Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Sterling Group Ventures, Inc. - Exhibit 10.1

Qualifying Report

for

Dangxiongcuo Salt Lake Deposit 

 

Nyima County 

  Tibet, China 

FOR 

Sterling Group Ventures, Inc. 

  900 - 789 West Pender Street, 

  Vancouver, BC, Canada 

  V6C 1H2, 

  Tel: 604 893 8891; 

  Fax: 604 408 8515. 

		Norm Tribe, P.Eng., 
N.Tribe &
      Associates Ltd. 
2611 Springfield Rd. 
Kelowna B.C., V1X 1B9
      
(250) 860 7661 
May 20, 2006 

	 	----- N.Tribe & Associates Ltd. ----- 	.i. 

 

Qualifying Report

for the 

Dangxiongcuo Salt Lake Deposit 

Table of Contents

	EXECUTIVE SUMMARY 	1 
	INTRODUCTION AND TERMS
      OF REFERENCE 	2 
	DISCLAIMER 	3 
	 	Location of Mineralization and Workings
      	6 
	 	Terms of Agreements 	7 
	ACCESSIBILITY, CLIMATE,
      LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY 	8 
	HISTORY 	11 
	GEOLOGICAL SETTING 	12 
	 	Regional Geological Setting
      	12 
	 	Property and Local Geology 	13 
	 	Lithology 	13 
	DEPOSIT TYPES 	14 
	MINERALIZATION 	14 
	EXPLORATION 	14 
	SAMPLING METHOD AND APPROACH 	15 
	ADJACENT PROPERTIES 	16 
	PHOTO
      ESSAY 	16 
	OTHER RELEVANT INFORMATION
      	23 

	 	----- N.Tribe & Associates Ltd. ----- 	.ii. 

	INTERPRETATION AND CONCLUSIONS 	25 
	 	Summary of Work Done by the Institute. 	25 
	 	Measured Physical Parameters 	25 
	 	Evaporation Ponds 	26 
	 	Environmental Statement 	27 
	 	Reserve Calculation 	27 
	 	Conclusions 	28 
	 	Risk Analysis 	28 
	RECOMMENDATIONS 	29 
	BUDGET 	30 
	CERTIFICATE 	31 
	REFERENCES 	33 

LIST OF APPENDICES

	 	APPENDIX I - Assay report
      
	 	 
	 	APPENDIX II – Geology
      Report for Dangxiongcuo Salt Lake Deposit Nyima County,
      Tibet of China. Beijing Mianping Salt Lake Research Institute 

	 	----- N.Tribe & Associates Ltd. ----- 	.iii. 

Qualifying Report

for

Dangxiongcuo Salt Lake Deposit 

List of Illustrations

	Figure
      #1 Location Map, The Dangxiongcuo Salt Lake, Nyima County, Tibet, China
      	4
      
	 	 
	Figure
      #2 Satellite imagery of Nyima County, Tibet, China. 	4
      
	 	 
	Figure
      #3 Satellite imagery of The Dangxiongcuo Salt Lake, Nyima County, Tibet,
      China. 	5
      
	 	 
	Figure
      #4 Road Map Central Tibet. 	5
      
	 	 
	Figure
      #5 Official Chinese License Document and Map 	6
      
	 	 
	Figure
      #6 Claim Map superimposed on the satellite image. 	12
      

	 	----- N.Tribe & Associates Ltd. ----- 	.iv. 

Qualifying Report

for

Dangxiongcuo Salt Lake Deposit 

List of Plates

	Plate i. Lake
      Dangxiongcuo on our way out of the basin 	16 
	 	 
	Plate ii. The lake
      levels were 200 meters higher in the past 	17 
	 	 
	Plate iii. We get the
      information on salinity pH temperature and other variables 	17 
	 	 
	Plate iv.
      Glassware and scales in the onsite laboratory 	18 
	 	 
	Plate v. A suite of
      samples ready for analysis. 	18 
	 	 
	Plate vi. An
      AAS analytical unit and computer in the laboratory 	19 
	 	 
	Plate vii.
      Weather station measures precipitation, temperature, sun light,
      humidity, wind speed and direction. 	19
	 	 
	Plate viii. Various
      compounds drop out of solution at various times in the process.
	20 
	 	 
	Plate ix.
      These little pots also measure evaporation rates and other
      parameters. 	20
      
	 	 
	Plate
      x. Taking the sample from the lake to be tested in Vancouver, Canada
      	21
      
	 	 
	Plate
      xi. These white lacustrine silt deposits were thought to be suitable for
      evaporation ponds but turned out to be permeable. 	21
      
	 	 
	Plate
      xii. The camp and the laboratory are powered by this 6 kw solar
      array 	22
      

	 	----- N.Tribe & Associates Ltd. ----- 	.v. 

Qualifying Report

for

Dangxiongcuo Salt Lake Deposit 

List of Appendices

	APPENDIX I - Assay report
      
	 
	
      APPENDIX II –
        Geology Report for Dangxiongcuo Salt Lake Deposit Nyima County, Tibet
        of China. Beijing Mianping Salt Lake Research Institute May 2005 
        

	 	----- N.Tribe & Associates Ltd. ----- 	vi. 

Qualifying Report 

for

Dangxiongcuo Salt Lake Deposit 

EXECUTIVE SUMMARY 

          This
report is written at the request of Richard Xuxin Shao, President and C.E.O. of
Sterling Group Ventures, Inc., for the purpose of providing an initial
assessment of the Dangxiongcuo Salt Lake Deposit as a mining prospect. The
Dangxiongcuo Salt Lake is located on the Qingzang Plateau in north-west central
Tibet, China. The property, is covered by an exploration permit issued to The
Beijing Mianping Salt Lake Research Institute and consists of the Dangxiongcuo
Salt Lake and the surrounding area. Included as part of the property are the
camp and research laboratory. Beijing Mianping Salt Lake Research Institute has
carried out the research work and has submitted a report (Chinese Report) on
this work. The writer visited the installation in the field, did a spot test of
the water in the salt lake and one of the hot springs feeding into the lake, and
visited and examined the laboratory experiments and procedures. A review of the
research data done by the Beijing Mianping Salt Lake Research Institute was done
and this report is a review of these findings. A translation of the Chinese
Report was provided and this will be reviewed and summarized. 

          The
  field visit allowed the writer to examine and evaluate the camp, the laboratory
  and the suitability of the experiments . The analysis of the spot sample confirmed
  the presence of the elements of interest, in concentrations consistent with
  those presented by the Chinese in their report.

	 	----- N.Tribe & Associates Ltd. ----- 	1

          The
reserves of useful compounds are listed as follows: 

	
  1,036,100 tonnes of LiCl. 

  
	
  1,281,800 tonnes of B2 O3 

  
	
  52,045,100 tonnes if KCl 

  
	
  10,307,600 tonnes of Na2 CO3 +NaHCO3 

  
	
  8,900 tonnes of Rb 

  
	
  113,500 tonnes of Br. 

          At
a grade of 0.43 g/l, Li, or 2.63 g/l LiCl, the Dangxiongcuo Salt Lake Deposit is
comparable or better in grade than the other mines presently in operation. 

          There
are large areas suitable for evaporation ponds. There are also hot springs in
this area, the thermal energy from which could be used to enhance the
evaporation rate.

          Along
the western part of the lake there is a large shallow area which is suitable for
damming off to form in lake evaporation ponds.

          A
budget of ¥144 M. (US$18.0 M.) is proposed for the research work Sterling has
agreed to finance this research. Sterling will need to raise ¥50.25 M. (US$5.28
M.) over the next 18 months to meet its commitment to the joint venture.

          This
seems reasonable, but very little of this type of work is being done with which
to compare this figure. 

INTRODUCTION AND TERMS OF REFERENCE

          This
  report is written at the request of Richard Xuxin Shao, President of Sterling
  Group Ventures Inc., for the purpose of providing an initial assessment of the
  Dangxiongcuo Salt Lake Deposit as a mining prospect. Located on the Qingzang
  plateau in north west central Tibet, China, the property consists of the Dangxiongcuo
  Salt Lake and the surrounding area. Included are the camp and 

	 	----- N.Tribe & Associates Ltd. ----- 	2

research laboratory on the north side of the lake and three
test ponds situated near the laboratory.

          Beijing
Mianping Salt Lake Research Institute has carried out the research work and has
submitted a report on this work herein referred to as the Chinese Report
(Appendix II). The scope of this review was to visit the installation in the
field, do a spot test of the water in the salt lake and one of the hot springs
feeding into the lake, to visit and examine the laboratory experiments and
procedures, to review the research data done by the Beijing Mianping Salt Lake
Research Institute and report on these findings. An official translation of the
Chinese Report was provided and this was reviewed and comments made in an
attempt to clarified the somewhat convoluted style of the Chinese technical
reporting.

DISCLAIMER 

          The
  writer is required by NI 43-101 to include description of the property title
  and terms of legal agreements. The Dangxiongcuo Salt Lake research project is
  under the direction of the Beijing Mianping Salt Lake Research Institute. The
  licenses are reported to be issued to the Beijing Mianping Salt Lake Research
  Institute. Documents indicating this are presented as Figure #5 but an interpretation
  of the Chinese is not provided. Further analysis of the titles is beyond the
  scope of this report and the expertise of this writer.

	 	----- N.Tribe & Associates Ltd. ----- 	3

 

Figure #1 Location Map, The Dangxiongcuo Salt Lake, Nyima
County, Tibet, China. 

 

Figure #2 Satellite imagery of Nyima County, Tibet, China.
  

	 	----- N.Tribe & Associates Ltd. ----- 	4

 

Figure #3 Satellite imagery of The Dangxiongcuo Salt Lake,
Nyima County, Tibet, China. 

 

Figure #4 Road Map Central Tibet. 

	 	----- N.Tribe & Associates Ltd. ----- 	5

Figure #5 Official Chinese License Document and Map 

Location of Mineralization and Workings

          The
  mineralization on the property is in the form of mineral salts dissolved in
  the Dangxiongcuo Salt Lake. The minerals of note are LiCl, B2O3,
  KCl, NaCl, and Na2SO4. These minerals dissolved in the
  brine are consistent throughout the lake. Surveys in a number of locations in
  and around the lake and at various depths in the lake have indicated that concentrations
  of minerals varies very little.

	 	----- N.Tribe & Associates Ltd. ----- 	6

Terms of Agreements 

          The
Beijing Mianping Salt Lake Research Institute is reported to hold the
exploration permit on the Dangxiongcuo Salt Lake and the surrounding area. The
number is 5400000620013 the area is 89.06 km2. and it is valid until Feb 23,
2007. There is a routine in which this exploration license can be converted into
a mining permit. Sterling Group Ventures Inc. (Sterling) has entered into a
Joint Venture agreement with The Beijing Mianping Salt Lake Research Institute
(Mianping) in which the Mianping has agreed to contribute the Technology, the
Exploration License and to begin the process of acquiring the mining permit.
Sterling has agreed to finance the Joint Venture with 144M Yuan in research and
in so doing will earn a 65% interest in the project development capital.

          Details
of the agreement are as follows: 

          1.
  Sterling will make a 1 million yuan payment to Mianping within two business
  days after the agreement is signed (Sterling reports that it has made this payment),

          2..
  Sterling will, within ten business days, set up a project account and put 3
  million yuan into the account for early working capital (Sterling ensures that
  early works are funded. When project account is short of cash, Sterling shall
  transfer the money into the account in time), 

          3..
  Sterling will finance the:

	
  feasibility study, 

  
	
  hot spring drilling, 

  
	
  topography study. 

  
	
  engineering geology, 

  
	
  pond tests, 

  
	
  weather station monitoring, 

  
	
  Chinese team working capital; etc., 

  
	
  Total estimate is 4.25 million yuan before Joint Venture agreement comes
  into effect,. 

 

	 	----- N.Tribe & Associates Ltd. ----- 	7

          4.
Sterling will deposit in the Joint Venture account, 15 million yuan within 30
business days after the business license of the Joint Venture has been issued.
(Estimate time is 3 months). 

          5.
Mianping will transfer the mining permit into the Joint Venture (estimated time
is 2-3 months). After the permit is transferred, Sterling will put 34 million
yuan into the account of the Joint Venture. Joint Venture will pay 34 million
yuan to Mianping, 

          6.
Before 34 million yuan is paid to Mianping, both parties control the account
together. After 34 million yuan is paid, Sterling controls the account, 

          7.
Summarizing the above, Sterling needs to put 50.25 million yuan in place
(roughly US$ 6.28 million) to meet its commitment to the Joint Venture.
Estimated time to raise this capital is 1.5 years, 

          8.
Sterling assures that the input of the registered capital and project
construction cost will be completed in time. 

          Although
a preliminary working schedule has been established, in the event that this
schedule is conflicted with the test research and project design work, the above
schedule will be adjusted accordingly. 

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE
  AND PHYSIOGRAPHY

          Dangxiongcuo
  Salt Lake (DXC) is located in the south-western part of Xizang plateau in Nyima
  County. The geographic co-ordinates are between 86°38'00" and 86°49'00"
  east and 31°30'00" to 31°40'00" north. The area of the lake is about
  55.53 km2 (5,553 hectares) (21.44 sq. mi.). The elevation of the
  lake is 4,475 m (14,682 ft.). The climate can only be described as hostile with
  elevations around the 15,000 foot (4,600 m.) level the winters can be very cold.
  The temperatures during our site visit in early May were around the freezing
  point and the humidity was in the 20% range with a moderate wind making the
  environment feel cold. To the southeast is Mount Qingbagonglong, 6,129 m. (20,108
  ft.) in height and snow covered year round.

	 	----- N.Tribe & Associates Ltd. ----- 	8

          The
  average ambient temperature at the lake is –1oC. (30.2 oF.),
  precipitation is 151 mm. (5.91 in.) and with a typical humidity is 16% –
  18%. Yearly evaporation is 2,302 mm. (90.63 in.) which is 15 times the rainfall.
  The average annual sunshine is 3,122 hours.

          There
is almost no local infrastructure. The only power, water, and roads are those
installed by the Institute. Beicun village at the head of the lake appeared to
have perhaps 300 people, local Tibetan herdsman of the Han ethnic group. They
are mainly occupied with herding yaks, sheep, goats, and a few horses. They
plant small gardens of barley and vegetables but are not self sufficient and
import food stuffs from outside.

          Although
people would be available from this village to work on a project in this area
the skill level would be very low. The village has a small Buddhist
monastery.

          Communication
with the outside world is by satellite telephone. The nearest land line is at
Nyima a distance of 90 km away.

          Shipment
of product does not seem to be a problem as numerous heavy trucks were noted all
along the road to the property. National rail service is available from Naqu
about 700 km distance to the east.

          Access
to Tibet is through Lhasa which has a good efficient international airport. Road
access into the property area is difficult at best. The road heads northwest
from Lhasa to the town of Zamsar then northeast through the Zhangzhong pass
which is 5,200m. (17,000 feet). This first 200 km is good paved road.

          
  Thence down into the valley turning right onto a rough gravel road near the
  Nam Tsho Salt Lake. This lake does not contain valuable mineral salts. Thence
  around the eastern and northern side of the Nam Tsho lake and on 300 kilometers
  to the isolated village of Pankgo. Pankgo appears to have a population of 4,000
  people. Some services and accommodation are available in Pankgo. Thence proceed
  400 kilometers to the City of Nyima which has a population of 5,000 people and
  is the County seat of the County of Nyima. Another 90 kilometers of very rough
  road brings you through another 4,600 m. 

	 	----- N.Tribe & Associates Ltd. ----- 	9

(16,000 foot) pass and down to the Dangxiongcuo Salt Lake. This
trip takes 26 hours of bone shaking 4X4 ride from Lhasa.

          Generally,
the physiography could be termed basin and range with broad valleys between
sharp ridges and arretes. The valleys are generally gentle in profile both
laterally and longitudinally with small to medium rivers coursing through the
bottoms of the valleys. Few of the rivers are bridged and most of the crossings
are by shallow fords. We passed through these valleys at breakup in the spring
and although some difficulties were encountered we were able to pass
successfully. Along these tracks for much of the route were seen numerous large
trucks of 30 – 40 tonnes. Most were freighting bagged material, probably salt
from one of the salt lake operations. There are no services along the route
except for Pankgo and Nyima.

          The
Dangxiongcuo Salt Lake sits in a rather confined basin between high rugged
ridges. There are numerous benches or beaches around the lake indicating lake
levels at one time were 200 meters above the present levels of the lake, as the
last glaciation receded. 

         There is
no infrastructure, except the road. Power, water and buildings were all
installed by The Beijing Mianping Salt Lake Research Institute.

          Vegetation
throughout the plateau is sparse grasses which have been grazed down to the root
level. Sheep, goats and yaks graze in large herds on what appeared to be very
lean fodder. Herdsmen and herdswomen tend these flocks with no visible support
and often many miles from the nearest shelter. Some of the herdsman seen to rely
on the 125cc motor bike for transportation. The women appeared mainly to walk.
Occasional five tonne trucks were seen hauling personal belongings grossly
overloaded with household items and people.

          Wildlife
  noted during the trip was an abundance of wild yaks which were seen in large
  herds. Several herds of Kiang or Tibetan wild ass (Equus kiang) of one
  hundred animals or more were encountered near the road. These are beautiful
  animals, three quarters the size of a horse and consistently colored with a
  brown black back and a white belly. Two herds of thirty or more Chiru or 

	 	----- N.Tribe & Associates Ltd. ----- 	10

Tibetan antelope (Pantholops hodgsoni) were seen, with
their 1 meter long horns. Several herds of thirty to forty Tibetan Gazelle
(Procapra picticauda) were also noted as well as several smaller groups.
Numerous White Lipped Pica populate the plain, quickly disappearing down their
burrows as one approaches. Also seen in the lights of the vehicle at night were
several Tibetan wooly hare, and a Tibetan sand fox.

          Reported
to inhabit the area but not seen on this trip are the Blue Sheep, the Argali
sheep and a brown wolf. Snow leopards and lynx are listed as inhabiting this
area but are extremely rare.

HISTORY 

          Lithium
is a metallic element that is widely distributed in the earth's crust at low
concentrations. Lepidolite, petalite, and spodumene, are important mineral
sources of lithium. Subsurface brines, which is water that is saltier than
seawater) are the dominant raw material for lithium carbonate production
worldwide because of lower production costs as compared with the costs for hard
rock ores. In the United States, lithium brines are produced and processed in
Nevada, and imported material is processed in North Carolina. Chile, China,
Australia, and Russia are listed as major lithium producers in 1996. The United
States is the leading consumer of lithium minerals and compounds and the leading
producer of value-added lithium materials. The use of lithium compounds in
ceramics, glass, and primary aluminum production represented more than 60% of
estimated consumption. Other major end uses for lithium were in the manufacture
of lubricants and greases, pharmaceuticals, synthetic rubber and more recently
lithium rechargeable batteries. 

          Mineral
  resources are known to be abundant in the salt lakes of the Qingzang Plateau.
  Exploration of these deposits began in 1999 when the initial survey work indicated
  the presence of lithium, boron and potassium in the Dangxiongcuo Salt Lake.
  The research station was set up in 2002 and the work began in 2004 and has been
  operating since that time collecting data and running experiments. 

	 	----- N.Tribe & Associates Ltd. ----- 	11

          Salt
lake exploration in the Qingzang Plateau is in a very preliminary stage and only
one deposit, the Zhabeye Salt Lake deposit, has been developed. The composition
of the brine at Dangxiongcuo Salt Lake is very similar and of the same type as
that at Zhabeye Salt Lake with good values in Li, B, and K. 

GEOLOGICAL SETTING

Regional Geological Setting

          Basement
rocks of the Dangxiongcuo basin are primarily Permian and cretaceous sediments.
The main strata is composed of Jurassic – cretaceous flysch rock (sandstone
shales and limestone) and cretaceous carbonate rock.

 

Figure #6 Claim Map super imposed on the satellite image.

	 	----- N.Tribe & Associates Ltd. ----- 	12

          Overlying
these basement rocks is the Dangxiongcuo stratum of loose Quaternary sediments
along the lake. These consist of lake facies sediments of glacial silts and
tills.

          The
Dangxiongcuo Salt Lake is strictly controlled by the
Dangziongcuo-Dangruoyongcuo-Xurucuo graben which is 90 km long and 30 km wide
and in the late Pleistocene contained one lake where now it contains the three
lakes after which it was named, Dangxiongcuo, Dangruoyongcuo and Xurucuo Lakes.
The terraces around Dangxiongcuo Salt Lake mark the elevation of this Late
Pleistocene Lake some 200 meters above the present lake level. 

Property and Local Geology

          Surrounding
the lake on three sides are terraces of lacustrine sediments. The composition of
the lacustrine sediment in the area is mainly grayish white thin-layered,
laminated carbonate clay or clayish carbonate. The thin layers are usually 3-5
cm thick. The laminations are patterned in light and dark horizontal layers with
thickness of ±1 mm and typical lacustrine bedding. This lacustrine sediment
although often called clay is not composed of clay minerals, but fine rock flour
produced in the grinding actions of the glaciers. The significance of this is
that these lacustrine glacier derived sediments have a degree of permeability
whereas a true clay bed would not. 

Lithology

          The
origin of the lithium and other salts in the lake has not been determined. Some
have suggested that the hot springs are the source of the lithium and the boron
as well as the potassium and sodium salts. Although a single sample is not
definitive, the spot test of the water in the North East Hot Spring did not
support this hypothesis.

          The
  lacustrine deposits were initially thought to be ideal material in which to
  build the evaporation ponds. However permeability of the material was soon noticed
  to allow significant losses during the evaporation process. 

	 	----- N.Tribe & Associates Ltd. ----- 	13

DEPOSIT TYPES 

          The
deposit is a large salt lake 55.53 km2 in area with a maximum depth of 14 m.
Brines are a common source of lithium and the Dangxiongcuo Salt Lake is a
classic brine type deposit. This type of deposit is know throughout the world
where ever desert climates allow evaporite deposits to form. Some of the well
known salt lake lithium deposits are in Chile at the Salar de Atacama and in
Nevada at the Silver Peak, and the Tincalayu Mine, Salar del Hombre Muerto in
Argentina and Lago Poopo in Bolivia. 

MINERALIZATION

          Mineralization
  in the lake is in the form of dissolved salts of sodium, potassium, lithium
  and boron, as chlorides, oxides, sulfates and carbonates. These can be recovered
  through fractional precipitation of the various salts by the evaporation of
  the water. Variations in salinity, pH and temperature determine which compound
  will form crystals and precipitate from the brine. 

          Mineral
  resources indicated in the lake are 903,700 tonnes of LiCl, and 1,180,300 tonnes
  of B2O3 as well as undefined quantities of KCl, NaCl ,
  Na2 SO4 and other minerals.

EXPLORATION 

          Traditional
  exploration is not applicable in proving up the mineralization in a salt lake
  deposit. Systematic water sampling on a grid pattern and a varying depths is
  an acceptable method. This has been done by The Beijing Mianping Salt Lake Research
  Institute with a few hundred water samples taken at various depths on a 2 km.
  X 2 km. grid pattern in the lake. The concentration of the various salts is
  fairly uniform throughout the lake and hence the quantity of contained metal
  is easily determined. 

	 	----- N.Tribe & Associates Ltd. ----- 	14

SAMPLING METHOD AND APPROACH 

          Sampling
by The Beijing Mianping Salt Lake Research Institute was done on a 2 km X 2 km
grid on which 106 samples were taken at 16 sample points at various depths.
Location control was provided by GPS . If the water depth was less than 2 meters
deep, one sample was taken; if the water depth was between 2 and 10 meters, then
two samples were taken at 3 and 8 meters and if the water was deeper than 10
meters then three samples were taken. Each sample consisted of two 500 ml.
bottles of brine. 

          The
sampling method used a standard water sampling technique where a bottle is
lowered into the lake to the required depth, the stopper removed, and the bottle
allowed to fill. AAS analytical techniques were used to determine the
composition of the brine sample. This sampling program was repeated several
times during the various seasons of the year. Several hundred samples have been
collected in this way and analyzed by The Beijing Mianping Salt Lake Research
Institute at their AAS laboratory on site. Full details are submitted in the
Chinese Report included as Appendix II. 

          
Two samples were collected by the writer. The results indicate that the
concentration of salts is comparable with the results shown in the attached
report. See Appendix I. The lake water returned values of 376 ppm lithium, 893
ppm boron and 11,300 ppm potassium. This sample was collected from the lake at a
depth of 1.0 meter.

          The
  second sample was collected from the North East Thermal Spring. The analysis
  returned values of 2.18 ppm boron, 0.733 ppm lithium and 12.5 ppm potassium.
  These results indicate that the salts do not originate from this particular
  hot spring. Other springs such as the South Thermal Spring are reported to be
  high in salts. 

	 	----- N.Tribe & Associates Ltd. ----- 	15

ADJACENT PROPERTIES 

          There
is one other lithium salt lake in Tibet. This is the working operation at
Zhabieye, in eastern Tibet. Experiments to establish some working parameters
were suggested from the study of this operation. 

          Other
salt lakes on the Qingzang Plateau are believed to be producing potassium salts.
This conclusion was reached by observing large trucks hauling bags of industrial
material toward the railhead. This could not be verified by the Chinese experts
accompanying this site visit.

PHOTO ESSAY

 

	 	----- N.Tribe & Associates Ltd. ----- 	16

 

	 	----- N.Tribe & Associates Ltd. ----- 	17

 

	 	----- N.Tribe & Associates Ltd. ----- 	18

 

	 	----- N.Tribe & Associates Ltd. ----- 	19

 

	 	----- N.Tribe & Associates Ltd. ----- 	20

 

	 	----- N.Tribe & Associates Ltd. ----- 	21

 

	 	----- N.Tribe & Associates Ltd. ----- 	22

OTHER RELEVANT INFORMATION 

World wide lithium production in past decade 

	  Country/year 	1995 	1996 	1997 	1998 	1999 	2000 	2001 	2002 	2003 	2004e 	Reserve 	Reserve 
	   base
      	  	  	  	  	  	  	  	  	  	  	  	 
    
	  Argentinae 	8 	30 	8 	1000 	200 	200 	200 	200 	960 	1300 	NA 	NA

	  Australiae 	1700 	1800 	2800 	2800 	2200 	2000 	2000 	2000 	3450 	3450 	160 000 	260 000
    
	  Bolivia
      	- 	- 	- 	- 	- 	- 	- 	- 	- 	- 	- 	5 400
      000 
	  Brazil
      	32 	32 	32 	30 	32 	30 	220 	220 	240 	240 	190 000 	910 000
    
	  Canada
      	660 	660 	1600 	1600 	710 	710 	700 	700 	710 	700 	180 000 	360 000
    
	  Chile
      	2000 	2100 	4100 	4500 	5300 	5500 	6800 	6800 	6580 	6600 	3 000 000 	3 000
      000 
	  China
      	320 	320 	2900 	2900 	2300 	2000 	2400 	2400 	2500 	2700 	540 000 	1 100
      000 
	  Namibiae 	52 	50 	40 	40 	  	  	  	  	  	  	NA 	NA

	  Portugal
      	160 	160 	180 	160 	140 	140 	200 	200 	190 	190 	NA 	NA

	  Russiae 	800 	800 	2000 	2000 	2000 	1800 	2000 	2000 	  	  	NA 	NA

	  USA
      	W 	W 	W 	W 	W 	W 	W 	W 	W 	W 	38 000 	410 000
    
	  Zaire
      	- 	- 	- 	- 	- 	- 	- 	- 	- 	- 	- 	320 000
    
	  Zimbabwe 	520 	500 	700 	500 	700 	700 	700 	560 	480 	360 	23 000
    	27 000 
	  World total 	U 6 300 	U 6 600 	U 14 000 	U 16 000 	U 14 000 	U 13 000 	U 15 100 	U 15 100 	U 15 100 	U 15 500 	ARP 4 100 000 	ARP 11 000 000

Table explanations 
all the data are in metric tons 

Reserve base - that part of an identified resource that meets
  specified minimum physical and chemical criteria related to current mining and
  production practices, including those for grade, quality, thickness, and depth.
  The reserve base is the in-place demonstrated (measured plus indicated) resource
  from which reserves are estimated. It may encompass those parts of the resources
  that have a reasonable potential for becoming economically available within
  planning horizons beyond those that assume proven technology and current economics.
  The reserve base includes those resources that are currently economic (reserves),
  marginally economic (marginal reserves), and some of those that are currently
  sub-economic (sub-economic resources). The term geologic reserve has
  been applied by others generally to the reserve-base category, but it also may
  include the inferred-reserve-base category; it is not a part of this classification
  system. Reserve - that part of the reserve base which could be economically
  extracted or produced at the time of determination. The term reserves need not
  signify that extraction facilities are in place and operative. Reserves include
  only recoverable materials; thus, terms such as extractable reserves
  and recoverable reserves are redundant and are not a part of this classification
  system. 

  W - withheld to avoid disclosing company proprietary data. 

  NA - Not Available 

  e - estimated 

  ARP - excludes Argentina and Portugal 

  U - excludes U.S. production 

 

	 	----- N.Tribe & Associates Ltd. ----- 	23

Lithium minerals and brine: World production by country

	Country/year 	1994 	1995 	1996 	1997 	1998 	1999 	2000 	2001 	2002 	2003e 	2004e 
	Argentina-spodumene and amblygonite 	400 	400 	400 	697 	  	  	  	  	  	  	 
    
	Argentina-carbonate 	  	  	  	  	6000 	1592 	2161 	  	906 	2850 	4970
  
	Argentina-chloride 	  	  	  	  	2500 	2794 	5182 	4512 	4729 	4700 	6303
  
	Australia-spodumene 	45 987 	81 841 	117 094 	88 399 	63 190 	75 824 	65 504 	79 859 	79 085 	124 410 	125 000
    
	Brazil-ore concentrate 	1600 	1600 	1600 	1600 	9485 	11 122 	10 875 	9084 	12 046 	12 100 	12 100
    
	Canada-spodumenee 	20 000 	21 000 	22 000 	22 500 	22 500 	22 500 	22 500 	22 500 	22 500 	22 500 	22 500
    
	Chile-carbonate 	10 439 	12 943 	14 180 	24 246 	28 577 	30 231 	35 869 	31 320 	35 242 	41 667 	42 500
    
	China-carbonatee 	9050 	12 800 	15 000 	15 500 	13 000 	12 500 	13 000 	13 000 	13 000 	13 500 	14 000
    
	Namibia-ore concentrate, petalite 	1861 	2011 	1972 	1019 	500 	  	  	  	  	  	 
    
	Portugal-lepidolite 	11 352 	8740 	7626 	6883 	7000 	14 862 	9352 	11 571 	16 325 	16 000 	16 000
    
	Russia-ore concentrate and brinese
    	2000 	2000 	2000 	2000 	2000 	2000 	2000 	2000 	2000 	2000 	2200
  
	USA-brine 	W 	W 	W 	W 	W 	W 	W 	W 	W 	W 	W 
	Zimbabwea 	25 279
    	33 498
    	30 929
    	49 833
    	28 055
    	36 671
    	37 914
    	36 103
    	33 172
    	12 131
    	12 000 

Table Explanations – all data in metric tonnes 

W - withheld to avoid
  disclosing company proprietary data. 

  e - estimated 

  a - amblygonite, eucryptite,
  lepidolite, petalite, spodumene

 

	 	----- N.Tribe & Associates Ltd. ----- 	24

INTERPRETATION AND CONCLUSIONS 

Summary of Work Done by the Institute.

          Work
done to date by The Beijing Mianping Salt Lake Research Institute includes: 

	
  Analyzing the basic regional geology, hydrology, water chemistry and
  origin, recharge water characteristics, and their relation to the brine and
  any stratification therein. 

  
	
  Testing the dynamics of the surface brines throughout the seasonal cycles.
  

  
	
  Sampling the lake brines on a grid pattern and testing for depth, water
  level, lake bottom lithology, chemistry, mineralogy, density, pH, and
  temperature, basically to determine the balance between water and salts,
  facies, map location and salting out stages. 

  
	
  Measuring the parameters of surface water to determine variations in
  rainfall, temperature, evaporation and runoff. 

  
	
  Testing the stability and continuity of the soils and rocks around the lake
  to determine their suitability for saltfield construction and other basic
  construction needs. 

  
	
  Analyzing all the above information to determine the economic parameters of
  the mineral assets and which of the minerals has value and how to recover
  them. 

Measured Physical Parameters 

          There
  are three rivers draining into the Dangxiongcuo Salt Lake from the southwest,
  the Qiangxiong, the Qurebaima and the Miankangluoma Rivers. The first two are
  fed by runoff form Mount Qingbagonglong and run year round. Draining from the
  north are the Yueza, Duowochiba and Mania rivers which run intermittently depending
  on the runoff conditions and precipitation.

 

	 	----- N.Tribe & Associates Ltd. ----- 	25

          The
average temperature at the lake is –1oC. (30.2 oF.),
precipitation is 151 mm. (5.91 in.) and with a typical humidity is 16% – 20%.
Yearly evaporation is 2302 mm. (90.63 in.) which is 15 times the rainfall.

          Several
water sources around the lake were measured for mineral content. Most of the
rivers and hot springs flowing into the lake carry significant lithium and boron
minerals with the exception of the Yueza river which did not. One of the hot
springs named the “South Thermal Spring” is reported to carry 8.5 mg/l, Li and
263.77 mg/l B2O3. A hot spring on the north-east edge of
the lake was sampled by the writer and the results are listed in Appendix I as
Sample #2. 

          The
pH of the lake brine ranges from 8.9 to 9.7 with the typical readings between
9.2 -9.4. As depth increases so does the pH value as does the salinity, the
density, and the concentration of lithium and boron.

          Comparing
the brine at Dangxiongcuo Salt Lake with the brine at the working operation at
Zhabieye, the Dangxiongcuo Salt Lake brine contains less Mg and Ca than does
Zhabieye, which is favorable to the extraction of Li2CO3
but the mineral content is lower which requires a larger evaporation area.
The most valuable component of the brine is the lithium with secondary values in
boron, potassium, rubidium and bromine.

          Several
hot springs occur in the lake basin, with the largest being the North Spring
which ix fresh water and provides water for the village of Beicun and the best
known being the South Thermal Spring which is a salt water spring. Water for the
camp comes from a small fresh water spring just above the camp and is more than
sufficient to provide water for the camp.

               The
use of the thermal energy from one or more of these springs has been suggested
to provide heat for the camp and to heat the evaporation ponds thus increasing
the rate of evaporation. 

Evaporation Ponds

               Two
  evaporation pond sites have been selected. A total of 111 pits and 24 drill
  holes have been completed to test the sites. The first site is to be along 

 

	 	----- N.Tribe & Associates Ltd. ----- 	26

the north shore of the lake with the evaporation ponds on the
shore. The second site is along the west side of the lake and will consist of a
barrier or breakwater and will be built to separate the pond from the lake. This
part of the lake has a large, ±3.0 meters, shallow area ideally suited to this
type of development. 

Environmental Statement

          There
appears to be very limited environmental impact from the proposed mining
operation. The only anticipated damage which might occur is the possibility of a
spill from one of the ditches or ponds which would contribute to the salination
of the grasslands at the edge of the lake. Procedures will be undertakes to
avoid such an event. Other environmental problems are related to the human
habitation of the area, the disposal of domestic and industrial waste especially
plastic wraps, glass, metal, food stuffs and human wastes. Care and discipline
will have to be exercised to eliminate these problems. 

Reserve Calculation

          Reserves
were calculated according to the requirements of the “Geological Mineral
Industrial Standards of the Peoples Republic of China, Geological exploration
regulations for salt lake and salt mineral resources.”

          The
calculation is made based on information collected on a 2000 m. X 2000 m. grid.
Three complete surveys were made at three different times of the season cycle.
There were slight discrepancies in the results, so an average was used to
estimate the resource. 

          The
  volume of the lake is calculated at 390,000,000 m3 

          The
  reserves of useful compounds are listed as follows: 

	1,036,100 tonnes of LiCl.
  
	1,281,800 tonnes of B2 O3
  
	52,045,100 tonnes if KCl
  
	10,307,600 tonnes of Na2 CO3 +NaHCO3
  
	8,900 tonnes of Rb
  
	113,500 tonnes of Br. 

 

	 	----- N.Tribe & Associates Ltd. ----- 	27

Conclusions 

          Concentration
of lithium, boron and potassium, exceed the minimum required for an industrial
evaporite operation. At a grade of 0.43 grams per liter, lithium, or 2.63 grams
per liter, lithium chloride, the Dangxiongcuo Salt Lake deposit is comparable or
better in grade than the other salt lake mines presently in operation. 

          Along
the northern edge of the lake there are large areas suitable for evaporation
ponds. There are also hot springs in this area, the thermal energy from which,
could be used to enhance the evaporation rate.

          Along
the western part of the lake there is a large shallow area which is suitable for
damming off to form in lake evaporation ponds. The bottom of the lake is
suitable for this type of installation. 

Risk Analysis

          The
risk in this operation is mainly dependent on the risk in operating in China.
Present conditions in China favor foreign investors and foreign capital
developing China’s natural resources. Any risk analysis involves the prediction
of future foreign policies by the Chinese.

          Risks
associated with the deposit itself, are minimal, as the sampling to date and the
nature of the deposit leaves little doubt as to what the metal content of the
deposit is.

          Resource
recovery parameters are a different matter and the experimentation presently
underway is attempting to determine what these parameters are. The risk that
snags in this experimentation could defeat or delay the production seems small
at this point, but does exist.

          The
  technical work observed during the site visit was being handled in a professional
  manner under difficult and remote conditions. Indications were that the variables
  of salinity, pH and temperature were well understood and that further testing
  will define the parameters best suited to the fractional precipitation of the
  minerals of value, i.e. the lithium and the boron. When these parameters are
  well defined, economics can be worked out and the parameters understood 

 

	 	----- N.Tribe & Associates Ltd. ----- 	28

the risks are again minimal. At this point in time, these
parameters are only partially defined but look favourable to the extraction of
lithium and boron.

          Possible
by-products are available in the brine at economic levels. Rubidium and
potassium are listed as economic with significant values in cesium, fluorine and
bromine.

RECOMMENDATIONS 

          It
is therefore recommended that the experimentation be continued until the
relevant parameters are defined. 

          With
  these technical parameters defined, economic parameters can be defined and production
  plans and schedules can be worked out. 

 

	 	----- N.Tribe & Associates Ltd. ----- 	29

BUDGET 

          The
Beijing Mianping Salt Lake Research Institute has outlined a research budget of
¥144 M. (US$ 18 M.) and Sterling has agreed to finance that research. 

          This
writer sees no reason not to accept this figure as a reasonable estimate of the
cost requirements of completing the research work.

          Sterling
will need to raise ¥50.25 M. (US$6.28 M.) to meet its commitments to the joint
venture. 

          Respectfully
submitted this 20th day of May, 2006, at Kelowna, B.C.. 

/s/ Norman Tribe 

  N.L.Tribe, P.Eng. 

 

	 	----- N.Tribe & Associates Ltd. ----- 	30

CERTIFICATE 

               I,
NORMAN LLOYD TRIBE, P. Eng., of 2611 Springfield Rd. in the City of Kelowna,
Province of British Columbia, hereby certify as follows: 

          I
am a Consulting Professional Geological Engineer registered (#11,330) with the
Association of Professional Engineers and Geoscientists of British Columbia
since 1978. 

          I
am a Consulting Geologist with an office at 2611 Springfield Road, Kelowna,
B.C., V1X 1B9. 

          I
am a registered Professional Engineer of the Province of British Columbia. 

          I
graduated with a degree of Bachelor of Applied Science from the University of
British Columbia in 1964.

          I
have worked as a geological engineer for a total of 41 years since my graduation
from university. I have read the definition of “qualified person” set out in
National Instrument 43-101 (“NI 43-101”) and certify that by reason of my
education, affiliation with a professional association (as defined in NI 43-101)
and past relevant work experience, I fulfill the requirements to be a “qualified
person” for the purposes of NI 43-101. 

          I
am responsible for the preparation of the technical report titled “Qualifying
Report for Dangxiongcuo Salt Lake Deposit, Nyima County, Tibet China” dated May
20, 2006 relating to the Dangxiongcuo Salt Lake Deposit, Nyima County, Tibet
China. I visited the Dangxiongcuo Salt Lake Deposit, May 2nd until
May 7th , 2006 for five days.

          I
  have not had prior involvement with the property that is the subject of this
  Technical Report. 

          I
  am not aware of any material fact or material change with respect to the subject
  matter of the Technical Report that is not reflected in the Technical Report,
  the omission to disclose which makes the Technical Report misleading. 

          I
am independent of the issuer applying all of the tests in section 1.5 of
National Instrument 43-101.

          I
have read National Instrument 43-101 and Form 43-101F1, and the Technical Report
has been prepared in compliance with that instrument and form. 

          I
consent to the filing of the Technical Report with any stock exchange and other
regulatory authority and any publication by them for regulatory purposes,
including electronic publication in the public company files on their websites
accessible by the public, of the Technical Report. 

          This
report dated May 20, 2006 is based on data collected from published sources,
from a report entitled “Geology Report for Dangxiongcuo Salt Lake Deposit , May,
2005, communication with Mr. Shi chemical engineer on site and Mr. Zhang
geologist and expert on the geology of the region and by the writer during a
visit to the property on May 2nd through May 7th,
2006.

          Dated
at Kelowna, Province of British Columbia this 20th day of May,
2006.

/s/ Norman Tribe 

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

  Norman Lloyd Tribe, P. Eng. 

  Consulting Geologist. 

  Tel: (250) 860 7661 

  Fax: (250) 860 7661 

  Email: nta@shaw.ca 

 

	 	----- N.Tribe & Associates Ltd. ----- 	31

CONSENT of AUTHOR

TO: B.C. Securities Commission, and the TSX Venture
Exchange. 

          I,
Norman Tribe, P.Eng., do hereby consent to the filing of the written disclosure
of the technical report titled “Dangxiongcuo Salt Lake Deposit, Nyima County,
Tibet China” and dated May 20th, 2006 and any extracts from or a
summary of the Technical Report in any Statement of Material Facts and news
releases of Sterling Group Ventures Inc. , and to the filing of the Technical
Report with the securities regulatory authorities referred to above.

          I
also certify that I have read the written disclosure being filed and I do not
have any reason to believe that there are any misrepresentations in the
information derived from the Technical Report or that the written disclosure in
the filings with SEDAR made for the purpose of continuous disclosure of the
activities of Sterling Group Ventures Inc., contains any misrepresentation of
the information contained in the Technical Report. 

Dated this 20th day of May, 2006. 

 

/s/ Norman Tribe 

  ________________________

  Norman Tribe, P.Eng. 

 

	 	----- N.Tribe & Associates Ltd. ----- 	32

REFERENCES 

Advanced Battery Technology, 1998a New Zealand -- More
sources of lithium? Advanced Battery Technology v. 34, no. 2. P.9. 

-----1998b Nissan minivan uses Li-ion Technology: Advanced
Battery Technology, v.34, no.2, p 24-25 

Chemical Week 1997 lithium battery growth: Chemical Week. V
159, no. 31, August 3, p. 41. 

Cyprus Amax Minerals Co., 1998 Cyprus Amax 10K report 1997
Englewood Co. Cyprus Amax Minerals C. p. 14 

Engineering and mining Journal 1970 Foote Minerals Lithium
Picture Engineering and Mining Journal v. 171, no. 4, p72. 

FMC Corp., 1998 Annual Report Chicago IL. P 23 – 25 Gwalia
closes Lithium carbonate plant. No. 359, p.8 

Kendall Tom 1997 New project round up – South America
  Industrial Minerals, no. 253, p.51 – 57. 

Light Metal Age, 1998, Aluminum-lithium alloys: Light metal
  age, v. 56, no. 1-2, p. 102 – 105. 

Lithium. Joyce A. Ober (1997) USGS 

Mining Annual Review (1985): 128. A borate mine in the
Tincalayu borax deposit. 

Skillings Mining Review, 1997 Avalon Ventures Ltd.’s
Separation Rapids rare metals property near Kenora in northwestern Ontario
Skillings Mining Review, v. 86, no. 47, November 22, p. 4-5. 

Toxco Waste Management Ltd., 1997 Market breakthrough at
Toxco Trail British Columbia Canada Toxco Waste Management Ltd. Press Release
February 10 p. 1. 

U.S. Bureau of Mines / Minerals yearbook metals and minerals
(except fuels) 1965 Year 1965, Volume I (1966) Eilertsen, Donald E. Lithium, pp.
607-610 

U.S. Geological Survey Data Series 140 Historical Statistics
for Mineral and Material Commodities in the United States. By Thomas
Kelly and Grecia Matos, with major contributions provided by David Buckingham,
Carl DiFrancesco, Kenneth Porter, and USGS mineral commodity specialists.

Vinnerstedt, L.J.Shan Ring and Hammel, C.J. 1995 Current status
  of environmental, health, and safety issues of lithium ion electric vehicle
  batteries: National renewable Energy Laboratory Report NREL/TP-473-7673, p.
  50. 

 

	 	----- N.Tribe & Associates Ltd. ----- 	33

APPENDIX I 

 

 

Assay report

 

	 	----- N.Tribe & Associates Ltd. ----- 	34

 

	 	----- N.Tribe & Associates Ltd. ----- 	35

	 	----- N.Tribe & Associates Ltd. ----- 	36

 

	 	----- N.Tribe & Associates Ltd. ----- 	37

	 	----- N.Tribe & Associates Ltd. ----- 	38Filed by Automated Filing Services Inc. (604) 609-0244 - US Geothermal Inc. - Exhibit 10.12

EMPLOYMENT AGREEMENT

  
    
      THIS AGREEMENT made as of the 1st day of April
        2006

    

  

BETWEEN:

  
    
      US Geothermal Inc., a body corporate having an
        office at Suite B, 1509 Tyrell Lane Boise, Idaho 83706 

        (the "Company")

    

  

AND:

  
    
      Daniel Kunz of 1509 Tyrell Lane, Suite B, Boise,
        Idaho 83706

        (the "Employee")

    

  

WHEREAS:

(A)         the
Company is in the business of developing the Raft River geothermal property;

(B)         the
Company wishes to engage the Employee as President and Chief Executive Officer;
and

(C)         the
parties hereto wish to enter into this Agreement for the purpose of fixing the
compensation and terms applicable to the employment of the Employee during the
period hereinafter set out.

              
NOW, THEREFORE, THIS AGREEMENT WITNESSES that the parties hereto, in
consideration of the respective covenants and agreements on the part of each of
them herein contained, do hereby covenant and agree as follows:

1.           
Employment

               The
Company hereby engages the Employee as President and Chief Executive Officer of
the Company and the Employee hereby accepts such employment, upon the terms and
conditions hereinafter set out.

2.           
Term

               This
Agreement will be effective from April 1, 2006 and will remain in full force and
effect until the earlier of December 31, 2008 or until terminated as hereinafter
provided.

3.           
Responsibility

                The
Employee will devote appropriate working time to his Employment hereunder, and
while engaged in his employment will have the authority and duty to perform and
carry out such duties and responsibilities as are customarily carried out by
persons holding similar positions in other development companies comparable in
size to 

the Company and such additional and related duties as may from
time to time be assigned, delegated, limited or determined by the Board of
Directors.

4.           
Other Business
Activities
                It
is agreed that the Employee's employment hereunder shall constitute one hundred
forty (140) hours per month, which shall be devoted exclusively for the benefit
of the Company.

(a)           
the Employee may engage in any other business activities, so long as such
activities will not interfere with, or impede, or have the potential to conflict
in any significant manner with either the interests of the Company and/or the
performance of his duties as President and Chief Executive Officer of the
Company. Before the Employee can engage in any other geothermal-related business
activity the Employee must disclose full particulars thereof in writing to the
Board of Directors, and within 15 days after the date of such disclosure, the
Employee must receive from a majority of the Board of Directors a decision that
such activities by the Employee will not, in the opinion of the Board of
Directors, interfere or be in conflict with the interests of the Company and/or
the Employee's performance of his duties to the Company hereunder;

(b)           
the Employee shall refer to the Board of Directors any and all matters and
transactions in respect of which an actual or potential conflict of interest
between the Employee and the Company has arisen or may arise, however remote the
possibility, and the Employee shall not proceed with any such matter or
transaction until the Board of Director's approval therefore is obtained. Such
approval shall not be unreasonably withheld. For purposes of clarification, this
provision is not intended to limit in any way the Employee's other fiduciary
obligations to the Company, which may arise in law or in equity.

5.           
Compensation
                In
consideration of the performance by the Employee of his responsibilities and
duties as President and Chief Executive Officer hereunder:

(a)           
the Company will pay the Employee the sum of US$132,000 per annum, payable
in monthly installments of $11,000 no later than the last working day of the
month;

(b)           
the Company will grant the Employee incentive stock options in such amount
and on such conditions as the Board of Directors of the Company may determine
from time to time; and,

(c)           
the Company will provide the Employee and his immediate family (consisting
of spouse and children) with medical, dental and related coverage as are
available to the other employees of the Company. The Company will also provide
reasonable life insurance and accidental death coverage with the proceeds
payable to the Employee's estate or specified family member.

6.           
Expenses

                The
Company shall reimburse the Employee for any and all reasonable and documented
expenses actually and necessarily incurred by the Employee in connection with
the performance of his duties under this Agreement. The Employee will furnish
the Company with an itemized account of his expenses in such form or forms as
may reasonably be required by the Company and at such times or intervals as may
be required by the Company.

7.           
Vacation

                Employee
will be entitled to a paid vacation of four weeks within each 12-month period
under the terms of this Agreement, to be calculated from the date of the
commencement of employment set forth in Section 2 herein.

8.           
Change of Control

               
Cognizant that the Company is a publicly owned entity, should a Change
of Control occur, the Employee, at his option shall elect to receive
compensation of $250,000 no later than five (5) working days after the effective
date that the Change of Control has occurred. This compensation is payable by
the Company or its Successor regardless of whether or not the Employee continues
under employment pursuant to this Employment Agreement or is replaced with a new
agreement.

9.           
Termination

                This
Agreement and the Employee's employment may be terminated by the Company
summarily and without notice, payment in lieu of notice, severance payments,
benefits, damages or any sums whatsoever, on the occurrence of any one or more
of the following events:

	 	(a) 	
      The Employee's failure to carry out his duties hereunder
      in a competent and professional manner;

	 	 	 
	 	(b) 	
      The Employee's appropriation of corporate opportunities
      for the Employee's direct or indirect benefit or his failure to disclose
      any material conflict of interest;

	 	 	 
	 	(c) 	
      The Employee's plea of guilty to, or conviction of, an
      indictable offence once all appeals (if any) have been completed without
      such conviction having been reversed;

	 	 	 
	 	(d) 	
      The existence of cause for termination of the Employee at
      common law including but not limited to cause related to fraud,
      dishonesty, illegality, breach of statute or regulation, or gross
      incompetence;

	 	 	 
	 	(e) 	
      Failure on the part of the Employee to disclose material
      facts concerning his business interests or employment outside of his
      employment by the Company, provided such facts relate to the Employee's
      duties hereunder;

	 	(f) 	
      Refusal on the part of the Employee to follow the
      reasonable and 1awful directions of the Board of Directors of the
      Company;

	 	 	 
	 	(g) 	
      Breach of fiduciary duty to the Company on the part of
      the Employee;

	 	 	 
	 	(h) 	
      Material breach of this Agreement or gross negligence on
      the part of the Employee in carrying out his duties under this Agreement;
      or

	 	 	 
	 	(i) 	
      A declaration of bankruptcy on the part of the Employee
      by a court of competent jurisdiction.

9.1           
In the event of the early termination of the Agreement for any reason set
out in Section 9 above, the Employee shall only be entitled to such compensation
as would otherwise be payable to the Employee hereunder up to and including such
date of termination, as the case may be.

9.2           
This Agreement and the Employee's employment may be terminated on notice by
the Company to the Employee for any reason other than for the reasons set out in
Section 9 above of this Agreement upon one month notice to the Employee. In such
event, the Employee will be entitled to a lump sum payment of salary and
incurred expenses from the date of the notice to the termination date contained
in section 2 of this agreement.

9.3           
This Agreement and the Employee's employment may be terminated on notice by
the Employee to the Company for any reason upon one month notice to the Company.
In such event, the Employee will be entitled to payment of salary and expenses
until the date one month after which notice was given.

10.          
Confidential Information

                The
Employee agrees to keep the affairs and Confidential Information (as defined
below) of the Company strictly confidential and shall not disclose the same to
any person, company or firm, directly or indirectly, during or after his
employment by the Company except as authorized in writing by the Board.
"Confidential Information" includes, without limitation, the following types of
information or material, both existing and contemplated, regarding the Company
or its parent, affiliated or subsidiary companies: corporate information,
including contractual licensing arrangements, plans, strategies, tactics,
policies, resolutions, patent, trademark and trade name applications; any
litigation or negotiations; information concerning suppliers; marketing
information, including sales, investment and product plans, customer lists,
strategies, methods, customers, prospects and market research data; financial
information, including cost and performance data, debt arrangements, equity
structure, investors and holdings; operational and scientific information,
including trade secrets; technical information, including technical drawings and
designs; any information relating to any mineral projects in which the Company
has an actual or potential interest; and personnel information, including
personnel lists, resumes, personnel data, organizational structure and
performance evaluations. The Employee agrees not to use such information,
directly or indirectly, for his own interests, or any interests other than those
of the Company, 

whether or not those interests conflict with the interests of
the Company during or after his employment by the Company. The Employee
expressly acknowledges and agrees that all information relating to the Company,
whether financial, technical or otherwise shall, upon execution of this
Agreement and thereafter, as the case may be, be the sole property of the
Company, whether arising before or after the execution of this Agreement. The
Employee expressly agrees not to divulge any of the foregoing information to any
person, partnership, Company or other legal entity or to assist in the
disclosure or divulging of any such information, directly or indirectly, except
as required by law or as otherwise authorized in writing by the Board. The
provisions of this Section 10 and Section 10.1 below shall survive the
termination of this Agreement for a period of one year. 

10.1           
The Employee agrees that all documents of any nature pertaining to the
activities of the Company or its related corporate entities, including
Confidential Information, in the Employee's possession now or at any time during
the Employee's period of employment, are and shall be the property of the
Company and that all such documents and copies of them shall be surrendered to
the Company when requested by the Company.

11.           Non-Competition
                 During
the Non-Competition Period (as defined below), the Employee shall not, either
individually or in partnership or jointly or in conjunction with any other
person, entity or organization, as principal, agent, consultant, lender,
contractor, employer, employee, investor, shareholder or in any other manner,
directly or indirectly, advise, manage, carry on, establish, control, engage in,
invest in, offer financial assistance or services to, or permit the Employee's
name or any part thereof to be used by, any business in geothermal resources
that competes with the business of the Company, its parent, affiliated or
subsidiary companies, or any business in which the Company, its parent,
affiliated or subsidiary companies is engaged. Competition, for purposes of this
paragraph is defined as a 10-mile radius around any and all geothermal
properties acquired by or in negotiations to be acquired by the Company up to
and inclusive of the date of termination. For purposes of this Agreement,
"Non-Competition Period" means a period ending twelve (12) months after the end
of the termination of this Agreement. 

12.           Acknowledgement
                The
Employee acknowledges that damages would be an insufficient remedy for a breach
by him of this Agreement and agrees that the Company may apply for and obtain
any relief available to it in a court of law or equity, including injunctive
relief, to restrain breach or threat of breach of this Agreement by the Employee
or to enforce the covenants contained therein and, in particular, the covenants
contained in Sections 10, and 11, in addition to rights the Company may have to
damages arising from said breach or threat of breach. 

13.          Representations
and
Warranties
                The
Employee represents and warrants to the Company that the execution and
performance of this Agreement will not result in or constitute a default,
breach, or violation, or an event that, with notice or lapse of time or both,
would be a default, 

breach, or violation, of any understanding, agreement or
commitment, written or oral, express or implied, to which the Employee is
currently a party or by which the Employee or Employee's property is currently
bound.

14.          Governing
Law
                This
Agreement shall be construed and enforced in accordance with the laws of the
State of Idaho, USA.

15.           Entire
Agreement
                This
Agreement constitutes the entire agreement between the parties hereto with
respect to the relationship between the Company and the Employee and supersedes
all prior arrangements and agreements, whether oral or in writing between the
parties hereto with respect to the subject matter hereof.

16.         
Amendments
                No
amendment to or variation of the terms of this Agreement will be effective or
binding upon the parties hereto unless made in writing and signed by both of the
parties hereto.

17.          Assignment
                This
Agreement is not assignable by the Employee. This Agreement is assignable by the
Company to any other company, which controls, is controlled by, or is under
common control with the Company. This Agreement shall enure to the benefit of
and be binding upon the Company and its successors and permitted assigns and the
Employee and his heirs, executors and administrators.

18.          Severability
                Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the
prohibition or unenforceability and shall be severed from the balance of this
Agreement, all without affecting the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.

19.          Headings
                The
division of this Agreement into Sections and the insertion of headings are for
convenience or reference only and shall not affect the construction or
interpretation of this Agreement.

20.          Time
of
Essence
               
Time shall be of the essence in all respects of this Agreement.

21.          Independent
Legal
Advice
                The
Employee agrees that he has had, or has had the opportunity to obtain,
independent legal advice in connection with the execution of this Agreement and
has read this Agreement in its entirety, understands its contents and is signing
this Agreement 

freely and voluntarily, without duress or undue influence from
any party.

22.          Notice
              
Any notice required or permitted to be made or given under this Agreement to
either party shall be in writing and shall be sufficiently given if delivered
personally , by facsimile, or if sent by prepaid registered mail to the intended
recipient of such notice at their respective addresses set forth below or to
such other address as may, from time to time, be designated by notice given in
the manner provided in this Section:

In the case of Company:

U.S. Geothermal Inc. 
1509 Tyrell Lane, Suite B 
Boise,
Idaho 83706 
Attention: Corporate Secretary 
Fax No.: 208-424-1030

In the case of Employee:

Daniel Kunz
1509 Tyrell Lane, Suite B 
Boise, Idaho 83706

Fax No.: 208-424-1030

22.1           
Any notice delivered to the party to whom it is addressed shall be deemed to
have been given and received on the day it is so delivered or, if such day is
not a business day, then on the next business day following any such day. Any
notice mailed shall be deemed to have been given and received on the 10th
business day following the date of mailing. In the case of facsimile
transmission, notice is deemed to have been given or served on the party to whom
it was sent at the time of dispatch if, following transmission, the sender
receives a transmission confirmation report or, if the sender's facsimile
machine is not equipped to issue a transmission confirmation report, the
recipient confirms in writing that the notice has been received.

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

	U.S. GEOTHERMAL INC. 	 
	 	  	 
	 	  	 
	By:	/s/ John Walker	 
	 	Chairman, US Geothermal Inc. 	 

	SIGNED by the Employee in the presence of: 	 	  
	 	 	 
	/s/ Kerry D. Hawkley	 	/s/ Daniel Kunz 
	Witness 	 	Daniel Kunz 
	 	 	 
	Kerry D. Hawkley	 	 
	Printed Name of Witness

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}]]