Document:

<PAGE>
                                                                    EXHIBIT 4.38

                          MUTUAL SETTLEMENT AND RELEASE

WHEREAS:

A. RICHARD PALMER of 9 Canberra Avenue, Greenwich NSW 2065, Australia, and PINE
VALLEY COAL PTY LIMITED of Ernst & Young Building, 321 Kent Street, Sydney, NSW,
2000, Australia are the parties to an Executive Employment Agreement made
effective as of the 10th day of March, 2003, pursuant to which Richard Palmer
served as the Managing Director of Pine Valley Coal Pty Limited and in various
capacities with Pine Valley Mining Corporation and its other subsidiaries (see
below);

B. Pine Valley Coal Pty Limited is a wholly-owned subsidiary of PINE VALLEY
MINING CORPORATION (formerly Globaltex Industries Inc.), a British Columbia
company, having its registered office at 3000 - 1055 West Georgia Street,
British Columbia, Canada V6E 3R3;

C. in addition to the positions he held with Pine Valley Coal Pty Limited,
Richard Palmer also served as a director and officer of Pine Valley Mining
Corporation, and two of its other wholly-owned subsidiaries, FALLS MOUNTAIN COAL
INC., a British Columbia company, and PINE VALLEY COAL LTD., an Alberta
corporation;

D. Richard Palmer resigned from all positions and offices he held with Pine
Valley Coal Pty Limited, Pine Valley Mining Corporation, Falls Mountain Coal
Inc. and Pine Valley Coal Ltd. effective on December 11, 2003;

E. Pine Valley Coal Pty Limited, Pine Valley Mining Corporation, Falls Mountain
Coal Inc. and Pine Valley Coal Ltd., and Richard Palmer have agreed to a
settlement on the terms set out in this Mutual Settlement and Release.

NOW THEREFORE, FOR AND IN CONSIDERATION of the release given by the Pine Valley
Group (as defined below) provided for herein and the delivery by Pine Valley
Coal Pty Limited and Pine Valley Mining Corporation to Richard Palmer of 400,972
fully-paid and non-assessable Common shares of Pine Valley Mining Corporation,
registered in the name of Richard Palmer and issued by Pine Valley Mining
Corporation at a deemed issue price of $0.25 (Canadian) per share (the
"SHARES"), the receipt and sufficiency of which is hereby acknowledged by
Richard Palmer, Richard Palmer (including his heirs, executors, administrators,
successors and assigns (collectively, "PALMER") DOES HEREBY REMISE, RELEASE, AND
FOREVER DISCHARGE Pine Valley Coal Pty Limited, Pine Valley Mining Corporation,
Falls Mountain Coal Inc. and Pine Valley Coal Ltd. (including each of their
respective past, present, and future directors, officers, shareholders,
affiliated and related companies, predecessor companies, insurers, employees,
agents, successors and assigns) (collectively, the "PINE VALLEY GROUP" and each
a "MEMBER OF THE PINE VALLEY Group") of and from any and all actions, causes of
action, claims, suits, debts, contracts, complaints, demands, damages, interest,
costs, expenses and compensation of whatsoever kind, whether in law or in
equity, whether at common law, under any legislation or otherwise, whether known
or unknown, and which Palmer now has in consequence of or in any way arising out
of or in any way connected with Palmer's role as an employee, director and/or
officer of any Member of the Pine Valley Group;

AND FOR AND IN CONSIDERATION of the release given by Palmer provided for herein
the Pine Valley Group and each Member of the Pine Valley Group DOES HEREBY
REMISE, RELEASE, AND FOREVER DISCHARGE Palmer of and from any and all actions,
causes of action, claims, suits, debts, contracts, complaints, demands, damages,
interest, costs, expenses and compensation of

<PAGE>
                                       2

whatsoever kind, whether in law or in equity, whether at common law, under any
legislation or otherwise, whether known or unknown, and which the Pine Valley
Group or any Member of the Pine Valley Group now has in consequence of or in any
way arising out of or in any way connected with Palmer's role as an employee,
director and/or officer of any Member of the Pine Valley Group;

AND IT IS FURTHER UNDERSTOOD AND AGREED that for the consideration expressed
herein, Palmer will not make any further claim or take any proceedings
whatsoever against any Member of the Pine Valley Group or any other person,
company or other legal entity which might result in a claim for contribution,
indemnity or otherwise in respect of the subject matter of this Mutual
Settlement and Release;

AND IT IS FURTHER UNDERSTOOD AND AGREED that for the consideration expressed
herein, if Palmer commences any proceedings against any other person, company or
other legal entity and that other person, company or other legal entity claims
against the Pine Valley Group or any Member of the Pine Valley Group in respect
of Palmer's claim, then Palmer will indemnify and save harmless the Pine Valley
Group and each Member of the Pine Valley Group in respect of any such claim or
liability in respect thereof;

AND IT IS FURTHER UNDERSTOOD AND AGREED that for the consideration expressed
herein, no Member of the Pine Valley Group will make any further claim or take
any proceedings whatsoever against Palmer or any other person, company or other
legal entity which might result in a claim for contribution, indemnity or
otherwise in respect of the subject matter of this Mutual Settlement and
Release;

AND IT IS FURTHER UNDERSTOOD AND AGREED that for the consideration expressed
herein, if any Member of the Pine Valley Group commences any proceedings against
any other person, company or other legal entity and that other person, company
or other legal entity claims against Palmer in respect of the such claim by a
Member of the Pine Valley Group, then the Pine Valley Group will indemnify and
save harmless Palmer in respect of any such claim or liability in respect
thereof;

AND IT IS FURTHER UNDERSTOOD AND AGREED that the settlement expressed herein
shall not constitute or be construed as an admission of liability by any Member
of the Pine Valley Group or Palmer;

AND IT IS FURTHER UNDERSTOOD AND AGREED that the Shares are subject to trading
restrictions imposed under securities laws and stock exchange policies
applicable to Pine Valley Mining Corporation as a reporting issuer in British
Columbia having its Common shares listed for trading on the TSX Venture
Exchange, and that the certificates representing the Shares will bear legends
describing such restrictions;

AND FURTHER FOR THE CONSIDERATION AFORESAID, the Pine Valley Group and Palmer
hereby acknowledge and agree that the facts relating to the events with respect
to which this Mutual Settlement and Release is given may prove to be different
from the facts as they are now understood or believed to be by the Pine Valley
Group and Palmer. The Pine Valley Group and Palmer hereby accept and assume the
risk of the facts being different and agree that this Mutual Settlement and
Release shall be in all respects enforceable and not subject to termination,
rescission or variation by reason of any discovery or revelation of any
difference in facts;

<PAGE>
                                        3

AND FURTHER FOR THE CONSIDERATION AFORESAID, each Member of the Pine Valley
Group and Palmer hereby represents, warrants and acknowledges to the other
parties hereto that this Mutual Settlement and Release has been executed
voluntarily after having received independent legal advice;

AND IT IS FURTHER UNDERSTOOD AND AGREED that, notwithstanding any of the
foregoing, nothing in this Mutual Settlement and Release will have the effect of
limiting, or be interpreted as being a waiver by Palmer of, all or any part of
Palmer's: (i) right to compensation from the Pine Valley Group that is otherwise
payable to Palmer pursuant to his consulting agreement with Pine Valley Mining
Corporation dated October 5, 2003 (as amended by an amending agreement dated
November 30, 2003); (ii) rights in his capacity as a shareholder of Pine Valley
Mining Corporation that he has in common with the other shareholders of Pine
Valley Mining Corporation, in each case, in proportion to their respective
shareholdings of Pine Valley Mining Corporation; or (iii) rights he may
otherwise have to seek compensation from a Member of the Pine Valley Group for
claims made against him by a third party arising out of his good faith actions
or omissions in his capacity as an employee, director or officer of a Member of
the Pine Valley Group;

AND IT IS UNDERSTOOD AND AGREED that this Mutual Settlement and Release contains
the entire agreement between the Pine Valley Group and Palmer with respect to
the subject matter hereof, and the terms of this Mutual Settlement and Release
are contractual and not a recital;

AND IT IS UNDERSTOOD AND AGREED that this Mutual Settlement and Release may be
executed in several counterparts (including by fax), each of which when so
executed will be deemed to be an original and will have the same force and
effect as an original and such counterparts together will constitute one and the
same instrument.

IN WITNESS WHEREOF, Richard Palmer, and an authorized signatory of each of Pine
Valley Coal Pty Limited, Pine Valley Mining Corporation, Falls Mountain Coal
Inc. and Pine Valley Coal Ltd. have hereunto set their hands to make this Mutual
Settlement and Release effective between them as of the 24th day of August,
2004.

Signed and Delivered, by RICHARD        )
PALMER in the presence of:              )
                                        )
                                        )
----------------------------------      )
Name                                    )
                                        )   /s/ Richard Palmer            (SEAL)
----------------------------------      )   ------------------------------
Address                                 )   RICHARD PALMER
                                        )
----------------------------------      )
                                        )
                                        )
----------------------------------      )
Occupation                              )

[Execution of this Mutual Settlement and Release by each of Pine Valley Coal Pty
Limited, Pine Valley Mining Corporation, Falls Mountain Coal Inc. and Pine
Valley Coal Ltd. appears on pages 4 and 5 below.]

<PAGE>
                                       4

Signed and Delivered, by an authorized      )
signatory of PINE VALLEY COAL PTY LIMITED   )
in the presence of:                         )   PINE VALLEY COAL PTY LIMITED
                                            )
/s/ Lei Wang                                )
-----------------------------------------   )   Per: /s/ Mark Fields
Name                                        )        ---------------------------
                                            )        Authorized Signatory
-----------------------------------------   )
Address                                     )
                                            )
-----------------------------------------   )
                                            )
                                            )
-----------------------------------------   )
Occupation

Signed and Delivered, by an authorized      )
signatory of PINE VALLEY MINING             )
CORPORATION in the presence of:             )   PINE VALLEY MINING CORPORATION
                                            )
/s/ Lei Wang                                )
-----------------------------------------   )
Name                                        )
                                            )
-----------------------------------------   )   Per: /s/ Mark Fields
Address                                     )        ---------------------------
                                            )        Authorized Signatory
-----------------------------------------   )
                                            )
-----------------------------------------   )
Occupation                                  )

<PAGE>
                                        5

Signed and Delivered, by an authorized      )
signatory of PINE VALLEY COAL LTD. in the   )
presence of:                                )   PINE VALLEY COAL LTD.
                                            )
/s/ Lei Wang                                )
-----------------------------------------   )   Per: /s/ Mark Fields
Name                                        )        ---------------------------
                                            )        Authorized Signatory
-----------------------------------------   )
Address                                     )
                                            )
-----------------------------------------   )
                                            )
-----------------------------------------   )
Occupation

Signed and Delivered, by an authorized      )
signatory of FALLS MOUNTAIN COAL INC. in    )
the presence of:                            )   FALLS MOUNTAIN COAL INC.
                                            )
/s/ Lei Wang                                )
-----------------------------------------   )   Per: /s/ Mark Fields
Name                                        )        ---------------------------
                                            )        Authorized Signatory
-----------------------------------------   )
Address                                     )
                                            )
-----------------------------------------   )
                                            )
-----------------------------------------   )
Occupation                                  )<PAGE>
                                                                    EXHIBIT 4.39

                         EXECUTIVE EMPLOYMENT AGREEMENT

THIS AGREEMENT is, notwithstanding the date of its execution, made effective as
of the 31st day of August, 2004.

BETWEEN:

         PINE VALLEY MINING CORPORATION, a British Columbia company, having its
         principal business office at Suite 501 - 535 Thurlow Street, Vancouver,
         BC V6E 3L2.

         ("Pine Valley")

         JEFFREY M. FEHN, businessman, of 2432 Traymore Road, University
         Heights, OH, USA 44118.

         (the "Executive")

WHEREAS:

A. Pine Valley is in the business of exploring for coal deposits, developing and
operating coal mines, and selling its coal production worldwide (the
"Business");

B. Pine Valley has offered and the Executive has accepted the position of
Chairman.

C. Pine Valley and the Executive have agreed to set out in writing the terms and
conditions of the employment of the Executive with Pine Valley.

In consideration of the premises and the mutual agreements set forth below the
parties hereto agree as follows:

1.   SERVICES, POSITION AND TERM

1.1  Pine Valley will employ the Executive, and the Executive will serve Pine
     Valley, on the terms and conditions set out herein.

1.2  The Executive will hold the position of Chairman, and perform those
     services normally or usually associated with the position of a senior
     executive officer with a public company, and such other duties consistent
     with the position of Chairman as may from time to time reasonably be
     delegated to the Executive by Pine Valley, including, without limitation,
     those detailed on Schedule "A" to this Agreement, (collectively, the
     "Services"). The Executive acknowledges that the effective performance of
     the Services may require that the Executive travel from time to time as
     required by Pine Valley.

1.3  The Executive will be employed to perform the Services for a term
     commencing on August 31, 2004 and the Executive's employment will continue
     until terminated in accordance with the provisions of this Agreement (the
     "Term").
<PAGE>
2.   PERFORMANCE BY EXECUTIVE

The Executive will perform the Services in a competent and efficient manner and
will devote the time and effort necessary to properly and fully perform the
Services. The Executive will at all times act in the best interests of Pine
Valley and will abide by all policies, practices and procedures of Pine Valley
in effect from time to time.

3.   COMPENSATION AND BENEFITS

3.1  SALARY

Pine Valley will pay to the Executive an annual salary of CAD $150,000 (the
"Salary"), less appropriate deductions and withholdings. Pine Valley will review
the Salary from time to time during the Term and may, in its sole discretion,
increase the Salary.

3.2  INCENTIVE PLANS

The Executive will be entitled to participate in those incentive compensation
plans and programs as set out in Schedule "B" or such other incentive
compensation plans and programs from time to time provided to the Executive by
Pine Valley in Pine Valley's sole discretion (the "Plans and Programs"). The
Plans and Programs may be modified or altered only as provided by those Plans or
Programs or by mutual agreement of Pine Valley and the Executive.

3.3  BENEFITS

During the Term, Pine Valley will make available to the Executive, at his
option, the benefits set out in Schedule "C" and any other benefits as may be
provided by Pine Valley from time to time in its sole discretion (the
"Benefits"). The Benefits, including any benefits that Pine Valley elects to
provide in its sole discretion from time to time, may be modified or altered
only by the mutual agreement of Pine Valley and the Executive.

3.4  EXPENSES

Pine Valley will reimburse the Executive for all reasonable out-of-pocket
expenses incurred by the Executive directly related to the performance by the
Executive of the Services. The Executive will account for such expenses in
accordance with the policies and directions of Pine Valley's board of directors.

4.   TERMINATION

4.1  DEFINITIONS

In this Agreement:

     (a)  "DISABILITY" means the inability of the Executive to substantially
          perform the Services for a continuous or cumulative period of four
          months in any 12 month period where such inability is a result of
          physical or mental illness or injury; and

                                        2
<PAGE>
     (b)  "JUST CAUSE" means conduct of the Executive that constitutes just
          cause to terminate the Executive's employment without any notice or
          compensation in lieu of notice at common law.

4.2  TERMINATION BY PINE VALLEY

Pine Valley, in its sole discretion and at any time, may terminate the
employment of the Executive:

     (a)  for Just Cause; or

     (b)  without Just Cause, subject to providing the payments and benefits set
          out in Section 4.3 of this Agreement;

in which case the Executive will be entitled to all Salary payable for Services
provided up to the date of termination and 25% of the Salary in lieu of annual
incentive compensation to which the Executive is entitled under the Plans and
Programs for the year in which the termination occurs, pro-rated to the date of
termination.

4.3  PAYMENTS IN THE EVENT OF TERMINATION WITHOUT JUST CAUSE

If the employment of the Executive is terminated by Pine Valley without Just
Cause (and not by reason of Disability or death), whether or not the termination
is related to a change of control of Pine Valley, then:

     (a)  Pine Valley will:

          (1)  provide to the Executive 12 months notice of termination (the
               "Notice Period") or a lump sum payment amount equal to one times
               the annual Salary ;

          (2)  pay to the Executive an amount equal to 25% of the annual Salary
               in lieu of annual incentive compensation payable pursuant to the
               Plans and Programs, provided that annual incentive compensation
               for the purpose of this Subsection (a)(2) does not include the
               Option Commitment granted by Pine Valley to the Executive
               effective September 24, 2004 (the "Option Commitment"); and

          (3)  continue the Executive's participation in the Benefits provided
               to the Executive immediately preceding the date of the
               termination (excluding any short or long term disability plan)
               until the earliest of the expiration of the Notice Period set out
               in Subsection (1) and the death of the Executive; and

          (4)  maintain in effect the Executive's right to exercise his options
               under the Option Commitment in accordance with Section 4.8 of
               this Agreement.

                                        3
<PAGE>
4.4  RESIGNATION BY EXECUTIVE

     (a)  The Executive may resign from his employment under this Agreement by
          providing to Pine Valley a minimum of one month's and a maximum of
          three month's prior written notice of such resignation and, in such
          case, the Executive will be entitled to exercise all options under the
          Option Commitment, or any other Plans and Programs, that will have
          vested as of the last full business day before the expiry of the
          period of notice of resignation given by the Executive.

     (b)  Upon receipt of written notice of resignation under Subsection 4.4(a)
          of this Agreement, Pine Valley may, at its option, earlier terminate
          the employment of the Executive in which case:

          (1)  the Executive will be entitled to exercise all options under the
               Option Commitment, or any other Plans and Programs, that will
               have vested as of the last full business day before the expiry of
               the period of notice of resignation given by the Executive; and

          (2)  Pine Valley will pay the Executive an amount equal to the Salary
               payable from the date of termination by Pine Valley until the
               earlier of the date of resignation selected by the Executive and
               three months from the date the Executive gave notice of
               resignation.

     (c)  Notwithstanding Subsections 4.4(a) and (b) of this Agreement, the
          Executive may resign from employment immediately and thereupon will be
          entitled to the payments and benefits set out in Section 4.3 of this
          Agreement if:

          (1)  Pine Valley conducts itself in a manner that would constitute a
               constructive dismissal of the Executive as determined in
               accordance with common law; and

          (2)  the Executive resigns within three months of the conduct of Pine
               Valley that constitutes a constructive dismissal of the
               Executive.

4.5  DEATH AND DISABILITY

     (a)  Death. If the Executive dies during the Term, then:

          (1)  employment of the Executive will terminate as of the date of
               death; and

          (2)  Pine Valley will pay to the estate of the Executive:

               (A)  unpaid Salary, if any, up to the date of death;

               (B)  50% of the annual Salary in lieu of annual incentive
                    compensation payable pursuant to the Plans and Programs for
                    the year in which the death occurs, prorated to the date of
                    death, provided that annual

                                        4
<PAGE>
                    incentive compensation for the purpose of this Subsection
                    (2)(B) does not include the Option Commitment;

               (C)  any compensation or benefits payable or owing to the
                    Executive on or after death in accordance with the terms of
                    any Benefits plans in which the Executive is participating
                    immediately prior to his death; and

          (3)  the Executive's estate shall have the right to exercise the
               Executive's options under the Option Commitment in accordance
               with Section 4.8 of this Agreement.

     (b)  Disability. If the Executive's employment is terminated by reason of
          Disability, then the Executive will be entitled thereafter to receive
          in lieu of the greater of the Notice Period set out in Section 4.3(a)
          of this Agreement and the reasonable notice period owed to the
          Executive as determined at common law (the "Reasonable Notice
          Period"):

          (1)  continued Salary payments for the duration of the Reasonable
               Notice Period;

          (2)  continued annual incentive plan compensation pursuant to the
               Plans and Programs that would have become payable to the
               Executive during the Reasonable Notice Period if the Executive
               had continued to be employed during the Reasonable Notice Period;

          (3)  any Benefits (other than Benefits relating to Disability) to
               which the Executive would have otherwise been entitled during the
               Reasonable Notice Period if the Executive had continued to be
               employed during the Reasonable Notice Period; and

          (4)  any Benefits relating to Disability that the Executive is
               entitled to as determined by the terms and conditions of any
               applicable Benefit plans, provided that if the Executive receives
               any Benefits under this Subsection (4) during any portion of the
               Reasonable Notice Period, then Pine Valley will not be obligated
               to pay to the Executive the amounts covered by such Benefits that
               would otherwise be payable to the Executive under Subsection (1).

4.6  OTHER CONDITIONS

The obligations of Pine Valley to the Executive on termination of employment of
the Executive by Pine Valley or by the Executive for any reason are subject to
the following conditions:

     (a)  Pine Valley is not obligated to continue the Executive's participation
          in the Benefits as set out in Section 4 of this Agreement where the
          continuation is not permitted pursuant to the terms of such Benefits
          or by law, and if Pine Valley is

                                        5
<PAGE>
          not permitted to continue such accrual or participation, then the
          Executive will not be entitled to any compensation in lieu thereof;

     (b)  Pine Valley is not obligated to provide share options or provide other
          incentive compensation, or compensation in lieu of either share
          options or other incentive compensation, to the Executive except as
          expressly set out in this Agreement, the Option Commitment, the
          Company's Option Plan, the Plans and Programs, and any other stock
          option agreement between the Executive and Pine Valley;

     (c)  Pine Valley may at any time or from time to time amend or terminate
          any Benefits or Plans and Programs that are continued or available
          after the date of termination of the Executive provided that the
          subject Benefits or Plans and Programs are similarly terminated or
          amended for all executives of Pine Valley;

     (d)  except as otherwise provided for in this Agreement, the date of
          termination for all purposes will be the last day of work of the
          Executive and will precede any period during which Pine Valley is
          obligated to pay Salary or continue Benefits and other compensation
          under Section 4.3 or 4.4; and

     (e)  the Executive will not be obligated to make reasonable efforts to find
          alternative employment for any period during which Pine Valley is
          obligated to continue participation in Benefits and Plans and Programs
          pursuant to Section 4.3 or 4.4, and the participation in Benefits and
          Plans and Programs pursuant to Section 4.3 or 4.4 will not be reduced
          or discontinued as a result of any employment of the Executive that
          commences after the employment of the Executive with Pine Valley
          ceases.

4.7  TERMINATION OF OBLIGATIONS

In the event of termination of the employment of the Executive by Pine Valley or
by the Executive, all obligations of Pine Valley to the Executive will terminate
except as specifically set forth in Section 4 of this Agreement and Pine Valley
will have no further obligation or liability for any claim, action or demand,
whether at common law or under any legislation from time to time applicable and
in force or otherwise for damages or loss sustained by the Executive arising out
of the employment of the Executive by Pine Valley or the termination or
cessation of that employment.

4.8  ACCELERATED VESTING OF INCENTIVE STOCK OPTIONS

Notwithstanding the vesting provisions set out in the Option Commitment, in the
event of:

     (a)  the termination of the employment of the Executive for any reason
          other than:

          (1)  termination for Just Cause; or

          (2)  the Executive being convicted of an indictable criminal offence
               in the nature of fraud,

                                        6
<PAGE>
               (any termination of the Executive's employment by Pine Valley, or
               by reason of the Executive's death, other than for the reasons
               listed above being a "Non-Critical Termination"); or

     (b)  a takeover of Pine Valley or other corporate transaction that will
          result in greater than 50% of the outstanding voting shares of Pine
          Valley being owned, directly or indirectly, by a person or group of
          persons acting jointly and in concert, where no such person or member
          of a group of such persons presently owns, directly or indirectly,
          more than 15% of the outstanding voting shares of Pine Valley, or a
          sale of all or substantially all of the assets of Pine Valley (in any
          such case, a "Triggering Event"), the Executive's Options under the
          Option Commitment will be deemed to be fully vested and immediately
          exercisable on the first to occur of:

     (c)  in the event of a Triggering Event that results from a takeover bid,
          on the date that the bidder takes up and pays for the Pine Valley
          shares under the subject bid;

     (d)  in the event of a Triggering Event that results from some other
          transaction, on the date that Pine Valley or its shareholders become
          subject to the principal transaction document governing the terms of
          the subject transaction; and

     (e)  in the event of a Non-Critical Termination, on the date of termination
          as defined in Subsection 4.6(d) of this Agreement, or on the date of
          death, as the case may be.

5.   GENERAL PROVISIONS

5.1  ENFORCEABILITY AND SEVERABILITY

It is the desire and intent of the parties hereto that the provisions of this
Agreement be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought. In
the event that any provision of this Agreement conflicts with the law under
which this Agreement is to be construed or if any such provision is held invalid
by a court with jurisdiction over the parties hereto, such provision will be
deemed to be restated to reflect as nearly as possible the original intentions
of the parties in accordance with applicable law. The remainder of this
Agreement will remain in full force and effect. In the event any such deemed
restatement of any such provision prevents the accomplishment of a fundamental
purpose of this Agreement, Pine Valley and the Executive will immediately
commence negotiations in good faith to provide the party which has been
adversely affected by such restatement with value (in cash or in kind)
equivalent to the value that such party would have received had such provision
not been restated.

5.2  ASSIGNMENT AND BENEFIT

The Executive will not assign or transfer this Agreement or any rights or
obligations hereunder. Pine Valley may assign this Agreement to any successor to
Pine Valley and the provisions hereof will inure to the benefit of, and be
binding upon, each successor of Pine Valley, whether the successor arises by
merger, consolidation or transfer of all or substantially all of its assets.
This

                                        7
<PAGE>
Agreement shall enure to the benefit of and be enforceable by the Executive's
successors and legal representatives.

5.3  ENTIRE AGREEMENT

This Agreement contains the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements or
understandings, whether oral or written and whether express or implied, between
the parties hereto. The Executive acknowledges and agrees that any prior
agreements or representations, whether oral or written and whether express or
implied, between the Executive and Pine Valley, are hereby terminated and the
Executive has no rights or entitlements under any such prior agreements or
representations against Pine Valley.

5.4  NOTICES

All notices, requests and other communications to any party hereunder will be in
writing and sufficient if delivered personally or sent by telecopy (with
confirmation of receipt) or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:

          If to Pine Valley, at

          #501 - 535 Thurlow Street
          Vancouver, BC V6E 3L2
          Fax: (604) 682-4698
          Attention: President

          If to the Executive, at:

          7670 First Place, Suite A
          Oakwood Village, OH 44146
          United States
          Fax: (440) 359-0001

or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Each such
notice, request or communication will be deemed to have been given when received
or, if given by mail, when delivered at the address specified in this Section or
on the fifth business day following the date on which such communication is
posted, whichever occurs first.

5.5  AMENDMENTS AND WAIVERS

No modification, amendment or waiver of any provision of, or consent required
by, this Agreement, nor any consent to any departure herefrom, will be effective
unless it is in writing and signed by the parties hereto. Such modification,
amendment, waiver or consent will be effective only in the specific instance and
for the purpose for which given.

                                        8
<PAGE>
5.6  HEADINGS

Descriptive headings are for convenience only and will not control or affect the
meaning or construction of any provision of this Agreement.

5.7  COUNTERPARTS

This Agreement may be executed in counterparts, and each such counterpart hereof
will be deemed to be an original instrument, but all such counterparts together
will constitute but one agreement.

5.8  CANADIAN DOLLARS

All dollar amounts referred to herein will be in lawful currency of Canada.

5.9  GOVERNING LAW

This Agreement and its application and interpretation will be governed
exclusively by the laws of British Columbia and the laws of Canada applicable in
British Columbia.

5.10 ATTORNMENT

Each party will submit to the jurisdiction of the Supreme Court of British
Columbia and all Courts having appellate jurisdiction thereover in any suit,
action or other proceeding arising out of or relating to this Agreement
commenced in such Court by one party against the other party (a "Permitted
Action"), and each party waives and will not assert by way of motion as defence
or otherwise in any Permitted Action, any claim that:

     (a)  such party is not subject to the jurisdiction of such Court;

     (b)  such permitted action is brought in an inconvenient forum;

     (c)  the venue of such permitted action is improper; or

     (d)  any subject matter of such permitted action may not be enforced in or
          by such Court.

In any suit or action brought to obtain a judgment for the recognition or
enforcement of any final judgement rendered in a Permitted Action no party to
this Agreement will seek, other than by way of appeal, in any Court of any
jurisdiction any review pertaining to the merits of any Permitted Action,
whether or not such party appears in or defends the Permitted Action.

5.11 INDEPENDENT LEGAL ADVICE

The Executive hereby acknowledges that he has had the opportunity to obtain
independent legal advice regarding this Agreement and has either obtained such
advice or has waived his right to obtain such advice.

                                        9
<PAGE>
5.12 SURVIVAL

Sections 4 and 5 of this Agreement will survive the termination of employment of
the Executive and will continue in full force and effect.

5.13 COLLECTION AND USE OF PERSONAL INFORMATION

The Executive acknowledges that Pine Valley will collect, use and disclose
health and other personal information for employment and business related
purposes. The Executive consents to Pine Valley collecting, using and disclosing
health and other personal information of the Executive for employment and
business related purposes in accordance with the privacy policy of Pine Valley.

5.14 TIME

Time is of the essence.

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

PINE VALLEY MINING CORPORATION

/s/ Mark T. Smith
-----------------------------------------
By: Mark T. Smith
Its: Director

JEFFREY M. FEHN

/s/ Jeffrey M. Fehn
-----------------------------------------

                                       10
<PAGE>
                                  SCHEDULE "A"

                             DESCRIPTION OF SERVICES

1. Formulation of medium and long term strategic goals for Pine Valley and
facilitating their implementation;

2. Principal executive responsibility for financial modelling and all financing
transactions;

3. Management and supervision of senior Pine Valley management;

4. Evaluation of Pine Valley's disclosure obligations under applicable
securities laws, in conjunction with directors, officers and professional
advisors to Pine Valley ;

5. Organization and leadership of board meetings and regular executive
management meetings;

6. Negotiation of employment contracts, overseeing management prospect search,
and interviewing new candidates for hire.

7. Management of the preparation of public announcements, MD & A and other
public disclosure documents;

8. Oversight and/or participation in the negotiation of key contracts;

9. Communications with and setting expectations for key professional advisors to
Pine Valley and its subsidiaries;

10. Consideration of risk management matters (including arranging for D&0
insurance for Pine Valley officers and directors);

                                       11
<PAGE>
                                  SCHEDULE "B"

                    INCENTIVE COMPENSATION PLANS AND PROGRAMS

1. OPTION COMMITMENT GRANTED TO THE EXECUTIVE PURSUANT TO THE STOCK OPTION PLAN
AND MADE EFFECTIVE SEPTEMBER 24, 2004;

                                       12
<PAGE>
                                  SCHEDULE "C"

                                    BENEFITS

PINE VALLEY MINING                                                  July 7, 2004

Province: BRITISH COLUMB                                               _IC: 1011

<TABLE>
<CAPTION>
                                                                                              # OF       MONTHLY      MONTHLY
       BENEFIT                                PLAN DESIGN                           VOLUME     EES        RATE        PREMIUM
       -------                                -----------                          --------   ----   --------------   -------
<S>                    <C>                                                         <C>        <C>    <C>              <C>
Basic Life Insurance   First benefit: $50,000                                      $250,000     5    $ 0.3351,000     $ 75.00
                       Non-Evidence Maximum: $50,000
                       Benefit reduces 50% at age 65
                       Benefit terminates at age 70

    Basic A D & D      Equivalent to Basic Life Benefit                            $250,000     5    $0.02951,000     $  7.25

   Dependent Life      Spouse $5,000   Each dependent child: $2,500                2 Unit(s)    5    $  1.01 Unit     $  2.02

  Weekly Indemnity     66.67% of weekly earnings to a maximum weekly benefit of
                       $1,000 payable on the:
                       - 1st day for hospitalization and accident
                       - 8th day for sickness   Benefit duration to age 65         $  3,895     5    $   0.601810     $233.16
                       Benefits are not Taxable   Non- Evidence Maximum $1,000
                       Benefits are payable for up to 17 weeks

Long Term Disability   66.7% of monthly earnings, rounded to the next higher
                       $1.00, subject to maximum of $7,500
                       Non-Evidence Maximum: $1,500                                $ 21,003     5    $   1.885100     $394.86
                       Elimination period: 17 weeks   C.G.L.A.: Net included
                       Benefit duration: to age 65   Benefits are not taxable
                       Offset Primary CFF and WCB
                       Definition of disability: 2 years 'own occupation'

Extended Health Care   No deductible applies   Drug Type: Generic Drugs
                       Reimbursement: 100% in Canada, 100% Out-of-Canada
                       (Emergency 50% Pay-Direct drug card included
                                                                                    3 Singe     5    $34.54/Single    $275.96
                                      100% Semi-Private Hospital 100%              2 Family          $56.67/Family
                                      Paramedical subject to $500
                       per year maximum per practioner
                       Vision Care: $200/24 months - 100% Reimbursement
                       Private Duty Nursing at $10,000 per calendar year
                       Employee Assistance Program is included   TLR-0.705
</TABLE>
<PAGE>
PINE VALLEY MINING                                                  July 7, 2004

Province: BRITISH COLUMB                                               _IC: 1011

<TABLE>
<CAPTION>
                                                                                              # OF       MONTHLY      MONTHLY
       BENEFIT                                PLAN DESIGN                           VOLUME     EES        RATE        PREMIUM
       -------                                -----------                          --------   ----   --------------   -------
<S>                    <C>                                                         <C>        <C>    <C>              <C>
     Dental Care       No deductible applies
                       Reimbursement: 80% Basic Services with 6 months recall
                       and 50% Major                                               3 Single     5    $43.33/Single    $345.49
                       Restorative Services
                       Maximum Benefit: $1,500 annual maximum for Basic
                       Services. $1,000 annual                                     2 Family          $108.25/Family
                       maximum for Major Restorative Services

                       Current Practical Association Fee Schedule for General
                       Practitioners   TLR=0.705

QUOTE EXPIRY DATE: September 5, 2004                                                     Sub-Total Monthly Premium: $2,335.74

*E. & O. E.

Prepared by: TAMMY LESLIE FOR MARTIN LEDSHAM                                                 Total Monthly Premium: $1,335.74
</TABLE>

Note: 1.   All quotations are subject to the provision of satisfactory health
           assistance of required by the Adviser.

      2.    All quotations are subject to verification by EXCON.

      3.    If average is currently in force with Maritime Life, this quote is
            not valid

      4.    A $10 monthly administration fee will apply for monthly billing if
            monthly premium is under $750. This fee does not apply to premium
            paid via Automatic Bank Debit.

                                       14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}]]