
	  	 	  
	  	 	  
	/s/ Charles A.
      Ager 	 	/s/
      Douglas D.G. Birnie 
	Signature of Authorized Signatory 	 	Signature of Authorized Signatory 
	  	 	  
	Charles A. Ager	 	Douglas D.G. Birnie 
	Name of Authorized Signatory 	 	Name of Authorized Signatory 
	  	 	  
	Chairman	 	President
    
	Position of Authorized Signatory 	 	Position of Authorized Signatory 
	  	 	  
	  	 	  
	  	 	  
	  	 	  
	/s/ Lorrie
      Archibald 	 	  
	LORRIE ARCHIBALD 	 	  

4 

SCHEDULE B 

DISTRIBUTION OF NANO SHARES 

	Name 	Number of Shares 
	Nanominerals Corp.
    	21,950,000 
	Billie W. Maine
	500,000 
	Richard J Werdesheim and Lynne Werdesheim 
trustees FBO
      Werdesheim Family Trust 
10/14/86 	2,500,000 

	Robert McDougal
	1,200,000 
	Warwick Management
      Limited 	3,690,000 
	Robocheyne
      Consulting Ltd. 	160,000 
	   
                         
                         
                         
                         
             Total 	30,000,000 

SCHEDULE D 

NET SMELTER RETURNS 

For the purposes of this Agreement, the term "net smelter
returns" shall mean the net proceeds actually paid to the Company attributable
to the Company’s net interest in the Property from the sale of minerals mined
and removed from the Property, after deduction of the following: 

	 	(a) 	
      smelting costs, treatment charges and penalties
      including, but not being limited to, metal losses, penalties for
      impurities and charges for refining, selling and handling by the smelter,
      refinery or other purchaser;

	 	 	 
	 	(b) 	
      costs of handling, transporting and insuring ores,
      minerals and other materials or concentrates from the Property or from a
      concentrator, whether situated on or off the Property, to a smelter,
      refinery or other place of treatment; and

	 	 	 
	 	(c) 	
      ad valorem taxes and taxes based upon production, but not
      income taxes.

     In the event the Company
commingles minerals from the Property with minerals from other properties, the
Company shall establish procedures, in accordance with sound mining and
metallurgical techniques, for determining the proportional amount of the total
recoverable metal content in the commingled minerals attributable to the input
from each of the properties by calculating the same on a metallurgical basis, in
accordance with sampling schedules and mining efficiency experience, so that
production royalties applicable to minerals produced from the Property may
reasonably be determined. 

For the purposes of this definition, “the Property” means any
mineral property covered by the terms of this Agreement.

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