Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Farallon Resources Ltd. - Form 20-F

No securities regulatory authority in Canada
has expressed an opinion about these securities and it is an offence to claim
otherwise. This short form prospectus constitutes a public offering of these
securities only in those jurisdictions where they may be lawfully offered for
sale and therein only by persons permitted to sell such securities. These
securities have not been and will not be registered under the United States
Securities Act of 1933, as amended (the “U.S. Securities Act”). Accordingly,
subject to certain exceptions, these securities may not be offered or sold
within the United States of America and this short form prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, any of these
securities within the United States of America. See “Plan of
Distribution”. 

Information has been incorporated by
reference in this prospectus from documents filed with the securities
commissions or similar authorities in Canada. Copies of the documents
incorporated herein by reference may be obtained on request without charge from
the Secretary, Farallon Resources Ltd., #1020, 800 West Pender Street,
Vancouver, British Columbia, V6C 2V6 (Telephone (604) 684-6365), and are also
available electronically at www.sedar.com. 

SHORT FORM PROSPECTUS 

	New Issue 	December 14, 2006 

 

UP TO $80,000,000 

160,000,000 Subscription Receipts, each
representing the right to receive One Common Share 
and
One-Half of One Common Share Purchase Warrant 

          This
short form prospectus (“Prospectus”) qualifies the distribution (the “Offering”)
of up to 160,000,000 subscription receipts (the “Subscription Receipts”) of
Farallon Resources Ltd. (the “Company”) at a price of $0.50 per Subscription
Receipt (the “Offering Price”). Each Subscription Receipt will entitle the
holder thereof to receive one common share (each, a “Common Share”) and one-half
of one common share purchase warrant (each whole common share purchase warrant,
a “Warrant”), without payment of additional consideration and without any
further action by holders of Subscription Receipts, upon satisfaction of the
Escrow Release Conditions (as defined herein). Each Warrant will entitle the
holder thereof to purchase one Common Share at a price of $0.70 at any time
before 5:00 p.m. (Vancouver time) on the date that is 24 months after the
closing date of the Offering (the “Closing Date”). The expiry of the Warrants
may be accelerated in certain events, as described under “Plan of Distribution”.
The Subscription Receipts will be issued and sold pursuant to an agency
agreement (the “Agency Agreement”) between Paradigm Capital Inc., Canaccord
Capital Corporation and MGI Securities Inc. (collectively, the “Agents”) and the
Company. The Offering Price was determined by negotiation between the Company
and the Agents. See “Plan of Distribution”. 

          On
the Closing Date 25% (up to $20,000,000) of the Offering proceeds will be
released to the Company and the Agents will receive one-half of the Agents’ Fee
and all of the Agents’ out-of-pocket expenses. The Subscription Receipts
represented by that portion of the Offering proceeds released on the Closing
Date will be automatically exchanged on the Closing Date on a pro rata
basis for one Common Share and one-half of one Warrant, without payment of
additional consideration and without any further action by holders of
Subscription Receipts. The remainder of the Offering proceeds (the “Escrowed
Funds”) will be deposited in escrow with Computershare Trust Company of Canada,
as escrow agent (the “Escrow Agent”), and invested in short term investment
grade debt obligations pending satisfaction of the Escrow Release Conditions, as
defined below. If the Escrow Release Conditions are satisfied before 5:00 p.m.
(Vancouver time) on the date that is 90 days after the Closing Date (the
“Condition Deadline”), the remainder of the Subscription Receipts will be
automatically exchanged for one Common Share and one-half of one Warrant,
without payment of additional consideration and without any further action by
holders of Subscription Receipts, and the Escrow Agent will pay to the Agents
the remainder of their fee and release the balance of the Escrowed Funds
(together with interest or other income earned 

thereon) to the Company (the “Escrow Release Date”). If the
Escrow Release Conditions are not satisfied before the Condition Deadline,
commencing on the third business day after the Notice Date (as defined herein),
the Escrow Agent will return to each holder of the Subscription Receipts (unless
otherwise directed by such holder), such holder’s pro rata share of the
Escrowed Funds and interest or other income earned thereon (less applicable
withholding tax, if any). After the Closing Date and before the Condition
Deadline, Subscription Receipt holders may, at their option, exchange their
Subscription Receipts for one Common Share and one-half of one Warrant, without
payment of additional consideration, the Escrowed Funds attributable to such
exchanged Subscription Receipts will be released to the Company and the Agents
will receive one-half of the Agents’ Fee attributable to such Subscription
Receipts. Each holder will receive Common Shares and Warrants for the unrefunded
Subscription Receipts. See “Use of Proceeds”, “Plan of Distribution” and
“Details of the Offering”. 

          The
Company’s Common Shares are listed and posted for trading on the Toronto Stock
Exchange (“TSX”) under the symbol “FAN”. The Company will apply to list the
Common Shares, as well as the Common Shares issuable upon exercise of the
Warrants and the Compensation Options (together the “Underlying Shares”), on the
TSX. Listing will be subject to the Company fulfilling all of the requirements
of the TSX. The closing price of the Common Shares on the TSX on December 13,
2006 (the last trading day before the date hereof) was $0.59. 

          Investing
in the Subscription Receipts, and the Common Shares and Warrants issuable upon
exchange thereof, involves risk. Prospective investors should consider the risk
factors described under “Risk Factors” before purchasing Subscription Receipts.

______________________________

Price: $0.50
per Subscription Receipt 
______________________________

	  	  	 	  	 	Net Proceeds to the 
	  	Price to Public 	 	Agents’ Fee(1) 	 	       Company(2)
    
	  	  	 	  	 	  
	Per Subscription Receipt 	$0.50 	 	$0.03 	 	$0.47 
	Total 	$80,000,000 	 	$4,800,000 	 	$75,200,000

______________________________

	(1) 	
      In consideration of the services rendered by the Agents
      in connection with the Offering, the Company has agreed to pay a cash
      commission to the Agents equal to 6% of the gross proceeds raised in the
      Offering (the “Agents’ Fee”). The Agents’ Fee will be paid as to one-half
      on the Closing Date, and one-half on the Escrow Release Date.

	 	 
	(2) 	
      Before deducting the expenses of the Offering, estimated
      to be $400,000, which will be paid out of the general funds of the
      Company.

          The
Offering is being made on a best efforts basis. 

          This
Prospectus also qualifies the issue by the Company of non-transferable
compensation options (“Compensation Options”) to the Agents. The Compensation
Options entitle the Agents to purchase an aggregate number of Common Shares
equal to 6% of the number of Subscription Receipts sold pursuant to the Offering
at the Offering Price at any time until 5:00 p.m., Vancouver time, on the second
anniversary of the Closing Date. 

	  	 	  	 	  	 	Exercise Price 
	  	 	  	 	  	 	or Average 
	  	 	Maximum Size or Number of 	 	Exercise Period/ 	 	Acquisition 
	Agents’
      Position 	 	Securities Held 	 	Acquisition Date 	 	Price 
	  	 	  	 	  	 	  
	Compensation Options 	 	9,600,000 Common Shares 	 	24 months 	 	$0.50 
	  	 	  	 	  	 	  
	Any other option granted by 
issuer or
      insider of issuer 	
	Nil 
	
	— 
	
	— 

	  	 	  	 	  	 	  
	Total Securities under option 	 	9,600,000 Common Shares 	 	— 	 	— 

          The
Agents conditionally offer the Subscription Receipts, subject to prior sale, on
a best efforts basis, if, as and when issued and sold by the Company in
accordance with the conditions contained in the Agency Agreement referred to
under “Plan of Distribution” and subject to the approval of certain legal
matters on behalf of the 

- ii - 

Company by Lang Michener LLP, Vancouver, British Columbia, and
on behalf of the Agents by Heenan Blaikie LLP, Toronto, Ontario. See “Plan of
Distribution”. 

          Subject
to applicable laws and in connection with the Offering, the Agents may
over-allot or effect transactions which stabilize or maintain the market price
of the Common Shares at levels other than those which otherwise might prevail on
the open market. Such transactions, if commenced, may be discontinued at any
time. See “Plan of Distribution”. 

          Subscriptions
will be received subject to rejection or allotment in whole or in part and the
right is reserved to close the subscription books at any time without notice. It
is expected that certificates evidencing the Subscription Receipts will be
available for delivery at closing, which is expected to take place on or about
December 21, 2006 or such later date as may be agreed between the Company and
the Agents, but in any event not later January 26, 2007 (the “Closing
Date”).

- iii - 

TABLE OF CONTENTS 

	Documents Incorporated by Reference 	1 	 	Interests of Experts 	14 
	Eligibility for Investment 	3 	 	Risk Factors 	15 
	Forward Looking Statements 	3 	 	Certain Canadian Federal Income
      Tax 	  
	The Company 	4 	 	Considerations 	16 
	Recent Developments 	6 	 	Auditors, Transfer Agent and
      Registrar 	18 
	Use of Proceeds 	8 	 	Purchasers’ Statutory Rights
      	18 
	Plan of Distribution 	9 	 	Auditors’ Consent 	19 
	Details of the Offering 	10 	 	Certificate of the Company
    	C-1 
	Capitalization 	14 	 	Certificate of the Agents 	C-2 

In this Prospectus: 

	Company 	means Farallon Resources Ltd.; 
	 	 
	Farallon, we, our, us 	means the Company and its subsidiaries; 
	 	 
	g/t 	means grams per tonne; 
	 	 
	GMV/t 	means gross metal value per tonne, calculated
      by multiplying metal grade by a specific metal price; 
	 	 
	m 	means metre; 
	 	 
	NI43-101 	means Canadian Securities Administrators’
      National Instrument 43-101, Standards of Disclosure for Mineral Projects;
    
	 	 
	Qualifying 
Jurisdictions 	means British Columbia, Alberta, Manitoba, New
      Brunswick and Ontario; 

	 	 
	ton 	means 2,000 pounds; and 
	 	 
	tonne 	means 1.102 tons. 

All currency amounts in this Prospectus
are in Canadian dollars unless otherwise indicated. 

DOCUMENTS INCORPORATED BY REFERENCE 

          The
following documents filed with the securities commission or similar regulatory
authority in British Columbia, Alberta, Manitoba, Ontario and New Brunswick are
specifically incorporated by reference into, and form an integral part of, this
Prospectus: 

	
  the Annual Information Form of the Company dated September 25, 2006 for the
  fiscal year ended June 30, 2006; 

  
	
  the audited consolidated financial statements and the notes thereto as at
  June 30, 2006 and 2005 and for each of the years in the three-year period
  ended June 30, 2006, together with the auditors’ report thereon; 

	
  management’s discussion and analysis of financial condition and results of
  operations for the fiscal year ended June 30, 2006; 

  
	
  the unaudited interim consolidated financial statements as at September 30,
  2006 and for the three months ended September 30, 2006 and 2005 and the notes
  thereto, and management’s discussion and analysis of financial condition and
  results of operations for the three months ended September 30, 2006; 

  
	
  the material change report dated July 13, 2006 relating to a proposed
  private placement; 

  
	
  the material change report dated August 28, 2006 relating to the filing of
  a preliminary prospectus for an offering of common shares; 

  
	
  the material change report dated September 25, 2006 relating to an update
  from drilling at the G-9 Deposit on the Campo Morado Project; 

  
	
  the material change report dated September 25, 2006 relating to the
  appointment of Constructora Necaxa, S.A. De C.V. as contractor to complete the
  underground access decline to the G-9 Deposit at the Campo Morado Project;

  
	
  the material change report dated October 13, 2006 relating to a private
  placement of 18.75 million units of the Company; 

  
	
  the material change report dated October 24, 2006 relating to the results
  of recent flotation tests conducted at the G-9 Deposit at the Campo Morado
  Project; 

  
	
  the material change report dated November 14, 2006 relating to the results
  of a resource estimate and new assays from core drilling for the G-9 Deposit
  at the Campo Morado Project; 

  
	
  the material change report dated November 17, 2006 relating to the closing
  of the previously announced private placement of 18.75 million units of the
  Company; 

  
	
  the material change report dated November 21, 2006 relating to the filing
  of a preliminary prospectus; 

  
	
  the material change report dated December 13, 2006 relating to the size and
  pricing of the Offering; and 

  
	
  the information circular dated November 17, 2006 in connection with the
  annual general meeting of shareholders to be held on December 14, 2006
  (excluding information which, pursuant to National Instrument 44-101 Short
  Form Prospectus Distributions issued by the Canadian Securities Administrators
  is not required to be incorporated by reference). 

          Material
change reports (other than confidential reports) and all other documents of the
type referred to above, filed by the Company with a securities commission or
similar regulatory authority in Canada after the date of this Prospectus and
before completion or withdrawal of this Offering, will be deemed to be
incorporated by reference into this Prospectus. 

          Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein will be deemed to be modified or superseded for the purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that is also incorporated or is deemed to be
incorporated by reference herein modifies or supersedes such statement. The
modifying or superseding statement need not state that it has modified or
superseded a prior statement or include any other information set forth in the
document that it modifies or supersedes. The making of a modifying or
superseding statement will not be deemed an admission for any purpose that the
modified or superseded statement, when made, constituted a misrepresentation, an
untrue statement of a material fact or an omission to state a material fact that
is required to be stated or that is necessary to make a statement not misleading
in 

- 2 - 

light of the circumstances in which it was made. Any
statement so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus. 

          Information
has been incorporated by reference in this prospectus from documents filed with
the securities commissions or similar authorities in Canada. Copies of the
documents incorporated herein by reference may be obtained on request without
charge from the Secretary, Farallon Resources Ltd., #1020, 800 West Pender
Street, Vancouver, British Columbia, V6C 2V6 (Telephone (604) 684-6365), and are
also available electronically at www.sedar.com. The Company’s filings through SEDAR are
not incorporated by reference in this Prospectus except as specifically set out
herein. 

ELIGIBILITY FOR INVESTMENT 

          Provided
the outstanding Common Shares of the Company remain listed on the TSX, the
Subscription Receipts offered hereby and the Common Shares and Warrants issuable
pursuant to the Subscription Receipts, will be qualified investments for trusts
governed by registered retirement savings plans, registered retirement income
funds, deferred profit-sharing plans and registered education savings plans
(collectively, “Exempt Plans”) provided that each annuitant, beneficiary,
employer or subscriber under the governing plan of the particular Exempt Plan
deals at arm's length with the Company at all relevant times. 

FORWARD LOOKING STATEMENTS 

          This
Prospectus, including the documents incorporated by reference, contains
forward-looking statements which may not be based on historical fact.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
Farallon to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, reliance on key personnel, the actual results of
exploration activities, actual results of reclamation activities, the estimation
or realization of mineral reserves and resources, the timing and amount of
estimated future production, capital expenditures, costs and timing of the
development of new deposits, requirements for additional capital, future prices
of precious and base metals, possible variations in ore grade or recovery rates,
failure of plant, equipment or processes to operate as anticipated, accidents,
labour disputes and other risks of the mining industry, delays in obtaining
governmental approvals, permits or financing or in the completion of development
or construction activities, currency fluctuations, title disputes or claims
limitations on insurance coverage and the timing and possible outcome of pending
litigation. Although we have attempted to identify important factors that could
cause actual actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or intended. 

          Prospective
investors can identify many of these statements by looking for words such as
“believe’’, “expects’’, “will’’, “intends’’, “projects’’, “anticipates’’,
“estimates’’, “continues’’ or similar words or the negative thereof. There can
be no assurance that the plans, intentions or expectations upon which these
forward-looking statements are based will occur. Forward-looking statements are
subject to risks, uncertainties and assumptions, including those discussed under
“Risk Factors” in this Prospectus and in our Annual Information Form.

          The
forward-looking statements contained herein are made as of the date of this
Prospectus and are expressly qualified in their entirety by this cautionary
statement. Readers should not place undue reliance on the forward-looking
statements, which reflect management’s plans, estimates, projections and views
only as of the date hereof. The Company undertakes no obligation to publicly
revise these forward-looking statements to reflect subsequent events or
circumstances, except as may be required by law. 

- 3 - 

THE COMPANY 

General 

          The
Company was incorporated on July 4, 1991 under the laws of British Columbia. The
head office of the Company is located at Suite 1020, 800 West Pender Street,
Vancouver, British Columbia, V6C 2V6. 

          We
are engaged in the business of acquiring ownership of, and exploring and
developing precious and base metals deposits. We have focused on exploring the
“Campo Morado Project” since 1995, except for a period from 2001 to 2003 when
the Project was placed in care and maintenance status. The Campo Morado Project
is located in Guerrero State, Mexico and comprises several government-granted
concessions totalling approximately 11,563 hectares.

Campo Morado Project 

          The
area comprising the Campo Morado Project contains former producing mines that
produced limited amounts of lead, silver and gold from oxidized massive sulphide
material. Farallon holds six concessions for the Campo Morado Project.

          As
at September 30, 2006, Farallon incurred aggregate exploration expenditures of
approximately US$49.3 million and acquisition costs of approximately US$9
million on the Campo Morado Project . (The consolidated schedules of exploration
expenses contained in the interim financial statements for the three months
ended September 30, 2006, incorrectly disclosed the September 30, 2006
cumulative exploration expenses, beginning of the period and end of period as
US$37,239,416 and US$39,948,784, respectively. The correct September 30, 2006
cumulative exploration expenses, beginning of the period and end of period, are
$46,602,699 and $49,312,067, respectively.) 

Mexico Mining Laws

          Both
the Dirección General de Minas (“Dirección General”) and Servicio Geologico
Mexicano (“Servicio”) are branches of the Coordinación de Minas of the
Secretaría de Economía, Mexico. The Dirección General grants and controls mining
claims. The Servicio is a decentralized entity with independent legal capacity
under the Mexican Federal Ministry of Economy. The Servicio is obligated, under
the Mining Law of Mexico, to identify and record the potential mineral
resources of Mexico, to assist the government with the promotion and development
of such resources and to determine which should be made available as
concessions. The Servicio also does exploration work and stakes mineral claims,
which eventually are granted to companies or individuals in exchange for option
payments and finder’s fees. 

          Concessions
are valid for fifty years and are renewable for an additional fifty years. They
may be located to an unlimited size. An annual surface tax must be paid. In
addition, an investment in, or production from, the concession in accordance
with a sliding scale based on the area and age of the concession must be
demonstrated. Concession holders must negotiate with the surface owners for
compensation for any losses occasioned by their activities. 

Mexico Environmental Law 

          At
the time of the exploration phase for certain mineral projects, such as Campo
Morado, Mexican environmental law requires a concession holder to submit a
preventive report (prepared by an independent registered environmental
consultant) to the Mexican National Institute of Ecology (or “INE”) before the
concessionaire commences exploration activities. This report provides the
government with the concessionaire’s plans for developing the project and sets
out actions it will take to minimize impacts to the environment. The INE reviews
the preventive report to ensure that the information fulfils the requirements of
Mexican Environmental Laws.

          Once
this report is approved a permit is granted. The INE was previously in charge of
issuing environmental permits, however this authority has recently been assigned
to an agency under the Secretary of the Environment and Natural Resources
(“SEMARNAT”). 

- 4 - 

          The
environmental permit authorizes the concessionaire to proceed with its
exploration activities, in compliance with the requirements imposed by the
environmental permit, for a specific period of time after the permit’s date of
issue. Modifications to the approved project activities and extensions of the
term of the permit are allowed. 

Campo Morado Permits 

          The
original environmental permit for the Campo Morado Project was submitted on
April 2, 1995, and has been renewed and modified on several occasions. The most
recent extension was granted until November 14, 2006 and a further extension has
been applied for. The permit covers the Campo Morado Project during the
exploration phase only and allows for certain disturbances, including
rehabilitation of old roads and underground workings, development of new access
roads, development camp and other facilities, and development of exploration
pits, surface drill pads, underground drill pads, surface and underground drill
holes. The permit prohibits hunting or collection of flora and fauna. The permit
requires compliance with noise and air pollution standards, reclamation of
abandoned areas, storage of spent lubricants until they are shipped to a
recycling facility, reclamation of any oil or fuel spills, and preparation of an
endangered species and reforestation study.

          Farallon
is conducting its current exploration work in compliance with the Campo Morado
permit. On June 7, 2006 SEMARNAT confirmed that the existing Campo Morado permit
is sufficient for the purposes of the proposed work plan outlined under “Recent
Developments” and “Use of Proceeds”. 

          Farallon
  has not yet been required to post a reclamation bond for the Campo Morado Project.
  However the environmental permit requirements for the exploitation phase of
  operations will require an extension and modification of the current permit,
  to be based on a new Environmental Impact Statement. The Company expects that
  the next exploitation phase will require, among other things, surface rights,
  water rights, water discharge permits, change of use of land permits, reclamation
  bonds, reforestation bonds, hazardous waste management permits, emission permits
  and social, anthropological and archaeological studies.

Estimates of Mineralization at Campo Morado Project

          In
2005, new estimates of the mineral resources outlined by drilling at the
Reforma, El Rey, Naranjo and El Largo Deposits at Campo Morado were announced.
These estimates were completed according to the standards of the Canadian
Institute of Mining and Metallurgy (2000) as required for mining projects under
NI43-101 and described in the “Technical Report on the Campo Morado Project –
Revised Update on Exploration, Resources and Metallurgical Activities for the
G-9 Deposit” dated December 2006 (the “Technical Report”), prepared by Ross
Banner, P. Eng., David Gaunt, P.Geo., Daniel Kilby, P. Eng., Peter Taggart, P.
Eng., Qingping Deng, CPG and David Dreisinger, P. Eng., all of whom are
qualified persons as defined in NI 43-101. Qingping Deng, CPG. of Behre Dolbear
& Company (USA) Inc., an independent qualified person as defined by
NI43-101, is responsible for each of the Reforma, El Rey, Naranjo and El Largo
estimates. 

Indicated and Inferred Mineral Resources 
at a
US$90GMV/t(1) cut-off – September 2005 

  	Deposit 	Category 	Tonnes 	Gold 	Silver 	Copper 	Zinc 	Lead 
	  	 
    	(000’s) 	(g/t) 	(g/t) 	(%)
    	(%)
    	(%)
    
	  	  	  	  	  	  	  	  
	Reforma 	Indicated 	3,972 	4.20 	224 	0.92 	3.86 	1.71 
	  	Inferred 	1
	1.31
    	392
    	0.24
    	0.04
    	0.50
    
	  	  	  	  	  	  	  	  
	El Rey 	Indicated 	1,051 	2.74 	154 	0.52 	4.45 	1.20 
	  	Inferred 	15
      	2.37
      	91
      	0.54
      	4.63
      	1.47
      
	  	  	  	  	  	  	  	  
	Naranjo 	Indicated 	2,056 	2.77 	136 	0.82 	4.12 	1.24 
	  	Inferred 	236
    	4.28
    	104
    	1.05
    	1.76
    	0.50
    
	  	  	  	  	  	  	  	  
	El Largo 	Indicated 	4,130 	1.12 	128 	0.40 	5.76 	1.33 
	  	Inferred 	1,258 	1.54
      	122
      	0.85
      	3.99
      	0.84
      

- 5 - 

  	Deposit 	Category 	Tonnes 	Gold 	Silver 	Copper 	Zinc 	Lead 
	  	 
    	(000’s) 	(g/t) 	(g/t) 	(%)
    	(%)
    	(%)
    
	  	  	  	  	  	  	  	  
	Total 	Indicated 	11,209 	2.67 	166 	0.67 	4.66 	1.44 
	  	Inferred 	1,510 	1.98
    	119
    	0.88
    	3.65
    	0.79
    

	(1) 	
      GMV/t is the sum of the metal grade multiplied by the
      following metal prices: US$375/oz for gold; US$5.50/oz for silver;
      US$1.00/lb for copper; US$0.51/lb for zinc and US$0.25/lb for lead
      converted to metric units.

          Mineral
resources that are not mineral reserves do not have demonstrated economic
viability. None of the foregoing mineralization has been determined to be ore
nor is considered to be a mineral reserve. 

Operations 

          Farallon
does not have any operating revenue although, historically, it has had annual
interest revenue as a consequence of investing surplus funds pending the
completion of exploration programs. 

Audit Committee 

          Pursuant
to Multilateral Instrument 52-110 – Audit Committees (“MI52-110”), the
Company is required to have an audit committee composed entirely of board
members that are “independent” of the Company, as that term is defined in
MI52-110 and meaning generally free from material relationships with the Company
which could be reasonably expected to interfere with the exercise of the
person’s independent judgement. Presently, David Copeland, Scott Cousens and
Robert Dickinson are members of the Company’s audit committee. In September,
2006, the Company determined that none of the members of its audit committee
were independent and shortly thereafter initiated its search for independent
board members. As of the date of this Prospectus, the Company is not in
compliance with the audit committee composition rule set out in MI52-110, as
none of the members of the Company’s audit committee are considered independent
as a consequence of their employment positions with Hunter Dickinson Inc., a
service provider to the Company. The Company is currently undertaking steps to
remedy such non-compliance, including actively recruiting new board members that
are independent and financially literate. The Company expects to appoint at
least one new, independent, financially literate board member that will serve on
the audit committee within 90 days of completion of the Offering. While it is
difficult to set a firm deadline by which the Company will completely rectify
the non-compliance given the high demand for qualified individuals, the Company
does intend to take the required steps in order to reach this goal as soon as
practicable. 

          The
Company is taking steps to ensure that the duties generally performed by
independent directors are being performed by the current directors. The board
members have extensive experience as directors of public companies and are
sensitive to the related corporate governance and financial reporting
obligations associated with such positions. Thus the board members are
reasonably well versed in the obligations of directors and the expectations of
independence from management. Given the Company’s recent activities in raising
additional capital over the last six months, the board has been particularly
sensitive to the appropriateness of board and management interaction, checks and
balances. 

RECENT DEVELOPMENTS 

Private Placement 

          On
November 17, 2006 the Company completed a private placement of 18,750,000 units
at $0.40 each (the “Private Placement”) and raised gross proceeds of $7,500,000.
Each unit consisted of one Common Share and one Common Share purchase warrant.
Each warrant entitles the holder to purchase one additional Common Share at a
price of $0.60 on or before the second anniversary of the closing of the Private
Placement. 

          Shareholders’
approval is required for the exercise of 11,044,417 of the warrants. Such
approval will be sought at the general shareholders meeting to be held December
14, 2006. If shareholder approval for those warrants is not obtained, the
Company will refund to the purchasers of such warrants, $0.02 per warrant.

- 6 - 

          The
net proceeds from the Private Placement, after payment of expenses associated
therewith, will be used for work on the Campo Morado Project and for general
working capital purposes. 

Recent Work at Campo Morado Project 

          Since
the beginning of the 2006 financial year and in preparation for a
pre-feasibility study, Farallon has undertaken a series of scoping level option
investigations. In the course of those investigations drilling expanded the G-9
Deposit at the Campo Morado Project. Farallon completed an initial estimate of
the resources for the G-9 Deposit in November 2005, as a result of which
subsequent drilling has been almost exclusively focused on the G-9
Deposit.

          In
November 2006 Farallon announced a revised estimate of inferred mineral
resources for the G-9 Deposit at the Campo Morado Project, as described in the
Technical Report. The G-9 estimates were completed by Farallon’s in-house
Qualified Person, David Gaunt, P.Geo. 

G-9 Deposit Inferred Resources 

	Cutoff(1) 	Tonnes 	Gold 	Silver 	Copper 	Zinc 	Lead 
	(% Zinc) 	(000’s) 	(g/t) 	(g/t) 	(%)
    	(%)
    	(%)
    
	2.0 	5,570 	2.8
    	186
    	1.3
    	7.3
    	1.0
    
	4.0 	3,840 	3.0
    	200
    	1.5
    	9.3
    	1.2
    
	6.0 	2,590 	3.0
    	205
    	1.7
    	11.4
    	1.3
    
	8.0 	1,770 	2.9
    	201
    	1.9
    	13.4
    	1.3
    
	10.0 	1,250 	2.6
    	195
    	2.0
    	15.3
    	1.2
    

	 	(1) 	
      In an operating situation a decreasing cutoff grade
      production schedule would be used to maximize rate of return. A decreasing
      cutoff grade procedure would commence with a 10% Zinc cutoff grade in the
      early years, likely finalizing with a 5% cutoff grade in the later years.
      Hence the inferred resources are presented at a range of cutoff
    grades.

          Mineral
resources that are not mineral reserves do not have demonstrated economic
viability. None of the foregoing mineralization has been determined to be ore
nor is considered to be a mineral reserve. 

          Based
on continuing positive drill results at the G-9 Deposit and preliminary
metallurgical tests which have indicated that the mineralization can be treated
by flotation techniques, Farallon has shifted its strategic focus for the Campo
Morado Project towards expediting the development of a mine at the G-9 Deposit.
Farallon has reset the target date for completion of a preliminary assessment to
early 2007 to enable the G-9 Deposit to be the focus of the preliminary
assessment. Accordingly, the date for delivery of the results of the
pre-feasibility study has been deferred to mid-2007. 

          In
the Technical Report the authors recommended an interim $55 million budget and
work plan that is designed to advance the G-9 Deposit to the pre-feasibility
stage in a manner that in management’s opinion is likely to expedite mine
development at the G-9 Deposit. The report recommended a surface and underground
drilling program to define, reclassify and expand the mineral resources of the
G-9 Deposit in order to enable mine planning and design work for the deposit to
be undertaken. The report also recommended test mining and bulk sampling, as
well as a comprehensive metallurgical test program to enable the development of
a process plant flow sheet, layout and detailed design. Additional engineering,
socio-economic and environmental studies to provide feasibility level
information for design engineering are also recommended. The information will
collectively be used to assist in the ongoing assessment of making a production
decision to develop a mine at G-9. 

          In
particular, the work plan includes: $7 million for 45,000 m of surface drilling
(40,000 m for exploration to test for extensions of the G-9 Deposit and other
targets (to test more property scale, structural and stratigraphic concepts, and
5,000 m geotechnical and condemnation); $20 million for surface improvements,
including water, 

- 7 - 

tailings, storage and infrastructure studies, metallurgical
pilot plant and equipment; $25 million for approximately 1,800 m of underground
work (1,400 m decline and 400 m in crosscuts) including, underground drill
stations, test mining and bulk sampling; $2 million for 10,000 m of underground
exploration drilling; and $1 million for socioeconomic and environmental
studies. The decline and related site activity work will be done with a view
towards supporting later production of up to 1,500 tonnes per day. 

Proposed Debt Financing 

          In
conjunction with this Offering, and to ensure sufficient funds are available for
work and related equipment in connection with the Campo Morado Project, Farallon
anticipates arranging debt financing (“Debt Financing”) which may include,
without limitation, senior or subordinated debt, loans from industry partners
and/or commitments of underwriting for non-convertible notes or bonds from
investment banks. 

          Management
understands that, before one or more lenders would commit to terms of a Debt
Financing, such lenders may require an independent engineer to review the Campo
Morado Project and the proposed work program. 

          Receipt
by the Company of a binding letter of commitment or duly-executed term sheet for
a Debt Financing is one of the Escrow Release Conditions. See “Details of the
Offering – Release of Offering Proceeds” and “Risk Factors”. 

USE OF PROCEEDS 

          The
net proceeds to be received by the Company from the sale of the Subscription
Receipts, after deducting the Agents’ commission and before expenses of the
Offering estimated to be $400,000, are estimated to approximately
$75,200,000.

          The
net proceeds, together with a portion of the proceeds from the Private
Placement, will be used for the work program described above, funding
complementary activities that management believes will ultimately support
potential mine development at the G-9 Deposit, and working capital necessary to
administer the work program.

          We
anticipate allocating net proceeds with the following priorities: 

	Priority 	Use of Proceeds 	Funds 	Total 
	  	  	  	  
	1 	Underground Exploration 	  	  
	  	- Decline/Crosscuts 	$25,000,000 	  
	  	- Drilling 	$2,000,000 	$27,000,000 
	  	  	  	  
	2 	Surface Exploration 	  	  
	  	- Drilling 	$7,000,000 	  
	  	- Design and Site Facilities Development 	$20,000,000 	$27,000,000 
	  	  	  	  
	3 	Permitting and Socio-Economic Costs 	$1,000,000 	$1,000,000 
	  	  	  	  
	4 	Working Capital 	$20,200,000 	$20,200,000

          Pending
the uses described above, the Company may invest all or a portion of the net
proceeds in high quality short-term interest-bearing corporate securities. 

          As
the work program outlined above proceeds, and depending on the results derived
therefrom, the Company may find it necessary or advisable to use portions of the
funds for other purposes (for example, activities that in management’s opinion
could expedite mine development in an orderly manner). The Company may also find
it necessary to obtain additional financing, either by debt, public offerings or
private placements.

- 8 - 

PLAN OF DISTRIBUTION 

          Pursuant
to an agreement dated December 14, 2006 (the “Agency Agreement”) between the
Company and the Agents, the Company has appointed the Agents as its agents to
offer the Subscription Receipts for sale to the public, either directly or
through authorized sub-agents, on a best efforts basis in the Qualifying
Jurisdictions, subject to compliance with all necessary legal requirements and
the terms and conditions of the Agency Agreement.

          The
Subscription Receipts are being sold at an Offering Price of $0.50 per
Subscription Receipt. The Offering Price was negotiated between the Company and
the Agents in the context of prevailing market conditions. The Agency Agreement
provides that the closing of this Offering will occur on December 21, 2006
or such later date as the Company and the Agents may agree, but in any event
not later than January 26, 2007. 

          The
Agency Agreement provides for payment by the Company of a fee to the Agents
equal to 6% of the gross proceeds raised in the Offering for various services
rendered to the Company in connection with the Offering. The Company has also
agreed to issue to the Agents the Compensation Options, which entitle the Agents
to purchase an aggregate number of Common Shares equal to 6% of the number of
Subscription Receipts sold in the Offering at the Offering Price at any time
until 5:00 p.m., Vancouver time, on the second anniversary of the Closing Date.
This Prospectus also qualifies the distribution of the Compensation Options. No
additional fee has been or will be paid to the Agents in connection with any
issue of Common Shares upon the exercise of the Warrants or the Compensation
Options. 

          While
the Agents have agreed to use their best efforts to sell the Subscription
Receipts, the Agents are not obliged to purchase any Subscription Receipts which
are not sold. The obligations of the Agents under the Agency Agreement are
several and not joint and may be terminated at their discretion on the basis of
their assessment of the state of the financial markets and upon the occurrence
of certain stated events.

          Conditional
on receiving gross Offering proceeds of not less than $55 million 

	
  the Company has agreed that it will not, directly or indirectly, sell,
  issue or announce the issuance of, or enter into any agreement to sell or
  issue, any securities of the Company, without the prior consent of the Agents,
  such consent not to be unreasonably withheld, for a period of 90 days
  following the Escrow Release Date, other than: (a) pursuant to the Offering;
  (b) pursuant to the exercise of outstanding warrants and or Warrants or
  Compensation Options issued under the Offering; (c) the grant of options
  pursuant to and in accordance with the Company’s employee stock option plan
  which limits options (existing or new) to 8% of the post-Offering Common
  Shares outstanding; (d) upon conversion of Subscription Receipts sold pursuant
  to the Offering; (e) pursuant to share issuance obligations under existing
  mineral property agreements; or (f) in connection with the acquisition by the
  Company of the shares and assets of other corporations or entities, and 

  
	
  each of the directors and executive officers of the Company and their
  associates will enter into a lock-up agreement with the Agents under which
  such persons will agree, directly or indirectly, not to sell, transfer,
  assign, pledge or otherwise dispose of any securities of the Company owned by
  any such persons, directly or indirectly, until the 90th day
  following the Escrow Release Date, without the prior written consent of the
  Agents, such consent to not be unreasonably held or delayed, or there occurs a
  take-over bid or similar transaction involving a change of control of the
  Company. 

          Pursuant
to policies of certain Canadian securities regulatory authorities, the Agents
may not, throughout the period of distribution under the Offering, bid for or
purchase Common Shares for their own account or for accounts over which they
exercise control or discretion. The foregoing restriction is subject to certain
exceptions, on the condition that the bid or purchase not be engaged in for the
purpose of creating actual or apparent active trading in or raising the price of
the Common Shares. These exceptions include a bid or purchase permitted under
the Universal Market Integrity Rules for Canadian marketplaces administered by
Market Regulation Services Inc. relating to market stabilization and passive
market making activities, and a bid or purchase made for or on behalf of a
customer where the order was not solicited during the period of distribution.
Subject to the foregoing, the Agents may over-allot or effect transactions which
stabilize or maintain the market price of the Company’s Common Shares 

- 9 - 

at levels other than those which otherwise might prevail on the
open market. Such transactions, if commenced, may be discontinued at any time.

          The
Subscription Receipts have not been and will not be registered under the U.S.
Securities Act or any state securities laws, and, subject to certain exceptions,
may not be offered, or delivered, directly or indirectly, or sold in the United
States except in certain transactions exempt from the registration requirements
of the U.S. Securities Act and in compliance with any applicable state
securities laws. The Agents have agreed that they will not offer or sell the
Subscription Receipts within the United States, its territories, its possessions
and other areas subject to its jurisdiction or to, or for the account or benefit
of, a “U.S. person” (as defined in Regulation S under the U.S. Securities Act),
except in accordance with the Agency Agreement and pursuant to exemptions from
the registration requirements of the U.S. Securities Act and in compliance with
applicable state securities laws.

          The
Company has agreed to indemnify the Agents against certain liabilities and
expenses, including liabilities under applicable securities legislation in
certain circumstances, or to contribute to payments the Agents may have to make
in respect thereof. 

          Subscriptions
for Subscription Receipts will be received subject to rejection or allotment in
whole or in part and the right is reserved to close the subscription books at
any time without notice.

          The
Company will apply to list the Common Shares issuable upon exercise of the
Subscription Receipts and the Underlying Shares on the TSX. Listing will be
subject to the Company fulfilling all the listing requirements of the TSX. 

DETAILS OF THE OFFERING 

Subscription Receipts 

          The
Subscription Receipts will be created and issued pursuant to the terms of a
subscription receipt agreement (the “Subscription Receipt Agreement”) to be
entered into among the Company, Paradigm Capital Inc. and the Escrow Agent. The
following summary of the Subscription Receipt Agreement is not complete and is
qualified in its entirety by reference to the Subscription Receipt Agreement
which will be available for review on the SEDAR website located at www.sedar.com
under the Company’s profile after the Closing Date. 

          Upon
exchange, each Subscription Receipt will entitle the holder thereof to acquire
one Common Share and one-half of one Warrant for no additional consideration.
The number of Common Shares issuable upon exchange will be subject to adjustment
in certain circumstances, as more fully described below. Subscription Receipts
representing the proceeds (up to $20 million) released to the Company on the
Closing Date will be automatically exchanged on a pro rata basis on the
Closing Date for the applicable number of Common Shares and Warrants. If the
Escrow Release Conditions are satisfied before the Condition Deadline,
outstanding Subscription Receipts will be automatically exchanged with no action
required by the holders thereof. If the Escrow Release Conditions are not
satisfied before the Condition Deadline the Escrow Agent will send a notice to
each holder of Subscription Receipts advising that, unless before a specified
date (the “Notice Date”) the holder directs the Escrow Agent to exchange such
holder’s Subscription Receipts and release the applicable Escrowed Funds to the
Company, the Escrow Agent will use available Escrowed Funds to refund the
maximum number of whole Subscription Receipts that can be so refunded (without
refunding or creating fractional Subscription Receipts) using and returning to
each holder of Subscription Receipts that portion of the Escrowed Funds
attributable to such holder’s subscription for Subscription Receipts and
interest or other income earned thereon (less applicable withholding tax, if
any). The refund of Escrowed Funds will commence on the third business day after
the Notice Date.

          The
Subscription Receipt Agreement will provide for adjustment in the number of
Common Shares issuable upon the exchange of the Subscription Receipts upon the
occurrence of certain events, including:

	(i) 	
      the issuance of Common Shares or securities exchangeable
      for or convertible into Common Shares to all or substantially all of the
      holders of the Common Shares as a stock dividend or other distribution
      (other than a “dividend paid in the ordinary course”, as defined in the
      Subscription Receipt Agreement, or a distribution

- 10 - 

		
      of Common Shares upon the exercise of the Subscription
      Receipts or pursuant to the exercise of directors, officers or employee
      stock options granted under the Company’s stock option plans);

	 	 
	(ii) 	
      the subdivision, redivision or change of the Common
      Shares into a greater number of shares;

	 	 
	(iii) 	
      the reduction, combination or consolidation of the Common
      Shares into a lesser number of shares;

	 	 
	(iv) 	
      the issuance to all or substantially all of the holders
      of the Common Shares of rights, options or warrants under which such
      holders are entitled, during a period expiring not more than 45 days after
      the record date for such issuance, to subscribe for or purchase Common
      Shares, or securities exchangeable for or convertible into Common Shares,
      at a price per share to the holder (or at an exchange or conversion price
      per share) of less than 95% of the “current market price”, as defined in
      the Subscription Receipt Agreement, for the Common Shares on such record
      date; and

	 	 
	(v) 	
      the issuance or distribution to all or substantially all
      of the holders of the Common Shares of shares of any class other than the
      Common Shares, rights, options or warrants to acquire Common Shares or
      securities exchangeable or convertible into Common Shares, of evidences of
      indebtedness or cash, securities or any property or other
  assets.

          The
Subscription Receipt Agreement will also provide for adjustment in the class or
number of securities issuable upon the exercise of the Subscription Receipts in
the event of the following: (1) reclassifications of the Common Shares; (2)
consolidations, amalgamations, plans of arrangement or mergers with or into
another entity (other than consolidations, amalgamations, plans of arrangement
or mergers which do not result in any reclassification of the Common Shares or a
change of the Common Shares into other shares); or (3) the transfer (other than
to one of the Company’s subsidiaries) of the undertaking or assets of the
Company as an entirety or substantially as an entirety to another company or
other entity. 

          No
adjustment in the number of Common Shares issuable upon the exercise of the
Subscription Receipts will be required to be made unless the cumulative effect
of such adjustment or adjustments would change the number of Common Shares to be
received upon exchange by at least one one-hundredth of a Common Share.

          No
fractional Common Shares will be issuable upon the exercise of Subscription
Receipts, and no cash or other consideration will be paid in lieu of fractional
shares. Holders of Subscription Receipts will not have any voting or pre-emptive
rights or any other rights which a holder of Common Shares would have.

          From
time to time, the Company, Paradigm Capital Inc. and the Escrow Agent, without
the consent of the holders of Subscription Receipts, may amend or supplement the
Subscription Receipts for certain purposes, including curing defects or
inconsistencies or making any change that does not adversely affect the rights
of any holder of Subscription Receipts. Any amendment or supplement to the
Subscription Receipt Agreement that adversely affects the interests of the
holders of the Subscription Receipts may only be made by “extraordinary
resolution”, which is defined in the Subscription Receipt Agreement as a
resolution either (1) passed at a meeting of the holders of Subscription
Receipts (at which there are holders of Subscription Receipts present in person
or represented by proxy representing at least 25% of the aggregate number of the
then outstanding Subscription Receipts) by the affirmative vote of holders of
Subscription Receipts representing not less than two-thirds of the number of
then outstanding Subscription Receipts represented at the meeting and voted on
such resolution or (2) adopted by an instrument in writing signed by the holders
of Subscription Receipts representing not less than two-thirds of the number of
then outstanding Subscription Receipts.

          Under
the Subscription Receipt Agreement, original purchasers of Subscription Receipts
under the Offering will have a contractual right of rescission following the
issuance of Common Shares and Warrants to them upon the exchange of the
Subscription Receipts, to receive the amount paid for the Subscription Receipts
if this Prospectus (including documents incorporated by reference herein) and
any amendment contains a misrepresentation or is not delivered to such
purchaser, provided such remedy for rescission is exercised within 180 days
after the Closing Date. 

- 11 - 

Common Shares and Preferred Shares 

          Each
Common Share carries the right to attend and vote at all general meetings of
shareholders, to receive dividends if, as and when declared by the directors,
and to participate in any dissolution or winding up of the Company. Each
Preferred share carries the right to attend and vote at all general meetings of
shareholders. The Preferred shares are issuable in series and the directors may
affix rights to dividends and exchange for Common Shares. The Preferred shares
rank in priority to the Common Shares with respect to payment of dividends and
return of capital on winding up or dissolution of the Company. 

Warrants 

          The
Warrants will be created and issued pursuant to the terms of a warrant indenture
(the “Warrant Indenture”) to be dated as of the Closing Date between the Company
and Computershare Trust Company of Canada, as warrant agent thereunder (the
“Warrant Agent”). The Company will appoint the principal transfer office of the
Warrant Agent in Vancouver, British Columbia as the location at which Warrants
may be surrendered for exercise or transfer.

          The
following summary of certain provisions of the Warrant Indenture does not
purport to be complete and is qualified in its entirety by reference to the
provisions of the Warrant Indenture.

          Each
Warrant will entitle the holder thereof to purchase one Common Share at a price
of $0.70 at any time before 5:00 p.m. (Vancouver time) on the date which is 24
months after the Closing Date, after which time the Warrants will expire and be
void and of no value. If, at any time after the Escrow Release Date, the volume
weighted average trading price of the Common Shares of the Company on the TSX is
greater than $1.50 for any 20 consecutive trading days, the Company may
accelerate the expiry of the Warrants by providing written notice to the holders
of Warrants and issuing a press release to the effect that the Warrants will
expire 30 days following the date of such notice. The Warrant Indenture will
contain provisions designed to protect the holders of Warrants against dilution
upon the happening of certain events. No fractional Common Shares will be issued
upon the exercise of Warrants. 

          The
Warrant Indenture will provide for adjustment in the number of Common Shares
issuable upon the exercise of the Warrants and/or the exercise price per Common
Share upon the occurrence of certain events, including:

	(i) 	
      the issuance of Common Shares or securities exchangeable
      for or convertible into Common Shares to all or substantially all of the
      holders of the Common Shares as a stock dividend or other distribution
      (other than a “dividend paid in the ordinary course”, as defined in the
      Warrant Indenture, or a distribution of Common Shares upon the exercise of
      the Warrants or pursuant to the exercise of directors, officers or
      employee stock options granted under the Company’s stock option
    plans);

	 	 
	(ii) 	
      the subdivision, redivision or change of the Common
      Shares into a greater number of shares;

	 	 
	(iii) 	
      the reduction, combination or consolidation of the Common
      Shares into a lesser number of shares;

	 	 
	(iv) 	
      the issuance to all or substantially all of the holders
      of the Common Shares of rights, options or warrants under which such
      holders are entitled, during a period expiring not more than 45 days after
      the record date for such issuance, to subscribe for or purchase Common
      Shares, or securities exchangeable for or convertible into Common Shares,
      at a price per share to the holder (or at an exchange or conversion price
      per share) of less than 95% of the “current market price”, as defined in
      the Warrant Indenture, for the Common Shares on such record date;
    and

	 	 
	(v) 	
      the issuance or distribution to all or substantially all
      of the holders of the Common Shares of shares of any class other than the
      Common Shares, rights, options or warrants to acquire Common Shares or
      securities exchangeable or convertible into Common Shares, or evidences of
      indebtedness or cash, securities or any property or other assets. The
      Warrant Indenture will also provide for adjustment in the class and/or
      number of securities issuable upon the exercise of the Warrants and/or
      exercise price per security in the event of the

- 12 - 

following additional events: (1)
reclassifications of the Common Shares; (2) consolidations, amalgamations, plans
of arrangement or mergers of the Company with or into another entity (other than
consolidations, amalgamations, plans of arrangement or mergers which do not
result in any reclassification of the Common Shares or a change of the Common
Shares into other shares); or (3) the transfer (other than to one of the
Company’s subsidiaries) of the undertaking or assets of the Company as an
entirety or substantially as an entirety to another corporation or other
entity.

          No
adjustment in the exercise price or the number of Common Shares purchasable upon
the exercise of the Warrants will be required to be made unless the cumulative
effect of such adjustment or adjustments would change the exercise price by at
least 1% or the number of Common Shares purchasable upon exercise by at least
one one-hundredth of a Common Share.

          The
Company will also covenant in the Warrant Indenture that, during the period in
which the Warrants are exercisable, it will give notice to holders of Warrants
of certain stated events, including events that would result in an adjustment to
the exercise price for the Warrants or the number of Common Shares issuable upon
exercise of the Warrants, at least 14 days before the record date or effective
date, as the case may be, of such event. 

          No
fractional Common Shares will be issuable upon the exercise of Warrants, and no
cash or other consideration will be paid in lieu of fractional shares. Holders
of Warrants will not have any voting or pre-emptive rights or any other rights
which a holder of Common Shares would have.

          From
time to time, the Company and the Warrant Agent, without the consent of the
holders of Warrants, may amend or supplement the Warrant Indenture for certain
purposes, including curing defects or inconsistencies or making any change that
does not adversely affect the rights of any holder of Warrants. Any amendment or
supplement to the Warrant Indenture that adversely affects the interests of the
holders of the Warrants may only be made by ‘‘extraordinary resolution’’, which
is defined in the Warrant Indenture as a resolution either (1) passed at a
meeting of the holders of Warrants (at which there are holders of Warrants
present in person or represented by proxy representing at least 25% of the
aggregate number of the then outstanding Warrants) by the affirmative vote of
holders of Warrants representing not less than two-thirds of the aggregate
number of then outstanding Warrants represented at the meeting and voted on such
resolution or (2) adopted by an instrument in writing signed by the holders of
Warrants representing not less than two-thirds of the aggregate number of then
outstanding Warrants. 

Release of Offering Proceeds 

          On
the Closing Date 25% (up to $20,000,000) of the Offering proceeds will be
released to the Company, the Subscription Receipts represented by that portion
of the Offering proceeds will be automatically exchanged on the Closing Date for
one Common Share and one-half of one Warrant, without payment of additional
consideration and without any further action by holders of Subscription
Receipts, and the Agents will receive one-half of the Agents’ Fee and all of the
Agents’ out-of-pocket expenses. The remainder of the Offering proceeds,
estimated at $60,000,000, will be deposited in escrow with the Escrow Agent, and
invested in short term investment grade debt obligations pending satisfaction of
the Escrow Release Conditions described below. After the Closing Date and before
the Condition Deadline, Subscription Receipt holders may, at their option,
exchange their Subscription Receipts for one Common Share and one-half of one
Warrant, without payment of additional consideration, the Escrowed Funds
attributable to such exchanged Subscription Receipts will be released to the
Company and the Agents will receive one-half of the Agents’ Fee attributable to
such Subscription Receipts. If the Escrow Release Conditions are not satisfied
on or before the Condition Deadline, commencing on the third business day after
the Notice Date the Escrow Agent will return to the Subscribers their pro
rata share of the Escrowed Funds, plus accrued interest thereon.
Subscription Receipt holders will not be refunded any of the Escrowed Funds
attributable to Subscription Receipts which have been exchanged prior to the
Condition Deadline. The Escrowed Funds will be less than the full amount of the
Offering proceeds.

          If
the Escrow Release Conditions are satisfied before the Condition Deadline, each
Subscription Receipt will be automatically exchanged for one Common Share and
one-half of one Warrant, without payment of additional consideration and without
any further action by holders of Subscription Receipts, and the Escrow Agent
will pay to the Agents the balance of their fee and release the balance of the
Escrowed Funds (together with interest or other income earned thereon) to the
Company.

- 13 - 

          The
Escrowed Funds will be released on satisfaction of certain conditions, including
the following (the “Escrow Release Conditions”): (i) a binding commitment letter
or term sheet having been executed for the Debt Financing and containing terms
and conditions acceptable to the Agents, acting reasonably; (ii) there having
been no material adverse change in the financial condition, business or
operations of the Company; (iii) the President and Chief Executive Officer and
Chief Financial Officer of the Company delivering certificates stating that
there has been no material adverse change in the financial condition, business
or operations of the Company and that the Debt Financing has been obtained; (iv)
the Company not being in breach or material default of any of its covenants or
obligations under the Agency Agreement or the Subscription Receipt Agreement
except as waived by the Agents; and (v) the Company and the Agents acting
reasonably having delivered a joint notice to the Escrow Agent confirming that
all conditions precedent to the release of the Escrowed Funds have been
satisfied or waived on terms satisfactory to the Company and the Agents. 

CAPITALIZATION 

          The
authorized share capital of the Company consists of an unlimited number of
Common Shares without par value, of which 124,572,331 were issued and
outstanding as at December 13, 2006, and an unlimited number of Preferred shares
without par value, of which none are currently issued or outstanding.

          The
following table shows the effect of the Offering on the issued Common Shares of
the Company: 

	Description of Security 
	Authorized 
	Issued at December 13, 2006 
	Issued after giving effect 
to
      Offering(1) 
	Common Shares 	Unlimited 	124,572,331 	374,172,331 

(1)      Assumes issuance of
9,600,000 Common Shares on full exercise of Compensation Options, and issuance
of 80,000,000 Common Shares on full exercise of Warrants. 

          As
at December 13, 2006, the Company had outstanding share purchase options to
purchase up to 6,356,500 Common Shares with a weighted average exercise price of
$0.79.

          As
at December 13, 2006, the Company had the following share purchase warrants,
each exercisable into one Common Share: 

	Number of Warrants 	Exercise Price 	Expiry Date 
	28,571,877 	$1.02 	December 17, 2006 
	18,750,000 	$0.60 	November 17, 2008 

          Since
June 30, 2006 no Common Shares have been issued pursuant to the exercise of
employee stock options or share purchase warrants.

INTERESTS OF EXPERTS 

          The
following individuals are named, in this Prospectus, as having prepared or
co-prepared a technical report on various aspects of the Campo Morado Project:
Daniel Kilby, P.Eng., Peter Taggart, P.Eng., Ross Banner, P.Eng., Qingping Deng,
Ph.D., CPG, David Dreisinger, P.Eng., and David Gaunt, P.Geo. 

          None
of those individuals holds, directly or indirectly, more than one percent of the
issued and outstanding Common Shares of the Company. 

          Certain
legal matters in connection with this Offering will be passed upon by Lang
Michener LLP on behalf of the Company and by Heenan Blaikie LLP, on behalf of
the Agents. As at the date hereof, the partners and associates of Lang Michener
LLP and Heenan Blaikie LLP, as a group, beneficially own, directly or
indirectly, less than one percent of the outstanding Common Shares of the
Company. 

- 14 - 

RISK FACTORS 

          An
investment in the Company’s Subscription Receipts, and the Common Shares and
Warrants issuable upon exchange therefor, is highly speculative and subject to a
number of risks. A prospective purchaser of such securities should carefully
consider the information described in this Prospectus as well as the risk
factors set out in our Annual Information Form incorporated herein by reference
and the following: 

There is no market for the active trading of Subscription
Receipts and no market is expected to develop. 

          There
is currently no market through which the Subscription Receipts may be sold.
Therefore, purchasers of Subscription Receipts may not be able to resell
Subscription Receipts. 

If Escrow Conditions are not satisfied, Subscribers will
only be entitled to a refund of a portion of the Subscription Price.

          On
the Closing Date 25% (up to $20,000,000) of the Offering proceeds will be
released to the Company and the Subscription Receipts represented by that
portion of the Offering proceeds will be automatically exchanged on the Closing
Date for the appropriate number of Common Shares and Warrants. Between the
Closing Date and the Condition Deadline, Subscribers may exchange Subscription
Receipts for Common Shares and Warrants. The balance of the Offering proceeds
will be held in escrow pending satisfaction of the Escrow Conditions. If the
Escrow Conditions are not satisfied by the Condition Deadline, Subscribers will
receive a refund of the Escrowed Funds attributable to such Subscriber’s
subscription and any interest or other income earned thereon, less withholding
tax, if any. Subscribers will not receive a refund of Offering proceeds released
to the Company on the Closing Date, nor will a Subscriber receive a refund for
Subscription Receipts exchanged for Common Shares and Warrants between the
Closing Date and the Condition Deadline. Accordingly, Subscribers will not
receive a full refund of the Offering Price in the event the Escrow Release
Conditions are not satisfied. See “Plan of Distribution – Release of Offering
Proceeds”. 

Loss of Entire Investment 

          An
investment in Common Shares and Warrants is highly speculative and may result in
the loss of an investor’s entire investment. Only potential investors who are
experienced in high risk investments and who can afford to lose their entire
investment should consider an investment in the Company. 

Our mineral resources are estimates only and may not
reflect the actual deposits or the economic viability of extraction.

          The
figures presented for mineral resources herein and in the documents incorporated
herein by reference are estimates only. The estimating of mineral resources is a
subjective process and the accuracy of reserve and resource estimates is a
function of the quantity and quality of available data and the assumptions used
and judgments made in interpreting engineering and geological information. There
is significant uncertainty in any resource estimate, and the actual deposits
encountered and the economic viability of mining a deposit may differ materially
from our estimates. 

          Estimated
mineral resources may have to be recalculated based on changes in metals prices,
further exploration or development activity or actual production experience.
This could materially and adversely affect estimates of the volume or grade of
mineralization, estimated recovery rates or other important factors that
influence resource estimates.

If Farallon were to lose the services of Dick Whittington
or other members of its management team, it may be delayed in its plan of
operations for the Campo Morado Project and operating expenses may be
increased.

          Farallon
relies on the services of Dick Whittington, who is president and Chief Executive
Officer of the Company, and other members of its management team to carry out
its plan of operations. Mr. Whittington is the only member of the Company’s
management team that provides his services on a full time basis. Farallon does
not maintain life insurance or key man insurance for such personnel. Farallon’s
success is dependent on the 

- 15 - 

performance of key personnel working in management, supervisory
and administrative capacities, or as consultants in advancing its corporate
objectives. The loss of the services of Mr. Whittington, senior management or
key personnel who are capable of managing Farallon’s business activities will
result in Farallon being required to identify and engage qualified management to
replace Mr. Whittington or other members of the management team. The time and
expense involved in this process could result in a delay in Farallon completing
its planned exploration programs. The loss of Mr. Whittington as Chief Executive
Officer and sole full time member of the management team could result in the
most extensive delay as Farallon would be required to locate, engage and orient
a new chief executive officer. Mr. Whittington and other members of Farallon’s
management team are seconded from Hunter Dickinson Inc, a related party by
virtue of common directors, and do not have a direct employment contract with
Farallon. If Farallon were to lose the services of Mr. Whittington or other
members of its management team, Farallon’s plan of operations for the Campo
Morado Project may be affected and its operating expenses may be increased. 

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

          In
the opinion of Lang Michener LLP, counsel to the Company, and Heenan Blaikie
LLP, counsel to the Agents, the following is as of the date hereof a summary of
the principal Canadian federal income tax considerations under the Income Tax
Act (Canada) (the "Tax Act") generally applicable to holders of Subscription
Receipts acquired under the Offering and Common Shares and Warrants issuable in
exchange for Subscription Receipts (collectively, the "Securities") who, for the
purposes of the Tax Act and at all relevant times, (i) are resident or deemed to
be resident solely in Canada, (ii) deal at arm's length and are not affiliated
with the Company, and (iii) hold the Securities as capital property. Holders
meeting all of the foregoing requirements are referred to as a "Holder" or
"Holders" in this summary, and this summary only addresses such Holders. In
addition, this summary does not address any Holder that is a financial
institution to which the "mark-to-market" provisions of the Tax Act apply, a
"specified financial institution" or a Holder an interest in which is a ""tax
shelter investment" (all as defined for purposes of the Tax Act), and does not
address other special situations or circumstances, and all affected Holders
should consult with their own tax advisors in this regard. 

          This
summary is based upon the facts set out in this short form prospectus, the
current provisions of the Tax Act and the regulations thereunder (the
“Regulations”) in force as of the date hereof, all specific proposals (the
“Proposed Amendments”) to amend the Tax Act or the Regulations that have been
publicly announced by the Minister of Finance (Canada) prior to the date
thereof, and counsel’s understanding of the current published administrative and
assessing practice of the Canada Revenue Agency (the “CRA”). No assurance can be
given that the Proposed Amendments will be enacted in their proposed form, if at
all. This summary does not take into account or anticipate any other changes to
the law, whether by legislative, governmental or judicial decision or action,
nor does it take into account provincial, territorial or foreign income tax
legislation or considerations, which may differ significantly from the Canadian
federal income tax considerations. 

          This
summary is of a general nature only, is not exhaustive of all possible Canadian
federal income tax considerations and is not intended to be, nor should it be
construed to be, legal or tax advice to any particular holder of Securities.
Consequently, prospective holders should consult their own tax advisors with
respect to their particular circumstances. The discussion below is qualified
accordingly. 

Acquisition of Common Shares and Warrants on Exchange of
Subscription Receipts 

          No
gain or loss will be realized by a Holder on the exchange of a Subscription
Receipt for one Common Share and one-half of one Warrant evidenced thereby. This
opinion is based upon the interpretation of counsel that a Subscription Receipt
is an agreement to acquire a Common Share and one-half of one Warrant upon
either the Closing Date or the satisfaction of the Escrow Release Conditions. No
advance income tax ruling has been requested from the CRA in this regard, and
counsel is not aware of any judicial consideration of this interpretation. 

          Holders
will be required to allocate the aggregate cost of a Subscription Receipt
between the Common Share and one-half of one Warrant on a reasonable basis in
order to determine their respective costs for purposes of the Tax Act. For its
purposes, the Company intends to allocate $0.49 of the issue price of each
Subscription Receipt as consideration for the issue of each Common Share and
$0.01 of the issue price of each Subscription Receipt as consideration for the
issue of each one-half of one Warrant. Although the Company believes that its
allocation is 

- 16 - 

reasonable, it is not binding on the CRA. The adjusted cost
base of a Holder’s Common Shares will be subject to the averaging rules under
the Tax Act. 

Repayment of Issue Price and Interest 

          As
described above under “Details of the Offering – Release of Offering Proceeds”,
if the Escrow Release Conditions are not satisfied prior to the Deadline, a
Holder will receive, in respect of such Subscription Receipts as are to be
refunded, that portion of the Escrowed Funds attributable to such Holder’s
subscription for Subscription Receipts which have not previously been exchanged
for Common Shares and Warrants and the Holder’s share of interest earned on the
Escrowed Funds. 

          The
Holder will not generally realize any income, gain or loss on the repayment to
the Holder of the issue price. Where a Holder is entitled to receive the
Holder’s share of interest earned on the Escrowed Funds, a Holder that is a
corporation, partnership, unit trust or any trust of which a corporation or a
partnership is a beneficiary will be required to include in computing income for
a taxation year any interest accrued to the Holder on the Escrowed Funds to the
end of the Holder’s taxation year, or that is receivable or received by the
Holder before the end of that taxation year, except to the extent that such
interest was included in computing the Holder’s income for a preceding taxation
year. Any other Holder that is entitled to receive the Holder’s share of
interest earned on the Escrowed Funds will be required to include in income for
a taxation year such interest as is received or receivable by the holder in that
taxation year, depending on the method regularly followed by the Holder in
computing income. 

Exercise or Expiry of Warrants 

          No
gain or loss will be realized by a Holder upon the exercise of a Warrant. The
cost to a Holder of a Common Share acquired upon the exercise of a Warrant will
be the aggregate of (i) the Holder’s adjusted cost base of the Warrant so
exercised, and (ii) the price paid for the Common Share (i.e., the exercise
price of the Warrant). The cost to a Holder of a Common Share acquired upon the
exercise of a Warrant must be averaged with the adjusted cost base (determined
immediately before the exercise of the Warrant) of all other Common Shares held
by the Holder as capital property at the time of the exercise of the Warrant.

          The
expiry of an unexercised Warrant will generally give rise to a capital loss
equal to the adjusted cost base to the Holder of the expired Warrant. 

Disposition of Subscription Receipts, Common Shares and
Warrants 

          A
disposition or deemed disposition by a Holder of a Subscription Receipt (for
great certainty, other than on the exchange thereof for a Common Share and
one-half of one Warrant), a Common Share or a Warrant (other than a disposition
of a Warrant on the exercise or expiry thereof) will generally result in the
Holder’s realizing a capital gain (or capital loss) equal to the amount by which
the proceeds of disposition of the Subscription Receipt, Common Share or
Warrant, as the case may be, are greater (or less) than the aggregate of the
holder’s adjusted cost base of the Subscription Receipt, Common Share or
Warrant, as the case may be, and any reasonable costs of disposition. One-half
of any capital gain (a “taxable capital gain”) must be included in the Holder’s
income for the taxation year of the disposition, and one-half of any capital
loss (an “allowable capital loss”) realized in a taxation year may generally be
deducted from taxable capital gains realized in the year of disposition.
Allowable capital losses in excess of taxable capital gains for a particular
year may be deducted from taxable capital gains realized in the three preceding
taxation years or any subsequent taxation year, subject to detailed rules and
the restrictions contained in the Tax Act in this regard. The amount of any
capital loss realized by a Holder that is a corporation on the disposition of
Common Shares may be reduced by the amount of any dividends received or deemed
to be received by such Holder subject to and in accordance with the provisions
of the Tax Act. Similar rules may apply to a partnership or trust of which a
corporation, trust or partnership is a member or beneficiary. A capital gain
realized or a taxable dividend received by a Holder who is an individual may
give rise to a liability for alternative minimum tax. If a Holder is a
“Canadian-controlled private corporation” as defined in the Tax Act, the Holder
may be liable to pay an additional refundable tax of 6 2/3% on some types of
income, including interest and taxable capital gains. 

- 17 - 

Dividends on Common Shares 

          Dividends
received or deemed to be received on the Common Shares by an individual
(including some trusts) will be included in computing the individual’s income
for tax purposes and will be subject to the gross-up and dividend tax credit
rules applicable to dividends received from taxable Canadian corporations (as
defined in the Tax Act). Taxable dividends received by an individual will be
relevant in computing possible liability for alternative minimum tax. 

          On
October 18, 2006, the Minister of Finance (Canada) tabled Bill C-28 in the House
of Commons. Bill C-28 contains provisions that are intended to enhance the
dividend gross-up and tax credit mechanism applicable to “eligible dividends”
paid by corporations resident in Canada after 2005. Under the Bill C-28, a
dividend will be eligible for the enhanced gross-up and dividend tax credit
treatment if the dividend recipient receives written notice from the paying
corporation designating the dividend as an “eligible dividend”. There may be
limitations on the ability of a corporation to designate dividends as “eligible
dividends”, and there can be no assurance that Bill C-28 will be enacted into
law in the form proposed, or at all. 

          A
Holder that is a corporation will include dividends received or deemed to be
received on the Common Shares in computing its income for tax purposes and
generally will be entitled to deduct the amount of such dividends in computing
its taxable income, subject to the normal rules and restrictions under the Tax
Act, with the result that no tax will be payable by it in respect of such
dividends. Certain corporations, including private corporations or subject
corporations (as such terms are defined in the Tax Act), may be liable to pay a
refundable tax under Part IV of the Tax Act at the rate of 331/3% of the
dividends received or deemed to be received on the Common Shares to the extent
that such dividends are deductible in computing taxable income. 

AUDITORS, TRANSFER AGENT AND REGISTRAR 

          The
auditors of the Company are KPMG LLP, Chartered Accountants, Vancouver, British
Columbia. The transfer agent and registrar for the Common Shares is
Computershare Investor Services Inc. at its principal office in Vancouver,
British Columbia. 

PURCHASERS’ STATUTORY RIGHTS 

          Securities
legislation in certain of the provinces of Canada provides purchasers with the
right to withdraw from an agreement to purchase securities. This right may be
exercised within two business days after receipt or deemed receipt of a
prospectus and any amendment thereto. In several of the provinces, the
securities legislation further provides a purchaser with remedies for rescission
or, in some provinces, damages where the Prospectus and any amendment contains a
misrepresentation or is not delivered to the purchaser, provided that the
remedies for rescission or damages are exercised by the purchaser within the
time limit prescribed by the securities legislation of the purchaser’s province.
The purchaser should refer to any applicable provisions of the securities
legislation of the purchaser’s province for the particulars of these rights or
consult with a legal adviser. 

- 18 - 

AUDITORS’ CONSENT 

	To: 	The Board of Directors of 
	  	Farallon Resources Ltd.
  

          We
have read the short form prospectus of Farallon Resources Ltd. (the “Company”)
dated December 14, 2006 relating to qualification for distribution of
subscription receipts of the Company. We have complied with Canadian generally
accepted standards for an auditors’ involvement with offering documents. 

          We
consent to the incorporation by reference in the above-mentioned short form
prospectus of our report to the shareholders of the Company on the consolidated
balance sheets of the Company as at June 30, 2006 and 2005 and the consolidated
statements of operations and deficit and cash flows for each of the years in the
three-year period ended June 30, 2006. Our report is dated September 1, 2006.

 

(Signed) KPMG LLP 

Chartered Accountants 

 

Vancouver, Canada 
December 14, 2006 

- 19 - 

CERTIFICATE OF THE COMPANY 

Dated: December 14, 2006 

          This
short form prospectus, together with the documents incorporated herein by
reference, constitutes full, true and plain disclosure of all material facts
relating to the securities offered by this Prospectus as required by the
securities legislation of British Columbia, Alberta, Manitoba, New Brunswick
and Ontario. 

 

	(Signed) J.R.H. (Dick) Whittington 	(Signed) Jeffrey R. Mason 
	Chief Executive Officer 	Chief Financial Officer 

 

On Behalf of the Board of Directors 

 

	(Signed) Scott D. Cousens 	(Signed) Ronald W. Thiessen 
	Director 	Director 

 

C-1 

CERTIFICATE OF THE AGENTS 

Dated: December 14, 2006 

          To
the best of our knowledge, information and belief, this short form prospectus,
together with the documents incorporated herein by reference, constitutes full,
true and plain disclosure of all material facts relating to the securities
offered by this short form prospectus as required by the securities legislation
of British Columbia, Alberta, Manitoba, Ontario and New Brunswick.

 

PARADIGM CAPITAL
INC. 
By: (Signed) ANDREW PARTINGTON 

 

CANACCORD CAPITAL
CORPORATION 
By: (Signed) DAVID HORTON 

 

MGI SECURITIES INC.

By: (Signed) JOSHUA H.H. KINGSMILL 

 

C-2Filed by Automated Filing Services Inc. (604) 609-0244 - Farallon Resources Ltd. - Exhibit 4.2

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR UNDER THE
SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES OR TO U.S PERSONS (AS DEFINED IN REGULATION S PROMULGATED UNDER THE U.S.
SECURITIES ACT) UNLESS THE SECURITIES ARE REGISTERED UNDER THE U.S. SECURITIES
ACT AND ALL APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS IS AVAILABLE.

UNIT SUBSCRIPTION AGREEMENT

	TO: 	FARALLON RESOURCES LTD.
      (“Farallon” or the “Issuer”) 
	FROM: 	 
    	 
    
	  	(Investor Name) 
	 	 
	RE: 	Purchase of Cdn $0.40 Unit (each a
      Share and a Warrant) of Farallon. 
	 	 
	REFERENCE
      DATE: 		October 12, 2006 

The undersigned (the “Subscriber”) hereby irrevocably
subscribes for and agrees to purchase from Farallon, on terms and conditions set
forth in Schedule A attached hereto (together with the first three pages, the
“Agreement”), that number of Units (the “Units”) in the capital of Farallon set
out on page 2 hereof at a price of Cdn.$0.40 Unit. 

IINSTRUCTIONS FOR COMPLETING THIS SUBSCRIPTION 

	1. 	
      Complete the information required on page 2 with respect
      to subscription amounts and registration and delivery
  particulars.

	2. 	
      Complete the applicable forms (the “Forms”) at the end of
      this Agreement:

		(a) 	
      Subscribers resident in Canada, complete and
      execute Schedule A – Representation Letter For Accredited
      Investors;

		(b) 	
      Subscribers who are U.S. Persons or who were
      offered the Units in the United States, must be “accredited investors”
      within the meaning assigned in Rule 501(a) of Regulation D promulgated
      under the U.S. Securities Act, and must complete and sign Schedule B
      – Certificate of U.S. Purchaser.

	3. 	
      Return this Agreement and all Schedules to Farallon at
      Suite 1020 – 800 West Pender Street, Vancouver, British Columbia, V6C 2V6
      with a certified cheque, money order or bank draft drawn on a Canadian
      chartered bank and made payable to Farallon Resources Ltd. in the amount
      of the applicable subscription funds, or in such other manner as may be
      acceptable to Farallon.

Farallon Wiring Instructions:

	CANADIAN DOLLAR ACCOUNT (US DOLLAR TRANSFERS,
      SEE BELOW) 	SWIFT NO: 	CIBCCATT 
		  	ACCOUNT NO.: 	35-10212 
	  	  	TRANSIT NO.: 	00010
    
	CIBC ACCOUNT
    	Canadian Account 	 
    	 
    
	ACCOUNT NAME:
    	Farallon Resources Ltd. 	 
    	 
    
	BANK: 	Canadian Imperial Bank of 	 
    	 
    
	  	Commerce 	 
    	 
    
	  	Commerce Place, Vancouver, B.C. 	  	  

- 2 -

	U.S. DOLLAR ACCOUNT (US dollars will be exchanged
      into 	  	  
	Canadian funds on the basis of US$1 = Cdn.$1.1324 even if
      such 	 
    	 
    
	exchange rate fluctuates prior to the Closing Date) 	 
    	 
    
	  	  	  	  
	CIBC ACCOUNT
      : 	USD
      Account 	 
    	 
    
	  	  	  	  
	BANK OF
      AMERICA NT & SA 	 
    	 
    
	NEW
      YORK, NEW YORK 	 
    	 
    
	ABA
      026009593 	 
    	 
    
	FOR
      CREDIT TO: 	 
    	 
    
	CIBC
      TORONTO, ONTARIO 	 
    	 
    
	ACCOUNT
      #6550-8-26157 	 
    	 
    
	FOR
      FURTHER CREDIT TO: 	 
    	 
    
	 	ACCOUNT NO.: 	02-58814 
	ACCOUNT NAME:
    	Farallon Resources Ltd. 	INSTITUTION: 	0010
  
	BANK: 	Canadian Imperial Bank of Commerce 	TRANSIT NO.: 	00010
    
	  	400 Burrard Street 	 
    	 
    
	  	Vancouver, B.C. 	  	  

Registration and Delivery Instructions

	  	  	Number of Units: 	 
	(Name of Subscriber - please print) 	  	  
	 
    	  	  
	  	  	  
	(Authorized Signature of Subscriber) 	  	Aggregate
      Subscription Price: 	 
	 
    	  	  
	  	  	  
	(Official Capacity or Title if Subscriber is not an
      individual 	 	  
	- please print) 	  	If the Subscriber is signing as agent for a principal and
      is 
	  	  	not a trust company or a portfolio manager, in either
    
	  	  	case, purchasing as trustee or agent for accounts
      fully 
	(Please print the name of the individual whose signature 	 	managed by it, complete the following and ensure that
    
	appears above if it is different from the name of the 	 	Schedule A or B are completed on behalf of such

	Subscriber printed above.) 	  	principal: 
	 
    	  	  
	  	  	  
	(Subscriber’s Address) 	  	(Name of Principal) 
	 
    	  	  
	  	  	  
	(Subscriber’s Address) 	  	(Principal’s Address) 
	 
    	  	  
	  	  	  
	(Telephone Number) 	 (E-Mail Address) 		  
	 	 	 	 

- 3 -

	Register the Units as follows: 	 	Deliver the Units as follows: 
	 	 	 
	(Name) 	 	(Name) 
	 	 	 
	(Account reference, if applicable) 	 	(Account reference, if applicable) 
	 	 	 
	(Address) 	 	(Contact Name) 
	 	 	 
	(Address) 	 	(Address) 
	 	 	 
	  	 	(Address) 

Consent to the Disclosure of Information under Privacy
Legislation

The Investor acknowledges that certain “Personal Information”
  (information about an identifiable individual) about the Investor may be required
  to be disclosed by the Issuer to the Toronto Stock Exchange (the “TSX”)
  and other applicable regulatory authorities pursuant to their policies and the
  Investor consents to the disclosure of such Personal Information by the Issuer
  to such regulatory authorities, and to the collection, use and disclosure of
  such Personal Information by the TSX in accordance with their specified purposes.

ACCEPTANCE 

	 	) 	FARALLON RESOURCES LTD. 
	Accepted and agreed to by Farallon as of the 	) 	  
	________ day of _____________________ , 2006. 	) 	  
	 	) 	Authorized Signatory 

- 4 -

TERMS OF SUBSCRIPTION

	Re: 	Purchase of Cdn $0.40 Farallon Units
      Exempt from Prospectus Requirements 
	 	 
	1. 	Definitions 
	 	 
	1.1 	(a)     
      “Accredited Investor” means, for a Subscriber resident in Canada or
      the United Sates a high net worth or high income person, specifically
      defined on the relevant attachments hereto as an Investor;

	 	(b)      
      “Applicable Securities Laws” means the securities legislation
      having application, and the rules, policies, notices and orders issued by
      applicable securities regulatory authorities, including the TSX, having
      application over this Offering and the Issuer; 
	 	  	  
	 	(c)      
      “Closing” means a completion of an issue and sale by the Issuer and
      the purchase by the Investors of the Units pursuant to this Subscription
      Agreement at or about 11:00 a.m. on the Closing Date. Closings may occur
      on one or more dates as the Issuer may determine within the requirements
      of the TSX; 
	 	  	  
	 	(d)      
      “Closing Date” means a day following TSX acceptance of this
      Subscription Agreement and others which form part of the Offering and
      which is expected to be on or about November 10, 2006, as the Issuer may
      determine within the requirements of the TSX. On the Closing Date, the
      Units will be issued and certificates representing the Units mailed to the
      Investor; 
	 	  	  
	 	(e)      
      “Exempt Amount Exemption” means the exemption from the prospectus
      requirements under Applicable Securities Laws for subscriptions of
      Cdn$150,000 which do not require the Investor to be an Accredited Investor
      or to provide a certificate; 
	 	  	  
	 	(f)      
      “Exemptions” means the exemptions from the registration and
      prospectus or equivalent requirements under Applicable Securities Laws;
  
	 	  	  
	 	(g)      
      “Foreign Portfolio Manager” means a person who carries on business
      as a “portfolio manager” (within the meaning of that term under Applicable
      Securities Laws) in an International Jurisdiction and who purchases Units
      as an agent for fully managed accounts; 
	 	  	  
	 	(h)      
      “Family, Friends and Business Associates Exemption” means the
      exemption from prospectus requirements found in Section 2.5 (1) of NI
      45-106; 
	 	  	  
	 	(i)       “fully
      managed” in relation to an account, means that the Investor has the
      discretion as to the account as contemplated by Applicable Securities
      Laws; 

	 	(j)      
      “International Jurisdiction” means a country other than Canada or
      the United States;
	 	 	 
	 	(k)      
      “Investor” means the person or persons named as Investor on the
      execution page of this Subscription Agreement and if more than one person
      is so named, means all of them jointly and severally;

	 	(l)       “MI
      45-102” means Multilateral Instrument 45-102 - Resale of Securities of
      the Applicable Securities Laws; 
	 	  	  
	 	(m)      
      “material” means material in relation to the Issuer and any
      subsidiary considered on a consolidated basis; 
	 	  	  
	 	(n)      
      “material change” means any change in the business, operations,
      assets, liabilities, ownership or capital of the Issuer and any subsidiary
      considered on a consolidated basis that would reasonably be expected to
      have a significant effect on the market price or value of the Issuer’s
      securities; 

- 5 -

(o)      
“material fact” means any fact that significantly affects or would
reasonably be expected to have a significant effect on the market price or value
of the Issuer’s securities;

(p)      
“misrepresentation” is as defined under Applicable Securities Laws;

(q)      
“NI 45-106” means National Instrument 45-106 in the form adopted by the
securities commissions in all provinces and territories of Canada (a copy is
available from the Issuer or online at www.bcsc.bc.ca);

(r)      
“Offering” means the sale by the Issuer of up to Cdn.$7.5 million of
Units of the Issuer on the terms set forth in this Agreement. There is no
minimum aggregate Offering and the Issuer reserves the right to decrease or
increase the size of the Offering at its discretion;

(s)      
“Portfolio Manager” means an adviser who manages the investment portfolio
of clients through discretionary authority granted by one or more clients;

(t)      
“Public Record” means information which has been publicly filed by the
Issuer under Applicable Securities Laws;

(u)      
“Principal Canadian Jurisdictions” means Ontario, British Columbia,
Alberta and Manitoba and certain other jurisdictions referred to in Multilateral
Instrument 45-102;

(v)      
  “Regulation D” means Regulation D under the U.S. Securities
  Act; 

(w)      “Regulation
  S” means Regulation S under the U.S. Securities Act; 

(x)       “Share”
  means a common share without par value in the capital of Farallon;

(y)      
“Subscription Agreement” means this subscription agreement between the
Investor and the Issuer, including all Schedules incorporated by reference as it
may be amended or supplemented from time to time;

(z)      
“TSX” means the Toronto Stock Exchange;

(aa)       “Unit” means a
unit consisting of one Share and one Warrant sold together hereunder;

(bb)       “Unit Subscription
Proceeds” means $0.40 times the number of Units subscribed for by the
Investor pursuant to this Agreement;

(cc)       “U.S. Person”
means a U.S. Person as defined in Regulation S” (the definition of which
includes, but is not limited to, a natural person resident in the United States
and an estate or trust of which any executor or administrator or trustee,
respectively, is a U.S. Person and any partnership or corporation organized or
incorporated under the laws of the United States); 

(dd)       “U.S. Securities
Act” means the Securities Act of 1933, as amended, of the United
States of America.

(ee)       Warrant” means a
share purchase warrant to be issued pursuant to this Agreement, one of which
will be issued as part of each Unit with the terms described in Section 3;
and

(ff)       “Warrant Share”
refers to the Share to be issued upon exercise of a Warrant.

1.2            
Words and phrases which are used in this Subscription Agreement and all
Schedules thereto and which are defined in NI 45-106 shall have the meaning
ascribed thereto in NI 45-106, unless otherwise specifically defined in Section
1.1 of this Subscription Agreement.

- 6 -

	2. 	
      Prospectus Exempt Subscription
  Commitment

2.1            
The undersigned (the “Investor”) hereby irrevocably subscribes for and agrees to
purchase from Farallon Resources Ltd.. (herein “Farallon” or the “Issuer”),
subject to the terms and conditions set forth herein, that number of Units of
the Issuer set out above the Investor’s name on the execution page 2 of this
Subscription Agreement at the price of Cdn.$0.40 per Unit. Subject to the terms
hereof, this Subscription will be deemed to have been made and be effective only
upon its acceptance by the Issuer.

	3. 	
      Description of Securities – Share and a
    Warrant

3.1            
Each Unit consists of one Share and one Warrant.

3.2            
Each Warrant will entitle the Investor to purchase one Warrant Share, subject to
sub-paragraph 3.4, for a 24-month period after the Closing Date at a price of
$0.60 per Warrant Share. 

3.3            
The Warrants to be issued to the Investor pursuant to this Agreement will be
governed by the terms and conditions set out in the certificates representing
the Warrants (the “Warrant Certificates”) which will be delivered to the
Investor at Closing. The Warrant Certificate will contain, among other things,
provision for the appropriate adjustment in a class, number and exercise price
of the Warrant Shares upon the occurrence of certain events, including any
subdivision, consolidation or re-classification of the common shares of the
Issuer or payments of stock dividends or upon the merger or re-organization of
the Issuer. Each warrant will be represented by two certificates, one for 40%
and one for 60% of the warrants purchased hereunder and which certificates will
be dealt with in accordance with sub-paragraph 3.4.

3.4            
If the full Offering is completed, then 40% of each holder’s Warrants may be
exercised without restriction and the exercise of the 60% balance of the
Warrants will be subject to prior shareholders’ approval by Farallon’s
shareholders, which approval will be sought at a meeting in December, 2006. In
the event that shareholders’ approval is not obtained for exercise of the 60%
portion , despite Farallon’s reasonable efforts to secure the approval, then the
certificate representing the 60% portion of the warrants will be cancelled and
the holder will be entitled to receive a payment from the Company of $0.02 for
each such cancelled 60% portion of the Warrants. If less than the full offering
is completed, the portion of each Warrant which is subject to Shareholders’
approval will be reduced proportionately, as will the cash compensation payable
in the event shareholders’ approval for the lesser Warrant proportion is not
obtained.

	4. 	
      Closing

4.1            
The Investor will deliver to the offices of the Issuer aggregate subscription
funds and subscription documents completed in accordance with the instructions
on the face page of this Agreement and arrange for concurrent delivery of
certified funds. On request by the Issuer, the Investor agrees to complete and
deliver any other documents, questionnaire, notices and undertakings as may
possibly be required by regulatory authorities, stock exchanges and Applicable
Securities Laws to complete the transactions contemplated by this Agreement.
Delivery of the Units will be completed by the Issuer at the offices of Lang
Michener LLP, Barristers & Solicitors, counsel to Farallon, 1500, 1055 W.
Georgia Street, Vancouver, B.C. V6E 4N7 on the Closing Date on a date following
permission of the TSX at which time certificates representing the Units will be
available against payment of funds for delivery to the Investor as the Investor
shall instruct. The Investor hereby waives receiving any prior notice of
Closing.

	5. 	
      Investor’s Acknowledgements – Regarding Risk,
      Restrictions, Independent Advice

5.1            
The Investor represents and warrants and acknowledges and agrees with (on its
own behalf and, if applicable, on behalf of each beneficial purchaser for whom
the Investor is contracting hereunder) the Issuer that:

(a)      
its decision to execute this Subscription and purchase the Units agreed to be
purchased hereunder has not been based upon any oral or written representation
as to fact or otherwise made by or on behalf of

- 7 -

the Issuer, and that its decision is
based entirely upon its review of information about the Issuer in the Public
Record;

(b)      
no prospectus has been filed by the Issuer with any securities commission or
similar authority, in connection with the issuance of the Units, and the
issuance and the sale of the Units is subject to such sale being exempt from the
prospectus/registration requirements under Applicable Securities Laws and
accordingly:

(i)       the Investor is restricted
from using certain of the civil remedies available under such legislation;

(ii)       the Investor may not
receive information that might otherwise be required to be provided to it under
such legislation; and

(iii)       the Issuer is relieved
from certain obligations that would otherwise apply under such legislation;

(c)      
the Investor (or others for whom the Investor is contracting hereunder) has been
advised to consult its own legal advisors with respect to the merits and risks
of an investment in the Units and with respect to applicable resale restrictions
and it (or others for whom it is contracting hereunder) is solely responsible
(and the Issuer is in no way responsible) for compliance with applicable resale
restrictions;

(d)      
to the knowledge of the Investor, the sale of the Units was not accompanied by
any advertisement;

(e)      
the offer made by this Subscription is irrevocable (subject to the right of the
Issuer to terminate this Subscription) and requires acceptance by the
Issuer;

(f)      
this Subscription is not enforceable by the Investor unless it has been accepted
by the Issuer and the Investor waives any requirement on the Issuer’s behalf to
communicate immediately its acceptance of this Subscription to the Investor;

(g)      
the Units are speculative investments which involve a substantial degree of
risk;

(h)      
the Investor is sophisticated in financial investments, has had access to and
has received all such information concerning the Issuer that the Investor has
considered necessary in connection with the Investor’s investment decision and
the Investor will not receive an offering memorandum or similar disclosure
document;

(i)      
the subscription proceeds will be available to the Issuer on Closing and this
subscription is not conditional on any other subscription completing;

(j)      
no agency, governmental authority, regulatory body, stock exchange or other
entity has made any finding or determination as to the merit for investment of,
nor have any such agencies or governmental authorities made any recommendation
or endorsement with respect to, the Units; and

(k)      
the Issuer will rely on the representations and warranties made herein or
otherwise provided by the Investor to the Issuer in completing the sale and
issue of the Units to the Investor. 

(Investors outside of Canada, go to
Section 6, subparagraph 6.2)

5.2            
The Investor hereby acknowledges and agrees that the subscription proceeds,
subject to any statutory rights of the Investor, will be immediately advanced to
the Issuer prior to the Closing Date and held by it pending closing or for
return if for any reason closing does not occur. 

- 8 -

5.3            
The Investor hereby agrees that with respect to any personal information
provided in this document or otherwise received by or in possession of the
Issuer (“Personal Information”), the Investor hereby consents to 

(a) the disclosure of any Personal
Information to the TSX and such securities commissions as may have jurisdiction
over the Issuer; and

(b) the further collection, use and
disclosure of any Personal Information by the aforesaid regulator authorities
for the discharge of their regulatory functions.

	6. 	
      Investor’s Exemption
Status

6.1            
The Investor, by its execution of this Subscription Agreement, hereby further
represents, warrants to, and covenants with, the Issuer (which representations,
warranties and covenants shall survive the Closing of the Offering) that the
Investor is purchasing the Units as principal for its own account, it is
purchasing such Units not for the benefit of any other person, and not with a
view to the resale or distribution of the Units and one of the following
Exemptions applies to the Investor: 

	 	(a) 	
      Insiders’ Family, Close Friends and Business
      Associates Exemption

	 	 	 	 
	 		
      The Investor is:

	 	 	 	 
	 		(i) 	
      a director, executive officer or control person of the
      Issuer, or of an affiliate of the Issuer,

	 	 	 	 
	 		(ii) 	
      a spouse, parent, grandparent, brother, sister or child
      of a director, executive officer or control person of the Issuer, or of an
      affiliate of the Issuer,

	 	 	 	 
	 		(iii) 	
      a parent, grandparent, brother, sister or child of the
      spouse of a director, executive officer or control person of the Issuer or
      of an affiliate of the Issuer,

	 	 	 	 
	 		(iv) 	
      a close personal friend of a director, executive officer
      or control person of the Issuer, or of an affiliate of the
  Issuer,

	 	 	 	 
	 		(v) 	
      a close business associate of a director, executive
      officer or control person of the Issuer, or of an affiliate of the
      Issuer,

	 	 	 	 
	 		(vi) 	
      a founder of the Issuer or a spouse, parent, grandparent,
      brother, sister, child, close personal friend or close business associate
      of a founder of the Issuer,

	 	 	 	 
	 		(vii) 	
      a parent, grandparent, brother, sister or child of a
      spouse of a founder of the Issuer,

	 	 	 	 
	 		(viii) 	
      a person of which a majority of the voting securities are
      beneficially owned by, or a majority of the directors are, persons
      described in paragraphs (i) to (vii), or

	 	 	 	 
	 		(ix) 	
      a trust or estate of which all of the beneficiaries or a
      majority of the trustees or executors are persons described in paragraphs
      (i) to (vii);

	 	 	 	 
	 		
      (NOT AVAILABLE FOR RESIDENTS IN ONTARIO OR
      SASKATCHEWAN)

	 	 	 	 
	 	(b) 	
      Minimum Amount Exemption

	 	 	 	 
	 		(i)            
      The aggregate acquisition cost of purchasing the Units will not be less
      than Cdn.$150,000 paid in cash at the time of purchase, and the Investor
      has not been created or used solely to purchase or hold the Units in
      reliance on this Exemption;

- 9 -

	 	(c) 	
      Accredited Investor Exemption

	 	 	 	 
	 		
      The Investor is an “Accredited Investor” and the Investor
      has properly completed and duly executed the Representation Letter for
      Accredited Investors attached to this Subscription Agreement as Schedule A
      indicating the means by which the Investor is an Accredited Investor and
      confirms the truth and accuracy of all statements made by the Investor in
      such certificate; or

	 	 	 	 
	 	(d) 	
      For residents of Ontario only, the Investor is:

	 	 	 	 
	 		(i) 	
      a founder of the Issuer,

	 	 	 	 
	 		(ii) 	
      an affiliate of a founder of the Issuer,

	 	 	 	 
	 		(iii) 	
      a spouse, parent, brother, sister, grandparent or child
      of an executive officer, director or founder of the Issuer, or

	 	 	 	 
	 		(iv) 	
      a person that is a control person of the
  Issuer.

	6.2 	
      Investors Outside of
Canada

If the Investor is resident in a jurisdiction outside of Canada
it acknowledges and certifies that:

(a)      
no securities commission or similar regulatory authority has reviewed or passed
on the merits of the Units;

(b)      
there is no government or other insurance covering the Units;

(c)      
there are risks associated with the purchase of the Units;

(d)      
there are restrictions on the Investor’s ability to resell the Units and it is
the responsibility of the Investor to determine what those restrictions are and
to comply with them before selling the Units; and

(e)      
the Issuer has advised the Investor that the Issuer is relying on an exemption
from the requirements to provide the Investor with a prospectus and to sell the
Units through a person registered to sell the Units under Applicable Securities
Laws and, as a consequence of acquiring securities pursuant to this exemption,
certain protections, rights and remedies provided by Applicable Securities Laws,
including statutory rights of rescission or damages, will not be available to
the Investor;

(f)      
the Investor is knowledgeable of securities legislation having application or
jurisdiction over the Investor and the Offering (other than the laws of Canada
and the United States) which would apply to this subscription;

(g)      
the Investor is purchasing the Units pursuant to exemptions from any prospectus,
registration or similar requirements under the laws of that International
Jurisdiction and or, if such is not applicable, the Investor is permitted to
purchase the Investor’s Units, and the Issuer has no filing obligations in the
International Jurisdiction;

(h)      
no laws in the International Jurisdiction require the Issuer to make any filings
or seek any approvals of any kind whatsoever from any regulatory authority of
any kind whatsoever in the International Jurisdiction;

(i)      
the Units are being acquired for investment only and not with a view to resale
and distribution within the International Jurisdiction; and

- 10 -

(j)      
if it is a resident of the United Kingdom then it complies with the provisions
of §7.1 of this Subscription Agreement as if it were a resident of British
Columbia and it is a person of the described in Article 11(3) of the
Financial Services Act, 1986 (Investment Advertisements)
(Exemptions) Order 1996, as amended, and is a person whose ordinary activities
involve it in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purpose of its business.

	6.3 	
      Other General Representations Applicable to All
      Investors

(a)      
the Investor has no knowledge of a “material fact” or “material change”, as
those terms are defined in Applicable Securities Laws, in respect of the affairs
of the Issuer that has not been generally disclosed to the public;

(b)      
the Investor (and, if applicable, any beneficial purchaser for whom it is
acting) is resident in the jurisdiction set out under the heading “Name and
Address of Investor” on the execution page of this Subscription Agreement;

(c)      
the Investor has the legal capacity and competence to enter into and execute
this Subscription and to take all actions required pursuant hereto and, if the
Investor is a corporation, it is duly incorporated and validly subsisting under
the laws of its jurisdiction of incorporation and all necessary approvals by its
directors, shareholders and others have been obtained to authorize execution of
this Subscription Agreement on behalf of the Investor;

(d)      
the entering into of this Subscription Agreement and the transactions
contemplated hereby do not result in the violation of any of the terms and
provisions of any law applicable to, or the constating documents of, the
Investor or of any agreement, written or oral, to which the Investor may be a
party or by which the Investor is or may be bound;

(e)      
the Investor has duly and validly authorized, executed and delivered this
Subscription Agreement and understands it is intended to constitute a valid and
binding agreement of the Investor enforceable against the Investor;

(f)      
in connection with the Investor’s investment in the Units, the Investor has not
relied upon the Issuer for investment, legal or tax advice, and has, in all
cases sought the advice of the Investor’s own personal investment advisor, legal
counsel and tax advisers or has waived its rights thereto and the Investor is
either experienced in or knowledgeable with regard to the affairs of the Issuer,
or either alone or with its professional advisors is capable, by reason of
knowledge and experience in financial and business matters in general, and
investments in particular, of evaluating the merits and risks of an investment
in the Units and is able to bear the economic risk of the investment and it can
otherwise be reasonably assumed to have the capacity to protect its own interest
in connection with the investment in the Units;

(g)      
no person has made to the Investor any written or oral representations: 

(i) that any person will resell or
repurchase the Units; 

(ii) that any person will refund the
purchase price for the Units; 

(iii) as to the future price or value
of the Units; or

(iv)       that the Units will be
listed and posted for trading on any stock exchange or that application has been
made to list the Units of the Issuer on any stock exchange;

U.S. Investor Representations and Warranties

(h)      
The Investor represents and warrants either:

- 11 -

	 	(i) 	
      The Investor

	 	 	 	 
	 		(A) 	
      is not, and is not purchasing the Units for the account
      of or benefit of, a U.S. Person or a person in the United
States;

	 	 	 	 
	 		(B) 	
      was not offered Units in the United States; and

	 	 	 	 
	 		(C) 	
      did not execute or deliver this Agreement in the United
      States; OR

	 	 	 	 
	 	(ii) 	
      The Investor a U.S. Person who is an "accredited
      investor" as defined in Rule 501(a) of Regulation D of the U.S. Securities
      Act; and

in the case of paragraph 6.3(h)(ii)
above, the Investor has duly completed, executed and delivered to the Issuer the
Certificate of U.S. Purchaser attached hereto as Schedule B, and represents,
warrants and covenants to the Issuer as to the accuracy of all matters set out
therein as at the date hereof and on the Closing Date;

(i)      
Unless the Investor completes the Certificate of U.S. Purchaser included herein
as Schedule B in connection with a purchase of the Units made in reliance on
Regulation D, the Investor additionally represents and warrants that:

(i)       the Investor does not have
any agreement or understanding (either written or oral) with any U.S. Person or
a person in the United States respecting:

(A)       the transfer or assignment
of any rights or interests in any of the Units;

(B)       the division of profits,
losses, fees, commissions, or any financial stake in connection with this
Subscription; or

(C)       the voting of the Units;
and

(ii)       the Investor has no
intention to distribute either directly or indirectly any of the Units in the
United States or to U.S. Persons; and

(iii)       the Investor represents
that the current structure of this transaction and all transactions and
activities contemplated hereunder is not a scheme to avoid the registration
requirements of the U.S. Securities Act;

(j)      
The Investor acknowledges and agrees that:

(i)       the Units have not been
registered under the U.S. Securities Act, and may not be offered or sold in the
United States or to a U.S. Person unless an exemption from such registration
requirements is available;

(ii)       the Issuer has no
obligation or present intention of filing a registration statement under the
U.S. Securities Act in respect of the Units; and

(iii)       the Investor will not
engage in any directed selling efforts (as defined by Regulation S under the
U.S. Securities Act) in the United States in respect of the Units, which
would include any activities undertaken for the purpose of, or that could
reasonably be expected to have the effect of conditioning the market in the
United States for the resale of the Units;

- 12 -

Compliance with Resale Laws

(k)      
the Investor will comply with Applicable Securities Laws and, if applicable,
Rule 904 of Regulation S concerning the resale of the Units and all related
restrictions (and the Issuer is not in any way responsible for such compliance)
and shall speak and consult with its own legal advisors with respect to such
compliance;

Own Expense

(l)      
the Investor acknowledges and agrees that all costs and expenses incurred by the
Investor (including any fees and disbursements of any special counsel or other
advisors retained by the Investor) relating to the purchase of the Units shall
be borne by the Investor;

International Investor

(m)      
if the Investor is resident of an International Jurisdiction (meaning herein a
country other than Canada or the United States) then:

(i)       the Investor is
knowledgeable of securities legislation having application or jurisdiction over
the Investor and the Offering (other than the laws of Canada and the U.S.) which
would apply to this subscription;

(ii)       the Investor is
purchasing the Units pursuant to exemptions from any prospectus, registration or
similar requirements under the laws of that International Jurisdiction and or,
if such is not applicable, the Investor is permitted to purchase the Investor’s
Units, and the Issuer has no filing obligations in the International
Jurisdiction;

(iii)       no laws in the
International Jurisdiction require the Issuer to make any filings or seek any
approvals of any kind whatsoever from any regulatory authority of any kind
whatsoever in the International Jurisdiction; and

(iv)       the Units are being
acquired for investment only and not with a view to resale and distribution
within the International Jurisdiction.

	7. 	
      Farallon's Representations

7.1            
The Issuer represents and warrants to the Investor that, as of the date of this
Subscription and at 
Closing hereunder:

(a)      
the Issuer and its subsidiaries are valid and subsisting corporations duly
incorporated and in good standing under the laws of the jurisdictions in which
they are incorporated, continued or amalgamated;

(b)      
the Issuer has complied, or will comply, with all applicable corporate and
securities laws and regulations in connection with the offer, sale and issuance
of the Units, and in connection therewith has not engaged in any “direct selling
efforts,” as such term is defined in Regulation S, or any “general solicitation
or general advertising” as described in Regulation D;

(c)      
the Issuer and its subsidiaries are the beneficial owners of the properties,
business and assets or the interests in the properties, business or assets
referred to in its Public Record and except as disclosed therein, all agreements
by which the Issuer or its subsidiaries holds an interest in a property,
business or asset are in good standing according to their terms, and the
properties are in good standing under the applicable laws of the jurisdictions
in which they are situated; 

(d)      
no Offering Memorandum has been or will be provided to the Investor;

- 13 -

(e)      
the financial statements comprised in the Public Record accurately reflect the
financial position of the Issuer as at the date thereof, and no adverse material
changes in the financial position of the Issuer have taken place since the date
of the Issuer’s last financial statements except as filed in the Public
Record;

(f)      
the creation, issuance and sale of the Units by the Issuer does not and will not
conflict with and does not and will not result in a breach of any of the terms,
conditions or provisions of its constating documents or any agreement or
instrument to which the Issuer is a party;

(g)      
the Units will, at the time of issue, be duly allotted, validly issued, fully
paid and non-assessable and will be free of all liens, charges and encumbrances
and the Issuer will reserve sufficient Units in the treasury of the Issuer to
enable it to issue the Units;

(h)      
this Subscription when accepted has been duly authorized by all necessary
corporate action on the part of the Issuer and, subject to acceptance by the
Issuer, constitutes a valid obligation of the Issuer legally binding upon it and
enforceable in accordance with its terms;

(i)      
neither the Issuer nor any of its subsidiaries is a party to any actions, suits
or proceedings which could materially affect its business or financial
condition, and to the best of the Issuer’s knowledge no such actions, suits or
proceedings have been threatened as at the date hereof, except as disclosed in
the Public Record;

(j)      
no order ceasing or suspending trading in the securities of the Issuer nor
prohibiting sale of such securities has been issued to the Issuer or its
directors, officers or promoters and to the best of the Issuer’s knowledge no
investigations or proceedings for such purposes are pending or threatened;
and

(k)      
except as set out in the Public Record or herein, no person has any right,
agreement or option, present or future, contingent or absolute, or any right
capable of becoming a right, agreement or option for the issue or allotment of
any unissued common Units of the Issuer or any other security convertible or
exchangeable for any such Units or to require the Issuer to purchase, redeem or
otherwise acquire any of the issued or outstanding Units of the Issuer.

	8. 	
      Covenants of Farallon

8.1      The Issuer hereby covenants
with each Investor that it will:

(a)      
offer, sell, issue and deliver the Units pursuant to exemptions from the
prospectus filing, registration or qualification requirements of Applicable
Securities Laws and otherwise fulfil all legal requirements required to be
fulfilled by the Issuer (including without limitation, compliance with all
Applicable Securities Laws of the Principal Canadian Jurisdictions) in
connection with the Offering;

(b)      
use its best efforts to maintain its status as a “reporting issuer” not in
default in Ontario, British Columbia, Alberta, New Brunswick and Manitoba;

(c)      
within the required time, file with the TSX any documents, reports and
information, in the required form, required to be filed by Applicable Securities
Laws in connection with the Offering, together with any applicable filing fees
and other materials; 

- 14 -

(d)      
the Issuer will use reasonable commercial efforts to satisfy as expeditiously as
possible any conditions of the TSX required to be satisfied prior to the TSX's
acceptance of the Issuer’s notice of the Offering; and

(e)      
use its best efforts to obtain all necessary approvals for this Offering.

	9. 	
      No Contractual Right of Action for
    Rescission

9.1            
The Investor acknowledges that it is purchasing the Units issued hereunder
pursuant to an exemption which does not require delivery to the Investor of an
offering memorandum, that it will not receive any Offering Memorandum in
connection with this Subscription and therefore is not entitled to contractual
rights of action or rescission.

	10. 	
      Resale Restrictions and Legending of
  Units

10.1            
The Investor acknowledges that any resale of the Units will be subject to resale
restrictions contained in the Applicable Securities Laws applicable to the
Issuer, the Investor or any proposed transferee. Investors with a Canadian or
international address will receive a certificate bearing the following legend
imprinted thereon:

“Unless permitted under securities
legislation, the holder of the securities must not trade the securities before
[four months plus one day from the Closing Date]”; and

“The securities represented by this
certificate are listed on the Toronto Stock Exchange (“TSX”); however, the said
securities cannot be traded through the facilities of TSX since they are not
freely transferable, and consequently any certificate representing such
securities is not ‘good delivery’ in settlement of transactions on the TSX.”

10.2            
Investors who are U.S Persons, have an address in the United States, or who
execute this Agreement in the United States (which the Issuer will presume
absent other evidence), will receive a certificate bearing the following legend
imprinted thereon:

“The securities represented hereby have
not been and will not be registered under the United States Securities Act of
1933, as amended (the “U.S. Securities Act”). The holder hereof, by purchasing
such securities, agrees for the benefit of the Issuer that such securities may
be offered, sold, pledged or otherwise transferred only (a) to the Issuer, (b)
outside the United States in accordance with Rule 904 of Regulation S under the
U.S. Securities Act if applicable, (c) inside the United States (1) pursuant to
the exemption from the registration requirements under the U.S. Securities Act
provided by Rule 144 thereunder, if available, and in accordance with applicable
State securities laws, or (2) in a transaction that does not require
registration under the U.S. Securities Act or any applicable State laws and
regulations governing the offer and sale of securities, and the holder has prior
to such sale furnished to the Issuer an opinion of counsel or other evidence of
exemption in form and substance reasonably satisfactory to the Issuer. Provided
that if the Issuer is a “foreign issuer” as that term is defined by Regulation S
of the U.S. Securities Act at the time of sale, a new certificate bearing no
restrictive legend, delivery of which will constitute “Good Delivery” may be
obtained form the transfer agent, upon delivery of this certificate and a duly
executed declaration, in form satisfactory to the Issuer and its transfer agent,
to the effect that the sale of the securities represented hereby is being made
in compliance with Rule 904 of Regulation S under the U.S. Securities Act.”

and that any certificate representing any Units issued in
exchange therefor or in substitution thereof will bear the same legend,
provided, however, that if the Issuer is a “foreign issuer” as that term
is defined by Regulation S under the U.S. Securities Act at the time of sale of
any Units, a new certificate bearing no legend may be obtained from the transfer
agent upon delivery of the certificate evidencing such securities and a duly
executed declaration, in a form satisfactory to the Issuer and the transfer
agent to the effect that

- 15 -

the sale of the securities is being made in compliance with
Rule 904 of Regulation S under the U.S. Securities Act.

	11. 	
      Consent to Disclosure of
  Information

11.1            
The Investor acknowledges and consents to the release by the Issuer of
information regarding the Investor's subscription including the Investor's name,
address, telephone number, e-mail address and the number of Units purchased, in
compliance with securities regulatory policies to regulatory authorities in the
Principal Canadian Jurisdictions and the Investor waives to the extent lawful,
its rights under any privacy legislation.

	12. 	
      General

12.1            
Time is of the essence hereof.

12.2            
Neither this Subscription Agreement nor any provision hereof shall be modified,
changed, discharged or terminated except by an instrument in writing signed by
the party against whom any waiver, change, discharge or termination is
sought.

12.3            
The parties hereto shall execute and deliver all such further documents and
instruments and do all such acts and things as may either before or after the
execution of this Subscription Agreement be reasonably required to carry out the
full intent and meaning of this Subscription Agreement.

12.4            
This Subscription Agreement shall be subject to, governed by and construed in
accordance with the laws of British Columbia and the laws of Canada as
applicable therein and the Investor hereby irrevocably attorns to the
jurisdiction of the Courts situate therein.

12.5            
This Subscription Agreement may not be assigned by any party hereto.

12.6            
Without limitation, this Subscription Agreement and the transactions
contemplated hereby are conditional upon and subject to the Issuer receiving the
acceptance of the TSX for this Subscription Agreement and the transactions
contemplated hereby.

12.7            
The Issuer shall be entitled to rely on delivery of a facsimile copy of this
Subscription Agreement, and acceptance by the Issuer of a facsimile copy of this
Subscription Agreement shall create a legal, valid and binding agreement between
the Investor and the Issuer in accordance with its terms.

12.8            
This Subscription Agreement may be signed by the parties in as many counterparts
as may be deemed necessary, each of which so signed shall be deemed to be an
original, and all such counterparts together shall constitute one and the same
instrument.

12.9            
This Subscription Agreement is deemed to be entered into on the acceptance date
by Farallon, notwithstanding its actual date of execution by the Investor.

12.10           This
Subscription Agreement, including, without limitation, the representations,
warranties, acknowledgements and covenants contained herein, shall survive and
continue in full force and effect and be binding upon the parties
notwithstanding the completion of the purchase of the Units by the Investor
pursuant hereto, the completion of the issue of Units of the Issuer and any
subsequent disposition by the Investor of the Units.

12.11           The
invalidity or unenforceability of any particular provision of this Subscription
shall not affect or limit the validity or enforceability of the remaining
provisions of this Subscription.

12.12           Except
as expressly provided in this Subscription and in the agreements, instruments
and other documents contemplated or provided for herein, this Subscription
contains the entire agreement between the parties with respect to the sale of
the Units and there are no other terms, conditions, representations or
warranties, whether expressed, implied, oral or written, by statute, by common
law, by the Issuer, by the Investor, or by anyone else.

- 16 -

12.13           All
monetary amounts are Canadian Dollars.

SCHEDULE A

REPRESENTATION LETTER
(FOR ACCREDITED
INVESTORS)

TO:            
Farallon Resources Ltd. (“Farallon”)

In connection with the purchase of Units in the capital of
Farallon (“Units”) by the undersigned subscriber or, if applicable, the
principal on whose behalf the undersigned is purchasing as agent (the
“Subscriber” for the purposes of this Schedule A), the Subscriber hereby
represents, warrants, covenants and certifies to Farallon that:

	1. 	
      The Subscriber is purchasing the Units as principal for
      its own account or is deemed to be acting as principal pursuant to
      National Instrument 45-106 entitled “Properties and Registration
      Exemptions” (“NI 45-106”);

	 	 
	2. 	
      The Subscriber is an “accredited investor” within the
      meaning of NI 45-106 by virtue of satisfying the indicated criterion as
      set out in Appendix “A” to this Representation Letter; and

	 	 
	3. 	
      Upon execution of this Schedule A by the Subscriber, this
      Schedule A shall be incorporated into and form a part of the Subscription
      Agreement.

Dated: _________________________, 2006.

	 	 
	 	Print name of Subscriber 
	 	 
	 	By: 	 
	 	               
    	Signature
	 	 	 
	 	               
    	Print name of Signatory (if different from Subscriber)
	 	 	 
	 	           
         Title 

IMPORTANT: PLEASE INITIAL APPENDIX “A” ON THE NEXT
PAGE

APPENDIX “A”

TO SCHEDULE A

Accredited Investor - (defined in NI 45-106) means:

	 ̈	(a)       an individual who, either
      alone or with a spouse, beneficially owns, directly or indirectly, financial
      assets having an aggregate realizable value that before taxes, but net of
      any related liabilities, exceeds $1,000,000;
	 	 
	 ̈	(b)       an individual whose net income
      before taxes exceeded $200,000 in each of the 2 most recent calendar years
      or whose net income before taxes combined with that of a spouse exceeded
      $300,000 in each of the 2 most recent calendar years and who, in either
      case, reasonably expects to exceed that net income level in the current
      calendar year;
	 	 
	 ̈	(c)       an individual who, either
      alone or with a spouse, has net assets of at least $5,000,000;
	 	 
	 ̈	(d)       a person, other than an individual
      or investment fund, that has net assets of at least $5,000,000 as shown
      on its most recently prepared financial statements;
	 	 
	 ̈	(e)       a person in respect of which all
      of the owners of interests, direct, indirect or beneficial, except the voting
      securities required by law to be owned by directors, are persons that are
      accredited investors;
	 	 
	 ̈	 (f)       a Canadian financial institution,
      or a Schedule III bank;
	 	 
	 ̈	 (g)       the Business Development Bank
      of Canada incorporated under the Business Development Bank of Canada
      Act (Canada);
	 	 
	 ̈	(h)       a subsidiary of any person
      referred to in paragraphs (f) or (g), if the person owns all of the voting
      securities of the subsidiary, except the voting securities required by law
      to be owned by directors of that subsidiary;
	 	 
	 ̈	(i)       a person registered under
      the securities legislation of a jurisdiction of Canada as an adviser or
      dealer, other than a person registered solely as a limited market dealer
      under one or both of the Securities Act (Ontario) or the Securities
      Act (Newfoundland and Labrador);
	 	 
	 ̈	(j)       an individual registered
      or formerly registered under the securities legislation of a jurisdiction
      of Canada as a representative of a person referred to in paragraph (i);
	 	 
	 ̈	(k)       the Government of Canada
      or a jurisdiction of Canada, or any crown corporation, agency or wholly
      owned entity of the Government of Canada or a jurisdiction of Canada;
	 	 
	 ̈	(l)       a municipality, public board or
      commission in Canada and a metropolitan community, school board, the Comité
      de gestion de la taxe scolaire de l’île de Montréal or an
      intermunicipal management board in Québec;
	 	 
	 ̈	(m)       any national, federal, state,
      provincial, territorial or municipal government of or in any foreign jurisdiction,
      or any agency of that government;
	 	 
	 ̈	(n)       a pension fund that is regulated
      by either the Office of the Superintendent of Financial Institutions (Canada)
      or a pension commission or similar regulatory authority of a jurisdiction
      of Canada;
	 	 
	 ̈	(o)       an investment fund that distributes
      or has distributed its securities only to 

(i)       a
  person that is or was an accredited investor at the time of the distribution;

- 2 -

(ii)       a person that
acquires or acquired securities in the circumstances referred to in Sections
2.10 [Minimum amount investment], and 2.19 [Additional investment in
investment funds] of NI 45-106; OR

(iii)       a person described
  in paragraph (i) or (ii) that acquires or acquired securities under Section
  2.18 [Investment fund reinvestment] of NI 45-106; 
 
	 ̈	(p)       an investment fund that distributes
      or has distributed securities under a prospectus in a jurisdiction of Canada
      for which the regulator or, in Québec, the securities regulatory authority,
      has issued a receipt;
	 	 
	 ̈	(q)       a trust company or trust corporation
      registered or authorized to carry on business under the Trust and Loan
      Companies Act (Canada) or under comparable legislation in a jurisdiction
      of Canada or a foreign jurisdiction, acting on behalf of a fully managed
      account managed by the trust company or trust corporation, as the case may
      be;
	 	 
	 ̈	(r)       a person acting on behalf of a
      fully managed account managed by that person, if that person

(i)       is registered or authorized
  to carry on business as an adviser or the equivalent under the securities legislation
  of a jurisdiction of Canada or a foreign jurisdiction; and

(ii)       in Ontario, is purchasing
  a security that is not a security of an investment fund;

	 ̈	(s)       a registered charity under the
      Income Tax Act (Canada) that, in regard to the trade, has obtained
      advice from an eligibility adviser or an adviser registered under the securities
      legislation of the jurisdiction of the registered charity to give advice
      on the securities being traded;
	 	 
	 ̈	(t)       an entity organized in a foreign
      jurisdiction that is analogous to any of the entities referred to in paragraphs
      (f) to (i) or paragraph (n) in form and function;
	 	 
	 ̈	(u)       an investment fund that is advised
      by a person registered as an adviser or a person that is exempt from registration
      as an adviser; OR
	 	 
	 ̈	(v)       a person that is recognized or
      designated by the securities regulatory authority or, except in Ontario
      and Québec, the regulator as

(i)       an accredited investor;
  or

(ii)       an exempt purchaser in
  Alberta or British Columbia after NI 45-106 comes into force;

and for purposes hereof:.

	(a) 	"Canadian financial
      institution" means 
	  	 	 
	  	(i) 	 an association governed by the
      Cooperative Credit Associations Act (Canada) or a central
      cooperative credit society for which an order has been made under section
      473(1) of the Cooperative Credit Associations Act (Canada),
      or 
	  	 	 
	

      

	(ii) 	 a bank, loan corporation, trust company ,
      trust corporation, insurance company, treasury branch, credit union,
      caisse populaire, financial services cooperative, or league that, in each
      case, is authorized by an enactment of Canada or a jurisdiction of Canada
      to carry on business in Canada or a jurisdiction of Canada;
	  	 	 
	(b) 
	"control person"
      has the meaning ascribed to that term in securities legislation
      except Ontario where "control person" means any person that holds or is
      one of a combination of persons that hold 

	  	 	 
	
	(i)  	a sufficient number of any of the securities of
      an issuer so as to affect materially the control of the issuer,
  or

- 3 -

	 	(ii) 	
      more than 20% of the outstanding voting securities of an
      issuer except where there is evidence showing that the holding of those
      securities does not affect materially the control of that
  issuer;

	(c) 	
      "eligibility adviser" means a person that
      is registered as an investment dealer or in an equivalent category of
      registration under the securities legislation of the jurisdiction of a
      purchaser and authorized to give advice with respect to the type of
      security being distributed;

	 	 	 
	(d) 	
      "executive officer" means, for an issuer,
      an individual who is

	 	 	 
		(i) 	
      a chair, vice-chair or president,

	 	 	 
		(ii) 	
      a vice-president in charge of a principal business unit,
      division or function including sales, finance or production,

	 	 	 
		(iii) 	
      an officer of the issuer or any of its subsidiaries and
      who performs a policy-making function in respect of the issuer,
  or

	 	 	 
		(iv) 	
      performing a policy-making function in respect of the
      issuer;

	 	 	 
	(e) 	
      "financial assets" means (i) cash, (ii)
      securities or (iii) a contract of insurance, a deposit or an evidence of a
      deposit that is not a security for the purposes of securities
      legislation;

	 	 	 
	(f) 	
      "founder" means, in respect of an
      issuer, a person who,

	 	 	 
		(i) 	
      acting alone, in conjunction or in concert with one or
      more persons, directly or indirectly, takes the initiative in founding,
      organizing or substantially reorganizing the business of the issuer,
      and

	 	 	 
		(ii) 	
      at the time of the trade is actively involved in the
      business of the issuer;

	 	 	 
	(g) 	
      "fully managed account" means an account of
      a client for which a person makes the investment decisions if that person
      has full discretion to trade in securities for the account without
      requiring the client's express consent to a transaction;

	 	 	 
	(h) 	
      "investment fund" has the meaning ascribed
      thereto in National Instrument 81-106 - Investment Fund Continuous
      Disclosure;

	 	 	 
	(i) 	
      "person" includes

	 	 	 
		(i) 	
      an individual,

	 	 	 
		(ii) 	
      a corporation,

	 	 	 
		(iii) 	
      a partnership, trust, fund and an association, syndicate,
      organization or other organized group of persons, whether incorporated or
      not, and

	 	 	 
		(iv) 	
      an individual or other person in that person's capacity
      as a trustee, executor, administrator or personal or other legal
      representative;

	 	 	 
	(j) 	
      "related liabilities" means

	 	 	 
		(i) 	
      liabilities incurred or assumed for the purpose of
      financing the acquisition or ownership of financial assets, or

	 	 	 
		(ii) 	
      liabilities that are secured by financial
  assets.

	 	 	 
	(k) 	
      "spouse" means, an individual
who,

	 	 	 
		(i) 	
      is married to another individual and is not living
      separate and apart within the meaning of the Divorce Act (Canada),
      from the other individual,

	 	 	 
		(ii) 	
      is living with another individual in a marriage-like
      relationship, including a marriage-like relationship between individuals
      of the same gender, or

- 4 -

	 	(iii) 	
      in Alberta, is an individual referred to in paragraph (i)
      or (ii) immediately above or is an adult interdependent partner within the
      meaning of the Adult Interdependent Relationships Act (Alberta);
      and

	(l) 	
      "subsidiary" means an issuer that is
      controlled directly or indirectly by another issuer and includes a
      subsidiary of that subsidiary;

Affiliated Entities and Control

	1. 	
      An issuer is considered to be an affiliate of another
      issuer if one of them is a subsidiary of the other, or if each of them is
      controlled by the same person.

	 	 	 
	2. 	
      A person (first person) is considered to control another
      person (second person) if

	 	 	 
		(a) 	
      the first person, directly or indirectly, beneficially
      owns or exercises control or direction over securities of the second
      person carrying votes which, if exercised, would entitle the first person
      to elect a majority of the directors of the second person, unless the
      first person holds the voting securities only to secure an
    obligation,

	 	 	 
		(b) 	
      the second person is a partnership, other than a limited
      partnership, and the first person holds more than 50% of the interests in
      the partnership, or

	 	 	 
		(c) 	
      the second person is a limited partnership and the
      general partner of the limited partnership is the first
  person.

SCHEDULE B

CERTIFICATE OF U.S. PURCHASER

This form must be completed by United States
investors.

A “United States investor” is any person in the United States
or any “U.S. person” as defined in Regulation S under the United States
Securities Act of 1933, as amended. This will include (a) any natural person
resident in the United States; (b) any partnership or corporation organized or
incorporated under the laws of the United States; (c) any trust of which any
trustee is a U.S. person; (d) any partnership or corporation organized outside
the United States by a U.S. person principally for the purpose of investing in
securities not registered under the U.S. Securities Act of 1933, unless it is
organized or incorporated, and owned, by accredited investors who are not
natural persons, estates or trusts; (e) any estate of which any executor or
administrator is a U.S. person.

	2. 	
      The Investor covenants, represents and warrants to
      Farallon Resources Ltd. (the “Issuer”) that:

	 	 	 
		(a)       it
      understands that the Units have not been and will not be registered under
      the U.S. Securities Act and that the sale contemplated hereby is being
      made in reliance on the exemption from such registration requirement
      provided by Rule 506 of Regulation D;
	 	 	 
		(b)       it
      acknowledges that it has not purchased the Units as a result of any form
      of general solicitation or general advertising, including advertisements,
      articles, notices or other communications published in any newspaper,
      magazine or similar media or broadcast over radio, or television, or any
      seminar or meeting whose attendees have been invited by general
      solicitation or general advertising;
	 	 	 
		(c)       it
      understands and agrees that there may be material tax consequences to the
      Investor of an acquisition, disposition or exercise of any of the Units.
      The Issuer gives no opinion and makes no representation with respect to
      the tax consequences to the Investor under United States, state, local or
      foreign tax law of the undersigned’s acquisition or disposition of such
      securities. In particular, no determination has been made whether the
      Issuer will be a “passive foreign investment company” (“PFIC”) within the
      meaning of Section 1291 of the United States Internal Revenue
    Code;
	 	 	 
	
	(d)       it understands and
      agrees that the financial statements of the Issuer have been prepared in
      accordance with Canadian generally accepted accounting principles, which
      differ in some respects from United States generally accepted accounting
      principles, and thus may not be comparable to financial statements of
      United States companies;

	 	 	 
		(e)       it
      understands and acknowledges that upon the issuance thereof, and until
      such time as the same is no longer required under the applicable
      requirements of the U.S. Securities Act or applicable state securities
      laws and regulations, the certificates representing the Units will bear a
      legend in substantially the following form:
	 	 	 
			
      “The securities represented hereby have not been and will
      not be registered under the United States Securities Act of 1933, as
      amended (the “U.S. Securities Act”). The holder hereof, by purchasing such
      securities, agrees for the benefit of the Issuer that such securities may
      be offered, sold, pledged or otherwise transferred only (a) to the Issuer,
      (b) outside the United States in accordance with Rule 904 of Regulation S
      under the U.S. Securities Act if applicable, (c) inside the United Sates
      (1) pursuant to the exemption from the registration requirements under the
      U.S. Securities Act provided by Rule 144 thereunder, if available, and in
      accordance with applicable State securities laws, or (2) in a transaction
      that does not require registration under the U.S. Securities Act or any
      applicable State laws and regulations governing the offer and sale of
      securities, and the holder has prior to such sale furnished to the Issuer
      an opinion of counsel or other evidence of exemption in form and substance
      reasonably satisfactory to Farallon. Provided that if Farallon is a
      “foreign issuer” as that term is defined by Regulation S of the U.S.
      Securities

- 2 -

Act at the time of sale, a new
certificate bearing no restrictive legend, delivery of which will constitute
“Good Delivery” may be obtained form the transfer agent, upon delivery of this
certificate and a duly executed declaration, in form satisfactory to Farallon
and its transfer agent, to the effect that the sale of the securities
represented hereby is being made in compliance with Rule 904 of Regulation S
under the U.S. Securities Act.”

If the Issuer is a “foreign issuer”
within the meaning of Regulation S under the U.S. Securities Act at the time of
sale, a new certificate, which will constitute “good delivery”, will be made
available to the Investor upon provision by the Investor to the transfer agent
of a declaration (in the form attached as Appendix “A”) that the sale of the
securities represented thereby is being made in compliance with Rule 904 of
Regulation S under the U.S. Securities Act. 

(f)      
it consents to the Issuer making a notation on its records or giving instruction
to the registrar and transfer agent of the Issuer in order to implement the
restrictions on transfer set forth and described herein;

(g)       if an individual, it
is a resident of the state or other jurisdiction listed in its address on the
signature page of the Subscription Agreement, or if the Investor is not an
individual, the office of the Investor at which the Investor received and
accepted the offer to purchase the Issuer’s Units is the address listed on the
signature page of the Subscription Agreement.

(h)       it has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of an investment in the Units and it is able to bear the
economic risk of loss of its entire investment;

(i)       the Issuer has
provided to it the opportunity to ask questions and receive answers concerning
the terms and conditions of the offering and it has had access to such
information concerning the Issuer as it has considered necessary or appropriate
in connection with its investment decision to acquire the Units;

(j)       it is acquiring the
Units for its own account, for investment purposes only and not with a view to
any resale, distribution or other disposition of the Units in violation of the
United States securities laws;

(k)      
if it decides to offer, sell or otherwise transfer any of the Units, it will not
offer, sell or otherwise transfer any of such Units directly or indirectly,
unless

(i)         the sale is to
the Issuer;

(ii)   
    the sale is made outside the United States in a
transaction meeting the requirements of Rule 904 of Regulation S under the U.S.
Securities Act and in compliance with applicable local laws and regulations;

(iii)       the sale is made
pursuant to the exemption from the registration requirements under the U.S.
Securities Act provided by Rule 144 thereunder and in accordance with any
applicable state securities or “Blue Sky” laws; or

(iv)       the Units are sold in a
transaction that does not require registration under the U.S. Securities Act or
any applicable state laws and regulations governing the offer and sale of
securities, and, in the case of clauses (ii) or (iv) above, it has prior to such
sale furnished to the Issuer an opinion of counsel or other evidence of
exemption in form and substance reasonably satisfactory to the Issuer;

(l)       It is an “accredited
investor” as defined in Regulation D by virtue of satisfying one or more of the
categories indicated below (please place your initials on the appropriate
line(s)):

	 	____________ 	Category 1. 	A bank, as defined in Section 3(a)(2) of the
      U.S. Securities Act, whether acting in its individual or fiduciary
      capacity; or 

- 3 -

	 	____________ 	Category 2. 	A savings and loan association or other
      institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act,
      whether acting in its individual or fiduciary capacity; or 
	 	 	  	  
	 	____________ 	Category 3. 	A broker or dealer registered pursuant to
      Section 15 of the Securities Exchange Act of 1934; or 
	 	 	  	  
	 	____________ 	Category 4. 	An insurance company as defined in Section
      2(13) of the U.S. Securities Act; or 
	 	 	  	  
	 	____________ 	Category 5. 	An investment company registered under the
      Investment Issuer Act of 1940; or 
	 	 	  	  
	 	____________ 	Category 6. 	A business development company as defined in
      Section 2(a)(48) of the Investment Issuer Act of 1940; or 
	 	 	  	  
	 	____________ 	Category 7. 	A small business investment company licensed by
      the U.S. Small Business Administration under Section 301(c) or (d) of the
      Small Business Investment Act of 1958; or 
	 	 	  	  
	 	____________ 	Category 8. 	A plan established and maintained by a state,
      its political subdivision or any agency or instrumentality of a state or
      its political subdivisions, for the benefit of its employees, with assets
      in excess of US$5,000,000; or 
	 	 	  	  
	 	____________ 	Category 9. 	An employee benefit plan within the meaning of
      the Employee Retirement Income Security Act of 1974 in which
      the investment decision is made by a plan fiduciary, as defined in Section
      3(21) of such Act, which is either a bank, savings and loan association,
      insurance company or registered investment advisor, or an employee benefit
      plan with total assets in excess of US$5,000,000 or, if a self-directed
      plan, the investment decisions are made solely by persons who are
      accredited investors; or 
	 	 	  	  
	 	____________ 	Category 10. 	A private business development company as
      defined in Section 202(a)(22) of the Investment Advisors Act of
      1940; or 
	 	 	  	  
	 	____________ 	Category 11. 	An organization described in Section 501(c)(3)
      of the Internal Revenue Code, a corporation, a Massachusetts
      or similar business trust, or a partnership, not formed for the specific
      purpose of acquiring the Units, with total assets in excess of
      US$5,000,000; or 
	 	 	  	  
	 	 ____________ 	Category 12. 	A director, executive officer or general
      partner of the Issuer; or 
	 	 	  	  
	 	____________ 	Category 13. 	A natural person whose individual net worth, or
      joint net worth with that person’s spouse, at the time of this purchase
      exceeds US$1,000,000; or 
	 	 	  	  
	 	____________ 	Category 14. 	A natural person who had an individual income
      in excess of US$200,000 in each year of the two most recent years or joint
      income with that person’s spouse in excess of US$300,000 in each of those
      years and has a reasonable expectation of reaching the same income level
      in the current year; or 

- 4 -

		____________ 	Category 15. 	A trust, with total assets in excess of
      US$5,000,000, not formed for the specific purpose of acquiring the
      securities offered, whose purchase is directed by a sophisticated person
      as described in SEC Rule 506(b)(2)(ii); or 
	 	 	  	  
		____________ 	Category 16. 	An entity in which each of the equity owners
      meets the requirements of one of the above categories.

	ONLY UNITED STATES INVESTORS NEED TO COMPLETE
      AND SIGN 	 
	 	 	 
	 	Date 	 
	 	 	 
	 	Duly authorized signatory for Investor 	 
	 	 	 
	 	(Print name of Investor) 	 

Appendix “A” to Schedule B

CERTIFICATE OF U.S. PURCHASER

Form of Declaration for Removal of Legend

TO:       Registrar and transfer
agent for the Units of Farallon Resources Ltd. (“Farallon”).

The undersigned (A) acknowledges that the sale of the
securities of Farallon to which this declaration relates is being made in
reliance on Rule 904 of Regulation S under the United States Securities Act of
1933, as amended (the “U.S. Securities Act”), and (B) certifies that (1) the
undersigned is not an “affiliate” of Farallon (as that term is defined in Rule
405 under the U.S. Securities Act); (2) the offer of such securities was not
made to a person in the United States and either (a) at the time the buy order
was originated, the buyer was outside the United States, or the seller and any
person acting on its behalf reasonably believed that the buyer was outside the
United States, or (b) the transaction was executed on or through the facilities
of the TSX and neither the seller nor any person acting on its behalf knows that
the transaction has been prearranged with a buyer in the United States; (3)
neither the seller nor any affiliate of the seller nor any person acting on
their behalf has engaged or will engage in any directed selling efforts in the
United States in connection with the offer and sale of such securities; (4) the
sale is bona fide and not for the purpose of “washing off” the resale
restrictions imposed because the securities are “restricted securities” (as that
term is defined in Rule 144(a)(3) under the U. S. Securities Act); (5) the
seller does not intend to replace such securities with fungible unrestricted
securities; and (6) the contemplated sale is not a transaction, or part of a
series of transactions, which, although in technical compliance with Regulation
S, is part of a plan or scheme to evade the registration provisions of the U.S.
Securities Act. Terms used herein have the meanings given to them by Regulation
S under the U.S. Securities Act.

Dated _______________200_.

	 	X 	 
	 	Signature of individual (if Purchaser
      is an individual) 
	 	 
	 	X 	 
	 	Authorized signatory (if Purchaser is
      not an individual) 
	 	 
    
	 	Name of Purchaser (please
      print) 
	 	 
    
	 	Name of authorized signatory
      (please print) 
	 	 
    
	 	Official capacity of authorized
      signatory (please print)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]