Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Romarco Minerals U.S. Inc. - Exhibit 4.8

 

 Mining Lease and Option to Purchase Agreement 

                This
  Mining Lease and Option to Purchase Agreement (“Agreement”) is made
  and entered into by and between Diversified Inholdings, LLC, a Nevada limited
  liability company (“Owner”), and Romarco Minerals U.S. Inc., a Nevada
  corporation (“Romarco”). 

 Recitals 

                A.
             Owner
  owns the unpatented mining claims collectively known as the Zebra claims situated
  in Elko County, Nevada, more particularly described in Exhibit A attached to
  and by this reference incorporated in this Agreement (collectively the “Property”).

                B.
             Owner
  and Romarco are parties to the Confidentiality Agreement dated July 19,
  2004, as amended, pursuant to which Owner provided certain information
  to Romarco in contemplation of a transaction.

                C.
             Owner
  desires to lease the Property to Romarco and to grant to Romarco the option
  to purchase the Property on the terms and conditions of this Agreement.

                Now,
  therefore, in consideration of their mutual promises, the parties agree as follows:

 1.            Definitions.
  The following defined terms, wherever used in this Agreement, shall have
  the meanings described below:

                1.1
             “Area
  of Interest” means the geographic area within the exterior boundaries
  of the Property and the lands described in Exhibit A and the map which is part
  of Exhibit A. 

                1.2
             
  “Closing Date” means the date on which Romarco’s purchase
  of the Property is closed in accordance with Section 5. 

                1.3
             
  “Effective Date” means August 1, 2004. 

                1.4
             
  “Governmental Regulations” means all directives, laws, orders, ordinances,
  regulations and statutes of any federal, state or local agency, court or office.

                1.5
             
  “Interest Rate” means LIBOR plus two percent (2%) per annum. 

                1.6
             
  “Lease Year” means each one (1) year period following the Effective
  Date and each anniversary of the Effective Date. 

                1.7
             
  “Minerals” means all minerals and mineral materials, including gold,
  silver, platinum and platinum group metals, base metals (including antimony,
  chromium, cobalt, copper, lead, manganese, mercury, nickel, molybdenum, titanium,
  tungsten, zinc), and other metals and mineral materials which are on, in or
  under the Property.

	   	 1	  

                1.8
             “Net
  Smelter Returns” means the net smelter returns from the production of
  Minerals from the Property as calculated and determined in accordance with Exhibit
  1 to the conveyance to be executed and delivered in accordance with Section
  5.5. 

                1.9
             
  “Option” means the Option granted by Owner to Romarco to purchase
  the Property. 

                1.10
             “Owner”
  means Diversified Inholdings, LLC, a Nevada limited liability company, and its
  successors and assigns. 

                1.11
             “Payments”
  means the payments payable by Romarco in accordance with Section 4.1. 

                1.12
             “Property”
  means the unpatented mining claims collectively known as the Zebra claims situated
  in Elko County, Nevada, plus any additional unpatented mining claims which are
  made subject to this Agreement in accordance with its terms. 

                1.13
            “Purchase
  Price” means the purchase price for the Property described in Section
  5. 

                1.14
             “Romarco”
  means Romarco Minerals U.S. Inc., a Nevada corporation, and its successors and
  assigns. 

                1.15
            “Royalty”
  means the production royalty payable by Romarco to Owner in accordance with
  Section 4.2. 

 2.            Lease
  and Grant of Rights. Owner leases the Property to Romarco and grants Romarco
  the rights and privileges described in this Section.

                2.1
              Lease.
  Owner leases the Property to Romarco for the purposes of exploration for
  Minerals, provided, however, that Romarco shall have no right to construct,
  develop or operate a mine on the Property without first having exercised and
  closed the Option.

                2.2
              Water
  Rights. Subject to the regulations of the State of Nevada concerning the
  appropriation and taking of water, Romarco shall have the right to appropriate
  and use water, to drill wells for the water on the Property and to lay and maintain
  all necessary water lines as may be required by Romarco in its operations on
  the Property. If Romarco acquires or files any application for appropriation
  or a permit, it shall cause each such application and permit to be taken jointly
  in the names of Owner and Romarco. On termination of this Agreement, except
  on Romarco’s exercise and closing of the Option, Romarco shall assign
  and convey to Owner all permits and water rights appurtenant to the Property
  which are acquired by Romarco during the term of this Agreement. If Romarco
  exercises and closes the Option, Owner shall assign and convey to Romarco all
  permits and water rights appurtenant to the Property.

	   	 2	  

 3.            Term.
  The initial term of this Agreement shall commence on the Effective Date and
  shall expire twenty (20) years after the Effective Date, unless this Agreement
  is sooner terminated, canceled or extended. Romarco shall have the right to
  extend this Agreement for additional one (1) year terms, provided that Romarco
  has fully performed all of its obligations under this Agreement and is conducting
  exploration or pre-development activities on the Property on the expiration
  of the term immediately preceding the extension term. Romarco shall deliver
  written notice to Owner of Romarco’s intent to extend this Agreement.

 4.            Payments.
  

                4.1
              Minimum
  Advance Royalty Payments. On the dates described below, Romarco shall pay
  to Owner the sums described below:

	 Date  	 Payment Amount  
	 Owner’s execution of this Agreement 
    	 $  5,000.00  
	 First anniversary of the Effective Date  	 $10,000.00  
	 Second anniversary of the Effective Date  	 $10,000.00  
	 Third anniversary of the Effective Date  	 $20,000.00  
	 Fourth anniversary of the Effective Date  	 $20,000.00  
	 Fifth anniversary of the Effective Date  	 $30,000.00  
	 Sixth anniversary of the Effective Date  	 $30,000.00  
	 Seventh and each subsequent anniversary  	 $40,000.00  
	              of
      the Effective Date  	  

 The cash Payments shall not be credited against the Purchase
  Price. 

 The foregoing payments shall be minimum advance Royalty payments
  and shall be credited cumulatively in favor of Romarco against its obligation
  to pay the Royalty prescribed in Section 4.2. 

                4.2
             
  Production Royalty. Romarco shall pay to Owner a production royalty based
  on the Net Smelter Returns from the production or sale of Minerals from the
  Property, including any additions to the Property resulting from the parties’
  location of unpatented mining claims in the Area of Interest. The Royalty percentage
  rates are based upon the average monthly price per troy ounce of gold as published
  by the London Bullion Dealers Association for the month during which gold refined
  from Minerals from the Property are outturned at the refinery, as follows:

	 Gold Price per Troy Ounce  	 Rate 
	 Less than $300  	 2.0% 
	 $300 or more but less than $400  	 3.0% 
	 $400 or more  	 4.0% 

 Romarco shall have the option to purchase a portion of the
  Royalty representing two percent (2%) of the Net Smelter Returns, all in accordance
  with the terms of the conveyance to be 

	   	 3	  

 executed and delivered in accordance with Section 5.5. 

                4.3
              Method
  of Payment. Except as otherwise provided in this Agreement, all payments
  by Romarco to Owner shall be paid by check or wire transfer to an account designated
  by Owner. 

                4.4
              Late
  Charge and Interest. If Romarco does not timely pay any Payment or any other
  amount payable by Romarco under this Agreement within ten business (10) days
  after the date on which such payment is due, Romarco shall pay interest on such
  overdue amount at the greater of the Interest Rate or ten percent (10%). If
  any Payment or other amount payable by Romarco remains delinquent for a period
  in excess of thirty (30) days, Romarco shall pay to Owner, in addition to the
  late charge, interest from and after the due date at the Interest Rate. 

                4.5
              Currency.
  All sums referred to in this Agreement are in United States currency.

 5.            Option.
  Owner grants to Romarco the exclusive right to purchase the Property, subject
  to the Royalty reserved by Owner and subject to Romarco’s obligations
  under the conveyance executed and delivered by Owner on the closing of the Option.
  Romarco may exercise the Option at any time after Romarco commits to commence
  development of a mine or mining on the Property or completes a positive feasibility
  study for development or mining on the Property. The Purchase Price for the
  Property shall be Five Thousand Dollars ($5,000.00) . 

                5.1
              Notice
  of Election. If Romarco elects to exercise the Option, Romarco shall deliver
  written notice to Owner. On Owner’s receipt of Romarco’s notice
  of exercise of the Option, the parties shall make diligent efforts to close
  the conveyance of the Property, as applicable, within thirty (30) days after
  Owner’s delivery of the notice.

                5.2
              Real
  Property Transfer Taxes. Romarco shall pay the real property transfer taxes,
  if any, the costs of escrow and all recording costs incurred in closing of the
  Option. The parties acknowledge that there are presently no real property transfer
  taxes assessed on the transfer of title to unpatented mining claims, including
  the unpatented mining claims which constitute the Property.

                5.3
              Proration
  of Taxes. Payment of any and all state and local real property and personal
  property taxes levied on the Property and not otherwise provided for in this
  Agreement shall be prorated between the parties as of the closing of any transaction
  on the basis of a thirty (30) day month. The parties acknowledge that there
  are presently no real property taxes assessed against unpatented mining claims,
  including the unpatented mining claims which constitute the Property.

                5.4
              Payment
  on Closing. On closing of the Option, Romarco shall pay the Purchase Price
  to Owner in cash or by wire transfer in accordance with Section 4.3

                5.5
              Conveyance
  on Closing. If Romarco exercises and closes the Option, Owner 

	   	 4	  

 shall execute and deliver to Romarco a conveyance of the Property
  which contains the reservation of the Royalty and obligates Romarco to make
  the Payments in the form of Exhibit B attached to and by this reference incorporated
  in this Agreement. On the closing of the Option, the parties shall complete
  the conveyance by inserting the description of all of the unpatented mining
  claims which comprise the Property on closing of the Option. The execution,
  delivery and recording of the conveyance shall not constitute a merger of Romarco’s
  obligations under this Agreement which shall survive the closing of the Option.
  Owner and Romarco shall execute and deliver such other written assurances and
  instruments as are reasonably necessary for the purpose of closing the purchase
  of the Property.

                5.6
              Effect
  of Closing. On closing of the Option, Romarco shall own the Property, subject
  to the Royalty reserved by Owner and Romarco’s obligations stated in the
  conveyance of the Property.

 6.            Compliance
  With The Law. Romarco shall, at Romarco’s sole cost, promptly comply
  with all Governmental Regulations relating to the condition, use or occupancy
  of the Property by Romarco, including but not limited to all exploration and
  development work performed by Romarco during the term of this Agreement. Romarco
  shall, at its sole cost, promptly comply with all applicable Governmental Regulations
  regarding reclamation of the Property and Romarco shall defend, indemnify and
  hold harmless Owner from any and all actions, assessments, claims, costs, fines,
  liability and penalties arising from or relating to Romarco’s failure
  to comply with any applicable Governmental Regulations. Owner agrees to cooperate
  with Romarco in Romarco’s application for governmental licenses, permits
  and approvals, the costs of which shall be borne by Romarco. Promptly following
  the Effective Date, Romarco shall apply and diligently prosecute its application
  for a special use permit for mining operations on the Property.

 7.            Work
  Practices, Data and Reports. 

                7.1
              Work
  Practices. Romarco shall work the Property in a miner-like fashion.

                7.2
              Inspection
  of Data. During the term of this Agreement, Owner shall have the right to
  examine and make copies of all data, including interpretative data, regarding
  the Property in Romarco’s possession during reasonable business hours
  and upon prior notice, provided, however, that the rights of Owner to examine
  such data shall be exercised in a manner that does not interfere with the operations
  of Romarco. On execution of this Agreement, Owner shall allow Romarco to inspect
  all data, including interpreted data, regarding the Property in Owner’s
  possession. Romarco shall have the right to make copies of any such data, subject
  to Romarco’s confidentiality obligations and the obligation to return
  such data on termination of this Agreement (except on Romarco’s exercise
  of the Option).

                7.3
              Reports.
  On or before April 1 following each calendar year during which this Agreement
  is effective, Romarco shall deliver to Owner a comprehensive report, which includes
  all factual data, of all of Romarco’s activities conducted on the Property
  for the previous calendar 

	   	 5	  

 year.

 8.            Scope
  of Agreement. This Agreement shall extend to and include the unpatented
  mining claims described in Exhibit A which is part of this Agreement, and in
  the exhibits which are part of this Agreement, and all other interests, mining
  claims and property rights made part of and subject to this Agreement in accordance
  with this Section. All unpatented mining claims located by Owner or Romarco
  which are partially or wholly in the Area of Interest shall be located in Owner’s
  name and shall be part of and subject to this Agreement. If a party locates
  any unpatented mining claims in the Area of Interest, the locator shall promptly
  notify the other party. The parties shall execute and deliver an amendment of
  this Agreement, in recordable form, which provides that the newly located unpatented
  mining claims are part of the Property and are subject to this Agreement. The
  amendment may be recorded by either party.

 9.            Liens
  and Notices of Non-Responsibility. Romarco agrees to keep the Property at
  all times free and clear of all liens, charges and encumbrances of any and every
  nature and description done made or caused by Romarco, and to pay, and defend,
  indemnify and hold harmless Owner from and against, all indebtedness and liabilities
  incurred by or for Romarco which may or might become a lien, charge or encumbrance;
  except that Romarco need not discharge or release any such lien, charge or encumbrance
  so long as Romarco disputes or contests the lien, charge or encumbrance and
  posts a bond sufficient to discharge lien acceptable to Owner. Subject to Romarco’s
  right to post a bond in accordance with the foregoing, if Romarco does not within
  thirty (30) days following the imposition of any such lien, charge or encumbrance,
  cause the same to be released of record, Owner shall have, in addition to Owner’s
  contractual and legal remedies, the right, but not the obligation, to cause
  the lien to be released by such manner as Owner deems proper, including payment
  of the claim giving rise to such lien, charge or encumbrance. All sums paid
  by Owner for and all expenses incurred by it in connection with such purpose,
  including court costs and attorney’s fees, shall be payable by Romarco
  to Owner on demand with interest at the Interest Rate. Notwithstanding the foregoing,
  Romarco shall have the right to grant a lien and security interest in its leasehold
  interest under this Agreement for the purpose of obtaining financing for Romarco’s
  activities on the Property.

 10.          Taxes.
  

                10.1
             Real
  Property Taxes. Owner shall pay any and all taxes assessed and due against
  the Property before execution of this Agreement. Romarco shall pay promptly
  before delinquency all taxes and assessments, general, special, ordinary and
  extraordinary, that may be levied or assessed during the term of this Agreement
  upon the Property. All such taxes for the year in which this Agreement is executed
  and for the year in which this Agreement terminates shall be prorated between
  Owner and Romarco, except that neither Owner nor Romarco shall be responsible
  for the payment of any taxes which are based upon income, net proceeds, production
  or revenues from the Property assessed solely to the other party. The parties
  acknowledge that there are presently no real property taxes assessed against
  unpatented mining claims, including the unpatented mining claims which constitute
  the Property.

	   	 6	  

                10.2
             Personal
  Property Taxes. Each party shall promptly when due pay all taxes assessed
  against such party’s personal property, improvements or structures placed
  or used on the Property.

                10.3
              Income
  Taxes. Owner shall not be liable for any taxes levied on or measured by
  income or net proceeds, or other taxes applicable to Romarco, based upon payments
  under this Agreement or under the conveyance executed and delivered by Owner
  on the Closing of the Option.

                10.4
              Delivery
  of Tax Notices. If Owner receives tax bills or claims which are Romarco’s
  responsibility, Owner shall promptly forward them to Romarco for payment. 

 11.         Insurance
  and Indemnity. 

                11.1
              Romarco’s
  Liability Insurance. Romarco shall, at Romarco’s sole cost, keep in
  force during this Agreement term a policy of commercial general liability insurance
  covering property damage and liability for personal injury occurring on or about
  the Property, with limits in the amount of at least Two Million Dollars ($2,000,000)
  per occurrence for injuries to or death of person, One Million Dollars ($1,000,000)
  per occurrence for property damage, and with a contractual liability endorsement
  insuring Romarco’s performance of Romarco’s indemnity obligations
  of this Agreement.

                11.2
              Form
  and Certificates. Such policy shall name Owner as an additional insured
  and contain a cross-liability and severability endorsement. Romarco’s
  insurance policy shall also be primary insurance without right of contribution
  from any policy carried by Owner. A certificate of insurance and a copy of Romarco’s
  insurance policy shall be provided to Owner before any entry by Romarco or its
  agents or employees on the Property and shall provide that such policy is not
  subject to cancellation, expiration or change, except upon thirty (30) days
  prior written notice to Owner. 

                11.3
              Waiver
  of Subrogation. Romarco and Owner each waives any and all rights of recovery
  against the other, and against the partners, members, officers, employees, agents
  and representatives of the other, for loss of or damage to the Property or injury
  to person to the extent such damage or injury is covered by proceeds received
  under any insurance policy carried by Owner or Romarco and in force at the time
  of such loss or damage.

                11.4
              Waiver
  and Indemnification. Owner shall not be liable to Romarco and Romarco waives
  all claims against Owner for any injury to or death of any person or damage
  to or destruction of any personal property or equipment or theft of property
  occurring on or about the Property or arising from or relating to Romarco’s
  business conducted on the Property. Romarco shall defend, indemnify and hold
  harmless Owner and its members, officers, directors, agents and employees from
  and against any and all claims, judgments, damage, demands, losses, expenses,
  costs or liability arising in connection with injury to person or property from
  any 

	   	 7	  

 activity, work, or things done, permitted or suffered by Romarco
  or Romarco’s agents, partners, servants, employees, invitees or contractors
  on or about the Property, or from any breach or default by Romarco in the performance
  of any obligation on the part of Romarco to be performed under the terms of
  this Agreement (all of the foregoing collectively referred to as “General
  Indemnity Claims”). Romarco agrees to defend all General Indemnity Claims
  on behalf of Owner, with counsel reasonably acceptable to Owner. The obligations
  of Romarco contained in this Section shall survive the expiration of the term
  or sooner termination of this Agreement. 

 12.          Environmental.
  

                12.1
              Definitions.
  Hazardous Materials means any material, waste, chemical, mixture or byproduct
  which: (a) is or is subsequently defined, listed, or designated under Applicable
  Environmental Laws (defined below) as a pollutant, or as a contaminant, or as
  toxic or hazardous; or (b) is harmful to or threatens to harm public health,
  safety, ecology, or the environment and which is or hereafter becomes subject
  to regulation by any federal, state or local governmental authority or agency.
  Applicable Environmental Laws means any applicable federal, state, or local
  government law (including common law), statute, rule, regulation, ordinance,
  permit, license, requirement, agreement or approval, or any applicable determination,
  judgment, injunction, directive, prohibition or order of any governmental authority
  with jurisdiction at any level of federal, state, or local government, relating
  to pollution or protection of the environment, ecology, natural resources, or
  public health or safety.

                12.2
              Romarco
  Hazardous Material Activities. Romarco shall limit any use, generation,
  storage, treatment, transportation, and handling of Hazardous Materials in connection
  with Romarco’s use of the Property (collectively “Romarco Hazardous
  Materials Activities”) to those Hazardous Materials, and to quantities
  of them, that are necessary to perform activities permitted under this Agreement.
  Romarco Hazardous Materials Activities include, without limitation, all such
  activities on or about the Property by Romarco’s employees, partners,
  agents, invitees, contractors and their subcontractors. Romarco shall not cause
  or permit any Hazardous Materials to be disposed or abandoned at the Property.
  Romarco shall cause all Romarco Hazardous Materials Activities to be performed
  in strict conformance to Applicable Environmental Laws. Romarco shall promptly
  notify Owner of any actual or claimed violation of Applicable Environmental
  Laws in connection with Romarco Hazardous Materials Activities, and Romarco
  shall promptly and thoroughly cure any violation of Applicable Environmental
  Laws in connection with Romarco Hazardous Materials Activities. If any governmental
  approval, consent, license or permit is required under Applicable Environmental
  Laws for Romarco to perform any portion of its work at the Property, including
  without limitation any air emission permits, before commencing any such work,
  Romarco shall be solely responsible, at Romarco’s expense, for obtaining
  and maintaining, and providing copies of, each approval, consent, license or
  permit. All Romarco Hazardous Materials Activities shall be performed by qualified
  personnel who have received proper training with respect to Hazardous Materials,
  including compliance with applicable OSHA laws and regulations. Romarco shall
  cause all Hazardous Materials present at the Property in connection with Romarco
  Hazardous Materials 

	   	 8	  

 Activities to be safely and securely stored, using double
  containment. Romarco agrees that neither its use of the Property nor Romarco
  Hazardous Materials Activities shall result in contamination of the environment.

                12.3
              Spills
  of Hazardous Materials. Romarco shall promptly notify Owner and each governmental
  regulatory entity with jurisdiction of any spills, releases, or leaks of Hazardous
  Materials that occur in connection with Romarco Hazardous Materials Activities
  or Romarco’s use of the Property, including but not limited to any resulting
  contamination of the environment (collectively “Romarco Contamination”).
  Romarco further shall promptly notify Owner of any claims of which Romarco becomes
  aware regarding any actual or alleged Romarco Contamination. Romarco shall be
  solely responsible at its expense for promptly, diligently and thoroughly investigating,
  monitoring, reporting on, responding to, and cleaning up to completion any and
  all such Romarco Contamination, in full conformance to Applicable Environmental
  Laws (collectively the “Romarco Environmental Response Work”). All
  Romarco Environmental Response Work shall be reported to each governmental regulatory
  entity with jurisdiction on an ongoing basis, and Romarco shall diligently attempt
  to obtain written concurrence from such each such regulatory entity that all
  Romarco Environmental Response Work has been satisfactorily performed and completed.
  Romarco at its expense shall keep Owner timely informed of Romarco’s progress
  in responding to any Romarco Contamination, including but not limited to providing
  Owner with copies, at Romarco’s expense, of all reports, work plans, and
  communications with governmental regulatory entities.

                12.4
              Removal
  of Stored Hazardous Materials. Before the expiration or termination of this
  Agreement, and notwithstanding any other provision of this Agreement, and in
  full conformance to Applicable Environmental Laws, Romarco shall: (a) cause
  to be properly removed from the Property all Hazardous Materials stored at the
  Property in connection with Romarco’s use of the Property or in connection
  with Romarco Hazardous Materials Activities; and (b) cause to be properly dismantled,
  closed and removed from the Property all devices, drums, equipment and containments
  used for handling, storing or treating Hazardous Materials Activities. As part
  of the closure and removal activities described in the preceding sentence, Romarco
  shall cause to be performed representative environmental sampling of areas of
  the Property where such handling, storing or treating of Hazardous Materials
  occurred, to confirm that no contamination of the environment has resulted from
  any Romarco Hazardous Materials Activities. Such sampling shall be performed
  by a qualified environmental consultant acceptable to Owner, and such consultant
  shall promptly issue a written report which describes the consultant’s
  data, findings, and conclusions, a copy of which shall be provided to Owner
  at Romarco’s expense. If any Romarco Contamination is discovered, Romarco
  shall immediately initiate Romarco Environmental Response Work as prescribed
  in this Agreement.

                12.5
              Environmental
  Indemnity. Romarco shall promptly reimburse, defend, indemnify (with legal
  counsel acceptable to Owner, whose consent shall not unreasonably be withheld)
  and hold harmless Owner, its employees, assigns, successors-in-interest, agents
  and representatives from any and all claims, liabilities, obligations, losses,
  causes of action, demands, governmental proceedings or directives, fines, penalties,
  expenses, costs (including but not 

	   	 9	  

 limited to reasonable attorney’s fees, consultant’s
  fees and other expert’s fees and costs), and damages, which arise from
  or relate to: (a) Romarco Hazardous Materials Activities; (b) Romarco Contamination;
  (c) any non-compliance with Applicable Environmental Laws in connection with
  Romarco’s use of the Property; or (d) a breach of any obligation of Romarco
  under this Section.

                12.6
              Survival.
  The provisions of this Section shall survive expiration or termination of
  this Agreement.

 13.          Property
  Maintenance. 

                13.1
              Claim
  Maintenance. 

                                     13.1.1     
  Annual Assessment Work. To the extent required by law, beginning with the
  annual assessment work period of September 1, 2004, to September 1, 2005, and
  for each succeeding annual assessment work year commencing during the term of
  this Agreement, and not less than thirty (30) days before the applicable deadline,
  Romarco shall perform for the benefit of the Property work of a type customarily
  deemed applicable as assessment work and of sufficient value to satisfy the
  annual assessment work requirements of all applicable federal, state and local
  laws, regulations and ordinances, if any, and shall prepare evidence of the
  same in form proper for recordation and filing, and shall timely record and/or
  file such evidence in the appropriate federal, state and local office as required
  by applicable federal, state and local laws, regulations and ordinances. Romarco
  shall deliver to Owner proof of Romarco’s compliance with this Section
  not less than ten (10) days before the applicable deadline. If Romarco elects
  to terminate this Agreement more than three (3) months before the deadline for
  performance of annual assessment work for the succeeding annual assessment year,
  Romarco shall have no obligation to perform annual assessment work nor to prepare,
  record and/or file evidence of the same for the following annual assessment
  year. The parties acknowledge that there are presently no annual assessment
  work requirements for the unpatented mining claims which constitute the Property.

                                    13.1.2
       Federal Mining Claim Maintenance Fees. If
  under applicable federal laws and regulations federal annual mining claim maintenance
  fees are required to be paid for the unpatented mining claims which constitute
  all or part of the Property, beginning with the annual assessment work period
  of September 1, 2004, to September 1, 2005, and not less than thirty (30) days
  before the applicable deadline (except for the assessment year ending on September
  1, 2005), Romarco shall timely and properly pay the federal annual mining claim
  maintenance fees, and shall execute and record or file, as applicable, proof
  of payment of the federal annual mining claim maintenance fees and of Owner's
  intention to hold the unpatented mining claims which constitute the Property.
  Romarco shall deliver to Owner proof of Romarco’s compliance with this
  Section not less than ten (10) days before the applicable deadline. If Romarco
  elects to terminate this Agreement more than three (3) months before the deadline
  for payment of the federal annual mining claim maintenance fees for the succeeding
  annual assessment year, 

	   	 10	  

 Romarco shall have no obligation to pay the federal annual
  mining claim maintenance fees for the Property for the succeeding assessment
  year.

                13.2
              Amendment
  of Mining Laws.  The parties acknowledge that legislation for the amendment
  or repeal of the mining laws of the United States applicable to the Property
  has been, and in the future may be, considered by the United States Congress.
  The parties desire to insure that any and all interests of the parties in the
  lands subject to the unpatented mining claims which comprise all or part of
  the Property, including any rights or interests acquired in such lands under
  the mining laws as amended, repealed or superseded, shall be part of the Property
  and shall be subject to the Agreement. If the mining laws applicable to the
  unpatented mining claims subject to this Agreement are amended, repealed or
  superseded, the conversion or termination of Owner's interest in the Property
  pursuant to such amendment, repeal or supersession of the mining laws shall
  not be considered a deficiency or defect in Owner's title in the Property, and
  Romarco shall have no right or claim against Owner resulting from the conversion,
  diminution, or loss of Owner's interest in and to the Property, except as expressly
  provided in this Agreement.

                                    If
  pursuant to any amendment or supersession of the mining laws Owner is granted
  the right to convert its interest in the unpatented mining claims comprising
  the Property to a permit, license, lease, or other right or interest, all converted
  interests or rights shall be deemed to be part of the Property subject to this
  Agreement. Upon the grant or issuance of such converted interests or rights,
  the parties shall execute and deliver an addendum to this Agreement, in recordable
  form, by which such converted interests or rights are made subject to this Agreement.

 14.          Relationship
  of the Parties. 

                14.1
              No
  Partnership. This Agreement shall not be deemed to constitute any party,
  in its capacity as such, the partner, agent or legal representative of any other
  party, or to create any joint venture, partnership, mining partnership or other
  partnership relationship between the parties.

                14.2
              Competition.
  Except as expressly provided in this Agreement, each party shall have the
  free and unrestricted right independently to engage in and receive the full
  benefits of any and all business endeavors of any sort outside the Property
  or outside the scope of this Agreement, whether or not competitive with the
  endeavors contemplated under this Agreement, without consultation with or participation
  of the other party. In particular, without limiting the foregoing, neither party
  to this Agreement shall have any obligation to the other as to any opportunity
  to acquire any interest, property or right offered to it outside the scope of
  this Agreement.

 15.          Inspection.
  Owner or Owner’s duly authorized representatives shall be permitted to
  enter on the Property and Romarco’s workings at all reasonable times for
  the purpose of inspection, but they shall enter on the Property at their own
  risk and in such a manner which does not unreasonably hinder, delay or interfere
  with Romarco’s operations.

	   	 11	  

 16.          Title.
  Owner represents that: (a) the claims were properly located in accordance
  with applicable federal and state laws and regulations; (b) all assessment work
  requirements for the claims have been performed and all filings and recordings
  of proof of performance have been made properly and the federal annual mining
  claim maintenance and rental fees have been paid properly; (c) the claims are
  in good standing; (d) subject to the paramount title of the United States, Owner
  has good right and full power to lease and to convey the interests described
  in this Agreement; and (e) the claims are free and clear of all liens, claims
  and encumbrances created by, through or under Owner. Owner disclaims any representation
  or warranty concerning the existence or proof of a discovery of locatable minerals
  on or under the Property.

 17.         Covenants,
  Warranties and Representations. Each of the parties covenants, warrants
  and represents for itself as follows:

                17.1
             Compliance
  with Laws. That it has complied with all applicable laws and regulations
  of any governmental body, federal, state or local, regarding the terms of and
  performance of its obligations under this Agreement.

                17.2
              No
  Pending Proceedings. That there are no lawsuits or proceedings pending or
  threatened which affect its ability to perform the terms of this Agreement.

                17.3
              Costs.
  That it shall pay all costs and expenses incurred or to be incurred by it
  in negotiating and preparing this Agreement and in closing and carrying out
  the transactions contemplated by this Agreement. 

                17.4
              Brokers.
  That it has had no dealings with any agent, broker or finder in connection with
  this Agreement, and shall indemnify, defend and hold the other party harmless
  from and against any claims that may be asserted through such party that any
  agent’s broker’s or finder’s fee is due in connection with
  this Agreement.

 18.         Termination
  by Owner. Any failure by Romarco to perform any of its covenants, liabilities,
  obligations or responsibilities under this Agreement shall be a default. Owner
  must give Romarco written notice of a default. If the default is not remedied
  within thirty (30) days after receipt of the notice, provided the default can
  reasonably be cured within that time, or, if not, if Romarco has not within
  that time commenced action to cure the same or does not after such commencement
  diligently prosecute such action to completion, Owner may terminate this Agreement
  by delivering notice to Romarco of Owner’s termination of this Agreement.
  On termination of this Agreement based on Romarco’s default, within ten
  (10) days after termination Romarco shall execute and deliver to Owner a release
  and termination of this Agreement in form acceptable for recording.

 19.          Termination
  by Romarco. Romarco may at any time terminate this Agreement by giving thirty
  (30) days advance written notice to Owner. If Romarco terminates this Agreement,
  Romarco shall perform all obligations and pay all payments which accrue or become
  due before 

	   	 12	  

 the termination date. On Romarco’s termination of this
  Agreement, within ten (10) days after termination Romarco shall execute and
  deliver to Owner a release and termination of this Agreement in form acceptable
  for recording.

 20.          Surrender
  of Property. On expiration or termination of this Agreement, Romarco shall
  surrender the Property promptly to Owner and at Romarco’s sole cost shall
  remove from the Property all of Romarco’s buildings, equipment and structures.
  Romarco shall reclaim the Property in accordance with all applicable Governmental
  Regulations. Romarco shall diligently perform reclamation and restoration of
  the Property such that Romarco’s reclamation and restoration shall be
  completed before expiration of this Agreement and not later than the date required
  under any Governmental Regulations.

 21.          Data.
  Within thirty (30) days following termination of this Agreement, Romarco
  shall deliver to Owner copies of all data regarding the Property in Romarco’s
  possession at the time of termination which before termination have not been
  furnished to Owner and, at Owner’s request, Romarco shall deliver to Owner
  all drilling core, samples and sample splits taken from the Property.

 22.          Confidentiality.
  The data and information, including the terms of this Agreement, coming into
  a party’s possession by virtue of this Agreement shall be deemed confidential
  and shall not be disclosed to outside third parties except as may be required
  to publicly record or protect title to the Property or to publicly announce
  and disclose information under Governmental Regulations or under the rules and
  regulations of any stock exchange on which the stock of any party, or the parent
  or affiliates of any party, is listed. Each party agrees to inform the other
  party of the content of the announcement or disclosure in sufficient time to
  permit the other party to jointly or simultaneously make a similar public announcement
  or disclosure. If a party negotiates for a transfer of all or any portion of
  its interest in the Property or under this Agreement or negotiates to procure
  financing or loans relating to the Property, in order to facilitate any such
  negotiations such party shall have the right to furnish information to third
  parties, provided that each third party to whom the information is disclosed
  agrees to maintain its confidentiality in the manner provided in this Section.

 23.          Assignment.
  

                23.1
              Romarco’s
  Assignment. Except as expressly provided in this Agreement, Romarco shall
  not assign, convey, encumber, sublease, grant any concession, or license or
  otherwise transfer (each a “Transfer”) all or any part of its interest
  in this Agreement or the Property, without, in each case, Owner’s prior
  written consent, which shall not be withheld unreasonably. In determining whether
  or not to grant or deny consent to Romarco’s proposed assignment, Owner
  shall have the right to consider: (a) the financial condition and technical
  capabilities of the proposed assignee; (b) the litigation and operating history
  of the proposed assignee; and (c) the proposed assignee’s history of compliance
  with applicable laws, regulations and ordinances relating to the proposed assignee’s
  mineral exploration and mining activities. Owner shall respond to Romarco’s
  request for consent to assignment within fifteen (15) business 

	   	 13	  

 days following Owner’s receipt of Romarco’s request,
  and Owner’s failure to respond during such fifteen (15) day period shall
  be deemed to be Owner’s consent to the proposed assignment. Any Transfer
  of this Agreement which is prohibited under this Section shall be deemed void
  and shall constitute a material default under the terms of this Agreement. 

                 23.2
              Owner’s
  Assignment. Subject to Romarco’s rights under this Agreement, Owner
  shall have the right to assign, convey, encumber, or sell all or any part of
  its interest in this Agreement or the Property. No change in ownership of Owner's
  interest in the Property shall affect Romarco's obligations under this Agreement
  unless and until Owner delivers and Romarco receives copies of the documents
  which demonstrate the change in ownership of Owner's interest. Until Romarco
  receives Owner's notice and the documents required to be delivered under this
  Section, Romarco may continue to make all payments under this Agreement as if
  the transfer of Owner's ownership interest had not occurred. No division of
  Owner's ownership as to all or any part of the Property shall enlarge Romarco's
  obligations or diminish Romarco's rights under this Agreement. 

 24.          Memorandum
  Agreement. The parties shall execute and deliver a memorandum of this Agreement.
  The execution of the memorandum shall not limit, increase or in any manner affect
  any of the terms of this Agreement or any rights, interests or obligations of
  the parties.

 25.          Notices.
  Any notices required or authorized to be given by this Agreement shall be
  in writing and shall be sent either by commercial courier, facsimile, or by
  certified U.S. mail, postage prepaid and return receipt requested, addressed
  to the proper party at the address stated below or such address as the party
  shall have designated to the other parties in accordance with this Section.
  Such notice shall be effective on the date of receipt by the addressee party,
  except that any facsimiles received after 5:00 p.m. of the addressee’s
  local time shall be deemed delivered the next day.

	 	 If to Owner:  	 Diversified Inholdings, LLC  
	 	  	 PO Box 34089  
	 	  	 Reno, Nevada 89533-4089  
	 	  	 
	 	 If to Romarco :  	 Romarco Minerals U.S. Inc.  
	 	  	 80 Bitterbrush Road  
	 	  	Reno,  Nevada 89523-9679  
	 	  	 
	 	  	 Romarco Minerals Inc.  
	 	  	 Romarco Minerals Inc.  
	 	  	885 W. Georgia Street 
	 	  	 Suite 1500  
	 	  	 Vancouver, BC, Canada V6C 3E8  

 26.          Binding
  Effect of Obligations. This Agreement shall be binding upon and inure to
  the 

	   	 14	  

 benefit of the respective parties and their successors or
  assigns.

 27.          Entire
  Agreement. The parties agree that the entire agreement between them is written
  in this Agreement and in a memorandum of agreement of even date. There are no
  terms or conditions, express or implied, other than expressly stated in this
  Agreement. This Agreement may be amended or modified only by a written instrument
  signed by the parties with the same formality as this Agreement. 

 28.          Governing
  Law and Forum Selection. This Agreement shall be construed and enforced
  in accordance with the laws of the State of Nevada. Any action or proceeding
  concerning the construction, or interpretation of the terms of this Agreement
  or any claim or dispute between the parties shall be commenced and heard in
  the Second Judicial District Court of the State of Nevada, in and for the County
  of Washoe, Reno, Nevada.

 29.          Multiple
  Counterparts. This Agreement may be executed in any number of counterparts,
  each of which shall be deemed to be an original, but all of which shall constitute
  the same Agreement.

 30.          Severability.
  If any part, term or provision of this Agreement is held by a court of competent
  jurisdiction to be illegal or in conflict with any Governmental Regulations,
  the validity of the remaining portions or provisions shall not be affected,
  and the rights and obligations of the parties shall be construed and enforced
  as if the Agreement did not contain the particular part, term or provision held
  to be invalid.

 31.          Time
  of Essence. Time is of the essence in the performance of the parties’
  obligations under this Agreement.

 The parties have executed this Agreement effective as of the
  Effective Date. 

	 	 Diversified Inholdings, LLC  
	 	 	  
	 	 	 
	 	By  	 
    
	 	 	 Greg Ekins, Manager  
	 	 	 
	 	 	 
	 	By	 
    
	 	 	 Peter Dilles, Manager  
	 	 
	 	 Romarco Minerals U.S. Inc.  
	 	 	  
	 	By	 
    
	 	Title: 	 
    

	   	 15	  

 

	 STATE OF NEVADA,  	 )  	  
	  	 ss.  	  
	 COUNTY OF WASHOE  	 )  	  

                This
  Mining Lease and Option to Purchase Agreement was acknowledged before me on
  August ______ , 2004, by Greg Ekins as Manager of Diversified Inholdings, LLC.

	 	 	 
	  	  	 Notary Public  
	  	 	 
	 STATE OF NEVADA, 
      	 )  	  
	  	 ss.  	  
	 COUNTY OF WASHOE 	 )  	  

               This
  Mining Lease and Option to Purchase Agreement was acknowledged before me on
  August ______ , 2004, by Peter Dilles as Manager of Diversified Inholdings,
  LLC. 

	 	 	 
	  	  	 Notary Public  
	  	 	 
	 	 )  	  
	 	 ss.  	  
	 	 )  	  

               This
  Mining Lease and Option to Purchase Agreement was acknowledged before me on 
  August ______ , 2004, by  as  of Romarco Minerals U.S. Inc.
  

	 	 	 
	  	  	 Notary Public  

	   	 16	  

 Mining Lease and Option to Purchase Agreement 

  Exhibit A 

  Description of Zebra Property and Area of Interest 

 Property. 

See attached list 

 Area of Interest. 

 See attached map 

	   	 17Filed by Automated Filing Services Inc. (604) 609-0244 - Romarco Minerals U.S. Inc. - Exhibit 4.9

 Mining Lease Agreement 

            This
  Mining Lease Agreement (“Agreement”) is made and entered into by
  and between Estill Ranches, Limited Liability Company, a California limited
  liability company (“Estill”), and Romarco Minerals U.S. Inc., a
  Nevada corporation (“Romarco”). 

  Recitals 

            A.
             Estill owns
  the fee lands situated in Washoe County, Nevada, more particularly described
  in Exhibit A attached to and by this reference incorporated in this Agreement.

            B.
             Estill desires
  to lease to Romarco certain rights in and to the Property, and Romarco desires
  to lease such rights from Estill upon the terms and conditions of this Agreement.

            Now,
  therefore, in consideration of their mutual promises, the parties agree as follows:

 1.        Definitions.
  The following defined terms, wherever used in this Agreement, shall have the
  meanings described below: 

            1.1           
  “Effective Date” means October 1, 2004.

            1.2           
  “Estill” means Estill Ranches, Limited Liability Company, a California
  limited liability company, and its successors and assigns. 

            1.3           
  “Governmental Regulations” means all directives, edicts, laws, orders,
  ordinances, regulations and orders of governmental authority. 

            1.4           
  “Interest Rate” means the statutory rate under Nevada law. 

            1.5           
  “Lease Year” means each one (1) year period following the Effective
  Date and each anniversary of the Effective Date. 

            1.6
             “Minerals”
  means all metals, minerals and mineral materials, including by way of example
  and not by limitation, gold, silver and other precious and base metals, including
  antimony, chromium, cobalt, copper, lead, manganese, mercury, nickel, molybdenum,
  titanium, tungsten, zinc, and other metals which are on, in or under the Property.

            1.7
             “Minimum
  Payments” means the minimum payments payable by Romarco in accordance
  with Section 4.1. 

            1.8           
  “Net Smelter Returns” means the net smelter returns from the production
  of Minerals calculated in accordance with Exhibit B. 

            1.9           
  “Property” means the fee lands described in Exhibit A attached to
  and by this reference incorporated in this Agreement consisting of approximately
  592 acres. 

 1

            1.10
             “Romarco”
  means Romarco Minerals U.S., Inc., a Nevada corporation, and its successors
  and assigns. 

            1.11           
  “Royalty” means the production royalty payable by Romarco to Estill
  in accordance with Section 4.2. 

 2.        Grant of Exploration
  Privilege and Lease. Estill grants to Romarco the rights and privileges
  described in this Section. 

            2.1           
  Grant of Exploration Privilege. Estill grants Romarco the right and privilege
  to enter on the Property for the purpose of exploration and prospecting for
  Minerals, including reasonable rights of ingress and egress for personnel, machinery,
  equipment, supplies and products and the right to use so much of the surface
  and water located on the Property as may be reasonably needed for such purposes.
  Romarco will advise Estill of Romarco’s plans for exploration on the Property
  and will confer with Estill concerning access routes, gates and water resources
  to coordinate Romarco’s exploration with Estill’s ranching operations.

            2.2
             Lease.
  Estill leases exclusively the Property to Romarco for the purposes of exploration
  for, development, mining and processing of Minerals, including all rights of
  ingress and egress for personnel, machinery, equipment, supplies and products
  and the right to use so much of the surface and water located on the Property
  as may be reasonably needed for such purposes. Romarco is granted the right
  to use the Property including, but without being limited to, the full right,
  authority and privilege of placing and using excavations, open pit mines, injection
  and production wells, openings, shafts, ditches and drains, and of constructing,
  erecting, maintaining, using and, at its election, removing any and all buildings,
  structures, plants, roadways, pumps, pipelines, electrical power lines and facilities,
  stockpiles, waste piles, heap leach pads, tailings ponds and facilities, settling
  ponds, and all other improvements, property and fixtures for mining, removing,
  beneficiation, concentrating, smelting, extracting, leaching (in place or otherwise),
  refining and shipping of Minerals and products of Minerals, or for any incidental
  activities, whether presently contemplated or known to be used in the mining,
  extraction, production or processing of Minerals and products of Minerals, ores,
  water, geothermal water and geothermal energy resources, or to any of the rights
  or privileges of Romarco under this Agreement. Romarco is further granted the
  right, to the extent Owner lawfully may grant the right, to divert streams,
  to remove lateral and subjacent supports, to use, cave, subside, consume, or
  destroy the surface or any part of it, to deposit earth, rocks, waste, ores
  and materials on any part of the Property, to leach the same, and to commit
  waste. 

            2.3
             Water
  Rights. Subject to the regulations of the State of Nevada concerning the
  appropriation, taking and use of water, Romarco shall have the right to appropriate
  and use water, to drill wells for the water on the Property and to lay and maintain
  all necessary water lines as may be required by Romarco in its exploration,
  development and mining operations on the Property. If Romarco acquires or files
  any application or appropriation for a water rights permit for water from or
  on the Property, on Romarco’s termination of its exploration, development
  and mining activities, including reclamation, on the Property (including reclamation
  activities) for which the water was 

 2

 appropriated or the water rights permit obtained, Romarco
  shall quitclaim to Estill the water and water rights permits.

            2.4           Livestock.
  Romarco will compensate Estill for the injury to or death of Estill’s
  livestock on the Property which proximately result from Romarco’s activities
  on the Property.

             2.5
             Aspen Grove.
  Romarco shall not for any reason disturb the aspen grove and creek in the
  northwest 1⁄4 of the northwest 1⁄4 of Section 20, Township 38 North,
  Range 23 East, M.D.B.&M., which is the southeasternmost portion of Assessor’s
  Parcel No. 066-150-07 without Estill’s prior consent which shall not be
  withheld unreasonably if Romarco’s disturbance of the area is necessary
  for exploration for or development, mining or processing of Minerals. 

 3.       Term.
  The initial term of this Agreement shall commence on the Effective Date and
  shall expire twenty (20) years after the Effective Date, provided, however,
  Romarco shall have the option and right to extend the term of this Agreement
  for thirty (30) additional terms of one (1) year each on the express condition
  that Romarco is conducting exploration activities on the Property and Romarco
  continues to pay the Minimum Payments provided for in this Agreement.

 4.        Payments.

            4.1
             Minimum Payments.
  Romarco shall make the following payments to Estill on the dates described below:

	 	 Date  	 Payment Amount  	 Total  
	 	 Date on which Estill executes this Agreement 
    	 $10.00 per acre	 $5,920.00  
	 	 First anniversary of the Effective Date  	 $10.00 per acre	 $5,920.00  
	 	 Second anniversary of the Effective Date  	 $10.00 per acre	 $5,920.00  
	 	 If before the third anniversary of the Effective 
    	 $10.00 per acre	 $5,920.00  
	 	      Date Romarco has expended more
      than  	  	  
	 	      $100,000 on exploration
      for Minerals on  	  	  
	 	      the Property, the payments on
      the third, fourth  	  	  
	 	      and fifth anniversaries of the
      Effective Date  	  	  
	 	      shall be  	  	  
	 	 If before the third anniversary of the Effective 
    	 $20.00 per acre	 $11,840.00  
	 	      Date Romarco has not expended
      at least  	  	  
	 	      $100,000 on exploration
      for Minerals on the  	  	  
	 	      Property, the payments on the
      third, fourth and  	  	  
	 	      fifth anniversaries of the Effective
      Date shall be  	  	  
	 	 If before the sixth anniversary of the Effective 
    	 $20.00 per acre	 $11,840.00  
	 	      Date, Romarco has expended $200,000
      or more  	  	  
	 	      on exploration for Minerals
      on the Property, the  	  	  
	 	      payments on the sixth and each
      subsequent  	  	  
	 	      anniversary of the Effective
      Date shall be  	  	  

3

 

	 	 If before the sixth anniversary of the Effective  	 $30.00 per acre  	 $17,760.00  
	 	      Date, Romarco has expended less than $200,000 
    	 	  
	 	      on exploration for Minerals on the Property,
      the  	 	  
	 	      payments on the sixth and each subsequent 
    	  	  
	 	      anniversary of the Effective Date shall
      be  	  	  

 If Romarco surrenders a portion of the Property, the minimum
  payments shall be adjusted accordingly. The Minimum Payments shall be credited
  against Romarco’s Royalty payment obligations.

            4.2
             Production
  Royalty. Romarco shall pay to Estill a production royalty based on the Net
  Smelter Returns from the production of Minerals from the Property. The Royalty
  percentage rate shall be three percent (3%), except the Royalty percentage rate
  for precious metals shall be adjusted based upon the average price of gold during
  the quarter during which the precious metals are produced, as follows: 

	 	 Gold Price per Troy Ounce  	 Royalty Rate  
	 	 $100 or less  	 1.8%
	 	 Greater than $100 but less than or equal to $200	 2.1%
	 	 Greater than $200 but less than or equal to $300	 2.4%
	 	 Greater than $300 but less than or equal to $400	 2.7%
	 	 Greater than $400	 3.0% + .3% for each  
	 	            full $100
      per Troy Ounce by which the price of  	 
	 	            Gold exceeds
      $400 per Troy Ounce  	 

 Owner or its authorized agents shall have a right to audit
  and inspect Romarco's accounts and records used in calculating production royalty
  payments, which right may be exercised as to each payment at any reasonable
  time during a period of one (l) year from the date on which the payment was
  made by Romarco. Owner shall pay the cost of the audit. If no such audit is
  performed during such period, such accounts, records and payments for the payments
  otherwise subject to audit shall be conclusively deemed to be true, accurate
  and correct.

            4.3
             Lesser
  Interest. If Estill owns less than the entire undivided interest in the
  portion of the Royalty Property from which Minerals are produced, the Royalty
  percentage rate shall be reduced to the proportion of Estill’s ownership
  interest. 

            4.4
             Method
  of Payment. All Minimum Payments and Royalty Payments payable by Romarco
  to Estill shall be paid by check delivered to Estill at its address for notice
  purposes. 

            4.5
             Interest.
  If any Minimum Payment, Royalty or other amount payable by Romarco remains delinquent
  for a period in excess of thirty (30) days, Romarco shall pay to Estill interest
  on the amount payable from and after the due date at the Interest Rate, plus
  a late fee equal to five percent (5%) of the amount payable.

 4

 5.        Compliance
  With The Law. Romarco shall, at Romarco’s sole cost, promptly comply
  with all Governmental Regulations relating to the condition, use or occupancy
  of the Property by Romarco, including but not limited to all exploration and
  development work performed by Romarco during the term of this Agreement. Romarco
  shall, at its sole cost, promptly comply with all applicable Governmental Regulations
  regarding reclamation of the Property and Romarco shall defend, indemnify and
  hold harmless Estill from any and all actions, assessments, claims, costs, fines,
  liability and penalties arising from or relating to Romarco’s failure
  to comply with any applicable Governmental Regulations. Estill agrees to cooperate
  with Romarco in Romarco’s application for governmental licenses, permits
  and approvals, the costs of which shall be borne by Romarco. 

 6.        Operations.

            6.1
             Security
  for Operations. Before Romarco commences exploration, development or mining
  activities on the Property, Romarco shall submit to Estill for its review copies
  of Romarco’s exploration and development plans and copies of all submittals
  to all Federal, State and other agencies. Before Romarco commences mining of
  Materials on the Property, Romarco, at its sole cost, shall obtain and deliver
  to Estill proof of Romarco’s security for the performance of Romarco’s
  reclamation obligations under all applicable Governmental Regulations. As a
  condition to Romarco’s right to commence development activity on the Property,
  Estill shall have the right to review and approve Romarco’s proposed security;
  Estill’s review and approval of Romarco’s proposed security shall
  not be unreasonably delayed or withheld. Romarco shall deliver to Estill copies
  of Romarco’s application for security together with all other documents
  filed or submitted by Romarco as a part of or with Romarco’s application
  for security. Romarco will also procure a reclamation performance bond or other
  adequate financial assurance which names Estill as the beneficiary and which
  secures Romarco’s performance of its obligation to reclaim any portion
  of the surface of the Property which Romarco disturbs during its exploration
  activities.

            6.2
             Inspection
  of Data. During the term of this Agreement, Estill shall have the right
  to examine and make copies of all data regarding the Property in Romarco’s
  possession during reasonable business hours and upon ten (10) business days’
  prior notice, provided, however, that the rights of Estill to examine such data
  shall be exercised in a manner such that inspection does not interfere with
  the operations of Romarco. Estill may exercise its right of inspection once
  annually. 

            6.3           
  Reports. Romarco shall deliver to Estill, on or before the ninetieth
  (90th) day after the end of each calendar year, a report of all exploration
  or development work conducted by Romarco on the Property for the previous year.
  Romarco shall deliver to Estill copies of all press releases issued by Romarco
  concerning Romarco’s activities or operations on the Property.

            6.4
             Estill’s
  Data and Information. On execution of this Agreement and on request by Romarco,
  Estill shall make available for Romarco’s inspection and copying Estill’s
  data and information concerning the geology, geochemistry or other technical
  aspects of the Property and any abstracts of title, preliminary title reports
  or title insurance policies for the Property. Romarco may exercise its right
  to inspect and copy Estill’s data and information during Estill’s
  regular business 

5

 hours and on reasonable advance notice from Romarco to Estill
  which shall be not less than ten (10) business days. 

            6.5
             Cross Mining.
  Romarco is granted the right to mine and remove Minerals and products of Minerals
  and other materials from the Property through or by means of shafts, openings
  or pits which may be in or upon adjoining or nearby lands owned or controlled
  by Romarco. Romarco may use the Property and any shafts, openings and pits on
  the Property for the mining, removal, treatment and transportation of ores and
  materials from adjoining or nearby lands, or for any purpose connected with
  such activities. Romarco shall have the right to treat or process, in any manner
  (including in situ or solution mining), any Minerals, products of Minerals or
  other materials mined or produced from the Property and from other lands. Such
  treatment may be conducted wholly or in part at facilities established or maintained
  on the Property or on other lands. The tailings and residue from such treatment
  shall be deemed waste and may be deposited on the Property or on other lands
  and Romarco shall have no obligation to remove such Waste from the Property
  nor to return to the Property Waste resulting from the processing Minerals,
  products of Minerals or other materials from the Property. 

            6.6
             Unitization.
  Romarco's operations on the Property and its operations on other lands may be
  conducted upon the Property and upon any and all such other lands as a single
  mining operation, to the same extent as if all such properties constituted a
  single tract of land.

            6.7
             Stockpiling
  and Waste. Romarco shall have the right to stockpile on the Property or
  on other lands any Minerals, products of Minerals, waste or materials mined
  or produced from the Property at such place or places as Romarco may elect,
  without the obligation to remove them from where stockpiled or to return them
  to the Property. The stockpiling of Minerals or products of Minerals from the
  Property on other lands shall not be deemed a removal or shipment requiring
  payment in respect of Owner's interest. Romarco shall have the right to stockpile
  on the Property any ore, materials or waste mined or produced by Romarco from
  other lands without obligation to remove the same at any time. Owner agrees
  to recognize the rights and interests of others in such other ores, materials
  and waste stockpiled on the Property and to permit their removal by Romarco
  or the owner of such other ores, materials and wastes. Waste, overburden, surface
  stripping and other materials from the Property may be deposited on or off the
  Property.

            6.8
             Commingling.
  Romarco shall have the right to commingle Minerals, products of Minerals
  and other materials from the Property and ores and other materials from other
  properties. Romarco shall measure, assay and sample Minerals, products of Minerals
  and materials from the Property and materials and ores from other properties
  before commingling. Representative samples of Minerals, products of Minerals
  and other ore and other materials shall be retained by Romarco, and assays of
  these samples shall be made before commingling to determine the metal content
  of each ore. Romarco shall keep detailed records of the measurements, assays
  of metal content and gross metal content of the Minerals, products of Minerals
  and other ore and materials. 

 7.        Scope
  of Agreement. This Agreement shall extend to and include only the Property
  described in this Agreement and in the exhibits which are part of this Agreement.

 6

 8.        Liens
  and Notices of Non-Responsibility. Romarco agrees to keep the Property at
  all times free and clear of all liens, charges and encumbrances of any and every
  nature and description done made or caused by Romarco, and to pay, and defend,
  indemnify and hold harmless Estill from and against, all indebtedness and liabilities
  incurred by or for Romarco which may or might become a lien, charge or encumbrance;
  except that Romarco need not discharge or release any such lien, charge or encumbrance
  so long as Romarco disputes or contests the lien, charge or encumbrance and
  posts a bond sufficient to discharge lien acceptable to Estill. Notwithstanding
  the foregoing, Romarco may grant a lien and security interest, encumber, mortgage
  or pledge its interests in and under this Agreement for the purpose of financing
  Romarco’s activities and operations on or relating to the Property or
  on other lands controlled, held or owned by Romarco.

 9.        Taxes.

            9.1
             Real Property
  Taxes. Romarco shall pay all taxes and assessments, general, special, ordinary
  and extraordinary, that are assessed or levied on any improvements or structures
  which Romarco constructs or places on the Property. Neither Estill nor Romarco
  shall be responsible for the payment of any taxes which are based upon income,
  net proceeds, production or revenues from the Property assessed solely to the
  other party. Each of Estill and Romarco shall pay its net proceeds of mines
  taxes assessed against its respective share of revenues from the production
  of Minerals from the Property. Romarco always shall have the right to contest,
  in the courts or otherwise, in its own name or in the name of Estill, the validity
  or amount of any such taxes or assessments, if it deems the same unlawful, unjust,
  unequal or excessive, or to take such other steps or proceedings as it may deem
  necessary to secure a cancellation, reduction, re-adjustment or equalization
  of the taxes, provided that Romarco first pays the taxes. 

            9.2
             Personal
  Property Taxes. Each party shall promptly when due pay all taxes assessed
  against such party’s personal property placed or used on the Property.

            9.3
             Delivery
  of Tax Notices. If Estill receives tax bills or claims which are Romarco’s
  responsibility, Estill shall promptly forward them to Romarco for payment.

 10.      Insurance and
  Indemnity. 

            10.1
           Romarco’s Liability
  Insurance. Romarco shall, at Romarco’s sole cost, keep in force during
  this Agreement term a policy of commercial general liability insurance covering
  property damage and liability for personal injury occurring on or about the
  Property in with coverage in amounts considered reasonable under Nevada mineral
  exploration practices and standards, but not less that One Million Dollars ($1,000,000.00),
  and with a contractual liability endorsement insuring Romarco’s performance
  of Romarco’s indemnity obligations under this Agreement. 

            10.2           Indemnification.
  Romarco shall defend, indemnify and hold harmless Estill and its members, officers,
  directors, agents and employees from and against any and all claims, judgments,
  damage, demands, losses, expenses, costs or liability arising from or relating
  to Romarco’s activities 

 7

 or operations on the Property, excluding, however, those arising
  from or relating to Estill’s negligence. Estill shall defend, indemnify
  and hold harmless Romarco and its members, officers, directors, agents and employees
  from and against any and all claims, judgments, damage, demands, losses, expenses,
  costs or liability arising from or relating to Estill’s activities or
  operations on the Property, excluding, however, those arising from or relating
  to Romarco’s negligence, including any such claims, damages or losses
  arising from or relating to any physical condition existing on the Property
  on the Effective Date or arising from or relating to activities or operations
  conducted by Estill or its predecessors-in-interest or affecting the Property.

 11.      Environmental. Before
  the expiration or termination of this Agreement, and notwithstanding any other
  provision of this Agreement, and in full conformance to applicable Governmental
  Regulations, Romarco shall: (a) cause to be properly removed from the Property
  all hazardous materials stored at the Property in connection with Romarco’s
  use of the Property or in connection with hazardous materials; and (b) cause
  to be properly dismantled, closed and removed from the Property all devices,
  drums, equipment and containments used for handling, storing or treating hazardous
  materials.

 12.      Relationship of
  the Parties. 

            12.1           No
  Partnership. This Agreement shall not be deemed to constitute any party,
  in its capacity as such, the partner, agent or legal representative of any other
  party, or to create any partnership, mining partnership or other partnership
  relationship, or fiduciary relationship between them. 

            12.2           Competition.
  Except as expressly provided in this Agreement, each party shall have the free
  and unrestricted right independently to engage in and receive the full benefits
  of any and all business endeavors of any sort outside the Property or outside
  the scope of this Agreement, whether or not competitive with the endeavors contemplated
  under this Agreement, without consultation with or participation of the other
  party. In particular, without limiting the foregoing, neither party to this
  Agreement shall have any obligation to the other as to any opportunity to acquire
  any money, property, interest or right offered to it outside the scope of this
  Agreement. 

 13.      Inspection.
  Estill or Estill’s duly authorized representatives shall be permitted
  to enter on the Property and Romarco’s workings at all reasonable times
  for the purpose of inspection, but they shall enter on the Property at their
  own risk and in such a manner as not to unreasonably hinder, delay or interfere
  with the operations of Romarco. 

 14.      Title Information
  and Data. Upon written request by Romarco, Estill shall deliver to Romarco
  copies of any policy of title insurance or preliminary title report concerning
  Estill’s title to the Property. 

 15.      Title. Estill
  holds and owns good and marketable title in fee simple to the fee lands which
  constitute the Property, and has the right, power and lawful authority to sell
  and transfer title to the Property. Except as otherwise disclosed by Estill
  to and approved by Romarco, the Property is free and clear of all claims, encumbrances,
  liens, royalties and security interests. Estill will defend title 

8

 to the fee lands consistent with these representations and
  warranties. Estill’s representations and warranties shall survive termination
  of this Agreement. 

 16.       Covenants, Warranties
  and Representations. Each of the parties covenants, warrants and represents
  for itself as follows: 

            16.1           Compliance
  with Laws. That it has complied with all applicable laws and regulations
  of any governmental body, Federal, state or local, regarding the terms of and
  performance of its obligations under this Agreement. 

            16.2           No
  Pending Proceedings. That there are no lawsuits or proceedings pending or
  threatened which affect its ability to perform the terms of this Agreement.

            16.3           Costs.
  That it shall pay all costs and expenses incurred or to be incurred by it in
  negotiating and preparing this Agreement and in closing and carrying out the
  transactions contemplated by this Agreement.

            16.4           USA
  Patriot Act. That it is not on the Specially Designated National & Blocked
  Persons List of the Office of Foreign Assets Control of the United States Treasury
  Department and is not otherwise blocked or banned by any foreign assets office
  rule or any other law or regulation, including the USA Patriot Act or Executive
  Order 13224.

 17.      Termination by Estill.
  In the event of any default or failure by Romarco to comply with any of the
  covenants, terms or conditions of this Agreement, Estill shall be entitled to
  give Romarco written notice of the default which shall specify details of the
  default. If such default is not remedied within thirty (30) days after receipt
  of the notice, provided the default can reasonably be cured within that time,
  or, if not, if Romarco has not within that time commenced action to cure the
  same or does not after such commencement diligently prosecute such action to
  completion, Estill may terminate this Agreement by delivering notice to Romarco
  of Estill’s termination of this Agreement.

 18.      Termination by Romarco.
  Romarco may at any time terminate this Agreement by giving written thirty (30)
  days advance notice to Estill. If Romarco terminates this Agreement, Romarco
  shall perform all obligations and pay all Minimum Payments and Royalty payments
  which accrue or become due before the termination date. Romarco may surrender
  a portion of the Property without terminating this Agreement by giving written
  notice of such surrender. Romarco’s notice shall describe by aliquot parts
  of the Property which conform to the legal parcels established by the county
  assessor. If Romarco surrenders part of the Property, the succeeding Minimum
  Payments payable under this Agreement shall be reduced accordingly.

 19.      Surrender. On expiration
  of the term of or sooner termination of this Agreement, Romarco shall surrender
  the Property promptly to Estill and shall remove from the Property, at Romarco’s
  sole cost, all buildings, structures, and equipment. After termination of this
  Agreement, Romarco shall have the right to enter on the Property to perform
  its obligations for compliance with reclamation or restoration of the Property.
  Romarco shall commence reclamation and restoration of the Property immediately
  on expiration of or sooner termination of this Agreement in accordance 

9

 with all applicable Government Regulations. Romarco shall
  diligently perform reclamation and restoration of the Property such that Romarco’s
  reclamation and restoration shall be completed at the earliest possible time,
  and no later than the date required for completion by any Governmental Entity.

 20.      Data. Within
  thirty (30) days following termination of this Agreement, Romarco shall deliver
  to Estill copies of all data regarding the Property in Romarco’s possession
  at the time of termination which Romarco has not delivered to Estill before
  termination. Romarco shall have no liability on account of any such information
  received or acted on by Estill or any other party to whom Estill delivers such
  information. 

 21.      Confidentiality.
  The data and information, including the terms of this Agreement, coming into
  the possession of a party by virtue of this Agreement, shall be deemed confidential
  and shall not be disclosed to outside third parties except as may be required
  to publicly record or protect title to the Property or to publicly announce
  and disclose information under the laws and regulations of the United States
  or any state or local government or any country, or under the rules and regulations
  of any stock exchange on which stock of any party, or the parent or affiliates
  of any party, is listed. Each party agrees with respect to any public announcements
  or disclosures so required, including the announcement of the execution of this
  Agreement, if any, to inform the other party of the content of the announcement
  or disclosure in sufficient time to permit the other party to jointly or simultaneously
  make a similar public announcement or disclosure if the other parties so desire,
  except that in the event any party anticipates selling or assigning all or a
  portion of its interest or negotiations to procure loans from third parties
  are undertaken, such party shall have the right to furnish information to the
  party to which such conveyance or assignment is anticipated or with whom such
  negotiations for loans are undertaken, upon obtaining from such party an agreement
  to hold confidential any information so furnished. 

 22.      Force Majeure.
  The respective obligations of either party, except Romarco’s indemnification,
  insurance and payment obligations under this Agreement, shall be suspended during
  the time and to the extent that such party is prevented from compliance, in
  whole or in part, by war or war conditions, actual or potential, earthquake,
  fire, flood, strike, labor stoppage, accident, riot, unavoidable casualty, act
  or restraint, present or future, or any lawful authority, statute, act of God,
  act of public enemy, delays in transportation, or other cause of the same or
  other character beyond the reasonable control of such party.

 23.      Change of Ownership.
  No change in ownership of Estill's interest in the Property shall affect Romarco’s
  obligations under this Agreement unless and until Estill delivers and Romarco
  receives certified copies of instruments recorded or other documents necessary
  to demonstrate the change in ownership of Estill's interest. No other type of
  notice, whether actual or constructive, shall be binding on Romarco. Until Romarco
  receives Estill's notice and the documents required to be delivered under this
  Section, Romarco may continue to make all payments under this Agreement as if
  the transfer of Estill's ownership interest had not occurred. No division of
  Estill's ownership as to all or any part of the Property shall enlarge Romarco’s
  obligations or diminish Romarco’s rights under this Agreement, and Romarco
  may disregard any such division.

 10

 24.       Assignement.
  Romarco may assign all or part of its interest in this Agreement or the Property,
  including to an affiliate of Romarco or to a joint venture, limited liability
  company or partnership of which Romarco is a member or partner. 

 25.       Memorandum Agreement.
  Upon the execution of this Agreement, the parties shall execute and deliver
  a short form of this Agreement which shall be recorded in the office of the
  recorder of each county in which all or part of the Property is located. The
  execution and recording of the memorandum of agreement shall not limit, increase
  or in any manner affect any of the terms of this Agreement, or any rights, interest
  or obligations of the parties. 

 26.      Notices. Any
  notices required or authorized to be given by this Agreement shall be in writing
  and shall be sent either by commercial courier, facsimile, or by certified U.S.
  mail, postage prepaid and return receipt requested, addressed to the proper
  party at the address stated below or such address as the party shall have designated
  to the other parties in accordance with this Section. Such notice shall be effective
  on the date of receipt by the addressee party, except that any facsimiles received
  after 5:00 p.m. of the addressee’s local time shall be deemed delivered
  the next day. 

	 	 If to Estill:  	 Estill Ranches, Limited Liability Company 
    
	 	  	 P.O. Box 655  
	 	  	 Eagleville, California 96110  
	 	  	 
	 	 If to Romarco :  	 Romarco Minerals U.S. Inc.  
	 	  	 80 Bitterbush Road  
	 	  	 Reno, Nevada 89523-9679  
	 	  	 
	 	 And copy to:  	 Romarco Minerals U.S. Inc.  
	 	  	 885 W. Georgia Street, Suite 1500  
	 	  	 Vancouver, BC Canada V6C 3E8  

 27.      Binding Effect of
  Obligations. This Agreement shall be binding upon and inure to the benefit
  of the respective parties and their successors or assigns. 

 28.      Whole Agreement.
  The parties agree that the whole agreement between them is written in this Agreement
  and in a memorandum of agreement of even date which is intended to be recorded.
  There are no terms or conditions, express or implied, other than expressly stated
  in this Agreement. This Agreement may be amended or modified only by an instrument
  in writing, signed by the parties with the same formality as this Agreement.

 29.      Governing Law and
  Forum Selection. This Agreement shall be construed and enforced in accordance
  with the laws of the state in which the Property is situated. Any action or
  proceeding concerning the construction, or interpretation of the terms of this
  Agreement or any claim or dispute between the parties shall be commenced and
  heard in the Second Judicial District Court of the State of Nevada, in and for
  the County of Washoe, Reno, Nevada. 

 11

 30.      Multiple Counterparts.
  This Agreement may be executed in any number of counterparts, each of which
  shall be deemed to be an original, but all of which shall constitute the same
  Agreement. 

 31.      Severability.
  If any part, term or provision of this Agreement is held by a court of competent
  jurisdiction to be illegal or in conflict with any law of the United States
  or any state, the validity of the remaining portions or provisions shall not
  be affected, and the rights and obligations of the parties shall be construed
  and enforced as if the Agreement did not contain the particular part, term or
  provision held to be invalid. 

 32.      Time of Essence.
  Time is of the essence in the performance of all obligations of the parties
  under this Lease. 

 33.      Release Instrument.
  Within ten (10) days after the expiration or earlier termination of this Agreement,
  Romarco shall execute, acknowledge and deliver to Estill an instrument of release
  by which Romarco releases all of its rights under this Agreement and conveys
  to Estill all of Romarco’s right, title and interest in and to the property
  free and clear of any burdens, claims, encumbrances or liens created by, through
  or under Romarco. 

 34.      Brokers. Each
  party warrants that it has had no dealings with any real estate broker or agent
  in connection with this Agreement, and shall indemnify, defend and hold the
  other party harmless from and against any claims that may be asserted through
  such party that any brokerage or finder’s fee is due in connection with
  this Agreement. 

              The
  parties have executed this Agreement effective as of the Effective Date. 

	 Estill Ranches, Limited Liability Company 
    	 	 Romarco Minerals U.S. Inc.  
	  	 	 
	 By  ______________________________________________	 	 By  ______________________________________________
	 Title:  ____________________________________________	 	 Title:  ____________________________________________

	 STATE OF ___________________,  	 )  	  
	  	 ss.  	  
	 COUNTY OF__________________	 )  	  

              This
  Mining Lease Agreement was acknowledged before me on ________________ , 2004,
  by __________________ , as ______________ of Estill Ranches, a Limited Liability
  Company.

	 	 	 
	  	  	 Notary Public  
	  	 	 
	 STATE OF ___________________,  	 )  	  
	  	 ss.  	  
	 COUNTY OF__________________	 )  	  

12

             This
  Mining Lease Agreement was acknowledged before me on _______________ , 2004,
  by ______________ , as ___________ of Romarco Minerals U.S., Inc. 

	 	 	 
	  	  	 Notary Public  

  

 13

Exhibit A 

Description of Property 

 A.        Geographic Description.

               The
  parcels and partial parcels included in the Property are as follows: 

                             1.
         That portion of Washoe County,
  Nevada Assessors Parcel Number (APN) 066-150-04 that includes the: 

                                          a.
         SE 1⁄4 section 27, T38N,
  R22E; excluding the SE 1⁄4 of the SE 1⁄4 of that section,

                                         
  b.        W 1⁄2 of the SW 1⁄4,
  section 26, T38N, R22E. 

                             2.
         All of Washoe County, Nevada
  Assessors Parcel Number (APN) 066-150-05, which is the NE 1⁄4 of the SW
  1⁄4, section 25, T38N, R22E. 

                             For
  a total of approximately 40 acres. 

                             3.
         That portion of Washoe County,
  Nevada Assessors Parcel Number )APN) 066-150-07 that includes the: 

                                        
  a. W 1⁄2 of the SW 1⁄4, section 17, T38N, R23E, 

                                        
  b. NE 1⁄4 of the NE 1⁄4, section 19, T38N, R23E,        

                                        
  c. NW 1⁄4 of the NW 1⁄4, section 20, T38N, R23E. 

                             For
  a total of approximately 160 acres. 

                             4.
         All of Washoe County, Nevada
  Assessors Parcel Number (APN) 066-150-08, which includes the: 

                                        
  a. W 1⁄4 section 30, T38N, R23E, 

                                        
  b. NE 1⁄4 of the SW 1⁄4, section 30, T38N, R23E. 

                             For
  a total of approximately 192 acres. 

             The
  total acreage for these parcels and partial parcels is approximately 592 acres.

 B.        Map. See attached map for
  illustration purposes. 

 14

 

 15

      Exhibit B 

  to Mining Lease Agreement 

  Net Smelter Returns 

	 1.      	 Definitions – For the purpose
        of this Exhibit, “Agreement” shall mean the Agreement to which
        this Exhibit is attached, “Owner” shall mean the party or
        parties paying a percentage of Net Smelter Returns pursuant to the Agreement.
        “Holder” shall mean the party or parties receiving a percentage
        of Net Smelter Returns pursuant to the Agreement and othr capitalized
        terms shall have the meanings assigned to them in the Agreement. 

	 
	 2.      	 Net Smelter Returns – For
        the purpose hereof, the term “Net Smelter Returns” shall,
        subject to paragraphs below, mean gross revenues received from the sale
        by the Owner of all ore mined from the Property and from the sale by the
        Owner of concentrate, doré, metal and products derived from ore
        mined from the Property, after deduction of the following: 

	 
	 	 (a)     
      
	 all smelting and refining costs, sampling, assaying
        and treatment charges and penalties including but not limited to metal
        losses, penalties for impurities and charges for refining, selling and
        handling by the smelter, refinery or other purchaser (including price
        participation charges by smelters and/or refiners); 

	 
	 	 (b)      
	 costs of handling, transporting, securing and insuring
        such material from the Property or from a concentrator, whether situated
        on or off the Property, to a smelter, refinery or other place of treatment,
        and in the case of gold or silver concentrates, security costs; and 

	 
	 	 (c)      
	 ad valorem taxes and taxes based upon sales or production,
        but not income taxes; and 

	 
	 3.      	 Non-Arm’s Length Revenue –
        Where revenue otherwise to be included under this Exhibit is received
        by the Owner in a transaction with a party with whom it is not dealing
        at arm’s length, the revenue to be included shall be based on the
        fair market value under the circumstances and at the time of the transaction.
      

	 
	 4.      	 Non-Arm’s Length Costs –
        Where a cost otherwise deductible under this Exhibit is incurred by the
        Owner in a transaction with a party with whom it is not dealing at arm’s
        length, the cost to be deducted shall be the fair market cost under the
        circumstances and at the time of the transaction. 

	 
	 5.      	 Currency – For the purpose
        of determining Net Smelter Returns, all receipts and major disbursements
        will be calculated in U.S. dollars. 

	 
	 6.      	 Hedging – The Owner may,
        but shall not be under any duty to, engage in price protection (hedging)
        or speculative transactions such as futures contracts and commodity options
        in its sole discretion covering all or part of production from the Property
        and none of the revenues, costs, profits or losses from such transactions
        shall be taken into account in calculating Net Smelter Returns or any
        interest therein. 

 16

 

	 7.      	 Commingling – If the Property
        is brought into commercial production, it may be operated as a single
        operation with other mining properties owned by third parties or in which
        the Owner has an interest, in which event, the parties agree that (notwithstanding
        separate ownership thereof) ores mined from the mining properties (including
        the Property) may be blended at the time of mining or at any time thereafter,
        provided, however, that the respective mining properties shall bear and
        have allocated to them their proportionate part of costs described in
        paragraphs 2(a) to 2(c) above incurred relating to the single operation,
        and shall have allocated to each of them the proportionate part of the
        revenues earned relating to such single operation. In making any such
        allocation, effect shall be given to the tonnages and location of ore
        and other material mined and beneficiated and the characteristics of such
        material including the metal content of ore removed from, and to any special
        charges relating particularly to ore, concentrates or other products or
        the treatment thereof derived from, any of such mining properties. 

	 
	 8.      	 Sampling – The Owner shall
        ensure that reasonable practices and procedures are adopted and employed
        for weighting, determining moisture content, sampling and assaying and
        determining recovery factors. 

	 
	 9.      	 Payments – Payments of a
        percentage of Net Smelter Returns shall be made to the Holder within thirty
        (30) days after the end of each calendar month in which Net Smelter Returns,
        as determined on the basis of final adjusted invoices, are received by
        the Owner. All such payments shall be made in U.S. dollars, or at the
        option of the Holder, in kind. 

	 
	 10.      	 Calculations – After the
        year in which commercial production is commenced on the Property, the
        Holder receiving a percentage of Net Smelter Returns from the Owner shall
        be provided annually on or before April 1 with a copy of the calculation
        of Net Smelter Returns, determined in accordance with this Exhibit, for
        the preceding calendar year, certified correct by the Owner. 

	 
	 11.      	 Audits – The Owner shall
        cause the Net Smelter Returns and the records relating thereto to be audited
        within the first quarter of each calendar year by a national firm of chartered
        accountants designated and paid by the Owner (which may be the auditor
        of the Owner) and: 

	 
	 	(a) 
	 copies of the audited reports shall
        be delivered to the Holder and the Owner by the chartered accounting firm;
      

	 
	 	(b) 
	 wither party shall have three (3) months
        after receipt of any audited report to object thereto in writing to the
        other party, and failing such objection, such report shall be deemed correct;
        and 

	 
	 	(c) 
	 in the event of a reaudit, all costs
        relating to such reaudit shall be paid by the Owner (if the original audit
        is found in error by a margin of 10% or more) or the Holder (if the original
        audit is found to be correct) and the Holder requested the reaudit. 

	 
	 12.      	 Rights of Parties – Nothing
        contained in the Agreement or any Exhibit attached thereto shall be construed
        as conferring upon the Holder any right to or beneficial interest in the
        Property. 

17

 

	 	 The right to receive a percentage of Net
        Smelter Returns from the Owner as and when due is and shall be deemed
        to be a contractual right only. Furthermore, the right to receive a percentage
        of Net Smelter Returns by the Holder from the Owner as and when due shall
        not be deemed to constitute the Owner the partner, agent or legal representative
        of the Holder or to create any fiduciary relationship between them for
        any purpose whatsoever. 

	 
	 13.      	 Operations – The owner shall
        be entitled to: 

	 
	 	 (a)     
      
	 Make all operational decisions with respect to the
        methods and extent of mining and processing of ore, concentrate, doré,
        metal and products produced from the Property (for example, without limitation,
        decision to process by heap leaching rather than conventional milling);
      

	 
	 	 (b)      
	 Make all decisions relating to sales of such ore,
        concentrate, doré, metal and products produced; and 

	 
	 	 (c)      
	 Make all decisions concerning temporary or long-term
        cessation of operations. 

	 
	 14.      	 Annual Reports – Within one
        hundred and twenty (120) days following the end of each calendar year,
        the Owner shall provide the Holder with an annual report of all activities
        and operations conducted upon or with respect to the Property during the
        preceding calendar year, together with a description of the activities
        and operations anticipated during the current year (including estimates
        of expenditures, production, ore reserves and any Net Smelter Returns
        payable). 

 18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}]]