Document:

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                                                                    EXHIBIT 4.79

                                AGENCY AGREEMENT

December 12, 2005

Pine Valley Mining Corporation
Suite 501-535 Thurlow Street
Vancouver, British Columbia  V6E 3L2

Attention:  Martin Rip

Dear Sirs:

The undersigned, RBC Dominion Securities Inc., Salman Partners Inc. and Sprott
Securities Inc. (collectively, the "AGENTS") understand that Pine Valley Mining
Corporation (the "COMPANY") proposes to issue and sell up to 4,055,000 units of
the Company (individually a "UNIT" and, collectively, the "UNITS") subject to
the terms and conditions set out below.

Upon and subject to the terms and conditions set forth herein, the Agents hereby
agree to act and upon acceptance hereof the Company hereby appoints the Agents,
as the Company's exclusive agents to offer for sale, on a best efforts agency
basis, without underwriter liability, 4,055,000 Units at a price of $2.50 per
Unit for an aggregate gross proceeds to the Company of up to $10,137,500 (the
"OFFERING"). Each Unit shall consist of one Common Share (as hereinafter
defined) (a "UNIT SHARE") and one-half of one Common Share purchase warrant (a
"WARRANT"). Each whole Warrant will entitle the holder thereof to purchase one
Common Share (a "WARRANT SHARE") at a price of $3.50 per Warrant Share at any
time prior to 5:00 p.m. (Vancouver time) on the date that is 18 months following
the Closing Date (as hereinafter defined). The Warrants shall be created and
issued pursuant to a warrant indenture (the "WARRANT INDENTURE") to be dated as
of the Closing Date (as hereinafter defined) between the Company and the
Transfer Agent.

The Company agrees that the Agents will be permitted to appoint other registered
dealers (or other dealers duly licensed or registered in their respective
jurisdictions) as their agents to assist in the Offering and that the Agents may
determine the remuneration payable to such other dealers appointed by them. Such
remuneration shall be payable by the Agents.

In consideration of the services to be rendered by the Agents in connection with
the Offering, the Company shall pay to the Agents at Closing (as hereinafter
defined) in cash a commission equal to 6.5% of the gross proceeds realized by
the Company in respect of the sale of Units (the "COMMISSION").

                                   DEFINITIONS

In this Agreement, in addition to the terms defined above, the following terms
shall have the following meanings:

"AFFILIATES" has the meaning ascribed thereto in Section 10;

"AGREEMENT" means the agreement resulting from the acceptance by the Company;

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"BUSINESS DAY" means a day which is not a Saturday, Sunday or statutory or civic
holiday in the City of Vancouver, British Columbia, or Toronto, Ontario, as
applicable;

"CANADIAN SECURITIES LAWS" means all applicable securities laws in each of the
Canadian Selling Jurisdictions and the respective regulations made thereunder,
together with applicable published fee schedules, prescribed forms, policy
statements, notices, orders, blanket rulings and other regulatory instruments of
the securities regulatory authorities in such provinces and all rules and
policies of the TSXV;

"CLOSING" means the closing on the Closing Date of the transaction of purchase
and sale in respect of the Units as contemplated by this Agreement and the
Subscription Agreements;

"CLOSING DATE" means December 12, 2005 or such other date as the Agents, and the
Company shall agree;

"CLOSING TIME" means 10:00 a.m. (Toronto time) on the Closing Date or such other
time on the Closing Date as the Company and the Agents may agree;

"COMMON SHARE" means a common share in the capital of the Company;

"COMPANY'S AUDITORS" means Deloitte & Touche LLP, Chartered Accountants, or such
other firm of chartered accountants as the Company may have appointed or may
from time to time appoint as auditors of the Company;

"COMPANY'S KNOWLEDGE" means knowledge of members of the Company's Board of
Directors or senior management team;

"DEBT INSTRUMENT" means any loan, bond, debenture, promissory note or other
instrument evidencing indebtedness (demand or otherwise) for borrowed money or
other liability;

"ENVIRONMENTAL LAWS" has the meaning ascribed thereto in paragraph 4(a)(xxix);

"FINANCIAL STATEMENTS" has the meaning ascribed thereto in paragraph 4(a)(v);

"FMCI" means Falls Mountain Coal Inc.;

"GMC" means Globaltex Gold Mining Corp.

"INCLUDING" means including without limitation;

"INFORMATION" has the meaning ascribed thereto in paragraph 4(a)(xxi);

"INSTITUTIONAL ACCREDITED INVESTOR" means those institutional "accredited
investors" specified in Rule 501(a)(1), (a)(2), (a)(3) or (a)(7) of Regulation D
adopted pursuant to the U.S. Securities Act;

"LEASED PREMISES" means the premises which are material to the Company and its
subsidiaries, taken as a whole and which the Company or its subsidiaries occupy
as a tenant;

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"MATERIAL ADVERSE EFFECT" has the meaning ascribed thereto in paragraph 4(a)(i);

"MATERIAL AGREEMENT" means any material Debt Instrument, indenture, contract,
commitment, agreement (written or oral), instrument, lease or other document, to
which the Company or its subsidiaries are a party;

"MATERIAL SUBSIDIARIES" means FMCI and PVCL;

"MISREPRESENTATION", "MATERIAL FACT", "MATERIAL CHANGE", "AFFILIATE",
"ASSOCIATE", and "DISTRIBUTION" have the respective meanings ascribed thereto in
the Securities Act (Ontario);

"NI 43-101" has the meaning ascribed thereto in paragraph 4(a)(xliii);

"PERSON" means any individual, corporation, partnership, joint venture,
association, trust or other legal entity;

"PERSONNEL" has the meaning ascribed thereto in Section 10;

"PVCL" means Pine Valley Coal Ltd.;

"PUBLIC DISCLOSURE DOCUMENTS" means, collectively, all of the documents which
have been filed by or on behalf of the Company prior to the Closing Time with
the relevant Securities Regulators pursuant to the requirements of Canadian
Securities Laws, including all press releases filed on SEDAR;

"PURCHASERS" means the persons (which may include the Agents) who, as purchasers
or beneficial purchasers acquire Units by duly completing, executing and
delivering Subscription Agreements and any other required documentation and
permitted assignees or transferees of such persons from time to time;

"RBC" means RBC Dominion Securities Inc.

"SELLING JURISDICTIONS" means the provinces of Quebec and Ontario, and such
other jurisdictions inside or outside Canada, including the United States, as
mutually agreed to by the Company and the Agents;

"SECURITIES REGULATORS" means, collectively, the securities regulators or other
securities regulatory authorities in the Selling Jurisdictions;

"SUBSCRIPTION AGREEMENTS" means collectively the Canadian and U.S. subscription
agreements in the forms agreed upon by the Agents and the Company, pursuant to
which Purchasers agree to subscribe for and purchase the Units herein
contemplated and shall include, for greater certainty, all schedules thereto;

"SUBSIDIARY" and "SUBSIDIARIES" shall have the meaning ascribed thereto in the
Canada Business Corporations Act;

"TAXES" shall have the meaning ascribed thereto in paragraph 4(a)(vii);

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"TRANSFER AGENT" means Computershare Trust Company of Canada, in its capacity as
transfer agent, registrar and warrant agent of the Company at its principal
offices in the cities of Vancouver, British Columbia and Toronto, Ontario;

"TSXV" means the TSX Venture Exchange;

"U.S. SECURITIES ACT" means the United States Securities Act of 1933, as
amended;

                              TERMS AND CONDITIONS

1. (A) SALE ON EXEMPT BASIS. The Agents shall offer for sale and sell the Units
in the Selling Jurisdictions on a private placement basis in compliance with all
applicable Canadian Securities Laws and all applicable securities laws of other
Selling Jurisdictions such that the offer and sale of the Units does not
obligate the Company to file a prospectus, a registration statement or other
offering document under applicable securities legislation. The Agents shall
offer the Units for sale in the United States through a U.S. registered
broker-dealer affiliate pursuant to exemptions from the registration
requirements of the U.S. Securities Act and applicable state securities laws,
all such sales to be carried out and completed in accordance with Schedule "A"
annexed hereto, the particulars of which are incorporated herein by reference.

(B) FILINGS. The Company undertakes to file, or cause to be filed, all forms or
undertakings required to be filed by the Company in connection with the issue
and sale of the Units respectively so that the distribution of the Units to the
Purchasers may lawfully occur without the necessity of filing a prospectus, a
registration statement or an offering memorandum in Canada or the United States
(but on terms that will permit the Unit Shares and Warrants acquired by the
Purchasers in the Selling Jurisdictions to be sold by such Purchasers at any
time in the Selling Jurisdictions subject to applicable hold periods and other
restrictions under Canadian Securities Laws, the U.S. Securities Act and the
provisions of paragraph 2 of this Agreement), and the Agents undertake to use
their commercially reasonable best efforts to cause Purchasers of Units to
complete any forms required by Canadian Securities Laws or under other
applicable securities laws. All fees payable in connection with such filings
shall be at the expense of the Company.

(C) NO OFFERING MEMORANDUM. Neither the Company nor any of the Agents shall (i)
provide to prospective purchasers any document or other material that would
constitute an offering memorandum or future oriented financial information
within the meaning of Canadian Securities Laws or applicable securities laws of
the United States or any state or territory thereof; or (ii) engage in any form
of general solicitation or general advertising in connection with the offer and
sale of the Units, including causing the sale of the Units to be advertised in
any newspaper, magazine, printed public media, printed media or similar medium
of general and regular paid circulation, broadcast over radio, television or
telecommunications, including electronic display, or conduct any seminar or
meeting relating to the offer and sale of the Units whose attendees have been
invited by general solicitation or advertising.

(D) UNITED STATES OFFERS AND SALES. Each of the Company and the Agents (on their
own behalf and on behalf of a U.S. registered broker-dealer affiliate of the
Agents) agree that the representations, warranties and covenants contained in
Schedule "A" to this Agreement entitled "United States Offers and Sales" are
incorporated by reference in and shall form part of this Agreement with respect
to offers and sales of Units in the United States by a U.S. registered

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broker-dealer affiliate of the Agents. The Agents agree, on behalf of themselves
and their United States affiliates, for the benefit of the Company to comply
with the U.S. selling restrictions imposed by the laws of the United States and
contained in Schedule "A" to this Agreement. Notwithstanding the foregoing
provisions of this paragraph 1(d), an Agent will not be liable to the Company
under this paragraph or Schedule "A" to this Agreement with respect to a
violation by another Agent or by another member of the selling dealer group.

2. (A) COVENANTS OF THE COMPANY. The Company hereby covenants to the Agents, the
Purchasers and their respective permitted assigns and acknowledges that each of
them is relying on such covenants in connection with the purchase of the Units,
that the Company shall:

        (i)     for a period of two years after the Closing Date, use its
                reasonable best efforts subject to the reasonable discretion of
                the board of directors of the Company to act in the best
                interest of the Company, remain a reporting issuer under
                Canadian Securities Laws in the provinces of British Columbia
                and Alberta not in default of any requirement of such Canadian
                Securities Laws;

        (ii)    allow the Agents and their representatives the opportunity to
                conduct all due diligence which the Agents may reasonably
                require to be conducted prior to the Closing Date;

        (iii)   duly execute and deliver the Subscription Agreements and the
                Warrant Indenture at the Closing Time and shall comply with and
                satisfy all terms, conditions and covenants therein contained to
                be complied with or satisfied by the Company;

        (iv)    fulfil or cause to be fulfilled, at or prior to the Closing
                Date, each of the conditions applicable to the Company set out
                in Section 6;

        (v)     ensure that the Unit Shares shall, upon issuance in accordance
                with their terms, be duly issued as fully paid and
                non-assessable securities in the capital of the Company, and
                shall have the attributes corresponding in all material respects
                to the description thereof set forth in this Agreement and the
                Subscription Agreements;

        (vi)    ensure that the Warrants shall be duly and validly created,
                authorized and issued and shall have the attributes
                corresponding in all material respects to the description
                thereof set forth in this Agreement and the Warrant Indenture;

        (vii)   ensure that at all times prior to the expiry of the Warrants,
                sufficient Warrant Shares are allotted and reserved for issuance
                upon the due and proper exercise of the Warrants and, upon
                issuance in accordance with the terms of the Warrant Indenture,
                shall be issued as fully paid and non-assessable securities in
                the capital of the Company;

        (viii)  use its best efforts to ensure that the Unit Shares and the
                Warrant Shares are listed and remain listed for trading on the
                TSXV (or the Toronto Stock Exchange) if and when such securities
                are issued;

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        (ix)    in connection with the issuance of the Units, execute and file
                with the Securities Regulators all forms, notices and
                certificates required to be filed pursuant to the Canadian
                Securities Laws in the time required by the applicable Canadian
                Securities Laws, including, for greater certainty, all forms,
                notices and certificates set forth in the opinions delivered to
                the Agents pursuant to Section 6 of this Agreement required to
                be filed by the Company; and

        (x)     for a period of 120 days from the Closing Date, not directly or
                indirectly, offer to sell, grant any option for the sale, or
                issue or announce any intention to do so, in a public offering
                or by way of private placement, any securities in the capital of
                the Company without the prior written consent of RBC, such
                consent not to be unreasonably withheld, except in conjunction
                with: (i) the grant or exercise of stock options to or by
                employees, officers or directors of, or consultants to, the
                Company and other similar issuances pursuant to the existing
                share incentive plan of the Company and other existing share
                compensation arrangements of the Company; or (ii) outstanding
                warrants or obligations disclosed in schedule "B" hereto.

3. (A) MATERIAL CHANGES DURING DISTRIBUTION. During the period from the date
hereof to the Closing Date, the Company shall promptly notify the Agents (and,
if requested by any of the Agents, confirm such notification in writing) of any
material change (actual, anticipated, contemplated or threatened, financial or
otherwise) in the business, affairs, operations, assets, liabilities (contingent
or otherwise) or capital of the Company and its subsidiaries, taken as a whole.

During the period from the date hereof to the Closing Date, the Company shall
promptly, and in any event, within any applicable time limitation, comply with
all applicable filing and other requirements under Canadian Securities Laws as a
result of such change. The Company shall in good faith discuss with the Agents
any fact or change in circumstances (actual, anticipated, contemplated or
threatened, and financial or otherwise) which is of such a nature that there is
reasonable doubt as to whether notice in writing need be given to the Agents
pursuant to this paragraph 3.

(B) PRESS RELEASES. During the period from the date hereof to the Closing Time,
subject to applicable law (including the time limits imposed thereunder), the
Company shall obtain prior approval of the Agents as to the content and form of
any press release. In addition, until the Closing Time, any press release
announcing or otherwise referring to this Offering shall include an appropriate
legend on each page as follows: "Not for distribution to U.S. news wire services
or dissemination in the United States."

4. (A) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to the Agents, the U.S. registered broker-dealer affiliate of the
Agents, and the Purchasers, and acknowledges that each of them is relying upon
such representations and warranties in purchasing the Units, that:

        (i)     the Company and each of its Material Subsidiaries has been duly
                incorporated and is validly existing under the laws of their
                respective jurisdictions of existence, has all requisite
                corporate power and authority and is duly qualified and possess
                all material certificates, authority, permits (other than the
                amended permit to allow

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                the Company to produce 2.2 million tonnes of coal per annum) and
                licences issued by the appropriate provincial, municipal,
                federal regulatory agencies or bodies necessary (and has not
                received or is not aware of any modification or revocation to
                such licences, authority, certificates or permits, except such
                modifications or amendments as are necessary for the conduct of
                their business) to carry on their businesses as now conducted
                and to own their properties and assets, except for those
                certificates, authority, permits and licenses which the failure
                to obtain would not, individually or in the aggregate, have a
                material adverse effect on the business, results of operations
                or financial condition of the Company and its Material
                Subsidiaries, considered as a whole (a "MATERIAL ADVERSE
                EFFECT"), has all requisite corporate power and authority to
                carry out its obligations under this Agreement, the Subscription
                Agreements and the Warrant Indenture;

        (ii)    the Company has no material subsidiaries other than as listed
                below and the Company beneficially owns, directly or indirectly,
                the percentage indicated below of the issued and outstanding
                shares in the capital of the Material Subsidiaries, free and
                clear of all mortgages, liens, charges, pledges, security
                interests, encumbrances, claims or demands of any kind
                whatsoever except as set out in the Public Disclosure Documents,
                all of such shares have been duly authorized and validly issued
                and are outstanding as fully paid and non-assessable shares and
                no person has any right, agreement or option, present or future,
                contingent or absolute, or any right capable of becoming a
                right, agreement or option, for the purchase from the Company of
                any interest in any of such shares or for the issue or allotment
                of any unissued shares in the capital of any of the Material
                Subsidiaries or any other security convertible into or
                exchangeable for any such shares:

<TABLE>
<CAPTION>
       NAME                  JURISDICTION OF      BENEFICIAL EQUITY/VOTING
                             INCORPORATION OR            OWNERSHIP
                               CONTINUANCE
------------------------     ----------------     -------------------------
<S>                          <C>                  <C>
Falls Mountain Coal Inc.     British Columbia               100%
Pine Valley Coal Ltd.            Alberta                    100%
</TABLE>

                GMC and Pine Valley Coal Pty. Limited are inactive wholly-owned
                subsidiaries of the Company and are not material to the Company;

        (iii)   at the Closing Time, all consents, approvals, permits,
                authorizations or filings as may be required under Canadian
                Securities Laws necessary for the execution and delivery of this
                Agreement, the Warrant Indenture and the Subscription
                Agreements, the issuance and sale of the Unit Shares and the
                Warrants comprising the Units and the Warrant Shares upon
                exercise of the Warrants and the consummation of the
                transactions contemplated hereby and thereby have been made or
                obtained, as applicable;

        (iv)    each of the execution and delivery of this Agreement, the
                Warrant Indenture and the Subscription Agreements, the
                performance by the Company of its obligations hereunder or
                thereunder, the issue and sale of the Unit Shares and Warrants

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                comprising the Units and the issue and sale of Warrant Shares
                upon the exercise of the Warrants and the consummation of the
                transactions contemplated hereby and thereby do not and will not
                conflict with or result in a breach or violation of any of the
                terms or provisions of, or constitute a default under, (whether
                after notice or lapse of time or both), (A) any statute, rule or
                regulation applicable to the Company or its subsidiaries
                including Canadian Securities Laws and the securities laws of
                any other Selling Jurisdiction; (B) the constating documents,
                by-laws or resolutions of the Company or its subsidiaries which
                are in effect at the date hereof; (C) any Debt Instrument,
                Material Agreement, mortgage, indenture, contract, agreement,
                instrument, lease or other document to which the Company or its
                subsidiaries are a party or by which any one of them is bound;
                or (D) any judgment, decree or order binding the Company or its
                subsidiaries or the property or assets of the Company or its
                subsidiaries;

        (v)     the audited consolidated financial statements of the Company as
                at and for the year ended March 31, 2005 and the unaudited
                consolidated financial statements of the Company as at and for
                the six months ended September 30, 2005 (collectively, the
                "FINANCIAL STATEMENTS") have been prepared in accordance with
                generally accepted accounting principles in Canada consistently
                applied throughout the period referred to therein and present
                fairly, in all material respects, the financial position
                (including the assets and liabilities, whether absolute,
                contingent or otherwise) of the Company and its subsidiaries (on
                a consolidated basis) as at such dates and results of operations
                of the Company and its subsidiaries (on a consolidated basis)
                for the periods then ended and there has been no change in
                accounting policies or practices of the Company and its
                subsidiaries since March 31, 2005;

        (vi)    there has been no adverse material change (actual, proposed or
                prospective, whether financial or otherwise) in the business,
                results of operations, assets, liabilities (contingent or
                otherwise) or capital or financial condition of the Company or
                its Material Subsidiaries, since March 31, 2005, which has not
                been generally disclosed to the public and, except as disclosed
                in the Public Disclosure Documents, the business of the Company
                and its subsidiaries has been carried on in the usual and
                ordinary course consistent with past practice since March 31,
                2005 to the extent that such past practice is consistent with
                the current business direction of the Company and its
                subsidiaries;

        (vii)   all taxes (including income tax, capital tax, payroll taxes,
                employer health tax, workers' compensation payments, property
                taxes, customs duties and land transfer taxes), duties,
                royalties, levies, imposts, assessments, deductions, charges or
                withholdings and all liabilities with respect thereto including
                any penalty and interest payable with respect thereto
                (collectively, "TAXES") due and payable or required to be
                collected or withheld and remitted, by the Company or its
                subsidiaries have been paid, collected or withheld and remitted
                as applicable, except for where the failure to pay such Taxes
                would not have a Material Adverse Effect or result in an adverse
                material change to the Company and its subsidiaries, taken as a
                whole. All tax returns, declarations, remittances and filings
                required to be filed by the Company or its subsidiaries have
                been filed with all appropriate governmental authorities and all
                such returns, declarations, remittances and filings

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                are complete and accurate and no material fact or facts have
                been omitted therefrom which would make any of them misleading
                or result in an adverse material change to the Company and its
                subsidiaries, taken as a whole. To the best knowledge of the
                Company, no examination of any tax return of the Company or its
                subsidiaries is currently in progress and there are no issues or
                disputes outstanding with any governmental authority respecting
                any taxes that have been paid, or may be payable, by the Company
                or its subsidiaries. There are no agreements, waivers or other
                arrangements with any taxation authority providing for an
                extension of time for any assessment or reassessment of taxes
                with respect to the Company;

        (viii)  the auditors of the Company who audited the consolidated
                financial statements of the Company for the year ended March 31,
                2005 and who provided their audit report thereon are independent
                public accountants as required under applicable Canadian
                Securities Laws;

        (ix)    there has never been a "reportable event" (within the meaning of
                National Instrument 51-102) with the present or former auditors
                of the Company;

        (x)     no holder of outstanding securities of the Company is entitled
                to any pre-emptive or any similar rights to subscribe for any
                Common Shares or other securities of the Company and no rights,
                warrants or options to acquire, or instruments convertible into
                or exchangeable for, any security in the capital of the Company
                are outstanding other than as set forth in Schedule "B" hereto;

        (xi)    except as set out in the Public Disclosure Documents, there is
                not, in the constating documents, by-laws or in any Debt
                Instrument, Material Agreement, agreement, mortgage, indenture
                or other instrument or document to which the Company is a party,
                any restriction upon or impediment to, the declaration or
                payment of dividends by the directors of the Company or the
                payment of dividends by the Company to the holders of its Common
                Shares;

        (xii)   neither the Company nor any of its subsidiaries are a party to
                or bound or affected by any commitment, agreement or document
                containing any covenant which expressly limits the freedom of
                the Company or any of its subsidiaries to compete in any line of
                business, transfer or move any of their respective assets or
                operations or which materially or adversely affects the business
                practices, operations or condition of the Company and its
                subsidiaries, taken as a whole except as set out in the Public
                Disclosure Documents;

        (xiii)  to the best of the Company's knowledge, no legal or governmental
                proceedings are pending to which the Company or its Material
                Subsidiaries are a party or to which their property is subject
                that would result individually or in the aggregate in any
                material adverse change in the operation, business or condition
                of the Company and its subsidiaries, taken as a whole, and to
                the best knowledge of the Company no such proceedings have been
                threatened against or are contemplated with respect to the
                Company or its subsidiaries or their properties;

        (xiv)   the Company and its Material Subsidiaries have conducted and are
                conducting their business in material compliance with all
                applicable laws and regulations of

                                     - 9 -
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                each jurisdiction in which they carry on business (including all
                applicable federal, provincial, municipal and local
                environmental, anti-pollution and licensing laws, regulations
                and other lawful requirements of any governmental or regulatory
                body, including relevant exploration and exploitation permits
                and concessions) except where the failure to so comply would not
                have a Material Adverse Effect and have not received a notice of
                non-compliance, nor know of, nor has reasonable grounds to know
                of, any facts that could give rise to a notice of non-compliance
                with any such laws, regulations or permits which would have a
                Material Adverse Effect;

        (xv)    neither the Company nor the Material Subsidiaries are aware of
                any pending or contemplated change to any applicable law or
                regulation or governmental position that would materially
                adversely affect the business of the Company and its
                subsidiaries or the business or legal environment under which
                the Company or its subsidiaries operate;

        (xvi)   this Agreement has been duly authorized, executed and delivered
                by the Company and constitutes a valid and binding obligation of
                the Company enforceable against the Company in accordance with
                its terms;

        (xvii)  upon the execution and delivery thereof, the Subscription
                Agreements and the Warrant Indenture shall constitute valid and
                binding obligations of the Company and each shall be enforceable
                against the Company in accordance with its terms, except as
                enforcement thereof may be limited by bankruptcy, insolvency,
                reorganization, moratorium and other laws relating to or
                affecting the rights of creditors generally and except as
                limited by the application of equitable principles when
                equitable remedies are sought, and by the fact that rights to
                indemnity, contribution and waiver, and the ability to sever
                unenforceable terms, may be limited by applicable law;

        (xviii) at the Closing Time, all necessary corporate action will have
                been taken by the Company to: (a) validly issue the Unit Shares
                as fully paid and non-assessable securities in the capital of
                the Company; (b) validly create, authorize and issue the
                Warrants; and (c) allot, reserve and authorize the issuance of
                Warrant Shares, as fully paid and non-assessable securities in
                the capital of the Company upon the due exercise of the
                Warrants;

        (xix)   at the Closing Date (and prior to giving effect to this
                Offering) the authorized capital of the Company consists of an
                unlimited number of Common Shares of which 71,647,878 Common
                Shares are issued and outstanding as fully paid and
                non-assessable;

        (xx)    the Company is a reporting issuer in the provinces of British
                Columbia and Alberta. The Company is not currently in default of
                any requirement of the Canadian Securities Laws of such
                jurisdictions, except for such defaults as would not have a
                Material Adverse Effect and the Company is not included on a
                list of defaulting reporting issuers maintained by any of the
                securities regulators of such jurisdictions;

                                     - 10 -
<PAGE>

        (xxi)   all information which has been prepared by the Company relating
                to the Company and its subsidiaries and their business, property
                and liabilities and either publicly disclosed or provided to the
                Agents, including all financial, marketing, sales and
                operational information provided to the Agents and all Public
                Disclosure Documents (collectively, the "INFORMATION") is, as of
                the date of such information, true and correct in all material
                respects, and no fact or facts have been omitted therefrom which
                would make such information materially misleading;

        (xxii)  all filings and fees required to be made and paid by the Company
                pursuant to the Canadian Securities Laws and general corporate
                law have been made and paid, and such disclosure and filings
                were true and accurate in all material respects as at the
                respective dates thereof and the Company has not filed any
                confidential material change reports;

        (xxiii) the Company and its subsidiaries are in compliance with all laws
                respecting employment and employment practices, terms and
                conditions of employment, occupational health and safety, pay
                equity and wages, except for such failures to comply as would
                not have a Material Adverse Effect. There is not currently any,
                or any reasonably foreseeable, labour disruption or conflict
                involving the Company or its subsidiaries;

        (xxiv)  except as disclosed in the Public Disclosure Documents, none of
                the Company or its subsidiaries have any loans or other
                indebtedness outstanding which has been made to any of their
                respective shareholders, officers, directors or employees, past
                or present, or any person not dealing at "arm's length" (as such
                term is defined in the Income Tax Act (Canada)) with the Company
                or its subsidiaries;

        (xxv)   the assets of the Company and its subsidiaries and their
                business and operations are insured against loss or damage with
                responsible insurers on a basis consistent with insurance
                obtained by reasonably prudent participants in comparable
                businesses, and such coverage is in full force and effect, and
                the Company or its subsidiaries have not breached the terms of
                any policies in respect thereof nor failed to promptly give any
                notice or present any material claim thereunder;

        (xxvi)  the Transfer Agent, at its principal offices in the city of
                Vancouver, British Columbia has been duly appointed as transfer
                agent and registrar in respect of the Common Shares and warrant
                agent with respect of the Warrants;

        (xxvii) other than the Agents, there are no persons acting or purporting
                to act at the request or on behalf of the Company, that are
                entitled to any brokerage or finder's fee in connection with the
                transactions contemplated by this Agreement;

        (xxviii)other than the Company, there is no person that is or will be
                entitled to the proceeds from the sale of the Units pursuant to
                this Offering under the terms of any Debt Instrument, Material
                Agreement, mortgage, indenture, contract, instrument, lease
                agreement (written or unwritten);

        (xxix)  the Company and its subsidiaries are in material compliance with
                each material license and permit held by them and they are not
                in material violation of, or in

                                     - 11 -
<PAGE>

                material default under, the applicable statutes, ordinances,
                rules, regulations, orders or decrees (including "ENVIRONMENTAL
                LAWS" as defined below) of any governmental entities, regulatory
                agencies or bodies having, asserting or claiming jurisdiction
                over them or over any part of their operations or assets;

        (xxx)   the Company and its subsidiaries (i) are in compliance with any
                and all applicable foreign, federal, provincial, state and local
                laws and regulations relating to the protection of human health
                and safety, conservation, the environment or hazardous or toxic
                substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
                LAWS"), except for such failures to comply as would not have a
                Material Adverse Effect, (ii) have received all material
                permits, licenses or other approvals required of any of them
                under applicable Environmental Laws to conduct their business,
                and (iii) are in compliance with all terms and conditions of any
                such permit, license or approval, except in each case for such
                permits, licenses, approvals or failures to comply that would
                not have a Material Adverse Effect;

        (xxxi)  there have been no past, and there are no pending or, to the
                best knowledge of the Company, threatened claims, complaints,
                notices or requests for information received by the Company or
                its subsidiaries with respect to any alleged violation of any
                Environmental Law and no conditions exist at, on or under any
                property now or previously owned, operated, leased or contracted
                to perform work by the Company or its subsidiaries which, with
                the passage of time, or the giving of notice or both, would give
                rise to liability under any Environmental Law that, individually
                or in the aggregate, has or may reasonably be expected to have a
                Material Adverse Effect;

        (xxxii) except as set out in the Public Disclosure Documents, the
                Company is not party to any agreement, nor is the Company aware
                of any agreement, which in any manner affects the voting control
                of any of the securities of the Company or its subsidiaries;

        (xxxiii)other than as disclosed in or contemplated by the Public
                Disclosure Documents, the Company is not party to any Debt
                Instrument or any agreement, contract or commitment to create,
                assume or issue any Debt Instrument other than of the ordinary
                cause of business;

        (xxxiv) neither the Company, nor any of its subsidiaries, nor, to the
                knowledge of the Company, any other person is in default in the
                observance or performance of any term or obligation to be
                performed by any one of them under any Material Agreement,
                except for such defaults as would not have a Material Adverse
                Effect and no event has occurred which with notice or lapse of
                time or both would constitute such a default;

        (xxxv)  the minute books and records of the Company and its Material
                Subsidiaries which the Company has made available to the Agents
                and their counsel, Cassels Brock & Blackwell LLP, in connection
                with their due diligence investigation of the Company for the
                period from inception to the date of examination thereof, are
                all of the minute books and substantially all the records of the
                Company and its Material Subsidiaries for such period and
                contain copies of all proceedings (or

                                     - 12 -
<PAGE>

                certified copies thereof) of the shareholders, the board of
                directors and all committees of the board of directors of the
                Company and its subsidiaries to the date of review of such
                corporate records and minute books. There have been no other
                meetings, resolutions or proceedings of the shareholders, board
                of directors or any committees of the board of directors of the
                Company and its Material Subsidiaries during such period not
                reflected in such minute books and other records;

        (xxxvi) with respect to each of the Leased Premises, the Company or its
                subsidiaries occupy the Leased Premises and have the exclusive
                right to occupy and use the Leased Premises and each of the
                leases pursuant to which the Company or its subsidiaries occupy
                the Leased Premises is in good standing and in full force and
                effect. The performance of obligations pursuant to and in
                compliance with the terms of this Agreement and the completion
                of the transactions described herein by the Company, will not
                afford any of the parties to such leases or any other person the
                right to terminate such lease or result in any additional or
                more onerous obligations under such leases;

        (xxxvii)there are no actions, suits, proceedings or inquiries pending
                or, to the best knowledge of the Company, threatened against or
                affecting the Company its subsidiaries or their respective
                property or assets at law or in equity or before or by any
                federal, provincial, municipal or other governmental department,
                commission, board, bureau, agency or instrumentality other than
                those that would not have a Material Adverse Effect;

        (xxxviii)there are no judgments against the Company or its
                subsidiaries, which are unsatisfied, nor are there any consent
                decrees or injunctions to which the Company are subject;

        (xxxix) the Company and its Material Subsidiaries are the absolute legal
                and beneficial owners of, and have good and marketable title to
                or leasehold interest in, all of the material property or assets
                thereof as described in the Public Disclosure Documents, free of
                all mortgages, liens, charges, pledges, security interests,
                encumbrances, claims or demands whatsoever, other than those
                described in the Information, and no other property rights are
                necessary for the conduct of the business of the Company and its
                subsidiaries (taken as a whole) as currently conducted or
                contemplated to be conducted, the Company knows of no claim or
                basis for any claim that might or could adversely affect the
                right of the Company and its subsidiaries to use, transfer or
                otherwise exploit such property rights, other than those
                described in the Public Disclosure Documents, and the Company
                and its Subsidiaries have no responsibility or obligation to pay
                any commission, royalty, licence fee or similar payment to any
                person with respect to the property rights thereof, expect as
                described in the Public Disclosure Documents;

        (xl)    the Company and its Material Subsidiaries hold either freehold
                title, mining leases, mining claims, coal licenses, coal leases,
                or other conventional property, proprietary or contractual
                interests or rights, recognized in the jurisdiction in which a
                particular property is located in respect of the coal deposits,
                ore bodies and minerals located in properties in which the
                Company and its Material Subsidiaries have an interest as
                described in the Information under valid,

                                     - 13 -
<PAGE>

                subsisting and enforceable title documents or other recognized
                and enforceable agreements or instruments, sufficient to permit
                the Company and its Material Subsidiaries to explore the coal
                deposits, ore bodies or other minerals relating thereto, all
                such property, leases or claims and all property, leases or
                claims in which the Company or its Material Subsidiaries have
                any interest or right have been validly located and recorded in
                accordance with all applicable laws and are valid and
                subsisting, the Company or its Material Subsidiaries have all
                necessary surface rights, access rights and other necessary
                rights and interest relating to the properties in which the
                Company or its Material Subsidiaries have an interest as
                described in the Information granting the Company or its
                Material Subsidiaries the right and ability to explore for
                minerals, ore and metals for development purposes as are
                appropriate in view of their respective rights and interests
                therein, and each of the proprietary interests or rights and
                each of the documents, agreements and instruments and
                obligations relating thereto referred to above are currently in
                good standing in the name of the Company or its Material
                Subsidiaries;

        (xli)   any and all of the agreements and other documents and
                instruments pursuant to which the Company and its subsidiaries
                hold their property and assets (including any interest in, or
                right to earn an interest in, any property) are valid and
                subsisting agreements, documents or instruments in full force
                and effect, enforceable in accordance with the terms thereof,
                the Company and its subsidiaries are not in default of any of
                the provisions of any such agreements, documents or instruments
                nor has any such default been alleged. None of the properties
                (or any interest in, or right to earn an interest in, any
                property) of the Company and its subsidiaries are subject to any
                right of first refusal or purchase or acquisition rights which
                are not disclosed in the Information;

        (xlii)  the Company has disclosed all material information relating to
                the Willow Creek coal project in the Public Disclosure Documents
                in compliance with Canadian Securities Laws and such disclosure
                was true and complete and accurate in all material respects;

        (xliii) all mining operations of the Company and the Material
                Subsidiaries since acquisition of their material properties have
                been conducted in all material respects in accordance with good
                mining and engineering practices and all applicable material
                workers' compensation and health and safety and workplace laws,
                regulations and policies have been complied with in all material
                respects except for such failures to comply as have not had and
                would not reasonably be expected to have a Material Adverse
                Effect;

        (xliv)  there are no environmental audits, evaluations, assessments,
                studies or tests relating to the Company or any of the Material
                Subsidiaries except for ongoing assessments conducted by or on
                behalf of the Company in the ordinary course;

        (xlv)   there are no claims with respect to native rights currently or,
                to the best of the knowledge of the Company, pending or
                threatened with respect to any of the material properties at the
                Company or the Material Subsidiaries;

                                     - 14 -
<PAGE>

        (xlvi)  the Company has duly filed with the applicable regulatory
                authorities in compliance with Canadian Securities Laws all
                reports required by National Instrument 43-101 ("NI 43-101"),
                and all such reports comply with the requirements of NI 43-101;

        (xlvii) the currently issued and outstanding common shares of the
                Company are listed and posted for trading on the TSXV and no
                order ceasing or suspending trading in any securities of the
                Company or prohibiting the trading of the Company's issued
                securities has been issued and no proceedings for such purpose
                are pending or, to the knowledge of the Company, threatened;

        (xlviii) neither the Company nor any of its subsidiaries shall take any
                action which would be reasonably expected to result in the
                delisting or suspension of its Common Shares on or from the TSXV
                or the Toronto Stock Exchange (if as and when listed on such
                exchange) or on or from any securities exchange, market or
                trading or quotation facility on which its Common Shares are
                then listed or quoted and the Company shall comply with the
                rules and regulations thereof;

        (xlix)  no proceedings have been taken, instituted or, to the knowledge
                of the Company, are pending for the dissolution or liquidation
                of the Company or the Material Subsidiaries;

        (l)     the Transfer Agent, at its principal offices in Vancouver,
                British Columbia and Toronto, Ontario, will be appointed as the
                registrar and transfer agent in respect of the Warrants by the
                Closing Time;

        (li)    each Debt Instrument to which the Company or a Material
                Subsidiary is a party is in good standing and each of the
                Company and the Material Subsidiaries is not in default of any
                obligation or covenant under such Debt Instruments; and

        (lii)   subject to such risks and uncertainties as have been disclosed
                in the Public Disclosure Documents, the net proceeds of the
                Offering will be sufficient to meet the working capital
                requirements of the Company to support its current operations
                and to fund the completion of its expansion plans through the
                end of its current fiscal year.

        (liii)  the coal licenses referenced in table 1 and table 2 and the coal
                lease referenced in table 3 of the opinion provided pursuant to
                section 6(j) hereto comprises all of the Company's material
                licenses and leases and ownership interest in the Willow Creek
                Project.

        (B) REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE AGENTS. Each of the
Agents hereby severally represent, warrant and covenant to the Company and
acknowledges that the Company is relying upon such representations and
warranties, that:

        (i)     in respect of the offer and sale of the Units, it will comply
                with all Canadian Securities Laws and all applicable laws of the
                jurisdictions outside Canada in which it offers the Units and
                will offer the Units in the United States only on a basis exempt
                from the registration requirements under the U.S. Securities Act
                in accordance with the provisions of Schedule "A" to this
                Agreement;

                                     - 15 -
<PAGE>

        (ii)    it and its representatives have not engaged in or authorized,
                and will not engage in or authorize, any form of general
                solicitation or general advertising in connection with or in
                respect of the Units in any newspaper, magazine, printed media
                of general and regular paid circulation or any similar medium,
                or broadcast over radio or television or otherwise or conducted
                any seminar or meeting concerning the offer or sale of the Units
                whose attendees have been invited by any general solicitation or
                general advertising; and

        (iii)   it has not and will not solicit offers to purchase or sell the
                Units so as to require the filing of a prospectus or offering
                memorandum with respect thereto or the provision of a
                contractual right of action (as defined in Ontario Securities
                Commission Rule 14-501) under the laws of any jurisdiction,
                including the United States of America or any state thereof.

5. CLOSING DELIVERIES. The purchase and sale of the Units shall be completed at
the Closing Time at the offices of Cassels Brock & Blackwell LLP in Toronto,
Ontario, or at such other place as RBC (on behalf of the Agents) and the Company
may agree upon. At or prior to the Closing Time: (a) the Company shall, subject
to the provisions of Section 6 of this Agreement, duly and validly deliver to
the Agents certificates in definitive form representing the Unit Shares and
Warrants comprising the Units in the names of the Purchasers or as indicated on
their respective Subscription Agreements in the City of Toronto, against payment
at the direction of the Company of the subscription price therefor, in lawful
money of Canada. The Agents and the Company may discharge their respective
payment obligations by delivery by the Agents of a bank draft, certified cheque
or by transfer of funds by electronic wire transfer to the designated bank
account of each of the Company. Such payment to the Company shall be solely in
respect of the sale of Units and shall be equal to the aggregate purchase price
for the Units, less the Commission payable in respect of the sale of Units and
the reasonable out-of-pocket costs and expenses of the Agents of the Offering,
including reasonable fees and disbursements of counsel expenses (subject to the
maximum amount set out and as more particularly described in paragraph 8
hereof).

6. CLOSING CONDITIONS. Each Purchaser's obligation to purchase the Units at the
Closing Time shall be conditional upon the fulfilment at or before the Closing
Time of the following conditions:

(A)     the Agents shall have received a certificate, dated as of the Closing
        Date, signed by the Chief Executive Officer and Chief Financial Officer
        of the Company, or such other officers of the Company as the Agents may
        agree, certifying for and on behalf of the Company, to the best of their
        knowledge, information and belief after due inquiry, that:

        (i)     no order, ruling or determination having the effect of
                suspending the sale or ceasing the trading in any securities of
                the Company (including the Common Shares) has been issued by any
                regulatory authority and is continuing in effect and no
                proceedings for that purpose have been instituted or are pending
                or, are contemplated or threatened by any regulatory authority;

        (ii)    the Company has duly complied with all the terms, covenants and
                conditions of this Agreement on its part to be complied with up
                to the Closing Time; and

                                     - 16 -
<PAGE>

        (iii)   the representations and warranties of the Company contained in
                this Agreement are true and correct as of the Closing Time with
                the same force and effect as if made at and as of the Closing
                Time after giving effect to the transactions contemplated by
                this Agreement.

(B)     the Agents shall have received at the Closing Time certificates dated
        the Closing Date, signed by appropriate officers of the Company
        addressed to the Agents and their counsel, with respect to the articles
        and by-laws of the Company, all resolutions of the Company's board of
        directors relating to this Agreement and the transactions contemplated
        hereby and thereby, the incumbency and specimen signatures of signing
        officers, the constating documents of the Company and such other matters
        as the Agents may reasonably request;

(C)     the Agents shall have received at the Closing Time, evidence that all
        requisite approvals, consents and acceptances of the shareholders, the
        appropriate regulatory authorities and the TSXV required to be made or
        obtained by the Company in order to complete the Offering have been made
        or obtained;

(D)     the Subscription Agreements, the Warrant Indenture and the certificates
        representing the Unit Shares and the Warrants shall have been executed
        or endorsed, as applicable and delivered by the parties thereto in form
        and substance satisfactory to the Agents and their counsel, acting
        reasonably;

(E)     the TSXV shall have issued its conditional acceptance for the issuance
        of the Unit Shares and the Warrant Shares;

(F)     the Agents shall have received favourable legal opinions addressed to
        the Agents dated the Closing Date, from Bull, Housser & Tupper, counsel
        for the Company (it being understood that such counsel may rely to the
        extent appropriate in the circumstances, (i) as to matters of fact, on
        certificates of the Company executed on its behalf by a senior officer
        of the Company and on certificates of the Transfer Agent, as to the
        issued capital of the Company; (ii) as to matters of fact not
        independently established, on certificates of the Company's auditors or
        a public official); and (iii) as to matters of law with respect to
        consulting counsel in the applicable local jurisdictions) with respect
        to the following matters:

                (i)     as to the incorporation and subsistence of the Company
                        under the laws of British Columbia and as to the
                        corporate power of the Company to carry out its
                        obligations under this Agreement, the Subscription
                        Agreements and the Warrant Indenture and to issue the
                        Unit Shares, the Warrants and the Warrant Shares;

                (ii)    as to the authorized and issued capital of the Company;

                (iii)   that the Company has all requisite corporate power and
                        authority under the laws of its jurisdiction of
                        incorporation to carry on its business as presently
                        carried on and to own its properties;

                (iv)    that none of the execution and delivery of this
                        Agreement, the Subscription Agreements and the Warrant
                        Indenture, the performance by

                                     - 17 -
<PAGE>

                        the Company of its obligations hereunder and thereunder,
                        or the sale or issuance of the Unit Shares, the Warrants
                        and the Warrant Shares will conflict with or result in
                        any breach of the constating documents or by-laws of the
                        Company or the resolutions of the directors and
                        shareholders of the Company or applicable corporate law;

                (v)     that each of this Agreement, the Subscription Agreements
                        and the Warrant Indenture have been duly authorized and
                        executed and delivered by the Company, and constitute a
                        valid and legally binding obligation of the Company
                        enforceable against it in accordance with its terms,
                        except as enforcement thereof may be limited by
                        bankruptcy, insolvency, liquidation, reorganization,
                        moratorium or similar laws affecting the rights of
                        creditors generally and except as limited by the
                        application of equitable principles when equitable
                        remedies are sought, and the qualification that the
                        enforceability of rights of indemnity and contribution
                        may be limited by applicable law;

                (vi)    that the Unit Shares have been validly issued as fully
                        paid and non-assessable securities in the capital of the
                        Company;

                (vii)   that the Warrants have been duly and validly created and
                        issued;

                (viii)  Computershare Trust Company of Canada has been appointed
                        the warrant agent under the Warrant Indenture and
                        transfer agent and registrar for the Common Shares;

                (ix)    that the Warrant Shares have been reserved and
                        authorized and allotted for issuance to the Purchasers
                        and, upon the due exercise of the Warrants in accordance
                        with the provisions thereof and of the Warrant
                        Indenture, will be validly issued as fully paid and
                        non-assessable securities in the capital of the Company;

                (x)     that the issuance and sale by the Company of the Unit
                        Shares and Warrants to the Purchasers are exempt from
                        the prospectus and registration requirements of
                        applicable Canadian Securities Laws in the Canadian
                        Selling Jurisdictions and no documents are required to
                        be filed (other than specified forms accompanied by
                        requisite filing fees), proceedings taken or approvals,
                        permits, consents or authorizations obtained under the
                        applicable Canadian Securities Laws to permit such
                        issuance and sale;

                (xi)    that the issuance of the Warrant Shares upon the due
                        exercise of the Warrants will be exempt from the
                        prospectus and registration requirements of applicable
                        Canadian Securities Laws subject to certain provisos and
                        specified resale restrictions;

                (xii)   that no other documents will be required to be filed,
                        proceedings taken or approvals, permits, consents or
                        authorizations obtained under the applicable Canadian
                        Securities Laws in connection with the first trade of
                        the Unit Shares, the Warrants or the Warrant Shares, as
                        the case may be,

                                     - 18 -
<PAGE>

                        provided that four months and a day have lapsed since
                        the Closing Date, subject to the usual qualifications;

                (xiii)  that the issuance of the Unit Shares, the Warrants and
                        the Warrant Shares has been conditionally accepted for
                        filing by the TSXV and the Common Shares of the Company
                        are listed on the TSXV;

                (xiv)   as to such other matters as the Agents' legal counsel
                        may reasonably request prior to the Closing Time.

(G)     the Agents shall have received certificates of status or similar
        certificates with respect to the jurisdiction in which the Company is
        incorporated;

(H)     the Agents shall have received a legal opinion addressed to the Agents
        and the Purchasers from special United States counsel to the Company,
        dated as of the Closing Date, in form and substance satisfactory to the
        Agents and their counsel, acting reasonably, with respect to the initial
        sale of the Units by the Company in the United States or to U.S. persons
        (as such term is defined in Regulation S under the U.S. Securities Act).

(I)     the Agents shall have received a favourable legal opinion addressed to
        the Agents and the Purchasers dated as of the Closing Date, in form and
        substance satisfactory to the Agents and its counsel, acting reasonably,
        as to (i) the incorporation and subsistence of the Material
        Subsidiaries; (b) the corporate power and authority of the Material
        Subsidiaries; (iii) the ability of each of the Material Subsidiaries to
        carry on its business as presently carried on and to own it assets; (iv)
        the authorized capital, issued and outstanding share capital of the
        Material Subsidiaries; and (v) as to the ownership of the issued and
        outstanding securities of the Material Subsidiaries;

(J)     the Agents shall have received a favourable legal opinion addressed to
        the Agents, the Purchasers and the Agents' counsel, as to the title to
        the coal licenses and coal leases issued pursuant to the Coal Act
        (British Columbia) and constituting the Willow Creek coal project, dated
        as of the Closing Date, in form and substance satisfactory to the Agents
        and its counsel, acting reasonably; and

(K)     the Agents shall, in their sole discretion, be satisfied with their due
        diligence review with respect to the business, assets, financial
        condition, affairs and prospects of the Company.

7.      RIGHTS OF TERMINATION

(A) DUE DILIGENCE OUT. In the event that the due diligence investigations
performed by the Agents and/or their representatives reveal any material
information or fact not generally known to the public which might, in the sole
opinion of the Agents (or any one of them), acting reasonably, adversely affect
the market price of the Common Shares, quality of the investment or
marketability of the Offering, the Agents (or any one of them) shall be
entitled, at their sole option and in accordance with subparagraph 7(g) of this
Agreement, to terminate their obligations under this Agreement (and the
obligations of the Purchasers arranged by them to purchase the Units ) by notice
to that effect given to the Company any time prior to the Closing Time.

                                     - 19 -
<PAGE>

(B) LITIGATION. If any inquiry, action, suit, investigation or proceeding
whether formal or informal (including matters of regulatory transgression or
unlawful conduct and including any inquiry or investigation by the TSXV, any
securities commission, or the U.S. Securities Exchange Commission) is commenced,
announced or threatened in relation to, the Company or its Material
Subsidiaries, or any of their respective officers, directors or principal
shareholders, the Agents (or any one of them) shall be entitled, at their sole
option and in accordance with subparagraph 7(g) of this Agreement, to terminate
their obligations under this Agreement (and the obligations of the Purchasers
arranged by them to purchase the Units ) by notice to that effect given to the
Company any time prior to the Closing Time.

(C) DISASTER OUT. In the event that prior to the Closing Time, there should
develop, occur or come into effect any event of any nature, including terrorism,
accident, a new or change in any governmental law or regulation, or other
condition or major financial occurrence of national or international
consequence, which, in the sole opinion of the Agents (or any one of them),
materially adversely affects, or may adversely affect, the financial markets
generally or the business, operations, affairs or profitability of the Company
and its Material Subsidiaries, taken as a whole, or on the market price or value
of the Common Shares, the Agents (or any one of them) shall be entitled at their
sole option, in accordance with subparagraph 7(g) of this Agreement, to
terminate their obligations under this Agreement (and the obligations of the
Purchasers arranged by them to purchase the Units ) by written notice to that
effect given to the Company prior to the Closing Time.

(D) CHANGE IN MATERIAL FACT. In the event that prior to the Closing Time, the
Agents or the Agents' representatives, through their due diligence
investigations, or otherwise discover or there should occur a material change or
a change in any material fact or new material fact shall arise, which, in the
sole opinion of the Agents (or any one of them), has or could be expected to
have a material adverse change or material adverse effect on the business,
affairs or profitability of the Company and its Material Subsidiaries, taken as
a whole, or on the market price or value of the Common Shares, the Agents (or
any one of them) shall be entitled, at their sole option, in accordance with
subparagraph 7(g), to terminate their obligations under this Agreement (and the
obligations of the Purchasers arranged by them to purchase the Units ) by
written notice to that effect given to the Company prior to the Closing Time.

(E) NON-COMPLIANCE WITH CONDITIONS. The Company agrees that all terms,
conditions and covenants in this Agreement shall be construed as conditions and
complied with so far as the same relate to acts to be performed or caused to be
performed by the Company, as applicable, that they will each use its best
efforts to cause such conditions to be complied with, and any breach or failure
by the Company to comply with any of such conditions or in the event that any
representation or warranty given by the Company becomes false and is not
rectified as at the Closing Time, shall entitle the Agents (or any one of them),
at their sole option in accordance with subparagraph 7(g), to terminate their
obligations under this Agreement (and the obligations of the Purchasers arranged
by them to purchase the Units ) by notice to that effect given to the Company at
or prior to the Closing Time. The Agents may waive, in whole or in part, or
extend the time for compliance with, any terms and conditions without prejudice
to their rights in respect of any other of such terms and conditions or any
other or subsequent breach or non-compliance, provided that any such waiver or
extension shall be binding upon the Agents only if the same is in writing and
signed by them.

                                     - 20 -
<PAGE>

(F) CEASE TRADE ORDER. In the event that any order to cease trading in
securities of the Company is made or threatened by a Securities Regulator,
which, in the sole opinion of the Agents (or any one of them), acting
reasonably, operates or could operate to prevent or restrict trading in the
Common Shares or distribution or sale of the Units in the Selling Jurisdictions,
or any other jurisdiction where Purchasers are resident the Agents (or any one
of them) shall be entitled, at their sole option, in accordance with
subparagraph 7(g) of this Agreement, to terminate their obligations under this
Agreement (and the obligations of the Purchasers arranged by them to purchase
the Units) by written notice to that effect given to the Company prior to the
Closing Time.

(G) EXERCISE OF TERMINATION RIGHTS. The rights of termination contained in
subparagraphs 7(a), (b), (c), (d), (e) and (f) may be exercised by the Agents
and are in addition to any other rights or remedies the Agents may have in
respect of any default, act or failure to act or non-compliance by the Company
in respect of any of the matters contemplated by this Agreement or otherwise. In
the event of any such termination by the Agents, there shall be no further
liability on the part of the Agents to the Company or on the part of the Company
to the Agents except in respect of any liability which may have arisen or may
arise after such termination in respect of acts or omissions prior to such
termination under paragraphs 8 and 10.

8. EXPENSES. Whether or not the Offering is completed, the Company will pay all
reasonable expenses and fees in connection with the Offering, including all
expenses of or incidental to the issue, sale or distribution of the Units
including, the fees and expenses of the Company's counsel; all costs incurred in
connection with the preparation of documents relating to the Offering; and all
reasonable expenses and fees incurred by the Agents which shall include the
reasonable fees (to a maximum of $75,000, exclusive of GST) and disbursements of
the Agents' counsel. All reasonable fees and expenses incurred by the Agents or
on their behalf shall be payable by the Company immediately upon receiving an
invoice therefor from the Agents and shall be payable whether or not the
Offering is completed.

9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All terms, warranties,
representations, covenants and agreements herein contained or contained in any
documents submitted pursuant to this Agreement and in connection with the
transactions herein contemplated shall survive the purchase and sale of the Unit
Shares and Warrants comprising the Units and continue in full force and effect
for the benefit of the Agents and the Purchasers and shall not be limited or
prejudiced by any investigation made by or on behalf of the Agents in connection
with the purchase and sale of the Unit Shares and Warrants comprising the Units.

10. (A) INDEMNITY. The Company hereby agrees to indemnify and hold the Agents
and/or any of their respective affiliates (the "AFFILIATES") and each of the
directors, officers, employees and shareholders of the Agents and/or the
Affiliates (hereinafter collectively referred to as the "PERSONNEL") harmless
from and against any and all expenses, losses (other than loss of profits),
claims, actions, damages or liabilities, whether joint or several (including the
aggregate amount paid in reasonable settlement of any actions, suits,
proceedings or claims), and the reasonable fees and expenses of their counsel
that may be incurred in advising with respect to and/or defending any claim that
may be made against the Agents and/or the Affiliates, to which the Agents and/or
the Affiliates and/or the Personnel may become subject or otherwise involved in
any capacity under any statute or common law or otherwise insofar as such
expenses, losses, claims, damages, liabilities or actions arise out of or are
based, directly or indirectly, upon the performance of professional services
rendered to the Company by the Agents and/or the

                                     - 21 -
<PAGE>

Affiliates and the Personnel hereunder or otherwise in connection with the
matters referred to in this Agreement, provided, however, that this indemnity
shall not apply to the extent that a court of competent jurisdiction in a final
judgment that has become non-appealable shall determine that:

        (i)     the Agents and/or the Affiliates or the Personnel have been
                grossly negligent or dishonest or have committed any fraudulent
                act in the course of such performance;

        (ii)    the expenses, losses, claims, damages or liabilities, as to
                which indemnification is claimed, were directly caused by the
                gross negligence, dishonesty or fraud referred to in (i).

If for any reason (other than the occurrence of any of the events itemized in
(i) and (ii) above), the foregoing indemnification is unavailable to the Agents
and/or the Affiliates or insufficient to hold them harmless, then the Company
shall contribute to the amount paid or payable by the Agents and/or the
Affiliates as a result of such expense, loss, claim, damage or liability in such
proportion as is appropriate to reflect not only the relative benefits received
by the Company on the one hand and the Agents and/or the Affiliates on the other
hand but also the relative fault of the Company and the Agents and/or the
Affiliates, as well as any relevant equitable considerations; provided that the
Company shall, in any event, contribute to the amount paid or payable by the
Agents and/or the Affiliates as a result of such expense, loss, claim, damage or
liability, any excess of such amount over the amount of the fees received by the
Agents and/or the Affiliates hereunder pursuant to this Agreement.

The Company agrees that in case any legal proceeding shall be brought against
the Company and/or the Agents and/or the Affiliates by any governmental
commission or regulatory authority or any stock exchange or other entity having
regulatory authority, either domestic or foreign, shall investigate the Company
and/or the Agents and/or the Affiliates and any Personnel shall be required to
testify in connection therewith or shall be required to respond to procedures
designed to discover information regarding, in connection with, or by reason of
the performance of professional services rendered to the Company by the Agents
and/or the Affiliates under this Agreement, the Agents and/or the Affiliates
shall have the right to employ its own counsel in connection therewith, and the
reasonable fees and expenses of such counsel as well as the reasonable costs
(including an amount to reimburse the Agents and/or the Affiliates for time
spent by its Personnel in connection therewith) and out-of-pocket expenses
incurred by its Personnel in connection therewith shall be paid by the Company
as they occur. Provided that, notwithstanding the foregoing, the Agents and/or
the Affiliates and the Personnel shall utilize counsel to the Company unless in
the opinion of the Agents and/or the Affiliates, based on counsel, there is an
actual, potential or apparent conflict between the interests of such parties and
the interests of the Company such that joint representation would be
inappropriate.

Promptly after receipt of notice of the commencement of any legal proceeding
against the Agents and/or the Affiliates or any of the Personnel or after
receipt of notice of the commencement of any investigation, which is based,
directly or indirectly, upon any matter in respect of which indemnification may
be sought from the Company, the Agents and/or the Affiliates (or any one of
them) will notify the Company in writing of the commencement thereof and,
throughout the course thereof, will provide copies of all relevant documentation
to the Company, will keep the

                                     - 22 -
<PAGE>

Company advised of the progress thereof and will discuss with the Company all
significant actions proposed.

The indemnity and contribution obligations of the Company shall be in addition
to any liability which the Company may otherwise have, shall extend upon the
same terms and conditions to those of the Agents and/or the Affiliates and the
Personnel who are not signatories hereto and shall be binding upon and enure to
the benefit of any successors, assigns, heirs and personal representatives of
the Company, the Agents and/or the Affiliates and any of the Personnel of the
Agents and/or the Affiliates. The foregoing provisions shall survive the
completion of professional services rendered under this Agreement or any
termination of the authorization given by this Agreement.

(B) RIGHT OF INDEMNITY IN FAVOUR OF OTHERS. With respect to any party who may be
indemnified by paragraph 10(a) above and is not a party to this Agreement, the
Agents shall obtain and hold the rights and benefits of this paragraph 10 in
trust for and on behalf of such Indemnified Party.

11. ACTION BY AGENTS. All steps which must or may be taken by the Agents in
connection with this Agreement, with the exception of the matters relating to
termination contemplated by Section 7 or matters relating to indemnity and
contribution contemplated by Section 10, may be taken by RBC on behalf of itself
and the Agents and the execution and delivery of this Agreement by the Company
and the Agents shall constitute the authority of the Company for accepting
notification of any such steps from, and for delivery of the definitive
documents constituting the Units to RBC. RBC agrees to consult with the other
Agents with respect to all material matters.

12. SYNDICATION OF AGENTS

        The sale of the Units in connection with the Offering shall be on a
"reasonable best efforts" basis without underwriter liability or obligation and
shall be as to the following percentages of the Units to be sold at that time:

<TABLE>
<CAPTION>
NAME OF AGENT                                SYNDICATE POSITION
<S>                                          <C>
RBC Dominion Securities Inc.                       75.0%
Salman Partners Inc.                               12.5%
Sprott Securities Inc.                             12.5%
</TABLE>

        If any of the Agents fails to sell its applicable percentage of the
aggregate amount of the Units at the Closing Time, the other Agents shall have
the right, but shall not be obligated, to sell the Units which would otherwise
have been sold by the Agent which fails to sell.

13. ADVERTISEMENTS. The Company acknowledges that the Agents shall have the
right, subject always to clauses 1(a) and (c) and 4(b) of this Agreement, at
their own expense, to place such advertisement or advertisements relating to the
sale of the Units contemplated herein as the Agents may consider desirable or
appropriate and as may be permitted by applicable law. The Company and the
Agents each agree that they will not make or publish any advertisement in any
media whatsoever relating to, or otherwise publicize, the transaction provided
for herein so as to result in any exemption from the prospectus and registration
requirements of applicable Canadian Securities Laws or the securities
legislation in any other jurisdiction in which the Units

                                     - 23 -
<PAGE>

shall be offered or sold being unavailable in respect of the sale of the Units
to prospective purchasers.

14. NOTICES. Unless otherwise expressly provided in this Agreement, any notice
or other communication to be given under this Agreement (a "NOTICE") shall be in
writing addressed as follows:

(A)     If to the Company, to:

        Pine Valley Mining Corporation
        Suite 501 - 535 Thurlow Street
        Vancouver, British Columbia  V6E 3L2

        Attention: Martin Rip, Vice President, Finance and Chief Financial
        Officer
        Fax:       (604) 682-4698

        with a copy to:

        Bull, Housser & Tupper
        3000 - 1055 West Georgia Street
        Vancouver, British Columbia  V6E 3R3

        Attention: Grant Weaver
        Fax:       (604) 646-2514

(B)     If to the Agents, to:

        RBC Dominion Securities Inc.
        Royal Bank Plaza, South Tower
        4th Floor, P.O. Box 50
        Toronto, Ontario  M5J 2W7

        Attention: Gordon Bell
        Fax:       (416) 842-7527

        with a copy to:

        Cassels Brock & Blackwell LLP
        Suite 2100, Scotia Plaza
        40 King Street West
        Toronto, Ontario  M5H 3C2

        Attention:  Chad Accursi
        Telecopier: (416) 642-7131

or   to such other address as any of the parties may designate by notice given
to the others.

Each notice shall be personally delivered to the addressee or sent by facsimile
transmission to the addressee and (i) a notice which is personally delivered
shall, if delivered on a Business Day, be

                                     - 24 -
<PAGE>

deemed to be given and received on that day and, in any other case, be deemed to
be given and received on the first Business Day following the day on which it is
delivered; and (ii) a notice which is sent by facsimile transmission shall be
deemed to be given and received on the first Business Day following the day on
which it is sent.

15. TIME OF THE ESSENCE. Time shall, in all respects, be of the essence hereof.

16. CANADIAN DOLLARS. All references herein to dollar amounts are to lawful
money of Canada.

17. HEADINGS. The headings contained herein are for convenience only and shall
not affect the meaning or interpretation hereof.

18. SINGULAR AND PLURAL, ETC. Where the context so requires, words importing the
singular number include the plural and vice versa, and words importing gender
shall include the masculine, feminine and neuter genders.

19. ENTIRE AGREEMENT. This Agreement constitutes the only agreement between the
parties with respect to the subject matter hereof and shall supersede any and
all prior negotiations and understandings, including the engagement letter dated
November 15, 2005. This Agreement may be amended or modified in any respect by
written instrument only.

20. SEVERABILITY. The invalidity or unenforceability of any particular provision
of this Agreement shall not affect or limit the validity or enforceability of
the remaining provisions of this Agreement.

21. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Province of British Columbia and the laws of
Canada applicable therein.

22. SUCCESSORS AND ASSIGNS. The terms and provisions of this Agreement shall be
binding upon and enure to the benefit of the Company, the Agents and the
Purchasers and their respective executors, heirs, successors and permitted
assigns; provided that, except as provided herein or in the Subscription
Agreements, this Agreement shall not be assignable by any party without the
written consent of the others.

23. FURTHER ASSURANCES. Each of the parties hereto shall do or cause to be done
all such acts and things and shall execute or cause to be executed all such
documents, agreements and other instruments as may reasonably be necessary or
desirable for the purpose of carrying out the provisions and intent of this
Agreement.

24. EFFECTIVE DATE. This Agreement is intended to and shall take effect as of
the date first set forth above, notwithstanding its actual date of execution or
delivery.

25. LANGUAGE. The parties hereby acknowledge that they have expressly required
this Agreement and all notices, statements of account and other documents
required or permitted to be given or entered into pursuant hereto to be drawn up
in the English language only. Les parties reconnaissent avoir expressment
demandees que la presente Convention ainsi que tout avis, tout etat de compte et
tout autre document a etre ou pouvant etre donne ou conclu en vertu des
dispositions des presentes, soient rediges en langue anglaise seulement.

                                     - 25 -
<PAGE>

                           [INTENTIONALLY LEFT BLANK]

                                     - 26 -
<PAGE>

26. COUNTERPARTS. This Agreement may be executed in any number of counterparts
and by facsimile, each of which so executed shall constitute an original and all
of which taken together shall form one and the same agreement. If the Company is
in agreement with the foregoing terms and conditions, please so indicate by
executing a copy of this letter where indicated below and delivering the same to
the Agents.

Yours very truly,

RBC DOMINION SECURITIES INC.

Per:
     ------------------------------------
          Authorized Signing Officer

SALMAN PARTNERS INC.

Per:
     ------------------------------------
          Authorized Signing Officer

SPROTT SECURITIES INC.

Per:
     ------------------------------------
          Authorized Signing Officer

The foregoing is hereby accepted on the terms and conditions therein set forth.

DATED as of December 12, 2005.

                                             PINE VALLEY MINING CORPORATION

                                             Per:
                                                  ------------------------------
                                                    Authorized Signing Officer

                                     - 27 -
<PAGE>

                                  SCHEDULE "A"

                         UNITED STATES OFFERS AND SALES

        As used in this Exhibit A, capitalized terms used herein and not defined
herein shall have the meaning ascribed thereto in the Agency Agreement to which
this Exhibit is annexed and the following terms shall have the meanings
indicated:

        (a)     "Directed Selling Efforts" means directed selling efforts as
                that term is defined in Regulation S. Without limiting the
                foregoing, but for greater clarity in this Exhibit, it means,
                subject to the exclusions from the definition of directed
                selling efforts contained in Regulation S, any activity
                undertaken for the purpose of, or that could reasonably be
                expected to have the effect of, conditioning the market in the
                United States for any of the Units and includes the placement of
                any advertisement in a publication with a general circulation in
                the United States that refers to the offering of the Units;

        (b)     "Foreign Issuer" means a foreign issuer as that term is defined
                in Regulation S. Without limiting the foregoing, but for greater
                clarity in this Exhibit, it means any issuer which is (a) the
                government of any foreign country or of any political
                subdivision of a foreign country; or (b) a corporation or other
                organization incorporated under the laws of any foreign country,
                except an issuer meeting the following conditions: (1) more than
                50 percent of the outstanding voting securities of such issuer
                are held of record either directly or through voting trust
                certificates or depositary receipts by residents of the United
                States; and (2) any of the following: (i) the majority of the
                executive officers or directors are United States citizens or
                residents, (ii) more than 50 percent of the assets of the issuer
                are located in the United States, or (iii) the business of the
                issuer is administered principally in the United States;

        (c)     "Institutional Accredited Investor" means those institutional
                "accredited investors" specified in Rule 501(a)(1), (a)(2),
                (a)(3) or (a)(7) of Regulation D adopted pursuant to the U.S.
                Securities Act;

        (d)     "Regulation D" means Regulation D adopted by the SEC under the
                U.S. Securities Act;

        (e)     "Regulation S" means Regulation S adopted by the SEC under the
                U.S. Securities Act;

        (f)     "Rule 144" means Rule 144 adopted by the SEC under the U.S.
                Securities Act;

        (g)     "SEC" means the United States Securities and Exchange
                Commission;

        (h)     "Selling Dealer Group" means dealers or brokers other than the
                Agents and their U.S. affiliates who participate in the offer
                and sale of the Units pursuant to the Agency Agreement;

                                     - 28 -
<PAGE>

        (i)     "Substantial U.S. Market Interest" means substantial U.S. market
                interest as that term is defined in Regulation S;

        (j)     "U.S. Exchange Act" means the United States Securities Exchange
                Act of 1934, as amended;

        (k)     "U.S. Person" means a U.S. person as that term is defined in
                Regulation S; and

        (l)     "U.S. Securities Act" means the United States Securities Act of
                1933, as amended;

        (m)     "United States" means the United States of America, its
                territories and possessions, any state of the United States, and
                the District of Columbia.

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE AGENTS

The Agents acknowledge that the Units, Unit Shares, Warrants, Warrant Shares
have not been and will not be registered under the U.S. Securities Act and may
be offered and sold within the United States or to, or for the account or
benefit of, U.S. persons only in transactions exempt from or not subject to the
registration requirements of the U.S. Securities Act. Accordingly, the Agents
represent, warrant and covenant to and with the Company that:

1.      They have not offered or sold, and will not offer or sell, any Units
        except (a) in an offshore transaction in accordance with Rule 903 of
        Regulation S or (b) within the United States as provided in paragraphs 2
        through 10 below. Accordingly, none of the Agents, their affiliates, any
        persons acting on their behalf, or any member of the Selling Dealer
        Group have made or will make (except as permitted in paragraphs 2
        through 10 below) (i) any offer to sell or any solicitation of an offer
        to buy, any Units to any U.S. Person or any person in the United States,
        (ii) any sale of Units to any purchaser unless, at the time the buy
        order was or will have been originated, the purchaser was outside the
        United States, or such Agents, affiliate or person acting on behalf of
        either, reasonably believed that such purchaser was outside the United
        States, or (iii) any Directed Selling Efforts in the United States with
        respect to the Units. Terms used in this paragraph have the meanings
        given to them by Regulation S.

2.      They have not entered and will not enter into any contractual
        arrangement with respect to the distribution of the Units, except with
        their affiliates, any members of the Selling Dealer Group or with the
        prior written consent of the Company. They shall require each selling
        group member to agree, for the benefit of the Company, to comply with,
        and shall use their best efforts to ensure that each selling group
        member complies with, the same provisions of this Exhibit as apply to
        the Agents as if such provisions applied to such selling group member.

3.      All offers and sales of Units in the United States shall be made through
        a U.S. registered broker dealer affiliate in compliance with all
        applicable U.S. broker-dealer requirements.

4.      Offers and sales of Units in the United States shall not be made (i) by
        any form of general solicitation or general advertising (as those terms
        are used in Regulation D), including advertisements, articles, notices
        or other communications published in any newspaper, magazine, or similar
        media or broadcast over radio or television, or any seminar or

                                     - 29 -
<PAGE>

        meeting whose attendees had been invited by general solicitation or
        general advertising or (ii) in any manner involving a public offering
        within the meaning of Section 4(2) of the U.S. Securities Act.

5.      Any offer, sale or solicitation of an offer to buy Units that has been
        made or will be made in the United States was or will be made only to
        Institutional Accredited Investors in accordance with the requirements
        of Rule 506 of Regulation D in transactions that are exempt from
        registration under the U.S. Securities Act and applicable state
        securities laws.

6.      The Agents acting through a U.S. registered broker dealer affiliate, may
        offer the Units in the United States only to offerees with respect to
        which any of the Agents has a pre-existing relationship and has
        reasonable grounds to believe are Institutional Accredited Investors and
        immediately prior to making any such offer and, based on the
        institutional accredited investor certificates attached as a schedule to
        the Subscription Agreement for Purchasers purchasing as Institutional
        Accredited Investors, had reasonable grounds to believe and did believe
        that each offeree was an Institutional Accredited Investor, and on the
        date hereof, they continue to believe that each U.S. Purchaser is an
        Institutional Accredited Investor.

7.      Prior to any sales of Units in the United States, they shall cause each
        U.S. Purchaser thereof to sign and deliver a Subscription Agreement
        containing such representations, warranties and acknowledgements as may
        be necessary to ensure compliance with U.S. securities laws.

8.      Prior to completion of any sale to the Closing Time, they will provide
        the Company with a list of all purchasers of the Units in the United
        States.

9.      At least one business day prior to the Closing Time, they will provide
        the Company with a list of all purchasers of the Units in the United
        States.

10.     They will inform, and cause the U.S. registered broker dealer affiliate
        to inform, all purchasers of the Units in the United States that the
        Units have not been and will not be registered under the U.S. Securities
        Act and are being sold to them without registration under the U.S.
        Securities Act in reliance on Rule 506 of Regulation D.

11.     The Agents agree that at the Closing Time, they, together with the U.S.
        registered broker dealer affiliate, will provide a certificate,
        substantially in the form of Annex I to this Exhibit A, relating to the
        manner of the offer and sale of the Units in the United States.

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

The Company represents, warrants, covenants and agrees that:

1.      The Company is a Foreign Issuer within the meaning of Regulation S and
        reasonably believes that there is no Substantial U.S. Market Interest in
        the Units.

2.      The Company is not, and as a result of the sales of the Units
        contemplated hereby will not be, an "investment company" as defined in
        the United States Investment Company Act of 1940, as amended.

                                     - 30 -
<PAGE>

3.      Except with respect to offers and sales within the United States to
        accredited investors (within the meaning of Rule 501(a) of Regulation D)
        who are Qualified Institutional Buyers, in reliance upon any exemption
        from registration under Regulation D, neither the Company nor any of its
        affiliates, nor any person acting on its behalf, has made or will make:
        (A) any offer to sell, or any solicitation of an offer to buy, any Units
        to a U.S. Person or a person in the United States; or (B) any sale of
        Units unless, at the time the buy order was or will have been
        originated, the purchaser is (i) outside the United States or (ii) the
        Company, its affiliates, and any person acting on their behalf
        reasonably believes that the purchaser is outside the United States.

4.      During the period in which the Units are offered for sale, neither it
        nor any of its affiliates, nor any person acting on its or their behalf
        (i) has engaged in or will engage in any form of general solicitation or
        general advertising (as those terms are used in Regulation D) with
        respect to offers or sales of the Units in the United States, including
        advertisements, articles, notices or other communications published in
        any newspaper, magazine or similar media, or broadcast over radio, or
        television, or any seminar or meeting whose attendees have been invited
        by general solicitation or general advertising; or (ii) or in any manner
        involving a public offering within the meaning of Section 4(2) of the
        U.S. Securities Act.

5.      Except with respect to the offer and sale of the Units offered hereby
        and offers and sales of Common Shares to accredited investors only
        pursuant to the Company's employee benefit plans in accordance with Rule
        506 of the U.S. Securities Act, the Company has not, for a period of six
        months prior to the date hereof sold, offered for sale or solicited any
        offer to buy any of its securities in the United States.

6.      Neither the Company, nor any of its affiliates, nor any person acting on
        its or their behalf, has paid or will pay any commission or other
        remuneration, directly or indirectly for soliciting the exercise of the
        Warrants.

7.      The Corporation will use its commercially reasonable efforts to qualify
        as a "foreign issuer" for a period of 24 months after the Closing Date.

                                     - 31 -
<PAGE>

                              ANNEX I TO SCHEDULE A

                            UNDERWRITERS' CERTIFICATE

In connection with the private placement in the United States of the units (the
"Units") of Pine Valley Mining Corporation (the "Company") with one or more U.S.
Institutional Accredited Investors (the "U.S. Purchasers") pursuant to one or
more Subscription Agreements dated as of December 12, 2005, the undersigned RBC
Dominion Securities Inc., on behalf of the Agents referred to in the Agency
Agreement dated December 12, 2005 among the Company, RBC Dominion Securities
Inc., Sprott Securities Inc. and Salman Partners Inc. (the "Agency Agreement"),
and RBC Capital Markets Corporation who has signed below in its capacity as
placement agent in the United States for the Agents (the "U.S. Placement
Agent"), do hereby certify as follows:

        (i)     the U.S. Placement Agent is a duly registered broker or dealer
                with the United States Securities and Exchange Commission (the
                "SEC") and the National Association of Securities Dealers, Inc,
                ("NASD") and is in good standing with the NASD and the SEC on
                the date hereof;

        (ii)    all offers and sales of Units in the United States were made to
                a maximum of 50 U.S. Purchasers by the U.S. registered
                broker-dealer affiliate;

        (iii)   no written material other than the Subscription Agreement, was
                used in connection with the offer and sale of the Units in the
                United States;

        (iv)    immediately prior to offering Units to such offerees in the
                United States, we had reasonable grounds to believe and did
                believe that each offeree was an "accredited investor" of the
                type specified in Rule 501(a)(1), (a)(2), (a)(3) or (a)(7) of
                Regulation D adopted pursuant to the U.S. Securities Act" (an
                "Institutional Accredited Investor") and, on the date hereof, we
                continue to believe that each U.S. person purchasing Units
                through us, as agent, is an Institutional Accredited Investor;

        (v)     no form of general solicitation or general advertising (as those
                terms are used in Regulation D under the U.S. Securities Act)
                was used, nor will be used, by us or our representatives,
                including advertisements, articles, notices or other
                communications published in any newspaper, magazine or similar
                media or broadcast over radio or television, or any seminar or
                meeting whose attendees had been invited by general solicitation
                or general advertising, in connection with the offer or sale of
                the Units in the United States or to U.S. persons;

        (vi)    the offering of the Units in the United States has been
                conducted by the Agents through the U.S. Placement Agent in
                accordance with the Agency Agreement and all applicable U.S.
                broker-dealer requirements; and

                                     - 32 -
<PAGE>

        (vii)   prior to the sale of Units in the United States pursuant to Rule
                506 of Regulation D, we caused each U.S. purchaser to execute a
                Subscription Agreement which includes a term sheet and
                containing such representations, warranties and acknowledgements
                as may be necessary to ensure compliance with U.S. securities
                laws.

Terms used in this certificate have the meanings given to them in the Agency
Agreement unless defined herein.

DATED this 12 day of December, 2005

RBC DOMINION SECURITIES INC.                   RBC CAPITAL MARKETS
                                               CORPORATION

By:                                            By:
     -----------------------------                  ----------------------------
       Authorized Signing Officer                    Authorized Signing Officer

                                     - 33 -
<PAGE>

                                  SCHEDULE "B"

                       OUTSTANDING CONVERTIBLE SECURITIES

                                     - 34 -<PAGE>

                                                                    EXHIBIT 4.80

                         PINE VALLEY MINING CORPORATION

                                     - and -

                      COMPUTERSHARE TRUST COMPANY OF CANADA

                     COMMON SHARE PURCHASE WARRANT INDENTURE

                           Providing for the Issue of
                    2,027,500 Common Share Purchase Warrants

                                December 12, 2005

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                     <C>
ARTICLE 1 INTERPRETATION..............................................................................    2
   1.1      Definitions...............................................................................    2
   1.2      Words Importing the Singular..............................................................    6
   1.3      Interpretation not Affected by Headings...................................................    6
   1.4      Day not a Business Day....................................................................    6
   1.5      Time of the Essence.......................................................................    6
   1.6      Governing Law.............................................................................    6
   1.7      Meaning of "outstanding" for Certain Purposes.............................................    6
   1.8      Currency..................................................................................    7
   1.9      Termination...............................................................................    7
ARTICLE 2 ISSUE OF WARRANTS...........................................................................    7
   2.1      Issue of Warrants.........................................................................    7
   2.2      Form and Terms of Warrants................................................................    7
   2.3      Signing of Warrant Certificates...........................................................    8
   2.4      Certification by the Warrant Agent........................................................    8
   2.5      Warrantholder not a Shareholder, etc. ....................................................    8
   2.6      Issue in Substitution for Lost Warrant Certificates.......................................    9
   2.7      Warrants to Rank Pari Passu...............................................................    9
   2.8      Registration and Transfer of Warrants.....................................................    9
   2.9      Registers Open for Inspection.............................................................   11
   2.10     Exchange of Warrants......................................................................   11
   2.11     Ownership of Warrants.....................................................................   11
   2.12     Adjustment of Exchange Basis..............................................................   12
   2.13     Rules Regarding Calculation of Adjustment of Exchange Basis...............................   16
   2.14     Postponement of Subscription..............................................................   17
   2.15     Notice of Adjustment......................................................................   18
   2.16     No Action after Notice....................................................................   18
   2.17     Purchase of Warrants for Cancellation.....................................................   18
   2.18     Optional Purchases by the Company.........................................................   19
   2.19     Protection of Warrant Agent...............................................................   19
   2.20     Legended Warrant Certificates.............................................................   19
ARTICLE 3 EXERCISE OF WARRANTS........................................................................   21
   3.1      Method of Exercise of Warrants............................................................   21
   3.2      No Fractional Shares......................................................................   22
   3.3      Effect of Exercise of Warrants............................................................   23
   3.4      Cancellation of Warrant Certificates......................................................   25
   3.5      Subscription for less than Entitlement....................................................   25
   3.6      Expiration of Warrant.....................................................................   25
   3.7      Prohibition on Exercise by U.S. Persons; Exception........................................   25
ARTICLE 4 COVENANTS FOR WARRANTHOLDERS' BENEFIT.......................................................   26
   4.1      General Covenants of the Company..........................................................   26
   4.2      Securities Qualification Requirements.....................................................   27
   4.3      Warrant Agent's Remuneration and Expenses.................................................   27
   4.4      Performance of Covenants by Warrant Agent.................................................   27
ARTICLE 5 ENFORCEMENT.................................................................................   28
   5.1      Suits by Warrantholders...................................................................   28
</TABLE>

<PAGE>

                                      -ii-

<TABLE>
<S>                                                                                                     <C>
   5.2      Limitation of Liability...................................................................   28
ARTICLE 6 MEETINGS OF WARRANTHOLDERS..................................................................   29
   6.1      Right to Convene Meetings.................................................................   29
   6.2      Notice....................................................................................   29
   6.3      Chairman..................................................................................   29
   6.4      Quorum....................................................................................   29
   6.5      Power to Adjourn..........................................................................   30
   6.6      Show of Hands.............................................................................   30
   6.7      Poll and Voting...........................................................................   30
   6.8      Regulations...............................................................................   31
   6.9      Company, Warrant Agent and Counsel may be Represented.....................................   31
   6.10     Powers Exercisable by Extraordinary Resolution............................................   32
   6.11     Meaning of "Extraordinary Resolution".....................................................   32
   6.12     Powers Cumulative.........................................................................   33
   6.13     Minutes...................................................................................   33
   6.14     Instruments in Writing....................................................................   34
   6.15     Binding Effect of Resolutions.............................................................   34
   6.16     Holdings by the Company or Subsidiaries of the Company Disregarded........................   34
ARTICLE 7 SUPPLEMENTAL INDENTURES AND SUCCESSOR COMPANIES.............................................   35
   7.1      Provision for Supplemental Indentures for Certain Purposes................................   35
   7.2      Successor Companies.......................................................................   36
ARTICLE 8 CONCERNING THE WARRANT AGENT................................................................   36
   8.1      Trust Indenture Legislation...............................................................   36
   8.2      Rights and Duties of Warrant Agent........................................................   36
   8.3      Evidence, Experts and Advisers............................................................   37
   8.4      Securities, Documents and Monies Held by Warrant Agent....................................   39
   8.5      Actions by Warrant Agent to Protect Interests.............................................   39
   8.6      Warrant Agent not Required to Give Security...............................................   39
   8.7      Protection of Warrant Agent...............................................................   39
   8.8      Replacement of Warrant Agent..............................................................   40
   8.9      Conflict of Interest......................................................................   41
   8.10     Acceptance of Trusts......................................................................   42
   8.11     Warrant Agent not to be Appointed Receiver................................................   42
   8.12     Authorization to Carry on Business........................................................   42
ARTICLE 9 GENERAL.....................................................................................   42
   9.1      Notice to the Company and the Warrant Agent...............................................   42
   9.2      Notice to the Warrantholders..............................................................   43
   9.3      Discretion of Directors...................................................................   44
   9.4      Satisfaction and Discharge of Indenture...................................................   44
   9.5      Provisions of Indenture and Warrants for the Sole Benefit of Parties and Warrantholders...   44
   9.6      Counterparts and Formal Date..............................................................   45

SCHEDULE "A" - FORM OF WARRANT CERTIFICATE ...........................................................  A-1

SCHEDULE "B" - REPRESENTATION LETTER .................................................................  B-1

SCHEDULE "C" - FORM OF DECLARATION FOR REMOVAL OF LEGEND..............................................  C-1
</TABLE>

<PAGE>

              THIS WARRANT INDENTURE dated as of December 12, 2005

BETWEEN:

                        PINE VALLEY MINING CORPORATION, a corporation
                        amalgamated under the laws of the Province of British
                        Columbia

                        (hereinafter called the "COMPANY")

AND

                        COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company
                        existing under the laws of Canada

                        (hereinafter called the "WARRANT AGENT")

RECITALS

WHEREAS:

A. The Company proposes to issue 2,027,500 common share purchase warrants of the
Company (the "SHARE PURCHASE WARRANTS" or the "WARRANTS");

B. Each whole Warrant entitles the holder thereof to purchase, subject to
adjustment in certain events, one Common Share at a price of $3.50 per share at
any time prior to 5:00 p.m. (local time in the Cities of Vancouver, British
Columbia, Calgary, Alberta, and Toronto, Ontario as applicable, where this
certificate is surrendered) on the date which is eighteen (18) months following
the Closing Date, all upon the terms and conditions herein set forth;

C. For such purpose the Company deems it necessary to create and issue Warrants
to be constituted and issued in the manner hereinafter set forth;

D. The Company is duly authorized to create and issue the Warrants to be issued
as herein provided;

E. All things necessary have been done and performed to make the Warrants, when
certified by the Warrant Agent and issued as provided in this indenture, legal,
valid and binding upon the Company with the benefits of and subject to the terms
of this indenture;

F. The foregoing recitals are made as statements of fact by the Company and not
by the Warrant Agent;

<PAGE>

                                      -2-

G. The Warrant Agent has agreed to enter into this indenture and to hold all
rights, interests and benefits contained herein for and on behalf of those
persons who become holders of Warrants issued pursuant to this indenture from
time to time;

      NOW THEREFORE THIS INDENTURE WITNESSES that for good and valuable
consideration mutually given and received, the receipt and sufficiency of which
are hereby acknowledged, it is hereby agreed and declared as follows:

                                    ARTICLE 1

                                 INTERPRETATION

1.1   Definitions

      In this indenture, unless there is something in the subject matter or
context inconsistent therewith:

      "AGENT" means RBC Capital Markets on behalf of itself, Salman Partners
      Inc. and Sprott Securities Inc.;

      "APPLICABLE LEGISLATION" means the provisions of the statutes of Canada
      and its provinces and the regulations under those statutes relating to
      trust indentures and/or the rights, duties or obligations of issuers and
      trustees under trust indentures as are from time to time in force and
      applicable to this indenture;

      "BUSINESS DAY" means a day that is not a Saturday, Sunday, a day on which
      banks are closed or a civic or statutory holiday in the City of Toronto,
      Ontario or Vancouver, British Columbia;

      "CAPITAL REORGANIZATION" has the meaning ascribed thereto in subsection
      2.12(4);

      "CLOSING DATE" means December 12, 2005 or such other date(s) as may be
      agreed to by the Company and the Agent;

      "COMMON SHARES" means fully paid and non-assessable common shares without
      nominal or par value in the capital of the Company;

      "COMMON SHARE REORGANIZATION" has the meaning ascribed thereto in
      subsection 2.12(1);

      "COMPANY" means Pine Valley Mining Corporation, a corporation existing
      under the laws of the Province of British Columbia, and its lawful
      successors from time to time;

      "COMPANY'S AUDITORS" means the chartered accountant or firm of chartered
      accountants duly appointed as auditor or auditors of the Company from time
      to time;

<PAGE>

                                      -3-

      "COUNSEL" means a barrister or solicitor (who may be an employee of the
      Company) or a firm of barristers or solicitors (who may be counsel for the
      Company), in both cases acceptable to the Warrant Agent;

      "CURRENT MARKET PRICE" at any date, means the weighted average price per
      Common Share at which the Common Shares have traded:

      (i)   on the TSX-V;

      (ii)  if the Common Shares are not listed on the TSX-V, on any stock
            exchange upon which the Common Shares are listed as may be selected
            for this purpose by the directors, acting reasonably; or

      (iii) if the Common Shares are not listed on any stock exchange, on any
            over-the-counter market;

      during the 20 consecutive trading days (on each of which at least 500
      Common Shares are traded in board lots) ending the 2nd trading day before
      such date and the weighted average price shall be determined by dividing
      the aggregate sale price of all Common Shares sold in board lots on the
      exchange or market, as the case may be, during the 20 consecutive trading
      days by the number of Common Shares sold or, if not traded on any
      recognized market or exchange, as determined by the directors of the
      Company acting reasonably;

      "DIRECTOR" means a member of the board of directors of the Company for the
      time being, and unless otherwise specified herein, reference to "action by
      the board of directors" means action by the board of directors of the
      Company as a board or, whenever duly empowered, action by a committee of
      the board;

      "DIVIDENDS PAID IN ORDINARY COURSE" means cash dividends declared payable
      on the Common Shares in any fiscal year of the Company to the extent that
      such cash dividends do not exceed, 5% of the Exercise Price and for such
      purpose the amount of any dividend paid in shares shall be the aggregate
      stated capital of such shares and the amount of any dividend paid in other
      than cash or shares shall be the fair market value of such dividend as
      determined by resolution passed by the board of directors of the Company,
      subject, if applicable, to the prior consent of any stock exchange or any
      other over-the-counter market on which the Common Shares are traded and
      for such purpose the amount of any dividends paid in other than cash or
      shares shall be the fair market value of such dividend as determined by
      the directors;

      "EXCHANGE BASIS" means, as at any time, the number of Common Shares or
      other classes of shares or securities which a Warrantholder is entitled to
      receive upon the exercise of the rights attached to the Warrants pursuant
      to the provisions of this indenture and which, as at the date hereof, is
      equal to one Common Share per Warrant;

<PAGE>

                                      -4-

      "EXERCISE DATE" with respect to any Warrant means the date on which such
      Warrant is surrendered for exercise in accordance with the provisions of
      Article 3;

      "EXERCISE PRICE" means $3.50 for each Common Share, subject to adjustment
      in accordance with the provisions of this indenture;

      "EXTRAORDINARY RESOLUTION" has the meaning ascribed thereto in sections
      6.11 and 6.14;

      "PERSON" means an individual, a corporation, a partnership, a syndicate, a
      trustee or any unincorporated organization and words importing persons are
      intended to have a similarly extended meaning;

      "PURCHASER" means a purchaser of the Warrants;

      "REGULATION S" means Regulation S under the U.S. Securities Act;

      "SECURITIES COMMISSIONS" means the securities commissions or similar
      regulatory authorities in the applicable provinces of Canada;

      "SHARE PURCHASE WARRANTS" means the common share purchase warrants issued
      hereunder entitling the holders thereof to purchase Common Shares on the
      basis of one Common Share for each whole Share Purchase Warrant upon
      payment of the Exercise Price; provided that in each case the number
      and/or class of shares or securities receivable on the exercise of the
      Share Purchase Warrants may be subject to increase or decrease or change
      in accordance with the terms and provisions hereof;

      "SHAREHOLDER" means an owner of record of one or more Common Shares or
      shares of any other class or series of the Company;

      "SUBJECT SECURITIES" means the Common Shares issuable upon exercise of the
      Warrants and the Common Shares or other securities or property issuable
      upon the exercise of the Warrants as a result of any adjustment to the
      subscription rights pursuant to Article 2 hereof;

      "SUBSIDIARY OF THE COMPANY" or "SUBSIDIARY" means a corporation, a
      majority of the outstanding voting shares of which is owned, directly or
      indirectly, by the Company or by one or more subsidiaries of the Company
      and, as used in this definition, "voting shares" means shares of a class
      or classes ordinarily entitled to vote for the election of the majority of
      the directors of a corporation irrespective of whether or not shares of
      any other class or classes shall have or might have the right to vote for
      directors by reason of the happening of any contingency;

      "THIS WARRANT INDENTURE", "THIS INDENTURE", "HEREIN", "HEREBY", and
      similar expressions mean and refer to this Warrant Indenture and any
      indenture, deed or instrument supplemental or ancillary hereto; and the
      expressions "ARTICLE",

<PAGE>

                                      -5-

      "SECTION" or "SUBSECTION" followed by a number or letter mean and refer to
      the specified Article, section or subsection of this indenture;

      "TIME OF EXPIRY" means, in respect of a Warrant, 5:00 p.m. (local time in
      the Cities of Vancouver, British Columbia, Calgary, Alberta, and Toronto,
      Ontario as applicable, where this certificate is surrendered) on the the
      date which is eighteen (18) months from the Closing Date;

      "TSX-V" means the TSX Venture Exchange and shall include for greater
      certainty, such other Canadian exchange on which the Common Shares are
      listed and which forms the primary trading market for such shares;

      "TRADING DAY" means a day on which the TSX-V (or such other exchange on
      which the Common Shares are listed and which forms the primary trading
      market for such shares) is open for trading, and if the Common Shares are
      not listed on a stock exchange, a day on which an over-the-counter market
      where such shares are traded is open for business;

      "TRANSFER AGENT" means the transfer agent or agents for the time being of
      the Common Shares;

      "U.S. PERSON" means a U.S. person as that term is defined in Regulation S;

      "U.S. SECURITIES ACT" means the United States Securities Act of 1933, as
      amended, of the United States;

      "UNITED STATES" means the United States as that term is defined in
      Regulation S;

      "WARRANT AGENT" means Computershare Trust Company of Canada, a trust
      company existing under the laws of Canada, or any lawful successor thereto
      including through operation of section 8.8;

      "WARRANT CERTIFICATES" means the certificates representing the Warrants
      substantially in the form attached as Schedule "A" hereto or such other
      form as may be approved under section 2.6, evidencing Warrants;

      "WARRANTHOLDERS" or "HOLDERS" means the persons whose names are entered
      for the time being in the register maintained pursuant to section 2.8;

      "WARRANTHOLDERS' REQUEST" means an instrument, signed in one or more
      counterparts by Warrantholders entitled to acquire, in the aggregate, at
      least 25% of the aggregate number of all Warrants then outstanding, which
      requests the Warrant Agent to take some action or proceeding specified
      therein;

      "WARRANTS" means the Share Purchase Warrants; and

      "WRITTEN ORDER OF THE COMPANY", "WRITTEN REQUEST OF THE COMPANY", "WRITTEN
      CONSENT OF THE COMPANY", "CERTIFICATE OF THE COMPANY" and any other

<PAGE>

                                      -6-

      document required to be signed by the Company, means, respectively, a
      written order, request, consent, certificate or other document signed in
      the name of the Company by any officer and director of the Company, and
      may consist of one or more instruments so executed.

1.2   Words Importing the Singular

            Unless elsewhere otherwise expressly provided or unless the context
otherwise requires, words importing the singular include the plural and vice
versa and words importing the masculine gender include the feminine and neuter
genders.

1.3   Interpretation not Affected by Headings

            The division of this indenture into Articles, sections, subsections
and paragraphs, the provision of a table of contents and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this indenture.

1.4   Day not a Business Day

            In the event that any day on or before which any action is required
or permitted to be taken hereunder is not a business day, then such action shall
be required or permitted to be taken on or before the requisite time on the next
succeeding day that is a business day.

1.5   Time of the Essence

            Time shall be of the essence in all respects in this indenture, the
Warrants and the Warrant Certificates.

1.6   Governing Law

            This indenture, the Warrants and the Warrant Certificates shall be
construed and enforced in accordance with the laws of the Province of British
Columbia and the federal laws of Canada applicable therein and shall be treated
in all respects as British Columbia contracts.

1.7   Meaning of "outstanding" for Certain Purposes

            Every Warrant represented by a Warrant Certificate certified and
delivered by the Warrant Agent hereunder shall be deemed to be outstanding until
it shall be cancelled or delivered to the Warrant Agent for cancellation or
until the Time of Expiry; provided that where a new Warrant Certificate has been
issued pursuant to section 2.6 hereof to replace one which is lost, mutilated,
stolen or destroyed, the Warrants represented by only one of such Warrant
Certificates shall be counted for the purpose of determining the aggregate
number of Warrants outstanding.

<PAGE>

                                      -7-

1.8   Currency

            Unless otherwise stated, all dollar amounts referred to in this
indenture are in Canadian dollars.

1.9   Termination

            This indenture shall continue in full force and effect until the
earlier of: (a) the Time of Expiry; and (b) the date that no Warrants are
outstanding hereunder; provided that this indenture shall continue in effect
thereafter, if applicable, until the Company and the Warrant Agent have
fulfilled all of their respective obligations under this indenture.

                                    ARTICLE 2

                                ISSUE OF WARRANTS

2.1   Issue of Warrants

            A total of 2,027,500 Share Purchase Warrants entitling the
registered holders thereof to acquire an aggregate of 2,027,500 Common Shares
are hereby created and authorized to be issued hereunder at the Exercise Price
upon the terms and conditions herein set forth and shall be executed by the
Company and certified by or on behalf of the Warrant Agent upon the written
order of the Company and delivered by the Company in accordance with sections
2.3 and 2.4.

2.2   Form and Terms of Warrants

      (1) The Warrant Certificates for the Warrants shall be substantially in
the form attached as Schedule "A" hereto, subject to the provisions of this
indenture, with such additions, variations and changes as may be required or
permitted by the terms of this Indenture, and which may from time to time be
agreed upon by the Warrant Agent and the Company, and shall have such legends,
distinguishing letters and numbers as the Company may, with the approval of the
Warrant Agent, prescribe. Except as hereinafter provided in this Article 2, all
Share Purchase Warrants shall, save as to denominations, be of like tenor and
effect. The Warrant Certificates may be engraved, printed, lithographed,
photocopied or be partially in one form or another, as the Company may
determine. No change in the form of the Warrant Certificate shall be required by
reason of any adjustment made pursuant to this Article 2 in the number and/or
class of securities or type of securities which may be acquired pursuant to the
Warrants.

      (2) Each Warrant authorized to be issued hereunder shall entitle the
registered holder thereof to acquire (subject to sections 2.12 and 2.13) upon
due exercise and upon the due execution of the subscription form endorsed on the
reverse side of the Warrant Certificate or other instrument of subscription in
such form as the Warrant Agent and/or the Company may from time to time
prescribe and upon payment

<PAGE>

                                      -8-

of the Exercise Price, one Common Share or such other kind and amount of shares
or securities or property, calculated pursuant to the provisions of sections
2.12 and 2.13, as the case may be, at any time after the date of issuance of
such Warrants and prior to the Time of Expiry, in accordance with the provisions
of this indenture.

      (3) Fractional Warrants shall not be issued or otherwise provided for.

2.3   Signing of Warrant Certificates

            The Warrant Certificates shall be signed by any one of the directors
or officers of the Company and may, but need not be under the corporate seal of
the Company or a reproduction thereof. The signature of any such director or
officer may be mechanically reproduced in facsimile and Warrant Certificates
bearing such facsimile signatures shall be binding upon the Company as if they
had been manually signed by such director or officer. Notwithstanding that the
person whose manual or facsimile signature appears on any Warrant Certificate as
a director or officer may no longer hold office at the date of issue of the
Warrant Certificate or at the date of certification or delivery thereof, any
Warrant Certificate signed as aforesaid shall, subject to section 2.4 be valid
and binding upon the Company and the registered holder thereof will be entitled
to the benefits of this indenture.

2.4   Certification by the Warrant Agent

      (1) No Warrant Certificate shall be issued or, if issued, shall be valid
for any purpose or entitle the registered holder to the benefit hereof or
thereof until it has been certified by manual signature by or on behalf of the
Warrant Agent and such certification by the Warrant Agent upon any Warrant
Certificate shall be conclusive evidence as against the Company that the Warrant
Certificate so certified has been duly issued hereunder and the holder is
entitled to the benefits hereof.

      (2) The certification of the Warrant Agent on the Warrant Certificates
issued hereunder shall not be construed as a representation or warranty by the
Warrant Agent as to the validity of this indenture or the Warrants (except the
due certification thereof) and the Warrant Agent shall in no respect be liable
or answerable for the use made of the Warrants or any of them or of the
consideration therefor except as otherwise specified herein.

2.5   Warrantholder not a Shareholder, etc.

            Nothing in this indenture or the holding of a Warrant evidenced by a
Warrant Certificate shall be construed as conferring upon a Warrantholder any
right or interest whatsoever as a Shareholder, including but not limited to the
right to vote at, to receive notice of, or to attend meetings of shareholders or
any other proceedings of the Company, nor entitle the holder to any right or
interest in respect thereof except as herein and in the Warrants expressly
provided.

<PAGE>

                                      -9-

2.6   Issue in Substitution for Lost Warrant Certificates

      (1) In the event that any Warrant Certificates issued and certified under
this indenture shall become mutilated or be lost, destroyed or stolen, the
Company, subject to applicable law, and subsection 2.6(2), shall issue and
thereupon the Warrant Agent shall certify and deliver a new Warrant Certificate
of like denomination, date and tenor as the one mutilated, lost, destroyed or
stolen in exchange for, in place of and upon cancellation of such mutilated
Warrant Certificate, or in lieu of and in substitution for such lost, destroyed
or stolen Warrant Certificate, and the substituted Warrant Certificate shall be
in a form approved by the Warrant Agent and Warrants evidenced by it will
entitle the holder thereof to the benefits hereof and shall rank equally in
accordance with its terms with all other Warrant Certificates issued or to be
issued hereunder.

      (2) The applicant for the issue of a new Warrant Certificate pursuant to
this section 2.6 shall bear the cost of the issue thereof and in the case of
mutilation shall as a condition precedent to the issue thereof, deliver to the
Warrant Agent the mutilated Warrant Certificate, and in the case of loss,
destruction or theft shall, as a condition precedent to the issue thereof,
furnish to the Company and to the Warrant Agent such evidence of ownership and
of the loss, destruction or theft of the Warrant Certificate so lost, destroyed
or stolen as shall be satisfactory to the Company and to the Warrant Agent in
their sole discretion, and such applicant shall be required to furnish an
indemnity or security in amount and form satisfactory to the Company and the
Warrant Agent in their sole discretion and shall pay the reasonable charges of
the Company and the Warrant Agent in connection therewith.

2.7   Warrants to Rank Pari Passu

            Except as specifically provided in subsections 2.2(3) and 2.12(5)
hereof, all Warrants shall rank pari passu, whatever may be the actual date of
issue or the class of same.

2.8   Registration and Transfer of Warrants

      (1) The Company will cause to be kept by the Warrant Agent at the
principal stock transfer offices of the Warrant Agent in the cities of
Vancouver, British Columbia, Calgary, Alberta and Toronto, Ontario:

            (a)   a register of holders in which shall be entered in
                  alphabetical order the names and addresses of the holders of
                  Warrants and particulars of the Warrants held by them and the
                  Warrant Agent shall be entitled to rely on such register in
                  connection with the exchange, transfer, exercise or deemed
                  exercise of any Share Purchase Warrant or Share Purchase
                  Warrants pursuant to the terms of this indenture or the terms
                  thereof; and

            (b)   a register of transfers in which all transfers of Warrants and
                  the date and other particulars of each such transfer shall be
                  entered.

<PAGE>

                                      -10-

      (2) No transfer of any Warrant will be valid unless entered on the
register of transfers referred to in subsection 2.8(1) hereof, upon surrender to
the Warrant Agent of the Warrant Certificate evidencing such Warrant, and a duly
completed and executed Transfer of Warrants form attached to the Warrant
Certificate executed by the registered holder or his executors, administrators
or other legal representatives or his or their attorney duly appointed by an
instrument in writing in form and execution satisfactory to the Warrant Agent,
and, upon compliance with such requirements and such other reasonable
requirements as the Warrant Agent may prescribe, such transfer will be recorded
on the register of transfers by the Warrant Agent.

      (3) The transferee of any Warrant will, after surrender to the Warrant
Agent of the Warrant Certificate evidencing such Warrant as required by
subsection 2.8(2) hereof and upon compliance with all other conditions in
respect thereof required by this indenture or by law, be entitled to be entered
on the register of holders referred to in subsection 2.8(1) hereof, as the owner
of such Warrant free from all equities or rights of set-off or counterclaim
between the Company and the transferor or any previous holder of such Warrant,
except in respect of equities of which the Company is required to take notice by
statute or by order of a court of competent jurisdiction.

      (4) The Company will be entitled, and may direct the Warrant Agent, to
refuse to recognize any transfer, or enter the name of any transferee, of any
Warrant on the registers referred to in subsection 2.8(1) hereof, if such
transfer would constitute a violation of the securities laws of any jurisdiction
or the rules, regulations or policies of any regulatory authority having
jurisdiction. The Warrant Agent is entitled to assume compliance with all
applicable securities legislation unless otherwise notified in writing by the
Company. No duty shall rest with the Warrant Agent to determine compliance of
the transferee or transferor of any Warrant with applicable securities
legislation.

      (5) Any Warrant Certificate issued to a transferee in transfers
contemplated by this section 2.8 shall bear the appropriate legends as set forth
in subsections 2.20 (1) and (2).

      (6) If a Warrant Certificate tendered for transfer bears the legend set
forth in section 2.20(1), the Warrant Agent shall not register such transfer
unless the transferor has provided the Warrant Agent with the Warrant
Certificate and: (A) an effective registration statement under the U.S.
Securities Act and applicable United States state securities laws covering any
such transaction has been filed, or (B) the Company has received an acceptable
legal opinion stating that such transaction is exempt from registration, or (C)
the Company otherwise satisfies itself that such transaction is exempt from
registration.

      (7) If a Warrant Certificate tendered for transfer does not bear the
legend set forth in section 2.20(1) and such transfer is not otherwise exempt,
the Warrant Agent shall not register such transfer unless the transferor has
provided the Warrant Agent with the Warrant Certificate and a duly executed and
completed Transfer of Warrants form attached to the Warrant Certificate, and the
offer of the securities being transferred was made to a person not in the United
States and that is not a U.S. Person.

<PAGE>

                                      -11-

2.9   Registers Open for Inspection

            The registers referred to in subsection 2.8(1) shall be open at all
reasonable times during business hours on a business day for inspection by the
Company, the Warrant Agent or any Warrantholder. The Warrant Agent shall, from
time to time when requested to do so in writing by the Company, furnish the
Company with a list of the names and addresses of holders of Warrants entered in
the register of holders kept by the Warrant Agent and showing the number of
Subject Securities which might then be acquired upon the exercise of the
Warrants held by each such holder.

2.10  Exchange of Warrants

      (1) Warrant Certificates may, upon compliance with the reasonable
requirements of the Warrant Agent, be exchanged for Warrant Certificates in any
other authorized denomination representing in the aggregate an equal number of
Warrants as the number of Warrants represented by the Warrant Certificates being
exchanged. The Company shall sign and the Warrant Agent shall certify, in
accordance with sections 2.3 and 2.4, all Warrant Certificates necessary to
carry out the exchanges contemplated herein.

      (2) Warrant Certificates may be exchanged only at the principal stock
transfer offices of the Warrant Agent in the cities of Vancouver, British
Columbia, Calgary, Alberta and Toronto, Ontario or at any other place that is
designated by the Company with the approval of the Warrant Agent. Any Warrant
Certificates tendered for exchange shall be surrendered to the Warrant Agent and
cancelled.

      (3) Except as otherwise herein provided, the Warrant Agent may charge
Warrantholders requesting an exchange a reasonable sum for each Warrant
Certificate issued; and payment of such charges and reimbursement of the Warrant
Agent or the Company for any and all taxes or governmental or other charges
required to be paid shall be made by the party requesting such exchange as a
condition precedent to such exchange.

2.11  Ownership of Warrants

            The Company and the Warrant Agent and their respective agents may
deem and treat the holder of any Warrant Certificate as the absolute owner of
that Warrant represented thereby for all purposes and the Company and the
Warrant Agent and their respective agents shall not be affected by any notice or
knowledge to the contrary. The holder of any Warrant shall be entitled to the
rights evidenced by that Warrant free from all equities or rights of set-off or
counterclaim between the Company and the original or any intermediate holder
thereof and all persons may act accordingly and the receipt from any holder for
the Common Shares or monies obtainable pursuant thereto shall be a good
discharge to the Company and the Warrant Agent for the same and neither the
Company nor the Warrant Agent shall be bound to inquire into the title of any
holder.

<PAGE>

                                      -12-

2.12  Adjustment of Exchange Basis

            The Exchange Basis shall be subject to adjustment from time to time
in the events and in the manner provided as follows:

      (1) If and whenever at any time after the date hereof and prior to the
Time of Expiry the Company shall:

            (a)   issue Common Shares or securities exchangeable for or
                  convertible into Common Shares to all or substantially all the
                  holders of the Common Shares as a stock dividend or other
                  distribution (other than as a Dividend Paid in the Ordinary
                  Course or a distribution of Common Shares upon exercise of the
                  Warrants or pursuant to the exercise of directors, officers or
                  employee stock options granted under stock option plans of the
                  Company), or

            (b)   subdivide, redivide or change its then outstanding Common
                  Shares into a greater number of shares, or

            (c)   reduce, combine or consolidate its then outstanding Common
                  Shares into a lesser number of shares,

            (any of such events in these clauses (a), (b) or (c) being called a
            "COMMON SHARE REORGANIZATION"), then the Exchange Basis in effect on
            the effective date of such subdivision or consolidation, or on the
            record date of such stock dividend or other distribution, as the
            case may be, shall be adjusted by multiplying the Exchange Basis in
            effect immediately prior to such effective or record date by a
            fraction: (i) the numerator of which shall be the total number of
            Common Shares outstanding on such date immediately after giving
            effect to such Common Share Reorganization (including, in the case
            where securities exchangeable for or convertible into Common Shares
            are distributed, the number of Common Shares that would have been
            outstanding had such securities been exchanged for or converted into
            Common Shares on such record date, assuming in any case where such
            securities are not then convertible or exchangeable but subsequently
            become so, that they were convertible or exchangeable on the record
            date on the basis upon which they first become convertible or
            exchangeable), and (ii) the denominator of which shall be the total
            number of Common Shares outstanding on such date before giving
            effect to such Common Share Reorganization. The resulting product,
            adjusted to the nearest 1/100th, shall thereafter be the Exchange
            Basis until further adjusted as provided in this Article 2.

      (2) If and whenever at any time after the date hereof and prior to the
Time of Expiry, the Company fixes a record date for the distribution to all or
substantially all of the holders of Common Shares of rights, options or warrants
entitling them for a period expiring not more than 45 days after such record
date (the "RIGHTS PERIOD"), to

<PAGE>

                                      -13-

subscribe for or purchase Common Shares, or securities exchangeable for or
convertible into Common Shares, at a price per share to the holder (or at an
exchange or conversion price per share) of less than 95% of the Current Market
Price for the Common Shares on such record date (any of such events being called
a "RIGHTS OFFERING"), then the Exchange Basis shall be adjusted effective
immediately after such record date for the Rights Offering by multiplying the
Exchange Basis in effect immediately prior to such record date by a fraction:

            (a)   the numerator of which shall be the number of Common Shares
                  which would be outstanding after giving effect to the Rights
                  Offering (assuming the exercise of all of the rights, warrants
                  or options under the Rights Offering and assuming the exchange
                  or conversion into Common Shares of all exchangeable or
                  convertible securities issued upon exercise of such rights,
                  warrants or options, if any), and

            (b)   the denominator of which shall be the aggregate of:

                  (i)   the total number of Common Shares outstanding as of the
                        record date for the Rights Offering, and

                  (ii)  a number of Common Shares arrived at by dividing

                        (A)   the amount equal to the aggregate consideration
                              payable on the exercise of all of the rights,
                              warrants and options under the Rights Offering
                              plus the aggregate consideration, if any, payable
                              on the exchange or conversion of the exchangeable
                              or convertible securities issued upon exercise of
                              such rights, warrants or options (assuming the
                              exercise of all rights, warrants and options under
                              the Rights Offering and assuming the exchange or
                              conversion of all exchangeable or convertible
                              securities issued upon exercise of such rights,
                              warrants and options);

                         by

                        (B)   the Current Market Price of the Common Shares as
                              of the record date for the Rights Offering.

The resulting product, adjusted to the nearest 1/100th, shall thereafter be the
Exchange Basis until further adjusted in accordance with this Article 2. Any
Common Shares owned by or held for the account of the Company or any of its
subsidiaries or a partnership in which the Company is directly or indirectly a
party to will be deemed not to be outstanding for the purpose of any
computation. If, at the date of expiry of the rights, options or warrants
subject to the Rights Offering, less than all the rights, options or warrants
have been exercised, then the Exchange Basis shall be readjusted effective
immediately after the date of expiry to the Exchange Basis which would have
been in

<PAGE>

                                      -14-

effect on the date of expiry if only the rights, options or warrants issued
had been those exercised. If at the date of expiry of the rights of exchange or
conversion of any securities issued pursuant to the Rights Offering less than
all of such securities have been exchanged or converted into Common Shares, then
the Exchange Basis shall be readjusted effective immediately after the date of
expiry to the Exchange Basis which would have been in effect on the date of
expiry if only the exchangeable or convertible securities issued had been those
securities actually exchanged for or converted into Common Shares.

      (3) If and whenever at any time after the date hereof and prior to the
Time of Expiry the Company shall fix a record date for the issue or distribution
to all or substantially all the holders of its outstanding Common Shares of:

            (a)   shares of the Company of any class other than Common Shares;
                  or

            (b)   rights, options or warrants to acquire Common Shares or
                  securities exchangeable for or convertible into Common Shares;
                  or

            (c)   evidences of indebtedness; or

            (d)   cash, securities or any property or other assets,

and if such issuance or distribution does not constitute a Dividend Paid in the
Ordinary Course, a Common Share Reorganization or a Rights Offering (any of such
non-excluded events being herein called a "SPECIAL Distribution"), the Exchange
Basis shall be adjusted effective immediately after the record date for the
Special Distribution by multiplying the Exchange Basis in effect on such record
date by a fraction:

                  (i)   the numerator of which shall be the number of Common
                        Shares outstanding on such record date multiplied by the
                        Current Market Price of the Common Shares on such record
                        date, and

                  (ii)  the denominator of which shall be:

                        (A)   the product of the number of Common Shares
                              outstanding on such record date and the Current
                              Market Price of the Common Shares on such record
                              date, less

                        (B)   the fair market value, as determined by action by
                              the directors acting reasonably and in good faith
                              (whose determination shall be conclusive), to the
                              holders of the Common Shares of the shares,
                              rights, options, warrants, evidences or
                              indebtedness or property or other assets issued or
                              distributed in the Special Distribution,

<PAGE>

                                      -15-

provided that no such adjustment shall be made if the result of such adjustment
would be to decrease the Exchange Basis in effect immediately before such record
date. The resulting product, adjusted to the nearest 1/100th, shall thereafter
be the Exchange Basis until further adjusted as provided in this Article 2. Any
shares owned by or held for the account of the Company or its subsidiaries or a
partnership of which the Company is directly or indirectly a party to shall be
deemed not to be outstanding for the purpose of any such computation.

      (4) If and whenever at any time after the date hereof and prior to the
Time of Expiry there shall be a reclassification of Common Shares at any time
outstanding or change of the Common Shares into other shares or into other
securities (other than a Common Share Reorganization), or a consolidation,
amalgamation or merger of the Company with or into any other corporation or
other entity (other than a consolidation, amalgamation or merger which does not
result in any reclassification of the outstanding Common Shares or a change of
the Common Shares into other shares), or a transfer (other than to a Subsidiary)
of the undertaking or assets of the Company as an entirety or substantially as
an entirety to another corporation or other entity (any of such events being
herein called a "CAPITAL REORGANIZATION"), any Warrantholder who thereafter
shall exercise his right to receive Common Shares pursuant to Warrant(s) shall
be entitled to receive, and shall accept in lieu of the number of Subject
Securities to which such holder was theretofore entitled upon such exercise, the
aggregate number of shares, other securities or other property which such holder
would have been entitled to receive as a result of such Capital Reorganization
if, on the effective date or record date thereof, as the case may be, the
Warrantholder had been the registered holder of the number of Subject Securities
to which such holder was theretofore entitled upon exercise. If appropriate,
adjustments shall be made as a result of any such Capital Reorganization in the
application of the provisions set forth in this Article 2 with respect to the
rights and interests thereafter of Warrantholders to the end that the provisions
set forth in this Article 2 shall thereafter correspondingly be made applicable
as nearly as may reasonably be in relation to any shares, other securities or
other property thereafter deliverable upon the exercise of any Warrant. Any such
adjustment shall be made by and set forth in an indenture supplemental hereto
approved by the directors pursuant to the provisions of this indenture and shall
for all purposes be conclusively deemed to be an appropriate adjustment.

      (5) Forthwith upon the occurrence of any of the events referred to in the
preceding subsections above, the Company shall:

            (a)   file with the Warrant Agent a certificate of the Company
                  specifying the required adjustment; and

            (b)   give notice to the Warrantholders of the required adjustment.

      (6) Any adjustment to the Exchange Basis as set forth herein shall also
include a corresponding adjustment to the Exercise Price which shall be
calculated by multiplying the Exercise Price by a fraction: (i) the numerator of
which shall be the

<PAGE>

                                      -16-

Exchange Basis prior to the adjustment, and (ii) the denominator of which shall
be the Exchange Basis after the adjustment.

2.13  Rules Regarding Calculation of Adjustment of Exchange Basis

            For the purposes of section 2.12:

      (1) The adjustments provided for in section 2.12 shall be cumulative and
such adjustments shall be made successively whenever an event referred to
therein shall occur, subject to the following subsections of this section 2.13.

      (2) If the purchase price provided for in any Rights Offering (the "RIGHTS
OFFERING PRICE") is decreased, the Exchange Basis shall forthwith be changed so
as to increase the Exchange Basis to such Exchange Basis as would have been
obtained had the adjustment to the Exchange Basis made pursuant to subsection
2.12(2) upon the issuance of such Rights Offering been made upon the basis of
the Rights Offering Price as so decreased, provided that the provisions of this
subsection shall not apply to any decrease in the Rights Offering Price
resulting from provisions in any such Rights Offering designed to prevent
dilution if the event giving rise to such decrease in the Rights Offering Price
itself requires an adjustment to the Exchange Basis pursuant to the provisions
of section 2.12.

      (3) No adjustment in the Exchange Basis shall be required unless such
adjustment would result in a change of at least one-one hundredth of a Common
Share based on the prevailing Exchange Basis provided, however, that any
adjustments which, except for the provisions of this subsection would otherwise
have been required to be made, shall be carried forward and taken into account
in any subsequent adjustment.

      (4) No adjustment in the Exchange Basis shall be made in respect of any
event described in section 2.12, other than the events referred to in paragraphs
(b) and (c) of subsection (1) thereof, if Warrantholders are entitled to
participate in such event on the same terms, mutatis mutandis, as if
Warrantholders had exercised their Warrants prior to or on the effective date or
record date of such event, any such participation being subject to regulatory
approval.

      (5) No adjustment in the Exchange Basis shall be made pursuant to section
2.12 in respect of the issue from time to time of Common Shares purchasable on
exercise of the Warrants or in respect of the issue from time to time of a
Dividend Paid in the Ordinary Course of Common Shares to holders of Common
Shares who exercise an option or election to receive substantially equivalent
dividends in Common Shares in lieu of receiving a cash dividend, and any such
issue shall be deemed not to be a Common Share Reorganization.

      (6) If a dispute shall at any time arise with respect to adjustments
provided for in section 2.12, such dispute shall, absent manifest error, be
conclusively determined by the Company's Auditors, or if they are unable or
unwilling to act, by such other firm of independent chartered accountants as may
be selected by the directors and any further

<PAGE>

                                      -17-

determination, absent manifest error, shall be binding upon the Company, the
Warrant Agent and the Warrantholders.

      (7) If the Company shall set a record date to determine the holders of the
Common Shares for the purpose of entitling them to receive any dividend or
distribution or any subscription or purchase rights and shall, thereafter and
before the distribution to such shareholders of any such dividend, distribution,
or subscription or purchase rights, legally abandon its plan to pay or deliver
such dividend, distribution, or subscription or purchase rights, then no
adjustment in the Exchange Basis shall be required by reason of the setting of
such record date.

      (8) In the absence of a resolution of the directors fixing a record date
for a Rights Offering or Special Distribution, the Company shall be deemed to
have fixed as the record date therefor the date on which the Rights Offering or
Special Distribution is effected.

      (9) As a condition precedent to the taking of any action which would
require any adjustment in any of the subscription rights pursuant to any of the
Warrants, including the Exchange Basis, the Company shall take any corporate
action which may, in the opinion of counsel, be necessary in order that the
Company have unissued and reserved in its authorized capital and may validly and
legally issue as fully paid and non-assessable all the shares or other
securities which all the holders of such Warrants are entitled to receive on the
exercise of all the subscription rights attaching thereto in accordance with the
provisions thereof.

      (10) In case the Company, after the date hereof, shall take any action
affecting any Common Shares, other than action described in section 2.12, which
in the opinion of the directors acting reasonably and in good faith would
materially affect the rights of Warrantholders, the Exchange Basis shall be
adjusted in such manner, if any, and at such time, as the directors, in their
sole discretion acting reasonably and in good faith, may reasonably determine to
be equitable in the circumstances. Failure of the taking of action by the
directors so as to provide for an adjustment in the Exchange Basis prior to the
effective date of any action by the Company affecting the Common Shares shall be
conclusive evidence that the directors have determined that it is equitable to
make no adjustment in the circumstances.

      (11) The Warrant Agent shall be entitled to act and rely on any adjustment
calculations by the Company or the Company's Auditors.

2.14  Postponement of Subscription

            In any case where the application of section 2.12 results in an
increase in the number of Subject Securities which are issuable upon exercise of
the Warrants taking effect immediately after the record date for a specific
event, if any Warrant is exercised after that record date and prior to
completion of the event, the Company may postpone the issuance to the holder of
the Warrant of the Subject Securities to which he is entitled by reason of such
adjustment but such Subject Securities shall be so issued

<PAGE>

                                      -18-

and delivered to that holder upon completion of that event, with the number of
such Subject Securities calculated on the basis of the number of Subject
Securities on the date that the Warrant was exercised adjusted for completion of
that event and the Company shall deliver to the person or persons in whose name
or names the Subject Securities are to be issued an appropriate instrument
evidencing the right of such person or persons to receive such Subject
Securities and the right to receive any dividends or other distributions which,
but for the provisions of this section, such person or persons would have been
entitled to receive in respect of such Subject Securities from and after the
date that the Warrant was exercised in respect thereof.

2.15  Notice of Adjustment

      (1) At least 14 days prior to the effective date or record date, as the
case may be, of any event which requires or might require adjustment pursuant to
section 2.12, the Company shall:

            (a)   file with the Warrant Agent a certificate of the Company
                  specifying the particulars of such event (including the record
                  date or the effective date for such event) and, if
                  determinable, the required adjustment and the computation of
                  such adjustment; and

            (b)   give notice to the Warrantholders of the particulars of such
                  event (including the record date or the effective date for
                  such event) and, if determinable, the required adjustment.

      (2) In case any adjustment for which a notice in subsection 2.15(1) has
been given is not then determinable, the Company shall promptly after such
adjustment is determinable:

            (a)   file with the Warrant Agent a computation of such adjustment;
                  and

            (b)   give notice to the Warrantholders of the adjustment.

      (3) The Warrant Agent may, absent manifest error, act and rely upon
certificates and other documents filed by the Company pursuant to this section
for all purposes of the adjustment.

2.16  No Action after Notice

            The Company covenants with the Warrant Agent that it will not take
any other corporate action which might deprive the holder of a Warrant of the
opportunity of exercising the rights of acquisition pursuant thereto during the
period of 14 days after the giving of the notice set forth in subparagraph
(1)(b) of section 2.15 hereof;

2.17  Purchase of Warrants for Cancellation

            The Company may, at any time and from time to time, purchase
Warrants by invitation for tender, by private contract or otherwise (which shall
include a purchase

<PAGE>
                                      -19-

through an investment dealer or firm holding membership on a Canadian stock
exchange) on such terms as the Company may determine. All Warrants purchased
pursuant to the provisions of this section 2.17 shall be forthwith delivered to,
cancelled and destroyed by the Warrant Agent and shall not be reissued. If
required by the Company, the Warrant Agent shall furnish the Company with a
certificate as to such destruction.

2.18  Optional Purchases by the Company

            Subject to applicable law, the Company may from time to time
purchase on any stock exchange, in the open market, by private agreement or
otherwise any of the Warrants. Any such purchase shall be made at the lowest
price or prices at which, in the opinion of the board of directors, such
Warrants are then obtainable, plus reasonable costs of purchase, and may be made
in such manner, from such persons, and on such other terms as the Company in its
sole discretion may determine. The Warrant Certificates representing the
Warrants purchased pursuant to this section 2.18 shall forthwith be delivered to
and cancelled by the Warrant Agent.

2.19  Protection of Warrant Agent

            The Warrant Agent shall not:

            (a)   at any time be under any duty or responsibility to any
                  registered holder of Warrants to determine whether any facts
                  exist which may require any adjustment contemplated by this
                  Article 2, nor to verify the nature and extent of any such
                  adjustment when made or the method employed in making the
                  same;

            (b)   be accountable with respect to the validity or value or the
                  kind or amount of any Subject Securities which may at any time
                  be issued or delivered upon the exercise of the Warrants;

            (c)   be responsible for any failure of the Company to make any cash
                  payment or to issue, transfer or deliver the Subject
                  Securities or certificates evidencing the same upon the
                  surrender of any Warrants for the purpose of the exercise of
                  such rights or to comply with any of the covenants contained
                  in this Article 2; or

            (d)   incur any liability or responsibility whatsoever or be in any
                  way responsible for the consequence of any breach on the part
                  of the Company of any of the representations, warranties or
                  covenants of the Company or any acts or deeds of the agents or
                  servants of the Company.

2.20  Legended Warrant Certificates

      (1)   (a)   The Warrant Agent understands and acknowledges that the
                  Warrants and the Common Shares issuable upon the exercise of

<PAGE>

                                      -20-

                  the Warrants have not been, and will not be, registered under
                  the U.S. Securities Act.

            (b)   Each certificate representing the Warrants originally issued
                  to a U.S. Person, or a person in the United States, or a
                  person for the account or benefit of a U.S. Person or a person
                  in the United States, as well as all certificates issued in
                  exchange for or in substitution of the foregoing securities,
                  until such time as the same is no longer required under
                  applicable requirements of the U.S. Securities Act or
                  applicable state securities laws, shall bear a legend on the
                  face of such certificate, to the following effect:

                  "THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE
                  UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE
                  UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S.
                  SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
                  SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
                  SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY
                  (A) TO THE COMPANY, OR (B) OUTSIDE THE UNITED STATES IN
                  ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S.
                  SECURITIES ACT.";

                  provided, that if Warrants or such Common Shares are being
                  sold in compliance with the requirements of Regulation S of
                  the U.S. Securities Act and in compliance with Canadian local
                  laws and regulations, any such legend may be removed by
                  providing a declaration to the Company's registrar and
                  transfer agent to the effect set forth in Schedule "C" hereto.
                  The Warrant Agent shall, upon receipt of the executed form of
                  "Declaration for Removal of Legend" as set forth in Schedule
                  "C" hereto, issue a new certificate within three business days
                  thereof;

            (c)   If a Warrant Certificate or Common Share certificate issued
                  with respect to an exercise of Warrants is tendered for
                  transfer and bears the legend set forth in paragraph
                  2.20(1)(b) hereof and the holder thereof has not obtained the
                  prior written consent of the Company, the Warrant Agent or the
                  registrar and transfer agent of the Common Shares, as the case
                  may be, shall not register such transfer unless the holder
                  complies with the requirements of the said paragraph
                  2.20(1)(b) hereof;

            (d)   If a Warrant Certificate or Common Share certificate issued
                  with respect to an exercise of Warrants is tendered for
                  transfer and does not bear the legend set forth in paragraph
                  2.20(1)(b) hereof, the

<PAGE>

                                      -21-

                  Warrant Agent or the registrar and transfer agent of the
                  Common Shares, as the case may be, shall not register such
                  transfer if it has reason to believe that the transferee is a
                  U.S. Person, is in the United States or is acquiring the
                  Warrants evidenced thereby for the account or benefit of a
                  U.S. Person or a person in the United States.

      (2) Each Warrant Certificate originally issued to every Purchaser, as well
as all certificates issued in exchange for or in substitution of the Warrant
Certificates, unless such exchange or substitution shall occur subsequent to the
that date that prior to April 13, 2006, shall bear the following legend (with
the necessary information inserted):

                  "UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
                  THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE APRIL 13,
                  2006< "

                  "WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE
                  AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE
                  SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES
                  ISSUABLE UPON EXERCISE OF THE WARRANTS MAY NOT BE SOLD,
                  TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH
                  THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN
                  CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL
                  APRIL 13, 2006

provided that, if at any time, in the opinion of counsel to the Company, such
legends are no longer necessary or advisable under any such securities laws, or
the holder of any such legended certificate, at the holder's expense, provides
the Company with evidence satisfactory in form and substance to the Company
(which may include an opinion of counsel satisfactory to the Company) to the
effect that such legends are not required such legended certificate may
thereafter be surrendered to the Company in exchange for a certificate which
does not bear such legend.

                                    ARTICLE 3

                              EXERCISE OF WARRANTS

3.1   Method of Exercise of Warrants

      (1) The registered holder of any Warrant may exercise the rights thereby
conferred on him to acquire all or any part of the Subject Securities to which
such Warrant entitles the holder, by surrendering the Warrant Certificate
representing such Warrants to the Warrant Agent at any time on or before the
Time of Expiry at its

<PAGE>

                                      -22-

principal stock transfer offices in the Cities of Vancouver, British Columbia,
Calgary, Alberta, or Toronto, Ontario (or at such other place or places as may
be decided by the Company from time to time with the approval of the Warrant
Agent), with a duly completed and executed subscription of the registered holder
or his executors, or administrators or other legal representative or his
attorney duly appointed by an instrument in writing in the form and manner
satisfactory to the Warrant Agent, substantially in the form set out in Schedule
"A" attached hereto specifying the number of Common Shares subscribed for
together with a certified cheque, bank draft or money order in lawful money of
Canada, payable to or to the order of the Company in an amount equal to the
Exercise Price multiplied by the number of Subject Securities subscribed for. A
Warrant Certificate with the duly completed and executed subscription and
payment of the Exercise Price shall be deemed to be surrendered only upon
personal delivery thereof to or, if sent by mail or other means of transmission,
upon actual receipt thereof by the Warrant Agent.

      (2) Any subscription referred to in subsection 3.1(1) shall be signed by
the Warrantholder, shall specify the person(s) in whose name such Subject
Securities are to be issued, the address(es) of such person(s) and the number of
Subject Securities to be issued to each person, if more than one is so
specified. If any of the Subject Securities subscribed for are to be issued to a
person(s) other than the Warrantholder, the signatures set out in the
subscription referred to in subsection 3.1(1) shall be guaranteed by a Canadian
chartered bank, a Canadian trust company or by a medallion signature guaranteed
from a member of a recognized Signature Medallion Guarantee Program and the
Warrantholder shall pay to the Company or the Warrant Agent all applicable
transfer or similar taxes and the Company shall not be required to issue or
deliver certificates evidencing Subject Securities unless or until such
Warrantholder shall have paid to the Company or the Warrant Agent on behalf of
the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid or that no tax is due.

      (3) If, at the time of exercise of the Warrants, in accordance with the
provisions of subsection 3.1(1), there are any trading restrictions on the
Subject Securities pursuant to applicable securities legislation or stock
exchange requirements, the Company shall, on the advice of counsel, endorse any
certificates representing the Subject Securities to such effect. The Warrant
Agent is entitled to assume compliance with all applicable securities
legislation unless otherwise notified in writing by the Company.

3.2   No Fractional Shares

            Under no circumstances shall the Company be obliged to issue any
fractional Common Shares or any cash or other consideration in lieu thereof upon
the exercise of one or more Warrants. To the extent that the holder of one or
more Warrants would otherwise have been entitled to receive on the exercise or
partial exercise thereof a fraction of a Common Share, that holder may exercise
that right in respect of the fraction only in combination with another Warrant
or Warrants that in the aggregate entitle the holder to purchase a whole number
of Common Shares.

<PAGE>

                                      -23-

3.3   Effect of Exercise of Warrants

      (1) Upon compliance by the Warrantholder with the provisions of section
3.1, the Subject Securities subscribed for shall be deemed to have been issued
and the person to whom such Subject Securities are to be issued shall be deemed
to have become the holder of record of such Subject Securities on the Exercise
Date unless the transfer registers of the Company for the Common Shares shall be
closed on such date, in which case the Subject Securities subscribed for shall
be deemed to have been issued and such person shall be deemed to have become the
holder of record of such Subject Securities on the date on which such transfer
registers are reopened.

      (2) Within three business days following the due exercise of a Warrant
pursuant to section 3.1 and forthwith after the Time of Expiry, the Warrant
Agent shall deliver to the Company a notice setting forth the particulars of all
Warrants exercised, if any, and the persons in whose names the Subject
Securities are to be issued (as applicable) and the addresses of such holders of
the Subject Securities.

      (3) Within five business days of the due exercise of a Warrant pursuant to
section 3.1, the Company shall mail to the person in whose name the Subject
Securities so subscribed for are to be issued, as specified in the subscription
completed on the Warrant Certificate, at the address specified in such
subscription, or, if so specified in such subscription, a certificate or
certificates for the Subject Securities to which the Warrantholder is entitled
and, if applicable, shall cause the Warrant Agent to mail a Warrant Certificate
representing any Warrants not then exercised.

      (4) In the event that the Warrants are exercised by any Warrantholder that
is not a U.S. Person or a person in the United States prior to the date that is
four months and one day after the Closing Date, the certificates evidencing the
Common Shares shall bear the following legend (with the necessary information
inserted):

                  "UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
                  THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE APRIL 13,
                  2006"

                  " WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE
                  AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE
                  SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES
                  ISSUABLE UPON EXERCISE OF THE WARRANTS MAY NOT BE SOLD,
                  TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH
                  THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN
                  CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL
                  APRIL 13, 2006

<PAGE>

                                      -24-

      (5) In the event that the Warrants are exercised by any Warrantholder that
is a U.S. Person or a person in the United States, the certificates evidencing
the Common Shares shall also bear the following legend:

                  "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
                  UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
                  (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
                  SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT
                  SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
                  ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN
                  ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S.
                  SECURITIES ACT OR (C) WITHIN THE UNITED STATES IN A
                  TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S.
                  SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, AND THE
                  SELLER HAS FURNISHED TO THE COMPANY AN OPINION TO SUCH EFFECT
                  FROM COUNSEL OF RECOGNIZED STANDING REASONABLY SATISFACTORY TO
                  THE COMPANY PRIOR TO SUCH OFFER, SALE OR TRANSFER. DELIVERY OF
                  THIS CERTIFICATE MAY NOT CONSTITUTE GOOD DELIVERY IN
                  SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.
                  PROVIDED THAT THE COMPANY IS A "FOREIGN ISSUER" WITHIN THE
                  MEANING OF REGULATION S AT THE TIME OF SALE, A NEW CERTIFICATE
                  BEARING NO LEGEND MAY BE OBTAINED FROM THE COMPANY'S TRANSFER
                  AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
                  DECLARATION, IN A FORM SATISFACTORY TO THE TRANSFER AGENT AND
                  THE COMPANY TO THE EFFECT THAT SUCH SALE IS BEING MADE IN
                  ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S.
                  SECURITIES ACT."

      (6) If at any time, in the opinion of counsel to the Company, such legends
are no longer necessary or advisable under any such securities laws, or the
holder of any such legended certificate, at the holder's expense, provides the
Company with evidence satisfactory in form and substance to the Company (which
may include an opinion of counsel satisfactory to the Company) to the effect
that such legends are not required such legended certificate may thereafter be
surrendered to the Company in exchange for a certificate which does not bear
such legend.

<PAGE>

                                      -25-

3.4   Cancellation of Warrant Certificates

            All Warrant Certificates surrendered to the Warrant Agent pursuant
to sections 2.6, 2.8(2), 2.10 or 3.1 shall be cancelled by the Warrant Agent and
the Warrant Agent shall record the cancellation of such Warrant Certificates on
the register of holders maintained by the Warrant Agent pursuant to subsection
2.8(1). The Warrant Agent shall, if required by the Company, furnish the Company
with a certificate identifying the Warrant Certificates so cancelled. All
Warrants represented by Warrant Certificates which have been duly cancelled
shall be without further force or effect whatsoever.

3.5   Subscription for less than Entitlement

            The holder of any Warrant may subscribe for and purchase a whole
number of Subject Securities which is less than the number which the holder is
entitled to purchase pursuant to a surrendered Warrant Certificate. In such
event, the holder thereof shall be entitled to receive a new Warrant Certificate
in respect of the balance of Subject Securities which such holder was entitled
to purchase pursuant to the surrendered Warrant Certificate and which were not
then purchased, such new Warrant Certificate to contain the same legend as
provided for in section 2.20, if applicable.

3.6   Expiration of Warrant

            After the Time of Expiry, all rights under any Warrant in respect of
which the right of subscription and purchase herein and therein provided for
shall not theretofore have been exercised shall wholly cease and terminate and
such Warrant shall be void and of no effect.

3.7   Prohibition on Exercise by U.S. Persons; Exception

      (1) Subject to subsection 3.7(2), (i) Warrants may not be exercised within
the United States or by or on behalf of any U.S. Person; and (ii) no Common
Shares issued upon exercise of Warrants may be delivered to any address in the
United States. The Warrant Agent shall be entitled to rely upon the registered
address of the Warrantholder as set forth in such Warrantholder's subscription
agreement for the purchase of the Warrants in determining whether the address is
in the United States or is a U.S. Person.

      (2) Notwithstanding subsection 3.7(1), (i) Warrants which bear the legend
set forth in subsection 2.20(1) may be exercised in the United States or by or
on behalf of a U.S. Person; and (ii) Common Shares issued upon exercise of any
such Warrants may be delivered to an address in the United States, provided that
the person exercising the Warrants signs and delivers to the Warrant Agent a
letter substantially in the form attached as Schedule "B" hereto and such Common
Shares or new Warrants, if less than the entire amount of the Warrants held is
exercised, are appropriately legended in accordance with the legend set forth in
subsection 2.20(1).

<PAGE>

                                      -26-

                                    ARTICLE 4

                      COVENANTS FOR WARRANTHOLDERS' BENEFIT

4.1   General Covenants of the Company

            The Company covenants with the Warrant Agent for the benefit of the
Warrant Agent and the Warrantholders that so long as any Warrants remain
outstanding:

      (1) The Company will at all times maintain its existence and will carry on
and conduct its business in a prudent manner in accordance with industry
standards and good business practice, will keep or cause to be kept proper books
of account in accordance with applicable law and will, if and whenever required
in writing by the Warrant Agent, file with the Warrant Agent copies of all
annual statements of the Company furnished to its shareholders during the term
of this indenture.

      (2) The Company will use its best efforts to maintain the listing of the
Common Shares on the TSX-V and to have the Common Shares issued pursuant to the
exercise of the Purchase Warrants listed and posted for trading on the TSX-V as
expeditiously as possible.

      (3) The Company will reserve and keep available a sufficient number of
Subject Securities for issuance upon the exercise of Warrants issued by the
Company.

      (4) The Company will cause the Subject Securities from time to time
subscribed for pursuant to the Warrants issued by the Company hereunder, in the
manner herein provided, to be duly issued in accordance with the Warrants and
the terms hereof.

      (5) The Company will cause the certificates representing the Subject
Securities from time to time to be acquired pursuant to the Warrants in the
manner herein provided, to be duly issued and delivered in accordance with the
Warrants and the terms hereof.

      (6) All Subject Securities that shall be issued by the Company upon
exercise of the rights provided for herein shall be issued as fully paid and
non-assessable common shares.

      (7) The Company will use its best efforts to maintain its status as a
"reporting issuer" not in default of the requirements of in the Provinces of
British Columbia and Alberta until the Time of Expiry and shall in a timely
fashion file or deposit all documents and reports with the relevant Securities
Commissions and similar regulatory authorities required to be filed or deposited
under applicable securities legislation.

      (8) The Company will, upon request in writing from a Warrantholder,
provide such Warrantholder with a copy of all of the financial statements of the
Company mailed

<PAGE>

                                      -27-

to the holders of the Common Shares after the date hereof and until the Warrants
owned by such Warrantholder remain outstanding.

      (9) If the Company is a party to a transaction in which the Company is not
the continuing corporation, the Company shall obtain all consents which may be
necessary or appropriate under Canadian law to enable the continuing corporation
to give effect to the Warrants.

      (10) Generally, the Company will well and truly perform and carry out all
the acts and things to be done by it as provided in this indenture.

      (11) The Company will promptly advise the Warrant Agent and the
Warrantholders in writing of any default under the terms of this indenture.

4.2   Securities Qualification Requirements

      (1) If, in the opinion of counsel, any instrument is required to be filed
with, or any permission, order or ruling is required to be obtained from, any
securities administrator or any other step is required under any federal or
provincial law of Canada before the Subject Securities may be issued or
delivered to a Warrantholder or resold by such Warrantholder, the Company
covenants that it will use its best efforts to file such instrument, obtain such
permission, order or ruling or take all such other actions, at its expense, as
is required or appropriate in the circumstances.

      (2) The Company will give written notice of the issue of Subject
Securities pursuant to the exercise of Warrants, in such detail as may be
required, to each securities administrator in each jurisdiction in which there
is legislation requiring the giving of any such notice.

4.3   Warrant Agent's Remuneration and Expenses

            The Company covenants that it will pay to the Warrant Agent from
time to time reasonable remuneration for its services hereunder and will pay or
reimburse the Warrant Agent upon its request for all reasonable expenses and
disbursements of the Warrant Agent in the administration or execution of the
trusts hereby created (including the reasonable compensation and the
disbursements of its counsel and all other advisers, experts, accountants and
assistants not regularly in its employ) both before any default hereunder and
thereafter until all duties of the Warrant Agent hereunder shall be finally and
fully performed, except any such expense or disbursement in connection with or
related to or required to be made as a result of the gross negligence, wilful
misconduct or bad faith of the Warrant Agent.

4.4   Performance of Covenants by Warrant Agent

            Subject to section 8.7, if the Company shall fail to perform any of
its covenants contained in this indenture and the Company has not rectified such
failure within 25 business days after receiving written notice from the Warrant
Agent of such failure, the Warrant Agent may notify the Warrantholders of such
failure on the part of

<PAGE>

                                      -28-

the Company or may itself perform any of the said covenants capable of being
performed by it, but shall be under no obligation to perform said covenants or
to notify the Warrantholders. All reasonable sums expended or disbursed by the
Warrant Agent in so doing shall be repayable as provided in section 4.3. No such
performance, expenditure or advance by the Warrant Agent shall be deemed to
relieve the Company of any default hereunder or of its continuing obligations
under the covenants herein contained.

                                    ARTICLE 5

                                   ENFORCEMENT

5.1   Suits by Warrantholders

            Subject to section 6.10, all or any of the rights conferred upon a
Warrantholder by the terms of the Warrants held by him and/or this indenture may
be enforced by such Warrantholder by appropriate legal proceedings but without
prejudice to the right that is hereby conferred upon the Warrant Agent to
proceed in its own name to enforce each and all of the provisions herein
contained for the benefit of the holders of the Warrants from time to time
outstanding. The Warrant Agent shall also have the power at any time and from
time to time to institute and to maintain such suits and proceedings as it may
reasonably be advised shall be necessary or advisable to preserve and protect
its interests and the interests of the Warrantholders.

            Subject to applicable law, the Warrant Agent and, by acceptance of
the Warrant Certificate and as part of the consideration for the issue of the
Warrants, the Warrantholders hereby waive and release any right, cause of action
or remedy now or hereafter existing in any jurisdiction against any person in
its capacity as an incorporator or any past, present or future shareholder,
director, officer, employee or agent of the Company for the creation and issue
of the shares pursuant to any warrant or any covenant, agreement, representation
or warranty by the Company herein or contained in the Warrant Certificates.

5.2   Limitation of Liability

            The obligations hereunder (including without limitation under
subsection 8.7(5)) are not personally binding upon, nor shall resort hereunder
be had to, the private property of any of the past, present or future directors
or shareholders of the Company or any of the past, present or future officers,
employees or agents of the Company, but only the property of the Company (or any
successor person) shall be bound in respect hereof.

<PAGE>

                                      -29-

                                    ARTICLE 6

                           MEETINGS OF WARRANTHOLDERS

6.1   Right to Convene Meetings

            The Warrant Agent may at any time and from time to time, and shall
on receipt of a written request of the Company or of a Warrantholders' Request,
convene a meeting of the Warrantholders provided that the Warrant Agent has been
provided with sufficient funds and is indemnified to its reasonable satisfaction
by the Company or by the Warrantholders signing such Warrantholders' Request
against the costs, charges, expenses and liabilities which may be incurred in
connection with the calling and holding of such meeting. If within 15 business
days after the receipt of a written request of the Company or a Warrantholders'
Request, funding and indemnity given as aforesaid the Warrant Agent fails to
give the requisite notice specified in section 6.2 to convene a meeting , the
Company or such Warrantholders, as the case may be, may convene such meeting.
Every such meeting shall be held in the City of Vancouver, British Columbia,
Calgary, Alberta or Toronto, Ontario or at such other place as may be approved
or determined by the Warrant Agent.

6.2   Notice

            At least 14 days prior notice of any meeting of Warrantholders shall
be given to the Warrantholders at the expense of the Company in the manner
provided for in section 9.2 and a copy of such notice shall be delivered to the
Warrant Agent unless the meeting has been called by it, and to the Company
unless the meeting has been called by it. Such notice shall state the time and
place of the meeting, the general nature of the business to be transacted and
shall contain such information as is reasonably necessary to enable the
Warrantholders to make a reasoned decision on the matter, but it shall not be
necessary for any such notice to set out the terms of any resolution to be
proposed or any of the provisions of this Article 6. The notice convening any
such meeting may be signed by an appropriate officer of the Warrant Agent or of
the Company or the person designated by such Warrantholders, as the case may be.

6.3   Chairman

            The Warrant Agent may nominate in writing an individual (who need
not be a Warrantholder) to be chairman of the meeting and if no individual is so
nominated, or if the individual so nominated is not present within 15 minutes
after the time fixed for the holding of the meeting, the Warrantholders present
in person or by proxy shall appoint an individual present to be chairman of the
meeting. The chairman of the meeting need not be a Warrantholder.

6.4   Quorum

            Subject to the provisions of section 6.11, at any meeting of the
Warrantholders a quorum shall consist of two Warrantholders present in person or

<PAGE>

                                      -30-

represented by proxy and representing at least 25% of the aggregate number of
Warrants then outstanding. If a quorum of the Warrantholders shall not be
present within one-half hour from the time fixed for holding any meeting, the
meeting, if summoned by the Warrantholders or on a Warrantholders' Request,
shall be dissolved; but in any other case the meeting shall be adjourned to the
same day in the next week (unless such day is not a business day in which case
it shall be adjourned to the next following business day) at the same time and
place to the extent possible and, subject to the provisions of section 6.11, no
notice of the adjournment need be given. Any business may be brought before or
dealt with at an adjourned meeting which might have been dealt with at the
original meeting in accordance with the notice calling the same. At the
adjourned meeting the Warrantholders present in person or represented by proxy
shall form a quorum and may transact the business for which the meeting was
originally convened, notwithstanding that they may not represent at least 25% of
the aggregate number of Warrants then unexercised and outstanding. No business
shall be transacted at any meeting unless a quorum is present at the
commencement of business.

6.5   Power to Adjourn

            The chairman of any meeting at which a quorum of the Warrantholders
is present may, with the consent of the meeting, adjourn any such meeting, and
no notice of such adjournment need be given except such notice, if any, as the
meeting may prescribe.

6.6   Show of Hands

            Every question submitted to a meeting shall be decided in the first
place by a majority of the votes given on a show of hands except that votes on
an extraordinary resolution shall be given in the manner hereinafter provided.
At any such meeting, unless a poll is duly demanded as herein provided, a
declaration by the chairman that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by a particular
majority shall be conclusive evidence of the fact.

6.7   Poll and Voting

            On every extraordinary resolution, and when demanded by the chairman
or by one or more of the Warrantholders acting in person or by proxy on any
other question submitted to a meeting and after a vote by show of hands, a poll
shall be taken in such manner as the chairman shall direct. Questions other than
those required to be determined by extraordinary resolution shall be decided by
a majority of the votes cast on the poll. On a show of hands, every person who
is present and entitled to vote, whether as a Warrantholder or as proxy for one
or more absent Warrantholders, or both, shall have one vote. On a poll, each
Warrantholder present in person or represented by a proxy duly appointed by
instrument in writing shall be entitled to one vote in respect of each whole
Warrant then held by him. A proxy need not be a

<PAGE>

                                      -31-

Warrantholder. The chairman of any meeting shall be entitled, both on a show of
hands and on a poll, to vote in respect of the Warrants, if any, held or
represented by him.

6.8   Regulations

            Subject to the provisions of this indenture, the Warrant Agent or
the Company with the approval of the Warrant Agent may from time to time make
and from time to time vary such regulations as it shall consider necessary or
appropriate:

            (a)   for the deposit of instruments appointing proxies at such
                  place and time as the Warrant Agent, the Company or the
                  Warrantholders convening the meeting, as the case may be, may
                  in the notice convening the meeting direct;

            (b)   for the deposit of instruments appointing proxies at some
                  approved place other than the place at which the meeting is to
                  be held and enabling particulars of such instruments
                  appointing proxies to be mailed, cabled or telegraphed before
                  the meeting to the Company or to the Warrant Agent at the
                  place where the same is to be held and for the voting of
                  proxies so deposited as though the instruments themselves were
                  produced at the meeting;

            (c)   for the form of instrument appointing a proxy and the manner
                  in which the form of proxy may be executed; and

            (d)   generally for the calling of meetings of Warrantholders and
                  the conduct of business thereat including setting a record
                  date for Warrantholders entitled to receive notice of or to
                  vote at such meeting.

            Any regulations so made shall be binding and effective and the votes
given in accordance therewith shall be valid and shall be counted. Save as such
regulations may provide, the only persons who shall be recognized at any meeting
as a Warrantholder, or be entitled to vote or be present at the meeting in
respect thereof (subject to section 6.9), shall be Warrantholders or persons
holding proxies of Warrantholders.

6.9   Company, Warrant Agent and Counsel may be Represented

            The Company and the Warrant Agent, by their respective directors,
officers and employees and the counsel for each of the Company, the
Warrantholders and the Warrant Agent may attend any meeting of the
Warrantholders and speak thereat but shall not be entitled to vote as such
unless in their capacities as Warrantholders.

<PAGE>

                                      -32-

6.10  Powers Exercisable by Extraordinary Resolution

            In addition to all other powers conferred upon them by any other
provisions of this indenture or by law, the Warrantholders at a meeting shall
have the power, exercisable from time to time by extraordinary resolution:

            (a)   to agree with the Company to any modification, alteration,
                  compromise or arrangement of the rights of Warrantholders
                  and/or the Warrant Agent in its capacity as Warrant Agent
                  hereunder (subject to the Warrant Agent's approval) or on
                  behalf of the Warrantholders against the Company, whether such
                  rights arise under this indenture or the Warrants or
                  otherwise;

            (b)   to amend or repeal any extraordinary resolution previously
                  passed or sanctioned by the Warrantholders;

            (c)   to direct or authorize the Warrant Agent (subject to the
                  Warrant Agent receiving funding and indemnity) to enforce any
                  of the covenants on the part of the Company contained in this
                  indenture or the Warrants or to enforce any of the rights of
                  the Warrantholders in any manner specified in such
                  extraordinary resolution or to refrain from enforcing any such
                  covenant or right;

            (d)   to waive, authorize and direct the Warrant Agent to waive any
                  default on the part of the Company in complying with any
                  provisions of this indenture or the Warrants either
                  unconditionally or upon any conditions specified in such
                  extraordinary resolution;

            (e)   to restrain any Warrantholder from taking or instituting any
                  suit, action or proceeding against the Company for the
                  enforcement of any of the covenants on the part of the Company
                  contained in this indenture or the Warrants or to enforce any
                  of the rights of the Warrantholders; and

            (f)   to direct any Warrantholder who, as such, has brought any
                  suit, action or proceeding to stay or discontinue or otherwise
                  deal with any such suit, action or proceeding, upon payment of
                  the costs, charges and expenses reasonably and properly
                  incurred by such Warrantholder in connection therewith.

6.11  Meaning of "Extraordinary Resolution"

      (1) The expression "extraordinary resolution" when used in this indenture
means, subject as hereinafter in this section 6.11 and in section 6.14 provided,
a resolution proposed at a meeting of Warrantholders duly convened for that
purpose and held in accordance with the provisions of this Article 6 at which
there are present in person or by proxy Warrantholders representing at least 25%
of the aggregate number of all the then outstanding Warrants and passed by the
affirmative votes of

<PAGE>

                                      -33-

Warrantholders representing not less than 66 2/3% of the aggregate number of all
the then outstanding Warrants represented at the meeting and voted on the poll
upon such resolution.

      (2) If, at any meeting called for the purpose of passing an extraordinary
resolution, Warrantholders representing at least 25% of the aggregate number of
all the then outstanding Warrants are not present in person or by proxy within
one-half hour after the time appointed for the meeting, then the meeting, if
convened by Warrantholders or on a Warrantholders' Request, shall be dissolved;
but in any other case it shall stand adjourned to such day, being not less than
10 business days later, and to such place and time as may be appointed by the
chairman. Not less than three business days prior notice shall be given of the
time and place of such adjourned meeting in the manner provided in sections 9.1,
9.2 and 9.3. Such notice shall state that at the adjourned meeting the
Warrantholders present in person or represented by proxy shall form a quorum but
it shall not be necessary to set forth the purposes for which the meeting was
originally called or any other particulars. At the adjourned meeting the
Warrantholders present in person or represented by proxy shall form a quorum and
may transact the business for which the meeting was originally convened and a
resolution proposed at such adjourned meeting and passed by the requisite vote
as provided in subsection 6.11(1) shall be an extraordinary resolution within
the meaning of this indenture notwithstanding that Warrantholders representing
at least 25% of all the then outstanding Warrants are not present in person or
represented by proxy at such adjourned meeting.

      (3) Votes on an extraordinary resolution shall always be given on a poll
and no demand for a poll on an extraordinary resolution shall be necessary.

6.12  Powers Cumulative

            It is hereby declared and agreed that any one or more of the powers
or any combination of the powers in this indenture stated to be exercisable by
the Warrantholders by extraordinary resolution or otherwise may be exercised
from time to time and the exercise of any one or more of such powers or any
combination of powers from time to time shall not be deemed to exhaust the right
of the Warrantholders to exercise such powers or combination of powers then or
thereafter from time to time.

6.13  Minutes

            Minutes of all resolutions and proceedings at every meeting of
Warrantholders as aforesaid shall be made and duly entered in books to be
provided for that purpose by the Warrant Agent at the expense of the Company and
any minutes as aforesaid, if signed by the chairman of the meeting at which
resolutions were passed or proceedings had, or by the chairman of the next
succeeding meeting of the Warrantholders, shall be prima facie evidence of the
matters therein stated and, until the contrary is proved, every meeting, in
respect of the proceedings of which minutes shall have been made, shall be
deemed to have been duly convened and held, and all resolutions passed thereat
or proceedings taken, to have been duly passed and taken.

<PAGE>

                                      -34-

6.14  Instruments in Writing

            All actions which may be taken and all powers that may be exercised
by the Warrantholders at a meeting held as provided in this Article 6 also may
be taken and exercised by Warrantholders representing at least 66 2/3% of the
aggregate number of all the then outstanding Warrants by an instrument in
writing signed in one or more counterparts by such Warrantholders in person or
by attorney duly appointed in writing, and the expression "extraordinary
resolution" when used in this indenture shall include an instrument so signed.

6.15  Binding Effect of Resolutions

            Every resolution and every extraordinary resolution passed in
accordance with the provisions of this Article 6 at a meeting of Warrantholders
shall be binding upon all the Warrantholders, whether present at or absent from
such meeting, and every instrument in writing signed by Warrantholders in
accordance with section 6.14 shall be binding upon all the Warrantholders,
whether signatories thereto or not, and each and every Warrantholder and the
Warrant Agent (subject to the provisions for indemnity herein contained) shall
be bound to give effect accordingly to every such resolution and instrument in
writing. In the case of an instrument in writing, the Warrant Agent shall give
notice in the manner contemplated in sections 9.1 and 9.2 of the effect of the
instrument in writing to all Warrantholders and the Company as soon as is
reasonably practicable.

6.16  Holdings by the Company or Subsidiaries of the Company Disregarded

      (1) In determining whether Warrantholders are present at a meeting of
Warrantholders for the purpose of determining a quorum or have concurred in any
consent, waiver, extraordinary resolution, Warrantholders' Request or other
action under this indenture, Warrants owned legally or beneficially by the
Company or its subsidiaries or in partnership of which the Company is directly
or indirectly a party to shall be disregarded.

      (2) For the purposes of disregarding any Warrants owned legally or
beneficially by the Company or any Subsidiary or any partnership of which the
Company is directly or indirectly a party to or any other affiliate of the
Company in subsection 6.16(1), the Company shall provide to the Warrant Agent,
from time to time and upon request, a certificate of the Company setting forth
as at the date of such certificate:

            (a)   the names (other than the name of the Company) of the
                  registered holders of Warrants of which, to the knowledge of
                  the Company, are owned by or held for the account of the
                  Company or any Subsidiary or a partnership of which the
                  Company is directly or indirectly a party to or any other
                  affiliate of the Company; and

            (b)   the number of Warrants owned legally and beneficially by the
                  Company or any Subsidiary or a partnership of which the
                  Company

<PAGE>

                                      -35-

                  is directly or indirectly a party to or any other affiliate of
                  the Company;

and the Warrant Agent in making the determination in subsection 6.16(1) shall be
entitled to rely on such certificate.

                                    ARTICLE 7

                SUPPLEMENTAL INDENTURES AND SUCCESSOR COMPANIES

7.1   Provision for Supplemental Indentures for Certain Purposes

            From time to time the Company (if properly authorized by its
directors) and the Warrant Agent may, subject to the provisions hereof, and they
shall, when so directed hereby, execute and deliver by their proper officers,
indentures or instruments supplemental hereto, which thereafter shall form part
hereof, for any one or more or all of the following purposes:

            (a)   setting forth adjustments in the application of Article 2;

            (b)   adding to the provisions hereof such additional covenants and
                  enforcement provisions as, in the opinion of counsel are
                  necessary or advisable, provided that the same are not in the
                  opinion of the Warrant Agent, relying on the advice of
                  counsel, prejudicial to the interests of the Warrantholders as
                  a group;

            (c)   giving effect to any extraordinary resolution passed as
                  provided in Article 6;

            (d)   making such provisions not inconsistent with this indenture as
                  may be necessary or desirable with respect to matters or
                  questions arising hereunder provided that such provisions are
                  not, in the opinion of the Warrant Agent, relying on the
                  advice of counsel, prejudicial to the interests of the
                  Warrantholders as a group;

            (e)   adding to or amending the provisions hereof in respect of the
                  transfer of Warrants, making provision for the exchange of
                  Warrants and making any modification in the form of the
                  Warrant Certificate which does not affect the substance
                  thereof;

            (f)   amending any of the provisions of this indenture or relieving
                  the Company from any of the obligations, conditions or
                  restrictions herein contained, provided that no such amendment
                  or relief shall be or become operative or effective if, in the
                  opinion of the Warrant Agent, relying on the advice of
                  counsel, such amendment or relief impairs any of the rights of
                  the Warrantholders as a group or of the Warrant Agent, and
                  provided further that the Warrant Agent may in

<PAGE>

                                      -36-

                  its sole discretion decline to enter into any supplemental
                  indenture which in its opinion may not afford adequate
                  protection to the Warrant Agent when the same shall become
                  operative; and

            (g)   for any other purpose not inconsistent with the terms of this
                  indenture, including the correction or rectification of any
                  ambiguities, defective or inconsistent provisions, errors or
                  omissions herein, provided that, in the opinion of the Warrant
                  Agent, relying on the advice of counsel, the rights of the
                  Warrant Agent and the Warrantholders as a group are in no way
                  prejudiced thereby.

7.2   Successor Companies

            In the case of the amalgamation, consolidation, merger or transfer
of the undertaking or assets of the Company as an entirety or substantially as
an entirety to another person (a "SUCCESSOR COMPANY"), the successor company
resulting from the amalgamation, consolidation, merger or transfer (if not the
Company) shall be bound by the provisions hereof and all obligations for the due
and punctual performance and observance of each and every covenant and
obligation contained in this indenture to be performed by the Company and the
successor company shall by supplemental indenture satisfactory in form to the
Warrant Agent and executed and delivered to the Warrant Agent, expressly assume
those obligations.

                                    ARTICLE 8

                          CONCERNING THE WARRANT AGENT

8.1   Trust Indenture Legislation

      (1) If and to the extent that any provision of this indenture limits,
qualifies or conflicts with a mandatory requirement of Applicable Legislation,
such mandatory requirement shall prevail.

      (2) The Company and the Warrant Agent agree that each will at all times in
relation to this indenture and any action to be taken hereunder observe and
comply with and be entitled to the benefit of Applicable Legislation.

8.2   Rights and Duties of Warrant Agent

      (1) In the exercise of the rights and duties prescribed or conferred by
the terms of this indenture, the Warrant Agent shall act honestly and in good
faith with a view to the best interests of the Warrantholders and shall exercise
the degree of care, diligence and skill that a reasonably prudent trustee would
exercise in comparable circumstances. No provision of this indenture shall be
construed to relieve the Warrant Agent from, or require any other person to
indemnify the Warrant Agent against liability for its own negligence, wilful
misconduct or bad faith.

<PAGE>

                                      -37-

      (2) The Warrant Agent shall not be bound to do or take any act, action or
proceeding for the enforcement of any of the obligations of the Company under
this indenture unless and until it shall have received a Warrantholders' Request
specifying the act, action or proceeding which the Warrant Agent is requested to
take. The obligation of the Warrant Agent to commence or continue any act,
action or proceeding for the purpose of enforcing any rights of the Warrant
Agent or the Warrantholders hereunder shall be conditional upon the
Warrantholders furnishing, when required by notice in writing by the Warrant
Agent, sufficient funds to commence or continue such act, action or proceeding
and an indemnity reasonably satisfactory to the Warrant Agent and its counsel to
protect and hold harmless the Warrant Agent, its officers, directors, employees
and agents against the costs, charges and expenses and liabilities to be
incurred thereby and any loss and damage it may suffer by reason thereof. None
of the provisions contained in this indenture shall require the Warrant Agent to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers unless indemnified and funded as aforesaid.

      (3) The Warrant Agent may, before commencing any act, action or
proceeding, or at any time during the continuance thereof require the
Warrantholders at whose instance it is acting to deposit with the Warrant Agent
the Warrant Certificates held by them, for which Warrant Certificates the
Warrant Agent shall issue receipts.

      (4) Every provision of this indenture that, by its terms, relieves the
Warrant Agent of liability or entitles it to rely upon any evidence submitted by
it is subject to the provisions of Applicable Legislation, of this section 8.2
and of section 8.3.

      (5) The Warrant Agent shall not be bound to give any notice or do or take
any act, action or proceeding by virtue of the powers conferred on it hereunder
unless and until it shall have been required to do so under the terms hereof;
nor shall the Warrant Agent be required to take notice of any default hereunder,
unless and until notified in writing of such default, which notice shall
specifically set out the default desired to be brought to the attention of the
Warrant Agent and in the absence of such notice the Warrant Agent may for all
purposes of this indenture conclusively assume that no default has occurred or
been made in the performance or observance of the representations, warranties
and covenants, agreements or conditions herein contained. Any such notice shall
in no way limit any discretion herein given to the Warrant Agent to determine
whether or not the Warrant Agent shall take action with respect to any default.

      (6) In this indenture, whenever confirmations or instructions are required
to be given to the Warrant Agent, in order to be valid, such confirmations and
instructions shall be in writing.

8.3   Evidence, Experts and Advisers

      (1) In addition to the reports, certificates, opinions and other evidence
required by this indenture, the Company shall furnish to the Warrant Agent such

<PAGE>

                                      -38-

additional evidence of compliance with any provision hereof and in such form as
may be prescribed by Applicable Legislation or as the Warrant Agent may
reasonably require by written notice to the Company.

      (2) In the exercise of its rights and duties hereunder, the Warrant Agent
may, if it is acting in good faith, act and rely absolutely as to the truth of
the statements and the accuracy of the opinions expressed therein, upon
statutory declarations, opinions, reports, written requests, consents, or orders
of the Company, certificates of the Company or other evidence furnished to the
Warrant Agent pursuant to any provision hereof or of Applicable Legislation or
pursuant to a request of the Warrant Agent. The Warrant Agent shall be under no
responsibility in respect of the validity of this indenture or the execution and
delivery hereof by or on behalf of the Company or in respect of the validity or
the execution of any Warrant Certificate by the Company and issued hereunder,
nor shall it be responsible for any breach by the Company of any covenant or
condition contained in this indenture or in any such Warrant Certificate; nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any securities to be issued upon the
right to acquire provided for in this indenture and/or in any Warrant
Certificate or as to whether any securities will when issued be duly authorized
or be validly issued and fully paid and non-assessable.

      (3) Whenever Applicable Legislation requires that evidence referred to in
subsection 8.3(1) be in the form of a statutory declaration, the Warrant Agent
may accept the statutory declaration in lieu of a certificate of the Company
required by any provision hereof. Any such statutory declaration may be made by
one or more of the directors or officers of the Company and may be relied upon
by the Warrant Agent in good faith without further inquiry.

      (4) Proof of the execution of an instrument in writing, including a
Warrantholders' Request, by any Warrantholder may be made by a certificate of a
notary public or other person with similar powers that the person signing such
instrument acknowledged to him the execution thereof, or by an affidavit of a
witness to such execution or in any other manner which the Warrant Agent may
consider adequate and in respect of a corporate Warrantholder, shall include a
certificate of incumbency of such Warrantholder together with a certified
resolution authorizing the person who signs such instrument to sign such
instrument.

      (5) The Warrant Agent may act and rely and shall be protected in acting
and relying upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, letter, telegram, cablegram or other
paper document believed by it to be genuine and to have been signed, sent or
presented by or on behalf of the proper party or parties.

      (6) The Warrant Agent may employ or retain such counsel, accountants,
engineers, appraisers or other experts or advisers as it may reasonably require
for the purpose of determining and discharging its duties hereunder and may pay
reasonable remuneration for all services so performed by any of them, without
taxation of costs of

<PAGE>

                                      -39-

any counsel and shall not be responsible for any misconduct on the part of any
of them who has been selected with due care by the Warrant Agent. Any reasonable
remuneration paid by the Warrant Agent shall be paid by the Company in
accordance with section 4.3.

      (7) The Warrant Agent may, as a condition precedent to any action to be
taken by it under this indenture, require such opinions, statutory declarations,
reports, certificates or other evidence as it, acting reasonably, considers
necessary or advisable in the circumstances.

8.4   Securities, Documents and Monies Held by Warrant Agent

            The Warrant Agent may retain any cash balance held in connection
with this Warrant Indenture and may, but need not, hold the same in its deposit
department or the deposit department of one of its Affiliates; but the Warrant
Agent and its Affiliates shall not be liable to account for any profit to the
Company or any other person or entity other than at a rate, if any, established
from time to time by the Warrant Agent or its Affiliates.

            For the purpose of this Section, "Affiliate" means affiliated
companies within the meaning of the Business Corporations Act (British
Columbia).

8.5   Actions by Warrant Agent to Protect Interests

            Subject to the provisions of this indenture and Applicable
Legislation, the Warrant Agent shall have the power to institute and to maintain
such actions and proceedings as it may consider necessary or expedient to
preserve, protect or enforce its interests and the interests of the
Warrantholders.

8.6   Warrant Agent not Required to Give Security

            The Warrant Agent shall not be required to give any bond or security
in respect of the execution of the trusts and powers of this indenture or
otherwise, subject to section 8.8.

8.7   Protection of Warrant Agent

            By way of supplement to the provisions of any law for the time being
relating to trustees, it is expressly declared and agreed as follows:

      (1) The Warrant Agent shall not be liable for or by reason of any
representations, statements of fact or recitals in this indenture or in the
Warrants (except the representation contained in section 8.9 or in the
certificate of the Warrant Agent on the Warrants) or be required to verify the
same and all such statements of fact or recitals are and shall be deemed to be
made by the Company (except the representation contained in section 8.9 or in
the certificate of the Warrant Agent on the Warrants).

<PAGE>

                                      -40-

      (2) Nothing herein contained shall impose any obligation on the Warrant
Agent to see to or to require evidence of the registration or filing (or renewal
thereof) of this indenture or any instrument ancillary or supplemental hereto.

      (3) The Warrant Agent shall not be bound to give notice to any person or
persons of the execution hereof.

      (4) The Warrant Agent shall not incur any liability or responsibility
whatsoever or be in any way responsible for the consequence of any breach on the
part of the Company of any of the covenants or warranties herein contained or of
any acts of any directors, officers, employees, agents or servants of the
Company.

      (5) Without limiting any protection or indemnity of the Warrant Agent
under any other provision hereof, or otherwise at law, the Company hereby agrees
to indemnify and hold harmless the Warrant Agent and its directors, officers,
agents and employees from and against any and all liabilities, losses, damages,
penalties, claims, actions, suits, costs, expenses and disbursements, including
reasonable legal or advisor fees and disbursements, of whatever kind and nature
which may at any time be imposed on, incurred by or asserted against the Warrant
Agent in connection with the performance of its duties and obligations
hereunder, other than such liabilities, losses, damages, penalties, claims,
actions, suits, costs, expenses and disbursements arising by reason of the gross
negligence, fraud or wilful misconduct of the Warrant Agent. This provision
shall survive the resignation or removal of the Warrant Agent, or the
termination of this indenture. The Warrant Agent shall not be under any
obligation to prosecute or defend any action or suit in respect of this
indenture which, in the opinion of its counsel, may involve it in expense or
liability, unless the Company shall, so often as required, furnish the Warrant
Agent with satisfactory indemnity and funding against such expense or liability.

8.8   Replacement of Warrant Agent

      (1) The Warrant Agent may resign its trust and be discharged from all
further duties and liabilities hereunder by giving to the Company not less than
60 days prior notice in writing or such shorter prior notice as the Company may
accept as sufficient. The Warrantholders by extraordinary resolution shall have
the power at any time to remove the existing Warrant Agent and to appoint a new
Warrant Agent. In the event of the Warrant Agent resigning or being removed as
aforesaid or being dissolved, becoming bankrupt, going into liquidation or
otherwise becoming incapable of acting hereunder, the Company shall forthwith
appoint a new Warrant Agent unless a new Warrant Agent has already been
appointed by the Warrantholders; failing such appointment by the Company, the
retiring Warrant Agent or any Warrantholder may apply to a justice of the B.C.
Supreme Courtat the Company's expense, on such notice as such justice may
direct, for the appointment of a new Warrant Agent; but any new Warrant Agent so
appointed by the Company or by the Court shall be subject to removal as
aforesaid by the Warrantholders. Any new Warrant Agent appointed under any
provision of this section 8.8 shall be a corporation authorized to carry on the
business of a trust company in the Province of British Columbia and, if required
by

<PAGE>

                                      -41-

Applicable Legislation of any other province, in such other province. On any
such appointment the new Warrant Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named herein as
Warrant Agent without any further assurance, conveyance, act or deed; but there
shall be immediately executed, at the expense of the Company, all such
conveyances or other instruments as may, in the opinion of counsel, be necessary
or advisable for the purpose of assuring the same to the new Warrant Agent,
provided that any resignation or removal of the Warrant Agent and appointment of
a successor Warrant Agent shall not become effective until the successor Warrant
Agent shall have executed an appropriate instrument accepting such appointment
and, at the request of the Company, the predecessor Warrant Agent, upon payment
of its outstanding remuneration and expenses, shall execute and deliver to the
successor Warrant Agent an appropriate instrument transferring to such successor
Warrant Agent all rights and powers of the Warrant Agent hereunder and all
securities, documents of title and other instruments and all monies and
properties held by the Warrant Agent hereunder.

      (2) Upon the appointment of a successor warrant agent, the Company shall
promptly notify the Warrantholders thereof in the manner provided for in section
9.2.

      (3) Any corporation into or with which the Warrant Agent may be merged or
consolidated or amalgamated, or any corporation succeeding to the stock transfer
business of the Warrant Agent, shall be the successor to the Warrant Agent
hereunder without any further act on its part or of any of the parties hereto,
provided that such corporation would be eligible for appointment as a new
warrant agent under subsection 8.8(1).

      (4) Any Warrants certified but not delivered by a predecessor Warrant
Agent may be certified by the new or successor warrant agent in the name of the
predecessor or the new or successor warrant agent.

8.9   Conflict of Interest

      (1) The Warrant Agent represents to the Company that at the time of
execution and delivery hereof no material conflict of interest exists which it
is aware of in the Warrant Agent's role as a fiduciary hereunder and agrees that
in the event of a material conflict of interest arising which it becomes aware
of hereafter it will, within 90 days after ascertaining that it has such a
material conflict of interest, either eliminate the same or resign its trust
hereunder. If any such material conflict of interest exists or hereafter shall
exist, the validity and enforceability of this indenture and the Warrants shall
not be affected in any manner whatsoever by reason thereof.

      (2) Subject to subsection 8.9(1), the Warrant Agent, in its personal or
any other capacity, may buy, lend upon and deal in securities of the Company and
generally may contract and enter into financial transactions with the Company or
any Subsidiary without being liable to account for any profit made thereby.

<PAGE>

                                      -42-

8.10  Acceptance of Trusts

            The Warrant Agent hereby accepts the trusts in this indenture
declared and provided for and agrees to perform the same upon the terms and
conditions herein set forth.

8.11  Warrant Agent not to be Appointed Receiver

            The Warrant Agent and any person related to the Warrant Agent shall
not be appointed a receiver or receiver and manager or liquidator of all or any
part of the assets or undertaking of the Company or any Subsidiary or any
partnership of which the Company is directly or indirectly involved.

8.12  Authorization to Carry on Business

            The Warrant Agent represents to the Company that it is registered to
carry on the business of a trust company in each of the provinces of Canada.

                                    ARTICLE 9

                                     GENERAL

9.1   Notice to the Company and the Warrant Agent

      (1) Unless herein otherwise expressly provided, any notice to be given
hereunder to the Company or the Warrant Agent shall be deemed to be validly
given if delivered, if sent by registered letter, postage prepaid or if
transmitted by telecopier:

            (a)   If to the Company, to:

                        Pine Valley Mining Corporation
                        Suite 501-535 Thurow Street
                        Vancouver, British Columbia V6E 3L2

                        Attention: Martin Rip
                        Telefax No.: (604) 682-4698

                  with a copy to:

                        Bull, Housser & Tupper
                        3000 - 1055 West Georgia Street
                        Vancouver, British Columbia V6E 3R3

                        Attention: Grant Weaver
                        Telefax No.: (604) 646-2514

            (b)   If to the Warrant Agent, to:

<PAGE>

                                      -43-

                        Computershare Trust Company of Canada
                        530-8th Avenue S.W., Suite 710
                        Calgary, AB T2P 3S8

                        Attention: Manager, Corporate Trust
                        Telefax No.: (403) 267-6598

and any notice given in accordance with the foregoing shall be deemed to have
been received on the date of delivery if that date is a business day or, if
mailed, on the fifth business day following the date of the postmark on such
notice or, if transmitted by telecopier, on the day following the transmission.

      (2) The Company or the Warrant Agent, as the case may be, may from time to
time notify the other in the manner provided in subsection 9.1(1) of a change of
address which, from the effective date of such notice and until changed by like
notice, shall be the address of the Company or the Warrant Agent, as the case
may be, for all purposes of this indenture. A copy of any notice of change of
address given pursuant to this subsection 9.1(2) shall be available for
inspection at the principal stock transfer offices of the Warrant Agent in the
Cities of Vancouver, British Columbia, Calgary, Alberta or Toronto, Ontario by
Warrantholders during normal business hours.

      (3) If, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to the Warrant
Agent or to the Company hereunder could reasonably be considered unlikely to
reach its destination, the notice shall be valid and effective only if it is
delivered to an officer of the party to which it is addressed or if it is
delivered to that party at the appropriate address provided in subsection 9.1(1)
by cable, telegram, telex, telecopier or other means of prepaid, transmitted or
recorded communication and any notice delivered in accordance with the foregoing
shall be deemed to have been received on the date of delivery to the officer or
if delivered by cable, telegram, telex, telecopier or other means of prepaid,
transmitted, recorded communication on the third business day following the date
of the sending of the notice by the person giving the notice.

9.2   Notice to the Warrantholders

      (1) Any notice to the Warrantholders under the provisions of this
indenture shall be deemed to be validly given if the notice is sent by prepaid
mail or, if delivered by hand, to the holders at their addresses appearing in
the register of holders. Any notice so delivered shall be deemed to have been
received on the date of delivery if that date is a business day or the business
day following the date of delivery if such date is not a business day. All
notices may be given to whichever one of the Warrantholders (if more than one)
is named first in the appropriate register hereinbefore mentioned, and any
notice so given shall be sufficient notice to all Warrantholders and any other
persons (if any) interested in such Warrants.

      (2) If, by reason of strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to the
Warrantholders

<PAGE>

                                      -44-

could reasonably be considered unlikely to reach its destination, the notice may
be published or distributed once in the Report on Business section of the
national edition of The Globe and Mail newspaper or, in the event of a
disruption in the circular of that newspaper, once in a daily newspaper in the
English language of general circulation in Toronto, Ontario and Vancouver,
British Columbia; provided that in the case of a notice convening a meeting of
the holders of Warrants, the Warrant Agent may require such additional
publications of that notice, in the same or in other cities or both, as it may
deem necessary for the reasonable protection of the holders of Warrants or to
comply with any applicable requirement of law or any stock exchange. Any notice
so given shall be deemed to have been given on the day on which it has been
published in all of the cities in which publication was required (or first
published in a city if more than one publication in that city is required). In
determining under any provision hereof, the date when notice of any meeting or
other event must be given, the date of giving notice shall be included and the
date of the meeting or other event shall be excluded.

9.3   Discretion of Directors

            Any matter provided herein to be determined by the directors of the
Company in their sole discretion and determination so made will be conclusive.

9.4   Satisfaction and Discharge of Indenture

            Upon the date by which there shall have been delivered to the
Warrant Agent for exercise or destruction in accordance with the provisions
hereof of all Warrants theretofore certified hereunder, this indenture, except
to the extent that Common Shares and certificates therefor have not been issued
and delivered hereunder or the Company has not performed any of its obligations
hereunder, shall cease to be of further effect in respect of the Company, and
the Warrant Agent, on written demand of and at the cost and expense of the
Company, and upon delivery to the Warrant Agent of a certificate of the Company
stating that all conditions precedent to the satisfaction and discharge of this
indenture have been complied with and upon payment to the Warrant Agent of the
expenses, fees and other remuneration payable to the Warrant Agent, shall
execute proper instruments acknowledging satisfaction of and discharging this
indenture; provided that if the Warrant Agent has not then performed any of its
obligations hereunder any such satisfaction and discharge of the Company's
obligations hereunder shall not affect or diminish the rights of any
Warrantholder or the Company against the Warrant Agent.

9.5   Provisions of Indenture and Warrants for the Sole Benefit of Parties and
      Warrantholders

            Nothing in this indenture or the Warrants, expressed or implied,
shall give or be construed to give to any person other than the parties hereto
and the holders from time to time of the Warrants any legal or equitable right,
remedy or claim under this indenture, or under any covenant or provision therein
contained, all such covenants and provisions being for the sole benefit of the
parties hereto and the Warrantholders.

<PAGE>

                                      -45-

9.6   Counterparts and Formal Date

            This indenture may be simultaneously executed in several
counterparts, each of which when so executed shall be deemed to be an original
and such counterparts together shall constitute one and the same instrument and
notwithstanding their date of execution shall be deemed to bear the date set out
at the top of the first page of this indenture.

            IN WITNESS WHEREOF the parties hereto have executed this indenture
under the hands of their proper officers in that behalf.

                                 PINE VALLEY MINING CORPORATION

                                 Per:
                                     ----------------------------------
                                      Authorized Signing Officer

                                 COMPUTERSHARE TRUST COMPANY OF CANADA

                                 Per:
                                      ---------------------------------
                                      Authorized Signing Officer

                                 Per:
                                      ---------------------------------
                                      Authorized Signing Officer

<PAGE>

                                  SCHEDULE "A"

                           FORM OF WARRANT CERTIFICATE

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE APRIL 13, 2006.

WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH
ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANTS MAY NOT BE
SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES
OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A
CANADIAN RESIDENT UNTIL APRIL 13, 2006.

THE WARRANTS EVIDENCED HEREBY ARE EXERCISABLE ON OR BEFORE 5:00 P.M. (LOCALTIME
IN THE CITIES OF VANCOUVER, BRITISH COLUMBIA, CALGARY, ALBERTA, AND TORONTO,
ONTARIO AS APPLICABLE WHERE THIS CERTIFICATE IS SURRENDERED) ON JUNE 12, 2007,
AFTER WHICH TIME THE WARRANTS EVIDENCED HEREBY SHALL BE DEEMED TO BE VOID AND OF
NO FURTHER FORCE OR EFFECT.

[THE BELOW LEGEND SHALL APPEAR ONLY ON WARRANTS ISSUED TO U.S. PURCHASERS]:

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE
THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, OR (B)
OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE
U.S. SECURITIES ACT.

WARRANT CERTIFICATE NO. W______                     Representing _______________
                                                    Warrants to acquire
                                                    Common Shares

                             SHARE PURCHASE WARRANTS

                                       OF

                         PINE VALLEY MINING CORPORATION

THIS CERTIFIES that, for value received, the registered holder hereof, (the
"holder") is entitled at any time prior to 5:00 p.m. (localtime in the Cities of
Vancouver, British Columbia, Calgary, Alberta, and Toronto, Ontario as
applicable, where this certificate is surrendered) on June 12, 2007, to
subscribe for the number of

<PAGE>

                                     -A-2-

Common Shares specified above of Pine Valley Mining Corporation (the "Company"),
by surrendering to Computershare Trust Company of Canada (the "Warrant Agent")
at its principal stock transfer offices in the Cities of Vancouver, British
Columbia, Calgary, Alberta or Toronto, Ontario this Warrant Certificate with a
subscription in the form of the attached Subscription Form duly completed and
executed and accompanied by payment of $3.50 per Common Share, subject to
adjustment in certain events, (the "Exercise Price") or by certified cheque,
bank draft or money order in lawful money of Canada payable to or to the order
of the Company at par in the City of Vancouver, British Columbia.

            The holder of this Warrant Certificate may purchase less than the
number of Common Shares which he is entitled to purchase on the exercise of the
Share Purchase Warrants represented by this certificate, in which event a new
Warrant Certificate representing the Share Purchase Warrants not then exercised
will be issued to the holder.

            Upon acceptance hereof the holder hereby expressly waives the right
to receive any fractional Common Shares upon the exercise hereof in full or in
part and further waives the right to receive any cash or other consideration in
lieu thereof. The Share Purchase Warrants represented by this certificate shall
be deemed to have been surrendered, and payment or by certified cheque, bank
draft or money order shall be deemed to have been made only upon personal
delivery thereof or, if sent by post or other means of transmission, upon actual
receipt thereof by the Warrant Agent at its principal stock transfer offices in
the Cities of Vancouver, British Columbia, Calgary, Alberta, or Toronto, Ontario

            Upon due exercise of the Share Purchase Warrants represented by this
Warrant Certificate and payment of the Exercise Price, the Company shall cause
to be issued to the person(s) in whose name(s) the Common Shares so subscribed
for are to be issued (provided that if the Common Shares are to be issued to a
person other than the registered holder of this Share Purchase Warrant
certificate, the holder's signature on the Subscription Form herein shall be
guaranteed by a Canadian chartered bank, by a Canadian trust company by a
medallion signature guarantee from a member of a recognized Signature Medallion
Guarantee Program and the holder shall pay to the Company or the Warrant Agent
all applicable transfer or similar taxes and the Company shall not be required
to issue or deliver certificates evidencing the Common Shares unless or until
the holder shall have paid the Company or the Warrant Agent the amount of such
tax or shall have satisfied to the satisfaction of the Company that such tax has
been paid or that no tax is due) the number of Common Shares to be issued to
such person(s) and such person(s) shall become a holder in respect of such
Common Shares with effect from the date of such exercise and upon due surrender
of this Warrant Certificate the Warrant Agent shall issue a certificate(s)
representing such Common Shares to be issued within five business days after the
exercise of the Share Purchase Warrants represented by this certificate.

            This Warrant Certificate represents Share Purchase Warrants of the
Company issued or issuable under the provisions of the Warrant Indenture (which

<PAGE>

                                     -A-3-

indenture together with all other instruments supplemental or ancillary thereto
is herein referred to as the "Warrant Indenture") dated as of December 12, 2005
between the Company and the Warrant Agent, which contains particulars of the
rights of the holders of the Share Purchase Warrants and the Company and of the
Warrant Agent in respect thereof and the terms and conditions upon which the
Share Purchase Warrants are issued and held, all to the same effect as if the
provisions of the Warrant Indenture were herein set forth, to all of which the
holder of this Warrant Certificate by acceptance hereof assents. A copy of the
Warrant Indenture will be available for inspection at the principal office of
the Warrant Agent in the Cities of Vancouver, British Columbia, Calgary, Alberta
and Toronto, Ontario Capitalized terms used in this Warrant Certificate and not
otherwise defined shall have the meanings ascribed thereto in the Warrant
Indenture.

            No transfer of any Warrant will be valid unless entered on the
register of transfers, upon surrender to the Warrant Agent of the Warrant
Certificate evidencing such Warrant, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Warrant Agent
executed by the registered holder or his executors, administrators or other
legal representatives or his or their attorney duly appointed by an instrument
in writing in form and execution satisfactory to the Warrant Agent. Subject to
the provisions of the Share Purchase Warrant Indenture and upon compliance with
the reasonable requirements of the Warrant Agent, Share Purchase Warrant
certificates may be exchanged for Warrant Certificates entitling the holder
thereof to acquire an equal aggregate number of Common Shares subject to
adjustment as provided for in the Warrant Indenture. The Company and the Warrant
Agent may treat the registered holder of this Warrant Certificate for all
purposes as the absolute owner hereof. The holding of the Share Purchase
Warrants represented by this certificate shall not constitute the holder hereof
a holder of Common Shares nor entitle him to any right or interest in respect
thereof except as herein and in the Warrant Indenture expressly provided.

            The Warrant Indenture provides for adjustment in the number of
Common Shares to be delivered upon exercise of the right of purchase hereby
granted and to the exercise price in certain events therein set forth.

            The Warrant Indenture contains provisions making binding upon all
holders of Share Purchase Warrants outstanding thereunder resolutions passed at
meetings of such holders held in accordance with such provisions and instruments
in writing signed by Warrantholders holding a specified percentage of Warrants
outstanding.

            The Share Purchase Warrants and the Warrant Indenture shall be
governed by and performed, construed and enforced in accordance with the laws of
the Province of British Columbia and the federal laws applicable therein and
shall be treated in all respects as British Columbia contracts. Time shall be of
the essence hereof and of the Warrant Indenture.

<PAGE>

                                     -A-4-

            The Company may from time to time and at any time prior to 5:00 p.m.
(localtime in the Cities of Vancouver, British Columbia, Calgary, Alberta, and
Toronto, Ontario as applicable, where this certificate is surrendered) on June
12, 2007, purchase any of the Share Purchase Warrants by private agreement or
otherwise on such terms and conditions and at such price as the Company may in
its sole discretion determine.

            This Warrant Certificate shall not be valid for any purpose until it
has been certified by or on behalf of the Warrant Agent for the time being under
the Warrant Indenture.

            IN WITNESS WHEREOF the Company has caused this Share Purchase
Warrant certificate to be signed by its duly authorized officer as of the _____
day of __________, _____.

                                      PINE VALLEY MINING CORPORATION

                                      By:_______________________________________
                                         Authorized Signing Officer

THIS SHARE PURCHASE WARRANT CERTIFICATE REPRESENTS SHARE PURCHASE WARRANTS
REFERRED TO IN THE WARRANT INDENTURE WITHIN MENTIONED.

COUNTERSIGNED BY:

COMPUTERSHARE TRUST COMPANY OF CANADA

By:______________________________
      Authorized Signing Officer

Date of Certification:______________________

<PAGE>

                                     -A-5-

                              TRANSFER OF WARRANTS

THE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A U.S.
PERSON OR TO ANY PERSON IN THE UNITED STATES (AS DEFINED IN RULE 902(K) OF
REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED) OR TO
ANY PERSON FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR A PERSON IN THE UNITED
STATES, EXCEPT IN LIMITED CIRCUMSTANCES SPECIFIED IN THE WARRANT INDENTURE.

            FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:

                                     (name)

                                    (address)

____________________of the Warrants registered in the name of the undersigned
represented by the within certificate.

The undersigned hereby certifies that the transfer of these securities is not
being made to, and the offer of these securities was not made to, and the person
named above is not, a person in the United States or a U.S. Person (as such
terms are defined in Regulation S under the United States Securities Act of
1933, as amended), unless such transfer is exempt under the United States
Securities Act of 1933, as amended.

            DATED the___________day of_____________,___________.

Signature of  Warrantholder          _________________________________
guaranteed by:                         (Signature of Warrantholder)

                                    ____________________________________
                                      * Authorized Signature Number

NOTE: (1) The signature to this transfer must correspond with the name as
recorded on the Warrants in every particular without alteration or enlargement
or any change whatever. The signature of the person executing this transfer must
be guaranteed by an authorized officer of a Canadian chartered bank or of a
major Canadian trust company or by a medallion signature guarantee from a member
recognized under the Signature Medallion Guarantee Program or from a similar
entity in the United States, if this transfer is executed in the United States,
or in accordance with industry standards.

      (2) If the transfer is to a U.S. Person as defined in Rule 902(k) of
Regulation S under the United States Securities Act of 1933, as amended, special
restrictions apply as set out in the Warrant Indenture governing these Warrants.

<PAGE>

                                     -A-6-

If by hand or courier:                     If by mail:

c/o Computershare Trust Company of         c/o Computershare Trust Company of
Canada                                     Canada
Attention: Manager, Corporate Trust        Attention: Manager, Corporate Trust
           530-8th Avenue, Suite 710                  530-8th Avenue, Suite 710
           Calgary, AB                                Calgary, AB
           T2P 3S8                                    T2P 3S8

<PAGE>

                                     -A-7-

                                SUBSCRIPTION FORM

TO:   PINE VALLEY MINING CORPORATION

If by hand or courier:                      If by mail:

c/o Computershare Trust Company of          c/o Computershare Trust Company of
Canada                                      Canada
Attention: Manager, Corporate Trust         Attention: Manager, Corporate Trust
           530-8th Avenue, Suite 710                   530-8th Avenue, Suite 710
           Calgary, AB                                 Calgary, AB
           T2P 3S8                                     T2P 3S8

            The undersigned holder of the within Share Purchase Warrants hereby
irrevocably subscribes for __________Common Shares of Pine Valley Mining
Corporation at the Exercise Price referred to in the attached Warrant
Certificate on the terms and conditions set forth in such certificate and the
Warrant Indenture and encloses herewith a certified cheque, bank draft or money
order payable at par in the City of Vancouver, British Columbia to the order of
Pine Valley Mining Corporation in payment in full of the subscription price of
the Common Shares hereby subscribed for.

            The undersigned hereby directs that the said Common Shares be issued
as follows:

<TABLE>
<CAPTION>
                                                                NUMBER OF COMMON
NAMES(S) IN FULL                ADDRESS(ES)                     SHARES
----------------                ------------                    ----------------
<S>                             <C>                             <C>
________________                ____________                    ________________
________________                ____________                    ________________
________________                ____________                    ________________
</TABLE>

(Please print. If securities are issued to a person other than the registered
Warrantholder, the holder must pay to the Warrant Agent all exigible taxes and
the signature of the holder must be guaranteed by a Canadian chartered bank, a
Canadian trust company or by a medallion signature guarantee from a member of a
recognized Signature Medallion Guarantee Program or in accordance with industry
standards.)

            The undersigned hereby certifies that the undersigned is not a U.S.
Person or a person in the United States, and is not acquiring any of the Common
Shares issuable upon the exercise of the Warrants for the account or benefit of
a U.S. Person or a person in the United States, other than the Original U.S.
Purchaser (as hereinafter defined), and none of the persons listed above is a
U.S. Person or a person in the United States, unless such person is the Original
U.S. Purchaser. In addition to this exercise form, an Original U.S. Purchaser
must also provide an executed letter, substantially in the form attached as
Schedule "B" to the Warrant Indenture, a copy of which is available upon request
from the Warrant Agent or the Company. For purposes

<PAGE>

                                     -A-8-

hereof "United States" and "U.S. Person" shall have the meanings given to such
terms in Regulation S under the United States Securities Act of 1933, as amended
(the "U.S. Securities Act") and "Original U.S. Purchaser" means the accredited
investor who first purchased the Warrants pursuant to the terms of the Private
Placement Subscription Agreement (U.S. Purchaser).

            DATED this_______________day of_____________,__________.

                      __________________________     ______________________
                      Signature of Warrantholder     Signature of Guarantor

                      ______________________________________________________
                      Print Name

                      ______________________________________________________
                      Address

[ ] Please check this box if the securities are to be delivered at the office
where these Share Purchase Warrants are surrendered, failing which the
securities will be mailed.

<PAGE>

                                  SCHEDULE "B"

                              REPRESENTATION LETTER

TO:   Pine Valley Mining Corporation

Ladies and Gentlemen:

            In connection with the acquisition by the purchaser (the
"Subscriber") of common shares (the "Common Shares") of Pine Valley Mining
Corporation (the "Corporation"), the Subscriber or the undersigned on behalf of
the Subscriber, as the case may be, hereby represents and agrees for the benefit
of each of you that:

      1. The Subscriber is an "accredited investor" as defined in Rule
501(a)(1), (a)(2), (a)(3) or (a)(7) of Regulation D adopted pursuant to the
United States Securities Act of 1933, as amended (the "Act"). The specific
category(s) of Accredited Investor applicable to the undersigned is checked
below. ALL REFERENCES TO DOLLAR AMOUNTS IN THIS SCHEDULE "B" ARE TO THE LAWFUL
CURRENCY OF THE UNITED STATES.

                          [PLEASE CHECK ALL THAT APPLY]

_____ (a) a bank as defined in Section 3(a)(2) of the Act, or any savings
      and loan association or other institution as defined in Section 3(a)(5)(A)
      of the Act, whether acting in its individual or fiduciary capacity; any
      broker or dealer registered pursuant to Section 15 of the Securities
      Exchange Act of 1934; any insurance company as defined in Section 2(a)(13)
      of the Act; any investment company registered under the Investment Company
      Act of 1940 (the "1940 Act") or a business development company as defined
      in Section 2(a)(48) of the 1940 Act; a Small Business Investment Company
      licensed by the U.S. Small Business Administration under Section 301(c) or
      (d) of the Small Business Investment Act of 1958; any plan established and
      maintained by a state, its political subdivisions or any agency or
      instrumentality of a state or its political subdivisions, for the benefit
      of its employees, if such plan has total assets in excess of $5,000,000;
      or any employee benefit plan within the meaning of Title I of the Employee
      Retirement Income Security Act of 1974 ("ERISA"), if the investment
      decision is made by a plan fiduciary, as defined in Section 3(21) of
      ERISA, which is either a bank, savings and loan association, insurance
      company or registered investment adviser, or if the employee benefit plan
      has total assets in excess of $5,000,000 or, if a self-directed plan, with
      investment decisions made solely by persons that are accredited investors
      within the meaning of Regulation D under the Act;

_____ (b) any private business development company as defined in Section
      202(a)(22) of the Investment Advisors Act of 1940;

<PAGE>

                                     -B-2-

_____ (c) any organization described in Section 501(c)(3) of the Internal
      Revenue Code, corporation, Massachusetts or similar business trust, or
      partnership, not formed for the specific purpose of acquiring the Units,
      with total assets in excess of $5,000,000; or

_____ (d) any trust, with total assets in excess of $5,000,000, not formed
      for the specific purpose of acquiring the Units offered, whose purchase is
      directed by a sophisticated person as described in Rule 506(b)(2) of
      Regulation D (i.e., a person with such knowledge and experience in
      financial and business matters that he or she is capable of evaluating the
      merits and risks of the prospective investment).

      2. The Subscriber is acquiring the Common Shares for its own account and
not with a view to the resale, distribution or other disposition thereof or with
any present intention of offering or selling the Common Shares or any interest
therein.

      3. The Subscriber understands and acknowledges that neither the Common
Shares nor any interest therein has been or will be registered under the Act or
the securities laws of any State or other political subdivision of the United
States. The Subscriber understands and acknowledges that the Corporation is
under no obligation to register any of the Common Shares on Subscriber's behalf
or to assist Subscriber in complying with an exemption from registration.

      4. The Subscriber further acknowledges and agrees that, because the Common
Shares have not been registered under the Act and the Common Shares will be
issued in connection with a private offering exempt from registration under the
Act, the Securities are "restricted securities" within the meaning of Rule 144
(a)(3) under the Act and cannot be reoffered or resold unless they are
subsequently registered under the Act or an exemption from registration
thereunder is available, and that the Subscriber will continue to bear the
economic risk of its investment in the Common Shares for an indefinite period of
time.

      5. The Subscriber agrees that it will not re-offer, resell, pledge,
hypothecate or otherwise transfer any of the Common Shares (or securities that
may be received in replacement thereof or in exchange therefor) except: (a) to
the Corporation; or (b) outside the United States in accordance with Rule 904 of
Regulation S under the Act. The Subscriber agrees that in connection with any
transaction pursuant to the foregoing clause (b), it will furnish to the
Corporation a written opinion of counsel acceptable to the Corporation to the
effect that such offer, sale, pledge, hypothecation or other transfer is exempt
from the registration requirements of all applicable United States federal and
state securities laws. The Subscriber also agrees that each certificate for the
Common Shares (and any certificate issued in replacement thereof or in exchange
therefor) shall bear a restrictive legend in substantially the following form
and that an appropriate stop transfer order implementing the same shall be
lodged with the transfer agent for the Common Shares:

<PAGE>

                                     -B-3-

                  " THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
                  UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
                  (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
                  SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION
                  THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
                  TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE
                  UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S
                  UNDER THE U.S. SECURITIES ACT OR (C) WITHIN THE UNITED STATES
                  IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE
                  U.S. SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, AND
                  THE SELLER HAS FURNISHED TO THE CORPORATION AN OPINION TO SUCH
                  EFFECT FROM COUNSEL OF RECOGNIZED STANDING REASONABLY
                  SATISFACTORY TO THE CORPORATION PRIOR TO SUCH OFFER, SALE OR
                  TRANSFER. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE GOOD
                  DELIVERY IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN
                  CANADA. PROVIDED THAT THE CORPORATION IS A "FOREIGN ISSUER"
                  WITHIN THE MEANING OF REGULATION S AT THE TIME OF SALE, A NEW
                  CERTIFICATE BEARING NO LEGEND MAY BE OBTAINED FROM THE
                  CORPORATION'S TRANSFER AGENT UPON DELIVERY OF THIS CERTIFICATE
                  AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO THE
                  TRANSFER AGENT AND THE CORPORATION TO THE EFFECT THAT SUCH
                  SALE IS BEING MADE IN ACCORDANCE WITH RULE 904 OF REGULATION S
                  UNDER THE U.S. SECURITIES ACT."

      6. The Subscriber represents that it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Common Shares. The Subscriber acknowledges that it
has had access to such information concerning the Corporation as it has deemed
necessary to make an informed decision to purchase the Common Shares, and has
been afforded the opportunity to ask questions and receive answers from
representatives of the Corporation regarding the Corporation and the terms and
conditions relating to investment in the Corporation, and all such questions
have been answered to its full satisfaction.

      7. The Subscriber is not purchasing the Common Shares: (a) as a result of
or subsequent to becoming aware of any advertisement, article, notice or other
communication published in any newspaper, magazine or similar medium or
broadcast

<PAGE>

                                     -B-4-

over television or radio; or (b) as a result of or subsequent to attendance at a
seminar or meeting called by any of the means set forth in (a); or (c) as a
result of or subsequent to any solicitation by a person not previously known to
it in connection with investments in securities generally.

      8. The Subscriber acknowledges that a purchase of the Common Shares
involves a high degree of risk and Subscriber can afford the complete loss of
its purchase price for the Common Shares.

Dated_________________, 2005              ________________________________
                                          (Print name of Subscriber)

                                          By: __________________________________

                                          Name: ________________________________
                                          Title: _______________________________

<PAGE>

                                  SCHEDULE "C"

                    FORM OF DECLARATION FOR REMOVAL OF LEGEND

TO:   Computershare Trust Company of Canada as registrar and transfer agent for
      Pine Valley Mining Corporation

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

Dated:                                        __________________________________
                                              Name of Seller

                                              By: ______________________________
                                                  Name:
                                                  Title:

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