Document:

ex101

     

    THE
      PROPERTY OPTION AGREEMENT

    

     

    CARL
      VON EINSIEDEL

    

    AND

    

    RAM
      EXPLORATION LTD.

    

    AND

    

    ERC
      EXPLORATION LTD.

    

    

     

    JOHNSON

    MINERAL
      PROPERTIES

    

    PROVINCE
      OF BRITISH COLUMBIA

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

     

    

      
        	
                DEFINITIONS

              	
                2

              
	
                REPRESENTATIONS
                  AND WARRANTIES OF VON
                  EINSIEDEL

              	
                5

              
	
                REPRESENTATIONS
                  AND WARRANTIES OF ERC

              	
                6

              
	
                GRANT
                  AND EXERCISE OF OPTION

              	
                6

              
	
                RIGHT
                  OF ENTRY

              	
                8

              
	
                OBLIGATIONS
                  OF VON EINSIEDEL DURING PROPERTY OPTION
                  PERIOD 

              	
                8

              
	
                TERMINATION
                  OF PROPERTY ACQUISITION
                  

              	
                8

              
	
                TRANSFERS

              	
                9

              
	
                FORCE
                  MAJEURE 1

              	
                10

              
	
                CONFIDENTIAL
                  INFORMATION

              	
                10

              
	
                ARBITRATION

              	
                10

              
	
                DEFAULT
                  AND TERMINATION

              	
                11

              
	
                NOTICES

              	
                11

              
	
                GENERAL

              	
                11

              

      

    

    
SCHEDULE
“A”

    DESCRIPTION
      OF PROPERTY RIGHTS AND PROPERTY 

    

    SCHEDULE
“B”

    JOINT
      VENTURE AGREEMENT 

    

    

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    OPTION
      AGREEMENT

    

    

    THIS
      AGREEMENT made
      effective as of the 28 day of November, 2005.

    BETWEEN:

    CARL
      VON EINSIEDEL,
      an
      individual having a residence at 8888 Shook Road, Mission, in the Province
      of
      British Columbia.,V2V 7N1, Canada. 

    

    (hereafter
      “von Einsiedel”)

    

    AND:

    

    RAM
      EXPLORATION LTD.,
      a body
      corporate, incorporated under the laws of British Columbia and having offices
      located at 1124 - 470 Granville Street, Vancouver in the Province of British
      Columbia, V6C 1V5, Canada

    

    (hereafter
      “Ram”)

    

    AND:

     

    ERC
      EXPLORATION LTD..,
      a body
      corporate, incorporated under the laws of British Columbia and having offices
      located at 112 - 2906 West Broadway Street, Vancouver, in the Province of
      British Columbia, V6K 2G8, Canada

    

    (hereafter
      “ERC”)

     

    

    WHEREAS:

    

    A.
       von
      Eindsiedel is the holder of all Property Rights related to the Property;
      and

    

    B.
       von
      Eindsiedel has agreed to grant an Option to ERC to acquire an interest in and
      to
      the Property Rights and the Property, on the terms and conditions hereinafter
      set forth;

    

    NOW
      THEREFORE THIS AGREEMENT WITNESSETH that
      in
      consideration of the sum of $1.00 now paid by ERC to von Eindsiedel and the
      sum
      of $1.00 now paid by ERC to Ram (the receipt of which von Eindsiedel and Ram
      hereby acknowledged), the parties agree as follows:

    

    DEFINITIONS

    

    1.1
       For
      the
      purposes of this Agreement the following words and phrases shall have the
      following meanings, namely:

    

    a)
       “Agreement”
      means this agreement and any amendments thereto from time to time;

    

    b)
       “Commencement
      Date” means the date of this Agreement;

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    
      	
              c)
                

            	
              “Completion
                Date” means the date on which ERC fulfills all of its obligations with
                respect to proper exercise of the Option as contemplated in Article
                4
                hereof;

            

    

    

    d)     “ERC”
means
      ERC Exploration Ltd.;

    

    
      	
              e)
                

            	
              “Exploration
                Expenditures” means the sum of 

            

    

    
      	(i)  	
              all
                costs of acquisition and maintenance of the Property, all exploration
                and
                development expenditures and all other costs and expenses of whatsoever
                kind or nature including those of a capital nature, incurred or chargeable
                by Ram with respect to the exploration and development of the Property
                and
                the placing of the Property into Commercial Production and
                

            

    

    
      	(ii)  	
              any
                compensation for general overhead expenses which Ram , as Operator,
                will
                charge to ERC, an amount equal to 5% of all amounts included in
                subparagraph (i) involving aggregate payments by it in excess of
                $10,000,
                and 7.5% of all other amounts included in subparagraph (i) involving
                aggregate payments by it less than
                $10,000

            

    

    

    
      	
              f)
                

            	
              “Feasibility
                Report” means a detailed written report of the results of a comprehensive
                study on the economic feasibility of placing the Property or a portion
                thereof into Commercial Production and shall include a reasonable
                assessment of the mineral ore reserves and their amenability to
                metallurgical treatment, a description of the work, equipment and
                supplies
                required to bring the Property or a portion thereof into Commercial
                Production and the estimated cost thereof, a description of the mining
                methods to be employed and a financial appraisal of the proposed
                operations supported by an explanation of the data used therein;
                

            

    

    

    g)      “von
      Eindsiedel” means Carl von Einsiedel.

    

    
      	
              h)
                

            	
              “Joint
                Venture Agreement” means the agreement substantially in the form as
                attached hereto as Schedule “B”;

            

    

    

    
      	
              i)
                

            	
              “Mine”
                means the workings established and assets acquired, including, without
                limiting the generality of the foregoing, development headings, plant
                and
                concentrator installations, infrastructure, housing, airport and
                other
                facilities in order to bring the Property into Commercial
                Production;

            

    

    

    j)      “Mineral
      Products” means the end products derived from operating the Property as a
      Mine;

    

    k)      “Mining
      Operations” means every kind of work done:

    

    i)
       on
      or in
      respect of the Property in accordance with a Feasibility Report; or

    
      	 	
              ii)
                

            	
              if
                not provided for in a Feasibility Report, unilaterally and in good
                faith
                to maintain the Property in good standing, to prevent waste or to
                otherwise discharge any obligation which is imposed upon it pursuant
                to
                this Agreement;

            

    

    

    including,
      without limiting the generality of the foregoing, investigating, prospecting,
      exploring, developing, property maintenance, preparing reports, estimates and
      studies, designing, equipping, improving, surveying, construction and mining,
      milling, concentrating, rehabilitation, reclamation, and environmental
      protection;

    

    
      	
              l)
                

            	
              “Option”
                means the irrevocable option for ERC to earn in and acquire a net
                undivided interest in and to the Property as provided in this
                Agreement;

            

    

    

    
      	
              m)
                

            	
              “Option
                Period” means the period commencing on the Commencement Date to and
                including December 31, 2009;

            

    

     

     

    
      
        
        

      

      
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              n)
                

            	
              “Property”
                means the exploration properties and lands located in the Province
                of
                British Columbia, all as more particularly described in Schedule
“A”
                hereto;

            

    

    

    
      	o)      	
              “Property
                Rights” means all applications for permits for general reconnaissance,
                permit for general reconnaissance, interim approvals, applications
                for
                contracts of work, contracts of work, licenses, permits, easements,
                rights-of-way, certificates and other approvals obtained by either
                of the
                parties either before or after the date of this Agreement and necessary
                for the exploration and development of the Property, or for the purpose
                of
                placing the Property into production or continuing production therefrom,
                and;

            

    

     

    
      	p)  	
                  “Ram”
                means Ram Explorations Ltd., a British Columbia
                corporation.

            

    

    

    REPRESENTATIONS
      AND WARRANTIES OF VON
      EINSIEDEL

     

    2.1
       von
      Eindsiedel hereby acknowledges and confirms that it holds the Property Rights
      related to an undivided one hundred (100%) percent interest in the Property
      as
      at the date hereof.

    

    
      	2.2  	
              von
                Eindsiedel represents and warrants to ERC
                that:

            

    

    
      	a)  	
              von
                Eindsiedel is lawfully authorized to hold his interest in the Property
                and
                will remain so entitled until 85% of the interests of von Eindsiedel
                in
                the Property have been duly transferred to ERC as contemplated by
                the
                terms hereof;

            

    

    
      	b)  	
              von
                Eindsiedel is
                an individual, has attained the age of majority and is legally competent
                to execute this agreement and to take all actions required pursuant
                thereto and that upon the execution and delivery, this agreement,
                will
                constitute a legal, valid and binding contract of von Eindsiedel
                enforceable against von Eindsiedel in accordance with its
                terms;

            

    

    
      	c)  	
              as
                at the date hereof and at the time of transfer to ERC of an interest
                in
                the mineral claims and/or exploration licenses comprising the Property
                von
                Eindsiedel is and will be the beneficial owner of its interest in
                the
                Property free and clear of all liens, charges, claims, royalties
                or net
                profit interests of whatsoever nature, and no taxes or rentals will
                be due
                in respect of any thereof;

            

    

    
      	d)  	
              von
                Eindsiedel has the right and capacity to deal with the Property and
                the
                right to enter into this Agreement and to dispose of his right, title
                and
                interest in the Property as herein
                contemplated;

            

    

    
      	e)  	
              there
                is no adverse claim or challenge against or to von Eindsiedel’s interest
                in the Property, nor to the knowledge of von Eindsiedel is there
                any basis
                therefor, and there are no outstanding agreements or options to acquire
                or
                purchase such interest in the Property or any portion thereof other
                than
                this Agreement;

            

    

    
      	f)  	
              no
                person has any royalty, net profit interests or other interest whatsoever
                in the Property;

            

    

    
      	g)  	
              von
                Eindsiedel is duly authorized to execute this Agreement and for the
                performance of this Agreement by him, and the consummation of the
                transactions herein contemplated will not conflict with or result
                in any
                breach of any covenants or agreements contained in, or constitute
                a
                default under, or result in the creation of any encumbrance under
                the
                provisions of its articles or constating documents or any indenture,
                agreement or other instrument whatsoever to which von Eindsiedel
                is a
                party or by which he is bound or to which he or the Property may
                be
                subject;

            

    

    
      	h)  	
              no
                proceedings are pending for, and it is unaware of any basis for the
                institution of any proceedings leading to, the placing of von Eindsiedel
                in bankruptcy or subject to any other laws governing the affairs
                of and
                insolvent person;

            

    

    
      	i)  	
              there
                are no claims, proceedings, actions or lawsuits in existence and
                to the
                best of von Eindsiedel’s information and belief none are contemplated or
                threatened against or with respect to the right, title, estate and
                interest of von Eindsiedel in the
                Property;

            

    

    
      	j)  	
              to
                the best of his information and belief, all laws, regulations and
                orders
                of all governmental agencies having jurisdiction over the Property
                have
                been complied with by von
                Eindsiedel;

            

    

     

     

    
      
        
        

      

      
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      	k)  	
              to
                the best of his information and belief von Eindsiedel is in good
                standing
                under all agreements and instruments affecting the Property to which
                he is
                a party or is bound.

            

    

    

    2.3
      The
      representations and warranties contained in this section are provided for the
      exclusive benefit of ERC, and a breach of any one or more thereof may be waived
      by ERC in whole or in part at any time without prejudice to its rights in
      respect of any other breach of the same or any other representation or warranty,
      and the representations and warranties contained in this section shall survive
      the execution hereof.

    

    2.4
      The
      representations and warranties contained in this section shall be deemed to
      apply to all assignments, transfers, conveyances or other documents transferring
      to ERC the interest to be acquired hereunder and there shall not be any merger
      of any covenant, representation or warranty in such assignments, transfers,
      conveyance or documents, any rule or law, in equity or statute to the contrary
      notwithstanding.

     

    REPRESENTATIONS
      AND WARRANTIES OF ERC

    

    3.1
      ERC
      represents and warrants to von Eindsiedel that:

    
      	a)  	
              it
                has been duly incorporated and validly exists as a corporation in
                good
                standing under the laws of its jurisdiction of
                incorporation;

            

    

    
      	b)  	
              it
                is or will be prior to acquiring any undivided interest in the Property
                hereunder, lawfully authorized to hold mineral claims and real property
                under the laws of the jurisdiction in which the Property is
                situate;

            

    

    
      	c)  	
              it
                has duly obtained all corporate authorizations for the execution
                of this
                Agreement and for the performance of this Agreement by it, and the
                consummation of the transaction herein contemplated by it will not
                conflict with or result in any breach of any covenants or agreements
                contained in, or constitute a default under, or result in the creation
                of
                any encumbrance under the provisions of the articles or the constating
                documents of it or any shareholders' or directors' resolution, indenture,
                agreement or other instrument whatsoever to which it is a party or
                by
                which they are bound or to which it or the Property may be subject;
                and,

            

    

    
      	d)  	
              no
                proceedings are pending for, and it is unaware of any basis for the
                institution of any proceedings leading to, the dissolution or winding
                up
                of ERC or the placing of ERC in bankruptcy or subject to any other
                laws
                governing the affairs of insolvent corporations.
                

            

    

    

    3.2
      The
      representations and warranties contained in this section are provided for the
      exclusive benefit of von Eindsiedel and a breach of any one or more thereof
      may
      be waived by von Eindsiedel in whole or in part at any time without prejudice
      to
      its rights in respect of any other breach of the same or any other
      representation or warranty, and the representations and warranties contained
      in
      this section shall survive the execution hereof.

    

    3.3
      The
      representations and warranties contained in this section shall be deemed to
      apply to all assignments, transfers, conveyances or other documents transferring
      to von Eindsiedel the interest to be acquired hereunder and there shall not
      be
      any merger of any covenant, representation or warranty in such assignments,
      transfers, conveyance or documents, any rule or law, in equity or statute to
      the
      contrary notwithstanding.

    .

    GRANT
      AND EXERCISE OF OPTION

    

    4.1
      von
      Eindsiedel hereby irrevocably grants to ERC the sole and exclusive right and
      Option to acquire up to and including a eighthly five percent (85%) right,
      title, estate and interest of von Eindsiedel’s one 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    hundred
      (100%) percent net undivided interest) in and to the Property Rights and
      Property, free and clear of all charges, encumbrances, claims, royalties and
      net
      profit interests of whatsoever nature. 

    4.2
      If at
      any time after the date hereof ERC determines in its sole discretion to
      commission a Feasibility Report recommending the Construction of a Mine, ERC
      shall give written notice thereof to von Einsiedel. 

    4.3
      The
      Option may be exercised at any time (subject to the terms as stated herein)
      by
      ERC: 

    a)
      paying
      von Eindsiedel two thousand and five hundred ($2,500) dollars upon the execution
      of this agreement;

    b)
      paying
      von Eindsiedel two thousand and five hundred ($2,500) dollars on or before
      December 31, 2006;

    c)
      paying
      von Eindsiedel ten thousand ($10,000) dollars on or before December 31,
      2007

    d)
      paying
      von Eindsiedel thirty five thousand ($35,000) dollars on or before December
      31,
      2008

    e)
      incurring Exploration Expenditures on the Property as follows:

    i)
      aggregate Exploration Expenditures of not less than ten thousand dollars
      ($10,000) on or before December 31, 2006; 

    ii)
      aggregate Exploration Expenditures (including Exploration Expenditures as
      described in paragraph 4.3(c)(i) above) of not less than twenty thousand dollars
      ($20,000) on or before December 31, 2007;

    iii)
      aggregate Exploration Expenditures (including Exploration Expenditures as
      contemplated in paragraph 4.3(c)(i) and (ii) above) of not less than sixty
      thousand ($60,000) dollars on or before December 31, 2008; and

    iv)
      aggregate Exploration Expenditures (including Exploration Expenditures as
      contemplated in paragraph 4.3(c)(i), (ii) and (iii) above) of not less than
      two
      hundred and fifty thousand dollars ($250,000) on or before December 31,
      2009.

    4.4
      Prior
      to the exercise of the Option as herein provided, Ram is hereby appointed as
      operator of the

    Property
      and shall carry out exploration and development programs on the Property on
      the
      following terms:

    a)
      Ram
      shall have the same powers, duties and obligations in carrying out such programs
      asset out in Article 7 of the Joint Venture Agreement attached hereto as
      Schedule “B”, excepting thereout Section 7.5 and 7.6 thereof;

    b)
      For
      income tax purposes, all Exploration Expenditures incurred by Ram pursuant
      to
      such programs shall be incurred for the benefit of ERC; and

    c)
      Until
      such time as the Option is exercised in accordance with the terms hereof, ERC
      shall have no interest of whatsoever nature in the Property Rights or the
      Property.

    

    4.5
      If
      and when the Option has been exercised in accordance with Section 4.3 and
      commencing on the

    Completion
      Date:

    a)
      The
      undivided right, title and interest of the parties in the Property shall be
      as
      follows:

    Before
      Completion Date
      (net)               
After
      Completion Date (net)

    von
      Eindsiedel
      100%                
von
      Eindsiedel 15%

    ERC
      0%     
ERC
      85%

    Total
      100%                                 
Total
      100%

    b)
      the
      undivided right, title and interest in and to the Property Rights and the
      Property acquired by ERC upon the Completion Date shall vest in ERC free and
      clear of all charges, encumbrances, claims, royalties or net profit interests
      of
      whatsoever nature other than as set forth and described in the Joint Venture
      Agreement substantially in the form attached hereto as Schedule
“B”;

    d)
      for
      the purposes of the Joint Venture Agreement:

    i)
      von
      Eindsiedel will be deemed to have contributed forty four thousand and one
      hundred dollars ($44,100)and ERC will be deemed to have contributed two hundred
      and fifty thousand dollars ($250,000) dollars of Costs to the Joint Venture
      for
      purposes thereof;

    ii)
      Ram
      will be the initial operator of the Joint Venture and will have the option
      to
      remain as operator of the Joint Venture for so long as von Eindsiedel holds
      a
      participating interest of fifteen (15%) percent or greater in the Joint
      Venture;

    iii)
      Ram
      will be entitled on a calendar year basis to a fee equal to:

    A.
      5% of
      the value of Costs in excess of ten thousand ($10,000) dollars; and

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    B.
      7.5%
      of the value of Costs less than ten thousand ($10,000) dollars; 

    iv)
      any
      royalties on production from the Property payable to third parties will be
      payable pro rata in accordance with each party's participating interest in
      the
      Joint Venture.

    4.6
      Within 30 days after the Completion Date, von Eindsiedel shall deliver to ERC's
      counsel such number of duly executed transfers which in the aggregate convey
      von
      Eindsiedel's interest to be acquired hereunder in the Property in favour of
      ERC.
      In the event that von Eindsiedel shall deliver notice to ERC's counsel that
      it
      has exercised the Option pursuant to the terms hereof, ERC shall be entitled
      to
      receive and to record such of the transfers contemplated hereby at its own
      cost
      with the appropriate governmental office to effect legal transfer of such
      interest in the Property into the name of ERC.

    4.7
      If,
      during the Option Period, Ram:

    a)
      makes
      a voluntary or involuntary assignment into bankruptcy or takes advantage of
      any
      legislation for the winding-up or liquidation of the affairs of insolvent or
      bankrupt companies or has a bankruptcy petition filed against it; or

    b)
      fails
      to perform in a manner that is consistent with good mining practice or fails
      to
      perform in a manner consistent with its duties and responsibilities under this
      Agreement and does not remedy such default within 30 days of receipt of written
      notice from ERC specifying such default;

    ERC
      shall
      have the right, upon thirty (30) days written notice to Ram, to terminate Ram
      as
      the Operator of the Property.

    

    RIGHT
      OF ENTRY

    

    5.1
      During the term of this Agreement, the directors and officers of Ram and their
      servants, agents and independent contractors, shall have the sole and exclusive
      right in respect of the Property to:

    a)
      enter
      thereon at their sole risk and expense;

    b)
      do
      such prospecting, exploration, development and other mining work thereon and
      thereunder as Ram, as operator and under the direction of ERC, in its sole
      discretion may determine advisable;

    c)
      bring
      upon and erect upon the Property such buildings, plant, machinery and equipment
      as Ram may deem advisable and for a period of six months following the
      termination of this Agreement, to remove such buildings, plant, machinery and
      equipment; and

    d)
      remove
      therefrom and dispose of reasonable quantities of ores, minerals and metals
      for
      the purposes of obtaining assays or making other tests. 

    

    OBLIGATION
      OF RAM DURING OPTION PERIOD

    

    6.1
      During the term of this Agreement, Ram shall:

    a)
      maintain in good standing those mineral claims and/or exploration licenses
      comprised in the Property by the doing and filing of assessment work or the
      making of payments in lieu thereof, and the performance of all other actions
      which may be necessary in that regard and in order to keep such mineral claims
      free and clear of all liens and other charges arising from Ram’s activities
      thereon except those at the time contested in good faith by ERC; 

    b)
      permit
      the directors, officers, employees and designated consultants of ERC, at their
      own risk and expense, access to the Property at all reasonable times, and ERC
      agrees to indemnify Ram against and to save it harmless from all costs, claims,
      liabilities and expenses that ERC may incur or suffer as a result of any injury
      (including injury causing death) to any director, officer, employee or
      designated consultant of ERC while on the Property;

    c)
      permit
      ERC, at its own expense, reasonable access to the results of the work done
      on
      the Property during the last completed calendar year;

    d)
      do all
      work on the Property in a good and workmanlike fashion and in accordance with
      all applicable laws, regulations, orders and ordinances of any governmental
      authority;

    e)
      indemnify and save ERC harmless in respect of any and all costs, claims,
      liabilities and expenses arising out of Ram’s activities on the
      Property;

    

    TERMINATION
      OF OPTION

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    7.1
      Provided that ERC is not in default pursuant to the provisions hereof, ERC
      shall
      have the right at any time during the term of this Agreement to terminate the
      Option by providing not less than forty five (45) days written notice to Ram
      and
      to von Eindsiedel.

    7.2
      Notwithstanding the termination of the Option, ERC shall have the right, within
      a period of one hundred and eighty (180) days following the end of the Option
      Period, to remove from the Property all buildings, plant, equipment, machinery,
      tools, appliances and supplies which have been brought upon the Property by
      or
      on behalf of ERC, and any such property not removed within such 180 day period
      shall thereafter become the property of von Eindsiedel.

    

    TRANSFERS

    

    8.1
      If
      von Eindsiedel (the “Proposed Seller”) should receive a bona fide offer from an
      independent third party (the “Proposed Purchaser”) dealing at arm's length with
      the Proposed Seller to purchase all or a part of its interest in the Property,
      which offer the Proposed Seller desires to accept, or if the Proposed Seller
      intends to sell all or a part of its interest in the Property: 

    a)
      The
      Proposed Seller shall first offer (the “Offer”) such interest in writing to ERC
      upon terms no less favourable than those offered by the Proposed Purchaser
      or
      intended to be offered by the Proposed Seller, as the case may be;

    b)
      The
      Offer shall specify the price, terms and conditions of such sale, the name
      of
      the Proposed Purchaser and shall, in the case of an intended offer by the
      Proposed Seller, disclose the person or persons to whom von Eindsiedel intends
      to offer its interest and, if the offer received by the Proposed Seller from
      the
      Proposed Purchaser provides for any consideration payable to the Proposed Seller
      otherwise than in cash, the Offer shall include the Proposed Seller's good
      faith
      estimate of the cash equivalent of the non-cash consideration; 

    c)
      If
      within a period of sixty (60) days of the receipt of the Offer and ERC notifies
      the Proposed Seller in writing that it will accept the Offer, the Proposed
      Seller shall be bound to sell such interest to ERC on the terms and conditions
      of the Offer. If the Offer so accepted by ERC contains the Proposed Seller's
      good faith estimate of the cash equivalent of the non-cash consideration as
      aforesaid, and if ERC disagrees with the Proposed Seller's best estimate, ERC
      shall so notify von Eindsiedel at the time of acceptance and ERC shall, in
      such
      notice, specify what it considers, in good faith, the fair cash equivalent
      to be
      and the resulting total purchase price. If ERC so notifies the Proposed Seller,
      the acceptance by ERC shall be effective and binding upon ERC, and the cash
      equivalent of any such non-cash consideration shall be determined by binding
      arbitration and shall be payable by ERC, subject to prepayment as hereinafter
      provided, within 60 days following its determination by arbitration. ERC shall
      in such case pay to the Proposed Seller, against receipt of an absolute transfer
      of clear and unencumbered title to the interest of the Proposed Seller being
      sold, the total purchase price which is specified in its notice to the Proposed
      Seller and such amount shall be credited to the amount determined following
      arbitration of the cash equivalent of any non-cash consideration;

    d)
      If ERC
      fails to notify the Proposed Seller before the expiration of the time limited
      therefor that it will purchase the interest offered, the Proposed Seller may
      sell and transfer such interest to the Proposed Purchaser at the price and
      on
      the terms and conditions specified in the Offer for a period of sixty (60)
      days,
      but the terms of this paragraph shall again apply to such interest if the sale
      to the Proposed Purchaser is not completed within such sixty (60)
      days;

    e)
      Any
      sale hereunder shall be conditional upon the Proposed Purchaser delivering
      to
      the nonselling party, its agreement related to this Agreement and to the
      Property, containing: 

    i)
      a
      covenant by the Proposed Purchaser to perform all the obligations of the
      Proposed Seller to be performed under this Agreement in respect of the interest
      to be acquired by it from the Proposed Seller to the same extent as if this
      Agreement had been originally executed by the Proposed Purchaser;
      and

    ii)
      a
      provision subjecting any further sale, transfer or other disposition of such
      interest

    in
      the
      Property and this Agreement or any portion thereof to the restrictions contained
      in this paragraph (e).

    8.2
      The
      provision of Section 8.1 shall apply to a proposed sale by ERC of its interest
      in the Property

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    mutatis
      mutandis such
      that
      von Eindsiedel shall have a right of first refusal to acquire such interest
      in
      proportion to the then current interest.

    8.3
      No
      assignment by a party of any interest less than its entire interest in this
      Agreement and in the

    Property
      shall discharge it from any of its obligations hereunder, but upon the transfer
      by a party of the entire interest at the time held by it in this Agreement,
      whether to one or more transferees and whether in one or in a number of
      successive transfers, the party shall be deemed to be discharged from all
      obligations hereunder save and except for fulfilment of contractual commitments
      accrued due prior to the date on which the party shall have no further interest
      in this Agreement.

    

    FORCE
      MAJEURE

    

    9.1
      If
      Ram is at any time either during the term of this Agreement or thereafter
      prevented or delayed in complying with any provisions of this Agreement by
      reason of strikes, lock-outs, labour shortages, power shortages, fuel shortages,
      fires, wars, acts of God, governmental regulations restricting normal
      operations, shipping delays or any other reason or reasons, other than lack
      of
      funds, beyond the control of Ram, the time limits for the performance by ERC
      of
      its obligations hereunder shall be extended by a period of time equal in length
      to the period of each such prevention or delay, but nothing herein shall
      discharge Ram from its obligations hereunder to maintain the Property in good
      standing.

    9.2
      Ram
      shall give prompt notice to ERC and to von Einsiedel of each event of force
      majeure under Section 9.1 and upon cessation of such event shall furnish to
      ERC
      and to von Einsiedel with notice to that effect together with particulars of
      the
      number of days by which the obligations of ERC and to von Einsiedel hereunder
      have been extended by virtue of such event of force majeure and all preceding
      events of force majeure.

    

    CONFIDENTIAL
      INFORMATION

    

    10.1
      The
      parties to this Agreement shall keep confidential all books, records, files
      and
      other information supplied by any party to one of the other parties or to their
      employees, agents or representative in connection with this Agreement or in
      respect of the activities carried out on the Property by a party, or related
      to
      the sale of minerals, or other products derived from the Property, including
      all
      analyses, reports, studies or other documents prepared by a party or its
      employees, agents or representatives, which contain information from, or
      otherwise reflects such books, records, files or other information. The parties
      shall not and shall ensure that their employees, agents or representatives
      do
      not disclose, divulge, publish, transcribe, or transfer such information, all
      or
      in part, without the prior written consent of the other parties, which may
      not
      be arbitrarily withheld and which shall not apply to such information or any
      part thereof to the extent that: 

    a)
      prior
      to its receipt by a party such information was already in the possession of
      such
      party or its employees, agents or representatives; or

    b)
      in
      respect of such information required to be publicly disclosed pursuant to
      applicable securities or corporate laws.

    

    ARBITRATION

    

    11.1
      Von
      Einseidel and ERC agree that all questions or matters in dispute with respect
      to
      any dispute shall be settled by arbitration and shall be submitted to
      arbitration pursuant to the terms hereof. 

    11.2
      It
      shall be a condition precedent to the right of von Einseidel and ERC, to submit
      any matter to arbitration pursuant to the provisions hereof, that any party
      intending to refer any matter to arbitration shall have given not less than
      ten
      (10) days' prior notice of its intention to do so to the other party, together
      with particulars of the matter in dispute. On the expiration of such ten (10)
      days, the party who gave such notice may proceed to refer the dispute to
      arbitration as provided in 11.3.

    11.3
      The
      party desiring arbitration shall appoint one arbitrator, and shall notify the
      other party of such appointment, and such other party shall, within fifteen
      (15)
      days after receiving such notice, either consent to the appointment of such
      arbitrator which shall then carry out the arbitration or appoint an

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    arbitrator,
      and the two arbitrators so named, before proceeding to act, shall, within thirty
      (30) days of the appointment of the last appointed arbitrator, unanimously
      agree
      on the appointment of a third arbitrator to act with them and be chairman of
      the
      arbitration herein provided for. If the other parties shall fail to appoint
      an
      arbitrator within fifteen (15) days after receiving notice of the appointment
      of
      the first arbitrator, the first arbitrator shall be the only arbitrator, and
      if
      the two arbitrators appointed by the party shall be unable to agree on the
      appointment of the chairman, the chairman shall be appointed under the
      provisions of the Arbitration
      Act of
      British Columbia. Except as specifically otherwise provided in this section,
      the
      arbitration herein provided for shall be conducted in accordance with such
      Act.
      The chairman, or in the case where only one arbitrator is appointed, the single
      arbitrator, shall fix a time and place in Vancouver, British Columbia, for
      the
      purpose of hearing the evidence and representations of the parties, and he
      shall
      preside over the arbitration and determine all questions of procedure not
      provided for under such Act or this section. After hearing any evidence and
      representations that the parties may submit, the single arbitrator, or the
      arbitrators, as the case may be, shall make an award and reduce the same to
      writing, and deliver one copy thereof to each of the parties. The expense of
      the
      arbitration shall be paid as specified in the award 

    11.4
      The
      arbitrating parties agree that the award of a majority of the arbitrators,
      or in
      the case of a single arbitrator, of such arbitrator, shall be final and binding
      upon each of them.

    

    DEFAULT
      AND TERMINATION

    

    12.1
      If
      at any time during the term of this Agreement ERC fails to perform any
      obligation required to be performed by it hereunder or is in breach of a
      warranty given by it hereunder, which failure or breach materially interferes
      with the implementation of this Agreement, von Eindsiedel may terminate this
      Agreement but only if:

    a)
      it
      shall have first given to the defaulting ERC a notice of default containing
      particulars of the obligation which the defaulting ERC has not performed, or
      the
      warranty breached; and

    b)
      the
      defaulting ERC has not, within forty-five (45) days following delivery of such
      notice of default, cured such default or commenced proceedings to cure such
      default by appropriate payment or performance, the defaulting ERC hereby
      agreeing that should it so commence to cure any default it will prosecute the
      same to completion without undue delay, provided however, that this paragraph
      shall not be extended to a default by ERC to exercise an Option pursuant to
      Article 4 thereof.

    12.2
      Notwithstanding Section 12.1 hereof, if at any time ERC fails to perform a
      condition precedent to the exercise of the Option, von Eindsiedel shall be
      entitled to forthwith terminate this Agreement.

    

    NOTICES

    

    13.1
      Each
      notice, demand or other communication required or permitted to be given under
      this Agreement shall be in writing and shall be sent by prepaid registered
      mail
      deposited in a Post Office in Canada addressed to the party entitled to receive
      the same, or delivered, telexed, telegraphed or telecopied to such party at
      the
      address for such party specified on the face page hereof. The date of receipt
      of
      such notice, demand or other communication shall be the date of delivery thereof
      if delivered, telexed, telegraphed or telecopied, or, if given by registered
      mail as aforesaid, shall be deemed conclusively to be the third business day
      after the same shall have been so mailed except in the case of interruption
      of
      postal services for any reason whatever, in which case the date of receipt
      shall
      be the date on which the notice, demand or other communication is actually
      received by the addressee.

    13.2
      Either party may at any time and from time to time notify the other party in
      writing of a change or address and the new address to which notice shall be
      given to it thereafter until further change.

    

    GENERAL

    

    14.1
      This
      Agreement shall supersede and replace any other agreement or arrangement,
      whether oral or written, heretofore existing between the parties in respect
      of
      the subject matter of this Agreement. 

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    14.2
      No
      consent or waiver expressed or implied by any party in respect of any breach
      or
      default by any other party in the performance by such other of its obligations
      hereunder shall be deemed or construed to be a consent to or a waiver of any
      other breach of default.

    14.3
      The
      parties shall promptly execute or cause to be executed all documents, deeds,
      conveyances and other instruments of further assurance and do such further
      and
      other acts which may be reasonably necessary or advisable to carry out fully
      and
      effectively the intent and purpose of this Agreement or to record wherever
      appropriate the respective interest from time to time of the parties in the
      Property.

    14.4
      This
      Agreement shall enure to the benefit of and be binding upon the parties and
      their respective successors and permitted assigns.

    14.5
      This
      Agreement shall, (i) be governed by and construed in accordance with the laws
      of
      British Columbia and the parties hereby irrevocably attorn to the jurisdiction
      of the said province and (ii) be subject to the approval of all securities
      regulatory authorities having jurisdiction, such approvals to be sought in
      a
      timely and diligent manner.

    14.6
      Time
      shall be of the essence in this Agreement.

    14.7
      Wherever the neuter and singular is used in this Agreement it shall be deemed
      to
      include the plural, masculine and feminine, as the case may be.

    14.8
      The
      rights and obligations of each party shall be in every case several and not
      joint or joint and several.

    

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

    

    

    CARL
      VON EINSIEDEL

    

    

    Carl
      von Einsiedel                  /s/
      Bradley Hiley

      witness

    

    

    Bradley
      Hiley

    name
      of witness

    

    

    RAM
      EXPLORATION LTD.

     

    

    /s/
      Carl von Einsiedel

    Carl
      von Einsiedel, Pres.

     

    

    

    ERC
      EXPLORATION LTD.

     

    

    /s/
      William Iversen

    William
      Iversen, Pres. & CE0

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      

      SCHEDULE
“A”

      

      THE
        OPTION AGREEMENT

       

      DESCRIPTION
        OF PROPERTY RIGHTS AND PROPERTY

      dated
        November 28, 2005

       

      The
        Johnson mineral claims are located within the Kamloops Mining Division of
        British Columbia

      Map
        sheet
        82M

      UTM
        5671000N/301000E

      

      

      
        	
                Tenure

              	
                Name

              	
                Owner

              	
                Map
                  Number

              	
                Expiry

              	
                Status

              	
                Cells

              	
                Area
                  (Hectares)

              
	
                510730

              	
                Johnson

              	
                127981

              	
                82M04

              	
                April
                  13, 2006

              	
                GOOD

              	
                20

              	
                405.435

              
	
                517513

              	
                “

              	
                127981

              	
                82M04

              	
                July
                  12, 2006

              	
                GOOD

              	
                1
                  +
                  5 fractions

              	
                121.640

              
	
                510731

              	
                “

              	
                127981

              	
                82M04

              	
                April
                  13, 2006

              	
                GOOD

              	
                4

              	
                81.105

              
	 	 	 	 	 	
                Totals

              	
                25
                  + 5 fractions

              	
                608.180

              

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

         

        SCHEDULE
“B”

        TO

        THE
          PROPERTY OPTION AGREEMENT

        

        JOINT
          VENTURE AGREEMENT

        

        between

        

        VONCO
          (a company to be formed)

        

        and

        

        ERC
          EXPLORATION LTD.

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        TABLE
          OF CONTENTS

        

        

        
          
            	 DEFINITIONS	
                     4

                  
	 REPRESENTATIONS
                    AND WARRANTIES	
                     6

                  
	 PURPOSE AND
                    CREATION
                    OF THE JOINT VENTURE	
                     6

                  
	 DILUTION	
                     8

                  
	 MANAGEMENT
                    COMMITTEE	
                     8

                  
	 OPERATOR	
                     10

                  
	 POWER, DUTIES
                    AND
                    OBLIGATIONS OF OPERATOR	
                     11

                  
	 PROGRAMS	
                     13

                  
	 MINE
                    FINANCING	
                     14

                  
	 CONSTRUCTION
                    OF
                    MINE	
                     14

                  
	 OPERATION
                    OF
                    MINE	
                     14

                  
	 PAYMENT OF
                    CONSTRUCTION AND OPERATING COSTS	
                     15

                  
	 DISTRIBUTION
                    IN
                    KIND	
                     15

                  
	 SURRENDER
                    OF
                    INTEREST	
                     16

                  
	 TERMINATION
                    OR SUSPENSION OF MINING
                    OPERATIONS	
                     16

                  
	 INFORMATION AND
                    DATA	
                     17

                  
	 PARTITION	
                     17

                  
	 TAXATION	
                     18

                  
	 RIGHT
                    OF FIRST
                    REFUSAL	
                    18

                  
	 FORCE
                    MAJEURE	
                    19

                  
	 NOTICE	
                    19

                  
	 WAIVER	
                    20

                  
	 FURTHER
                    ASSURANCES	
                    20

                  
	 USE OF
                    NAME	
                     20

                  
	 ENTIRE
                    AGREEMENT	
                     20

                  

          

           

           

          
            
              
              

            

            
              2

              
                

              

            

            
              
              

            

          

           

          
            	 AMENDMENT	
                     20

                  
	 ARBITRATION	
                     20

                  
	 RIGHT
                    TO
                    AUDIT	
                     20

                  
	 TIME	
                     21

                  
	 RULE AGAINST
                    PERPETUITIES	
                     21

                  
	 DOCUMENT
                    RETENTION
                    ON TERMINATION	
                     21

                  
	 ENUREMENT	
                     21

                  
	 GOVERNING
                    LAW	
                     21

                  
	 NUMBER
                    AND GENDER	
                     21

                  
	 HEADINGS	
                     21

                  
	 TIME
                    OF THE
                    ESSENCE	
                     21

                  

          

        

        

        

        SCHEDULE
“A”

        DESCRIPTION
          OF PROPERTY RIGHTS AND PROPERTY

        

        SCHEDULE
“B”

        DEFINITION
          OF NET PROFITS

        

        SCHEDULE
“C”

        ACCOUNTING
          PROCEDURES

         

        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

        

        JOINT
          VENTURE AGREEMENT

        

        THIS
          AGREEMENT made
          as
          of the ___ day of ___________, 20__.

        

        BETWEEN:

        

        VONCO,
          a
          corporation to be formed having offices at 1124 - 470 Granville Street,
          in the
          City of Vancouver, in the Province of British Columbia, (hereafter referred
          to
          as “Vonco”);

        

        OF
          THE
          FIRST PART

        

        AND:

        

        ERC
          EXPLORATION LTD.,,
          a body
          corporate, incorporated under the laws of Nevada and having offices located
          at
          112 - 2906 West Broadway Street, Vancouver, British Columbia, V6K 2G8,
          Canada;

        

        (hereafter
          “ERC”)

        OF
          THE
          SECOND PART

        

        WHEREAS:

        A.
          Vonco
          owns a 15 % and ERC owns a 85% undivided right, title and interest in and
          to the
          Property;

        B.
          The
          parties wish to create a joint venture to carry out the continued operation
          of
          the Property on the terms and subject to the conditions hereinafter set
          forth.

        

        NOW
          THEREFORE THIS AGREEMENT WITNESSETH that
          in
          consideration of the premises, and of the mutual covenants and agreements
          herein
          contained, the parties hereto have agreed and do hereby agree as
          follows:

        

        DEFINITIONS

        1.1
          In
          this Agreement, including the Recitals and Schedules hereto the following
          words
          and expressions shall have the following meanings: 

        
          	a)  	
                  “Accounting
                    Procedure” means the accounting procedure attached to this Agreement as
                    Schedule “C”;

                

        

        
          	b)  	
                  “Affiliate”
                    shall have the same meaning as under the Business
                    Corporations Act (Alberta)
                    as at the date hereof;

                

        

        
          	c)  	
                  “Agreement”
                    means this Joint Venture Agreement as amended from time to time;
                    

                

        

        
          	d)  	
                  “Commercial
                    Production” means the operation of the Property as a producing mine and
                    the production of Mineral Products therefrom (excluding bulk
                    sampling,
                    pilot plant or test

                

        

        
          	e)  	
                  operations);

                

        

        
          	f)  	
                  “Completion
                    Date” means the date on which it is demonstrated to the satisfaction
                    of
                    the Management Committee that the preparing and equipping of
                    a Mine for
                    Commercial Production is complete;

                

        

        
          	g)  	
                  “Construction”
                    means every kind of work carried out during the Construction
                    Period by the
                    Operator in accordance with a Feasibility Report approved by
                    the
                    Management Committee;

                

        

        
          	h)  	
                  “Construction
                    Period” means the period beginning on the date of a Feasibility Report
                    and
                    ending on the Completion Date;

                

        

         

         

        
          
            
            

          

          
            4

            
              

            

          

          
            
            

          

        

         

         

        
          	i)  	
                  “Costs”
                    means all items of outlay and expense whatsoever, direct or indirect,
                    with
                    respect to Mining Operations in accordance with this Agreement,
                    without
                    limiting the generality of the foregoing, the following categories
                    of
                    Costs shall have the following
                    meanings

                

        

        
          	j)  	
                  ”ERC”
                    means ERC Exploration Ltd. 

                

        

        
          	k)  	
                  “Feasibility
                    Report” means a detailed written report of the results of a comprehensive
                    study on the economic feasibility of placing the Property or
                    a portion
                    thereof into Commercial Production and shall include a reasonable
                    assessment of the mineral ore reserves and their amenability
                    to
                    metallurgical treatment, a description of the work, equipment
                    and supplies
                    required to bring the Property or a portion thereof into Commercial
                    Production and the estimated cost thereof, a description of the
                    mining
                    methods to be employed and a financial appraisal of the proposed
                    operations supported by an explanation of the data used
                    therein;

                

        

        
          	l)  	
                  “Interest”
                    means the undivided beneficial percentage interest from time
                    to time of a
                    party in the Joint Venture and the Property, and Mineral Products,
                    as set
                    out hereunder; 

                

        

        
          	m)  	
                  “Joint
                    Venture” means the joint venture created pursuant to this Agreement;
                    

                

        

        
          	n)  	
                  “Management
                    Committee” means the management committee constituted in
                    accordance

                

        

        with
          the
          provisions of Article 5 hereof to manage or supervise the management of
          the
          business and affairs of the Joint Venture;

        
          	o)  	
                  “Mine”
                    means the workings established and assets acquired, including,
                    without
                    limiting the generality of the foregoing, development headings,
                    plant and
                    concentrator installations, infrastructure, housing, airport
                    and other
                    facilities in order to bring the Property into Commercial
                    Production;

                

        

        
          	p)  	
                  “Mine
                    Construction Costs” means those Costs incurred during the Construction
                    Period;

                

        

        
          	q)  	
                  “Mine
                    Costs” means Mine Construction Costs and Operating Costs;
                    and

                

        

        
          	r)  	
                  “Mineral
                    Products” means the end products derived from operating the Property as
                    a
                    Mine;

                

        

        
          	s)  	
                  “Mining
                    Operations” means every kind of work done by the
                    Operator:

                

        

        i)on
          or
          in respect of the Property in accordance with a Feasibility Report;
          or

        ii)
          if
          not provided for in a Feasibility Report, unilaterally and in good faith
          to
          maintain the Property in good standing, to prevent waste or to otherwise
          discharge any obligation which is imposed upon it pursuant to this Agreement
          and
          in respect of which the Management Committee has not given it directions;
          including, without limiting the generality of the foregoing, investigating,
          prospecting, exploring, developing, property maintenance, preparing reports,
          estimates and studies, designing, equipping, improving, surveying, Construction
          and mining, milling, concentrating, rehabilitation, reclamation, and
          environmental protection.

        
          	t)  	
                  “Net
                    Profits” shall mean net profits calculated in accordance with Schedule
“B”
                    hereto;

                

        

        
          	u)  	
                  “Operator”
                    means the operator appointed pursuant to Article
                    6;

                

        

        
          	v)  	
                  “Operating
                    Costs” means those Costs incurred subsequent to the Completion
                    Date;

                

        

        
          	w)  	
                  “Operating
                    Year” shall mean a twelve-month period, the first Operating Year to
                    commence on the Completion Date and each succeeding Operating
                    Year
                    commencing at the expiration of the preceding Operating
                    Year.

                

        

        
          	x)  	
                  “Operating
                    Plan” shall mean a plan in accordance with Section
                    11.2.;

                

        

        
          	y)  	
                  “Option
                    Agreement” means the option agreement, made as of the 28th
                    day of November , 2005. between Carl von Einseidel, Ram Exploration
                    Ltd.
                    and ERC; 

                

        

        
          	z)  	
                  “Other
                    Tenements” means (i) all surface rights of and to any lands within or
                    outside the Property including surface held in fee or under lease,
                    licence, easement, right of way or other rights of any kind (and
                    all
                    renewals, extensions and amendments thereof or substitutions
                    therefor)
                    acquired by or on behalf of the parties with respect to the Property,
                    (ii)
                    all information obtained from Mining Operations, and (iii) those
                    rights
                    and benefits appurtenant to the Property that are acquired for
                    the purpose
                    of conducting Mining Operations;

                

        

        
          	aa)  	
                  “party”
                    or “parties” means the parties to this Agreement and their respective
                    successors and permitted assigns which become parties to this
                    Agreement;

                

        

        
          	bb)  	
                  “Program”
                    means a plan, including budgets, for the Project or any part
                    thereof as
                    approved by the Management Committee pursuant to this
                    Agreement;

                

        

         

         

        
          
            
            

          

          
            5

            
              

            

          

          
            
            

          

        

         

        
          	cc)  	
                  “Project”
                    means the exploration and development of the Property, preparation
                    and
                    delivery of a Feasibility Report and the Construction and operation
                    of
                    facilities to put the Property into Commercial
                    Production;

                

        

        
          	dd)  	
                  “Property”
                    means those certain mining claims and related rights and interests
                    set out
                    and more particularly described in Schedule “A” hereto and Other Tenements
                    and shall include any renewal thereof and any form of substitute
                    or
                    successor title thereto;

                

        

        
          	ee)  	
                  “Royalty”
                    means a royalty on the Net Profits calculated in accordance with
                    Schedule
                    “B” hereto;

                

        

        
          	ff)  	
                  “Simple
                    Majority” means a decision made by the parties hereof or the Management
                    Committee by greater than 50% of the votes entitled to be cast.
                    

                

        

        
          	gg)  	
                  “Vonco”
                    means a company to be formed by Carl von
                    Einseidel.

                

        

        

        REPRESENTATIONS
          AND WARRANTIES

        2.1
          Each
          of the parties represents each to the other that

        :a)
          it is
          the legal and beneficial owner of the Interest as set forth and described
          in the
          recitals hereto free and clear of all liens, charges and encumbrances except
          as
          set forth in Schedule “A” attached hereto and the Option Agreement;
          and

        b)
          save
          and except as set out herein, there is no adverse claim or challenge against
          or
          to the ownership of or title to its Interest or any portion thereof, nor
          is
          there any basis therefor, and there are no outstanding agreements or options
          to
          acquire or purchase its Interest or any portion thereof.

        2.2
          Each
          of the parties represents each to the other that:

        a)
          it is
          a company duly incorporated, organized and validly subsisting under the
          laws of
          its incorporating jurisdiction;

        b)
          it has
          full power and authority to carry on its business and enter into this Agreement
          and any agreement or instrument referred to or contemplated by this Agreement
          and to carry out and perform all of its obligations hereunder; and

        c)
          it has
          duly obtained all corporate authorizations for the execution, delivery
          and
          performance of this Agreement and the consummation of the transactions
          herein
          contemplated will not conflict with or result in any breach of any covenants
          or
          agreements contained in, or constitute a default under, or result in the
          creation of any encumbrance, lien or charge under the provisions of its
          constating documents or any indenture, agreement or other instrument whatsoever
          to which it is a party or by which it is bound or to which it may be subject
          and
          will not contravene any applicable laws.

        2.3
          The
          representations and warranties hereinbefore set out are conditions on which
          the
          parties have relied in entering into this Agreement, are to be construed
          as both
          conditions and warranties and shall, regardless of any investigation which
          may
          have been made by or on behalf of any party as to the accuracy of such
          representations and warranties, survive the closing of the transactions
          contemplated hereby and each of the parties will indemnify and save the
          other
          harmless from all loss, damage, costs, actions and suits arising out of
          or in
          connection with any breach of any representation or warranty contained
          in this
          Agreement and each party shall be entitled, in addition to any other remedy
          to
          which it may be entitled, to set off any such loss, damage or costs suffered
          by
          it as a result of any such breach against any payment required to be made
          by it
          to the other party hereunder.

        

        PURPOSE
          AND CREATION OF THE JOINT VENTURE

        3.1
          The
          parties agree each with the other to use their best efforts to develop
          and
          operate the Property with the goal of eventually putting the Property into
          Commercial Production should a Feasibility Report recommending Commercial
          Production be obtained and a decision to commence Commercial Production
          be made,
          and for this purpose the parties hereby agree to associate and participate
          in a
          single purpose joint venture to carry out all such acts which are necessary
          or
          appropriate, directly or indirectly, to carry out the Project.

        

        3.2
          The
          parties have not created a partnership and nothing contained in this Agreement
          shall in any manner whatsoever constitute a party the partner, agent or
          legal
          representative of any other party or create any fiduciary relationship
          between
          them for any purpose whatsoever. No party shall have any authority to

         

         

        
          
            
            

          

          
            6

            
              

            

          

          
            
            

          

        

         

        act
          for
          or to assume any obligations or responsibility on behalf of any other party
          except as may be, from time to time, agreed upon in writing between the
          parties
          or as otherwise expressly provided. 

        

        3.3
          The
          rights and obligations of each party shall be in every case several and
          not
          joint or joint and several.

        

        3.4
          Beneficial ownership of the Property shall remain in each party in proportion
          to
          its respective Interest and any legal title to the Property held by any
          party
          shall be subject to this Agreement. All property held, acquired or contributed
          by or on behalf of the parties under or pursuant to this Agreement shall
          be
          beneficially owned by the parties as tenants in common in proportion to
          their
          respective Interests. 

        

        3.5
          Each
          party shall make available its Interest for the purposes of the Project
          and, in
          particular, each party agrees to grant a mortgage, charge, lien, encumbrance
          on,
          or a security Interest in, its Interest to and in favour of any lender
          or party
          hereto to facilitate financing of the Project or any portion
          thereof.

        

        3.6
          The
          rights and obligations of the parties created under this Agreement shall
          be
          strictly limited to the Property and shall not be extended by implication
          or
          otherwise, except with the unanimous written consent of the
          parties.

        

        3.7
          Except as may be otherwise expressly provided in this Agreement, nothing
          herein
          shall restrict in any way the freedom of any party, except with respect
          to its
          Interest, to conduct as it sees fit any business or activity whatsoever,
          including the development or application of any process, and the exploration
          for, development, mining, extraction, production, handling, processing
          or any
          treatment, transportation or marketing of any ore, mineral or other product
          for
          any other purpose, without any accountability to any other party.

        

        3.8
          Each
          party shall do all things and execute all documents necessary in order
          to
          maintain the Property and the Property Rights in good standing.

         

        3.9
          Except as may be otherwise expressly specified in this Agreement, each
          party, in
          proportion to its Interest, shall indemnify and hold harmless each other
          party
          and each director, officer, employee, agent and representative of each
          other
          party, from and against any claim of or liability to any third person asserted
          on the ground that action taken under this Agreement has resulted in or
          will
          result in any loss or damage to such third person to the extent, but only
          to the
          extent that such claim or liability is paid by such other party in the
          amount in
          excess of that amount payable by reason of such other party's Interest,
          but the
          foregoing shall not prejudice any claim of any party against the
          Operator.

        

        3.10
          Each
          party covenants and agrees with the others:

        
          	(a)  	
                  to
                    perform or cause to be performed its obligations and commitments
                    under
                    this Agreement and, without limiting the generality of the foregoing,
                    to
                    pay Costs in proportion to its Interest except as may be otherwise
                    provided in Article 4 and Article 9 hereof;
                    and

                

        

        
          	(b)  	
                  not
                    to engage either alone or in association with others in any activity
                    in
                    respect of the Property or the Project except as provided or
                    authorized by
                    this Agreement.

                

        

        

        3.11
          For
          administrative convenience, and without, altering or affecting the rights,
          titles and interests created hereby, the parties agree that the Operator
          may
          hold the Property, in trust, for the use and benefit of the parties in
          accordance with the terms and provisions of this Agreement and in proportion
          to
          their respective Interests as adjusted from time to time, until such times
          as
          the Management Committee shall determine that it is appropriate or advisable
          for
          the Property to be held or registered in the name of the parties, another
          trustee or nominee which the Management Committee may select. Such holding
          of
          the Property in trust shall not prevent the vesting of the legal and beneficial
          title hereto in the parties in the manner and at the times as otherwise
          herein
          provided.

        

         

        
          
            
            

          

          
            7

            
              

            

          

          
            
            

          

        

         

         

        DILUTION

        4.1
          Upon
          formation of the Joint Venture, Vonco
          will be deemed to have contributed forty four thousand and one hundred
          dollars
          ($44,100)and ERC will be deemed to have contributed two hundred and fifty
          thousand ($250,000) dollars of Costs to the Joint Venture for purposes
          thereof

        

        4.2
          The
          respective Interests of the parties shall be subject to variation from
          time to
          time in the event: a) of failure by a party to pay its proportionate share
          of
          Costs;

        a) subject
          to Section 4.5 and Section 8.7 hereof, of the election by a party not to
          participate in a Program, or;

        
          	
                  b)

                	
                  subject
                    to Section 4.5 and Section 8.7 hereof, of the election by a party
                    to pay
                    less than its proportionate share of Costs in respect of a Program
                    adopted
                    by the Management Committee.

                

        

        

        4.3
          Upon
          the happening of any of the events set forth in subsection 4.2(a)-(b),
          inclusive
          hereof, each party's Interest shall be varied to equal the product obtained
          by
          multiplying 100% by a fraction of which the numerator shall be the amount
          of
          Costs paid by such party and of which and the denominator shall be the
          total
          amount of Costs paid by all parties. For the purposes of this section,
          the
          amount of Costs paid by a party shall include the amount of Costs deemed
          to have
          been paid by that party as set forth in Section 4.1.

        

        4.4
          In
          the event that a party's Interest is reduced to five (5%) percent or less
          by the
          operation of Section 4.3 hereof, such party shall forthwith relinquish
          its
          Interest and shall transfer such Interest to the other parties hereto in
          proportionate shares and shall receive as consideration therefor a Royalty
          equal
          to two and one-half (2.5%) percent of Net Profits. In the event of such
          relinquishment, such party shall have no further right to participate in
          any
          Programs and shall have no further Interest in the Property, except the
          Royalty.

        

        4.5
          A
          party which forfeits or reduces its Interest in the Property pursuant to
          Section
          4.2 shall have the rights to redeem its position if the actual Costs expended
          is
          less costly by at least 25% than the budget as set out in the Program to
          which
          the party had not agreed, otherwise the forfeiture is final. The Operator
          shall
          not later than thirty (30) days after completion of a Program, provide
          a
          complete statement of expenditures incurred to date and an estimate of
          expenditures to be incurred to completion of the Operating Year (such
          expenditures to be verified by audit within six (6) months if the forfeiting
          party request and agrees to pay for same) to all parties including the
          forfeiting party. Within twenty (20) days of receipt of the foregoing statement,
          the forfeiting party shall inform the Operator of its wish to redeem its
          Interest or to require an audit. A party redeeming its Interest shall pay
          the
          Costs it would have paid had it participated in the Program, plus interest
          thereon at a rate per annum of prime plus one percent thereon from the
          date of
          the Operator's invoices to the date of payment to the Operator. Payment
          shall be
          made by the redeeming party to the Operator within thirty (30) days of
          providing
          notice of such redemption. The Operator shall pay the proceeds to the other
          parties in proportion to the manner in which their Interests related to
          the
          participation in the subject Program.

        

        MANAGEMENT
          COMMITTEE

        5.1
          A
          Management Committee, consisting of one representative of each party, and
          one or
          more alternate representatives, shall be constituted and appointed within
          fourteen (14) days after the formation of the Joint Venture. The Management
          Committee shall manage, or supervise the management of, the business and
          affairs
          of the Joint Venture and shall exercise all such powers and do all such
          acts as
          the Joint Venture may exercise and do. The Management Committee shall meet
          within fifteen (15) days of its constitution (at which time a chairman
          shall be
          elected from among their number) and may otherwise meet at such places
          as it
          thinks fit for the dispatch of business, adjourn and otherwise regulate
          its
          meetings and proceedings as the members thereof deem fit. Unless otherwise
          provided herein, questions arising at any meeting of the Management Committee
          shall be decided by a Simple Majority of votes with each party's representatives
          being entitled to cast that number of votes which is equal to that party's
          Interest. Unless agreed to in writing by the parties hereto, all meetings
          of the
          Management Committee 

         

         

        
          
            
            

          

          
            8

            
              

            

          

          
            
            

          

        

         

        shall
          be
          held in Vancouver, British Columbia or such other place as the parties
          may
          agree. Any meetings may, if the parties so consent, be held by conference
          telephone.

        

        5.2
          Management Committee Quorum:

        
          	a)  	
                  A
                    quorum for any meeting of the Management Committee shall consist
                    of a
                    representative or representatives of a party or parties whose
                    Interests
                    aggregate one hundred (100%) percent. No business other than
                    the election
                    of a chairman, if any, and the adjournment or termination of
                    the meeting
                    shall be dealt with if a quorum is not present at the commencement
                    of the
                    meeting but the quorum need not be present throughout the
                    meeting;

                

        

        
          	b)  	
                  If
                    a quorum is not present at the opening of a meeting, the parties
                    present
                    or represented shall adjourn the meeting for a period of seven
                    (7) days
                    from the date of the adjourned meeting, but shall not transact
                    any other
                    business. A quorum for any such adjourned meeting shall consist
                    of a
                    representative or representatives of a party or parties who attend
                    such
                    reconvened meeting.

                

        

        

        5.3
          A
          meeting of the Management Committee at which a quorum is present shall
          be
          competent to exercise all or any of the authorities, powers and discretion
          bestowed upon the Management Committee in this Agreement.

        

        5.4
          No
          questions submitted to the Management Committee need be seconded and the
          chairman, if any, of the meeting shall be entitled to submit the questions
          to a
          vote during the meeting.

        

        5.5
          The
          decision on any question by consent in writing of the representatives of
          all
          parties shall be as valid as if it had been decided at a duly called and
          held
          meeting of the Management Committee. Each decision may be in counterparts
          each
          consented to in writing by one or more representatives which together shall
          be
          deemed to constitute one decision.

        

        5.6
          At
          the time of any decision by the Management Committee to adopt a Program,
          the
          parties shall pay, subject to the provisions of Article 8 hereof, their
          proportionate share of the estimated Costs of such Program by depositing
          the
          same into the interest bearing bank account opened and maintained pursuant
          to
          Section 5.7 hereof.

        

        5.7
          The
          Management Committee shall open and maintain an interest bearing bank account
          with a Canadian Chartered bank in the name of the Joint Venture and shall
          use
          the funds on deposit therein for the purposes of the Joint Venture. The
          Management Committee shall appoint signing officers on the said account
          as shall
          be required and shall advise the parties of the particulars of the said
          account.

        

        5.8
          Each
          of the parties hereby agrees that:

        
          	a)  	
                  any
                    interest earned on any sums deposited in the bank account opened
                    and
                    maintained pursuant to Section 5.7 hereof shall be shared in
                    proportion to
                    their respective Interests; and

                

        

        
          	b)  	
                  each
                    shall, following formation of the Joint Venture, deposit in such
                    account
                    in proportion to their Interests any of the actual Costs in excess
                    of the
                    estimated Costs when requested to do so by the Management
                    Committee.

                

        

        

        5.9
          Any
          party (the “Paying Party”) may pay any reasonable Costs due to maintain the
          Property or the Project in good standing and the other parties shall, in
          proportion to their Interest and within fifteen (15) days of being given
          notice
          of such payment, reimburse the Paying Party for such payment, failing such
          reimbursement the parties not paying shall, for purposes of Section 4.2
          hereof,
          be deemed to have elected not to participate in a Program in accordance
          with
          Section 8.3 hereof, and the provisions of Article 4 hereof shall
          apply.

        

        5.10
          In
          the event that the Operator or the consultant appointed pursuant to Section
          7.4
          recommends that further work be conducted on the Property, then the Management
          Committee shall prepare or cause to be prepared a Program.

        
 

        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

         

        5.11
          At
          any time during the currency of this Agreement the Management Committee
          may
          cause a Feasibility Report to be prepared by a substantial and well recognized
          engineering firm in such form as the Management Committee may require.
          The
          Management Committee shall, forthwith upon receipt of a Feasibility Report,
          provide each of the parties with a copy thereof. Upon request of any party
          and
          at reasonable intervals and times the parties shall meet in order to discuss
          such a report.

        

        OPERATOR

        6.1
          The
          initial Operator shall be Services co. An Operator shall continue as Operator
          until changed pursuant to the terms hereof or by a decision of the Management
          Committee with parties representing a Simple Majority voting in favour
          if the
          Operator has failed to perform in a manner that is consistent with good
          mining
          practice or has failed to perform in a manner consistent with its duties
          and
          responsibilities under this Agreement, and the Management Committee has
          given to
          the Operator written notice setting forth particulars of the Operator's
          default
          and the Operator has not within 30 days of receipt of such notice commenced
          to
          remedy the default and thereafter to proceed continuously and diligently
          to
          complete all required remedial action. 

         

        6.2
          The
          Operator may at any time on sixty (60) days notice to the Management Committee
          resign as Operator, in which event the Management Committee shall select
          another
          party or person to be Operator (hereinafter called the “new Operator”) upon the
          thirtieth (30th) day after receipt of the Operator's notice of resignation
          or
          such sooner date as the Management Committee may establish and give notice
          of to
          the resigning Operator. The resigning Operator shall thereupon be released
          and
          discharged from all its duties and obligations as Operator upon the appointment
          of the new Operator except those duties and obligations that it theretofore
          should have performed.

        

        6.3
          Upon
          the Operator making a voluntary or involuntary assignment into bankruptcy
          or
          taking advantage of any legislation for the winding-up or liquidation of
          the
          affairs of insolvent or bankrupt companies the Operator shall automatically
          be
          terminated as operator and the other party or its nominee appointed as
          Operator.

        

        6.4
          The
          new Operator shall assume all of the rights, duties, obligations and status
          of
          the Operator as provided in this Agreement, other than the previous Operator's
          Interest, if any, without obligation to retain or hire any of the employees
          of
          the former Operator or to indemnify the former Operator for any costs or
          expenses which the previous Operator will incur as a result of the termination
          of employment of any of its employees resulting from this change of Operator,
          and shall continue to act as Operator until its replacement or
          resignation.

        

        6.5
          Upon
          the effective time of a resignation, removal or cessation, the departing
          Operator shall within sixty (60) days of such resignation, removal or cessation,
          turn over to its successor, or if no successor has been designated, to
          the
          Management Committee, control and possession of the Property together with
          (i)
          all documents, books, records and accounts (or copies thereof) pertaining
          to the
          performance of its functions as Operator and (ii) all monies held by it
          in its
          capacity as the Operator. Upon transfer and delivery thereof, the departing
          Operator shall be released and discharged from, and the successor Operator
          shall
          assume, all duties and obligations of Operator except the unsatisfied duties
          and
          obligations of the departing Operator accrued prior to the effective date
          of the
          change of Operator and for which the departing Operator shall, notwithstanding
          its release or discharge, continue to remain liable, it being understood
          and
          agreed that the departing and successor Operators respectively shall co-operate
          in finalizing all outstanding matters and completing the transition. If
          the
          title to any real or personal property included in the Property is held
          in the
          name of the departing Operator, it shall transfer such property to the
          successor
          Operator in trust for the parties hereto unless otherwise directed by the
          Management Committee.

        
 

        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        

         

        6.6
          Within sixty (60) days of the effective time of an Operator's resignation,
          removal or cessation as Operator, the Management Committee may cause an
          audit to
          be made of the records maintained by the departing Operator and the cost
          of such
          audit shall be for the joint account of the parties hereto. 6.7 Except
          as
          authorized by the Management Committee or as otherwise herein provided,
          the
          Operator shall not assign its operating rights or obligations under this
          Agreement.

        

        POWER,
          DUTIES AND OBLIGATIONS OF OPERATOR

        7.1
          Subject to the control and direction of the Management Committee, the Operator
          shall have full right, power and authority to do everything necessary or
          desirable to carry out a Program and the Project and to determine the manner
          of
          exploration and development of the Property and, without limiting the generality
          of the foregoing, the right, power and authority to: 

        
          	a)  	
                  regulate
                    access to the Property subject only to the right of representatives
                    of the
                    parties to have access to the Property at all reasonable times
                    for the
                    purpose of inspecting work being done thereon but at their own
                    risk and
                    expense;

                

        

        
          	b)  	
                  employ
                    and engage such employees, agents and independent contractors
                    as it may
                    consider necessary or advisable to carry out its duties and obligations
                    hereunder and in this connection to delegate any of its powers
                    and rights
                    to perform its duties and obligations hereunder, but the Operator
                    shall
                    not enter into contractual relationships with another person
                    except on
                    terms which are commercially
                    competitive;

                

        

        
          	c)  	
                  execute
                    all documents, deeds and instruments, do or cause to be done
                    all such acts
                    and

                

        

        
          	d)  	
                  things
                    and give all such assurances as may be necessary to maintain
                    good and
                    valid title to the Property. Each party hereby irrevocably constitutes
                    the
                    Operator its true and lawful attorney to give effect to the foregoing
                    and
                    hereby agrees to indemnify and save the Operator harmless from
                    any and all
                    costs, loss or damage sustained or incurred without gross negligence
                    or
                    bad faith by the Operator directly or indirectly as a result
                    of its
                    exercise of its powers pursuant to this subsection;
                    and

                

        

        
          	e)  	
                  conduct
                    such title examination and cure such title defects as may be
                    advisable in
                    the reasonable judgment of the
                    Operator.

                

        

        

        7.2
          The
          Operator shall have the following duties and obligations during the term
          hereof:

        
          	a)  	
                  to
                    diligently manage, direct and control all exploration, development
                    and
                    producing operations in and under the Property in a prudent and
                    workmanlike manner and in compliance with all applicable laws,
                    rules,
                    orders and regulations;

                

        

        
          	b)  	
                  to
                    prepare and deliver to each of the parties during the periods
                    of active
                    field work, monthly progress and expense reports of the work
                    in progress,
                    on or before the day which is forty-five (45) days following
                    each calendar
                    month with respect to work done in such month and on or before
                    the first
                    day of every calendar year, comprehensive annual reports covering
                    the
                    activities and expenses hereunder and such report shall include
                    the
                    results obtained during the twelve (12) month period ending on
                    !
                    immediately preceding;

                

        

        
          	c)  	
                  to
                    provide and deliver to each of the parties, together with the
                    reports
                    referred to in subparagraph (b), copies of all assays, maps and
                    drill
                    logs;

                

        

        
          	d)  	
                  subject
                    to the terms and conditions of this Agreement, to keep the Property
                    in
                    good standing, free and clear of all liens, charges and encumbrances
                    of
                    every character arising from operations (except for those which
                    are in
                    effect on the date of this Agreement or are created pursuant
                    to this
                    Agreement, liens for taxes not yet due, other inchoate liens
                    and liens
                    contested in good faith by the Operator) and to proceed with
                    all diligence
                    to contest or discharge any lien that is filed by reason of the
                    Operator's
                    failure to perform its obligations
                    hereunder;

                

        

        
          	e)  	
                  to
                    maintain true and correct books, accounts and records of operations
                    hereunder in accordance with the Accounting Procedure, separate
                    and apart
                    from any other books, accounts and records maintained by the
                    Operator,
                    provided that the judgment of the Operator as to matters related
                    to
                    accounting, for which provision is not made in the Accounting
                    Procedure
                    shall govern if the Operator's accounting practices are in accordance
                    with
                    accounting principles generally accepted in the mining industry
                    in
                    Canada;

                

        

         

         

        
          
            
            

          

          
            11

            
              

            

          

          
            
            

          

        

         

         

        
          	f)  	
                  to
                    permit one representative of the parties appointed in writing
                    at all
                    reasonable times and at their expense to inspect, audit and copy
                    the
                    Operator's accounts and records relating to the accounting for
                    production
                    or to the determination of the proceeds from the sale thereof
                    for any
                    fiscal year of the Operator within 9 months following the end
                    of such
                    fiscal year. The Operator shall maintain its accounts and records
                    for a
                    period of at least two (2) years or such longer period as required
                    by the
                    laws of Canada or its Provinces. The parties shall be entitled
                    to inspect,
                    audit and copy the accounts and records upon giving the Operator
                    ten (10)
                    days notice of their intention to do
                    so;

                

        

        
          	g)  	
                  to
                    obtain and maintain or cause any contractor engaged hereunder
                    to obtain
                    and maintain during any period in which active work is carried
                    out
                    hereunder such insurance coverage as the Management Committee
                    deems
                    advisable;

                

        

        
          	h)  	
                  to
                    permit the parties or their representatives appointed in writing,
                    at all
                    reasonable times, at their own expense and risk, reasonable access
                    to the
                    Property and all data derived from carrying out work
                    thereon;

                

        

        
          	i)  	
                  to
                    open and maintain on behalf of the Joint Venture such bank account
                    or bank
                    accounts as the Management Committee may direct with a Canadian
                    chartered
                    bank;

                

        

        
          	j)  	
                  to
                    prosecute and defend, but not to initiate without the consent
                    of the
                    Management Committee, all litigation or administrative proceedings
                    arising
                    out of the Property, or Project;

                

        

        
          	k)  	
                  to
                    transact, undertake and perform all transactions, contracts,
                    employments,
                    purchases, operations, negotiations with third parties and any
                    other
                    matter or thing undertaken by or on behalf of the Joint Venture
                    hereunder
                    in the Operator's name and to pay all expenditures incurred in
                    connection
                    therewith promptly when due;

                

        

        
          	l)  	
                  to
                    transact, undertake and perform all transactions, contracts,
                    employments,
                    purchases, operations, negotiations with third parties and any
                    other
                    matter or thing undertaken on behalf of the parties in the Operators
                    name;
                    m) to maintain in good standing those mineral claims comprised
                    in the
                    Property by the doing and filing of all assessment work or the
                    making of
                    payments in lieu thereof and by the payment of all taxes and
                    other like
                    charges;

                

        

        
          	m)  	
                  to
                    take all proper and reasonable steps for the protection of rights
                    of
                    surface owners against damage occasioned by operations to be
                    conducted
                    hereunder and pay such damages as may lawfully be determined
                    as resulting
                    from such operations.

                

        

        

        7.3
          Subject to any specific provisions of this Agreement, the Operator, in
          carrying
          out its duties and obligations hereunder, shall at all times be subject
          to the
          direction and control of the Management Committee and shall perform its
          duties
          hereunder in accordance with the instructions and directions as from time
          to
          time communicated to it by the Management Committee and shall make all
          reports
          to the Management Committee except where otherwise specifically provided
          herein.

        

        7.4
          The
          Operator shall commence and diligently complete the Project and without
          limiting
          the generality of the foregoing, may retain an independent consulting geologist
          acceptable to the Management Committee to prepare a report in respect of
          the
          Project, the results thereof, the conclusions derived therefrom and the
          recommendation as to whether or not further work should be conducted on
          the
          Property.

        

        7.5
          Subject to Section 7.3, the Operator may charge the following sums in return
          for
          its head office overhead functions which are not charged directly as provided
          in
          the Accounting Procedure: a) with respect to Mine Construction, an amount
          equal
          to 5.0% of all Construction Costs; and b) subsequent to the Completion
          Date, an
          amount equal to 2.5% of all Operating Costs.

        

        7.6
          Notwithstanding Section 7.5, if a party gives notice in writing to the
          Management Committee that the party holds a bona fide belief that the sums
          charged under Section 7.5 are either excessive or insufficient then the
          Management Committee shall call a meeting to be held within ninety (90)
          days of
          receipt of such notice for the purpose of amending or ratifying the amounts
          charged under Section 7.5 hereof.

        
          
            
            

          

          
            12

            
              

            

          

          
            
            

          

        

        

        PROGRAMS

        8.1
          Expenditures shall only be incurred under and pursuant to Programs prepared
          by
          the Operator and approved by the Management Committee. Any Feasibility
          Report
          shall be prepared pursuant to a separate Program.

        

        8.2
          The
          Operator shall prepare and submit to the Management Committee a Program
          within
          90 days of the completion of the previous Program. If the Operator does
          not
          prepare a Program within the time limited, then the other parties shall
          have the
          right to prepare a Program for submission to the Management Committee at
          which
          time the party submitting the Program shall become the Operator. 

        

        8.3
          Within sixty (60) days of the approval by the Management Committee of a
          Program,
          each party shall give written notice to the Operator stating whether or
          not it
          elects to contribute its respective Costs of such Program or requesting
          the
          Operator to revise this Program provided that each party may only make
          such
          requests once in respect of each Program. Subject to Section 8.7, failure
          by any
          of the parties to give notice pursuant to this subsection within such sixty
          (60)
          day period shall be deemed an election by that party not to contribute
          to such
          Program.

        

        8.4
          If
          the party elects or is deemed to have elected not to contribute its Costs
          of a
          Program, the other parties may give notice in writing to the Operator stating
          that it or they will contribute all expenditures under or pursuant to such
          Program and the Operator will proceed with such Program and thereafter
          the
          interests of the parties shall be adjusted in accordance with Article 4.
          The
          Operator will not proceed with any Program which is not fully
          subscribed.

        8.5
          If
          the parties elect or contribute their respective Costs of a Program, the
          Operator will proceed with the Program. 

        8.6
          If
          any party requests the Operator to revise a Program in accordance with
          Section
          8.3, the Operator will revise such Program at once and resubmit the revised
          Program to the parties on the same terms and conditions as any other Program,
          except that the parties shall not have the right to request any further
          revisions.

        

        8.7
          If
          any party elects or is deemed to have elected not to contribute to a Program
          its
          Interest will not be subject to adjustment if, within sixty (60) days of
          such
          election or deemed election it elects to pay to the contributing party
          or
          parties one hundred and fifty (150%) percent of what would otherwise have
          been
          its contribution to such Program, but any amount so paid in excess of what
          would
          otherwise have been its contribution to such Program shall be deemed not
          to be a
          contribution to Costs by the party making it.

        

        8.8
          An
          election by a party to contribute to a Program shall make that party liable
          to
          pay its proportionate share of Costs actually incurred under or pursuant
          to the
          Program including Program Overruns, as herein after defined, of up to but
          not
          exceeding ten (10%) percent.

        

        8.9
          After
          having elected to contribute to a Program which is proceeded with, a party
          shall, within 30 days after being invoiced therefor by the Operator, pay
          such
          portion of its share of Costs as the Operator may require but the Operator
          shall
          not require payment of any funds more than one month in advance.

        

        8.10
          If
          it appears that Costs will exceed by greater than ten (10%) percent those
          estimated under a program the Operator shall immediately give written notice
          to
          the party or parties contributing to that program outlining the nature
          and
          extent of the additional costs and expenses (hereinafter called “Program
          overruns”). If Program Overruns are approved by the party or parties
          contributing to that Program, then within thirty (30) days after the receipt
          of
          a written request from the Operator, the party or parties contributing
          to that
          Program shall provide the Operator with their respective shares of such
          Program
          overruns. If Program Overruns are not approved by the party or parties
          contributing to that Program, the Operator shall have a right to curtail
          or
          abandon such Program. Any costs incurred by the Operator due to 

         

         

        
          
            
            

          

          
            13

            
              

            

          

          
            
            

          

        

         

        a
          curtailment or abandonment of the Program shall be paid by the parties
          pursuant
          to their respective Interests in the Program.

        

        8.11
          If
          any party at any time fails to pay its share of Costs in accordance with
          Sections 8.9 or 8.10, the Operator may give written notice to that party
          demanding payment, and if the party has not paid such amount within fifteen
          (15)
          days of the receipt of such notice, that party shall be deemed to: 

         

        
          	(a)  	
                  be
                    in default under Section 8.9 or 8.10 as applicable;
                    and

                

        

        
          	(b)  	
                  have
                    elected not to contribute to that Program for the purpose of
                    Article 4 and
                    the Interest of the parties shall be adjusted in accordance with
                    Article 4
                    and the Operator shall have the right to curtail or abandon the
                    Program
                    and that party shall not be entitled to contribute to any subsequent
                    Programs.

                

        

        

        MINE
          FINANCING

        9.1
          The
          parties hereto shall be responsible for providing or arranging the financing
          of
          a Mine. In providing or arranging the financing for a Mine, the Property
          and
          Mine may be pledged, hypothecated, mortgaged, charged, or otherwise encumbered
          in order to secure monies borrowed and used for the sole purpose of enabling
          the
          Mine to be financed. Subject to this Article any party may pledge, mortgage,
          hypothecate, charge or otherwise encumber its interest in order to secure
          by way
          of floating charge as a part of the general corporate assets of that party's
          money borrowed for its general corporate purposes, provided that the pledgee,
          mortgagee, holder of the charge or encumbrance (in this paragraph referred
          to as
          a “Chargee”) shall hold the same subject to the provisions of this Agreement and
          that if the Chargee realizes upon any of its security it will comply with
          this
          Agreement. The agreement between the party, as borrower, and the Chargee
          shall
          contain specific provisions to the same effect as the provisions of this
          Article.

        

        CONSTRUCTION
          OF MINE

        10.1
          Upon
          approval by the Management Committee of the Feasibility Report recommending
          the
          Construction of a Mine, the Management Committee shall cause the Operator
          to,
          and the Operator shall, proceed with Construction with all reasonable dispatch.
          Construction shall be substantially in accordance with the Feasibility
          Report
          subject to any variations agreed upon by the parties and subject also to
          the
          right of the Management Committee to cause such other reasonable variations
          in
          Construction to be made as the Management Committee deems
          advisable.

        

        OPERATION
          OF MINE

        11.1
          Commencing with the Completion Date, all Mining Operations shall be planned
          and
          conducted and all estimates, reports and statements shall be prepared and
          made
          on the basis of an Operating Year.

        

        11.2
          With
          the exception of the first Operating Year, an Operating Plan for each Operating
          Year shall be submitted by the Operator to the parties not later than ninety
          (90) days prior to the end of the year immediately preceding the Operating
          Year
          to which the Operating Plan relates. Each Operating Plan shall contain
          the
          following:

         

        
          	a)  	
                  a
                    plan for the proposed Mining
                    Operations;

                

        

        
          	b)  	
                  a
                    detailed estimate of all Mine Costs plus a reasonable allowance
                    for
                    contingencies;

                

        

        
          	c)  	
                  an
                    estimate of the quantity and quality of the ore to be mined and
                    the
                    concentrates or metals to be produced; and such other facts as
                    may be
                    necessary to reasonably illustrate the results intended to be
                    achieved by
                    the Operating Plan; and upon request of any party the Operator
                    shall meet
                    with that party to discuss the Operating Plan and shall provide
                    such
                    additional or supplemental information as that party may reasonably
                    require with respect thereto.

                

        

        

        11.3
          The
          Management Committee shall adopt each Operating Plan, with such changes
          as it
          deems necessary, on or prior to ninety (90) days prior to the end of the
          year
          immediately preceding the Operating Year to which the Operating Plan relates;
          provided, however, that the Management Committee may from time to time
          and at
          any time amend any Operating Plan.

        
 

        
          
            
            

          

          
            14

            
              

            

          

          
            
            

          

        

         

        11.4
          The
          Operator shall be entitled to include in the estimate of Mine Costs referred
          to
          in Section 11.2 hereof the reasonably estimated costs of satisfying continuing
          obligations that may remain after this Agreement terminates, in excess
          of
          amounts actually expended. Such continuing obligations are or will be incurred
          as a result of the Joint Venture and shall include such things as monitoring,
          stabilization, reclamation or restoration obligations, severance and other
          employee benefit costs and all other obligations incurred or imposed as
          a result
          of the Joint Venture which continue or arise after termination of this
          Agreement
          and settlement of all accounts. The amount accrued from time to time for
          the
          satisfaction of such continuing obligations shall be classified as Costs
          hereunder but shall be segregated into a separate account.

        

        PAYMENT
          OF CONSTRUCTION AND OPERATING
          COSTS

        12.1
          The
          parties hereto shall, from time to time, pay for all Mine Construction
          Costs
          incurred to the date of invoice, or at the beginning of each month for
          an
          advance equal to the estimated cash disbursements to be made during the
          month.
          Each party shall pay the Mine Construction Costs or the estimated cash
          disbursements within thirty (30) days after receipt of the invoice.

        

        12.2
          The
          Operator may invoice the parties, from time to time, for Operating Costs
          incurred to the date of the invoice, or at the beginning of each month
          for an
          advance equal to the estimated cash disbursements to be made during the
          month.
          The parties shall pay the Operating Costs or the estimated cash disbursements
          aforesaid to the Operator within thirty (30) days after receipt of the
          invoice.
          If the payment or advance requested is not so made, the amount of the payment
          or
          advance shall bear interest calculated monthly not in advance from the
          30th day
          after the date of receipt of the invoice thereof by the parties at a rate
          equivalent to the weighted average prime rate for the month plus two percent
          until paid. The Operator shall have a lien on a party or parties' aggregate
          Interest in order to secure any payment or advance required hereunder together
          with interest which has accrued thereon. 12.4 If a party or parties fail
          (i) to
          pay an invoice contemplated in Section 9.3 within the time period herein
          provided, or (ii) to pay an invoice contemplated in Section 12.3 within
          the
          thirty (30) day period aforesaid, the Operator may, by notice, demand payment.
          If no payment is made within fifteen (15) days of the Operator's demand
          notice,
          the Operator may, without limiting its other rights at law, enforce the
          lien
          created by Section 12.3 by taking possession of all or any part of the
          parties'
          aggregate Interest. The Operator may sell and dispose of the Interest which
          it
          has so taken into its possession by:

        
          	a)  	
                  first
                    offering that Interest to the other parties, if more than one
                    then in
                    proportion to the respective Interests of the parties which wish
                    to accept
                    that offer, for that price which is the fair market value stated
                    in the
                    lower of two appraisals obtained by the Operator from independent,
                    well
                    recognized appraisers competent in the appraisal of mining properties;
                    and

                

        

        
          	b)  	
                  if
                    the parties have not purchased all or part of that Interest as
                    aforesaid,
                    then by selling the balance, if any, either in whole or in part
                    or in
                    separate parcels at public auction or by private tender (the
                    parties being
                    entitled to bid) at a time and on whatever terms the Operator
                    shall
                    arrange, having first given notice to the parties of the time
                    and place of
                    the sale. As a condition of the sale as contemplated in Article
                    12.4(b),
                    the purchaser shall agree to be bound by this Agreement and,
                    prior to
                    acquiring the Interest, shall deliver notice to that effect to
                    the
                    parties, in form acceptable to the Operator. The proceeds of
                    the sale
                    shall be applied by the Operator in payment of the amount due
                    from the
                    parties and interest as aforesaid, and the balance remaining,
                    if any,
                    shall be paid to the parties after deducting reasonable costs
                    of the sale.
                    Any sale or disposal made as aforesaid shall be a perpetual bar
                    both at
                    law and in equity by the parties and its successors and assigns
                    against
                    all other parties and the Operator.

                

        

        

        DISTRIBUTION
          IN KIND

        13.1
          It
          is expressly intended that, upon approval of a Feasibility Report recommending
          the Construction of a Mine, the association of the parties shall be limited
          to
          the efficient production of Mineral Products from the Property and that
          each of
          the parties shall be entitled to use, dispose of or otherwise deal with
          its
          proportionate share of Mineral Products as
          it
          sees fit. Each party shall take in kind the Mineral Products 

        
           

          
            
              
              

            

            
              15

              
                

              

            

            
              
              

            

          

        

         

        produced
          from the Mine, f.o.b. truck or railcar on the Property, and separately
          dispose
          of its proportionate share of the Mineral Product. Extra costs and expenses
          incurred by reason of the parties taking in kind and making separate
          dispositions shall be paid by each party directly and not through the Operator
          or Management Committee.

        

        13.2
          Each
          party shall construct, operate and maintain, all at its own cost and expense,
          any and all facilities which may be necessary to receive and store and
          dispose
          of its proportionate share of the Mineral Product at the rate the same
          are
          produced.

         

        13.3
          If a
          party has not made the necessary arrangements to take in kind and store
          its
          share of production as aforesaid the Operator shall, at the sole cost and
          risk
          of that party store, in any location where it will not interfere with Mining
          Operations, the production owned by that party. The Operator and the other
          parties shall be under no responsibility with respect thereto. All of the
          Costs
          involved in arranging and providing storage shall be billed directly to,
          and be
          the sole responsibility of the party whose share of production is so stored.
          The
          Operator's charges for such assistance and any other related matters shall
          be
          billed directly to and be the sole responsibility of the party. All such
          billings shall be subject mutatis mutandis to the provisions of Paragraphs
          12.3.

        

        SURRENDER
          OF INTEREST

        14.1
          Any
          party may, at any time upon notice, surrender its entire Interest to the
          other
          parties by giving those parties notice of surrender. The notice of surrender
          shall:

        
          	a)  	
                  indicate
                    a date for surrender not less than three months after the date
                    on which
                    the notice is given; and

                

        

        
          	b)  	
                  contain
                    an undertaking that the surrendering party
                    will:

                

        

        
          	i)  	
                  satisfy
                    its proportionate share, based on its then Interest, of all obligations
                    and liabilities which arose at any time prior to the date of
                    surrender;

                

        

        
          	ii)  	
                  if
                    the Operator has not included in Mine Costs the costs of continuing
                    obligations as set out in Section 11.4 hereof, pay its reasonably
                    estimated proportionate share, based on the surrendering party's
                    then
                    Interest, of the Costs of rehabilitating the Mine site and of
                    reclamation
                    as at the date of surrender; and

                

        

        
          	iii)  	
                  will
                    hold in confidence, for a period of two years from the date of
                    surrender,
                    all information and data which it acquired pursuant to this
                    Agreement.

                

        

        

        14.2
          Upon
          the surrender of its entire Interest as contemplated herein and upon delivery
          of
          a release in writing, in form acceptable to counsel for the Operator, releasing
          the other parties from all claims and demands hereunder, the surrendering
          party
          shall be relieved of all obligations or liabilities hereunder except for
          those
          which arose or accrued or were accruing due on or before the date of the
          surrender.

        

        14.3
          A
          party to whom a notice of surrender has been given as contemplated herein
          may
          elect, by notice within ninety (90) days to the party which first gave
          the
          notice, to accept the surrender, in which case Article 11.4 and 14.2 shall
          apply, or to join in the surrender.

        

        TERMINATION
          OR SUSPENSION OF MINING
          OPERATIONS

        15.1
          The
          Operator may, at any time subsequent to the Completion Date, on at least
          thirty
          (30) days notice to all parties, recommend that the Management Committee
          approve
          the suspension of Mining Operations. The Operator's recommendation shall
          include
          a plan and budget (in this Article 15 called the “Mine Maintenance Plan”) in
          reasonable detail of the activities to be performed to maintain the Property
          during the period of suspension and the Costs to be incurred. The Management
          Committee may, at any time subsequent to the Completion Date, cause the
          Operator
          to suspend Mining Operations in accordance with the Operator's recommendation
          with such changes to the Mine Maintenance Plan as the Management Committee
          deems
          necessary. The parties shall be committed to contribute their proportionate
          share of the Costs incurred in connection with the Mine Maintenance Plan.
          The
          Management Committee may cause Mining Operations to be resumed at any
          time.

         

         

        
          
            
            

          

          
            16

            
              

            

          

          
            
            

          

        

        

        15.2
          The
          Operator may, at any time following a period of at least ninety (90) days
          during
          which Mining Operations have been suspended, upon at least thirty (30)
          days
          notice to all parties, or in the events described herein, recommend that
          the
          Management Committee approve the permanent termination of Mining Operations.
          The
          Operator's recommendation shall include a plan and budget (in this Article
          15
          called the “Mine Closure Plan”) in reasonable detail of the activities to be
          performed to close the Mine and reclaim the Property. The Management Committee
          may, by unanimous approval of the representatives of all parties, approve
          the
          Operator's recommendation with such changes to the Mine Closure Plan as
          the
          Management Committee deems necessary.

        

        15.3
          If
          the Management Committee approves the Operator's recommendation as aforesaid,
          it
          shall cause the Operator to:

        
          	a)  	
                  implement
                    the Mine Closure Plan whereupon the parties shall be committed
                    to pay, in
                    proportion to their respective Interests, such Costs as may be
                    required to
                    implement that Mine Closure Plan;

                

        

        
          	b)  	
                  remove,
                    sell and dispose of such assets as may reasonably be removed
                    and disposed
                    of profitably and such other assets as the Operator may be required
                    to
                    remove pursuant to applicable environmental and mining laws;
                    and sell,
                    abandon or otherwise dispose of the Property. The disposal price
                    for the
                    Property shall be the best price obtainable and the net revenues,
                    if any,
                    from the removal and sale shall be credited to the parties in
                    proportion
                    to their respective Interests.

                

        

        

        15.4
          If
          the Management Committee does not approve the Operator's recommendation
          contemplated herein, the Operator shall maintain Mining Operations in accordance
          with the Mine Maintenance Plan pursuant to this Article 1

        

        INFORMATION
          AND DATA

        16.1
          At
          all times during the subsistence of this Agreement the duly authorized
          representatives of each party shall have access to the Property and the
          Project
          at its and their sole risk and expense and at reasonable intervals and
          times,
          and shall further have access at all reasonable time to all technical records
          and other factual engineering data and information relating to the Property
          and
          the Project in the possession of the Management Committee or the Operator.
          In
          exercising the right of access to the Property or the Project the
          representatives of a party shall abide by the rules and regulations laid
          down by
          the Management Committee and by the Operator relating to matters of safety
          and
          efficiency. If any representative of a party is not an employee, the party
          shall
          so advise the Operator so that the Operator may require the representative,
          before giving him access to the Property or the Project or to data or
          information relating thereto, to sign and undertaking in favour of the
          Joint
          Venture, in form and substance satisfactory to the Operator, to maintain
          confidentiality to the same extent as each party is required to do under
          Section
          16.2 hereof.

        

        16.2
          All
          records, reports, accounts and other documents referred to herein with
          respect
          to the Property and the Project and all information and data concerning
          or
          derived from the Property and the Project shall be kept confidential and
          each
          party shall take or cause to be taken such reasonable precautions as may
          be
          necessary to prevent the disclosure thereof to any person other than each
          party,
          the Operator, an Affiliate and any financial institution or other person
          having
          made, making or negotiating loans to one or more of the foregoing or any
          trustee
          for any such person, or as may be required by laws, by regulation or policy
          of
          any governmental agency, securities commission or stock exchange, or in
          connection with the filing of a prospectus or statement of material facts
          by a
          party, an Affiliate or the Operator or to a prospective assignee as permitted
          hereunder, or as may be required in the performance of obligations under
          this
          Agreement without prior consent of all parties, which consent shall not
          be
          unreasonably withheld.

        

        PARTITION

        17.1
          No
          party shall, during the term of this Agreement, exercise any right to apply
          for
          any partition of the Property or for sale thereof in lieu of
          partition.

        
          
            
            

          

          
            17

            
              

            

          

          
            
            

          

        

        

        TAXATION

        18.1
          Each
          party on whose behalf any Costs have been incurred shall be entitled to
          claim
          all tax benefits, write-offs and deductions with respect thereto.

        

        RIGHT
          OF FIRST REFUSAL

        19.1
          Save
          and except as provided in Section 3.5 and Article 4 hereof, the parties
          shall
          not transfer, convey, assign, mortgage or grant an option in respect of
          or grant
          a right to purchase or in any manner transfer or alienate all or any portion
          of
          its Interest or rights under this Agreement otherwise in accordance with
          this
          Article.

        

        19.2
          Nothing in this Article shall prevent a sale by a party of all of its Interest
          or an assignment of all its rights under this Agreement to an Affiliate
          provided
          that such Affiliate first complies with the provisions of Section.

        

        19.10
          and
          agrees with the other party in writing to retransfer such interest to the
          originally assigning party before ceasing to be an Affiliate of such
          party;

         

        
          	a)  	
                  a
                    variation pursuant to Section 4.3;
                    or

                

        

        
          	b)  	
                  a
                    disposition pursuant to an amalgamation or corporate reorganization
                    which
                    will have the effect in law of the amalgamating or surviving
                    company
                    possessing all the property, rights and interests and being subject
                    to all
                    the debts, liabilities and obligations of each amalgamating or
                    predecessor
                    company.

                

        

        

        19.3
          Should a party (the “transferring party”) intend to dispose of all or any
          portion of its Interest or rights under this Agreement it shall first give
          notice in writing to the parties (the “other parties”) of such intention
          together with the terms and conditions on which the transferring party
          intends
          to dispose of its Interest or a portion thereof or rights under this
          Agreement.

        

        19.4
          If a
          party (the “transferring party”) receives any offer to dispose of all or any
          portion of its Interest or rights under this Agreement which it intends
          to
          accept, the transferring party shall not accept the same unless and until
          it has
          first offered to sell such Interest or rights to the parties (the “other
          parties”) on the same terms and conditions as in the offer received and the same
          has not been accepted by the other parties in accordance with Section
          19.6.

        

        19.5
          Any
          communication of an intention to sell pursuant to Section 19.3 and 19.4
          (the
“Offer”) for the purpose of this Article only shall be in writing delivered in
          accordance with Article 21 and shall:

        
          	a)  	
                  set
                    out in reasonable detail all of the terms and conditions of any
                    intended
                    sale;

                

        

        
          	b)  	
                  if
                    it is made pursuant to Section 19.3, include a photocopy of the
                    Offer;
                    and

                

        

        
          	c)  	
                  if
                    it is made pursuant to Section 19.4, clearly identify the offering
                    party
                    and include such information as is known by the transferring
                    party about
                    such offering party; and such communication will be deemed to
                    constitute
                    an Offer by the transferring party to the other parties to sell
                    the
                    transferring party's Interest or its rights (or a portion thereof
                    as the
                    case may be) under this Agreement to the other parties on the
                    terms and
                    conditions set out in such Offer. For greater certainty it is
                    agreed and
                    understood that any Offer hereunder shall deal only with the
                    disposition
                    of the Interest or rights of the transferring party hereunder
                    and not with
                    any other interest, right or property of the transferring party
                    and such
                    disposition shall be made solely for a monetary
                    consideration.

                

        

        

        19.6
          Any
          Offer made as contemplated in Section 19.5 shall be open for acceptance
          by the
          other parties in accordance with their respective Interests for a period
          of
          sixty (60) days from the date of receipt of the Offer by the transferring
          party.

        
 

        
          
            
            

          

          
            18

            
              

            

          

          
            
            

          

        

         

        19.7
          If
          the other parties accept the Offer within the period provided for in Section
          19.6, such acceptance shall constitute a binding agreement of purchase
          and sale
          between the transferring party and the other parties for the Interest or
          its
          rights (or a portion thereof as the case may be) under this Agreement on
          the
          terms and conditions set out in such Offer.

         

        19.8
          If
          the other parties do not accept the Offer within the period provided for
          in
          Section 19.6 or do accept but fail to close the transaction contemplated
          thereby
          within ninety (90) days following receipt of such Offer, the transferring
          party
          may complete a sale and purchase of its Interest or a portion thereof on
          terms
          and conditions not less favourable to the transferring party than those
          set out
          in the Offer and, in the case of an Offer under Section 19.4, only to the
          party
          making the original offer to the transferring party and in any event such
          sale
          and purchase shall be completed within nine months from the expiration
          of the
          right of the other party to accept such Offer of the transferring party
          must
          again comply with the provisions of this Article.

        

        19.9
          While any Offer is outstanding no other Offer may be made until the first
          mentioned Offer is disposed of and any sale resulting therefrom completed
          or
          abandoned in accordance with the provisions of this Article.

        

        19.10
          Before the completion of any sale by the transferring party of its Interest
          or
          rights or any portion thereof under this Agreement, the purchasing party
          shall
          enter into an agreement with the parties agreeing not to sell except on
          the same
          terms and conditions as set out in this Agreement.

        

        FORCE
          MAJEURE

        20.1
          No
          party will be liable for its failure to perform any of its obligations
          under
          this Agreement due to a cause beyond its reasonable control (except those
          caused
          by its own lack of funds) including, but not limited to acts of God, fire,
          flood, explosion, strikes, lockouts or other industrial disturbances, laws,
          rules and regulations or orders of any duly constituted governmental authority
          or non-availability of materials or transportation (each an “Intervening
          Event”).

        

        20.2
          All
          time limits imposed by this Agreement, excepting those set out in Article
          15,
          will be extended by a period equivalent to the period of delay resulting
          from an
          Intervening Event. 20.3 A party relying on the provisions of Section 20.1
          will
          take all reasonable steps to eliminate any Intervening Event and, if possible,
          will perform its obligations under this Agreement as far as practical,
          but
          nothing herein will require such party to settle or adjust any labour dispute
          or
          to question or to test the validity of any law, rule, regulation or order
          of any
          duly constituted governmental authority or to complete its obligations
          under
          this Agreement if an Intervening Event renders completion
          impossible.

        

        NOTICE

        21.1
          Any
          notice, direction, cheque or other instrument required or permitted to
          be given
          under this Agreement shall be in writing and may be given by the delivery
          of the
          same or by mailing the same by prepaid registered or certified mail or
          by
          sending the same by telegram, telex, telecommunication or other similar
          form of
          communication, in each case addressed to the intended recipient at the
          address
          of the respective party set out on the front page hereof.

        

        21.2
          Any
          notice, direction, cheque or other instrument aforesaid will, if delivered,
          be
          deemed to have been given and received on the day it was delivered, and
          if
          mailed, be deemed to have been given and received on the third business
          day
          following the day of mailing, except in the event of disruption of the
          postal
          service in which event notice will be deemed to be received only when actually
          received and, if sent by telegram, telex, telecommunication or other similar
          form of communication, be deemed to have been given or received on the
          day it
          was so sent.

        
 

        
          
            
            

          

          
            19

            
              

            

          

          
            
            

          

        

         

        21.3
          Any
          party may at any time give to the other notice in writing of any change
          of
          address of the party giving such notice and from and after the giving of
          such
          notice the address or addresses therein specified will be deemed to be
          the
          address of such party for the purposes of giving notice hereunder.

        

        WAIVER

        22.1
          If
          any provision of this Agreement shall fail to be strictly enforced or any
          party
          shall consent to any action by any other party or shall waive any provision
          as
          set out herein, such action by such party shall not be construed as a waiver
          thereof other than at the specific time that such waiver or failure to
          enforce
          takes place and shall at no time be construed as a consent, waiver or excuse
          for
          any failure to perform and act in accordance with this Agreement at any
          past or
          future occasion.

        

        FURTHER
          ASSURANCES

        23.1
          Each
          of the parties hereto shall form time to time and at all times do all such
          further acts and execute and deliver all further deeds and documents as
          shall be
          reasonably required in order to fully perform and carry out the terms of
          this
          Agreement. For greater certainty, this section shall not be construed as
          imposing any obligation on any party to provide guarantees.

        

        USE
          OF NAME

        24.1
          No
          party shall, except when required by this Agreement or by any law, by-law,
          ordinance, rule, order or regulation, use, suffer or permit to be used,
          directly
          or indirectly, the name of any other party for any purpose related to the
          Property or the Project.

        

        ENTIRE
          AGREEMENT

        25.1
          This
          Agreement embodies the entire agreement and understanding among the parties
          hereto and supersedes all prior agreements and undertakings, whether oral
          or
          written, relative to the subject matter hereof.

        

        AMENDMENT

        26.1
          This
          Agreement may not be changed orally but only by an agreement in writing,
          by the
          party or parties against which enforcement, waiver, change, modification
          or
          discharge is sought.

        

        ARBITRATION

        27.1
          If
          any question, difference or dispute shall arise between the parties or
          any of
          them in respect of any matter arising under this Agreement or in relation
          to the
          construction hereof the same shall be determined by the award of three
          arbitrators to be named as follows:

        
          	a)  	
                  the
                    party or parties sharing one side of this dispute shall name
                    an arbitrator
                    and give notice thereof to the party or parties sharing the other
                    side of
                    the dispute;

                

        

        
          	b)  	
                  the
                    party or parties sharing the other side of the dispute shall,
                    within 14
                    days of receipt of the notice, name an arbitrator;
                    and

                

        

        
          	c)  	
                  the
                    two arbitrators so named shall, within 15 days of the naming
                    of the latter
                    of them, select a third arbitrator. The decision of the majority
                    of these
                    arbitrators shall be made within 30 days after the selection
                    of the latter
                    of them. The expense of the arbitration shall be borne equally
                    by the
                    parties to the dispute. If the parties on either side of the
                    dispute fail
                    to name their arbitrator within the time limited or proceed with
                    the
                    arbitration, the arbitrator named may decide the question. The
                    arbitration
                    shall be conducted in accordance with the provisions of the Arbitration
                    Act of
                    British Columbia and the decision of the arbitrator or amajority
                    of the
                    arbitrators, as the case may be, shall be conclusive and binding
                    upon all
                    the parties.

                

        

        

        RIGHT
          TO AUDIT

        28.1
          Any
          party acquiring a Royalty pursuant to this Agreement shall have the right
          to
          audit at its expense the books and records in respect of such Royalty of
          the
          Operator or the other parties, if it is not the Operator in respect of
          such
          Royalty.

        
 

        
          
            
            

          

          
            20

            
              

            

          

          
            
            

          

        

         

        TIME

        29.1
          Unless earlier terminated by agreement of all parties or as a result of
          one
          party acquiring a 100% Interest, the Joint Venture and this Agreement shall
          remain in full force and effect for so long as any part of the Property
          or
          Project is held in accordance with this Agreement. Termination of the Agreement
          shall not, however, relieve any party from any obligations theretofore
          accrued
          but unsatisfied.

        

        RULE
          AGAINST PERPETUITIES

        30.1
          If
          any right, power or interest of any party in any Property under this Agreement
          would violate the rule against perpetuities, then such right, power or
          interest
          shall terminate at the expiration of 20 years after the death of the survivor
          of
          all the lineal descendants of her late Majesty, Queen Elizabeth II of the
          United
          Kingdom, living on the date of execution of this Agreement.

        

        DOCUMENT
          RETENTION ON TERMINATION

        31.1
          Prior to the distribution of the Property or the Project or the net revenues
          received on the disposal thereof on termination of this Agreement, the
          Management Committee shall meet any may approve a procedure for the retention,
          maintenance and disposal of documents maintained by the Management Committee
          (the “Documents”) and shall appoint such party as may consent thereto to ensure
          that all proper steps are taken to implement and maintain that procedure.
          If a
          quorum is not present at the meeting or if he Management Committee fails
          to
          approve a procedure as aforesaid, the Operator, if a party, otherwise the
          party
          holding the largest Interest as at the day immediately preceding the date
          the
          Management Committee was called to meet, shall retain, maintain and dispose
          of
          the Documents according to such procedure, in compliance with all applicable
          laws, as it deems fit. The party entrusted with the retention, and expenses
          incidental thereto and shall be entitled to receive payment of those costs
          and
          expenses prior to any distribution being made of the Property and Project
          or the
          net revenues received on the disposal thereof.

        

        ENUREMENT

        32.1
          This
          Agreement shall enure to the benefit of and be binding upon the parties
          hereto
          and their respective successors and permitted assigns.

        

        GOVERNING
          LAW

        33.1
          This
          Agreement shall be governed by and interpreted in accordance with the laws
          of
          the Province of British Columbia and the parties irrevocably attorn to
          the
          jurisdiction of the said province.

         

        SEVERABILITY

        34.1
          If
          any one or more of the provisions contained herein should be invalid, illegal
          or
          unenforceable in any respect in any jurisdiction, the validity, legality
          and
          enforceability of such provision shall not in any way be affected or impaired
          thereby in any other jurisdiction and the validity, legality and enforceability
          of the remaining provisions contained herein shall not in any way be affected
          or
          impaired thereby.

        

        NUMBER
          AND GENDER

        35.1
          Words used herein importing the singular number only shall include the
          plural,
          and vice versa, and words importing the masculine gender shall include
          the
          feminine and neuter genders, and vice versa, and words importing persons
          shall
          include firms and corporations.

        

        HEADINGS

        36.1
          The
          division of this Agreement into articles and sections and the insertion
          of
          headings are for convenience of reference only and shall not affect the
          construction or interpretation of this Agreement.

        

        TIME
          OF THE ESSENCE

        37.1
          Time
          shall be of the essence in the performance of this Agreement.

        
 

        
          
            
            

          

          
            
              21

            

            
              

            

          

          
            
            

          

        

        

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

        

        

        

        VONCO

        

        

        per______________________

        Carl.
          von
          Einsiedel, Pres. & CEO

        

        

        ERC
          EXPLORATION LTD.

        

        

        

        per
          _________________

        William
          Iversen, Pres. & CEO

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    SCHEDULE
“A”

    

    THE
      JOINT VENTURE AGREEMENT

     

    DESCRIPTION
      OF PROPERTY RIGHTS AND PROPERTY

    dated
      November 28, 2005

     

    The
      Johnson mineral claims are located within the Kamloops Mining Division of
      British Columbia

    Map
      sheet
      82M

    UTM
      5671000N/301000E

    

    

    
      	
              Tenure

            	
              Name

            	
              Owner

            	
              Map
                Number

            	
              Expiry

            	
              Status

            	
              Cells

            	
              Area
                (Hectares)

            
	
              510730

            	
              Johnson

            	
              127981

            	
              82M04

            	
              April
                13, 2006

            	
              GOOD

            	
              20

            	
              405.435

            
	
              517513

            	
              “

            	
              127981

            	
              82M04

            	
              July
                12, 2006

            	
              GOOD

            	
              1
                +
                5

              fractions

            	
              121.640

            
	
              510731

            	
              “

            	
              127981

            	
              82M04

            	
              April
                13, 2006

            	
              GOOD

            	
              4

            	
              81.105

            
	 	 	 	 	 	
              Totals

            	
              25
                + 5

              fractions

            	
              608.180

            

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
“B”

    TO
      

    THE
      JOINT
      VENTURE AGREEMENT

     

    DEFINITION
      OF NET PROFITS

    

    1.
“Net
      Profits” means the aggregate of:

    
      	(a)  	
              all
                revenues from the sale or other disposition of ores, metals or minerals
                mined or extracted from the Property or any portion thereof and any
                concentrates produced therefrom;
                and

            

    

    
      	b)  	
              all
                revenues from the operation, sale or other disposition of any Facilities
                the cost of which is included in the definition of “Operating Expenses”,
                “Capital Expenses” or “Exploration Expenses”, less (without duplication)
                Working Capital, Operating Expenses, Capital Expenses and Exploration
                Expenses.

            

    

    

    2.
      “Working Capital” means the amount reasonably necessary to provide for the
      operation of the mining operation on the Property and for the operation and
      maintenance of the Facilities for a period of six months.

    

    3.
      “Operating Expenses” means all costs, expenses, obligations, liabilities and
      charges of whatsoever nature or kind incurred or chargeable directly or
      indirectly in connection with Commercial Production from the Property and in
      connection with the maintenance and operation of the Facilities, all in
      accordance with generally accepted accounting principles, consistently applied,
      including, without limiting the generality of the foregoing, all amounts payable
      in connection with mining, handling, processing, refining, transporting and
      marketing of ore, concentrates, metals, minerals and other products produced
      from the Property, all amounts payable for the operation and maintenance of
      the
      Facilities including the replacement of items which by their nature require
      periodic replacement, all taxes (other than income taxes), royalties and other
      imposts and all amounts payable or chargeable in respect of reasonable overhead
      and administrative services.

    

    4.
      “Capital Expenses” means all expenses, obligations and liabilities of whatsoever
      kind (being of a capital nature in accordance with generally accepted accounting
      principles) incurred or chargeable, directly or indirectly, with respect to
      the
      development, acquisition, redevelopment, modernization and expansion of the
      Property and the Facilities, including, without limiting the generality of
      the
      foregoing, interest thereon from the time so incurred or chargeable at a rate
      per annum from time to time equal to “prime rate” of the Royal Bank of Canada
      plus two (2%) percent per annum, but does not include Operating Expenses nor
      Exploration Expenses.

    

    5.
      “Exploration Expenses” means all costs, expenses, obligations, liabilities and
      charges of whatsoever nature or kind incurred or chargeable, directly or
      indirectly, in connection with the exploration and development of the Property
      including, without limiting the generality of the foregoing, all costs
      reasonably attributable, in accordance with generally accepted accounting
      principles, to the design, planning, testing, financing, administration,
      marketing, engineering, legal, accounting, transportation and other incidental
      functions associated with the exploration and mining operation contemplated
      by
      this Agreement and with the Facilities, but does not include Operating Expenses
      nor Capital Expenses.

    

    6.
      “Facilities” means all plant, equipment, structures, roads, rail lines, storage
      and transport facilities, housing and service structures, real property or
      interest therein, whether on the Property or not, acquired or constructed
      exclusively for the mining operation on the Property contemplated by this
      Agreement (all commonly referred to as “infrastructure”).

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
“C”

    TO

    THE
      JOINT
      VENTURE AGREEMENT

     

    ACCOUNTING
      PROCEDURES

     

    TABLE
      OF CONTENTS

     

    
      	 1. Interpretation
              	
               1

            
	 2.
              Statements and Billings	
               2

            
	 3. Direct
              Charges	
               2

            
	 4. Purchase of
              Material	
               3

            
	 5. Disposal of
              Material	
               4

            
	 6.
              Inventories	
               4

            
	 7.
              Adjustments	
               4

            

    

     

    

    1.
      INTERPRETATION

    In
      this
      Schedule the following words, phrases and expressions shall have the following
      meanings:

    
      	a)  	
              “Agreement”
                means the Agreement to which this Accounting Procedure is attached
                as
                Schedule “C”.

            

    

    
      	b)  	
              “Count”
                means a physical inventory count.

            

    

    
      	c)  	
              “Employee”
                means those employees of the Operator who are assigned to and directly
                engaged in the conduct of Mining Operations, whether on a full-time
                or
                part-time basis.

            

    

    
      	d)  	
              “Employee
                Benefits” means the Operator's cost of holiday, vacation, sickness,
                disability benefits, field bonuses, paid to Employees and the Operator's
                costs of established plans for employee's group life insurance,
                hospitalization, pension, retirement and other customary plans maintained
                for the benefit of Employees and Personnel, as the case may be, which
                costs may be charged as a percentage assessment on the salaries and
                wages
                of Employees or Personnel, as the case may be, on a basis consistent
                with
                the Operator's cost experience.

            

    

    
      	e)  	
              “Field
                Offices” means the necessary sub-office or suboffices in each place where
                a Program or Construction is being conducted or a Mine is being
                operated.

            

    

    
      	f)  	
              “Government
                Contributions” means the cost or contributions made by the Operator
                pursuant to assessments imposed by governmental authority which are
                applicable to the salaries or wages of Employees or Personnel, as
                the case
                may be.

            

    

    
      	g)  	
              “Joint
                Account” means the books of account maintained by the Operator to record
                all costs, expenses, credits and other transactions arising out of
                or in
                connection with the Mining
                Operations.

            

    

    
      	h)  	
              “Material”
                means the personal property, equipment and supplies acquired or held,
                at
                the direction or with the approval of the Management Committee, for
                use in
                the Mining Operations and, without limiting the generality, more
                particularly “Controllable Material” means such Material which is
                ordinarily classified as Controllable Material, as that classification
                is
                determined or approved by the Management Committee, and controlled
                in
                mining operations.

            

    

    
      	i)  	
              “Personnel”
                means those management, supervisory, administrative, clerical or
                other
                personnel of the Operator normally associated with the Supervision
                Offices
                whose salaries and wages are charged directly to the Supervision
                Office in
                question.

            

    

    
      	j)  	
              “Reasonable
                Expenses” means the reasonable expenses of Employee or Personnel, as the
                case may be, for which those Employees or Personnel may be reimbursed
                under the Operator's usual expense account practice; including without
                limiting the generality of the foregoing, any relocation expenses
                necessarily incurred in order to properly staff the Mining Operations
                if
                the relocation is approved by the Management
                Committee.

            

    

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     

    
      	k)  	
              “Supervision
                Office” means the Operator's offices or department within the Operator's
                offices from which the Mining Operations are generally
                supervised.

            

    

     

    2.
      STATEMENTS AND BILLINGS

    2.1
      The
      Operator shall, by invoice, charge each party with its proportionate share
      of
      Exploration Costs and Mine Costs in the manner provided in the
      Agreement.

    

    2.2
      The
      Operator shall deliver, with each invoice rendered for Costs incurred a
      statement indicating:

    a)
      all
      charges or credits to the Joint Account relating to Controllable Material in
      detail; and

    b)
      all
      other charges and credits to the Joint Account summarized by appropriate
      classification indicative of the nature of the charges and credits.

    

    2.3
      The
      Operator shall deliver with each invoice for an advance of Costs a statement
      indicating:

    
      	a)  	
              the
                estimated Exploration Costs or, in the case of Mine Costs, the estimated
                cash disbursements, to be made during the next succeeding
                month;

            

    

    
      	b)  	
              the
                addition thereto or subtraction therefrom, as the case may be, made
                in
                respect of Exploration Costs or Mine Costs actually having been incurred
                in an amount greater or lesser than the advance which was made by
                each
                party for the penultimate month preceding the month of the invoice;
                and

            

    

    
      	c)  	
              the
                advances made by each party to date and are Exploration Costs or
                Mine
                Costs incurred to the end of the penultimate month preceding the
                month of
                the invoice.

            

    

     

    3.
      DIRECT CHARGES

    3.1
      The
      Operator shall charge the Joint Account with the following items:

    
      	a)  	
              Contractor's
                Charges:

            

    

    All
      proper costs relative to the Mining Operations incurred under contracts entered
      into by the Operator with third parties.

    
      	b)  	
              Labour
                Charges:

            

    

    
      	i)  	
              The
                salaries and wages of Employees in an amount calculated by taking
                the full
                salary or wage of each Employee multiplied by that fraction which
                has as
                its numerator the total time for the month that the Employees were
                directly engaged in the conduct of Mining Operations and as its
                denominator the total normal working time for the month of the
                Employee;

            

    

    
      	ii)  	
              The
                Reasonable Expenses of the Employees;
                and

            

    

    
      	iii)  	
              Employee
                Benefits and Government Contributions in respect of the Employees
                in an
                amount proportionate to the charge made to the Joint Account in respect
                to
                their salaries and wages.

            

    

    
      	c)  	
              Office
                Maintenance:

            

    

    
      	i)  	
              The
                cost or a pro rata portion of the costs, as the case may be, of
                maintaining and operating the Offices. The basis for charging the
                Joint
                Account for Office maintenance costs shall be as
                follows:

            

    

    the
      expense of maintaining and operating Field Offices, less any revenue therefrom;
      and

    that
      portion of maintaining and operating the Supervision Offices which is equal
      to
      the anticipated total operating expenses of the Supervision Offices divided
      by
      the anticipated total staff man days for the Employees whether in connection
      with the Mining Operations or not; multiplied by the actual total time spent
      on
      the Mining Operations by the Employee expressed in man days.

    ii)
      Without limiting generality of the foregoing, the anticipated total operating
      expenses of the Supervision Offices shall include:

    A.
      the
      salaries and wages of the Operator's Personnel which have been directly charged
      to those Offices;

    B.
      the
      Reasonable Expenses of the Personnel; and

    C.
      Employee Benefits

    iii)
      The
      Operator shall make an adjustment in respect of the Office Maintenance cost
      forthwith after the end of each Operating Year upon having determined the actual
      operating expenses and actual total staff man days referred to in Clause
      3.1(c)(2)(b) of this Schedule “C”.

    d)
      Material:

    Material
      purchased or furnished by the Operator for use on the Property as provided
      under
      Section 4 of this Schedule “C”.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    e)
      Transportation
      Charges:

    The
      cost
      of transporting Employees and Material necessary for the Mining
      Operations.

    f)
      Service
      Charges:

    
      	i)  	
              The
                cost of services and utilities procured from outside sources other
                than
                services covered by Paragraph 3.1 h). The cost of consultant services
                shall not be charged to the Joint Account unless the retaining of
                the
                consultant is approved in advance by the Management Committee but
                if not
                so charged the cost of such services shall be included as Costs of
                the
                party retaining such consultant;
                and

            

    

    
      	ii)  	
              Use
                and service of equipment and facilities furnished by the Operator
                as
                provided in Subsection 4.5 of this Schedule
“C”.

            

    

    g)
      Damages
      and Losses to Joint Property:

    All
      costs
      necessary for the repair or replacement of Assets made necessary because of
      damages or losses by fire, flood, storms, theft, accident or other cause. The
      Operator shall furnish each party with written particulars of the damages or
      losses incurred as soon as practicable after the damage or loss has been
      discovered. The proceeds, if any, received on claims against any policies of
      insurance in respect of those damages or losses shall be credited to the Joint
      Account.

    h)
      Legal
      Expense:

    All
      costs
      of handling, investigating and settling litigation or recovering the assets,
      including, without limiting generality, attorney's fees, court costs, costs
      of
      investigation or procuring evidence and amounts paid in settlement or
      satisfaction of any litigation or claims; provided, however, that, unless
      otherwise approved in advance by the Management Committee, no charge shall
      be
      made for the services of the Operator's legal staff or the fees and expenses
      of
      outside solicitors.

    i)
      Taxes:

    All
      taxes, duties or assessments of every kind and nature (except income taxes)
      assessed or levied upon or in connection with a Property, the Mining Operations
      thereon, or the production therefrom, which have been paid by the Operator
      for
      the benefit of the parties.

    j)
      Insurance:

    Net
      premiums paid for

    
      	i)  	
              such
                policies of insurance on or in Operations as may be required to be
                carried
                by law; and

            

    

    
      	ii)  	
              such
                other policies of insurance as the Operator may carry in accordance
                with
                the Agreement; and

            

    

    
      	iii)  	
              the
                applicable deductibles in event of an insured
                loss.

            

    

    k)
      Rentals:

    Fees,
      rentals and other similar charges required to be paid for acquiring, recording
      and maintaining permits, mineral claims and mining leases and rentals and of
      the
      Mining Operations.

    l)
      Permits:

    Permit
      costs, fees and other similar charges which are assessed by various governmental
      agencies.

    m)
      Other
      Expenditures:

    Such
      other costs and expenses which are not covered or dealt with in the foregoing
      provisions of this Subsection 3.1 of this Schedule “C” as are incurred with the
      approval of the Management Committee for Mining Operations or as may be
      contemplated in the Agreement.

     

    4.
      PURCHASE
      OF MATERIAL

    4.1
      Subject to Subsection 4.4 of this Schedule “C” the Operator shall purchase all
      Materials for Mining Operations.

    

    4.2
      Materials purchased and services procured by the Operator directly for the
      Mining Operations shall be charged to the Joint Account at the price paid by
      the
      Operator less all discounts actually received. 

    

    4.3
      So
      far as it is reasonably practical and consistent with efficient and economical
      operations, the Operator shall purchase, furnish or otherwise acquire only
      such
      Material and the Operator shall attempt to minimize the accumulation of surplus
      stocks of Material.

    

    4.4
      Any
      party may sell Material or services required in the Mining Operations to the
      Operator for such price and upon such terms and conditions as the Management
      Committee may approve.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    4.5
      Notwithstanding the foregoing provisions of this Section 4, the Operator shall
      be entitled to supply for use in connection with the Mining Operations equipment
      and facilities which are owned by the Operator and to charge the Joint Account
      with such reasonable costs as are commensurate with the ownership and use
      thereof.

     

    5.
      DISPOSAL
      OF MATERIAL

    5.1
      The
      Operator, with the approval of the Management Committee may, from time to time,
      sell any Material which has become surplus to the reasonably foreseeable needs
      of the Mining Operations for such price and upon such terms and conditions
      as
      are available.

    

    5.2
      Any
      party may purchase from the Operator any Material which may from time to time
      become surplus to the reasonably foreseeable need of the Mining Operations
      for
      such price and upon such terms and conditions as the Management Committee may
      approve.

    

    5.3
      Upon
      termination of the Agreement, the Management Committee may approve the division
      of any Material held by the Operator at that date may be taken by the parties
      in
      kind or be taken by a party in lieu of a portion of its Proportionate Share
      of
      the net revenues received from the disposal of the Property. If such a division
      to a party be in lieu of a portion of its proportionate share, it shall be
      for
      such price and on such terms and conditions as the Management Committee may
      approve.

    

    5.4
      The
      net revenues received from the sale of any Material to third parties or to
      a
      party shall be credited to the Joint Account.

     

    6.
      INVENTORIES

    6.1
      The
      Operator shall maintain records of Material in reasonable detail and records
      of
      Controllable Material in detail.

    

    6.2
      The
      Operator shall perform Counts from time to time at reasonable intervals and
      in
      connection therewith shall give notice of its intention to perform a Count
      to
      each party at least 30 days in advance of the date set for performing of the
      Count. Each party shall be entitled to be represented at the performing of
      a
      Count upon giving notice thereof to the Operator within 20 days of the
      Operator's notice. A party who is not represented at the performing of the
      Count
      shall be deemed to have approved the Count as taken.

    

    6.3
      Forthwith after performing a Count, the Operator shall reconcile the inventory
      with the Joint Account and provide each party with a statement listing the
      overages and shortages of inventory except such shortages as may have arisen
      due
      to a lack of diligence on the part of the Operator.

     

    7.
      ADJUSTMENTS

    7.1
      Payment of any invoice by a party shall not prejudice the right of that party
      to
      protest the correctness of the statement supporting the payment; provided,
      however, that all invoices and statements presented to each party by the
      Operator during any Operating Year shall conclusively be presumed to be true
      and
      correct upon the expiration of 12 months following the end of the Operating
      Year
      to which the invoice or statement relates, unless within that 12 month period
      that party gives notice to the Operator making claim on the Operator for an
      adjustment to the invoice or statement.

    

    7.2
      The
      Operator shall not adjust any invoice or statement in favour of itself after
      the
      expiration of 12 months following the end of the Operating Year to which the
      invoice or statement relates. 

    

    7.3
      Notwithstanding Subsections 7.1 and 7.2 of this Schedule “C”, the Operator may
      make adjustments to an invoice or statement which arise out of a physical
      inventory of Material or Assets.

    

    7.4
      A
      party shall be entitled upon notice to the Operator to request that the
      independent external auditor of the Operator provide that party with its opinion
      that any invoice or statement delivered pursuant to the 

    
 

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Agreement
      in respect of the period referred to in Subsection 7.1 of this Schedule “C” has
      been prepared in accordance with this Agreement.

     

    7.5
      The
      time for giving the audit opinion contemplated in Subsection 7.4 of this
      Schedule “C” shall not extend the time for the taking of exception to and making
      claims on the Operator for adjustment as provided in Subsection 7.1 of this
      Schedule “C”.

    

    7.6
      The
      cost of the auditor's opinion referred to in Subsection 7.4 of this Schedule
“C”
shall be solely for the account of the party requesting the auditor's opinion,
      unless the audit disclosed a material error adverse to that party, in which
      case
      the cost shall be solely for the account of the Operator.Exhibit 4.2.89
                                                                  --------------

                                AMENDMENT NO. 4
                                ---------------
                                       TO
                                       --
                          SECURITIES PURCHASE AGREEMENT
                          -----------------------------

     This Amendment No. 4 (this "Amendment"), dated as of December 21, 2005, to
the Securities Purchase Agreement, dated as of June 4, 2004 (the "Purchase
Agreement"), as amended, is by and among Salon Media Group, Inc., a Delaware
corporation (the "Company"), and the Purchasers who are signatories to the
Purchase Agreement. Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Purchase Agreement.

                                    RECITALS
                                    --------

     WHEREAS, the Company has held Three Closings of the sale of Shares and
issuance of the Warrants and wishes to sell additional Shares and issue
additional Warrants; and

     WHEREAS, Section 9.4 of the Purchase Agreement provides that any term
thereof may be amended with the written consent of the Company and the holders
of at least a majority of the Common Stock issued or issuable upon conversion of
the Shares then outstanding; and

     WHEREAS, the Company and the undersigned Purchasers who hold at least a
majority of the Common Stock issued or issuable upon conversion of the Shares
currently outstanding are in favor of and consent to this Amendment.

     NOW, THEREFORE, the parties hereto hereby agree as follows:

     1.   Amendments.
          ----------

               Schedule A of the Purchase Agreement is hereby amended and
          restated as follows:

<TABLE>
<CAPTION>
                                              SCHEDULE A

     Series D-1 issuance on June 4, 2004
     Purchaser                                        Purchase Price    Shares     Warrants
     ----------------------------------------------- ---------------- ---------- ------------
<S>                                                        <C>               <C>      <C>
     John Warnock                                          249,600.00        208      402,580
     The Hambrecht 1980 Revocable Trust                    175,200.00        146      282,580
     HAMCO Capital Corporation                              50,400.00         42       81,290
     William E Mayer Holdings, Inc.                         25,200.00         21       40,645
                                                     ---------------- ---------- ------------
                                                           500,400.00        417      807,095
                                                     ================ ========== ============
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
     Series D-2 issuance on September 30, 2004
     Purchaser                                        Purchase Price    Shares     Warrants
     ----------------------------------------------- ---------------- ---------- ------------
<S>                                                        <C>               <C>      <C>
     John Warnock                                          249,600.00        208      340,363
                                                     ---------------- ---------- ------------
                                                           249,600.00        208      340,363
                                                     ================ ========== ============

     Series D-2 issuance on February 2, 2005
     Purchaser                                        Purchase Price    Shares     Warrants
     ----------------------------------------------- ---------------- ---------- ------------
     The Hambrecht 1980 Revocable Trust                    225,600.00        188      307,636
     HAMCO Capital Corporation                              25,200.00         21       34,363
                                                     ---------------- ---------- ------------
                                                           250,800.00        209      341,999
                                                     ================ ========== ============

     Series D-3 issuance on December 21, 2005
     Purchaser                                        Purchase Price    Shares     Warrants
     ----------------------------------------------- ---------------- ---------- ------------
     Nancy and Timothy Armstrong                           250,800.00        209      404,516
                                                     ---------------- ---------- ------------
                                                           250,800.00        209      404,516
                                                     ================ ========== ============
</TABLE>

     2.   General.
          -------

          (a) This Amendment shall be governed in all respects by the laws of
the State of California.

          (b) This Amendment may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all of which together shall
constitute one and the same instrument. This Amendment may be delivered by
facsimile transmission of the relevant signature pages hereof.

          (c) The Purchase Agreement, as amended by this Amendment, shall remain
in full force and effect.

<PAGE>

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

                                    SALON MEDIA GROUP, INC.

                                    By: /s/ Elizabeth Hambrecht
                                       ---------------------------------------
                                        Elizabeth Hambrecht
                                        President & Chief Executive Officer

[Counterpart Signature Page to Amendment No. 3 to Securities Purchase Agreement]

<PAGE>

                                        PURCHASER

                                        By: /s/ Nancy Armstrong
                                           -----------------------------------

                                        By: /s/ Timothy Armstrong
                                           -----------------------------------

                                        Name: Nancy and Timothy Armstrong

                                        Title:
                                              --------------------------------

                                        Address:
                                                ------------------------------

                                        --------------------------------------

[Counterpart Signature Page to Amendment No. 4 to Securities Purchase Agreement]

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