Document:

Aurora Gold Corporation
                        Suite 1505 - 1060 Alberni Street,
                          Vancouver, B.C. Canada E 4K2

                            Telephone: (604) 687-4432
                            Facsimile: (604) 687-4709

October 1, 1999

Patagonia Gold Corporation
Suite 1505- 1060 Alberni Street,
Vancouver, B.C. Canada
V6E 4K2

Attention: David Jenkins,

Dear Sirs:

Re:  Aurora Gold Corporation (the "Company")
     Letter of Intent: San Diego Exploration Reconnaissance Concession Joint
     Venture Guatemala, Central America

This  letter  is  intended  to  document  our  mutual  understanding  prior to a
commitment of funds from Patagonia Gold Corporation and/or associated  companies
for the acquisition of the San Diego mineral exploration  reconnaissance licence
and  the  exploration  of  the  San  Diego  mineral  exploration  reconnaissance
concession, Guatemala Central America.

Aurora  Gold  Corporation  has been  awarded  exclusive  title to the San  Diego
mineral exploration  reconnaissance licence by the government of Guatemala.  The
mineral  exploration  reconnaissance  license  confers  on the  titleholder  the
exclusive rights to identify and locate possible areas for  exploration,  within
the  licenses  territorial  limits and to unlimited  depth in the  subsoil.  The
license was awarded to Aurora Gold Corporation in September 1999.

Patagonia Gold Corporation  and/or associated  companies shall have the right to
earn a fifty  percent  (50%)  interest  in the  San  Diego  mineral  exploration
reconnaissance licence upon payment of the following amounts:

1.   The  payment  of USD Nine  Thousand  Two  Hundred  and  Fifty  (USD  9,250)
     Guatemala  government  fee for the  acquisition  of the San  Diego  mineral
     exploration reconnaissance license and

                                       1

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2.   The payment of USD Eighteen  Thousand Six Hundred Seventeen and 25/100 (USD
     18,617.25)  for a Phase  1  exploration  program  to be  conducted  between
     November  1, 1999 and March 31, 2000 on the San Diego  mineral  exploration
     reconnaissance  concession.  The work program  shall  consist of geological
     reconnaissance, sampling of rock outcrops and stream sediment sampling.

Yours truly,

Aurora Gold Corporation

/s/ Cameron Richardson                                          October 1, 1999
----------------------------------
Cameron Richardson
Controller and Corporate Secretary
(Authorized Representative)

Acceptance of these terms by Patagonia Gold Corporation

For and on behalf of Patagonia Gold Corporation

/s/ David Jenkins                                               October 1, 1999
----------------------------------
David Jenkins
President
Patagonia Gold Corporation
(Authorized Representative)

                                       2[LOGO]                                                Billiton UK Resources B.V.
                                                      Mariahoeve Plein 16
                                                      The Hague
                                                      The Netherlands

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February 25, 2000

Mr. David Jenkins
President,
Aurora Gold Corp.
Suite 1505, 1060 Alberni Street
Vancouver, BC
V6E 4K2

RE:  Letter of Intent - Private Placement and Property Option, Hammala Property,
     Kebbouch District, Tunisia.

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Dear David,

Further to your recent discussions with our Steve Parry, this is to confirm that
Billiton UK Resources  B.V., or a designated  affiliate of Billiton UK Resources
B.V.  (hereafter  Billiton),  a subsidiary of Billiton Plc, hereby proposes with
this Letter of Intent ("LOI") a private placement and option agreement regarding
your Hammala  property,  Tunisia,  as described in the attached  Schedule A (the
"Property").  The terms of this offer are subject to the review and  approval of
the Board of Directors of Billiton and relevant regulatory authorisations.

Under the proposed  agreement,  Billiton  would  purchase an initial  US$600,000
private  placement in Aurora,  with private  placement  funds used to complete a
surface mapping and drill programme on the Property. Part of the placement would
also be used to investigate and acquire other zinc prospects,  as part of a more
comprehensive strategic alliance in Tunisia between Aurora and Billiton.

Following delivery of results of this programme,  Billiton would have a right to
earn an initial 51% interest,  and a subsequent 19% interest  (aggregate 70%) in
the Property  through  work  expenditures  of $2 million and project  financing,
under the terms proposed in this letter.

Details of the offer are presented below. All figures are in US currency.

1.   Private Placement:  Billiton would purchase 857,143 common shares of Aurora
     at a price of $.70 per share for proceeds of $600,000. A full warrant would
     be attached to each share for an aggregate of 857,143 warrants, exercisable
     for one year  after  issue at a price of $.85 per  share.  Exercise  of the

<PAGE>

     warrants would be at Billiton's election, and failure to exercise would not
     result in termination  of the Farm-in Rights or Joint Venture  contemplated
     herein.

2.   Use of Proceeds:  Funds from the private placement totalling $475,000 would
     be used to conduct a geological  programme  including  drilling at Hammala,
     pursuant to a programme and budget  recommended by Aurora,  and approved by
     Billiton.  The remaining $125,000 would be utilised by Aurora to search for
     other zinc projects in Tunisia, and for general corporate purposes.

3.   First Farm-in Right: Up to one year from closing of the private  placement,
     Billiton (or a designated assignee which is an affiliate of Billiton) would
     have the right to exercise an option to earn a 51% working  interest in the
     Property  through an  expenditure of $1 million over a 2 year period as per
     the following schedule:

     --------------------------------------------------------------------------
     COMPLETION DATE                    AMOUNT                   CUMULATIVE AMT
     --------------------------------------------------------------------------
      JUNE 1, 2002                     $500,000                    $500,000
     --------------------------------------------------------------------------
      JULY 1, 2003                     $500,000                    $1,000,000
     --------------------------------------------------------------------------

     Funds expended in the first year of the farm-in right in excess of $500,000
     would be attributable to the second year  requirement.  Billiton would have
     the right to terminate the option at any time during operation of the First
     Farm-in Right subject only to prior notification in writing to Aurora of 90
     days.

4.   Joint Venture:  Upon completion of the First Farm-in Right, a joint venture
     ("Hammala  JV") would be  established  with the  participants  contributing
     their  share of  programme  costs  according  to their  percentage  working
     interests, subject to a standard dilution formula for non-contribution.

5.   Second Farm-in Right: Upon completion of the First Farm-in Right, but prior
     to an additional  expenditure of $2 million on the Property by the parties,
     Billiton  would  have the  right to elect  to earn a  further  19%  working
     interest (for an aggregate  70% interest) by providing  Aurora with project
     financing  for  all  further   expenditures  to  the  start  of  commercial
     production  from the  Property.  Billiton  would recoup its  investment  on
     behalf of Aurora  from 90% of Aurora's  net project  cash flow at a rate of
     LIBOR plus 4%. This rate reflects risk conditions  anticipated for Tunisian
     projects in the medium to long term.

6.   Operator:  Aurora  would be  Operator of the  project  from  closing of the
     Private Placement.  Billiton would have the right to become Operator at any
     time  following  its election to  participate  in the First  Farm-in  Right
     subject to giving Aurora 90 days notice of its intention. In the event that
     Billiton assumes operatorship prior to vesting, Billiton will pay Aurora 5%
     of expenditures up till vesting to a maximum of $25,000.  In the event that
     Billiton assumes operatorship after vesting no payment shall apply.

7.   Overhead/Management Fees: The Operator would have the right to charge a 10%
     fee for administrative and management  services to the project.  During the
     two  farm-in  phases of the  agreement,  the  intent of this is to  provide
     Aurora with significant coverage for its annual administrative costs.

8.   Approval  of  Programmes   and  Budgets:   The  Operator   would  have  the
     responsibility to propose programmes and budgets.  During the first farm-in
     phase of the project,  Billiton  would have the right to modify and approve
     the annual  programme  and  budget.  During the joint  venture  phase,  the
     Operator  would  propose  the  programme  and  budget  each  year,  and the
     participants  would  have  60  days  to  review,  modify  and  vote on each
     programme and budget, pro rata with their respective  interest.  In case of
     deadlock, Billiton would hold a deciding vote while its interest was 51% or
     greater.

9.   Pre-emptive  Rights:  Should one participant decide to encumber or sell its
     interest in the project to a third  party,  not  including a transfer to an
     affiliate, the non-selling participant would have the right to

<PAGE>

     purchase  the  seller's  interest  on terms no less  advantageous  to those
     offered  by the  third  party,  or  for  cash  where  there  is a  non-cash
     component.

10.  Future  Financing:  Billiton  would have the right to participate in future
     Aurora  financings pro rata with its  percentage  interest in Aurora at the
     time of the future financing.

11.  Timing:  This LOI expires at 5pm  Vancouver  time on Friday March 17, 2000.
     Unless  otherwise  agreed by the  parties,  this LOI,  once  signed,  would
     terminate by June 15, 2000 unless replaced by a signed formal agreement.

12.  Additional  Properties:  Aurora  will  attempt to acquire  additional  zinc
     properties in Tunisia.  Aurora agrees to offer any additional properties to
     Billiton under similar terms as presented in this LOI as long as it remains
     a party to the agreements  contemplated  in this LOI. In exchange  Billiton
     agrees  to  work   exclusively   with   Aurora  in   Tunisia  in  terms  of
     identification  and  acquisition  of new claims,  and agrees not to acquire
     properties  in Tunisia  without first  offering  said  properties to Aurora
     under similar terms to those presented herein for Hammala.  Both Aurora and
     Billiton  will provide  each other a schedule  for  inclusion in the formal
     agreements  identifying  specific projects which will be excluded from this
     provision.

13.  Area  of  Interest:  Following  the  establishment  of  the  Hammala  JV as
     contemplated in this LOI, a two-kilometre  area of interest ("AOI") will be
     established around the Property.  Land acquired by either party within this
     AOI  will be  offered  by the  acquiror  to the  other  party  at cost  for
     inclusion in the Hammala JV.

14.  Domicile:  Aurora agrees to move its domicile  outside of the United States
     of America as a condition  precedent to closing the private  placement  and
     the related property deal.

15.  Registration  Rights:  Aurora  will agree to provide  Billiton  with demand
     registration  rights  together with piggyback  rights,  with respect to the
     securities  issued to Billiton  under the private  placement  in order that
     Billiton  may  resell  such  securities  in the  United  States in a timely
     fashion.  This  provision is intended to replace the 4-month hold  normally
     created  through the AIF process on Canadian  exchanges.  The rights  would
     last for a period of two years or until Aurora's  shares become tradable on
     a Canadian exchange, whichever is earlier

In terms of  process,  we would  like to come to  agreement  on terms of a deal,
subject to the board and regulatory approvals noted above. Non-binding agreement
would be acknowledged by signing of this letter.  We would then ask for a period
of up to 7  business  days to inform our  senior  management  group of the final
version of the deal. A news release,  and filing of the proposed  agreement with
regulatory  authorities  would then be made,  with  approval of the news release
contents by both  Billiton  and Aurora  within the 7 day  business  window.  The
parties  would  then have 45 days to  complete  a binding  option/joint  venture
agreement  and  subscription  document.  Failure  to  complete  and  sign  these
documents  within the 45-day window would result in  termination of the terms of
this offer,  unless  agreed  otherwise by the parties.  We have the templates of
both  documents  essentially  in place now,  and would  expect to deliver  first
drafts to you within 5 business days.

For clarity, no press release or public disclosure of this offer will be made by
either party until the filing and news release noted above. This issue is highly
critical to Billiton and we consider  maintenance of the information  embargo as
critical to closing the deal.

In  closing,  I want to  communicate  that  our goal is to  develop  significant
"strategic  alliances" with a number of professional  exploration  groups during
the coming year. We see these  alliances as larger than a single  venture,  with
the  potential  for  property  transactions  both in and  out of the  associated
company. We would very much like to see Aurora as one our partners.

<PAGE>

If you are in  agreement  with the terms of this  offer,  please so  indicate by
signing  and  dating  a copy of the  offer  in the  space  provided  below,  and
returning one copy to the Billiton Vancouver office.

I trust this letter reflects our discussion,  and I look forward to working with
you and the Aurora group this summer.

Yours Truly,
Per: Billiton UK Resources B.V.

/s/ Eric B Tweedie

Eric B Tweedie
Director

Agreed and acknowledged  this 25th day of February 2000 on behalf of Aurora Gold
Corp.

/s/ David E. Jenkins                                          February 25, 2000
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Name                                                          Date

David E. Jenkins,  President
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Title

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                                   SCHEDULE A

               Property Description and Map with UTM Co-ordinates

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