Document:

Exhibit 10.1
                             SUBSCRIPTION AGREEMENT
                          (RAB Special Situations, LP)

THIS SUBSCRIPTION AGREEMENT (this "Agreement") dated as of the 31st day of
December, 2004,

BETWEEN:

      WESTERN GOLDFIELDS, INC., a Idaho (U.S.A.) corporation with an address at
      961 Matley Lane, Suite 120, Reno, Nevada 89502 (U.S.A.) (the "Issuer" or
      "Company")

AND:

      RAB SPECIAL SITUATIONS, LP, a Delaware limited partnership, with its
      principal business address at c/o RAB Capital Limited, No. 1 Adam Street,
      London W2CN 6LE, United Kingdom (the "Investor")

WITNESSES THAT WHEREAS:

A.    The Issuer is subject to the regulatory jurisdiction of the U.S.
      Securities and Exchange Commission (the "Commission") and any other
      securities commission of any State of the United States in which the Units
      of the Issuer are offered.

B.    The Investor has agreed to purchase Units of the Issuer with respect to
      the Issuer's private placement of the Units (the "Offering"), on the terms
      and conditions set forth herein at a price of U.S. $0.50 per Unit
      (including any interest or portion thereof, any securities into which the
      Units, the Shares, the Warrants (as defined below) or the Warrant Shares
      (as defined below) are convertible into or exchangeable for, the "Units").
      Each Unit consists of one share of Series "A-1" Convertible Preferred
      Stock, par value $0.01 per share (the "Preferred Stock"), of the Issuer
      (the "Shares"), the terms of which are set forth in the form of Articles
      of Amendment to the Articles of Incorporation of the Company attached
      hereto as Exhibit A hereto (the "Articles of Amendment"), and one half
      Series "A" warrant (the "Warrants"), the terms of which are set forth in
      the Warrant Agreement in the form attached hereto as Exhibit B (the
      "Warrant Agreement"). Each whole Series "A" warrant entitling the holder
      to acquire one additional share of Preferred Stock (the "Warrant Shares")
      at any time for a period of two years from the date of this Agreement at a
      price of $0.60. The Shares are convertible into shares of common stock of
      the Company (the "Common Shares") under the terms set forth in the
      Articles of Amendment and Warrant Agreement.

C.    Such investment will be made in reliance upon the provisions of Regulation
      S, Section 4(2), Section 4(6) and/or Regulation D of the Securities Act of
      1933, as amended (the "Securities Act"), and the other rules and
      regulations promulgated thereunder, and/or upon such other exemption from
      the registration requirements of the Securities Act as may be available
      with respect to any or all of the investments in securities to be made
      hereunder.

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained, the parties agree as follows:

1.    PURCHASE AND SALE OF UNITS

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1.1   The Investor hereby subscribes for and pays for in accordance with the
      terms of this Agreement, 1,000,000 Units at a price of U.S. $0.50 per
      Unit.

1.2   The Investor shall deliver the sum of U.S. $500,000 to the Issuer (the
      "Aggregate Purchase Price").

1.3   Each whole Warrant will be exercisable for $0.60 per share for a period of
      two years from the date of issuance.

1.4   Delivery and payment for the Units will be completed at the offices of the
      Company at 11:00 a.m. (Reno time) (the "Closing Time") on December 3, 2004
      or such earlier or later date or time as the Company may determine, but in
      no event later than December 15, 2004 (the "Closing Date").

2.    CONDITIONS OF CLOSING

2.1   Investor Closing Deliveries. The obligation of the Company to consummate
      the transactions contemplated by this Agreement is subject to the
      satisfaction of the following conditions precedent or execution and
      delivery to the Company of the following agreements, documents or
      instruments, as the case may be:

      (a)   Payment by the Investor to the Company of the Aggregate Purchase
            Price pursuant to Section 7 below;

      (b)   the representations and warranties made by the Investor in this
            Agreement shall be true and correct as of the Closing Date and the
            covenants of the Investor shall have been performed, satisfied and
            complied with, where applicable, on or before the Closing Date; and

      (c)   an executed copy of the Registration Rights Agreement in the form
            attached hereto as Exhibit C (the "Registration Rights Agreement").

2.2   Company Closing Deliveries. The obligation of the Investor to consummate
      the transactions contemplated by this Agreement is subject to the
      satisfaction of the following conditions precedent or execution and
      delivery to the Investor of the following agreements, documents or
      instruments, as the case may be:

      (a)   the representations and warranties made by the Company in this
            Agreement shall be true and correct as of the Closing Date (except
            for representations and warranties that speak as of a specific date)
            and the covenants of the Company shall have been performed,
            satisfied and complied with, where applicable, on or before the
            Closing Date;

      (b)   a certificate representing the Shares to the Investor;

      (c)   an executed copy of the Warrant Agreement;

      (d)   an executed copy of the Registration Rights Agreement;

      (e)   the Company shall have amended its Articles of Incorporation to
            authorize the issuance of the Preferred Stock with terms set forth
            in the Articles of Amendment;

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      (f)   a certificate executed by the chief executive officer or the chief
            financial officer of the Company, dated the Closing Date, in form
            and substance reasonably satisfactory to the Subscriber, confirming
            the satisfaction of paragraph 2.2(a) and such other matters as may
            be reasonably requested by the Investor or its counsel; and

      (g)   the Company's legal counsel issues an opinion that (i) the Company
            has the requisite corporate power and authority to issue the Shares,
            (ii) the execution and delivery of this Agreement and the agreements
            contemplated by this Agreement have been duly authorized by all
            necessary action on the part of the Company and no further consent
            or action is required by the Company, its Board of Directors or its
            stockholders; and (iii) the Shares and Warrants, when issued and
            paid for in accordance with this agreement, will be duly and validly
            issued, fully paid and non-assessable, are not subject to preemptive
            rights or similar rights of stockholders.

2.3   Notwithstanding the foregoing, in the event the Company has not accepted
      the Investor's subscription and this Agreement on or before December 15,
      2004, this Agreement and any other documents delivered in connection
      herewith will be returned to the Investor at the address set forth on the
      first page of this Agreement and any subscription funds that were provided
      will be returned in the same manner without interest or deduction.

3.    REPRESENTATIONS AND WARRANTIES

3.1   The Investor represents and warrants to the Issuer that:

      (a)   The Investor is duly organized and in good standing under the laws
            of its jurisdiction of its organization.

      (b)   The Investor has the requisite corporate or other organizational
            power and authority to enter into and to consummate the transactions
            contemplated by this Agreement. The execution and delivery by the
            Investor of the this Agreement and the other documents contemplated
            hereby have been duly authorized by all necessary action on the part
            of the Investor, and no further consent or action is required by the
            Investor.

      (c)   The Investor is knowledgeable and experienced in making investments
            of this type, and able to bear the economic risk of loss of its
            investment in the Company. The Investor is an "accredited investor,"
            as that term is defined in Rule 501(a) of Regulation D under the
            Securities Act.

      (d)   There are no claims for brokerage commissions, finder's fees or
            similar compensation in connection with the transactions
            contemplated by this Agreement based on any arrangement or agreement
            made by the Investor.

      (e)   The Investor is acting on its own behalf in connection with the
            investigation and examination of the Company and its decision to
            execute the agreement and the other documents, agreements and
            instruments contemplated hereby.

      (f)   The Investor is not acquiring the Units as a result or any
            information about the affairs of the Issuer that is not generally
            known to the public.

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3.2   The Issuer represents and warrants to the Investor that:

      (a)   Validity of Existence. The Issuer is a corporation duly incorporated
            and in good standing under the laws of the State of Idaho, and has
            the requisite corporate power and authority to conduct its business
            as it is currently being conducted.

      (b)   Subsidiaries. The Company has two direct, wholly owned subsidiaries,
            Western Mesquite Mines Inc. ("WMMI"), a Nevada corporation, and
            Calumet Mining Company ("Calumet"), an Idaho corporation. Except as
            otherwise provided by that certain Facility Agreement, dated as of
            November 5, 2003, between Western Mesquite Mines, Inc., each party
            listed in schedule 1 thereto as a Guarantor, RMB International
            (Dublin) Limited and RMB Resources Limited, and the other documents,
            agreements and instruments related thereto, the Company owns
            directly all of the capital stock or comparable equity interests of
            WMMI and Calumet free and clear of any lien. All of the issued and
            outstanding shares of capital stock of each of WMMI and Calumet are
            validly issued and are fully paid, non-assessable and free of
            preemptive and similar rights. Each of WMMI and Calumet are
            corporations duly incorporated and in good standing in their
            respective jurisdictions of organization, and each has the requisite
            corporate power and authority to conduct its business as it is
            currently being conducted.

      c)    Authorization; Enforcement. The Company has the requisite corporate
            power and authority to enter into and to consummate the transactions
            contemplated by this Agreement. The execution and delivery by the
            Company of this Agreement and the other documents contemplated
            hereby (collectively, the "Transaction Documents") have been duly
            authorized by all necessary action on the part of the Company, and
            no further consent or action is required by the Company, its Board
            of Directors or its stockholders. Each of the Transaction Documents,
            when duly authorized, executed and delivered by all parties thereto
            other than the Company, will constitute, a valid and binding
            obligation of the Company, enforceable against the Company in
            accordance with the terms thereof, except that (i) the enforcement
            thereof may be limited by applicable bankruptcy, insolvency,
            reorganization, moratorium or similar laws affecting the rights of
            creditors generally, (ii) equitable remedies, including, without
            limitation, specific performance and injunction, may be granted only
            in the discretion of a court of competent jurisdiction, (iii) rights
            of indemnity, contribution and the waiver of contribution provided
            for herein, and any provisions exculpating a party from a liability
            or duty otherwise owed by it, may be limited under applicable law,
            and (iv) the enforceability of provisions in any Transaction
            Document which purport to sever any provision which is prohibited or
            unenforceable under applicable law.

      d)    No Conflicts. The execution, delivery and performance of the
            transactions contemplated hereunder by the Company do not and will
            not (i) conflict with or violate any provision of the Company's or
            its subsidiaries' certificate or articles of incorporation, bylaws
            or other organizational or charter documents, (ii), to the knowledge
            of the Company, conflict with, or constitute a default (or an event
            that with notice or lapse of time or both would become a default)
            under, or give to others any rights of termination, amendment,
            acceleration or cancellation (with or without notice, lapse of time
            or both) of, any agreement, credit facility, debt or other
            instrument (evidencing a Company or debt or otherwise) to which the
            Company or any subsidiary is a party or by which any property or
            asset of the Company or any subsidiary is bound or affected, except
            to the extent that such conflict, default or termination right could
            not reasonably be expected to have a Material Adverse Effect (as
            defined in Section 3.2(g) below), or (iii), to the knowledge of the
            Company, result in a violation of any law, rule, regulation, order,
            judgment, injunction, decree or other restriction of any court or
            governmental authority to which the Company or its subsidiaries are
            subject (including federal and state securities laws and
            regulations, assuming the accuracy and completeness of the
            representations and warranties of the Investor in this Agreement),
            or by which any property or asset of the Company or its subsidiaries
            is bound or affected. As used herein, the words "knowledge of the
            Company" (or any substantially similar phrase) means the active
            knowledge (without investigation) of the President of the Company
            and its executive officers.

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      e)    Issuance of the Securities. The Preferred Stock and Warrants, when
            issued and paid for in accordance with this Agreement, will be duly
            and validly issued, fully paid and non-assessable, free and clear of
            all liens and, except as otherwise set forth herein or in the
            instruments representing such securities or describing the rights
            and obligations relating thereto, shall not be subject to preemptive
            rights or similar rights of stockholders. The Common Shares issuable
            upon conversion of the Preferred Stock or exercise of the Warrants,
            when issued in accordance with the Articles of Amendment or Warrant
            Agreement, as applicable, will be duly and validly issued, fully
            paid and non-assessable, free and clear of all liens and shall not
            be subject to preemptive rights or similar rights of stockholders.

      f)    Capitalization. All outstanding shares of capital stock of the
            Company are duly authorized, validly issued, fully paid and
            non-assessable. The Company has the authorized capitalization as set
            forth in its statements, reports, prospectuses and registration
            statements filed with the Commission (the "SEC Filings") as of the
            respective dates set forth therein. As of December 31, 2004, the
            Company had 38,722,309 Common Shares issued and outstanding, options
            exercisable to acquire 3,183,084 Common Shares at an average
            exercise price of $0.761, and warrants exercisable to acquire
            16,676,335 Common Shares at an average exercise price of $0.948.
            Except as contemplated in this Agreement or described in the SEC
            Filings, the Company has no preferred shares or convertible debt
            outstanding as of the Closing Date.

      g)    Material Changes. Since September 30, 2004, except as set forth in
            the SEC Filings, the Company has not suffered any change that has
            had, or could reasonably be expected to have, a Material Adverse
            Effect. "Material Adverse Effect" shall mean any event, occurrence
            or development that, individually or in the aggregate, has had or
            that could reasonably have, a material adverse affect on (A) the
            validity or enforceability of this Agreement, (B) the results of
            operations, assets, prospects, business or condition (financial or
            otherwise) of the Company and its subsidiaries, taken as a whole, or
            (C) the Company's ability to perform fully on a timely basis its
            obligations under this Agreement. Since September 30, 2004, and
            except as set forth in the SEC Filings, the Company has not incurred
            any liabilities (contingent or otherwise) other than (x) trade
            payables and accrued expenses incurred in the ordinary course of
            business consistent with past practice and expenses incurred in
            connection with the Offering and sale of the Shares and Warrant
            Shares and the preparation of a registration statement to be filed
            in connection therewith and (y) liabilities not required to be
            reflected in the Company's financial statements pursuant to GAAP or
            required to be disclosed in filings made with the Commission. Since
            September 30, 2004, except as set forth in the SEC Filings, the
            Company has not altered its method of accounting or the identity of
            its auditors. Since September 30, 2004, except as set forth in the
            SEC Filings, the Company has not declared or made any dividend or
            distribution of cash or other property to its stockholders or
            purchased, redeemed or made any agreements to purchase or redeem any
            shares of its capital stock.

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      h)    Absence of Litigation. There is no action, suit, claim, proceeding,
            inquiry or investigation before or by any court, public board,
            government agency or body pending or, to the knowledge of the
            Company, threatened against or affecting the Company or any of its
            subsidiaries that could, individually or in the aggregate, have a
            Material Adverse Effect.

      i)    Compliance. Neither the Company nor any subsidiary, to the knowledge
            of the Company, (i) is in default under or in violation of (and no
            event has occurred that has not been waived that, with notice or
            lapse of time or both, would result in a default by the Company or
            any subsidiary under), nor has the Company or any subsidiary
            received notice of a claim that it is in default under or that it is
            in violation of, any indenture, loan or credit agreement or any
            other agreement or instrument to which it is a party or by which it
            or any of its properties is bound (whether or not such default or
            violation has been waived), (ii) is in violation of any order of any
            court, arbitrator or governmental body, or (iii) is in violation of
            any statute, rule or regulation of any governmental authority,
            including without limitation all federal, state and local laws
            relating to taxes, environmental protection, occupational health and
            safety, product quality and safety and employment and labor matters
            (assuming the accuracy and completeness of the representations and
            warranties of the Investor in this Agreement), except in each case
            as could not, individually or in the aggregate, have or result in a
            Material Adverse Effect.

      j)    Title to Assets. The Company and its subsidiaries have good and
            marketable title in all property owned by them that is material to
            their respective businesses, in each case free and clear of all
            liens, except as set forth in the SEC Filings and except for liens
            which do not materially affect the value of such property and do not
            materially interfere with the use made and proposed to be made of
            such property by the Company and the subsidiaries. To the knowledge
            of the Company, any real property and facilities held under lease by
            the Company and the subsidiaries are held by them under valid,
            subsisting and enforceable leases.

      k)    Offering. Assuming the accuracy and completeness of the
            representations and warranties of the Investor in this Agreement,
            the offer, sale and issuance of the Units contemplated by this
            Agreement are exempt from the registration requirements of the
            Securities Act, and the Company has not taken action that would
            cause the loss of such exemption. Neither the Company nor any person
            acting on the Company's behalf has sold or offered to sell or
            solicited any offer to buy the Units by means of any form of general
            solicitation or advertising.

      l)    Application of Takeover Protections. There is no control share
            acquisition, business combination, poison pill (including any
            distribution under a rights agreement) or other similar
            anti-takeover provision under the Company's charter documents or the
            laws of its state of incorporation that are applicable to the
            Investor as a result of the consummation of the transactions
            contemplated by this agreement. The foregoing notwithstanding, the
            Company has authorized in its articles of incorporation blank check
            preferred stock.

      m)    Disclosure. No representation or warranty by the Company contained
            in this Agreement contains any untrue statement of material fact or
            omits to state any material fact necessary, in light of the
            circumstances under which it was made, to make the statements herein
            not misleading.

      n)    Patents and Trademarks. The Company and its subsidiaries have, or
            have rights to use, all patents, patent applications, trademarks,
            trademark applications, service marks, trade names, copyrights,
            licenses and other similar rights that are necessary or material for
            use in connection with their respective businesses.

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      o)    Regulatory Permits. To the knowledge of the Company, the Company and
            its subsidiaries possess all certificates, authorizations and
            permits issued by the appropriate federal, state, local or foreign
            regulatory authorities necessary to conduct their respective
            businesses.

      p)    Tax Returns. Except as set forth on Schedule 3.2(p), since January
            1, 2001, the Company and each of WMMI and Calumet has filed all tax
            returns required by law to be filed by it and has paid all
            applicable taxes to the extent such taxes have become due, and the
            Company has no knowledge of any tax deficiencies or interest or
            penalties currently accrued or accruing, or alleged by a
            governmental taxing authority to be currently accrued or accruing,
            thereon with respect to itself and each subsidiary.

      q)    Environmental Laws. The operations carried on by the Company are in
            material compliance with all applicable federal, state and municipal
            environmental, health and safety statutes, regulations and permits.
            To the Company's knowledge, none of such operations is subject to
            any judicial or administrative proceeding alleging the violation of
            any federal, state or municipal environmental, health or safety
            statute or regulation or is subject to any investigation concerning
            whether any remedial action is needed to respond to a release of any
            Hazardous Material into the environment. For the purposes of this
            subparagraph, "Hazardous Material" means any contaminant, pollutant,
            subject waste, deleterious substance, industrial waste, toxic matter
            or hazardous waste as defined by applicable federal, provincial,
            state or municipal laws or regulations enacted for the protection of
            the natural environment or human health.

      r)    OTC Bulletin Board. The Company's shares are currently quoted on the
            OTC Bulletin Board operated by the National Association of
            Securities Dealers.

      s)    SEC Reporting. The Company, as of the Closing Date, has filed all
            reports (the "SEC Reports") required to be filed by it pursuant to
            the Securities Exchange Act of 1934, as amended (the "1934 Act"). As
            of their respective filing dates, each of the Company's SEC Filings
            (and if any SEC Report filed prior to the date of this Agreement was
            amended or superseded by a filing prior to the date of the Closing
            Date, then as of the date of filing of such amendment or superseding
            filing), (i) where required, were prepared in all material respects
            in accordance with the requirements of the 1934 Act and the rules
            and regulations promulgated thereunder, and (ii) did not contain any
            untrue statements of a material fact and did not omit to state a
            material fact necessary to make the statements therein, in light of
            the circumstances under which they were made, not misleading. Each
            set of audited consolidated financial statements and unaudited
            interim financial statements of the Company (including any notes
            thereto) included in the SEC Reports (i) complies as to form in all
            material respects with the published rules and regulations of the
            SEC with respect thereto, and (ii) have been prepared in accordance
            with the standards of the Public Company Accounting Oversight Board
            (except as may be indicated therein or in the notes thereto) and
            fairly present, in all material respects, the financial position of
            the Company as of the dates thereof and the results of its
            operations and cash flows for the periods then ended subject, in the
            case of the unaudited interim financial statements, to normal
            year-end adjustments which were not or are not expected to be
            material in amount.

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      t)    Disclosure. The Company confirms that neither it nor any other
            person acting on its behalf has provided the Investor with any
            information that constitutes material, nonpublic information.

      u)    Sarbanes Oxley Compliance. Neither the Company nor any of its
            officers has received notice from any governmental entity
            questioning or challenging the accuracy, completeness, form or
            manner of filing or submission of the certifications of the
            principal executive officer and the principal accounting officer of
            the Company pursuant to Section 302(a) and Section 906 of the
            Sarbanes-Oxley Act of 2002 attached as exhibits to the SEC Reports.

      v)    Internal Controls. The Company and each of its subsidiaries maintain
            a system of internal accounting controls sufficient to provide
            reasonable assurance that (i) transactions are executed in
            accordance with management's general or specific authorizations,
            (ii) transactions are recorded as necessary to permit preparation of
            financial statements in conformity with generally accepted
            accounting principles and to maintain asset accountability, (iii)
            access to assets is permitted only in accordance with management's
            general or specific authorization, and (iv) the recorded
            accountability for assets is compared with the existing assets at
            reasonable intervals and appropriate action is taken with respect to
            any differences.

4.    COVENANTS

4.1 The Investor agrees to execute and deliver such further documents and to do
all such further acts and things as may be necessary to comply with the further
requirements for this Offering and to carry out the intent of this Agreement.

4.2 The Issuer agrees that material future contracts, exploration agreements,
property transfers and sales (both real and personal), consultancy arrangements
and all other decisions of a material nature to the overall business of the
Company are fully reviewed by the Independent Board Members of the Company.
Further, if a majority of the Independent Board Members object to the entering
into of any such contracts, or other actions enumerated above on the basis of
there being a conflict of interest with one or more of the Officers and/or
Directors of the Company, then the Company will not enter into such agreement.
For the purposes of this paragraph, an "Independent Board Member" shall be any
Board member not also an Officer of the Company, and having no other nexus with
the proposal being considered, other than as Director of the Company.

4.3 The Company hereby indemnifies and holds harmless the Investor, any of its
affiliates and the directors, officers, employees, shareholders and agents of
any of the foregoing from time to time (for purposes of this paragraph each an
"Indemnified Person") from and against all losses, claims, damages, liabilities,
actions or demands including, without limiting the generality of the foregoing,
amounts paid in any settlement approved by the Company of any action, suit,
proceeding or claim but excluding lost profits and consequential damages, to
which each Indemnified Person may become subject insofar as such losses, claims,
damages, liabilities, actions or demands arise out of or are based upon,
directly or indirectly, any breach of a representation, warranty, covenant or
obligation of the Company contained in this Subscription Agreement or any
certificate or other document delivered by the Company in connection herewith,
and will reimburse such Indemnified Person for any legal or other expenses
reasonably incurred by such Indemnified Person in connection with investigating
or defending any such loss, claim, damage, liability, tax action or demand. For
greater certainty, the foregoing shall not apply to any loss sustained by an
Indemnified Person by reason of the holding, ownership or disposition of the
Units or to any failure of an Indemnified Person to derive earnings or make a
profit from any of the Units.

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5. SECURITIES LAWS MATTERS

5.1   The Investor is aware of and acknowledges to and agrees with the Issuer as
      follows:

      (a)   The Investor is an accredited investor as that term is defined in
            Rule 501(a).

      (b)   The Units, the Shares, the Warrants and the Common Shares underlying
            the Shares and Warrants have not been registered under the
            Securities Act in reliance on the exemptions under the Securities
            Act.

      (c)   The Investor is acquiring the Units for its own account for
            investment and not with a view to or for resale in connection with
            any distribution of the Units. The Investor has not offered or sold
            any portion of the Units and has no present intention of dividing
            the Units with others or of selling, distributing or otherwise
            disposing of any portion of the Units either currently or after the
            passage of a fixed or determinable period of time or upon the
            occurrence or non-occurrence of any predetermined event or
            circumstance.

      (d)   The Investor covenants that it will not make any resale, transfer or
            other disposition of the Units, the Shares, the Warrants and the
            Common Shares underlying the Shares and Warrants except pursuant to
            registration under the Securities Act, or pursuant to an available
            exemption from registration (accompanied by an opinion of counsel
            acceptable to the Company that such resale, transfer or other
            disposition is exempt from the registration provisions of all
            applicable federal and state laws).

      (e)   The Investor understands and agrees that, in addition to the
            restrictions set forth in this Agreement, the following legend will
            be placed on any certificate(s) or other document(s) evidencing the
            Units, the Shares, the Warrants and the Common Shares underlying the
            Shares and Warrants in substantially the following form and the
            Investor must comply with the terms and conditions set forth in such
            legends prior to any resales, pledges, hypothecations or other
            transfers of the Units:

            "The [______] represented by this certificate have not been
            registered under any securities laws and may not be transferred, nor
            will any assignee, vendee, transferee, or endorsee hereof be
            recognized as having an interest in such [______] by the Company for
            any purpose, unless (a) the stockholder wishing to transfer the
            [______] provides an opinion of counsel satisfactory to the Company
            stating that the proposed transfer of the [______] is exempt from
            the registration provisions of all applicable federal and state
            laws, (b) said securities have been registered pursuant to the
            Securities Act of 1933, as amended (the "Act") and a registration
            statement under the Act with respect to such [______] shall then be
            in effect and such transfer has been qualified under applicable
            state securities laws, or (c) in accordance with the provisions of
            Regulation S under the Act."

      (f)   Stop transfer instructions have been or will be placed on any
            certificates or other documents evidencing the Units, the Shares,
            the Warrants and the Common Shares underlying the Shares and
            Warrants so as to restrict the resale, pledge, hypothecation or
            other transfer thereof in accordance with the provisions hereof. The
            parties agree that the Company shall refuse to register any transfer
            of the Units (or any securities issued upon conversion thereof) not
            made pursuant to registration under the Securities Act or pursuant
            to an available exemption from registration under the Securities Act
            (accompanied by an opinion of counsel acceptable to the Company that
            such resale, transfer or other disposition is exempt from the
            registration provisions of all applicable federal and state laws).
            The Company shall not treat as the owner of the Units (or any
            securities issued upon conversion thereof), or otherwise accord
            voting or dividend rights to, any transferee to whom Units (or any
            securities issued upon conversion thereof) have been transferred in
            contravention of this Agreement.

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      (g)   The Investor is not subscribing for Units as a result of or
            subsequent to any advertisement, article, notice or other
            communication published in any newspaper, magazine, or similar media
            or broadcast over television or radio, or presented at any seminar
            or meeting.

      (h)   The Investor agrees to furnish any additional information requested
            to assure compliance with applicable federal and state Securities
            Laws in connection with the purchase and sale of this Units.

      (i)   The Investor understands that the Units, the Shares, the Warrants
            and the Common Shares underlying the Shares and Warrants are
            "restricted securities" under applicable federal securities laws and
            that the Securities Act and the rules of the Commission provide in
            substance that the Investor may dispose of such securities only
            pursuant to an effective registration statement under the Securities
            Act or an exemption therefrom.

      (j)   The Investor agrees: (i) that the Investor will not sell, assign,
            pledge, give, transfer or otherwise dispose of the Units, the
            Shares, the Warrants and the Common Shares underlying the Shares and
            Warrants or make any offer or attempt to do any of the foregoing,
            except pursuant to a registration of such securities under the
            Securities Act and all applicable U.S. state securities laws or in a
            transaction which is exempt from the registration provisions of the
            Securities Act and all applicable U.S. state securities laws; (ii)
            that the Company and any transfer agent for the Units, the Shares,
            the Warrants and the Common Shares underlying the Shares and
            Warrants shall not be required to give effect to any purported
            transfer of any of such securities except upon compliance with the
            foregoing restrictions; and (iii) that a restrictive legend will be
            placed on the certificates representing such securities.

      (k)   The Investor has not offered or sold any portion of the subscribed
            for Units and has no present intention of dividing such Units with
            others or of reselling or otherwise disposing of any portion of such
            Units either currently or after the passage of a fixed or
            determinable period of time or upon the occurrence on nonoccurrence
            of any predetermined event or circumstance.

      (l)   The Investor agrees to furnish any additional information requested
            to assure compliance with applicable U.S. Securities Laws in
            connection with the purchase and sale of the Units.

6.    GENERAL

6.1   This Agreement may be executed in any number of counterparts, each of
      which will be taken to be an original; but such counterparts will together
      constitute one document.

6.2   Neither the Investor nor the Issuer may assign all or any part of his, her
      or its interest in or to this Agreement without the written consent of the
      other and any purported assignment without such consent will be void.

                                       10
<PAGE>

6.3   This Agreement is to be governed and interpreted according to the laws of
      the State of Nevada without regard to conflict of laws or principles.

6.4   This Agreement shall inure to the benefit of and be binding upon the
      parties hereto and their successors, personal representatives and
      permitted assigns.

6.5   Time is of the essence of this Agreement.

6.6   The parties to this Agreement may amend this Agreement only in writing.

6.7   The parties to this Agreement will execute and deliver such investor
      questionnaires, documents, transfers, assurances, Unit certificates and
      procedures necessary for the purposes of giving effect to or perfecting
      the transactions contemplated by this Agreement.

6.8   All notices or other communications given or made hereunder shall be in
      writing and shall be delivered or mailed by registered or certified mail,
      return receipt requested, postage prepaid, to the address given above, and
      such notice will be deemed to be given on the date of receipt.

7.    PAYMENT INSTRUCTIONS

Payment for the Units shall be made by bank wire transfer, certified cheque, or
bank draft (without deduction of bank service charges or otherwise) payable to
"Western Goldfields". The entire subscription price for all Units must be paid
at the time of subscription. In the case of a bank wire transfer, funds should
be wired to:

      Name:             Western Goldfields, Inc.  (Specify Savings Account)
      Bank:             Bank of America
      Address:          401 S. Virginia
                        Reno, NV  89501
      Account No:       0049 6701 3848
      ABA:              026009593

8.    REGISTRATION AND DELIVERY INSTRUCTIONS

The Investor hereby directs that at the time of the closing, the certificates
representing the Units shall be registered and delivered as follows:

Name:    ____________________________

Address: ____________________________

                                       11
<PAGE>

The Issuer is authorized to deliver the Units to:

Name: ____________________________

Address: ____________________________

Attention:  _________________________________

         (Contact Name & Tel Number)

                                       12
<PAGE>

IN WITNESS WHEREOF the parties hereto have hereunder set their hands as of the
date first stated above.

Western Goldfields, Inc.

By: /s/ Mark Shonnard
   -----------------------------------------
   Mark Shonnard, Chief Financial Officer

If Investor is an individual:

-------------------------------------         ----------------------------------
Name of Investor                              Signature of Investor

-------------------------------------         ----------------------------------
Name of Witness                               Signature  of Witness

-------------------------------------
Address of Investor

-------------------------------------
Occupation

OR

If Investor is a corporation:

Name of Corporation:

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

By:  /s/ W.P.S. Richards
   ----------------------------------
   Name:   W.P.S. Richards
   Title:  Director of General Partner

                                       13Exhibit 10.2

THE WARRANT REPRESENTED HEREBY AND THE SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT (THE "WARRANT") HAVE NOT BEEN REGISTERED UNDER ANY SECURITIES LAWS AND
MAY NOT BE TRANSFERRED, NOR WILL ANY ASSIGNEE, VENDEE, TRANSFEREE OR ENDORSEE
HEREOF BE RECOGNIZED AS HAVING AN INTEREST IN SUCH WARRANT BY THE COMPANY FOR
ANY PURPOSE, UNLESS (A) THE HOLDER WISHING TO TRANSFER THE WARRANT PROVIDES AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY STATING THAT THE PROPOSED
TRANSFER OF THE WARRANT IS EXEMPT FROM THE REGISTRATION PROVISIONS OF ALL
APPLICABLE FEDERAL AND STATE LAWS, (B) SAID SECURITIES HAVE BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND A
REGISTRATION STATEMENT UNDER THE ACT WITH RESPECT TO SUCH WARRANT SHALL THEN BE
IN EFFECT AND SUCH TRANSFER HAS BEEN QUALIFIED UNDER APPLICABLE STATE SECURITIES
LAWS, OR (C) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE ACT.
HEDGING TRANSACTIONS INVOLVING THE WARRANT MAY NOT BE CONDUCTED UNLESS THEY ARE
IN COMPLIANCE WITH THE ACT.

                             STOCK PURCHASE WARRANT

                To Purchase 500,000 Shares of Preferred Stock of

                            Western Goldfields, Inc.

      THIS CERTIFIES that, for value received, RAB Special Situations, LP (the
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after the date hereof (the "Initial Exercise Date")
and on or prior to the close of business on the date ending two (2) years from
the Initial Exercise Date (the "Termination Date"), but not thereafter, to
subscribe for and purchase from Western Goldfields, Inc., a corporation
incorporated in Idaho (the "Company"), 500,000 shares (the "Warrant Shares") of
Series "A-1" Convertible Preferred Stock, $0.01 par value, of the Company (the
"Preferred Stock"). The per share purchase price of the Warrant Shares (the
"Exercise Price") shall be $0.60.

      Capitalized terms used and not otherwise defined herein shall have the
meanings set forth for such terms in the Subscription Agreement, dated December
31, 2004 (the "Subscription Agreement"), between the Company and the Holder. The
Exercise Price and the number of shares for which the Warrant is exercisable
shall be subject to adjustment as provided herein. In the event of any conflict
between the terms of this Warrant and the Subscription Agreement, the
Subscription Agreement shall control.

      1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
Holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.

      2. Authorization of Shares. The Company covenants that all shares of
Preferred Stock which may be issued upon the exercise of rights represented by
this Warrant will, upon exercise of the rights represented by this Warrant, be
duly authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).

      3. Exercise of Warrant. Except as provided in Section 4 herein, exercise
of the purchase rights represented by this Warrant may be made at any time or
times on or after the Initial Exercise Date, and before the close of business on
the Termination Date, by the surrender of this Warrant and the Notice of
Exercise Form annexed hereto duly executed, at the office of the Company (or
such other office or agency of the Company as it may designate by notice in
writing to the registered Holder hereof at the address of such Holder appearing
on the books of the Company) and upon payment of the Exercise Price of the
shares thereby purchased by wire transfer or cashier's check drawn on a United
States bank. Upon proper exercise of this Warrant, the Holder shall be entitled
to receive a certificate for the number of shares of Preferred Stock so
purchased. Certificates for shares purchased hereunder shall be delivered to the
Holder hereof within three (3) business days after the date on which this
Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to
have been exercised and such certificate or certificates shall be deemed to have
been issued, and the Holder or any other person so designated to be named
therein, shall be deemed to have become a the Holder of record of such shares
for all purposes as of the date the Warrant has been exercised by payment to the
Company of the Exercise Price and all taxes required to be paid by the Holder,
if any, pursuant to Section 5 prior to the issuance of such shares, have been
paid. If this Warrant shall have been exercised in part, the Company shall, at
the time of delivery of the certificate or certificates representing the Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder
to purchase the unpurchased shares of Preferred Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.

                                       1
<PAGE>

      4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which the Holder would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the Exercise Price.

      5. Charges, Taxes and Expenses. Issuance of certificates for shares of
Preferred Stock upon the exercise of this Warrant shall be made without charge
to the Holder hereof for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder of this Warrant or in such name or names as may be directed by the
Holder of this Warrant; provided, however, that in the event certificates for
shares of Preferred Stock are to be issued in a name other than the name of the
Holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
hereof; and the Company may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any transfer tax incidental thereto.

      6. Further Assurances. The Company will take all action that may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of stock, free from all taxes, liens and
charges with respect to the issue thereof, on the exercise of all or any portion
of this Warrant from time to time outstanding.

      7. Transfer, Division and Combination.

            (a) Subject to compliance with any applicable securities laws,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company, together with
a written assignment of this Warrant substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned, may be exercised by a new Holder for the purchase of shares
of Preferred Stock without having a new Warrant issued.

            (b) This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 7(a) as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.

            (c) The Company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 7.

                                       2
<PAGE>

            (d) The Company agrees to maintain, at its aforesaid office, books
for the registration and the registration of transfer of the Warrants.

      8. No Rights as Stockholder until Exercise. This Warrant does not entitle
the Holder hereof to any voting rights or other rights as a stockholder of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price, the Warrant Shares so purchased shall
be and be deemed to be issued to such Holder as the record owner of such shares
as of the close of business on the later of the date of such surrender or
payment.

      9. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant certificate,
and in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and upon surrender and cancellation of such Warrant, if
mutilated, the Company will make and deliver a new Warrant of like tenor and
dated as of such cancellation, in lieu of such Warrant.

      10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.

      11. Adjustments of Exercise Price and Number of Warrant Shares.

            (a) Stock Splits, etc. The number and kind of securities purchasable
upon the exercise of this Warrant and payment of the Exercise Price shall be
subject to adjustment from time to time upon the happening of any of the
following. In case the Company shall (i) pay a dividend in shares of Preferred
Stock or make a distribution in shares of Preferred Stock to the holders of its
outstanding Preferred Stock, (ii) subdivide its outstanding shares of Preferred
Stock into a greater number of shares of Preferred Stock, (iii) combine its
outstanding shares of Preferred Stock into a smaller number of shares of
Preferred Stock or (iv) issue any shares of its capital stock in a
reclassification of the Preferred Stock, then the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that the Holder of this Warrant shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which he
would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof. Upon each such adjustment of the kind and number
of Warrant Shares or other securities of the Company which are purchasable
hereunder, the Holder of this Warrant shall thereafter be entitled to purchase
the number of Warrant Shares or other securities resulting from such adjustment
at an Exercise Price per Warrant Share or other security obtained by multiplying
the Exercise Price in effect immediately prior to such adjustment by the number
of Warrant Shares purchasable pursuant hereto immediately prior to such
adjustment and dividing by the number of Warrant Shares or other securities of
the Company resulting from such adjustment. An adjustment made pursuant to this
paragraph shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.

            (b) Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Preferred Stock), or sell,
transfer or otherwise dispose of all or substantially all its property, assets
or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) ("Other
Property"), are to be received by or distributed to the holders of Preferred
Stock of the Company, then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, such Other Property receivable upon or
as a result of such reorganization, reclassification, merger, consolidation or
disposition of assets as the Holder would have been entitled to receive if the
Holder had exercised this Warrant immediately prior to such event. In case of
any such reorganization, reclassification, merger, consolidation or disposition
of assets, the successor or acquiring corporation (if other than the Company)
shall expressly assume in writing or by operation of law the due and punctual
observance and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined in good faith by resolution of the Board of Directors
of the Company) in order to provide for adjustments of shares of Preferred Stock
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 11. The foregoing
provisions of this Section 11 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.

                                       3
<PAGE>

            (c) Rights of Holders Upon Dilutive Issuances. Subject to the
exclusions contained in subsection 11(d) below, for 12 months from Initial
Exercise Date, if the Company sells any shares of its Preferred Stock in a
capital raising transaction at a per share selling price lower $0.50, then the
Exercise Price of the Warrants then unexercised shall be adjusted downward to
equal such lower per share selling price. The Company shall give to the Holders
written notice of any such sale within 24 hours of the closing of any such sale.

            (d) Exclusions. Anything herein to the contrary notwithstanding, the
Company shall not be required to make any adjustment of the Exercise Price in
the case of (i) the issuance or sale of options, or the shares of capital stock
of the Company issuable upon exercise of such options, to purchase securities of
the Company to directors, officers, employees or consultants of the Company,
whether "qualified" for tax purposes or not, pursuant to plans or arrangements
approved by the Board of Directors or stockholders of the Company, (ii) the
issuance of securities of the Company pursuant to options, warrants or other
convertible securities of the Company outstanding as of the date hereof, (iii)
the issuance of securities of the Company concurrently with this financing, or
(iv) the issuance of common stock and warrants to Newmont Mining Corporation or
its affiliates ("Newmont") to purchase Mesquite mine or any adjustment to
securities of the company previously issued to Newmont in connection therewith.
The issuances or sales described in the preceding clauses (i) through (v) shall
be ignored for purposes of calculating any adjustment to the Exercise Price.

            (e) Nominal Adjustment. The Company shall not be required to make an
adjustment in the Exercise Price under this Section 11 if such adjustment is
less that $0.01. However, the Company shall be required to carry forward on its
books all adjustments that would have been made but for this Section 11(e) and
shall take such adjustment into account when making subsequent adjustments under
this Section 11. All calculations under this Section 11 shall be made to the
nearest cent.

      12. Voluntary Adjustment by the Company. The Company may at any time
during the term of this Warrant, reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.

      13. Notice of Adjustment. Whenever the number of Warrant Shares or number
or kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
promptly mail by registered or certified mail, return receipt requested, to the
Holder of this Warrant notice of such adjustment or adjustments setting forth
the number of Warrant Shares (and Other Property) purchasable upon the exercise
of this Warrant and the Exercise Price of such Warrant Shares (and Other
Property) after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which such
adjustment was made. Such notice, in the absence of manifest error, shall be
conclusive evidence of the correctness of such adjustment.

      14. Notice of Corporate Action. If at any time:

            (a) the Company shall take a record of the holders of its Preferred
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right; or

            (b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation; or

                                       4
<PAGE>

            (c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company; then, in any one or more of such
cases, the Company shall give to the Holder (i) at least 30 days prior written
notice of the date on which a record date shall be selected for such dividend,
distribution or right or for determining rights to vote in respect of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 30 days' prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (x) the date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, the date on which the holders of Preferred Stock shall be entitled to any
such dividend, distribution or right, and the amount and character thereof, and
(y) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
the holders of Preferred Stock shall be entitled to exchange their shares of
Preferred Stock for securities or Other Property deliverable upon such
disposition, dissolution, liquidation or winding up. Each such written notice
shall be sufficiently given if addressed to the Holder at the last address of
the Holder appearing on the books of the Company and delivered in accordance
with Section 16(d).

      15. Authorized Shares.

            (a) The Company covenants that during the period the Warrant is
outstanding, it will reserve from its authorized and unissued Preferred Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares
may be issued as provided herein without violation of any applicable law or
regulation.

            (b) The Company shall not by any action, including, without
limitation, amending its articles of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any shares of
Preferred Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in par
value, and (ii) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Preferred Stock upon the exercise of this Warrant.

            (c) Upon the request of the the Holder, the Company will at any time
during the period this Warrant is outstanding acknowledge in writing, in form
reasonably satisfactory to the Holder, the continuing validity of this Warrant
and the obligations of the Company hereunder.

            (d) Before taking any action which would cause an adjustment
reducing the current Exercise Price below the then par value, if any, of the
shares of Preferred Stock issuable upon exercise of the Warrants, the Company
shall take any corporate action which may be necessary in order that the Company
may validly and legally issue fully paid and non-assessable shares of such
Preferred Stock at such adjusted Exercise Price.

      16. Miscellaneous.

            (a) Jurisdiction. This Warrant shall be binding upon any successors
or assigns of the Company. This Warrant shall constitute a contract under the
laws of the State of Nevada without regard to its conflict of law principles or
rules, and be subject to arbitration pursuant to the terms set forth in the
Subscription Agreement.

                                       5
<PAGE>

            (b) Restrictions. The Holder hereof acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.

            (c) Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the Holder shall operate
as a waiver of such right or otherwise prejudice the Holder's rights, powers or
remedies, notwithstanding all rights hereunder terminate on the Termination
Date. If the Company fails to comply with any provision of this Warrant, the
Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.

            (d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder hereof by the Company shall be
delivered in accordance with the notice provisions of the Subscription
Agreement.

            (e) Limitation of Liability. No provision hereof, in the absence of
affirmative action by the Holder to purchase shares of Preferred Stock or
otherwise exercise its rights or privileges hereunder, and no enumeration herein
of the rights or privileges of the Holder hereof, shall give rise to any
liability of the Holder for the purchase price of any Preferred Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.

            (f) Remedies. The Holder, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.

            (g) Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of the Holder. The provisions of this Warrant are intended
to be for the benefit of all holders from time to time of this Warrant and shall
be enforceable by any such Holder.

            (h) Indemnification. The Company agrees to indemnify and hold
harmless the Holder from and against any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, reasonable
attorneys' fees, expenses and disbursements of any kind which may be imposed
upon, incurred by or asserted against the Holder in any manner relating to or
arising out of any failure by the Company to perform or observe in any material
respect any of its covenants, agreements, undertakings or obligations set forth
in this Warrant; provided, however, that the Company will not be liable
hereunder to the extent that any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
or disbursements are found in a final non-appealable judgment by a court to have
resulted from the Holder's bad faith or willful misconduct in its capacity as a
stockholder or warrantholder of the Company.

            (i) Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.

            (j) Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

            (k) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.

                                       6
<PAGE>

                     [The next page is the signature page.]

                                       7
<PAGE>

      IN WITNESS WHEREOF, the Company has caused this Stock Purchase Warrant to
be executed by its officer thereunto duly authorized.

Dated:  December 31, 2004

                                         WESTERN GOLDFIELDS, inc.

                                         By:      /s/ Mark Shonnard
                                                  --------------------------
                                         Name:    Mark Shonnard
                                                  --------------------------
                                         Title:   CFO
                                                  --------------------------

<PAGE>

NOTICE OF EXERCISE

To: [Transfer Agent]

            (1) The undersigned hereby elects to purchase ________ shares of
Series "A-1" Preferred Stock (the "Preferred Stock"), of Western Goldfields,
Inc. (the "Company") pursuant to the terms of the attached Warrant, and tenders
herewith payment of the exercise price in full, together with all applicable
transfer taxes, if any.

            (3) The undersigned hereby restates and confirms the continued
accuracy of the investment representations made by the Investors in the
Subscription Agreement by and between the Company and the Investors signatory
thereto.

            (4) Please issue a certificate or certificates representing said
shares of Preferred Stock in the name of the undersigned or in such other name
as is specified below:

                                    -------------------------------
                                    (Name)

                                    -------------------------------
                                    (Address)

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

Dated:                     ,
       --------------------  -----

                                    -------------------------------
                                    Signature

<PAGE>

ASSIGNMENT FORM

                        (To assign the foregoing Warrant,
                      execute this form and supply required
           information. Do not use this form to exercise the Warrant.)

            FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

_______________________________________________ whose address is

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

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

                                           Dated:  ______________, _______

                         Holder's Signature:       _____________________________

                         Holder's Address:         _____________________________

Signature Guaranteed:  ___________________________________________

Any assignee receiving this Warrant in a non-public resale transaction must be
an accredited investor as such term is defined under the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}]]