Document:

Silver Dragon Resources Inc.: Exhibit 10.5 - Prepared by TNT Filings Inc.

 

English version for informative purposes

ASSIGNMENT OF RIGHTS AGREEMENT (THE
"ASSIGNMENT OF RIGHTS AGREEMENT") OF THE EXPLORATION AND EXPLOITATION MINING
AGREEMENT ENTERED INTO BY AND BETWEEN THE MINING COMPANY "MINERA REAL
VICTORIA, S.A. DE C.V.", REPRESENTED IN THIS ACT BY MR. RAMON TOMAS
DAVILA FLORES (HEREINAFTER "ASSIGNOR") AND BY THE MINING COMPANY "SILVER
DRAGON MINING DE MEXICO, S.A. DE C.V.", REPRESENTED IN THIS ACT BY MR.
JUAN CARLOS ALBERTO GALVÁN PASTORIZA (HEREINAFTER "ASSIGNEE"), PURSUANT TO
THE FOLLOWING RECITALS AND CLAUSES:

RECITALS

I.         The
Assignor declares:

  a)
  That it is a Mexican Mining Company, incorporated according to the laws of the
  United States of Mexico, as evidenced in the Public Deed 7,320, dated February
  24, 2004, granted before Mr. Juan Gerardo Parral Perez, Notary Public Number
  11 of the City of Durango, registered before the Public Registrar of Commerce
  of said City, under the mercantile file number 183, 3RD Book,
  Second Auxiliary of Commerce Tome 58 and registered in the Public Mining
  Registrar under record number 111 page 56 in front of Volume XXXVIII of the
  Book of Mining Entities.

  b)
  That according to its corporate purpose, it is enabled to be entitled to hold
  mining concessions, as well as to execute the agreements which have as purpose
  the private rights derived from said concessions.

  c)
  That its legal representative has sufficient authorities to act in its name
  and representation, compelling it under the terms of this Agreement, as
  evidenced in the Public Deed mentioned in aforesaid recital I, paragraph (a),
  authorities that, to the date of execution of this Assignment of Rights
  Agreement, have not been revoked, limited or modified in any way.

  d)
  That on the date of March 25, 2004, in its position of Beneficiary, it
  executed with Ms. Silvia Villaseñor Haro, as Holder (the "Holder") an
  Exploration and Exploitation Mining Agreement over the rights derived from the
  mining concession that protects the lot named "PURO CORAZON", Title
  Number 166902 (the "Concession"), which identification data is the following:

"PURO CORAZON",
exploitation mining concession, title 166902, issued on July 25, 1980, located
at the Municipality of Guadalupe Victoria, Durango, with a area of 9.0000
hectares, registered under number 462 of the page 116, volume 219 of the General
Book of Concessions of the Public Mining Registrar.

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  e) That the
  Exploration and Exploitation Mining Agreement over the Concession (the
  "Agreement") was ratified by the Holder on March 27, 2004, before Mr.

  
  Gerardo Alberto Valdes Calderon, Notary Public Number 13 of the City of
  Monclova, State of Cohauila de Zaragoza, and ratified by the Assignor (as
  Beneficiary) on August 13, 2004 before Mr. Guillermo Tadeo Lucero Solis,
  Notary Public Number 11 of Durango, Durango. Likewise, said Agreement is
  registered before the Mining General Agency of the Public Mining Registrar ("PMR")
  under number 39, page 21, volume 18, of the Book of Mining Acts and
  Agreements, on January 28, 2005, (the "Agreement"), which is attached to this
  Assignment of Rights Agreement as Attachment "A".

  f)
  That to the date of execution of this Assignment of Rights Agreement, it
  declares that it has totally and faithfully complied with each and every one
  of the obligations assumed with the Holder pursuant to the established on the
  Agreement, including without limitation with the foreseen by the First Clause,
  paragraph (5) of said Agreement. Likewise, it is in compliance with the
  provisions of the Mining Law and Regulation, as well as the other laws related
  with the exploitation of the Concession.

  g)
  That it has paid totally and punctually the consideration agreed with the
  Holder in the First Clause, paragraph (8) of the Agreement, whereas to the
  date of execution of this Assignment of Rights Agreement it does not exist any
  debt or charge that the Assignor has for this concept with the Holder.

  h)
  That the Agreement is currently in effect under the terms of the Second Clause
  of the same, that it has not been modified in any way and that to the date of
  execution of this Assignment of Rights Agreement it does not exist agreement,
  settling or understanding to modify or limit the duration of its term or any
  other obligation contained in it. Likewise, the Assignor declares and
  guarantees that except for the Agreement, it has not executed with the Holder
  any other agreement related with the Concession that is currently in effect.

  i)
  That to the date of execution of this Assignment of Rights Agreement, the
  Assignor has not incurred in any event of default over the obligations
  acquired with the Holder pursuant to the Agreement, including by acts of God
  or force majeure, that generate or could generate the early termination of the
  Agreement or its rescission, whereby it declares that it is free from any
  liability, with the Holder for such events.

  j)
  That the Concession is free from liens or limitations of domain and current in
  the compliance of the obligations established by the Mining Law and
  Regulation, whereby it attaches to this Assignment of Rights Agreement as 
  Attachment "B" the evidence referred to in Article 23 of the Mining Law,
  through which it evidences that the Concession is in effect and in good legal
  standing.

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  k) That it has
  paid the superficial duties regarding the Concession up to the second semester
  of 2005 attaching evidence of the payments of such area fees as of the date of
  issuance of the Concession and up to the second semester of 2005 to this
  Assignment of Rights Agreement as Attachment "C", declaring that it
  does not exist for this concept any variation or inaccuracy in the payments
  that to this date have been made.

  
  l)
  That to the date of execution of this Assignment of Rights Agreement it has
  not assigned, sold, encumbered or promised to assign, sell or encumber the
  rights derived from the Agreement and that it has not acquired with third
  parties any obligation, nor exists any restriction under the Mining Law and
  Regulations, that impedes the execution of this Assignment of Rights
  Agreement.

  m)
  That the landmarks which indicate the starting point of each one of the lots
  provided by the CONCESSIONS are in good state of conservation, and were built
  according to the terms of the Mining Law and kept in the same place previously
  approved by the mining authorities.

  n)
  That by virtue of the mining activities, including the exploitation developed
  upon the lots provided by the Concession, it is in full compliance with the
  Mining Laws, including in a non-restrictive manner, in compliance with his
  labor and tax obligations.

  a)
  That on the date of execution of this Agreement, there exist no effective or
  ongoing orders, requests or claims, regarding environmental issues or of any
  other legal kind in connection to the lots provided by the Concession, as well
  as in connection with the activities carried out over them, and that has no
  knowledge of any reason for which such orders, requests or claims could be
  issued by any authority or third parties.

  b)
  That the lots provided by the Concessions are not located within natural
  protected areas nor within environmental reservations, whether of Federal or
  Local jurisdiction, and that no notice or communication regarding a
  prospective creation of a reservation of that nature over the areas were the
  lots provided by the Concessions, has been received by the Assignor.

  o)
  That to the date of execution of the present Assignment of Rights Agreement
  all the authorizations required to carry out works in the lot are in effect,
  whereby, to the date of signature of this Assignment of Rights Agreement, it
  does not exist any contingency of any legal nature, that may affect the
  effectiveness of the Concession that protects the lot or that can involve or
  affect in any way the Assignee.

  p)
  That nor the Assignor or the Holder have incurred nor have given any motive to
  incur, in any such nullity, cancellation, suspension or rescission causes
  regarding the rights that the Mining Law refers to with respects to the
  Concession.

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II. The Assignee declares:

  a)
  That it is a Mexican Mining Company, duly incorporated and existing according
  to the laws of the Federal Republic of Mexico, registered before the Public
  Registrar of Commerce of the City of Durango, state of Durango under the
  mercantile folio number 250, dated January 19, 2006, and currently in process
  of being registered in the Public Mining Registrar.

  b)
  That Mr. Juan Carlos Alberto Galvan Pastoriza is the legal representative of
  the Assignee and has sufficient authorities to represent and oblige it under
  the terms and conditions of this Assignment of Rights Agreement, without said
  authorities, to the date of execution of this Assignment of Rights Agreement,
  being revoked nor limited in any way.

  c)
  That it desires to acquire, as Assignee, all the rights and obligations of the
  Assignor derived from the Agreement, subject to the strict compliance of all
  the terms and conditions of this Assignment of Rights Agreement, as well as
  the lawfulness of all the recitals declared by the Assignor in this Assignment
  of Rights Agreement regarding the Agreement and the Concession.

  d)
  That it has the necessary resources to acquire as Assignee the rights over the
  Agreement, under the terms and conditions of this Assignment of Rights
  Agreement.

Pursuant to the foregoing recitals, the parties agree to grant
the following:

CLAUSES

FIRST. ASSIGNMENT OF THE AGREEMENT. 
In this act the Assignor assigns to the Assignee who acquires
for itself, free form any restriction and/or limitation, current with any tax
fees, contributions, consideration and governmental duties, the totality of the
rights derived form the Agreement, with all that may correspond in acts and
rights.

Likewise, by virtue of the assignment of the
Agreement, the Assignor obliges to simultaneously assign to the Assignee,
without any reserve or limitation, all of the rights that it may have to access
the lot protected by the Concession, such as rights by lease agreement,
bailment, land expropriation, temporarily occupations, licenses, permits,
authorizations, rights-of-way or any such permits or authorizations, written or
verbal, equivalent that, in general, permit the realizing of the mining works
and exploitation.

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SECOND. CONSIDERATION. The
parties agree that the Assignee will pay to the Assignor as the consideration
for the assignment of rights under this Assignment of 
Rights Agreement, the total sum of $400,000.00 American Dollars (Four Hundred
Thousand Dollars 00/100 Legal Currency of the United States of America) plus the
corresponding Value Added Tax ("VAT") resulting in the amount of $60,000.00
American Dollars (Sixty Thousand Dollars 00/100 Legal Currency of the United
States of America), which must be paid by Assignee to Assignor at the time and
amounts that are detailed as follows and against the delivery of the
corresponding invoices, which must meet the applicable fiscal requirements:

  a)
  As of the signature of this Assignment of Rights Agreement, the amount of
  $100,000.00 American Dollars (One Hundred Thousand American Dollars 00/100
  Legal Currency of the United States of America) plus the VAT.

  b)
  As of the 6 (six) months of the date of ratification before Notary Public of
  this Assignment of Rights Agreement the quantity of $100,000.00 American
  Dollars (One Hundred Thousand American Dollars 00/100 Legal Currency of the
  United States of America) plus the VAT.

  c)
  As of the 12 (twelve) months of the date of ratification before Notary Public
  of this Assignment of Rights Agreement the amount of $100,000.00 American
  Dollars (One Hundred Thousand American Dollars 00/100 Legal Currency of the
  United States of America) plus the VAT.

  d)
  As of the 24 (twenty four) months of the date of ratification before Notary
  Public of this Assignment of Rights Agreement the a amount of $100,000.00
  American Dollars (One Hundred Thousand American Dollars 00/100 Legal Currency
  of the United States of America) plus the VAT.

Assignee may either pay such amounts in USA Dollars, or in
its equivalent in national currency on the payment date, pursuant to Article 8
of the Monetary Law, according to the exchange rate published by the Bank of
México applicable to settle debts acquired in foreign currency and which should
be published The Federation's Official Gazette the day prior to the date in
which the payment should be carried out, moreover, to the amounts to be paid in
accordance to these Agreements, the corresponding VAT corresponding to each
payment will be added.

THIRD. EXPENSES. The expenses, taxes, fees and duties
caused by the performance of this Agreement, shall be paid by party that
pursuant to the applicable legislation in effect shall be paid for.

FOURTH. OBLIGATIONS OF ASSIGNEE. By virtue of the rights
assignment herein consigned in favor of Assignee and the pending payment of
balance, the Assignee obliges up to the total payment of the consideration to
which the Second Clause refers to, to the following:

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  a)
  To maintain in effect and in its favor the rights derived from the Agreement
  and no to solicit reduction or subdivision of the area that comprehends the
  lot under the Concession and comply with the obligations established under the
  Mining Law and Regulations as of the first semester of 2006.

  b) Maintain the
  rights derived from the Concession, free from all charge, liens, affectation
  or limitation of domain of any nature.

  c)
  In the event that the Assignee decides to initiate any work that requires
  Contractors, it will give the opportunity to Assignor to participate as
  Contractor with preference whenever it concurs with the same or better
  conditions of prices, capacities, economic and human resources that any other
  contractor that the Assignee intends to hire.

FIFTH. CONDITION PRECEDENT. 
The parties agree that the effects of this Assignment of Rights
Agreement, and the liability of the Assignee to pay to Assignor the
consideration agreed upon by the Second Clause of this Assignment of Rights
Agreement, will be subject so that simultaneously to the execution of this
Assignment of Rights Agreement, the Holder accepts to execute and executes with
the Assignee an Amendment Agreement over the Agreement (the "Amendment"), that
must include the following:

  a)
  That by virtue of the signature of the Amendment, the Assignee (as
  Beneficiary) must pay to the Holder, the amount of $50,000.00 American Dollars
  (Fifty Thousand Dollars 00/100 Legal Currency of the United States of America)
  plus the corresponding VAT, per ton of economic ore (ABOVE the CUT OFF) that
  is extracted from the mine.

  b)
  That as a result of the work that the Assignee carries out over the lot, the
  Assignee will pay to the Holder $1.50 American Dollars (One Dollar 50/100
  Legal Currency of the United States of America) plus the corresponding VAT,
  for each ton that is produced.

  c)
  That in the event that the Assignee does not initiate production over the Lot
  regarding the Concession Title within a 6 (six) months period as of the date
  of execution of this Addendum, the Assignee must pay to the Holder the monthly
  amount of $3,500.00 dollars plus VAT, minus the tax withholdings that are
  applicable under fiscal laws and subject to the issuance of the fiscal invoice
  from the Holder in favor of the Assignee. Such payment will be made for the
  period or periods of time during which no ore extracted and paid within the
  first eight days of the corresponding month, provided however, that the delay
  in the initiation of the production is not attributable to the Assignor or to
  the Holder, or due to any irregularity not attributable to the Assignee, due
  by the Holder's breach to any of the obligations under the Agreement.

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  d)
  That in the event that the Assignee pays the Holder the above mentioned
  monthly consideration, such must be discounted from any future payment made by
  the Assignee to the Holder as a result of the production and extraction of ore
  over the Lot under the first paragraph of this Section, subject to the
  condition that the payments due to the Holder by the production and extraction
  of ore are maintained at least in the minimum monthly amount of $3,500.00
  dollars in order to pay expenses. If by any reason the Assignee decides to not
  produce nor extract ore, any monthly payments that are made to the Holder will
  remain to its benefit.

  e)
  That the Addendum contains the Option in favor of the Assignee (as
  Beneficiary) to acquire, free from any liens, or limits of domain and current
  of any contribution, duty payments, as well as, free from any contingency of a
  labor, environmental, fiscal or social security nature and any other that may
  result applicable (not attributable to the Assignee), the title over the
  Concession, in which case, the Assignee must pay the Holder the amount of
  $2,000,000.00 (Two Million Dollars 00/100 Legal Currency of the United States
  of America) in case that the Option is exercised by Assignee (as Beneficiary)
  within the 3 (three) first years as of the signature of the Amendment, and
  alternatively, the Assignee must pay to the Holder the amount of $3,000,000.00
  (Three Million Dollars 00/100 Legal Currency of the United States of America)
  in the event that the Option is exercised by Assignee (as Beneficiary) on the
  next day to the third anniversary as of the signature of the Addendum, and
  before the fifth year as of the date of signature of the Addendum, in the
  understanding that the Option will conclude at the 5th anniversary
  of the Addendum.

  f)
  That the Addendum specifically contains sufficient recitals of the Holder
  regarding the legal standing that the lot under the Concession and the same
  Concession, including in a declarative but not limited manner, those recitals
  that may be applicable to the lot under the Concession and the same
  Concession, in connection with the recitals contained from paragraphs (j) to
  (s) of section (I) of the recitals of this Assignment of Rights Agreement.

Nonetheless the foregoing, the parties agree
to attach to this Agreement as Attachment "D" the Addendum that must be
executed by and between the Assignee (as Beneficiary) with the Holder
simultaneous to the execution of this Assignment of Rights Agreement, which
contains the reproduction of the previous terms, as well as diverse provisions,
liabilities and rights to which the parties will be subject in order to carry
out the exploration and exploitation of the lot under the Concession.

SIXTH. OBLIGATIONS OF ASSIGNOR. The
Assignor is obliged to:

  a)
  Provide to Assignee all the information that it requests and that is in
  Assignor's power, as well as signing, evidencing and complying any other
  requirement necessary and exercising all the legal actions that are required,
  with the purpose of obtaining, when required, any authorizations so that the
  Assignee exercises the rights that are conferred to it herein over the lot
  that is protected by the Concession;

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  b)
  Resolve any contingency that may affect the legal situation of the Agreement
  and the Concession, and that may impede, limit or prevent the exercise of the
  rights that through this document are granted in favor of the Assignee,
  obliging to release and hold the Assignee harmless as well as to indemnify it,
  without any limitation whatsoever, of any contingency derived from claims,
  demands, notices or any other acts, whether of federal, local or municipality
  authorities or of any third party with interests over the Agreement or the
  Concession, in an declarative but not limited form, of any fiscal, labor,
  social security, administrative or mainly environmental nature with regards to
  the recitals made by the Assignor in this Assignment of Rights Agreement, by
  contingencies that arise from any cause of default, being total or partial,
  regarding the assumed obligations by the Assignor by virtue of the Agreement
  and regarding the Concession or with respects to the activities and operations
  that were carried out by Assignor over the lot under Concession, as well as by
  eviction, nullity, revocation or loss of the rights of the Concession by
  causes previous to the execution of this Assignment of Rights Agreement or in
  case the competent authority does not authorize the registration of this
  Assignment of Rights Agreement;

  c)
  Assign the Agreement to the Assignee free from all charges, liens,
  encumbrances or limitations of any kind, and in strict compliance of all the
  obligations acquired with the Holder, according to the provisions of this
  Assignment of Rights Agreement and the recitals of the Assignor;

  d)
  Assume and comply with its obligations of labor, social security and fiscal
  nature as well as any other applicable, regarding its own employees and
  contractors, obliging to release and hold harmless the Assignee from any
  claim, demand, accusation or complaint that may arise against it, by the
  employees or contractors of the Assignor or by the authorities of labor or
  administrative jurisdiction, being the Assignor obligated to also indemnify
  the Assignee for any amounts spent by these concepts.

  e)
  Cooperate and assist the Assignee, through the signature of documents,
  evidencing, or complying with any other requirement as well as to carry out
  all the activities that are reasonably necessary to obtain the registration of
  this Assignment of Rights Agreement in the PMR.

  f)
  Cooperate and assist the Assignee, in the negotiations with the Holder so that
  the execution of the Addendum is carried out in the terms proposed by the
  Assignee pursuant to the Fifth Clause and Attachment "D" of this Assignment of
  Rights Agreement, for the performance of the works over the lot that is
  protected by the Concession.

8

SEVENTH. DEFAULT. 
Regardless of any provision, if any party is or incurs in default (the "Party in
Default"); with regards to any obligation established in this Assignment of
Rights Agreement, the party affected by said default (the "Affected Party"), may
notify in writing, specifying the event of default (the "Default Notice") to the
Party in Default, with the purpose that:

  a)
  Within the following 5 (five) business days as of the receipt of the Default
  Notice (whenever it refers to the non payment of any such amounts that have to
  be paid in the terms of this Assignment of Rights Agreement) the Party in
  Default: (i) pays the total of the amounts due to the Affected Party, or (ii)
  evidences that said amounts have been paid;

  b)
  Within the following 10 (ten) natural days as of the receipt of the Default
  Notice (that refers to the defaults derived from causes different to lack of
  payments) the Party in Default must amend such default or failure, whenever it
  is reasonable for it to be amended within said period.

Once the indicated terms for each type of
default have elapsed, without the Party in Default curing it, the Affected Party
will have the right to request the early termination of the Assignment of Rights
Agreement, without the requirement of delivering any written notice or having a
judicial statement.

EIGHTH. 
EARLY TERMINATION OF THE ASSIGNMENT OF RIGHTS
AGREEMENT. The Assignor may accelerate
the terms for the payment of the remaining balance to which the Second Clause
refers to, being able to request the total payment or terminate this Assignment
of Rights Agreement by Assignee's breach on the payment of the installments
established in the Second Clause of this Assignment of Rights Agreement and
provided that the Default Notice was given.

Nonetheless the cause for early termination
indicated in the previous paragraph, the parties agree that the Assignee may
retain the payment of any installment foreseen in the Second Clause of this
Assignment of Rights Agreement by virtue of any default of the Assignor under
the terms of this Assignment of Rights Agreement, especially for any of the
obligations assumed in the Fifth and Sixth Clause of this Assignment of Rights
Agreement, agreeing the parties that said retention may be maintained during all
the time in which the event of default of Assignor is in effect and until it is
totally and finally cured, without prejudice to Assignor's to release and hold
the Assignee harmless as well as to indemnify the Assignee under the terms of
this Assignment of Rights Agreement by virtue of its default.

This Assignment of Rights Agreement may be terminated by
Assignee, in the following cases:

  a) Any default of
  Assignor that is not cured within the term foreseen in paragraph (b) of the
  Seventh Clause;

9

  b)
  Termination by default of the Agreement for causes arising prior to the
  execution of this Assignment of Rights Agreement or in case the competent
  authority does not authorize the registration of this assignment or for any
  other cause attributable to Assignor.

In such cases, in addition to Assignor's
obligation to release and hold the Assignee harmless and to indemnify the
Assignee for any expenses that it carried out by virtue of default of the
Assignor, the Assignor will be obliged to reimburse the Assignee the sums paid
at the moment of termination of the Assignment of Rights Agreement, without
prejudice to the Assignors obligation to indemnify the Assignee for the damages
and losses that its suffers.

NINTH. RATIFICATION AND REGISTRATION OF THE
AGREEMENT. The Assignee and the Assignor oblige to
ratify the signatures of the present Assignment of Rights Agreement before the
Notary Public appointed by the Assignee. Likewise, the Assignee expressly
obliges, to register it in the PMR, whereby the Assignor obliges to collaborate
fully and in good faith, with the purpose for the Assignee obtains the
registration of the Assignment of Rights Agreement and the documents derived
from it.

TENTH. NOTICES AND NOTIFICATIONS. 
For the receipt of the notices and notifications, that pursuant
to the present Assignment of Rights Agreement the parties must deliver, the
Assignor and Assignee indicate as their domiciles the following:

ASSIGNOR

MINERA REAL VICTORIA, S.A. DE C.V. 

Attention: Mr. Ramon Tomas Davila Flores

Ana Leyva 204-4o
Floor 

Nueva Vizcaya 

Durango, Durango. 

Zip Code 34080 

Tel: (618)818-4769

Fax:

THE ASSIGNEE:

Silver Dragon Mining de México, S.A. de C.V. 

Attention: Mr. Juan Carlos Alberto Galván Pastoriza

Alonso de Pacheco No. 130, 

Del Lago 

Durango, Durango 

México, Zip Code 34080

Any party may deliver to the other at any
moment, a notice of change of domicile and as of the acknowledgement of receipt
of said notice, the domicile or domiciles indicated in the notices will be
considered as the domiciles of the party who delivered the notice.

10

ELEVENTH. APPLICABLE LAW AND JURISDICTION.
For all the
relative to the interpretation and performance of this Assignment of Rights
Agreement, the parties expressly submit themselves to the Federal Laws of the
Mexican Republic and to the competent Courts of the city of Durango, Durango,
waiving to any jurisdiction that may correspond regarding its present or future
domicile or by any other cause.

The parties sign this
Assignments of Rights Agreement by duplicate in the city of Durango, Durango,
dated March 8, 2006.

THE ASSIGNOR

________________________________

MINERA REAL
VICTORIA, S.A. DE C.V.

BY: MR. RAMON TOMAS DAVILA FLORES

THE ASSIGNEE

_______________________________________________

SILVER DRAGON MINING DE MÉXICO, S.A. DE C.V.

BY: MR. JUAN CARLOS ALBERTO GALVAN PASTORIZA

THE HOLDER, GRANTING
ITS CONSENT TO THE ASSIGNMENT THAT IN THIS ACT IS CONSIGNED, IN AGREEMENT WITH
THE CONTENT OF THE PRESENT ASSIGNMENT OF RIGHTS AGREEMENT IN ALL ITS TERMS:

_______________________________ 

MS. SILVIA VILLASEÑOR HARO

BY: MR. CARLOS MANUEL VILLASEÑOR ARGUELLES

 

11

 

 

 

 

 

 

 

 

 

12

ATTACHMENT "A"

EXPLORATION AND EXPLOITATION AGREEMENT OF THE MINING

CONCESSION

 

 

 

 

 

 

13

ATTACHMENT "B"

EVIDENCE ISSUED BY THE PUBLIC MINING REGISTRAR PURSUANT

TO ARTICLE 23 OF THE MINING LAW

 

 

 

 

 

 

14

ATTACHMENT "C"

EVIDENCE OF THE PAYMENT OF AREA DUTIES OVER THE CONCESSION 

AS OF THE DATE OF ITS FIRST SEMESTER OF 2001 UNTIL THE SECOND

SEMESTER OF 2005

 

 

 

 

 

 

15

ATTACHMENT "D"

AMENDMENT AGREEMENT THAT IS TO BE EXECUTED BY AND 

BETWEEN THE HOLDER AND THE ASSIGNEE (AS BENEFICIARY) OVER 

THE AGREEMENT OF EXPLORATION AND EXPLOITATION REGARDING

THE MINING CONCESSION

 

 

 

 

 

 

16Silver Dragon Resources Inc. - Exhibit 10.6 - Prepared By TNT Filings
Inc.

 

English version for informative purposes

       
ADDENDUM TO THE MINING
EXPLORATION AND EXPLOITATION AGREEMENT 
ENTERED INTO BY MS. SILVIA VIALLASENOR HARO, REPRESENTED BY MR.
CARLOS MANUEL VILLASEÑOR ARGUELLES, HEREINAFTER REFERRED TO AS THE "HOLDER" AND
ON THE OTHER HAND, THE MINING COMPANY SILVER DRAGON MINING DE MEXICO, S.A. DE
C.V. REPRESENTED BY MR. JUAN CARLOS ALBERTO GALVAN PASTORIZA, HEREINAFTER
REFERRED TO AS THE "BENEFICIARY" PURSUANT TO THE FOLLOWING RECITALS AND CLAUSES

RECITALS

I.         The HOLDER
declares that:

  a)
  She is of Mexican nationality, over age, single, registered at the Federal
  Registry of Tax Payers under number VIHS 780829 IV4, with sufficient capacity
  to enter into this agreement and to hold the rights over mining concessions
  under the provisions of the Mining Law and its Regulations.

  b)
  That her representative, Mr. Carlos Manuel Villasenor Arguelles, has
  sufficient authorities to represent the HOLDER, declaring that such
  authorities have not been revoked nor restricted in any way whatsoever, as
  evidence through public deed number 39, dated February 27, 2006, granted
  before Mr. Gerardo Alberto Valdes Calderon, Public Notary Number 13 of
  Monclova, Coahuila.

  c) That she is the
  legal holder of the rights over the mining concession regarding the lot called
  "PURO CORAZON", which data is as follows:

"PURO CORAZON", mining concession, title
166902, issued on July 25, 1980, located at the Municipality of Guadalupe
Victoria Durango, with a total surface of 9.0000 hectares, registered under
number 462 files 116 of volume 219 of the General Book of Concessions of the
Public Registrar of Mining (the "CONCESSION").

  d)
  That as of March 27, 2004 she entered and ratified before a Notary Public, the
  Mining Exploration and Exploration Agreement over the CONCESSION entered into
  with the Mexican Mining Company Mineral Real Victoria, S.A. de C.V. (as
  "Original Beneficiary") which was recorder at the PRM under number 39 files 21
  volume 18 dated January 28, 2005 (the "Exploitation Agreement")
  attached hereto as Exhibit "A"

  e)
  That as of March 9, 2006, as Holder of the Concession, she appeared to
  authorize the Assignment Agreement over the Exploitation Agreement, which
  rights were assigned to the BENEFICIARY (as Assignee) (the "Assignment
  Agreement")

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  f)
  To this date she has complied with all and each of the obligations assumed,
  specially the ones assumed under the terms of the Exploitation Agreement and
  the Assignment Agreement.

  g) That she
  desires to enter into this Addendum with the BENEFICIARY to fully comply with
  the provisions of the Assignment Agreement.

II. The BENEFICIARY declares that:

  a)
  It is a Mexican mining company duly incorporated and existing under the
  Federal Laws of the Republic of Mexico and recorder at the Public Registrar of
  Commerce of the City of Durango, State of Durango, under mercantile file
  number 250, dated January 19, 2006, and that since it was recently granted it
  is in the process of being registered at the Public Registrar of Mining.

  b)
  That Mr. Juan Carlos Alberto Galvan Pastoriza is the legal representative of
  the BENEFICIARY with sufficient authorities to represent it and enter into
  this Addendum, which have not been revoked nor modified in any way whatsoever
  to this date.

  c)
  That on March 9, 2006 it entered with the Mexican mining company Mineral Real
  Victoria, S.A. de C.V. into the Assignment Agreement by means of which it
  acquired all the rights corresponding to the Exploitation Agreement.

  d)
  That it desires to enter into this Addendum with the HOLDER to comply with all
  terms and conditions set forth in the Exploitation Agreement and the
  Assignment Agreement.

        Pursuant to the
above recitals, the parties herein agree to modify the terms of the Exploitation
Agreement pursuant to the following Clauses:

CLAUSES

FIRST. Parties agree to modify Section 8 of Clause First of
the Exploitation Agreement in order to read as follows:

CLAUSE FIRST.- ...

  8.
   Consideration for
  the Exploitation of the Lot. The consideration to be paid to the Holder
  due to the exploitation of the mining concession over the Lot and the rights
  to access such Lot, will be in the amount of USD$1.50 Dollars (One Dollar
  50/100) per ton of economic ore (ABOVE of CUT OFF) that is extracted from the
  Mine, to be paid monthly, within the following 30 days as of the date in which
  the Beneficiary receives the corresponding invoices, which shall fulfill all
  the applicable fiscal requirements, and breaking down the value added tax that
  corresponds, in the understanding that the Beneficiary will make the
  corresponding taxes withholdings under fiscal laws.

2

  Regardless of the above, parties herein
  agree that in the event that the Beneficiary does not initiate production over
  the Lot regarding the Concession Title within a 6 (six) months period as of
  the date of execution of this Addendum, the Beneficiary must pay to the Holder
  the monthly amount of $3,500.00 dollars plus VAT, minus the tax withholdings
  that are applicable under fiscal laws and subject to the issuance of the
  fiscal invoice from the Holder in favor of the Beneficiary. Such payment will
  be made for the period or periods of time during which no ore extracted and
  paid within the first eight days of the corresponding month, provided however,
  that the delay in the initiation of the production is not attributable to the
  ORIGINAL BENEFICIARY or to the Holder, or due to any irregularity not
  attributable to the Beneficiary, due by the Holder's breach to any of the
  obligations under the EXPLOITATION AGREEMENT.

  Both parties agree that in the event that
  the Beneficiary pays the Holder the above mentioned monthly consideration,
  such must be discounted from any future payment made by the Beneficiary to the
  Holder as a result of the production and extraction of ore over the Lot under
  the first paragraph of this Section, subject to the condition that the
  payments due to the Holder by the production and extraction of ore are
  maintained at least in the minimum monthly amount of $3,500.00 dollars in
  order to pay expenses. If by any reason the Beneficiary decides to not produce
  nor extract ore, any monthly payments that are made to the Holder will remain
  to its benefit."

SECOND.- The parties agree to incorporate Clause First Bis. to the
Exploitation Agreement, in order to read in the future as follows:

         
  FIRST. BIS. Option to Purchase. The Holder in this acts grants in favor
  of the Beneficiary the Option to Purchase the Concession, which could be
  exercised by the Beneficiary through the filing of a written notice to the
  Holder within a 30 days period in advance to the following events:

  a)
  The Option to Purchase the Concession can be exercised by the Beneficiary
  within the first 3 (three) year as of the date of execution of this Addendum,
  in which case, the parties must enter into and sign the corresponding
  Assignment Agreement over the Concession Title, by which the Beneficiary must
  pay to the Holder as purchase price for the Concession the amount of
  USD$2,000,000.00 Dollars (Two Million US Dollars) plus the applicable Value
  Added Tax (15%) which corresponds to the amount of USD$300,000.00 Dollars
  (Three Hundred Thousand US Dollars) minus the tax withholding that are
  applicable under fiscal laws; o, alternatively,

3

  b)
  The Option to Purchase the Concession can be exercised by the Beneficiary
  within the following five (5) years as of the execution of this Addendum, in
  which case, the parties must enter into and sign the corresponding Assignment
  Agreement over the Concession Title, through which the Beneficiary must pay to
  the Holder as considering for the purchase of the Concession the amount of
  USD$3,000,000.00 Dollars (Three Million US Dollars) plus the applicable Value
  Added Tax (15%) corresponding to the amount of USD$450,000.00 Dollars (Four
  Hundred Fifty Thousand US Dollars) minus the tax withholding that are
  applicable under fiscal law.

  Parties agree that
  the Assignment Agreement over the Mining Concession must be executed by the
  parties within the following 30 (thirty) days as of the date in which the
  Beneficiary notifies to the Holder its intention to exercise the Purchase
  Option, agreeing the parties that the assignment of the CONCESSION to the
  Beneficiary must be transferred by the Holder free of any lien, domain
  restraint and with all taxes and duties paid for, as well as free from any
  kind of liability whether of labor, environmental, tax, social security or of
  any other nature that is applicable to the LOT, without prejudice of further
  provisions that could be agreed on by the parties in the Assignment Agreement.

THIRD. Parties agree to modify first paragraph of Clause Second of the
Exploitation Agreement in order to read as follows:

  "SECOND. 
  Term.
  The duration of the exploitation and exploration agreement will be of 25
  (Twenty-five) years as of the date of signature and ratification before Notary
  Public of the Addendum, being March 9, 2006 which could be renewed by both
  parties subject to written consent".

FOURTH. CONSIDERATION. The parties agree that
the consideration to be paid by the BENEFICIARY to the HOLDER due to the
execution of this ADDENDUM will be the total amount of USD$50,000.00 Dollars
(Fifty Thousand Dollars) plus the applicable Value Added Tax (VAT) corresponding
to the amount of USD$7,500.00 Dollars (Seven Thousand Five Hundred Dollars)
subject to the issuance and delivery of the corresponding invoice from the
HOLDER to the BENEFICIARY which shall comply with all fiscal requirements, and
subject to the tax withholdings that are applicable under law.

The HOLDER is obliged to delivery to the
BENEFICIARY the corresponding invoice with the applicable tax requirements
within a 10 days term as of the execution of this Agreement.

4

All amounts referred in Dollars, must be
understood as Dollars of the United States of America, and the BENEFICIARY can
pay all amounts under this Addendum in such foreign currently, or if preferable,
in its equivalent to Mexican Currency at the exchange rate published by the Bank
of Mexico in the Official Federal Gazette one day prior to the effective payment
date pursuant to the terms of Article 8 of the Monetary Law. Likewise, all
amounts that are paid under this ADDENDUM must bear the applicable VAT.

FIFTH. EXPENSES. The BENEFICIARY will be responsible for the
payment of all expenses, duties and Notary Public's fees related with the
ratification of this Addendum.

Each party will be responsible in paying their
respective legal and accounting fees and expenses, or any other professional
expenses that are originated due to the negotiation and performance of this
Addendum and the execution of the transactions that are herein contemplated or
by any other matters related hereon.

SIXTH. HOLDER'S OBLIGATIONS. The HOLDER will
is oblige to cooperate and assist the BENEFICIARY, whether signing, evidencing,
complying with any requirements or performing all necessary legal actions to
obtain the registration of this Addendum at the Public Registrar of Mining.

SEVENTH. TAXES. Each party will be responsible
for the taxes that are caused due to the granting of the Exploitation Agreement
and this Addendum, in the understanding that the HOLDER will be responsible of
paying the applicable Income Tax that is generated, being obliged to issue the
corresponding invoices consigning the amounts paid by the BENEFICIARY, who must
withhold the corresponding taxes under the fiscal legislation.

The invoices that the HOLDER issues must meet
all applicable tax requirements under Mexican Fiscal laws, breaking down the
corresponding Value Added Tax, and the withholdings that are applicable under
law, otherwise the BENEFICIARY will be able to withhold any applicable payment
until the corresponding invoice is issued and delivered.

Likewise, both parties commit to comply with all applicable
tax obligations under the fiscal laws, as it may correspond.

EIGHT. RATIFICATION AND RECORDATION OF THE
ADDENDUM. HOLDER and the BENEFICIARY are compelled to ratify the signatures of
this Addendum before a Notary Public that is appointed by the BENEFICIARY.
Likewise, the BENEFICIARY is obliged to record this Addendum at the Public
Registrar of Mining thus the HOLDER is obliged to fully and in good faith
cooperate in order for the BENEFICIARY to have this Addendum and its ancillary
documents, recorded before such Authority.

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NINTH.- NOTICES AND NOTIFICATIONS. The parties appoint the following
addresses for all notices and notifications under this Addendum:

  HOLDER:

  SILVIA VILLASEÑOR HARO 

  Barranquilla 609, Col. Guadalupe 

  Monclova, Coahuila 

  C.P. 25750

  BENEFICIARY:

  Silver Dragon Mining de México, S.A. de C.V. 

  Attention: Mr. Juan Carlos Galvan Pastoriza 

  Alonso de Pacheco No. 130, 

  Fraccionamiento Del Lago 

  Durango, Durango 

  Mexico, C.P. 34080

Any party may notify at any moment to the other party about
any address change, and at the time such notice is acknowledged by consignee,
the new address that is notified will valid for the purposes of this clause.

TENTH.- The parties agree that the remainder of the clauses
and provisions of the Exploitation Agreement do not suffer any modification due
to the execution of this Addendum, therefore, the parties will remain being
compelled under the terms of such Exploitation Agreement and this Addendum.

ELEVENTH. JURISDICTION AND GOVERNING LAW. For the
interpretation and performance of this Addendum, the parties herein expressly
agree to submit themselves to the applicable Federal Laws of Mexico and to the
jurisdiction of the competent Courts of the City of Durango, Durango, waiving to
any other forum that may correspond due to their present or future domiciles.

IN WITNESS WHEREOF, the parties execute this Addendum in the City of Durango,
State of Durango, as of March 9, 2006.

HOLDER

___________________________________ 

Ms. Silvia Villaseñor Haro

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BENEFICIARY

_______________________________________________ 

SILVER DRAGON MINING DE MEXICO, S.A. DE C.V. 

BY: Mr. Juan Carlos Galvan Pastoriza

7

EXHIBIT "A"

MINING CONCESSION EXPLORATION AND EXPLOITATION AGREEMENT

8

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