Document:

Unassociated Document

    EXHIBIT
      10.1

     

     

     

     

    MINE
      DEVELOPMENT
      AND OPERATING AGREEMENT

    

    by
      and between

     

    Montana
      Tunnels Mining, Inc.

     

    and

     

    Elkhorn
      Tunnels, LLC

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      TABLE
        OF CONTENTS

    

    

      
        	 	 	 	 	 	 	Page	 
	 	 	 	 	 	 	
              	 
	
                ARTICLE
                  I

              	 	 	
                DEFINITIONS
                  AND CROSS-REFERENCES

              	 	 	
                1

              	 
	 	 	 	 	 	 	 	 
	
                1.1

              	 	 	
                Definitions

              	 	 	
                1

              	 
	
                1.2

              	 	 	
                Cross-References

              	 	 	
                1

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  II

              	 	 	
                NAME,
                  PURPOSES AND TERM

              	 	 	
                1

              	 
	 	 	 	 	 	 	 	 
	
                2.1

              	 	 	
                General

              	 	 	
                1

              	 
	
                2.2

              	 	 	
                Name

              	 	 	
                2

              	 
	
                2.3

              	 	 	
                Purposes

              	 	 	
                2

              	 
	
                2.4

              	 	 	
                Limitation

              	 	 	
                2

              	 
	
                2.5

              	 	 	
                Term

              	 	 	
                2

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  III

              	 	 	
                REPRESENTATIONS
                  AND WARRANTIES; TITLE TO ASSETS; INDEMNITIES

              	 	 	
                2

              	 
	 	 	 	 	 	 	 	 
	
                3.1

              	 	 	
                Representations
                  and Warranties of Both Participants

              	 	 	
                2

              	 
	
                3.2

              	 	 	
                Representations
                  and Warranties of MTM

              	 	 	
                3

              	 
	
                3.3

              	 	 	
                Disclosures

              	 	 	
                4

              	 
	
                3.4

              	 	 	
                Record
                  Title

              	 	 	
                5

              	 
	
                3.5

              	 	 	
                Loss
                  of Title

              	 	 	
                5

              	 
	
                3.6

              	 	 	
                Indemnities/Limitation
                  of Liability

              	 	 	
                5

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  IV

              	 	 	
                RELATIONSHIP
                  OF THE PARTICIPANTS

              	 	 	
                7

              	 
	 	 	 	 	 	 	 	 
	
                4.1

              	 	 	
                No
                  Partnership

              	 	 	
                7

              	 
	
                4.2

              	 	 	
                Federal
                  Tax Elections and Allocations

              	 	 	
                7

              	 
	
                4.3

              	 	 	
                State
                  Income Tax

              	 	 	
                7

              	 
	
                4.4

              	 	 	
                Tax
                  Returns

              	 	 	
                7

              	 
	
                4.5

              	 	 	
                Other
                  Business Opportunities

              	 	 	
                7

              	 
	
                4.6

              	 	 	
                Waiver
                  of Rights to Partition or Other Division of Assets

              	 	 	
                8

              	 
	
                4.7

              	 	 	
                Transfer
                  or Termination of Rights to Properties

              	 	 	
                8

              	 
	
                4.8

              	 	 	
                Implied
                  Covenants

              	 	 	
                8

              	 
	
                4.9

              	 	 	
                No
                  Third Party Beneficiary Rights

              	 	 	
                8

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  V

              	 	 	
                PRELIMINARY
                  MATTERS AND CONTRIBUTIONS BY PARTICIPANTS

              	 	 	
                8

              	 
	 	 	 	 	 	 	 	 
	
                5.1

              	 	 	
                Preliminary
                  Matters and Participants’ Initial Contributions

              	 	 	
                8

              	 
	
                5.2

              	 	 	
                Failure
                  to Make Initial Contribution

              	 	 	
                10

              	 
	
                5.3

              	 	 	
                Additional
                  Contributions

              	 	 	
                11

              	 
	
                5.4

              	 	 	
                Inventory
                  in Process

              	 	 	
                11

              	 
	
                5.5

              	 	 	
                Reclamation
                  Obligations

              	 	 	
                12

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  VI

              	 	 	
                INTERESTS
                  OF PARTICIPANTS

              	 	 	
                12

              	 
	 	 	 	 	 	 	 	 
	
                6.1

              	 	 	
                Initial
                  Participating Interests

              	 	 	
                12

              	 
	
                6.2

              	 	 	
                Changes
                  in Participating Interests

              	 	 	
                12

              	 
	
                6.3

              	 	 	
                Elimination
                  of Minority Interest.

              	 	 	
                12

              	 
	
                6.4

              	 	 	
                Continuing
                  Liabilities Upon Adjustments of Participating Interests

              	 	 	
                13

              	 
	
                6.5

              	 	 	
                Documentation
                  of Adjustments to Participating Interests

              	 	 	
                14

              	 
	
                6.6

              	 	 	
                Grant
                  of Lien and Security Interest

              	 	 	
                14

              	 
	
                6.7

              	 	 	
                Subordination
                  of Interests

              	 	 	
                14

              	 

      

       

      
        
          
          

        

        
          -i-

          
            

          

        

        
          
          

        

      

       

      
        TABLE
          OF CONTENTS

        (continued)

      

       

      
        	
                ARTICLE
                  VII

              	 	 	
                MANAGEMENT
                  COMMITTEE

              	 	 	
                15

              	 
	 	 	 	 	 	 	 	 
	
                7.1

              	 	 	
                Organization
                  and Composition

              	 	 	
                15

              	 
	
                7.2

              	 	 	
                Decisions

              	 	 	
                15

              	 
	
                7.3

              	 	 	
                Meetings

              	 	 	
                16

              	 
	
                7.4

              	 	 	
                Action
                  Without Meeting in Person

              	 	 	
                17

              	 
	
                7.5

              	 	 	
                Matters
                  Requiring Approval

              	 	 	
                17

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  VIII

              	 	 	
                MANAGER

              	 	 	
                17

              	 
	 	 	 	 	 	 	 	 
	
                8.1

              	 	 	
                Appointment

              	 	 	
                17

              	 
	
                8.2

              	 	 	
                Powers
                  and Duties of Manager

              	 	 	
                17

              	 
	
                8.3

              	 	 	
                Standard
                  of Care

              	 	 	
                21

              	 
	
                8.4

              	 	 	
                Resignation;
                  Deemed Offer to Resign

              	 	 	
                21

              	 
	
                8.5

              	 	 	
                Payments
                  To Manager

              	 	 	
                22

              	 
	
                8.6

              	 	 	
                Transactions
                  With Affiliates

              	 	 	
                22

              	 
	
                8.7

              	 	 	
                Activities
                  During Deadlock

              	 	 	
                22

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  IX

              	 	 	
                PROGRAMS
                  AND BUDGETS

              	 	 	
                22

              	 
	 	 	 	 	 	 	 	 
	
                9.1

              	 	 	
                Initial
                  and Post-Contribution Programs and Budgets

              	 	 	
                22

              	 
	
                9.2

              	 	 	
                Operations
                  Pursuant to Programs and Budgets

              	 	 	
                22

              	 
	
                9.3

              	 	 	
                Presentation
                  of Programs and Budgets

              	 	 	
                23

              	 
	
                9.4

              	 	 	
                Review
                  and Adoption of Proposed Programs and Budgets

              	 	 	
                23

              	 
	
                9.5

              	 	 	
                Election
                  to Participate

              	 	 	
                24

              	 
	
                9.6

              	 	 	
                Recalculation
                  or Restoration of Reduced Interest Based on Actual
                  Expenditures

              	 	 	
                25

              	 
	
                9.7

              	 	 	
                Expansion
                  or Modification Programs and Budgets

              	 	 	
                26

              	 
	
                9.8

              	 	 	
                Budget
                  Overruns; Program Changes

              	 	 	
                26

              	 
	
                9.9

              	 	 	
                Emergency
                  or Unexpected Expenditures

              	 	 	
                26

              	 
	
                9.10

              	 	 	
                Project
                  Financing

              	 	 	
                27

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  X

              	 	 	
                ACCOUNTS
                  AND SETTLEMENTS

              	 	 	
                27

              	 
	 	 	 	 	 	 	 	 
	
                10.1

              	 	 	
                Monthly
                  Statements

              	 	 	
                27

              	 
	
                10.2

              	 	 	
                Cash
                  Calls

              	 	 	
                27

              	 
	
                10.3

              	 	 	
                Failure
                  to Meet Cash Calls

              	 	 	
                27

              	 
	
                10.4

              	 	 	
                Cover
                  Payment

              	 	 	
                27

              	 
	
                10.5

              	 	 	
                Remedies

              	 	 	
                28

              	 
	
                10.6

              	 	 	
                Audits

              	 	 	
                30

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  XI

              	 	 	
                DISPOSITION
                  OF PRODUCTION

              	 	 	
                30

              	 
	 	 	 	 	 	 	 	 
	
                11.1

              	 	 	
                Net
                  Cash Flow

              	 	 	
                30

              	 
	
                11.2

              	 	 	
                Right
                  to Net Cash Flow

              	 	 	
                31

              	 
	
                11.3

              	 	 	
                Hedging

              	 	 	
                31

              	 

      

       

      
        
          
          

        

        
          -ii-

          
            

          

        

        
          
          

        

      

      

        TABLE
          OF CONTENTS

        (continued)
 

      
        	
                ARTICLE
                  XII

              	 	 	
                WITHDRAWAL
                  AND TERMINATION

              	 	 	
                32

              	 
	 	 	 	 	 	 	 	 
	
                12.1

              	 	 	
                Termination
                  by Expiration or Agreement

              	 	 	
                32

              	 
	
                12.2

              	 	 	
                Termination
                  by Deadlock

              	 	 	
                32

              	 
	
                12.3

              	 	 	
                Withdrawal

              	 	 	
                32

              	 
	
                12.4

              	 	 	
                Continuing
                  Obligations and Environmental Liabilities

              	 	 	
                32

              	 
	
                12.5

              	 	 	
                Disposition
                  of Assets on Termination

              	 	 	
                33

              	 
	
                12.6

              	 	 	
                Non-Compete
                  Covenants

              	 	 	
                33

              	 
	
                12.7

              	 	 	
                Right
                  to Data After Termination

              	 	 	
                33

              	 
	
                12.8

              	 	 	
                Continuing
                  Authority

              	 	 	
                33

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  XIII

              	 	 	
                ACQUISITIONS
                  WITHIN AREA OF INTEREST

              	 	 	
                34

              	 
	 	 	 	 	 	 	 	 
	
                13.1

              	 	 	
                General

              	 	 	
                34

              	 
	
                13.2

              	 	 	
                Notice
                  to Non-Acquiring Participant

              	 	 	
                34

              	 
	
                13.3

              	 	 	
                Option
                  Exercised

              	 	 	
                34

              	 
	
                13.4

              	 	 	
                Option
                  Not Exercised

              	 	 	
                34

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  XIV

              	 	 	
                ABANDONMENT
                  AND SURRENDER OF PROPERTIES

              	 	 	
                35

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  XV

              	 	 	
                TRANSFER
                  OF INTEREST; PREEMPTIVE RIGHT

              	 	 	
                35

              	 
	 	 	 	 	 	 	 	 
	
                15.1

              	 	 	
                General

              	 	 	
                35

              	 
	
                15.2

              	 	 	
                Limitations
                  on Free Transferability

              	 	 	
                35

              	 
	
                15.3

              	 	 	
                Preemptive
                  Right

              	 	 	
                37

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  XVI

              	 	 	
                DISPUTES

              	 	 	
                37

              	 
	 	 	 	 	 	 	 	 
	
                16.1

              	 	 	
                Governing
                  Law

              	 	 	
                37

              	 
	
                16.2

              	 	 	
                Dispute
                  Resolution

              	 	 	
                38

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  XVII

              	 	 	
                CONFIDENTIALITY,
                  OWNERSHIP, USE AND DISCLOSURE OF INFORMATION

              	 	 	
                38

              	 
	 	 	 	 	 	 	 	 
	
                17.1

              	 	 	
                Business
                  Information

              	 	 	
                38

              	 
	
                17.2

              	 	 	
                Participant
                  Information

              	 	 	
                38

              	 
	
                17.3

              	 	 	
                Permitted
                  Disclosure of Confidential Business Information

              	 	 	
                39

              	 
	
                17.4

              	 	 	
                Disclosure
                  Required By Law

              	 	 	
                39

              	 
	
                17.5

              	 	 	
                Public
                  Announcements

              	 	 	
                39

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  XVIII

              	 	 	
                GENERAL
                  PROVISIONS

              	 	 	
                40

              	 
	 	 	 	 	 	 	 	 
	
                18.1

              	 	 	
                Notices

              	 	 	
                40

              	 
	
                18.2

              	 	 	
                Interpretation

              	 	 	
                41

              	 
	
                18.3

              	 	 	
                Currency

              	 	 	
                41

              	 
	
                18.4

              	 	 	
                Headings

              	 	 	
                41

              	 
	
                18.5

              	 	 	
                Waiver

              	 	 	
                41

              	 
	
                18.6

              	 	 	
                Modification

              	 	 	
                41

              	 
	
                18.7

              	 	 	
                Force
                  Majeure

              	 	 	
                41

              	 
	
                18.8

              	 	 	
                Rule
                  Against Perpetuities

              	 	 	
                41

              	 
	
                18.9

              	 	 	
                Further
                  Assurances

              	 	 	
                42

              	 
	
                18.10

              	 	 	
                Entire
                  Agreement; Successors and Assigns

              	 	 	
                42

              	 
	
                18.11

              	 	 	
                Memorandum

              	 	 	
                42

              	 
	
                18.12

              	 	 	
                Counterparts

              	 	 	
                42

              	 

      

    

     

    
      
        
        

      

      
        -iii-

        
          

        

      

      
        
        

      

    

     

    EXHIBITS

     

    
      
        	
                EXHIBIT A

              	
                ASSETS

              
	 	 
	
                EXHIBIT B

              	
                ACCOUNTING
                  PROCEDURES

              
	 	 
	
                EXHIBIT C

              	
                TAX
                  MATTERS

              
	 	 
	
                EXHIBIT D

              	
                DEFINITIONS

              
	 	 
	
                EXHIBIT E

              	
                NET
                  PROCEEDS

              
	 	 
	
                EXHIBIT F

              	
                INSURANCE

              
	 	 
	
                EXHIBIT G

              	
                PREEMPTIVE
                  RIGHTS

              
	 	 
	
                EXHIBIT H

              	
                NET
                  CASH FLOW

              
	 	 
	
                EXHIBIT
                  I

              	
                INITIAL
                  PROGRAM AND BUDGET

              

      

    

    

    
      
        
        

      

      
        -iv-

        
          

        

      

      
        
        

      

    

    MINE
      DEVELOPMENT AND OPERATING AGREEMENT

     

    This
      Mine
      Development and Operating Agreement is made as of July 28, 2006 (the
“Effective
      Date”)
      by and
      between Montana Tunnels Mining, Inc. (“MTM”),
      a
      Delaware corporation and wholly-owned subsidiary of Apollo Gold Corporation,
      the
      address of which is 5655 South Yosemite, Suite 200, Greenwood Village, Colorado
      80111, and Elkhorn Tunnels, LLC (“EKT”),
      a
      Delaware limited liability company and an Affiliate of Calim Private Equity
      LLC,
      the address of which is 320 West Main Street, Aspen, Colorado
      81611.

     

    RECITALS

     

    A.  MTM
      is
      the owner and operator of the Montana Tunnels Mine in Jefferson County, Montana
      (the “Mine”).
      The
      Mine is an operating gold, silver and base metal mine. MTM has formulated a
      Development Plan for the Mine which calls for $15,700,000 in capital
      expenditures, ongoing operating expenses, payment of Approved Outstanding
      Accounts Payable, and other improvements at the Mine.

     

    B.  MTM
      has
      determined that it desires to bring in a third party to fund the implementation
      of the Development Plan in return for an interest in the Assets and proceeds
      from Products from the Mine. A copy of the Development Plan has been made
      available to and reviewed by EKT.

     

    C.  EKT
      wishes to participate with MTM in the implementation of the Development Plan
      and
      the ongoing development and mining of mineral resources within the Properties,
      and MTM is willing to grant such rights to EKT.

     

    NOW
      THEREFORE, in consideration of the covenants and conditions contained herein,
      MTM and EKT agree as follows:

     

    ARTICLE I

    DEFINITIONS
      AND CROSS-REFERENCES

     

    1.1Definitions.
      The terms defined in Exhibit D and elsewhere shall have
      the defined meaning wherever used in this Agreement, ncluding in Exhibits.
      

     

    1.2
      Cross-References.
      References to “Exhibits,”
      “Articles,”
      “Sections”
and
      “Subsections”
refer
      to Exhibits, Articles, Sections and Subsections of this Agreement. References
      to
“Paragraphs”
and
      “Subparagraphs”
refer
      to paragraphs and subparagraphs of the referenced Exhibits.

      

    ARTICLE II

    NAME,
      PURPOSES AND TERM

     

    2.1
      General.
      EKT and
      MTM hereby enter into this Agreement for the purposes hereinafter stated. All
      of
      the rights and obligations of the Participants in connection with the Assets
      and
      all Operations shall be subject to and governed by this Agreement.

     

    
      
        
        

      

      
        I-1

        
          

        

      

      
        
        

      

    

     

    
      	
              TABLE
                OF CONTENTS

              (continued)

            	
              Page

            

    

     

    2.2
      Name.
      The
      Assets shall be managed and operated by the Participants under the name of
      the
      Montana Tunnels Venture. The Manager shall accomplish any registration required
      by applicable assumed or fictitious name statutes and similar
      statutes.

     

    2.3
      Purposes.
      This
      Agreement is entered into for the following purposes and for no others, and
      shall serve as the exclusive means by which each of the Participants
      accomplishes such purposes:

     

    (a)
      to conduct Exploration on the Properties,

     

    (b)
      to
      acquire additional real property and other interests within the exterior
      boundaries of the Properties (the “Area of Interest”),

     

    (c)
      to implement the Development Plan and engage in ongoing Development
      and
      Mining of the Properties, if justified,

     

    (d)
      to engage in Operations on the Properties,

     

    (e)
      to engage in marketing Products, to the extent provided by Article XI,
      

     

    (f)
      to complete and satisfy all Environmental Compliance obligations and
      Continuing Obligations affecting the Properties, and

     

    (g)
      to perform any other activity necessary, appropriate, or incidental
      to
      any of the foregoing.

     

    2.4
      Limitation.
      Unless
      the Participants otherwise agree in writing, the Operations shall be limited
      to
      the purposes described in Section 2.3,
      and
      nothing in this Agreement shall be construed to enlarge such purposes or to
      change the relationships of the Participants as set forth in Article IV.

     

    2.5
      Term.
      The
      term of this Agreement shall be for 20 years from the Effective Date and for
      so
      long thereafter as Operations are conducted on the Properties on a continuous
      basis, and thereafter until all materials, supplies, equipment and
      infrastructure of the Business have been salvaged and disposed of, any required
      Environmental Compliance is completed and accepted and the Participants have
      agreed to a final accounting, unless the Agreement is earlier terminated as
      herein provided. For purposes hereof, Operations shall be deemed to be conducted
      on the Properties on a “continuous
      basis”
so
      long
      as there is not an absence of any substantial activity for more than 365
      consecutive days, other than as the result of force majeure under Section 18.7,
      or if
      Operations have been declared temporarily suspended due to economic
      conditions.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

      

    
      
        	
                TABLE
                  OF CONTENTS

                (continued)

              	
                Page

              

      

       

    

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES;

    TITLE
      TO ASSETS; INDEMNITIES

     

    3.1 Representations
      and Warranties of Both Participants.
      As of
      the Effective Date, each Participant represents and warrants to the other
      that:

     

    (a)
      it is an entity duly organized and in good standing under the laws of
      its
      state of incorporation or formation and is qualified to do business and is
      in
      good standing in the State of Montana, and in all other jurisdictions where
      necessary in order to carry out the purposes of this Agreement;

     

    (b)
      it
      has the capacity to enter into and perform this Agreement and all transactions
      contemplated herein and that all corporate, board of directors, shareholder,
      member, manager, surface and mineral rights owner, lessor, lessee and other
      actions required to authorize it to enter into and perform this Agreement have
      been properly taken;

     

    (c)
      it
      will not breach any other agreement or arrangement to which it or any of its
      Affiliates is a party by entering into or performing this Agreement;

     

    (d)
      it is
      not subject to any governmental order, judgment, decree, debarment, sanction
      or
      Laws that would preclude its execution and delivery of and performance under
      this Agreement, or the permitting or implementation of Operations under this
      Agreement; 

     

    (e)
      it
has
      obtained all consents, approvals, authorizations, declarations, or filings
      required by any federal, state, local, or other authority, stock exchange or
      any
      other third party, in connection with the valid execution, delivery, and
      performance by it of this Agreement and the consummation by it of the
      transactions contemplated hereby; 

     

    (f)
      this
      Agreement has been duly executed and delivered by it and is valid and binding
      upon it and enforceable against it in accordance with its terms; provided,
      however, that no representation or warranty is made as to (i) the remedy of
      specific performance or other equitable remedies for the enforcement of this
      Agreement or any other agreement contemplated hereby or (ii) rights to
      indemnity under this Agreement for securities law liability, and provided
      further that this representation is limited by applicable bankruptcy,
      insolvency, moratorium, and other similar laws affecting generally the rights
      and remedies of creditors and secured parties; and

     

    (g)
      All
      negotiations relative to this Agreement and the transactions contemplated hereby
      have been carried on by it in such manner as not to give rise to any valid
      claim
      against the other Participant for a brokerage commission, finder’s fee, or other
      fee or commission arising by reason of the transactions contemplated by this
      Agreement.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    
       

      
        	
                TABLE
                  OF CONTENTS

                (continued)

              	
                Page

              

      

       

    

    The
      representations and warranties set forth in Sections 3.1
      and
      3.2 shall
      survive the execution and delivery of any documents of Transfer provided under
      this Agreement. For a representation or warranty made to a Participant’s
“knowledge,” the term “knowledge” shall mean actual knowledge on the part of the
      officers of the representing Participant.

     

    3.2
      Representations and Warranties of MTM.
      As of
      the Effective Date, MTM makes the following representations and warranties
      to
      EKT:

     

    (a)
      The
      Properties are free and clear of all Encumbrances arising by, through or under
      MTM except for Permitted Encumbrances and those Encumbrances specifically
      identified in Paragraph 1.1
      of Exhibit A.
      Except
      as set forth in the Underlying Agreements and as identified in Paragraph 1.1
      of Exhibit A,
      there
      are no royalties or other burdens on production affecting the
      Properties.

     

    (b)
      (i) MTM has not received any notice of default of any of the terms or
      provisions of any Underlying Agreement; (ii) each Underlying Agreement is
      in good standing; (iii) MTM has no knowledge of any act or omission or any
      condition on the Properties which could be considered or construed as a material
      default under any Underlying Agreement.

     

    (c)
      MTM
      has to its knowledge delivered to or made available for inspection by EKT all
      Existing Data in MTM’s possession, and has delivered to EKT true and correct
      copies of all the Underlying Agreements.

     

    (d)
      The
      Properties include unpatented mining claims and millsites (collectively, the
      “Claims”).
      With
      respect to the Claims, except as provided in Paragraph 1.1
      of Exhibit A
      and
      subject to the paramount title of the United States and the rights of third
      parties to use the surface of those Claims pursuant to applicable Laws:
      (i) all Governmental Fees required to maintain those Claims have been paid
      through the assessment year ending September 1, 2006; and
      (ii) evidence of payment of Governmental Fees, and other filings required
      to maintain those Claims in good standing have been properly and timely recorded
      or filed with appropriate governmental agencies. Nothing in this Subsection 3.2.(d),
      however, shall be deemed to be a representation or a warranty as to the presence
      or absence of unpatented mining claims or millsites in conflict with the Claims,
      that the Claims constitute a compact group of contiguous claims free of interior
      gaps or fractions, or that any of the Claims contains a valuable mineral
      deposit. In addition, MTM does not make any representation or warranty as to
      whether or not MTM or its predecessors-in-title established or maintained
pedis
      possessio
      rights
      with respect to any of the Claims, what rights MTM has to use the surface of
      any
      of the Claims for any purpose, or otherwise as to the validity of any of the
      Claims or the use of the same (except as specifically set forth above).

     

    (e)
      With
      respect to the Properties, there are no pending or to MTM’s knowledge threatened
      actions, suits, claims or proceedings.

     

    
      
        
        

      

      
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    (f)
      MTM
      has obtained all material permits, licenses, approvals, authorizations and
      qualifications of all federal, state and local authorities required for it
      to
      carry on its current operations at or on the Properties. Except as disclosed
      in
Schedule 3.2(f)
      or
      the
      quarterly and annual reports filed with the Securities and Exchange Commission
      by Apollo Gold Corporation (the “Apollo
      SEC Filings”),
      MTM
      is not in material violation of and has no material liability (other than
      liability for compliance with existing permits and laws, including but not
      limited to performance of reclamation) under any Law applicable to the
      Properties.

     

    (g)
      All
      federal, state and local excise, property and other taxes and assessments
      pertaining to or assessed against the Properties have been timely and properly
      paid. 

     

    3.3
      Disclosures.
      Each of
      the Participants represents and warrants that it is unaware of any material
      facts or circumstances that have not been disclosed in this Agreement, which
      should be disclosed to the other Participant in order to prevent the
      representations and warranties in this Article III
      from
      being materially misleading. MTM does not make any representation or warranty,
      express or implied, as to the accuracy, reliability or completeness of the
      Existing Data (other than that it has been prepared or gathered by or at the
      direction of MTM in good faith) or as to the value of the Assets. In addition,
      EKT acknowledges and confirms that it has undertaken such investigation and
      has
      been provided with and has evaluated such documents and information as it has
      deemed necessary to enable it to make an informed and intelligent decision
      with
      respect to the execution, delivery and performance of this Agreement. EKT
      further acknowledges that MTM makes no representation or warranty with respect
      to (i) any projections, estimates or budgets delivered to or made available
      to EKT or its Affiliates of future revenues, future results of operations (or
      any component thereof), future cash flows or future financial condition (or
      any
      component thereof) of MTM or the Mine, (ii) estimates or forecasts
      concerning any mineral reserves or resources at the Mine or the nature,
      quantity, quality or costs of mining thereof, or the costs of reclamation,
      remediation or closure associated with the Mine, or (iii) any other
      information or documents made available to EKT or its Affiliates, counsel,
      accountants or advisors with respect to MTM or its businesses or operations,
      including any such information contained in Exhibit I, except as expressly
      set
      forth in this Agreement. 

     

    3.4
      Record Title.
      Until
      such time as EKT has completed its Initial Contribution, title to the Assets
      shall be held by MTM for the benefit of the Business. Once EKT has completed
      its
      Initial Contribution, title to the Assets shall be held by the Participants
      as
      tenants in common in proportion to their respective Participating Interests,
      and
      MTM shall make conveyances of undivided interests in the Properties and
      assignments or conveyances of the other Assets to EKT as necessary to accomplish
      that result. To the extent interests in any of the Underlying Agreements may
      not
      be assigned by MTM, then upon completion of EKT’s Initial Contribution MTM shall
      continue to hold such Underlying Agreements for the benefit of the Business.
      

     

    3.5
      Loss of Title.
      Any
      failure or loss of title to the Assets, and all costs of defending title, shall
      be charged to the Business Account, except that all costs and losses arising
      out
      of or resulting from breach of the representations and warranties of MTM as
      to
      title shall be charged to MTM.

     

    
      
        
        

      

      
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    3.6
      Indemnities/Limitation of Liability.
      

     

    (a)
      Each
      Participant shall defend, indemnify and hold the other Participant, its
      directors, shareholders, members, managers, officers, employees, agents and
      attorneys, and Affiliates (collectively “Indemnified
      Participant”) harmless from and against the entire amount of any
      Material Loss. A “Material Loss” shall mean all costs,
      expenses, damages or liabilities, including reasonable attorneys’ fees and other
      costs of arbitration or litigation (either threatened or pending) arising out
      of
      or based on a breach by a Participant (“Indemnifying
      Participant”) of any representation, warranty or covenant contained in
      this Agreement, including without limitation:

     

    (i)
      any
      action taken for or obligation or responsibility assumed on behalf of the other
      Participant, its directors, officers, shareholders, members, managers,
      employees, agents and attorneys, or Affiliates by a Participant, any of its
      directors, officers, shareholders, members, managers, employees, agents and
      attorneys, or Affiliates, in violation of Section 4.1;

     

    (ii)
      failure of a Participant or its Affiliates to comply with the non-compete or
      Area of Interest provisions of Section 12.6
      or
Article XIII;
      and

     

    (iii)
      failure of a Participant or its Affiliates to comply with the preemptive rights
      provisions of Section 15.3
      and
Exhibit G.

     

    A
      Material Loss shall not be deemed to have occurred until, in the aggregate,
      an
      Indemnified Participant incurs losses, costs, damages or liabilities in excess
      of $10,000 relating to breaches of warranties, representations and covenants
      contained in this Agreement.

     

    (b)
      If
      any claim or demand is asserted against an Indemnified Participant in respect
      of
      which such Indemnified Participant may be entitled to indemnification under
      this
      Agreement, or if an Indemnified Participant otherwise believes it may be
      entitled to indemnification under this Agreement, written notice of such claim
      or demand (together with a reasonable description thereof) shall promptly be
      given to the Indemnifying Participant. Failure to provide such notice shall
      not
      relieve the Indemnifying Participant of any of its obligations hereunder except
      to the extent the Indemnifying Participant is materially prejudiced thereby.
      The
      Indemnifying Participant shall have the right, but not the obligation, by
      notifying the Indemnified Participant within 30 days after its receipt of the
      notice of the claim or demand, to assume the entire control of (subject to
      the
      right of the Indemnified Participant to participate, at the Indemnified
      Participant’s expense and with counsel of the Indemnified Participant’s choice),
      the defense, compromise, or settlement of the matter, including, at the
      Indemnifying Participant’s expense, employment of counsel of the Indemnifying
      Participant’s choice. Any damages to the assets or business of the Indemnified
      Participant caused by a failure by the Indemnifying Participant to defend,
      compromise, or settle a claim or demand in a reasonable and expeditious manner
      requested by the Indemnified Participant, after the Indemnifying Participant
      has
      given notice that it will assume control of the defense, compromise, or
      settlement of the matter, shall be included in the damages for which the
      Indemnifying Participant shall be obligated to indemnify the Indemnified
      Participant. Any settlement or compromise of a matter by the Indemnifying
      Participant shall include a full release of claims against the Indemnified
      Participant which has arisen out of the indemnified claim or demand, and shall
      be made only with the consent of the Indemnified Party, such consent not to
      be
      unreasonably withheld or delayed. The Indemnified Party may participate in
      the
      defense of any claim at its expense, and until the Indemnifying Party has agreed
      to defend such claim, the Indemnified Party may file any motion, answer or
      other
      pleading or take such other action as it deems appropriate to protect its
      interests or those of the Indemnifying Party. If the Indemnifying Party does
      not
      elect to contest any third-party claim, the Indemnifying Party shall be bound
      by
      the results obtained with respect thereto by the Indemnified Party, including
      any settlement of such claim.

     

    
      
        
        

      

      
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    ARTICLE
      IV

    RELATIONSHIP
      OF THE PARTICIPANTS

     

    4.1 No
      Partnership.
      Nothing
      contained in this Agreement shall be deemed to constitute either Participant
      the
      partner or the venturer of the other, or, except as otherwise herein expressly
      provided, to constitute either Participant the agent or legal representative
      of
      the other, or to create any fiduciary relationship between them. Except as
      expressly otherwise provided herein, the Participants do not intend to create,
      and this Agreement shall not be construed to create, any mining, commercial
      or
      other partnership or joint venture. Neither Participant, nor any of its
      directors, officers, members, employees, agents and attorneys, or Affiliates,
      shall act for or assume any obligation or responsibility on behalf of the other
      Participant, except as otherwise expressly provided herein, and any such action
      or assumption by a Participant’s directors, officers, employees, agents and
      attorneys, or Affiliates shall be a breach by such Participant of this
      Agreement. The rights, duties, obligations and liabilities of the Participants
      shall be several and not joint or collective. Each Participant shall be
      responsible only for its obligations as herein set out and shall be liable
      only
      for its share of the costs and expenses as provided herein, and it is the
      express purpose and intention of the Participants that their ownership of Assets
      and the rights acquired hereunder shall be as tenants in common. Each
      Participant shall indemnify, defend and hold harmless the other Participant,
      its
      directors, officers, members, employees, agents and attorneys from and against
      any and all losses, claims, damages and liabilities arising out of any act
      or
      any assumption of liability by the indemnifying Participant, or any of its
      directors, officers, employees, agents and attorneys done or undertaken, or
      apparently done or undertaken, on behalf of the other Participant, except
      pursuant to the authority expressly granted herein or as otherwise agreed in
      writing between the Participants.

     

    4.2 Federal
      Tax Elections and Allocations.
      Without
      changing the effect of Section
      4.1,
      the
      relationship of the Participants shall constitute a tax partnership within
      the
      meaning of Section 761(a) of the United States Internal Revenue Code of 1986,
      as
      amended. Tax elections and allocations shall be made as set forth in
Exhibit C.

     

    
      
        
        

      

      
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    4.3
      State Income Tax.
      To the
      extent permissible under applicable law, the relationship of the Participants
      shall be treated for state income tax purposes in the same manner as it is
      for
      federal income tax purposes. 

     

    4.4 Tax
      Returns.
      After
      approval of the Manager, any tax returns or other required tax forms shall
      be
      filed in accordance with Exhibit C.

     

    4.5
      Other Business Opportunities.
      Except
      as expressly provided in this Agreement, each Participant shall have the right
      to engage in and receive full benefits from any independent business activities
      or operations, whether or not competitive with the Business, without consulting
      with, or obligation to, the other Participant. The doctrines of “corporate
      opportunity”
or
      “business
      opportunity”
shall
      not be applied to the Business nor to any other activity or operation of either
      Participant. Neither Participant shall have any obligation to the other with
      respect to any opportunity to acquire any property outside the Area of Interest
      at any time, or, except as otherwise provided in Section 12.5,
      within
      the Area of Interest after the termination of the Business, regardless of
      whether the incentive or opportunity of a Participant to acquire any such
      property interest may be based, in whole or in part, upon information learned
      during the course of Operations hereunder. Unless otherwise agreed in writing,
      neither Participant shall have any obligation to mill, beneficiate or otherwise
      treat any Products in any facility owned or controlled by such Participant.
      

     

    4.6
      Waiver of Rights to Partition or Other Division of Assets.
      The
      Participants hereby waive and release all rights of partition, or of sale in
      lieu thereof, or other division of Assets (except as otherwise expressly
      provided for in Sections 10.5
      and
12.5),
      including any such rights provided by Law.

     

    4.7
      Transfer or Termination of Rights to Properties.
      Except
      as otherwise provided in this Agreement, neither Participant shall Transfer
      all
      or any part of its interest in the Assets or this Agreement or otherwise permit
      or cause such interests to terminate.

     

    4.8
      Implied Covenants.
      There
      are no implied covenants contained in this Agreement other than those of good
      faith and fair dealing. 

     

    4.9
      No Third Party Beneficiary Rights.
      This
      Agreement shall be construed to benefit the Participants and their respective
      successors and assigns only, and shall not be construed to create third party
      beneficiary rights in any other party or in any governmental organization or
      agency, except to the extent required by Project Financing and as provided
      in
Subsection 3.6(a).
      

     

    
      
        
        

      

      
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    ARTICLE
      V

    PRELIMINARY
      MATTERS AND CONTRIBUTIONS BY PARTICIPANTS

     

    5.1 Preliminary
      Matters and Participants’ Initial Contributions.

     

    (a)
      MTM,
      as its Initial Contribution, hereby contributes the Assets described in
Exhibit A to the purposes of this Agreement. The amount of
      $13,000,000 shall be credited to MTM’s Equity Account on the Effective Date with
      respect to MTM’s Initial Contribution. 

     

    (b) (i) Subject
      to EKT’s right to (A) terminate this Agreement as set forth in Subsection 5.2(a),
      or
      (B) reduce its Initial Contribution as set forth in Subsection 5.2(c),
      EKT, as
      its Initial Contribution, shall have the sole obligation to provide funds for
      all Operations engaged in to implement the Development Plan, up to a total
      of
      $13,000,000 (the “Funding Requirement”),
      on or
      before 5:00 p.m. Mountain time on January 1, 2007 (the period between the
      Effective Date and January 1, 2007 at 5:00 p.m. Mountain time being referred
      to
      hereinafter as the “Earn-In
      Period”).
      Upon
      completion of the entire Funding Requirement, the entire amount of that Funding
      Requirement shall be credited to EKT’s Equity Account, and EKT shall be deemed
      to have made its Initial Contribution. 

     

    (i) With
      respect to the Funding Requirement, but subject to Section 5.2,
      on or
      before August 1, 2006, EKT shall either (A) wire transfer $200,000 into a
      bank account maintained by MTM solely for the purpose of funding Operations
      (pursuant to wire transfer instructions from MTM) or (B) fund and make
      available an irrevocable Letter of Credit with a nationally-recognized bank
      or
      other financial institution in the amount of $200,000, such funds to be used
      or
      drawn upon only by MTM or its Affiliates for purposes of funding Operations
      as
      contemplated by the Development Plan. On or before August 10, 2006, EKT shall
      either (X) wire transfer $800,000 into a bank account maintained by MTM solely
      for the purpose of funding Operations (pursuant to wire transfer instructions
      from MTM) or (Y) fund and make available an irrevocable letter of credit with
      a
      nationally-recognized bank or other financial institution in the amount of
      $800,000, such funds to be used or drawn upon only by MTM or its Affiliates
      for
      purposes of funding Operations as contemplated by the Development Plan.
      Thereafter, on or prior to the 1st day of each of the next four calendar months
      during the Earn-In Period, beginning on the 1st day of September, 2006, EKT
      shall either (A) wire transfer $2,500,000 into the same MTM account or
      (B) fund and make available an irrevocable Letter of Credit with a
      nationally-recognized bank or other financial institution in the amount of
      $2,500,000, such funds to be used or drawn upon only by MTM or its Affiliates,
      and only for the purpose of funding Operations contemplated by the Development
      Plan. On or before the 1st day of January of 2007, EKT shall either
      (A) wire transfer $2,000,000 into the same MTM account or (B) fund and
      make available a final irrevocable Letter of Credit with a nationally-recognized
      bank or other financial institution in the amount of $2,000,000, which such
      funds may similarly be used or drawn upon only by MTM or its Affiliates and
      only
      for the purpose of funding Operations contemplated by the Development
      Plan.

     

    (ii)
      MTM
      shall provide EKT with a written statement of Development, Mining and other
      expenses for Operations incurred within 15 Business Days after the end of
      each calendar month during the Earn-In Period, and shall make available for
      review by EKT, during normal business hours, for a period of six months
      after providing such a written statement to EKT, backup invoices, statements
      and
      the like verifying such expenditures promptly upon EKT’s written request.

     

    (iii)
      During the Earn-In Period, in addition to using the monthly funding provided
      by
      EKT to conduct ongoing Operations, MTM shall use the monthly funding provided
      by
      EKT to pay Approved Outstanding Accounts Payable, timely make all payments
      required (A) under the Underlying Agreements in order to maintain the
      Underlying Agreements in full force and effect, (B) to maintain the
      Properties, (C) to keep all necessary Permits in good standing, and
      (D) to maintain the Bonds.

     

    (iv)
      During the Earn-In Period, MTM may carry out such Operations at or on the
      Properties as it may, in its discretion, determine to be warranted, as long
      as
      those Operations are consistent with the Development Plan and the Initial
      Program and Budget, and MTM shall have exclusive control of all Operations
      on or
      for the benefit of the Properties, and of any and all equipment, supplies,
      machinery or other assets purchased or otherwise acquired in connection with
      such Operations. 

     

    (b)
      During the Earn-In Period, MTM shall have the sole right to determine the
      nature, timing, scope, extent and method of all Operations on or pertaining
      to
      the Properties, in accordance with the terms and provisions of the Development
      Plan, the Initial Program and Budget, this Subsection 5.1(c),
      Subsection 7.3(a)
      and the
      standard of care imposed upon the Manager pursuant to Section 8.3,
      but
      otherwise without any obligation to obtain the approval or consent of EKT.
      For
      all Operations conducted by MTM during the Earn-In Period, MTM shall make
      deposits into the Trust Account as defined in and required under the Collateral
      Trust Agreement, including those set forth in the contemplated Second
      Amendment to Collateral Trust Agreement among MTM, Western Surety Company and
      The Northern Trust Company. During the Earn-In Period, MTM shall:

     

    (i)
      keep
      EKT generally informed concerning all material Operations and other material
      activities affecting the Properties;

     

    (ii)
      within 15 Business Days after the end of each calendar month, furnish to
      EKT a reasonably detailed written report of all Operations conducted on or
      for
      the benefit of the Properties during the preceding month; and

     

    (iii)
      make available for inspection and copying by EKT all factual and interpretive
      reports, studies and analyses concerning the Properties.

     

    
      
        
        

      

      
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    5.2
      Failure to Make Initial Contribution.
      

     

      EKT’s
      failure to fund any of the amounts due (pursuant to Section 5.1) on August
      1,
      2006, August 10, 2006 or September 1, 2006, respectively, or EKT’s failure to
      fund not less than $5,000,000 of the Funding Requirement on or before
      October 1, 2006 in accordance with the provisions of Section 5.1,
      shall
      be deemed to be a withdrawal by EKT from the Business under Section 12.3,
      the
      termination of its Participating Interest hereunder and a transfer of its
      Participating Interest and Capital Account to MTM, effective the day after
      any
      such payment was due. Upon such failure, except as otherwise provided in
Subsection 5.2(b),
      MTM
      shall have no obligation to refund to EKT any portion of the Funding Requirement
      actually advanced by EKT, EKT shall have no further right, title or interest
      in
      the Assets, and EKT shall take such actions as are necessary to ensure that
      all
      Assets are free and clear of any Encumbrances arising by, through or under
      it,
      except for such Encumbrances to which the Participants may have agreed in
      writing. EKT’s withdrawal shall be effective upon such failure, but such
      withdrawal shall not relieve EKT of its obligation to MTM to fund Operations
      up
      to the amount of MTM’s outstanding contractual obligations to third parties
      which were incurred or accrued in accordance with the Initial Program and
      Budget, nor shall such withdrawal relieve EKT of its responsibility to fund
      and
      satisfy EKT’s share of liabilities to third persons which were incurred or
      accrued in accordance with the Initial Program and Budget (regardless of whether
      such liabilities accrue before or after such withdrawal), including
      Environmental Liabilities, Continuing Obligations and Environmental Compliance,
      arising prior to EKT’s withdrawal, EKT’s share of such responsibility to be
      determined based on the following table:

     

    
      	
              Portion
                of Funding 

              Requirement
                Contributed

            	 	
              %
                Share of Obligations/Liabilities

            
	
              <$1,000,000

            	 	
              13%

            
	
              >$1,000,000
                to $2,000,000

            	 	
              16%

            
	
              >$2,000,000
                to $3,000,000

            	 	
              19%

            
	
              >$3,000,000
                to $4,000,000

            	 	
              22%

            
	
              >$4,000,000
                to $5,000,000

            	 	
              25%

            

    

    

    Notwithstanding
      the foregoing, if EKT’s failure to fund as set forth in this Section 5.2(a) is
      for Cause, EKTs percentage share of such obligations and liabilities shall
      be
      determined based on the ratio of the amount actually contributed by it versus
      the full $13,000,000 contribution.

    

    (b)
      If
      EKT has timely funded the required amount due (pursuant to Section 5.1) on
      August 1, 2006, but subsequently fails to timely fund the required amount due
      on
      either August 10, 2006 or September 1, 2006, or fails to timely fund not less
      than $5,000,000 of the Funding Requirement on or before October 1, 2006 as
      provided in Subsection 5.2(a), then, effective upon the
      day after such failure, the amount of the Funding Requirement actually
      contributed by EKT shall be converted into an unsecured promissory note payable
      by MTM to EKT (i) if such failure is not for Cause, bearing interest from
      the effective date of the note at a rate of six percent per annum and
      payable within 30 days after the end of each calendar quarter, together
      with all accrued and unpaid interest, only from fifty percent of Net Cash Flow
      from the Mine and from no other source, beginning with the end of the first
      full
      calendar quarter during which the Net Cash Flow from the Mine is positive;
      provided, however, that if a Liquidity Event occurs following the effective
      date
      of the note, then the full amount of principal and interest evidenced by the
      note will be due and payable not later than ten days after the date of the
      Liquidity Event, and (ii) if such failure is for Cause, bearing interest
      from the effective date of the note at a rate of 12 percent per annum and
      payable, together with all accrued and unpaid interest, on the fifth anniversary
      of the note; provided, however, if (A) a Liquidity Event has occurred, then
      all principal and interest will be immediately payable within ten days following
      the Liquidity Event and (B) if Net Cash Flow from the Mine is positive
      following the end of a calendar quarter, then interest shall be paid at the
      end
      of such quarter to the extent of the lesser of the accrued and unpaid interest
      on the note or such positive Net Cash Flow.

     

    
      
        
        

      

      
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    (c)
      If EKT funds not less than $5,000,000 of the Funding Requirement on
      or
      before October 1, 2006, but then thereafter fails to complete the entire
      Funding Requirement, such failure shall not be deemed a withdrawal by EKT from
      the Business. Rather, in that event, EKT shall be deemed to have completed
      its
      Initial Contribution as of the date EKT fails to timely fund any portion of
      the
      Funding Requirement in excess of $5,000,000, and the Participants’ initial
      Participating Interests shall be determined (i) for EKT, based on a
      three percent Participating Interest for each full $1,000,000 of the
      Funding Requirement which EKT has actually fulfilled (so that, for example,
      if
      EKT has fulfilled the Funding Requirement up to $5,700,000, EKT’s Participating
      Interest shall be 15 percent, and if EKT has fulfilled the Funding
      Requirement up to $9,100,000, EKT’s Participating Interest shall be
      27 percent), and (ii) for MTM, by subtracting from 100 percent
      the Participating Interest attributable to EKT. Notwithstanding the foregoing
      or
      any other provisions of this Agreement to the contrary, if EKT funds not less
      than $5,000,000 of the Funding Requirement on or before October 1, 2006,
      but then thereafter fails to complete the entire Funding Requirement, from
      and
      after the date EKT fails to timely fund any portion of the Funding Requirement
      in excess of $5,000,000, EKT’s proportionate share of obligations and
      liabilities to third parties, including Environmental Liabilities, Continuing
      Obligations and Environmental Compliance, shall be determined based on the
      following table:

     

    
      	
              Portion
                of Funding 

              Requirement
                Contributed

            	
              %
                Share of Obligations/Liabilities

            
	
              >$5,000,000
                to $6,000,000

            	
              28%

            
	
              >$6,000,000
                to $7,000,000

            	
              31%

            
	
              >$7,000,000
                to $8,000,000

            	
              34%

            
	
              >$8,000,000
                to $9,000,000

            	
              37%

            
	
              >$9,000,000
                to $10,000,000

            	
              40%

            
	
              >$10,000,000
                to $11,000,000

            	
              43%

            
	
              >$11,000,000
                to $12,000,000

            	
              46%

            
	
              >$12,000,000
                to $13,000,000

            	
              49%

            

    

     

    
      
        
        

      

      
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    Thereafter,
      if EKT’s Participating Interest is increased or decreased, its percentage share
      of obligations and liabilities of the Business as determined pursuant to this
      Subsection
      5.2(c)
      shall be
      increased or decreased proportionately.

    

    5.3
      Additional Contributions.
      At such
      time as EKT has completed its Initial Contribution, the Participants shall
      be
      obligated to contribute funds to adopted Programs and Budgets in accordance
      with
      the provisions of Article IX.

     

    5.4
      Inventory in Process.
      All
      doré and mineral concentrates located in the Mine’s vaults or the loading bay at
      the Mine as of the Effective Date, and all doré or mineral concentrates from the
      Mine that are in transit to or at a third party refiner or other purchaser
      as of
      the Effective Date (and all provisional and final settlements received with
      respect thereto from such a third party refiner or other purchaser), are
      hereinafter referred to as the “Excluded Metals”. All of the Excluded Metals
      shall remain the sole property of MTM.

     

    5.5
      Reclamation Obligations. The
      Participants agree that all reclamation, restoration, clean-up and other
      obligations and liabilities associated with the Properties shall become
      obligations and liabilities of the Business as of the Effective
      Date.

     

    ARTICLE
      VI

    INTERESTS
      OF PARTICIPANTS

     

    6.1
      Initial Participating Interests.
      Upon
      completion in full by EKT of its Initial Contribution pursuant to Subsection 5.1(b),
      the
      Participants shall have the following initial Participating
      Interests:

     

    EKT           - 50%

    MTM        
      - 50%

     

    If
      EKT
      completes its Initial Contribution pursuant to Subsection 5.2(c),
      the
      Participants’ initial Participating Interests shall be determined as set forth
      in Subsection
       5.2(c).

     

    6.2
      Changes in Participating Interests.
      The
      Participating Interests shall be eliminated or changed as follows:

     

    (a)
      After EKT has completed its Initial Contribution, upon withdrawal or
      deemed withdrawal by a Participant as provided in Section 6.3
      and
Article XII;

     

    (b)
      Upon
      an election by either Participant pursuant to Section 9.5
      to
      contribute less to an adopted Program and Budget than the percentage equal
      to
      its Participating Interest, or to contribute nothing to an adopted Program
      and
      Budget; 

     

    
      
        
        

      

      
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    (c)
      In
      the event of default by either Participant in making its agreed-upon
      contribution to an adopted Program and Budget, followed by an election by the
      other Participant to invoke any of the remedies in Section 10.5;
      

     

    (d)
      Upon
      Transfer by either Participant of part or all of its Participating Interest
      in
      accordance with Article XV;
      or

     

    (e)
      Upon
      acquisition by either Participant of part or all of the Participating Interest
      of the other Participant, however arising.

     

    6.3
      Elimination of Minority Interest.
      

     

    (a)
      A
      Reduced Participant whose Recalculated Participating Interest becomes less
      than
      ten percent due to elections made pursuant to
Section 9.5 to contribute less to an adopted Program and
      Budget than the percentage equal to its Participating Interest, or to contribute
      nothing to an adopted Program and Budget shall be deemed to have withdrawn
      from
      the Business and shall relinquish its entire Participating Interest free and
      clear of any Encumbrances arising by, through or under the Reduced Participant,
      except any such Encumbrances listed in Paragraph 1.1 of Exhibit
      A or to which the Participants have agreed in writing. Such
      relinquished Participating Interest shall be deemed to have accrued
      automatically to the other Participant. The Reduced Participant’s Capital
      Account shall be transferred to the remaining Participant. The Reduced
      Participant shall have the right to receive five percent of Net Proceeds,
      if any, to a maximum amount of 100 percent of the Reduced Participant’s
      Equity Account balance as of the effective date of the withdrawal. Upon receipt
      of such amount, and subject to Section 6.4, the Reduced
      Participant shall thereafter have no further right, title, or interest in the
      Assets or under this Agreement, and the tax partnership established by
Exhibit C shall dissolve pursuant to Paragraph 4.2 of
      Exhibit C. In such event, the Reduced Participant shall execute and
      deliver an appropriate conveyance of all of its right, title and interest in
      the
      Assets to the remaining Participant. 

     

    (b)
      The
      relinquishment, withdrawal and entitlements for which this Section
      6.3
      provides
      shall be effective as of the effective date of the recalculation under
Section 9.5.
      However, if the final adjustment provided under Section
      9.6
      for any
      recalculation under Section 9.5
      results
      in a Recalculated Participating Interest of ten percent or more:
      (i) the Recalculated Participating Interest shall be deemed, effective
      retroactively as of the first day of the Program Period, to have automatically
      revested; (ii) the Reduced Participant shall be reinstated as a
      Participant, with all of the rights and obligations pertaining thereto;
      (iii) the right to Net Proceeds under Subsection
      6.3(a)
      shall
      terminate; and (iv) the Manager, on behalf of the Participants, shall make
      any necessary reimbursements, reallocations of Products, contributions and
      other
      adjustments as provided in Subsection 9.6(d).
      Similarly, if such final adjustment under Section 9.6
      results
      in a Recalculated Participating Interest for either Participant of less than
      ten percent for a Program Period as to which the provisional calculation
      under Section 9.5
      had not
      resulted in a Participating Interest of less than ten percent, then such
      Participant, at its election within 30 days after notice of the final
      adjustment, may contribute an amount resulting in a revised final adjustment
      and
      resultant Recalculated Participating Interest of ten percent. If no such
      election is made, such Participant shall be deemed to have withdrawn under
      the
      terms of Subsection
      6.3(a)
      as of
      the beginning of such Program Period, and the Manager, on behalf of the
      Participants, shall make any necessary reimbursements, reallocations of
      Products, contributions and other adjustments as provided in Subsection 9.6(d),
      including of any Net Proceeds to which such Participant may be entitled for
      such
      Program Period. 

     

    
      
        
        

      

      
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    6.4
      Continuing Liabilities Upon Adjustments of Partici-pating
      Interests.
      Any
      reduction or elimination of either Participant’s Participating Interest under
Section 6.2
      shall
      not relieve such Participant of its share of any liability, including, without
      limitation, Continuing Obligations, Environmental Liabilities and Environmental
      Compliance, whether arising before or after such reduction or elimination,
      out
      of acts or omissions occurring or conditions existing prior to the Effective
      Date or out of Operations conducted during the term of this Agreement but prior
      to such reduction or elimination, regardless of when any funds may be expended
      to satisfy such liability. For purposes of this Section 6.3,
      such
      Participant’s share of such liability shall be equal to (a) for MTM, its
      Participating Interest at the time the act or omission giving rise to the
      liability occurred, after first taking into account any reduction, readjustment
      or restoration of its Participating Interest under Sections 6.3,
      9.5,
      9.6
      and
10.5
      (or, as
      to such liability arising out of acts or omissions occurring or conditions
      existing prior to the Effective Date, equal to MTM’s initial Participating
      Interest), or (b) for EKT, its share of such liability determined pursuant
      to Subsection 5.2(c)
      at the
      time the act or omission giving rise to the liability occurred (or, as to such
      liability arising out of acts or omissions occurring or conditions existing
      prior to the Effective Date, equal to its share of such liability as initially
      determined pursuant to Subsection 5.2(c)).
      Should
      the cumulative cost of satisfying Continuing Obligations be in excess of
      cumulative amounts accrued or otherwise charged to the Trust Account referred
      to
      and defined in the Collateral Trust Agreement, each of the Participants shall
      be
      liable for its proportionate share (for MTM, its Participating Interest at
      the
      time of the act or omission giving rise to such liability occurred, after first
      taking into account any reduction, readjustment or restoration of Participating
      Interests under Sections 6.3,
      9.5,
      9.6
      and
10.5,
      and for
      EKT, its share of such liability determined pursuant to Subsection 5.2(c)
      at the
      time the act or omission giving rise to such liability occurred) of the cost
      of
      satisfying such Continuing Obligations, notwithstanding that this Agreement
      may
      have been terminated or that either Participant has previously withdrawn from
      the Business or that its Participating Interest has been reduced or converted
      into an interest in Net Proceeds pursuant to Subsection 6.3(a).
      

     

    6.5
      Documentation of Adjustments to Partici-pating Interests.
      Except
      as otherwise provided in Section 3.4,
      adjustments to the Participating Interests need not be evidenced during the
      term
      of this Agreement by the execution and recording of appropriate instruments,
      but
      each Participant’s Participating Interest and related Equity Account balance
      shall be shown in the accounting records of the Manager, and any adjustments
      thereto, including any reduction, readjustment or restoration of Participating
      Interests under Sections 6.3,
      9.5,
      9.6
      and
10.5,
      shall
      be made monthly. However, either Participant, at any time upon the written
      request of the other Participant, shall execute and acknowledge instruments
      necessary to evidence such adjustments in form sufficient for filing and
      recording in the jurisdiction where the Properties are located.

     

    
      
        
        

      

      
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    6.6
      Grant of Lien and Security Interest.
      

     

    (a)
      Subject to Section
      6.7,
      each
      Participant, effective as of the date of EKT’s completion of its Initial
      Contribution, grants to the other Participant a lien upon and a security
      interest in its Participating Interest, including all of its right, title
      and interest in the Assets, whenever acquired or arising, and the proceeds
      from
      and accessions to the foregoing.

     

    (b)
      The
      liens and security interests granted by Subsection
      6.6(a)
      shall
      secure every obligation or liability of the Participant granting such lien
      or
      security interest created under this Agreement, including the obligation to
      repay a Cover Payment in accordance with Section
      10.4.
      Each
      Participant hereby agrees to take all action necessary to perfect such lien
      and
      security interest and hereby appoints the other Participant its attorney-in-fact
      to execute, file and record all financing statements and other documents
      necessary to perfect or maintain such lien and security interest.

     

    6.7
      Subordination of Interests.
      Each
      Participant shall, from time to time, take all necessary actions, including
      execution of appropriate agreements, to pledge and subordinate its Participating
      Interest, any liens it may hold which are created under this Agreement other
      than those created pursuant to Section 6.6,
      and any
      other right or interest it holds with respect to the Assets (other than any
      statutory lien of the Manager) to any secured borrowings for Operations approved
      by the Management Committee, including any secured borrowings relating to
      Project Financing, and any modifications or renewals thereof.

      

    ARTICLE
      VII

    MANAGEMENT
      COMMITTEE

     

    7.1 Organization
      and Composition.
      The
      Participants hereby establish a Management Committee to consult and determine
      overall policies, objectives, procedures, methods and actions under this
      Agreement. The Management Committee shall consist of two members appointed
      by MTM and two members appointed by EKT. Each Participant may appoint one
      or more alternates to act in the absence of a regular member. Any alternate
      so
      acting shall be deemed a member. Appointments by a Participant shall be made
      or
      changed by notice to the other members. The chair of the Management Committee
      shall be a representative designated by MTM through the Earn-In Period.
      Thereafter, the chair of the Management Committee shall be designated by the
      Management Committee on an annual basis and, if in any year the Management
      Committee cannot agree on the chair, it shall be a representative designated
      by
      the Manager.

     

    
      
        
        

      

      
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    7.2
      Decisions.
      

     

    (a)
      After EKT has completed its Initial Contribution, each Participant,
      acting through its appointed member(s) in attendance at the meeting, shall
      have
      the votes on the Management Committee in proportion to its Participating
      Interest. Unless otherwise provided in this Agreement, the vote of the
      Participant with a Participating Interest over 50 percent shall determine
      the decisions of the Management Committee. If the Participants’ Participating
      Interests are 50/50 and the Participants cannot agree on a particular action
      or
      matter, then the vote of the Manager shall control, except with respect to
      the
      specific items set forth in Subsection 7.2(b),
      for
      which (when the Participants’ Participating Interests are 50/50) a unanimous
      vote shall be required.

     

    (b)
      When
      the Participants’ Participating Interests are 50/50, the following matters shall
      require unanimous approval of the Management Committee:

     

    (i)
      Any amendment to this Agreement.

     

    (ii)
      Sale of any of the Properties identified with an asterisk in Paragraph 1.1
      of Exhibit A.

     

    (iii)
      The terms of any Project Financing or the granting of any security
      interests in the Assets, other than as specifically provided for in this
      Agreement.

     

    (vi)
      Filing lawsuits pertaining to the Assets or the Business against third parties,
      except where the Manager reasonably believes that emergency action (such as
      the
      filing of a request for a temporary restraining order or a preliminary
      injunction) is necessary.

     

    (v)
      Any
      amendments to the Underlying Agreements.

     

    (vi)
      Programs and Budgets calling for Additional Contributions in excess of
      $1,000,000 per Participant during any annual period.

     

    (vii)
      Except as otherwise allowed in this Agreement, the addition of another
      Participant or otherwise granting any other Person any rights in respect of
      the
      Business under this Agreement. 

     

    7.3
      Meetings.

     

    (a)
      During the Earn-In Period, the Management Committee shall meet at least
      once each calendar month in Greenwood Village, Colorado, or at other agreed
      places so that MTM may report on its Operations and consult with EKT on the
      ongoing implementation of the Development Plan. After EKT has completed its
      Initial Contribution, the Management Committee shall hold regular meetings
      at
      least quarterly in Greenwood Village, Colorado, or at other agreed places.
      The
      Manager shall give seven days advance notice to the Participants of all
      such meetings. Additionally, either Participant may call a special meeting
      upon
      seven days advance notice to the other Participant. In case of an
      emergency, reasonable notice of a special meeting shall suffice. There shall
      be
      a quorum only if one member representing each Participant is present; provided,
      however, that if a Participant fails to attend two consecutive properly called
      meetings without reasonable justification, then a quorum shall exist at the
      second meeting if the other Participant is represented by at least one appointed
      member, and a vote of such Participant shall be considered the vote required
      for
      the purposes of the conduct of all business properly noticed.

     

    
      
        
        

      

      
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    (b)
      If business cannot be conducted at a regular or special meeting due
      to
      the lack of a quorum, either Participant may call the next meeting upon
      five days advance notice to the other Participant. 

     

    (c)
      Each
      notice of a meeting shall include an itemized agenda prepared by the Manager
      in
      the case of a regular meeting or by the Participant calling the meeting in
      the
      case of a special meeting, but any matters may be considered if either
      Participant adds the matter to the agenda at least three days before the
      meeting or with the consent of the other Participant. The Manager shall prepare
      minutes of all meetings and shall distribute copies of such minutes to the
      other
      Participant within seven days after the meeting. Either Participant may
      electronically record the proceedings of a meeting with the consent of the
      other
      Participant. The other Participant shall sign and return or object to the
      minutes prepared by the Manager within 30 days after receipt, and failure
      to do either shall be deemed acceptance of the minutes as prepared by the
      Manager. The minutes, when signed or deemed accepted by both Participants,
      shall
      be the official record of the decisions made by the Management Committee.
      Decisions made at a Management Committee meeting shall be implemented in
      accordance with adopted Programs and Budgets. If a Participant timely objects
      to
      minutes proposed by the Manager, the members of the Management Committee shall
      seek, for a period not to exceed 30 days from receipt by the Manager of
      notice of the objections, to agree upon minutes acceptable to both Participants.
      If the Management Committee does not reach agreement on the minutes of the
      meeting within such 30-day period, the minutes of the meeting as prepared by
      the
      Manager together with the other Participant’s proposed changes shall
      collectively constitute the record of the meeting. If personnel employed in
      Operations are required to attend a Management Committee meeting, reasonable
      costs incurred in connection with such attendance shall be charged to the
      Business Account. All other costs shall be paid by the Participants
      individually.

     

    7.4
      Action Without Meeting in Person.
      In lieu
      of meetings in person, the Management Committee may conduct meetings by
      telephone or video conference, so long as minutes of such meetings are prepared
      in accordance with Subsection
      7.3(c).
      The
      Management Committee may also, in lieu of meetings in person, take actions
      in
      writing signed by all members.

     

    7.5
      Matters Requiring Approval.
      Except
      as otherwise provided in Subsections
      5.1(b)
      and
(c)
      and as
      otherwise delegated to the Manager in Section
      8.2,
      the
      Management Committee shall have exclusive authority to determine all matters
      related to overall policies, objectives, procedures, methods and actions under
      this Agreement.

     

    
      
         

      

      
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    ARTICLE
      VIII

    MANAGER

     

    8.1
      Appointment.
      The
      Participants hereby appoint MTM as the Manager with overall management
      responsibility for Operations. MTM hereby agrees to serve as Manager until
      it
      resigns or is deemed to have resigned as provided in Section 8.4.

     

    8.2
      Powers and Duties of Manager.
      Subject
      to the terms and provisions of this Agreement, the Manager shall have the
      following powers and duties, which shall be discharged in accordance with
      adopted Programs and Budgets, except as otherwise set forth in Subsections 5.1(b)
      and
(c)
      and
      Article IX.

     

    (a)
      The Manager shall manage, direct and control Operations, and shall
      prepare and present to the Management Committee proposed Programs and Budgets
      as
      provided in Article IX.

     

    (b)
      The
      Manager shall implement the decisions of the Management Committee, shall make
      all expenditures necessary to carry out adopted Programs, and shall promptly
      advise the Management Committee if it lacks sufficient funds to carry out its
      responsibilities under this Agreement.

     

    (c)
      The
      Manager shall use reasonable efforts to: (i) purchase or otherwise acquire
      all material, supplies, equipment, water, utility and transportation services
      required for Operations (to the extent the same are reasonably available to
      the
      Manager using commercially reasonable efforts), such purchases and acquisitions
      to be made to the extent reasonably possible on the best terms available, taking
      into account all of the circumstances; (ii) obtain such customary
      warranties and guarantees as are available in connection with such purchases
      and
      acquisitions; and (iii) keep the Assets free and clear of all Encumbrances,
      except (A) any such Encumbrances listed in Paragraph 1.1
      of Exhibit A,
      (B) those existing at the time of, or created concurrent with, the
      acquisition of such Assets, (C) mechanic’s or materialmen’s liens (which shall
      be contested, released or discharged in a diligent matter), or
      (D) Encumbrances specifically approved by the Management
      Committee.

     

    (d)
      The
      Manager shall conduct such title examinations of the Properties and cure such
      title defects pertaining to the Properties as may be advisable in its reasonable
      judgment.

     

    (e)
      The
      Manager shall: (i) make or arrange for all payments required by leases,
      licenses, permits, contracts and other agreements related to the Assets,
      including without limitation the Underlying Agreements; (ii) pay all taxes,
      assessments and like charges on Operations and Assets (except taxes determined
      or measured by a Participant’s sales revenue or net income and taxes, including
      production taxes, attributable to a Participant’s share of proceeds from
      Products), and shall otherwise promptly pay and discharge expenses incurred
      in
      Operations; provided, however, that if authorized by the Management Committee
      the Manager shall have the right to contest (in the courts or otherwise) the
      validity or amount of any taxes, assessments or charges if the Manager deems
      them to be unlawful, unjust, unequal or excessive, or to undertake such other
      steps or proceedings as the Manager may deem reasonably necessary to secure
      a
      cancellation, reduction, readjustment or equalization thereof before the Manager
      shall be required to pay them, but in no event shall the Manager permit or
      allow
      title to the Assets to be lost as the result of the nonpayment of any taxes,
      assessments or like charges; and (iii) perform all other acts reasonably
      necessary to maintain the Assets.

     

    
      
         

      

      
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    (f)
      The
      Manager shall establish reasonable cash reserves for Operations and shall use
      cash received from Operations in the ordinary course of business for funding
      expenses of the Business. 

     

    (g)
      The
      Manager shall: (i) apply for all necessary permits, licenses and approvals;
      (ii) comply in material respects with all Laws and promptly notify the
      Management Committee of any allegations of substantial violations thereof;
      and
      (iii) prepare and file all reports or notices required for or as a result
      of Operations. The Manager shall not be in breach of this provision if a
      violation has occurred in spite of the Manager’s good faith efforts to comply
      consistent with its standard of care under Section 7.3.
      In the
      event of any such violation, the Manager shall timely cure or dispose of such
      violation on behalf of both Participants through performance, payment of fines
      and penalties, or both, and the cost thereof shall be charged to the Business
      Account. In addition, with respect to the posting of any bonds or other surety
      required to obtain any permits, licenses or approvals, the Manager shall have
      no
      obligation to provide any corporate guarantees or make its balance sheet
      available to ensure that such bonds or other surety are in place.

     

    (h)
      The
      Manager shall prosecute and defend all litigation or administrative proceedings
      arising out of Operations, but shall not initiate any such proceedings, except
      for emergency actions seeking a preliminary injunction or temporary restraining
      order when reasonably deemed necessary by the Manager, without the consent
      of
      the Management Committee. The non-managing Participant shall have the right
      to
      participate, at its own expense, in such litigation or administrative
      proceedings. The non-managing Participant shall approve in advance any
      settlement involving payments, commitments or obliga-tions in excess of $25,000
      in cash or value.

     

    (i)
      The
      Manager shall provide insurance for the benefit of the Participants as provided
      in Exhibit F
      or as
      may otherwise be determined from time to time by the Management Committee.
      

     

    (j)
      The
      Manager may dispose of Assets, whether by abandonment, surrender, or Transfer
      in
      the ordinary course of business, except that Properties may be abandoned or
      surrendered only as provided in Article XIV.
      Without
      prior authorization from the Management Committee, however, such authorization
      not to be unreasonably withheld or delayed, the Manager shall not:
      (i) dispose of Assets; (ii) enter into any sales contracts or
      commitments for Products on behalf of both Participants or the Business, except
      as permitted in Sections 11.1
      and
      11.2;
      (iii) begin a liquidation of the Business (except to the extent provided
      for in Section 12.4);
      or
      (iv) dispose of all or a substantial part of the Assets necessary to
      achieve the purposes of the Business.

     

    
      
         

      

      
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    (k)
      The
      Manager shall have the right to carry out its responsibilities hereunder through
      agents, Affiliates, consultants or independent contractors.

     

    (l)
      The
      Manager shall perform or cause to be performed all annual assessment work,
      and
      shall pay all Governmental Fees, required by Law in order to maintain the
      Claims. The Manager shall not be liable on account of any determination by
      any
      court or governmental agency that the annual assessment work performed by the
      Manager does not constitute the required annual assessment work for the purposes
      of preserving or maintaining ownership of the Claims, provided that the work
      is
      performed in accordance with the Manager’s standard of care under Section 8.3.
      The
      Manager shall timely record and file with the appropriate governmental agencies
      any required affidavits, notices of intent to hold and other documents in proper
      form attesting to the performance of required annual assessment work and the
      payment of Governmental Fees. The Manager shall not be liable for the loss
      of
      any of the Claims on account of (a) any determination by any court or
      governmental agency that any such document submitted by the Manager does not
      comply with applicable Laws, provided that such document is prepared and
      recorded or filed in accordance with the Manager’s standard of care under
Section 8.3,
      or
      (b) any other governmental determination or third party action challenging
      the validity of the Claims, so long as the Manager has conducted Operations
      in
      accordance with the Manager’s standard of care under Section 8.3.

     

    (m)
      If
      authorized by the Management Committee, with respect to the Properties, the
      Manager may: (i) locate, amend or relocate any unpatented mining claim or
      mill site or tunnel site, (ii) locate any fractions resulting from such
      amendment or relocation, (iii) apply for patents or mining leases or other
      forms of mineral tenure for any such unpatented claims or sites,
      (iv) abandon any unpatented mining claims for the purpose of locating mill
      sites or otherwise acquiring from the United States rights to the ground covered
      thereby, (v) abandon any unpatented mill sites for the purpose of locating
      mining claims or otherwise acquiring from the United States rights to the ground
      covered thereby, (vi) exchange with or convey to the United States any of
      the Claims for the purpose of acquiring rights to the ground covered thereby
      or
      other adjacent ground, and (vii) convert any unpatented claims or mill
      sites into one or more leases or other forms of mineral tenure pursuant to
      any
      Law hereafter enacted.

     

    (n)
      The
      Manager shall keep and maintain all required accounting and financial records
      pursuant to the procedures described in Exhibit B
      and in
      accordance with customary cost accounting practices in the mining industry,
      and
      shall ensure appropriate separation of accounts unless otherwise agreed by
      the
      Participants.

     

    
      
         

      

      
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    (o)
      The
      Manager shall maintain Equity Accounts for each Participant. Each Participant’s
      Equity Account shall be credited with the value of such Participant’s
      contributions under Subsections 5.1(a),
      5.1(b)
      and
5.2(c)
      and
      shall be credited with amounts contributed by such Participant under
Section 5.3.
      Each
      Participant’s Equity Account shall be charged with the cash and the fair market
      value of property distributed to such Participant (net of liabilities assumed
      by
      such Participant and liabilities to which such distributed property is subject).
      Contributions and distributions shall include all cash contributions or
      distributions plus the agreed value (expressed in dollars) of all in-kind
      contributions or distributions. 

     

    (p)
      Upon
      completion by EKT of its Initial Contribution, the Manager shall keep the
      Management Committee advised of all Operations by submitting in writing to
      the
      members of the Management Committee: (i) monthly progress reports that
      include statements of expenditures and comparisons of such expenditures to
      the
      adopted Budget; (ii) periodic summaries of data acquired; (iii) copies
      of reports concerning Operations; (iv) a detailed final report within
      60 days after completion of each Program and Budget, which shall include
      comparisons between actual and budgeted expenditures and comparisons between
      the
      objectives and results of Programs; and (v) such other reports as any
      member of the Management Committee may reasonably request. Subject to the
      provisions of Article XVIII,
      at all
      reasonable times the Manager shall provide the other Participant, upon the
      request of such Participant’s member of the Management Committee, access to, and
      the right to inspect and, at such Participant’s cost and expense, copies of the
      Existing Data and all maps, drill logs and other drilling data, core, pulps,
      reports, surveys, assays, analyses, production reports, operations, technical,
      accounting and financial records, and other Business Information, to the extent
      preserved or kept by the Manager. In addition, the Manager shall allow the
      non-managing Participant, at the latter’s sole risk, cost and expense, and
      subject to reasonable safety regulations, to inspect the Assets and Operations
      at all reasonable times, so long as the non-managing Participant does not
      unreasonably interfere with Operations.

     

    (q)
      The
      Manager shall prepare an Environmental Compliance plan for all Operations
      consistent with the requirements of any applicable Laws or contractual
      obligations and shall include in each Program and Budget sufficient funding
      to
      implement the Environmental Compliance plan and to satisfy the financial
      assurance requirements of any applicable Law or contractual obligation
      pertaining to Environmental Compliance. To the extent practical, the
      Environmental Compliance plan shall incorporate concurrent reclamation of
      Properties disturbed by Operations.

     

    (r)
      The
      Manager shall undertake to perform Continuing Obligations when and as economic
      and appropriate, whether before or after termination of the Business. The
      Manager shall have the right to delegate performance of Continuing Obligations
      to persons having demonstrated skill and experience in relevant disciplines.
      As
      part of each Program and Budget submittal, the Manager shall specify in such
      Program and Budget the measures to be taken for performance of Continuing
      Obligations and the cost of such measures. The Manager shall keep the other
      Participant reasonably informed about the Manager’s efforts to discharge
      Continuing Obligations. An authorized representative of the non-managing
      Participant shall have the right from time to time to enter the Properties
      to
      inspect work directed toward satisfaction of Continuing Obligations and audit
      books, records, and accounts related thereto. 

     

    
      
         

      

      
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    (s)
      The
      Manager shall make such monthly payments as are required by the Collateral
      Trust
      Agreement (and all Ancillary Agreements as defined therein). 

     

    (t)
      If
      Participating Interests are adjusted in accordance with this Agreement the
      Manager shall propose from time to time one or more methods for fairly
      allocating costs for Continuing Obligations.

     

    (u)
      The
      Manager shall undertake all other activities reasonably necessary to fulfill
      the
      foregoing, and to implement the policies, objectives, procedures, methods and
      actions determined by the Management Committee pursuant to Section
      7.1.
      

     

    8.3
      Standard of Care.
      The
      Manager shall discharge its duties under Section 8.2
      and
      conduct all Operations in a good, workmanlike and efficient manner, in
      accordance with sound mining and other applicable industry standards and
      practices, and in accordance with Laws and with the terms and provisions of
      leases, licenses, permits, contracts and other agreements pertaining to the
      Assets, including without limitation the Underlying Agreements. The Manager
      shall not be in default of any of its duties under Section 8.2
      or
      otherwise under the Agreement if its inability or failure to perform results
      from the failure of the other Participant to perform acts or to contribute
      amounts required of it by this Agreement.

     

    8.4
      Resignation; Deemed Offer to Resign.
      The
      Manager may resign upon not less than 60 days’ prior notice to the other
      Participant, in which case the other Participant may elect to become the new
      Manager by notice to the resigning Participant within 30 days after receipt
      of the notice of resignation. If any of the following shall occur, the Manager
      shall be deemed to have resigned upon the occurrence of the event described
      in
      each of the following Subsections, with the successor Manager to be appointed
      by
      the other Participant at a subsequently called meeting of the Management
      Committee, at which the Manager shall not be entitled to vote. The other
      Participant may appoint itself or a third party as the Manager.

     

    (a)
      The
      aggregate Participating Interest of the Manager or any of its Affiliates becomes
      less than 50 percent;

     

    (b)
      The
      Manager fails to perform a material obligation imposed upon it under this
      Agreement and such failure continues for a period of 30 days after notice
      from the other Participant demanding performance, subject to the Manager’s right
      to dispute the assertion that it has failed to perform the material obligation
      in question; 

     

    (c)
      The
      Manager generally fails to pay or contest in good faith its bills and Business
      debts as such obligations become due; 

     

    
      
         

      

      
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    (d)
      A
      receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
      official for a substantial part of its assets is appointed and such appointment
      is neither made ineffective nor discharged within 60 days after the making
      thereof, or such appointment is consented to, requested by, or acquiesced in
      by
      the Manager; 

     

    (e)
      The
      Manager commences a voluntary case under any applicable bankruptcy, insolvency
      or similar law now or hereafter in effect; or consents to the entry of an order
      for relief in an involuntary case under any such law or to the appointment
      of or
      taking possession by a receiver, liquidator, assignee, custodian, trustee,
      sequestrator or other similar official of any substantial part of its assets;
      or
      makes a general assignment for the benefit of creditors; or takes corporate
      or
      other action in furtherance of any of the foregoing; or

     

    (f)
      Entry
      is made against the Manager of a judgment, decree or order for relief affecting
      its ability to serve as Manager, or a substantial part of its Participating
      Interest or its other assets by a court of competent jurisdiction in an
      involuntary case commenced under any applicable bankruptcy, insolvency or other
      similar law of any jurisdiction now or hereafter in effect.

     

    Under
      Subsections 8.4(d),
      (e) or (f)
      above,
      the appointment of a successor Manager shall be deemed to pre-date the event
      causing a deemed resignation.

     

    8.5
      Payments To Manager.
      The
      Manager shall be compensated for its services and reimbursed for its costs
      hereunder in accordance with Exhibit B.

     

    8.6
      Transactions With Affiliates.
      If the
      Manager engages Affiliates to provide services hereunder, it shall do so on
      terms no less favorable than would be the case in arm’s-length transactions with
      unrelated persons.

     

    8.7
      Activities During Deadlock.
      If the
      Management Committee for any reason fails to adopt a Program and Budget, subject
      to the contrary direction of the Management Committee and receipt of necessary
      funds, the Manager shall be entitled to continue Operations at levels comparable
      with the last adopted Program and Budget. 

      

    ARTICLE
      IX

    PROGRAMS
      AND BUDGETS

     

    9.1 Initial
      and Post-Contribution Programs and Budgets.
      

     

    (a)
      The
      parties have agreed to the Initial Program and Budget to implement the
      Development Plan, to be funded by EKT pursuant to the provisions of Subsection 5.1(b),
      and
      thereafter in accordance with the provisions of this Article IX.
      The
      Initial Program and Budget is attached hereto as Exhibit I.

     

    
      
         

      

      
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    (b)
      Within 60 days after EKT’s completion of its Initial Contribution, MTM
      shall prepare the Post-Contribution Program and Budget and provide it to EKT
      for
      review in accordance with the provisions of Sections 9.4
      and
9.5.
      During
      the period between the date of completion of EKT’s Initial Contribution and the
      date of approval of the Post-Contribution Program and Budget, MTM may continue
      to conduct Operations on the Properties as it reasonably sees fit, and EKT
      shall
      reimburse MTM for a pro rata share (equivalent to EKT’s Participating Interest
      on the date of completion of its Initial Contribution) of the costs of such
      Operations, if any, that exceed revenue or other funds available to the
      Business, plus interest at an annual rate of two percentage points over the
      Prime Rate, not later than 30 days after approval of the Post-Contribution
      Program and Budget. Such interest shall accrue to the benefit of and be payable
      to MTM, but shall not be deemed as amounts contributed by EKT in the event
      dilution occurs in accordance with Article VI.
      Notwithstanding the foregoing, such interest shall accrue and be payable only
      to
      the extent MTM has funded its own pro rata share of such costs.

     

    9.2
      Operations Pursuant to Programs and Budgets.
      Upon
      completion of EKT’s Initial Contribution, except as otherwise set forth in
Section 9.1,
      Operations shall be conducted, expenses shall be incurred, and Assets shall
      be
      acquired only pursuant to approved Programs and Budgets. Every Program and
      Budget adopted pursuant to this Agreement shall provide for accrual of
      reasonably anticipated Environmental Compliance expenses for all Operations
      contemplated under the Program and Budget.

     

    9.3
      Presentation of Programs and Budgets.
      

     

    (a)
      Proposed Programs and Budgets shall be prepared by the Manager for a period
      of
      one year or any other shorter period as the Manager may determine, and
      shall be submitted to the Management Committee for review and consideration.
      All
      proposed Programs and Budgets may include Exploration, Development, Mining
      and
      Expansion or Modification Operations components, or any combination thereof,
      and
      shall be reviewed and adopted upon a vote of the Management Committee in
      accordance with Sections
      7.2
      and
9.4.
      Each
      Program and Budget adopted by the Management Committee, regardless of length,
      shall be reviewed at least once a year at a meeting of the Management Committee.
      During the period encompassed by any Program and Budget, and at least
      60 days prior to its expiration, a proposed Program and Budget for the
      succeeding period shall be prepared by the Manager and submitted to the
      Management Committee for review and consideration.

     

    (b)
      Notwithstanding Section 9.3(a), the Manager may prepare for planning
      purposes a life-of-mine budget that provides for on-going capital and
      Development expenditures that may require expenditures over more than one annual
      Program and Budget (each an “Extended
      Commitment”)
      and,
      unless an Extended Commitment is subsequently expressly disapproved by the
      Participants in accordance with the terms of this Agreement, if an Extended
      Commitment is approved by a Participant in one Program and Budget it cannot
      thereafter be the basis for rejecting a subsequent Program and Budget.

     

    
      
         

      

      
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    9.4
      Review and Adoption of Proposed Programs and Budgets.
      Within
      20 days after submission of a proposed Program and Budget, each Participant
      shall submit in writing to the Management Committee:

     

    (a)
      Notice that the Participant approves any or all of the components of the
      proposed Program and Budget; 

     

    (b)
      Modifications proposed by the Participant to the components of the proposed
      Program and Budget; or

     

    (c)
      Notice that the Participant rejects any or all of the components of the proposed
      Program and Budget.

     

    If
      a
      Participant fails to give any of the foregoing responses within the allotted
      time, the failure shall be deemed to be a vote by the Participant for adoption
      of the Manager’s proposed Program and Budget. If a Participant makes a timely
      submission to the Management Committee pursuant to Subsections
      9.4(a),
      (b)
      or
(c),
      then
      the Manager working with the other Participant shall seek for a period of time
      not to exceed 20 days to develop a complete Program and Budget acceptable
      to both Participants. The Manager shall then call a Management Committee meeting
      in accordance with Section
      7.3
      for
      purposes of reviewing and voting upon the proposed Program and Budget. The
      Manager may propose amendments (“Amendments”) to any currently approved Program
      and Budget from time to time prior to incurring costs under such Amendment.
      In
      such event, the Participants shall have 15 days after the proposal of an
      Amendment in which to submit to the Management Committee one of the responses
      set forth in Subsections 9.4(a),
      (b)
      or
(c)
      above
      (substituting “Amendment” for “Program and Budget” in each case). If a
      Participant fails to give any of the foregoing responses within the allotted
      time, the failure shall be deemed to be an approval by that Participant of
      the
      Manager’s proposed Amendment. If a Participant makes a timely submission to the
      Management Committee proposing modifications to or rejecting the proposed
      Amendment, then the Management Committee shall seek to develop an Amendment
      reasonably acceptable to both Participants. If the Participants have failed
      to
      agree on an Amendment within 20 days after its proposal by the Manager, the
      Amendment as approved by the Participant with the majority Participating
      Interest or the Manager (if the Participating Interests are then 50/50) shall
      be
      deemed approved by both Participants and the Management Committee, except to
      the
      extent that (i) the Participants’ Participating Interests are 50/50 and
      (ii) any Amendment includes any of the items set forth in Section 7.2(b),
      those
      items shall require the unanimous approval of the Management
      Committee.

     

    9.5
      Election to Participate.
      

     

    (a)
      Subject to the provisions of Subsection 9.5(c),
      by
      notice to the Management Committee within 20 days after the final vote
      adopting a Program and Budget, and notwithstanding its vote concerning adoption
      of a Program and Budget, to the extent a Program and Budget anticipates
      requiring additional contributions to the capital of the Business (each an
      “Additional
      Contribution”),
      a
      Participant may elect to participate in the Additional Contribution: (i) in
      proportion to its respective Participating Interest, (ii) in some lesser
      amount than its respective Participating Interest, or (iii) not at all. In
      case of an election under Subsection 9.5(a)(ii)
      or (iii),
      its
      Participating Interest shall be recalculated as provided in Subsection 9.5(b)
      below,
      with dilution effective as of the first day of the Program Period for the
      adopted Program and Budget. If a Participant fails to so notify the Management
      Committee of the extent to which it elects to participate, the Participant
      shall
      be deemed to have elected to participate in such Additional Contribution in
      proportion to its respective Participating Interest as of the beginning of
      the
      Program Period.

     

    
      
         

      

      
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    (b)
      If a
      Participant elects to participate in an Additional Contribution in some lesser
      amount than in proportion to its respective Participating Interest, or not
      at
      all, and the other Participant elects to fund all or any portion of the
      deficiency, the Participating Interest of the Reduced Participant shall be
      provisionally recalculated based on a reduction of one percent per full
      $250,000 increment not contributed. If, for example, the Manager proposed a
      Program and Budget calling for an Additional Contribution by the Reduced
      Participant of $2,200,000, and the Reduced Participant (whose then current
      Participating Interest was 50 percent) elected not to participate at all, the
      Reduced Participant’s Participating Interest would automatically decrease by
      eight percentage points (to 42 percent). If the Manager proposed a Program
      and Budget calling for expenditures by the Reduced Participant of $3,800,000,
      and the Reduced Participant (whose then current Participating Interest was
      40
      percent) elected to participate at a level equivalent to one-half of its then
      current Participating Interest, the Reduced Participant’s Participating Interest
      would automatically decrease by seven percentage points (to 33 percent).
      Subject to the provisions of Subsection 9.5(e),
      the
      Participating Interest of the other Participant shall be increased by the amount
      of the reduction in the Participating Interest of the Reduced Participant,
      and
      if the other Participant elects not to fund the entire deficiency, the Manager
      shall adjust the Program and Budget to reflect the funds available.

     

    (c)
      In
      preparing a Program and Budget and submitting it to the Management Committee,
      the Manager shall be deemed to have committed to fully funding its share of
      any
      Additional Contribution in respect of that Program and Budget and shall not
      be
      entitled to elect to participate in that Additional Contribution to a lesser
      extent or not at all unless and to the extent that (i) the Management
      Committee unanimously agrees to the contrary; or (ii) as a result of the
      election by the other Participant not to fund at the full level of its
      applicable Additional Contribution, the Program and Budget is withdrawn and
      resubmitted at a lower overall level of funding as provided in Section 9.4.

     

    (d)
      Whenever the Participating Interests are recalculated pursuant to this
Section
      9.5,
      (i) the Equity Accounts of both Participants shall be revised to bear the
      same ratio to each other as their recalculated Participating Interests; and
      (ii) the portion of Capital Account attributable to the reduced
      Participating Interest of the Reduced Participant shall be transferred to the
      other Participant.

     

    (e)
      In
      the event that there is more than one Reduced Participant with respect to any
      particular Program and Budget, then the amount, if any, of the recalculation
      of
      Participating Interests shall be adjusted appropriately to take into account
      the
      respective levels of reduction in the Additional Contributions of each.

     

    
      
         

      

      
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    9.6
      Recalculation or Restoration of Reduced Interest Based on Actual
      Expenditures.
      

     

    (a)
      If a Participant makes an election under Subsection 9.5(a)(ii)
      or (iii),
      then
      within 30 days after the conclusion of such Program and Budget, the Manager
      shall report the total amount of money expended plus the total obligations
      incurred by the Manager for such Budget that were or are to be borne by
      Additional Contributions.

     

    (b)
      If
      the Manager expended or incurred obligations from or attributable to Additional
      Contributions that were more or less than those called for in the adopted
      Budget, the Participating Interests shall be recalculated pursuant to
Subsection 9.5(b)
      by
      substituting each Participant’s actual Additional Contribution to the adopted
      Budget for that Participant’s estimated Additional Contribution at the time of
      the Reduced Participant’s election under Subsection 9.5(a).

     

    (c)
      If
      the Manager expended or incurred obligations in respect of Additional
      Contributions of less than 90 percent of the adopted Budget, within
      20 days after receiving the Manager’s report on expenditures, the Reduced
      Participant may notify the other Participant of its election to reimburse the
      other Participant for the difference between any amount contributed by the
      Reduced Participant in respect of the estimated Additional Contribution and
      the
      Reduced Participant’s proportionate share (at the Reduced Participant’s former
      Participating Interest) of the actual amount of Additional Contributions
      expended or incurred for the Program, plus interest on the difference accruing
      at the rate described in Section
      10.3
      plus
      two percentage points. The Reduced Participant shall deliver the
      appropriate amount (including interest) to the other Participant with such
      notice. Failure of the Reduced Participant to so notify and tender such amount
      shall result in dilution occurring in accordance with this Article
      IX
      and
      shall bar the Reduced Participant from exercising its rights under this
Subsection
      9.6(c)
      concerning the relevant adopted Program and Budget.

     

    (d)
      All
      recalculations under this Article
      IX
      shall be
      effective as of the first day of the Program Period for the Program and Budget
      in question. The Manager, on behalf of both Participants, shall make such
      reimbursements, reallocations of Products, contributions and other adjustments
      as are necessary so that, to the extent possible, each Participant will be
      placed in the position it would have been in had its Participating Interests
      as
      recalculated under this Section
      9.6
      been in
      effect throughout the Program Period for such Program and Budget. If the
      Participants are required to make contributions, reimbursements or other
      adjustments pursuant to this Section, the Manager shall have the right to
      purchase or sell a Participant’s share of Products in the same manner as under
Section 11.2
      and to
      apply the proceeds of such sale to satisfy that Participant’s obligation to make
      such contributions, reimbursements or adjustments.

     

    
      
         

      

      
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    (e)
      Whenever the Participating Interests are recalculated pursuant to this
Section 9.6,
      (i) the Participants’ Equity Accounts shall be revised to bear the same
      ratio to each other as their Recalculated Participating Interests; and
      (ii) the portion of Capital Account attributable to the reduced
      Participating Interest of the Reduced Participant shall be transferred to the
      other Participant. 

     

    9.7
      Expansion or Modification Programs and Budgets.
      Any
      Program and Budget proposed by the Manager involving Expansion or Modification
      shall be based on a Feasibility Study prepared by the Manager, Feasibility
      Contractors, or both, or prepared by the Manager and audited by Feasibility
      Contractors, as the Management Committee determines. The Program and Budget
      which includes Expansion or Modification shall be submitted for review and
      approval by the Management Committee within 60 days following receipt by
      the Manager of such Feasibility Study. During the period encompassed by any
      Program and Budget, and at least 60 days prior to its expiration, a Program
      and Budget for the succeeding period shall be prepared by the Manager and
      presented to the other Participant for review and comment.

     

    9.8
      Budget Overruns; Program Changes.
      The
      Manager shall promptly notify the other Participant of any material departure
      from a Program and Budget. If the Manager exceeds the Budget by more than
      ten percent in the aggregate, then the Manager shall propose an Amendment
      to the Program and Budget to account for the total of the anticipated overrun.
      Such Amendment shall be considered and approved by the Participants pursuant
      to
      the provisions of Section 9.4
      pertaining to Amendments. Budget overruns of ten percent or less in the
      aggregate shall, if and to the extent Additional Contributions are required,
      be
      borne by the Participants in proportion to their respective Participating
      Interests, without the requirement of approval of an Amendment.

     

    9.9
      Emergency or Unexpected Expenditures.
      In case
      of emergency, the Manager may take any reasonable action it deems necessary
      to
      protect life or property, to protect the Assets or to comply with Laws. The
      Manager may make reasonable expenditures on behalf of the Participants for
      unexpected events that are beyond its reasonable control and that do not result
      from a breach by it of its standard of care. The Manager shall promptly notify
      the other Participant of the emergency or unexpected expenditure, and to the
      extent the Business does not possess funds sufficient to bear such expenditures,
      the Manager shall be reimbursed for all resulting costs by the Participants
      in
      proportion to their respective Participating Interests.

     

    9.10
      Project Financing.
      If the
      Management Committee decides to seek Project Financing for operations at the
      Mine, each Participant shall, at its own cost, cooperate in seeking to obtain
      Project Financing for the Mine; provided, however, that all fees, charges and
      costs (including attorneys and technical consultants fees and arrangement fees)
      paid to the Project Financing lenders shall be borne by the Participants in
      proportion to their Participating Interests, unless such fees are capitalized
      as
      a part of the Project Financing.

     

    
      
         

      

      
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    ARTICLE
      X

    ACCOUNTS
      AND SETTLEMENTS

     

    10.1 Monthly
      Statements.
      After
      completion of EKT’s Initial Contribution, the Manager shall promptly submit to
      the Management Committee monthly statements of account reflecting in reasonable
      detail the charges and credits to the Business Account during the preceding
      month.

     

    10.2
      Cash Calls.
      On the
      basis of each adopted Program and Budget and the related Additional
      Contributions to be made by each Participant in accordance with Section 9.5,
      the
      Manager shall submit prior to the first day of each month a billing for
      estimated cash requirements in respect of the Additional Contributions for
      the
      next month. Within 15 days after receipt of each billing, or a billing made
      pursuant to Sections 9.8,
      9.9
      or
12.4,
      each
      Participant shall advance its share of such cash requirements. The Manager
      shall
      record all funds received in the Business Account. After completion of EKT’s
      Initial Contribution, the Manager shall at all times maintain a cash balance
      approximately equal to the rate of disbursement for 30 days. At the point
      at which the distributions of Net Cash Flow are being made in accordance with
      Subsection 11.1(c),
      the
      Manager shall at all times maintain a cash balance approximately equal to the
      rate of disbursement for up to 60 days. All funds in excess of immediate
      cash requirements shall be invested by the Manager for the benefit of the
      Business in cash management accounts and investments selected at the discretion
      of the Manager, which accounts may include, but are not limited to, money market
      investments and money market funds.

     

    10.3
      Failure to Meet Cash Calls.
      A
      Participant that fails to meet cash calls in the amount and at the times
      specified in Section 10.2
      shall be
      in default, and the amounts of the defaulted cash call shall bear interest
      from
      the date due at an annual rate equal to two percentage points over the
      Prime Rate, but in no event shall the rate of interest exceed the maximum
      permitted by Law. Such interest shall accrue to the benefit of and be payable
      to
      the non-defaulting Participant, but shall not be deemed as amounts contributed
      by the non-defaulting Participant in the event dilution occurs in accordance
      with Article VI.
      In
      addition to any other rights and remedies available to it by Law, the non
      defaulting Participant shall have those other rights, remedies, and elections
      specified in Sections 10.4
      and
10.5.
      

     

    10.4
      Cover Payment.
      If a
      Participant defaults in making a contribution or cash call in respect of an
      Additional Contribution required by an adopted Program and Budget in accordance
      with Section 9.5,
      the
      non-defaulting Participant may, but shall not be obligated to, advance some
      portion or all of the amount in default on behalf of the defaulting Participant
      (a “Cover
      Payment”).
      Each
      and every Cover Payment shall constitute a demand loan bearing interest from
      the
      date of the advance at the rate provided in Section 10.3.
      If more
      than one Cover Payment is made, the Cover Payments shall be aggregated and
      the
      rights and remedies described herein pertaining to an individual Cover Payment
      shall apply to the aggregated Cover Payments. The failure to repay such loan
      upon demand shall be a default.

     

    
      
         

      

      
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    10.5
      Remedies.
      The
      Participants acknowledge that if either Participant defaults in making a
      reimbursement payment required under Section 9.1
      or a
      cash call, or in repaying a loan, as required under Sections 10.2,
      10.3
      or
10.4,
      whether
      or not a Cover Payment is made, it will be difficult to measure the damages
      resulting from such default (it being hereby understood and agreed that the
      Participants have attempted to determine such damages in advance and determined
      that the calculation of such damages cannot be ascertained with reasonable
      certainty). Both Participants acknowledge and recognize that the damage to
      the
      non-defaulting Participant could be significant. In the event of such default,
      as reasonable liquidated damages, the non-defaulting Participant may, with
      respect to any such default not cured within 30 days after notice to the
      defaulting Participant of such default, elect any of the following remedies
      by
      giving notice to the defaulting Participant. Such election may be made with
      respect to each failure to meet a cash call relating to a Program and Budget,
      regardless of the frequency of such cash calls, provided such cash calls are
      made in accordance with Section 10.2.

     

    (a)
      The defaulting Participant grants to the non-defaulting Participant
      a
      power of sale as to all or any portion of the defaulting Participant’s interest
      in any Assets or in its Participating Interest that is subject to the lien
      and
      security interest granted in Section 6.6
      (whether
      or not such lien and security interest has been perfected), upon a default
      under
Sections 10.3
      or
10.4
      for
      the
      purpose of generating funds sufficient to cover the amount of the deficiency
      and
      related costs and expenses (including reasonable attorneys’ fees). Such power
      shall be exercised in the manner provided by applicable Law or otherwise in
      a
      commercially reasonable manner and upon reasonable notice. If the non-defaulting
      Participant elects to enforce the lien or security interest pursuant to the
      terms of this Subsection, the defaulting Participant shall be deemed to have
      waived any available right of redemption, any required valuation or appraisal
      of
      the secured property prior to sale, any available right to stay execution or
      to
      require a marshaling of assets, and any required bond in the event a receiver
      is
      appointed, and the defaulting Participant shall be liable for any
      deficiency.

     

    (b)
      The
      non-defaulting Participant may elect to have the defaulting Participant’s
      Participating Interest diluted or eliminated as follows:

     

    (i)
      For a
      default pertaining to a Program and Budget covering Operations other than
      Development or Mining, the non-defaulting Participant may elect to have the
      defaulting Participant’s Participating Interest diluted or eliminated at a rate
      equal to two times the rate set forth in Subsection 9.5(b).
      The
      Participating Interest of the other Participant shall be increased by the amount
      of the reduction in the Participating Interest of the Reduced
      Participant.

     

    (ii)
      For
      a default relating to a Program and Budget covering in whole or in part
      Development or Mining, the non-defaulting Participant may elect to have the
      defaulting Participant’s Participating Interest diluted or eliminated at three
      times the rate set forth in Subsection 9.5(b).
      The
      Participating Interest of the other Participant shall be increased by the amount
      of the reduction in the Participating Interest of the defaulting Participant.
      

     

    
      
         

      

      
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    (iii)
      Dilution under this Subsection 10.5(b)
      shall be
      effective as of the date of the original default, and Section 9.6
      shall
      not apply. The amount of any Cover Payment under Section 10.4
      and
      interest thereon, or any interest accrued in accordance with Section 10.3,
      shall
      be deemed to be amounts contributed by the non-defaulting Participant, and
      not
      as amounts contributed by the defaulting Participant.

     

    (iv)
      Whenever the Participating Interests are recalculated pursuant to this
Subsection 10.5(b),
      (A) the
      Equity Accounts of both Participants shall be adjusted to bear the same ratio
      to
      each other as their recalculated Participating Interests; and (B) the portion
      of
      Capital Account attributable to the reduced Participating Interest of the
      Reduced Participant shall be transferred to the other Participant.

     

    (c)
      If a Participant has defaulted in meeting a cash call or repaying a
      loan,
      and if the non-defaulting Participant has made a Cover Payment, then, in
      addition to a reduction in the defaulting Participant’s Participating Interest
      effected pursuant to Subsection 10.5(b),
      the
      non-defaulting Participant shall have the right, if the indebtedness arising
      from a default or Cover Payment is not discharged within 60 days after the
      default and upon not less than 30 days advance notice to the defaulting
      Participant, to elect to purchase all the right, title, and interest, whenever
      acquired or arising, of the defaulting Participant in the Assets, including
      but
      not limited to its Participating Interest or interest in Net Proceeds, together
      with all proceeds from and accessions of the foregoing (collectively the
“Defaulting
      Participant’s Entire Interest”)
      at a
      purchase price equal to 50 percent of the fair market value thereof as
      determined by a qualified independent appraiser appointed by the non-defaulting
      Participant. If the defaulting Participant conveys notice of objection to the
      person so appointed within ten days after receiving notice thereof, then an
      independent and qualified appraiser shall be appointed by the joint action
      of
      the appraiser appointed by the non-defaulting Participant and a qualified
      independent appraiser appointed by the defaulting Participant; provided,
      however, that if the defaulting Participant fails to designate a qualified
      independent appraiser for such purpose within ten days after giving notice
      of such objection, then the person originally designated by the non-defaulting
      Participant shall serve as the appraiser; provided further, that if the
      appraisers appointed by each of the Participants fail to appoint a third
      qualified independent appraiser within five days after the appointment of
      the last of them, then an appraiser shall be appointed by a judge of a court
      of
      competent jurisdiction in the state in which the Assets are situated upon the
      application of either Participant. There shall be withheld from the purchase
      price payable, upon transfer of the Defaulting Participant’s Entire Interest,
      the amount of any Cover Payment under Section 10.4
      and
      unpaid interest thereon to the date of such transfer, or any unpaid interest
      accrued in accordance with Section 10.3
      to the
      date of such transfer. Upon payment of such purchase price, the defaulting
      Participant shall be deemed to have relinquished all of the Defaulting
      Participant’s Entire Interest to the non-defaulting Participant, but shall
      remain liable to the extent provided in Section 6.4.
      

     

    
      
         

      

      
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    10.6
      Audits. 

     

    (a)
      After
      completion of EKT’s Initial Contribution, within 90 days after the end of
      each calendar year, at the request of a Participant, an audit shall be completed
      by certified public accountants selected by, and independent of, the Manager.
      The audit shall be conducted in accordance with generally accepted auditing
      standards and shall cover all books and records maintained by the Manager
      pursuant to this Agreement, all Assets and Encumbrances, and all transactions
      and Operations conducted during such calendar year, including production and
      inventory records and all costs for which the Manager sought reimbursement
      under
      this Agreement, together with all other matters customarily included in such
      audits. All written exceptions to and claims upon the Manager for discrepancies
      disclosed by such audit shall be made not more than three months after
      receipt of the audit report, unless either Participant elects to conduct an
      independent audit pursuant to Subsection 10.6(b)
      which is
      ongoing at the end of such three-month period, in which case such exceptions
      and
      claims may be made within the period provided in Subsection 10.6(b).
      Failure
      to make any such exception or claim within such period shall mean the audit
      is
      deemed to be correct and binding upon the Participants. The cost of all audits
      under this Subsection shall be charged to the Business Account. 

     

    (b)
      Notwithstanding the annual audit conducted by certified public accountants
      selected by the Manager, each Participant shall have the right to have an
      independent audit of all Business books, records and accounts, including all
      charges to the Business Account. This audit shall review all issues raised
      by
      the requesting Participant, with all costs borne by the requesting Participant.
      The requesting Participant shall give the other Participant 30 days prior
      notice of such audit. Any audit conducted on behalf of either Participant shall
      be made during the Manager’s normal business hours and shall not unreasonably
      interfere with Operations. Absent fraud or manifest error, neither Participant
      shall have the right to audit records and accounts of the Business relating
      to
      transactions or Operations more than 24 months after the calendar year
      during which such transactions, or transactions related to such Operations,
      were
      charged to the Business Account. All written exceptions to and claims upon
      the
      Manager for discrepancies disclosed by such audit shall be made not more than
      three months after completion and delivery of such audit, or they shall be
      deemed waived. 

      

    ARTICLE
      XI

    DISPOSITION
      OF PRODUCTION

     

    11.1 Net
      Cash Flow.
      Notwithstanding
      any of the terms and conditions of this Agreement to the contrary, during the
      term of this Agreement the Manager will keep track of Net Cash Flow from
      Operations from and after the Effective Date. Beginning with the first partial
      calendar quarter after the Effective Date, and for each full calendar quarter
      thereafter, the Manager will calculate Net Cash Flow (in accordance with the
      provisions of Exhibit H)
      for the
      quarter in question (and operating losses from previous periods will be carried
      forward). If there is positive cash flow, then the positive cash flow will
      be
      distributed to each of EKT and MTM as follows: 

     

    
      
         

      

      
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    (a)
      If EKT has made its Initial Contribution pursuant to the provisions
      of
Subsection 5.2(c),
      then
      interest on the amount of the Funding Requirement actually contributed by EKT,
      accruing beginning on the date that each portion of the Funding Requirement
      was
      actually contributed by EKT, calculated monthly, compounded, at a rate of 12
      percent per annum, shall be paid to EKT out of such cash flow, and MTM and
      EKT
      shall be entitled to the remainder of such cash flow in accordance with their
      then current Participating Interests.

     

    (b)
      If
      EKT has made its full Initial Contribution ($13,000,000), then interest on
      that
      amount, accruing beginning on the date that each portion of the Funding
      Requirement was actually contributed by EKT, calculated monthly, compounded,
      at
      a rate of 12 percent per annum, shall be paid to EKT out of such cash flow,
      EKT shall be entitled to a share of the remainder of such cash flow equal to
      15 percent in excess of the proportionate share of such cash flow to which
      it would otherwise be entitled by virtue of its Participating Interest, and
      MTM
      shall be entitled to the remainder of such cash flow, such arrangement to
      continue until EKT has fully recovered the amount of the Funding Requirement
      plus the accrued interest (the “EKT
      Share”);

     

    (c)
      After
      EKT has recovered the EKT Share, then until MTM has recovered, in addition
      to
      the amount it receives pursuant to Subsection 11.1(b),
      an
      additional amount equal to the aggregate amount of the EKT Share under
Subsection 11.1(b)
      (the
“MTM
      Share”),
      MTM
      shall be entitled to a share of such cash flow equal to 10 percent in
      excess of the proportionate share of such cash flow to which it would otherwise
      be entitled by virtue of its Participating Interest, and EKT shall be entitled
      to the remainder of such cash flow; and

     

    (d)
      After
      MTM has recovered the MTM Share, each Participant shall be entitled to a share
      of such cash flow in accordance with its Participating Interest.

     

    During
      periods when there is no positive cash flow, there will be no distributions,
      and
      the Manager shall be entitled to sell Products on behalf of the Participants
      and
      use the proceeds from such sales for the ongoing operation of the Business.
      All
      distributions of positive cash flow shall be made by the Manager to the
      Participants within 30 days after the end of each calendar quarter in which
      there is positive cash flow.

     

    11.2
      Right to Net Cash Flow.
      A
      Participant’s right to receive its proportionate share of Net Cash Flow is
      expressly conditioned upon such Participant’s performance of its obligations
      under this Agreement, including the making of its share of Additional
      Contributions. If a Participant fails to contribute to an approved Program
      and
      Budget that provides for Additional Contributions for operating costs as and
      when required, then, in addition to the other remedies available under
Article X,
      the
      Manager may apply that Participant’s share of Net Cash Flow to pay that
      Participant’s share of such Additional Contributions. Any balance remaining from
      the noncontributing Participant’s share of Net Cash Flow shall then be remitted
      to that Participant. In the event of such an application of Net Cash Flow by
      the
      Manager on behalf of a noncontributing Participant, that Participant’s
      Participating Interest shall not be reduced, unless and only to the extent
      that
      the noncontributing Participant’s share of Net Cash Flow is insufficient to pay
      that Participant’s share of the Additional Contributions.

     

    
      
         

      

      
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    11.3
      Hedging.
      Neither
      Participant shall have any obligation to account to the other Participant for,
      nor have any interest or right of participation in any profits or proceeds
      nor
      have any obligation to share in any losses from, futures contracts, forward
      sales, trading in puts, calls, options or any similar hedging, price protection
      or marketing mechanism employed by a Participant with respect to its
      proportionate share of any Products produced or to be produced from the
      Properties.

      

    ARTICLE
      XII

    WITHDRAWAL
      AND TERMINATION

     

    12.1
      Termination by Expiration or Agreement.
      This
      Agreement shall terminate as expressly provided in this Agreement, unless
      earlier terminated by written agreement of all Participants.

     

    12.2 Termination
      by Deadlock.
      If the
      Management Committee fails to adopt a Program and Budget for 180 days after
      the expiration of the latest adopted Program and Budget, either Participant
      may
      elect to terminate the Business by giving 30 days notice of termination to
      the other Participant.

     

    12.3 Withdrawal.
      A
      Participant may elect to withdraw from the Business by giving notice to the
      other Participant of the effective date of withdrawal, which shall be
      30 days after the date of the notice. Upon such withdrawal, the Business
      shall terminate, and the withdrawing Participant shall be deemed to have
      transferred to the remaining Participant all of its Participating Interest,
      including all of its interest in the Assets, without cost and free and clear
      of
      all Encumbrances arising by, through or under such withdrawing Participant,
      except those described in Paragraph 1.1
      of Exhibit A
      and
      those to which both Participants have agreed. The withdrawing Participant shall
      execute and deliver all instruments as may be necessary in the reasonable
      judgment of the other Participant to effect the transfer of its interests in
      the
      Assets to the other Participant. If within a 60-day period both Participants
      elect to withdraw, then the Business shall instead be deemed to have been
      terminated by the consent of the Participants pursuant to Section 12.1.

     

    12.4 Continuing
      Obligations and Environmental Liabilities.
      On
      termination of the Business under Sections 12.1,
      12.2
      or 12.3,
      each
      Participant shall remain liable for its respective share of liabilities to
      third
      persons (whether such arises before or after such withdrawal), including
      Environmental Liabilities and Continuing Obligations. The withdrawing
      Participant’s share of such liabilities shall be equal to (a) for MTM, its
      Participating Interest at the time such liability was incurred, after first
      taking into account any reduction, readjustment or restoration of its
      Participating Interest under Sections 6.3,
      9.5, 9.6
      and
10.5
      (or, as
      to liabilities arising prior to the Effective Date, its initial Participating
      Interest), or (b) for EKT, its share of such liability determined pursuant
      to Subsection 5.2(c)
      at the
      time such liability was incurred (or, as to liabilities arising prior to the
      Effective Date, its share of such liabilities as initially determined pursuant
      to Subsection
      5.2(c)).
      Should
      the cumulative cost of satisfying Continuing Obligations and Environmental
      Liabilities arising out of Operations conducted prior to such withdrawal be
      in
      excess of amounts contained in the Trust Account referred to and defined in
      the
      Collateral Trust Agreement, each of the Participants shall be liable for its
      proportionate share (for MTM, its Participating Interest at the time the act
      or
      omission giving rise to such liability occurred and for EKT, its share of such
      liability determined pursuant to Subsection 5.2(c)
      at the
      time the act or omission giving rise to such liability occurred) of the cost
      of
      satisfying such obligations, notwithstanding that either Participant has
      previously withdrawn from the Business.

     

    
      
         

      

      
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    12.5
      Disposition of Assets on Termination.
      Promptly after termination under Sections 12.1,
      12.2
      or
      12.3,
      the
      Manager shall take all action necessary to wind up the activities of the
      Business, in accordance with the provisions of Exhibit C.
      All
      costs and expenses incurred in connection with the termination of the Business
      shall be expenses chargeable to the Business Account. The
      Assets shall first be paid, applied or distributed in satisfaction of all
      liabilities of the Business to third parties and then to satisfy any debts,
      obligations or liabilities owed to the Participants. Before distributing any
      funds or Assets to Participants, the Manager shall have the right to segregate
      amounts which, in the Manager’s reasonable judgment, are necessary to discharge
      Continuing Obligations or to purchase for the account of Participants bonds
      or
      other securities for the performance of such obligations. The foregoing shall
      not be construed to include the repayment of any Participant’s capital
      contributions or Capital Account balance. Thereafter, any remaining cash and
      all
      other Assets shall be distributed (in undivided interests unless otherwise
      agreed) to the Participants, first in the ratio and to the extent of their
      respective Capital Accounts and then in proportion to their respective
      Participating Interests, subject to any dilution, reduction or termination
      of
      such Participating Interests as may have occurred pursuant to the terms of
      this
      Agreement. No Participant shall receive a distribution of any interest in
      Products or proceeds from the sale thereof if such Participant’s Participating
      Interest therein has been terminated pursuant to this Agreement.  

     

    12.6
      Non-Compete Covenants.
      Neither
      a Participant that withdraws pursuant to Section 12.3,
      or is
      deemed to have withdrawn pursuant to Sections 5.2,
      6.3,
      or
10.5,
      nor any
      Affiliate of such a Participant, shall directly or indirectly acquire any
      interest or right to explore or mine, or both, on any property any part of
      which
      is within the Area of Interest for 365 days after the effective date of
      withdrawal. If a withdrawing Participant, or the Affiliate of a withdrawing
      Participant, breaches this Section 12.5,
      such
      Participant shall be obligated to offer to convey to the non-withdrawing
      Participant, without cost, any such property or interest so acquired (or ensure
      its Affiliate offers to convey the property or interest to the non-withdrawing
      Participant, if the acquiring party is the withdrawing Participant’s Affiliate).
      Such offer shall be made in writing and can be accepted by the non-withdrawing
      Participant at any time within ten days after the offer is received by such
      non-withdrawing Participant. Failure of a Participant’s Affiliate to comply with
      this Section 12.6
      shall be
      a breach by such Participant of this Agreement.

     

    
      
         

      

      
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    12.7
      Right to Data After Termination.
      After
      termination of the Business pursuant to Section 12.1,
      12.2
      or
12.3,
      each
      Participant shall be entitled to make copies of all applicable information
      acquired hereunder before the effective date of termination not previously
      furnished to it, but a terminating or withdrawing Participant shall not be
      entitled to any such copies after any other termination or
      withdrawal.

     

    12.8
      Continuing Authority.
      On
      termination of the Business under Sections 12.1,
      12.2
      or
      12.3,
      or the
      deemed withdrawal of either Participant pursuant to Section 5.2,
      6.3
      or
10.5,
      the
      Participant which was the Manager prior to such termination or withdrawal (or
      the other Participant in the event of a withdrawal by the Manager) shall have
      the power and authority to do all things on behalf of both Participants which
      are reasonably necessary or convenient to: (a) wind up Operations and
      (b) complete any transaction and satisfy any obligation, unfinished or
      unsatisfied, at the time of such termination or withdrawal, if the transaction
      or obligation arises out of Operations prior to such termination or withdrawal.
      The Manager shall have the power and authority to grant or receive extensions
      of
      time or change the method of payment of an already existing liability or
      obligation, prosecute and defend actions on behalf of both Participants and
      the
      Business, encumber Assets, and take any other reasonable action in any matter
      with respect to which the former Participants continue to have, or appear or
      are
      alleged to have, a common interest or a common liability. 

      

    ARTICLE
      XIII

    ACQUISITIONS
      WITHIN AREA OF INTEREST

     

    13.1 General.
      Any
      interest or right to acquire any interest in real property or water rights
      related thereto within the Area of Interest either acquired or proposed to
      be
      acquired during the term of this Agreement by or on behalf of either Participant
      (the “Acquiring
      Participant”)
      or any
      Affiliate of such Participant shall be subject to the terms and provisions
      of
      this Agreement. EKT and MTM and their respective Affiliates for their separate
      account shall be free to acquire lands and interests in lands and to locate
      mining claims or millsites outside the Area of Interest. Failure of any
      Affiliate of either Participant to comply with this Article XIII
      shall be
      a breach by such Participant of this Agreement.

     

    13.2
      Notice to Non-Acquiring Participant.
      Within
      30 days after the acquisition of any interest or the right to acquire any
      interest in real property or water rights wholly or partially within the Area
      of
      Interest (except real property acquired by the Manager pursuant to a Program),
      the Acquiring Participant shall notify the other Participant of such acquisition
      by it or its Affiliate; provided further that if the acquisition of any interest
      or right to acquire any interest pertains to real property or water rights
      partially within the Area of Interest, then all such real property (i.e.,
      the
      part within the Area of Interest and the part outside the Area of Interest)
      shall be subject to this Article XIII.
      The
      Acquiring Participant’s notice shall describe in detail the acquisition, the
      acquiring party if that party is an Affiliate, the lands and minerals covered
      thereby, any water rights related thereto, the cost thereof, and the reasons
      why
      the Acquiring Participant believes that the acquisition of the interest is
      in
      the best interests of the Participants under this Agreement. In addition to
      such
      notice, the Acquiring Participant shall make any and all information concerning
      the relevant interest available for inspection by the other
      Participant.

     

    
      
         

      

      
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    13.3
      Option Exercised.
      Within
      30 days after receiving the Acquiring Participant’s notice, the other
      Participant may notify the Acquiring Participant of its election to accept
      a
      proportionate interest in the acquired interest equal to its Participating
      Interest. Promptly upon such notice, the Acquiring Participant shall convey
      or
      cause its Affiliate to convey to the Participants, in proportion to their
      respective Participating Interests, by appropriate conveyance with title held
      as
      described in Section 3.4,
      all of
      the Acquiring Participant’s (or its Affiliate’s) interest in such acquired
      interest, free and clear of all Encumbrances arising by, through or under the
      Acquiring Participant (or its Affiliate) other than those to which both
      Participants have agreed. The acquired interests shall become a part of the
      Properties for all purposes of this Agreement immediately upon such notice.
      The
      other Partici-pant shall promptly pay to the Acquiring Participant its
      propor-tionate share of the latter’s actual out-of-pocket acquisition
      costs.

     

    13.4
      Option Not Exercised.
      If the
      other Participant does not give such notice within the 30-day period set forth
      in Section 13.3,
      it
      shall have no interest in the acquired interests, and the acquired interests
      shall not be a part of the Assets or continue to be subject to this
      Agreement.

     

    ARTICLE
      XIV

    ABANDONMENT
      AND SURRENDER OF PROPERTIES

     

    Either
      Participant may request the Management Committee to authorize the Manager to
      surrender or abandon part or all of the Properties. If the Management Committee
      does not authorize such surrender or abandonment, or authorizes any such
      surrender or abandonment over the objection of either Participant, the
      Participant that desires to surrender or abandon shall assign to the objecting
      Participant, by appropriate conveyance and without cost to the objecting
      Participant, all of the abandoning Participant’s interest in the Properties
      sought to be abandoned or surrendered, free and clear of all Encumbrances
      created by, through or under the abandoning Participant other than those to
      which both Participants have agreed. Upon the assignment, such properties shall
      cease to be part of the Properties. The Participant that desires to abandon
      or
      surrender shall remain liable for its share (determined by its Participating
      Interest as of the date of such abandonment after first taking into account
      any
      reduction, readjustment or restoration of Participating Interests under
Sections 6.3,
      9.5, 9.6
      and
10.5)
      of any
      liability with respect to such Properties, including, without limitation,
      Continuing Obligations, Environmental Liabilities and Environmental Compliance,
      whether accruing before or after such abandonment, arising out of activities
      prior to the Effective Date and out of Operations conducted prior to the date
      of
      such abandonment, regardless of when any funds may be expended to satisfy such
      liability.

     

    
      
         

      

      
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    ARTICLE
      XV

    TRANSFER
      OF INTEREST; PREEMPTIVE RIGHT

     

    15.1
      General.
      A
      Participant shall have the right to Transfer to a third party an interest in
      its
      Participating Interest, including an interest in this Agreement or the Assets,
      solely as provided in this Article XV.

     

    15.2
      Limitations on Free Transferability.
      Any
      Transfer by either Participant under Section 15.1
      shall be
      subject to the following limitations:

     

    (a)
      Neither Participant shall Transfer any interest in this Agreement or
      the
      Assets (including, but not limited to, any royalty, profits, or other interest
      in the Products) except in conjunction with the Transfer of part or all of
      its
      Participating Interest; 

     

    (b)
      No
      transferee of all or any part of a Participant’s Participating Interest shall
      have the rights of a Participant unless and until the transferring Participant
      has provided to the other Participant notice of the Transfer, and, except as
      provided in Subsections 15.2(f)
      and
15.2(g),
      the
      transferee, as of the effective date of the Transfer, has committed in writing
      to assume and be bound by this Agreement to the same extent as the transferring
      Participant;

     

    (c)
      Neither Participant, without the consent of the other Participant, shall make
      a
      Transfer that shall violate any Law, or result in the cancellation of any
      permits, licenses, or other similar authorization;

     

    (d)
      No
      Transfer permitted by this Article XV
      shall
      relieve the transferring Participant of its share of any liability, whether
      accruing before or after such Transfer, which arises out of Operations conducted
      prior to such Transfer or exists on the Effective Date;

     

    (e)
      In
      the event of a Transfer of less than all of a Participating Interest, the
      transferring Participant and its transferee shall act and be treated as one
      Participant; provided however, that in order for such Transfer to be effective,
      the transferring Participant and its transferee must first:

     

    (i)
      agree, as between themselves, that one of them is authorized to act as the
      sole
      agent (“Agent”)
      on
      their behalf with respect to all matters pertaining to this Agreement and the
      Business; and

     

    (ii)
      notify the other Participant of the designation of the Agent, and in such notice
      warrant and represent to other Participant that:

     

    (A)
      the
      Agent has the sole authority to act on behalf of, and to bind, the transferring
      Participant and its transferee with respect to all matters pertaining to this
      Agreement and the Business;

     

    
      
         

      

      
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    (B)
      the
      other Participant may rely on all decisions of, notices and other communications
      from, and failures to respond by, the Agent, as if given (or not given) by
      the
      transferring Participant and its transferee; and

     

    (C)
      all
      decisions of, notices and other communications from, and failures to respond
      by,
      the other Participant to the Agent shall be deemed to have been given (or not
      given) to the transferring Participant and its transferee.

     

    The
      transferring Participant and its transferee may change the Agent (but such
      replacement must be one of them) by giving notice to the other Participant,
      which notice must conform to Subsection 15.2(e)(ii);

     

    (f)
      If
      the Transfer is the grant of an Encumbrance in a Participating Interest to
      secure a loan or other indebtedness of either Participant in a bona fide
      transaction, other than a transaction approved unanimously by the Management
      Committee or Project Financing approved by the Management Committee, such
      Encumbrance shall be granted only in connection with such Participant’s
      financing payment or performance of that Participant’s obligations under this
      Agreement and shall be subject to the terms of this Agreement and the rights
      and
      interests of the other Participant hereunder (including without limitation
      under
Section 6.7).
      Any
      such Encumbrance shall be further subject to the condition that the holder
      of
      such Encumbrance (the “Chargee”)
      first
      enter into a written agreement with the other Participant in form satisfactory
      to the other Participant, acting reasonably, binding upon the Chargee, to the
      effect that:

     

    (i)
      the
      Chargee shall not enter into possession or institute any proceedings for
      foreclosure or partition of the encumbering Participant’s Participating Interest
      and that such Encumbrance shall be subject to the provisions of this
      Agreement;

     

    (ii)
      the
      Chargee’s remedies under the Encumbrance shall be limited to the sale of the
      whole (but only of the whole) of the encumbering Participant’s Participating
      Interest to the other Participant, or, failing such a sale, at a public auction
      to be held at least 15 days after prior notice to the other Participant,
      such sale to be subject to the purchaser entering into a written agreement
      with
      the other Participant whereby such purchaser assumes all obligations of the
      encumbering Participant under the terms of this Agreement. The price of any
      preemptive sale to the other Participant shall be the remaining principal amount
      of the loan plus accrued interest and related expenses, and such preemptive
      sale
      shall occur within 60 days after the Chargee’s notice to the other
      Participant of its intent to sell the encumbering Participant’s Participating
      Interest. Failure of a sale to the other Participant to close by the end of
      such
      period, unless failure is caused by the encumbering Participant or by the
      Chargee, shall permit the Chargee to sell the encumbering Participant’s
      Participating Interest at a public sale; and

     

    (iii)
      the
      Encumbrance shall be subordinate to any then-existing debt, including Project
      Financing previously approved by the Management Committee, encumbering the
      transferring Participant’s Participating Interest; 

     

    
      
         

      

      
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    (g)
      If a
      sale or other commitment or disposition of Products or proceeds from the sale
      of
      Products by either Participant upon distribution to it pursuant to Article XI
      creates
      in a third party a security interest by Encumbrance in Products or proceeds
      therefrom prior to such distribution, such sales, commitment or disposition
      shall be subject to the terms and conditions of this Agreement including,
      without limitation, Section 6.5;

     

    (h)
      Any
      Transfer by EKT (other than a Transfer to an Affiliate) prior to the point
      at
      which it has completed its Initial Contribution shall be subject to MTM’s prior
      written consent, which such consent may be withheld by MTM in its sole
      discretion; provided, however, that in the event of such a Transfer to an
      Affiliate of EKT, EKT shall not be relieved of any of its obligations or
      liabilities under this Agreement; and

     

    (i)
      Only
      United States currency shall be used for Transfers for cash consideration or
      monetary equivalent.

     

    15.3
      Preemptive Right.
      From
      and after the Effective Date, any Transfer by either Participant under
Section 15.1
      and any
      Transfer by an Affiliate of Control of either Participant (other than to another
      Affiliate) shall be subject to a preemptive right of the other Participant
      to
      the extent provided in Exhibit G.
      Failure
      of a Participant’s Affiliate to comply with this Article XV
      and
Exhibit G
      shall be
      a breach by such Participant of this Agreement.

      

    ARTICLE
      XVI

    DISPUTES

     

    16.1
      Governing Law.
      Except
      for matters of title to the Properties or their Transfer, which shall be
      governed by the law of their situs, this Agreement shall be governed by and
      interpreted in accordance with the laws of the State of Colorado, without regard
      for any conflict of laws or choice of laws principles that would permit or
      require the application of the laws of any other jurisdiction.

     

    16.2
      Dispute Resolution.

     

    (a)If
      any dispute arises as to the interpretation of or the rights and
      obligations of the Participants under this Agreement, the Participants agree
      to
      use good faith efforts to resolve such a dispute within 30 days after
      either Participant gives notice to the other asserting the existence of such
      a
      dispute and specifically referring to this Subsection 16.2(a).

     

    (b)
      Any
      action arising from or in any way related to this Agreement or the Business
      shall be brought only in the state or federal courts in Denver County, Colorado
      and each Participant agrees that it shall not seek forum non conveniens
      dismissal of any actions so brought. This forum selection agreement applies
      no
      matter what the form of action, whether in  rem, in personam, or any other,
      and no matter what the theory of the action, whether in tort, contract, or
      any
      other, or whether based in common law or on any statute, rule, or regulation
      whether now existing or hereafter enacted.

     

    
      
         

      

      
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    (c)
      The
      prevailing party in any such action shall be entitled to recover its costs
      and
      expenses incurred in connection with such action, including without limitation
      reasonable attorneys’ fees.

      

    ARTICLE
      XVII

    CONFIDENTIALITY,
      OWNERSHIP, USE AND 

    DISCLOSURE
      OF INFORMATION

     

    17.1
      Business Information.
      All
      Business Information shall be owned jointly by the Participants as their
      Participating Interests are determined pursuant to this Agreement. Both before
      and after the termination of the Business, all Business Information may be
      used
      by either Participant for any purpose, whether or not competitive with the
      Business, without consulting with, or obligation to, the other Participant.
      Except as provided in Sections 17.3
      and
17.4,
      or with
      the prior written consent of the other Participant, each Participant shall
      keep
      confidential and not disclose to any third party or the public any portion
      of
      the Business Information that constitutes Confidential Information.

     

    17.2
      Participant Information.
      In
      performing its obligations under this Agreement, neither Participant shall
      be
      obligated to disclose any Participant Information. If a Participant elects
      to
      disclose Participant Information in performing its obligations under this
      Agreement, such Participant Information, together with all improvements,
      enhancements, refinements and incremental additions to such Participant
      Information that are developed, conceived, originated or obtained by either
      Participant in performing its obligations under this Agreement (“Enhancements”),
      shall
      be owned exclusively by the Participant that originally developed, conceived,
      originated or obtained such Participant Information. Each Participant may use
      and enjoy the benefits of such Participant Information and Enhancements in
      the
      conduct of the Business hereunder, but the Participant that did not originally
      develop, conceive, originate or obtain such Participant Information may not
      use
      such Participant Information and Enhancements for any other purpose. Except
      as
      provided in Section 17.4,
      or with
      the prior written consent of the other Participant, which consent may be
      withheld in such Participant’s sole discretion, each Participant shall keep
      confidential and not disclose to any third party or the public any portion
      of
      Participant Information and Enhancements owned by the other Participant that
      constitutes Confidential Information.

     

    17.3
      Permitted Disclosure of Confidential Business Information.
      Either
      Participant may disclose Business Information that is Confidential Information:
      (a) to a Participant’s officers, directors, partners, members, managers,
      employees, Affiliates, shareholders, agents, attorneys, accountants,
      consultants, contractors, subcontractors or advisors, for the sole purpose
      of
      such Participant’s performance of its obligations under this Agreement;
      (b) to any party to whom the disclosing Participant contemplates a Transfer
      of all or any part of its Participating Interest, for the sole purpose of
      evaluating the proposed Transfer; or (c) to any actual or potential lender,
      underwriter or investor for the sole purpose of evaluating whether to make
      a
      loan to or investment in the disclosing Participant.

     

    
      
         

      

      
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    The
      Participant disclosing Confidential Information pursuant to this Section 17.3,
      shall
      disclose such Confidential Information to only those parties who have a bona
      fide need to have access to such Confidential Information for the purpose for
      which disclosure to such parties is permitted under this Section 17.3
      and who
      have agreed in writing supplied to, and enforceable by, the other Participant
      to
      protect the Confidential Information from further disclosure, to use such
      Confidential Information solely for such purpose and to otherwise be bound
      by
      the provisions of this Article XVII.
      Such
      writing shall not preclude parties described in Subsection 17.3(b)
      from
      discussing and completing a Transfer with the other Participant. The Participant
      disclosing Confidential Information shall be responsible and liable for any
      use
      or disclosure of the Confidential Information by such parties in violation
      of
      this Agreement and such other writing. 

     

    17.4
      Disclosure Required By Law.
      Notwithstanding anything contained in this Article XVII,
      a
      Participant may disclose any Confidential Information if, in the reasonable
      opinion of the disclosing Participant’s legal counsel: (a) such disclosure
      is legally required to be made in a judicial, administrative or governmental
      proceeding pursuant to a valid subpoena or other applicable order; or
      (b) such disclosure is legally required to be made pursuant to the rules or
      regulations of a stock exchange or similar trading market applicable to the
      disclosing Participant or its Affiliates. Prior to any disclosure of
      Confidential Information under this Section 17.4,
      the
      disclosing Participant shall give the other Participant at least five days
      prior written notice (unless less time is permitted by such rules, regulations
      or proceeding) and, in making such disclosure, the disclosing Participant shall
      disclose only that portion of Confidential Information required to be disclosed
      and shall take all reasonable steps to preserve the confidentiality thereof,
      including, without limitation, obtaining protective orders and supporting the
      other Participant in intervention in any such proceeding.

     

    17.5
      Public Announcements.
      Prior
      to making or issuing any press release or other public announcement or
      disclosure of Business Information that is not Confidential Information, a
      Participant (or its Affiliate) shall first consult with the other Participant
      as
      to the content and timing of such announcement or disclosure, unless in the
      good
      faith judgment of such Participant, there is not sufficient time to consult
      with
      the other Participant before such announcement or disclosure must be made under
      applicable Laws; but in such event, the disclosing Participant shall notify
      the
      other Participant, as soon as possible, of the pendency of such announcement or
      disclosure, and it shall notify the other Participant before such announcement
      or disclosure is made if at all reasonably possible. Any press release or other
      public announcement or disclosure to be issued by either Participant relating
      to
      this Business shall also identify the other Participant.

      

    ARTICLE
      XVIII

    GENERAL
      PROVISIONS

     

    18.1
      Notices.
      All
      notices, payments and other required or permitted communications (“Notices”)
      to
      either Participant shall be in writing, and shall be addressed respectively
      as
      follows:

     

    
      
         

      

      
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      	 	If to EKT:	
              Elkhorn Tunnels, LLC

              320 West Main Street

              Aspen, Colorado 81611

              Attention: Managing
                Director

              Telephone: (970)
                920-6944

              Facsimile: (970)
                544-9155

            
	 	 	 
	 	With a copy to:	
              Mark E. Mendel, Esq.

              Mendel Blumenfeld, LLP

              5809 Acacia Circle

              El Paso, Texas 79912

              Telephone: (915)
                587-7878

              Facsimile: (915)
                587-8808

            
	 	 	 
	 	If to MTM:	
              Montana Tunnels Mining, Inc.

              5655 South Yosemite Street,
                Suite 200

              Greenwood Village, Colorado 80111

              Attention: R. David
                Russell

              Telephone: (720) 886-9656

              Facsimile: (720) 482-0957

            
	 	 	 
	 	With a copy to:	
              Deborah
                Friedman

              Davis Graham & Stubbs LLP

              1550 17th Street, Suite 500

              Denver, Colorado 80202

              Telephone: (303) 892-9400

              Facsimile: (303) 893-1379

            

    

     

    All
      Notices shall be given (a) by personal delivery to the Participant,
      (b) by electronic communication, capable of producing a printed
      transmission, (c) by registered or certified mail return receipt requested;
      or (d) by overnight or other express courier service. All Notices shall be
      effective and shall be deemed given on the date of receipt at the principal
      address if received during normal business hours, and, if not received during
      normal business hours, on the next business day following receipt, or if by
      electronic communication, on the date of such communication. Either Participant
      may change its address by Notice to the other Participant.

     

    18.2
      Interpretation.
      The
      singular shall include the plural, and the plural the singular wherever the
      context so requires, and the masculine, the feminine, and the neuter genders
      shall be mutually inclusive. The term “including” shall mean including without
      limitation.

     

    18.3
      Currency.
      All
      references to “dollars”
or
      “$”
herein
      shall mean lawful currency of the United States of America. 

     

    
      
         

      

      
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    18.4
      Headings.
      The
      subject headings of the Sections and Subsections of this Agreement and the
      Paragraphs and Subparagraphs of the Exhibits to this Agreement are included
      for
      purposes of convenience only, and shall not affect the construction or
      interpretation of any of its provisions. 

     

    18.5
      Waiver.
      The
      failure of either Participant to insist on the strict performance of any
      provision of this Agreement or to exercise any right, power or remedy upon
      a
      breach hereof shall not constitute a waiver of any provision of this Agreement
      or limit such Participant’s right thereafter to enforce any provision or
      exercise any right.

     

    18.6
      Modification.
      No
      modification of this Agreement shall be valid unless made in writing and duly
      executed by both Participants.

     

    18.7
      Force Majeure.
      Except
      for the obligation to make payments and make cash calls when due hereunder,
      the
      obligations of a Participant shall be suspended to the extent and for the period
      that performance is prevented by any cause, whether foreseeable or
      unforeseeable, beyond its reasonable control, including, without limitation,
      labor disputes (however arising and whether or not employee demands are
      reasonable or within the power of the Participant to grant); acts of God; Laws,
      instructions or requests of any government or governmental entity; judgments
      or
      orders of any court; inability to obtain on reasonably acceptable terms any
      public or private license, permit or other authorization; curtailment or
      suspension of activities to remedy or avoid an actual or alleged, present or
      prospective violation of Environmental Laws; action or inaction by any federal,
      state or local agency that delays or prevents the issuance or granting of any
      approval or authorization required to conduct Operations beyond the reasonable
      expectations of the Participant seeking the approval or authorization (including
      a failure to complete any review and analysis required by the National
      Environmental Policy Act or any similar state law within 18 months after
      initiation of that process); acts of war or conditions arising out of or
      attributable to war, whether declared or undeclared; riot, civil strife,
      insurrection or rebellion; fire, explosion, earthquake, storm, flood, sink
      holes, drought or other adverse weather condition; delay or failure by suppliers
      or transporters of materials, parts, supplies, services or equipment or by
      contractors’ or subcontractors’ shortage of, or inability to obtain, labor,
      transportation, materials, machinery, equipment, supplies, utilities or
      services; accidents; breakdown of equipment, machinery or facilities; actions
      by
      native rights groups, environmental groups, or other similar special interest
      groups; or any other cause whether similar or dissimilar to the foregoing.
      The
      affected Participant shall promptly give notice to the other Participant of
      the
      suspension of performance, stating therein the nature of the suspension, the
      reasons therefor, and the expected duration thereof. The affected Participant
      shall resume performance as soon as reasonably possible. 

     

    18.8
      Rule Against Perpetuities.
      The
      Participants do not intend that there shall be any violation of the Rule Against
      Perpetuities, the Rule Against Unreasonable Restraints on the Alienation of
      Property, or any similar rule. Accordingly, if any right or option to acquire
      any interest in the Properties, in a Participating Interest, in the Assets,
      or
      in any real property exists under this Agreement, such right or option must
      be
      exercised, if at all, so as to vest such interest within time periods permitted
      by applicable rules. If, however, any such violation should inadvertently occur,
      the Participants hereby agree that a court shall reform that provision in such
      a
      way as to approximate most closely the intent of the Participants within the
      limits permissible under such rules. 

     

    
      
         

      

      
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    18.9
      Further Assurances.
      Each of
      the Participants shall take, from time to time and without additional
      consideration, such further actions and execute such additional instruments
      as
      may be reasonably necessary or convenient to implement and carry out the intent
      and purpose of this Agreement or as may be reasonably required by lenders in
      connection with Project Financing.

     

    18.10
      Entire Agreement; Successors and Assigns.
      This
      Agreement contains the entire understanding of the Participants and supersedes
      all prior agreements and understandings between the Participants relating to
      the
      subject matter hereof. This Agreement shall be binding upon and inure to the
      benefit of the respective successors and permitted assigns of the Participants.
      Any third party who acquires any interest in this Agreement or the Properties
      shall agree in writing to be bound by all of the terms and conditions of this
      Agreement. In the event of any conflict between this Agreement and any Exhibit
      or Schedule attached hereto, the terms of this Agreement shall be
      controlling.

     

    18.11
      Memorandum.
      At the
      request of either Participant, a Memorandum or short form of this Agreement,
      and
      financing statement(s) or other documents evidencing the security interest
      granted by each Participant to the other pursuant to Section 6.6,
      shall
      be prepared by the Manager, executed and acknowledged by both Participants,
      and
      delivered to the Manager for registration or recording and filing in those
      appropriate governmental offices as may be necessary to provide constructive
      notice of this Agreement and the rights and obligations of the Participants
      hereunder. The Manager shall register, record and file all such documents in
      the
      proper governmental offices. Unless both Participants agree, this Agreement
      shall not be recorded.

     

    18.12
      Counterparts.
      This
      Agreement may be executed in any number of counterparts, and it shall not be
      necessary that the signatures of both Participants be contained on any
      counterpart. Each counterpart shall be deemed an original, but all counterparts
      together shall constitute one and the same instrument. 

     

    
      
         

      

      
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    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      Effective Date.

    

      	 	 	Montana
              Tunnels
              Mining, Inc.
	 	 
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
              R. David Russell
	 	Title: President
	 	 
	 	Elkhorn Tunnels, LLC

    

    
      

        	 	 	 
	 	By:  	 
	 	
                
Name:
                Patrick Imeson
	 	Title: Managing
                Director
	 	 
	 	 

      

       

      
        
           

        

        
          -46-Unassociated Document

    EXHIBIT
      10.2

     

    OPTION
      AGREEMENT

     

    THIS
      OPTION AGREEMENT is made and entered into effective as of July 28, 2006 by
      and between Elkhorn Goldfields, Inc., a Montana corporation, whose address
      is
      320 West Main Street, Aspen, Colorado 81611 (“EGI”),
      and
      Montana Tunnels Mining, Inc., a Delaware corporation, whose address is P.O.
      Box
      176, Jefferson City, Montana 59638 (“MTM”).
      EGI
      and MTM will be collectively referred to hereinafter as the “Parties”
and
      each will be referred to individually as a “Party”.

     

    RECITALS

     

    A. MTM
      is
      the owner of certain patented mining claims and unpatented mining claims in
      Broadwater County, Montana, and holds a leasehold interest in certain additional
      unpatented mining claims in Broadwater County, Montana, all as more particularly
      described in Exhibit A
      attached
      hereto and incorporated by reference (the “Property”).
      A
      previously operating gold mine known as the Diamond Hill Mine (the “Mine”)
      is
      located on the Property. MTM is also the owner of certain personal property
      rights and interests associated with the Mine (the “Assets”),
      as
      described in Exhibit B
      attached
      hereto and incorporated herein by reference.

     

    B. MTM
      desires to grant to EGI, and EGI desires to acquire: (i) an exclusive right
      to explore and evaluate the mineral development potential of the Property;
      and
      (ii) an option to purchase the Property from MTM, all for the consideration
      and upon the terms and conditions described herein.

     

    AGREEMENT

     

    NOW,
      THEREFORE, for and in consideration of the claim maintenance and tax payment
      requirements set forth in this Agreement, and the mutual promises, covenants,
      and conditions herein contained and recited, and other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged
      and
      confirmed, the Parties hereto agree as follows:

     

    ARTICLE
      1

    DEFINITIONS

     

    As
      used
      in this Agreement, the following terms shall have the meanings assigned to
      them
      in this Article 1.

     

    	1.1  	
            “Affiliate”
              means any person, partnership, joint venture, corporation or other
              form of
              enterprise which directly or indirectly controls, is controlled by,
              or is
              under common control with, a Party to this Agreement. For purposes
              of the
              preceding sentence, “control”
              means possession, directly or indirectly, of the power to direct or
              cause
              direction of management and policies through ownership of voting rights.
              

          

     

    
      
         

      

      
        F-1

        
          

        

      

      
         

      

    

     

    	1.2  	
            “Agreement”
              means this Option Agreement, the recitals and all exhibits attached
              hereto
              and by this reference incorporated
              herein.

          

     

    	1.3  	
            “Asset
              Records”
              means all records and files of MTM pertaining to the Mine, the Assets
              and
              the Property, other than Retained Records. Except to the extent such
              materials constitute Retained Records, and except to the extent that
              providing such materials would be in violation of applicable Laws,
              Asset
              Records include all available property, geological, geophysical,
              geochemical, metallurgical and engineering reports, analyses, data,
              maps
              and records pertaining to the Assets, the Mine, and the Property; all
              mill, processing and smelter records; all assays, surveys, technical
              reports, drill logs and samples; all records pertaining to Permits
              and
              environmental conditions at or affecting the Property; and all title
              records and conveyance documents held by MTM with respect to the Property;
              excluding any interpretive data or reports that are proprietary to
              or
              constitute trade secrets of MTM or any third
              party.

          

     

    	1.4  	
            “Assumed
              Liabilities”
              means all of the past, present and future obligations and liabilities
              (whether known or unknown, fixed or contingent) associated with the
              Property, the Mine, and the Assets.

          

     

    	1.5  	
            “Assumption
              Agreement”
              means the Assumption Agreement in the form of Exhibit D
              hereto, pursuant to which EGI will assume and be solely responsible
              for
              the Assumed Liabilities.

          

     

    	1.6  	
            “Bill
              of Sale”
              means a Bill of Sale and Assignment substantially in the form of
              Exhibit E
              hereto,
              pursuant to which MTM will convey the Personal Property to
              EGI.

          

     

    	1.7  	
            “Effective
              Date”
              means July 28, 2006.

          

     

    	1.8  	
            “Environmental
              Compliance”
              means actions taken in connection with activities or operations on
              the
              Property to comply with the requirements of all Environmental Laws
              or
              contractual commitments related to reclamation of the Property or other
              compliance with Environmental Laws.

          

     

    	1.9  	
            “Environmental
              Laws”
              means the Comprehensive Environmental Response, Compensation and Liability
              Act of 1980, the Resource Conservation and Recovery Act of 1976, the
              Clean
              Air Act, the Clean Water Act, the Hazardous Materials Transportation
              Act,
              the Toxic Substances Control Act, the Federal Water Pollution Control
              Act,
              the Superfund Amendments and Reauthorization Act of 1986, the Safe
              Drinking Water Act, the Endangered Species Act, the National Environmental
              Policy Act, the Mine Safety and Health Act of 1977, the Federal Land
              Policy and Management Act of 1976, the Emergency Planning and Community
              Right to Know Act, and the National Historic Preservation Act, each
              as
              amended, and any state law counterparts, together with all other laws
              (including rules, regulations, codes, plans, injunctions, judgments,
              orders, decrees, rulings, and charges thereunder) of federal, state
              and
              local governments (and all agencies thereof) concerning pollution or
              protection of the environment, reclamation, public health and safety,
              or
              employee health and safety, including laws relating to emissions,
              discharges, releases, or threatened releases of pollutants, contaminants,
              or chemical, industrial, hazardous, or toxic materials or wastes into
              ambient air, surface water, ground water, or lands or otherwise relating
              to the existence, manufacture, processing, distribution, use, treatment,
              storage, disposal, recycling, transport, or handling or reporting or
              notification to any governmental authority in the collection, storage,
              use, treatment or disposal of pollutants, contaminants, or chemical,
              industrial, hazardous, or toxic materials or
              wastes.

          

     

    
      
         

      

      
        F-2

        
          

        

      

      
         

      

    

     

    	1.10  	
            “Environmental
              Liabilities”
              means any liability arising out of, based on or resulting
              from:  (i) the presence, release, threatened release,
              discharge or emission into the environment of any Hazardous Materials
              or
              substances existing or arising on, beneath or above such property and/or
              emanating or migrating and/or threatening to emanate or migrate from
              such
              property to other properties; (ii) disposal or treatment of or the
              arrangement for the disposal or treatment of Hazardous Materials
              originating or transported from such property to an off-site treatment,
              storage or disposal facility; (iii) physical disturbance of the
              environment on or from such property; or (iv) the violation or
              alleged violation of any Environmental Laws relating to such
              property.

          

     

    	1.11  	
            “Exploration”
              means all activities directed toward ascertaining the existence, location,
              quantity, quality or commercial value of deposits of Valuable Minerals,
              and all related Environmental Compliance.

          

     

    	1.12  	
            “Exploration
              and Related Work”
              means and includes all operations and activities of EGI (or performed
              at
              the request of EGI) on or relating to the Property for purposes of
              determining ore reserves and mineralization, including, without
              limitation, the right to enter upon the Property for purposes of
              surveying, exploring, testing, sampling, trenching, bulk sampling in
              an
              amount not to exceed 200 tons of ore without the consent of MTM,
              prospecting and drilling for Valuable Minerals, and to construct and
              use
              roads and drill pads, and to use so much of the surface of the Property
              in
              such manner as EGI deems necessary in its reasonable discretion for
              the
              enjoyment of any rights and privileges granted to EGI hereunder or
              otherwise necessary to effect the purposes of this Agreement, and any
              reclamation and remediation required in connection with the
              foregoing.

          

     

    	1.13  	
            “Hazardous
              Materials”
              means any substance: (a) the presence of which requires reporting,
              investigation, removal or remediation under any Environmental Law;
              (b) that is defined as a “hazardous waste,” “hazardous substance,”
              “extremely hazardous substance” or “pollutant” or “contaminant” under any
              Environmental Law; (c) that is toxic, explosive, corrosive,
              flammable, ignitable, infectious, radioactive, reactive, carcinogenic,
              mutagenic or otherwise hazardous and is regulated under any Environmental
              Law; (d) the presence of which on a property causes or threatens to
              cause a nuisance upon the property or to adjacent properties or poses
              or
              threatens to pose a hazard to the health or safety of persons on or
              about
              the property; (e) that contains gasoline, diesel fuel or other petroleum
              hydrocarbons; or (f) that contains PCBs, asbestos or urea formaldehyde
              foam insulation; in each case subject to exceptions provided in applicable
              Environmental Laws.

          

     

    
      
         

      

      
        F-3

        
          

        

      

      
         

      

    

     

    	1.14  	
            “Mining
              Lease”
              means that Mining Exploration and Lease Agreement dated May 26, 1999,
              among Nyla Tyrell, et al and MTM.

          

     

    	1.15  	
            “Option”
              means the exclusive right of EGI to purchase the Property pursuant
              to this
              Agreement.

          

     

    	1.16  	
            “Option
              Period”
              means the period of time commencing on the Effective Date and continuing
              for a period of two years thereafter, unless EGI has previously exercised
              the Option in accordance with Sections 2.1 and 2.2 or EGI has
              otherwise relinquished its rights
              hereunder.

          

     

    	1.17  	
            “Property”
              shall have the meaning set forth in
              Recital A.

          

     

    	1.18  	
            “Retained
              Records”
              means (i) copies of any property files of MTM pertaining to the
              Property, the Mine or the Assets; (ii) all tax returns, files and
              records of MTM pertaining to the Property, the Mine or the Assets;
              (iii) all files, records and sales materials of MTM pertaining to
              marketing and sales of production from the Mine; and (iv) all other
              files and records of MTM which do not directly relate to the Property,
              the
              Mine or the Assets.

          

     

    	1.19  	
            “Valuable
              Minerals”
              means all ores, minerals, mineral deposits or mineral substances of
              every
              kind or character located in, on or under the
              Property.

          

     

    	1.20  	
            “$”
              means United States currency.

          

     

    ARTICLE 2

    GRANT
      OF RIGHTS AND OPTION

     

    	2.1  	
            Rights
              Granted.
              MTM hereby grants to EGI:  (a) the exclusive right to enter
              upon the Property during the Option Period for the purpose of conducting
              Exploration and Related Work; and (b) the exclusive and irrevocable
              option to purchase the Property, exercisable by EGI in its sole discretion
              (the “Option”)
              by (i) paying a purchase price (if it elects to exercise the Option)
              of $250,000 plus the posting of a substitute reclamation bond, payable
              as
              set forth in Section 2.4 (the “Purchase
              Price”),
              and (ii) paying holding costs for the Property as set forth in
              Section 2.3.

          

     

    	2.2  	
            Option
              Period; Termination.

          

     

    	(a)  	
            Option
              Period.
              Unless sooner terminated pursuant to this Section 2.2, the Option
              shall expire at 5:00 p.m. Mountain time on July 28, 2008 (the
              “Expiration
              Date”).
              The Option may be exercised by EGI by delivery to MTM of a written
              notice
              of election to exercise the Option at any time prior to the end of
              the
              Option Period (the date such notice is effective being referred to
              hereinafter as the “Exercise
              Date”).

          

     

    	(b)  	
            Termination.
              In the event EGI desires to terminate this Agreement, which EGI may
              elect
              to do in its sole discretion at any time during the Option Period,
              EGI may
              terminate this Agreement by giving MTM written notice of termination,
              and
              this Agreement shall be deemed terminated immediately upon receipt
              by MTM
              of the notice of termination. Following expiration of the Option Period
              without EGI exercising the Option, or termination of this Agreement
              for
              any reason prior to the expiration of the Option Period, neither of
              the
              Parties shall have any further obligations or liabilities hereunder,
              except as set forth in Sections 8.1 and
              8.2.

          

     

    
      
         

      

      
        F-4

        
          

        

      

      
         

      

    

     

    	2.3  	
            Property
              Maintenance.
              During the Option Period, in order to maintain the Option in full force
              and effect, EGI shall, at least 15 days prior to their respective
              completion or due dates, (a) perform required annual assessment work
              (in good faith and in accordance with industry standards) or pay all
              claim
              maintenance fees required in lieu thereof to maintain the unpatented
              mining claims comprising a portion of the Property (the “Claims”),
              and provide reasonable evidence of such payment or performance to MTM;
              (b) make all filings and recordings with the Bureau of Land
              Management (the “BLM”)
              and Broadwater County required in connection therewith,
              and provide copies of such filings and recordings to MTM; (c) pay all
              real property and other ad valorem taxes assessed against the
              Property; and (d) pay all rental and advance royalty payments
              required under the Mining Lease. If EGI fails to make the payments
              or
              perform the obligations set forth in items (a) - (d) above, and to
              provide MTM with evidence of payment or performance of the same, not
              later
              than 15 days prior to their respective completion or due dates, MTM
              may,
              but shall have no obligation to, pay or perform the same and terminate
              this Agreement pursuant to
              Section 8.2.

          

     

    	2.4  	
            The
              Closing.
              If EGI exercises the Option in accordance with the terms of this
              Agreement, the closing of the sale of the Property (the “Closing”)
              shall take place within 30 days after the written notice of election
              to exercise the Option is delivered by EGI to MTM, at a time and place
              mutually agreeable to EGI and MTM. 

          

     

    	(a)  	
            Deliverables.
              

          

     

    	(i)  	
            At
              the Closing, MTM shall deliver to EGI:  (a) a fully
              executed and acknowledged good and sufficient special warranty deed
              and
              assignment substantially in the form of Exhibit C
              attached hereto and incorporated herein by reference (the “Deed”),
              conveying the Property to EGI free and clear of all liens and encumbrances
              arising by, through or under MTM other than Permitted Encumbrances;
              (b) a fully executed Bill of Sale; (c) a fully-executed
              Assignment of the Mining Lease in the form of Exhibit F
              attached hereto and incorporated herein by reference; (d) a
              certificate of non-foreign status for U.S. federal tax purposes;
              (e) a fully executed Assumption Agreement; and (f) the Asset
              Records.

          

     

    	(ii)  	
            At
              the Closing, EGI shall deliver:  (a) the full amount of the
              Purchase Price, $250,000 of which shall be paid by wire transfer in
              accordance with written instructions to be delivered by MTM to EGI
              prior
              to the date of the Closing, and the remainder of which shall be payable
              by
              EGI having in place a reclamation bond or other surety instruments,
              which
              will have been as of the Closing Date accepted by the Montana Department
              of Environmental Quality (“MDEQ”) and the BLM, to (1) replace MTM’s
              existing reclamation bond covering the Property in the amount of $622,512
              (as more particularly described in Section 2.7), and (2) which will
              allow for the release, simultaneous with the Closing, of that Irrevocable
              Standby Letter of Credit No. SSB-SB-2005/0276 (DEQ Bond No. 002620-HR)
              and
              any guarantees associated therewith; (b) a fully executed Assumption
              Agreement; and (c) certificates of good standing for EGI from the offices
              of the Montana Secretary of State. In addition, each of EGI and MTM
              will
              deliver such other closing certificates and documents as are reasonably
              requested by the other Party. Closing costs, including real property
              transfer taxes, recording costs and any escrow fees will be paid by
              EGI,
              including all applicable taxes and disbursements. Any ad valorem real
              property taxes on the Property for calendar year 2006 will be split
              between MTM and EGI on a pro rata basis.

          

     

    
      
         

      

      
        F-5

        
          

        

      

      
         

      

    

     

    	2.5  	
            Geological
              and Other Data.
              Upon execution of this Agreement, MTM shall make available to EGI all
              records, information and data in its possession or reasonably available
              to
              it relating to title to the Property or environmental conditions at
              or
              pertaining to the Property, and all maps, assays, surveys, technical
              reports, drill logs, samples, mine, mill, processing and smelter records,
              and metallurgical, geological, geophysical, geochemical, and engineering
              data, and interpretive reports derived therefrom, concerning the Property
              and EGI, at its expense, may copy any such records, information and
              data
              that it desires. MTM makes no representation or warranty as to the
              accuracy, reliability or completeness of any such records, information
              or
              data, and EGI and any third parties with whom EGI shares any such data and
              information shall rely on the same at their sole
              risk.

          

     

    	2.6  	
            Transfer
              Approvals.
              Promptly after the Exercise Date, EGI agrees, in consultation with
              and
              approval from MTM, to contact the applicable governmental authorities
              and
              use commercially reasonable efforts to understand what information
              those
              governmental authorities will require in order to timely grant the
              transfer of the Permits from MTM to EGI or what information those
              governmental authorities will require EGI to submit in order for EGI
              to
              obtain replacement permits for those Permits presently held by MTM
              that
              are not transferable (provided that in making such contacts EGI shall
              comply with the confidentiality provisions set forth in
              Section 10.5). Promptly after the Exercise Date, EGI (i) shall
              file with the appropriate governmental authorities all applications
              and
              other instruments of transfer for all of the Permits which are
              transferable and subject to approval or other processing by such
              governmental authorities, including the posting and acceptance by the
              appropriate governmental authority of whatever bonds or other surety
              are
              required in connection with such approval or other processing;
              (ii) shall file with the appropriate governmental authorities all
              required notices of transfers of these Permits for which no approval
              is
              necessary; and (iii) shall file with the appropriate governmental
              authorities all applications, instruments or notices required, including
              the posting and acceptance by the appropriate governmental authority
              of
              whatever bonds or other surety are required, to obtain replacement
              permits
              for those Permits presently held by MTM that are not transferable (with
              those items referred to in sub-clauses (i), (ii) and (iii) above
              collectively referred to as the “Transfer
              Approvals”).
              EGI will diligently pursue on a commercially reasonable efforts basis
              all
              Transfer Approvals necessary to complete transfer of the Property and
              the
              Permits from MTM to EGI or obtain replacement permits in EGI’s own name as
              of the Closing Date (provided that all such Transfer Approvals shall
              be
              contingent on the consummation of the Closing), and will keep MTM apprised
              of the status of its efforts to secure such Transfer Approvals (provided
              that use of “commercially reasonable efforts” shall not require EGI to
              undertake extraordinary or unreasonable measures to obtain such Transfer
              Approvals as of the Closing Date, such as the initiation or prosecution
              of
              legal proceedings or the payment of fees in excess of normal and usual
              filing and processing fees). All of the Transfer Approvals must be
              in
              place and effective as of the Closing Date, and EGI shall have no right
              to
              conduct any activities under any permit that has not been assigned,
              transferred or re-issued to it.
              MTM agrees that it will cooperate in good faith with EGI in its efforts
              to
              obtain the Transfer Approvals.

          

     

    
      
         

      

      
        F-6

        
          

        

      

      
         

      

    

     

    	2.7  	
            Replacement
              of Bonds.
              Not later than ten days after the Exercise Date, EGI shall provide
              to the
              appropriate state and federal governmental authorities (the “Agencies”)
              a firm undertaking (such firm undertaking to include submission of
              the
              final reclamation bond on forms approved by the Agencies) acceptable
              to
              the Agencies (subject only to the payment of required premiums by EGI
              and
              the Closing) to post, effective as of the Closing Date, a reclamation
              bond
              (or other surety instrument acceptable to MTM and the Agencies) covering
              all of the existing reclamation, remediation, clean-up and closure
              obligations pertaining to the Property, which shall replace MTM’s existing
              reclamation bond covering the Property in the amount of $622,512 (as
              more
              particularly described in Section 2.7), and which will allow for the
              release, simultaneous with the Closing, of that Irrevocable Standby
              Letter
              of Credit No. SSB-SB-2005/0276 (DEQ Bond No. 002620-HR) and any guarantees
              associated therewith. From and after the Closing Date, EGI assumes,
              and
              MTM shall have no further obligation or liability for, all reclamation,
              remediation, clean-up and closure requirements associated with the
              Property.

          

     

    ARTICLE
      3

    RIGHTS
      AND OBLIGATIONS OF EGI AND OTHER

    ARRANGEMENTS
      DURING THE OPTION PERIOD

     

    	3.1  	
            EGI’s
              Rights.
              During the Option Period, the rights of EGI shall include the
              following:

          

     

    	(a)  	
            Operations
              at the Property.
              EGI may carry out such Exploration operations at the Property as it
              may,
              in its sole discretion, determine to be warranted, and EGI shall have
              the
              exclusive right to conduct and control of all Exploration and Related
              Work
              on or for the benefit of the Property, and of any and all equipment,
              supplies, machinery or other assets purchased or otherwise acquired
              in
              connection with such Exploration operations; provided,
              however,
              that during the Option Period except as provided herein, EGI shall
              have no
              right to conduct on the Property any activities related to activities
              of
              EGI on other properties, and EGI shall have no right
              to:

          

     

    	(i)  	
            conduct
              any activities in preparation for the removal and recovery of Valuable
              Minerals from the Property, including pre-stripping, stripping and
              the
              construction or installation of a mill, leach facilities, or any other
              improvements or other facilities for beneficiation of Valuable Minerals;
              or

          

     

    
      
         

      

      
        F-7

        
          

        

      

      
         

      

    

     

    	(ii)  	
            to
              remove Valuable Minerals from the Property,

          

    	 	 

    	 	except that EGI shall be permitted to recover and
            remove
            such Valuable Minerals from the Property as are reasonably required to
            carry out Exploration on the Property in accordance with usual industry
            standards, including removal of samples of Valuable Minerals for
            testing.

     

    	(b)  	
            Permits.
              The rights of EGI shall include all other rights necessary or incident
              to
              or for its performance of its activities hereunder, including, but
              not
              limited to the authority to apply in its own name for all necessary
              permits, licenses and other approvals from the United States of America,
              the State of Montana or any other governmental or other entity having
              regulatory authority over any part of the
              Property.

          

     

    	3.2  	
            Conduct
              of Operations by EGI at the Property.
              All of the work which may be performed by EGI on or with respect to
              the
              Property shall be performed in a good and workmanlike manner and in
              accordance with good industry practices.

          

     

    	3.3  	
            Indemnity.
              EGI agrees to indemnify, defend and hold MTM, its Affiliates, and their
              respective officers, directors and employees harmless from and against
              any
              and all Losses (as defined in Section 7.1) MTM may incur to third
              persons or entities for injury to or death of persons or damage to
              property which result from operations conducted by or on behalf of
              EGI at
              or with respect to the Property during the Option Period, unless such
              injury, death or damage is due to MTM’s gross negligence or willful
              misconduct.

          

     

    	3.4  	
            Insurance.
              During the Option Period, EGI agrees to carry such insurance, covering
              all
              employees of EGI working at or on the Property, as will fully comply
              with
              the requirements of the statutes of the State of Montana pertaining
              to
              worker’s compensation and occupational disease and disabilities as are now
              in force or as may be hereafter amended or enacted. In addition, during
              the Option Period, EGI agrees to carry liability insurance with respect
              to
              any operations conducted by it or on its behalf on or with respect
              to the
              Property in reasonable amounts in accordance with accepted industry
              practices. In connection with that obligation, EGI agrees that it will
              carry general liability insurance (a) with a policy limit of
              $1,000,000 (combined single limit, annual aggregate), until such time
              as
              EGI elects to conduct activities on the Property that will require
              submission to the BLM or MDEQ and approval by the BLM or MDEQ of a
              Plan of
              Operations or Mining and Reclamation Plan, and thereafter (b) with a
              policy limit of $2,000,000 (combined single limit, annual aggregate),
              and
              that MTM shall be named as an additional named insured on each of said
              policies for the foresaid amounts. Prior to conducting any work on
              the
              Property, EGI will provide to MTM a certificate evidencing the required
              amount of insurance coverage and naming MTM as an additional insured,
              which such certificate shall provide for at least thirty (30) days
              prior written notice of cancellation to EGI and to
              MTM.

          

     

    	3.5  	
            Compliance
              with Laws.
              EGI agrees to conduct and perform all of its operations on or with
              respect
              to the Property during the Option Period in compliance with all applicable
              federal, state and local laws, rules and regulations, including, without
              limitation, such laws, rules and regulations pertaining to social
              security, unemployment compensation, wages and hours and conditions
              of
              labor, and Environmental Laws, and EGI shall defend, indemnify and
              hold
              MTM, its Affiliates and their respective officers, directors and employees
              harmless from and against any and all Losses (as defined in
              Section 7.1) incurred by MTM occasioned by the failure of EGI to
              comply with said laws, rules or
              regulations.

          

     

    
      
         

      

      
        F-8

        
          

        

      

      
         

      

    

     

    	3.6  	
            Liens
              and Encumbrances.
              During the Option Period, and thereafter if EGI does not exercise the
              Option, EGI shall keep the title to the Property free and clear of
              all
              liens and encumbrances resulting from its operations under this Agreement.
              At its sole cost and expense, EGI shall contest any suit, demand or
              action
              commenced to enforce any claim of a lien or encumbrance on the Property
              and, if the suit, demand or action is decided by a court or other
              authority of ultimate and final jurisdiction against EGI or the Property,
              EGI shall promptly pay the judgment and shall post any bond and take
              all
              other action necessary to prevent any sale or loss of the Property
              or any
              part thereof.

          

     

    	3.7  	
            Reclamation.
              If this Agreement is terminated and EGI does not exercise the Option,
              EGI
              shall reclaim and remediate the Property to the extent disturbed by
              EGI
              (or at its direction) during the Option Period, in accordance with
              applicable federal, state and local laws, rules and regulations. MTM,
              to
              the extent it may legally do so, hereby agrees to grant to EGI such
              access
              to the Property following such termination as is reasonably necessary
              to
              complete such reclamation and remediation work, although MTM shall
              have no
              obligation to maintain any of the Claims after this Agreement is so
              terminated. 

          

     

    	3.8  	
            Data
              and Information.
              During the Option Period, not later than 30 days after the first and
              second anniversaries of the Effective Date, EGI shall provide to MTM
              copies of any and all data and information created by it or on its
              behalf
              and pertaining to the Property including, but not limited to,
              electronically transferred geochemical laboratory results, raw
              geophysical, geological data and information, and information and data
              represented on paper such as survey maps, drill hole logs, assay reports,
              and other non-interpretive geological data relating to the Claims,
              as well
              as copies of internal analyses of such data, excluding any such analyses
              that include trade secrets or other data or information proprietary
              to
              EGI. The data and information to be provided to MTM shall include without
              limitation copies of survey maps, drill hole logs, assay reports or
              other
              non-interpretive data (or analyses thereof) pertaining to work that
              was
              not performed on the Property if it was performed for the benefit of
              the
              Property. EGI makes no representation or warranty as to the accuracy,
              reliability or completeness of any such information made available
              to MTM
              under this Section 3.8, and MTM shall rely on the same at its sole
              risk.

          

     

    	3.9  	
            Responsibility
              for Services to the Mine.
              All charges for water, electricity, natural gas, telephone, sewer,
              trash
              disposal and other recurring services provided to the Mine which relate
              to
              such services provided subsequent to the Effective Date will be for
              the
              account of EGI. 

          

     

    
      
         

      

      
        F-9

        
          

        

      

      
         

      

    

     

    ARTICLE
      4

    REPRESENTATIONS
      AND WARRANTIES OF MTM

     

    	4.1  	
            Representations
              and Warranties.
              MTM represents and warrants to EGI as of the date hereof as follows,
              and
              covenants that these representations and warranties will be true and
              correct throughout the Option Period and through the
              Closing:

          

     

    	(a)  	
            Organization
              and Standing.
              MTM is a corporation duly organized, validly existing, and in good
              standing under the laws of the State of
              Delaware.

          

     

    	(b)  	
            Corporate
              Power.
              MTM has the requisite corporate power and authority: (i) to enter
              into this Agreement and all other agreements contemplated hereby; and
              (ii) to carry out and perform its obligations under the terms and
              provisions of this Agreement and all agreements contemplated
              hereby.

          

     

    	(c)  	
            Authorization
              and Enforceability.
              All requisite corporate action on the part of MTM, and its officers,
              directors, and shareholders, necessary for the execution, delivery,
              and
              performance of this Agreement and all other agreements of MTM contemplated
              hereby, have been taken. This Agreement and all agreements and instruments
              contemplated hereby are, and when executed and delivered by MTM (assuming
              valid execution and delivery EGI), will be, legal, valid, and binding
              obligations of MTM enforceable against MTM in accordance with their
              respective terms. The execution, delivery and performance of this
              Agreement by MTM will not violate any provision of the articles of
              incorporation or by-laws of MTM or of any law; any order of any court
              or
              other agency of government; or any provision of any indenture, agreement
              or other instrument to which MTM is a party or by which its properties
              or
              assets are bound; or be in conflict with, result in a breach of or
              constitute (with due notice and lapse of time) a default under any
              such
              indenture, agreement or other instrument. There is no law, rule or
              regulation, nor is there any judgment, decree or order of any court
              or
              governmental authority binding on MTM which would be contravened by
              the
              execution, delivery, performance or enforcement of this Agreement or
              any
              instrument or agreement required hereunder. Notwithstanding the foregoing,
              no representation is made as to: (i) the remedy of specific
              performance or other equitable remedies for the enforcement of this
              Agreement or any other agreement contemplated hereby; or (ii) rights
              to indemnity under this Agreement for securities law liability.
              Additionally, this representation is limited by applicable bankruptcy,
              insolvency, moratorium, and other similar laws affecting generally
              the
              rights and remedies of creditors and secured
              parties.

          

     

    	(d)  	
            Encumbrances.
              To MTM’s knowledge, the Property is free and clear of all encumbrances
              arising by, through or under MTM, except for Permitted Encumbrances
              and
              those liens, claims and encumbrances specifically identified in
              Exhibit A.
              Except as set forth in the mining lease identified in Exhibit A
              (the Mining
              Lease”)
              and as otherwise identified in Exhibit A,
              there are no royalties or other burdens on production affecting the
              Properties. For purposes of this Agreement, “Permitted
              Encumbrances”
              means (i)(A) liens for taxes, assessments and governmental charges or
              levies not yet due and payable; and (B) encumbrances such as
              materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s liens and
              other similar liens arising in the ordinary course of business securing
              obligations that (x) are not overdue for a period of more than 60
              days and (y) are not in excess of $5,000 in the aggregate at any
              time; (ii) minor survey exceptions, easement agreements and other
              customary encumbrances on title to real property that (A) were not
              incurred in connection with any indebtedness and (B) do not have a
              material adverse effect on the value or the use of such property for
              its
              present purposes; (iii) zoning restrictions and other limitations
              imposed by any governmental authority having jurisdiction over real
              property; (iv) reservations in federal patents; (v) encumbrances
              of record (which for purposes of this Agreement shall include encumbrances
              that are reflected in the official records of the Broadwater County,
              Montana Clerk and Recorder’s Office or the Broadwater County Assessor’s
              Office, or that are reflected in the public records maintained by the
              Montana State Office of the Bureau of Land Management); (vi) as to
              those portions of the Property covered by the Mining Lease, the terms
              and
              conditions of the Mining Lease, and liens affecting the interests of
              the
              lessor under the Mining Lease; (vii) liens of pledges or deposits
              under workers’ compensation laws or similar legislation, unemployment
              insurance or other types of social security or to secure the performance
              of tenders, statutory obligations, surety and appeal bonds, bids, leases,
              governmental contracts, performance and return of money bonds and similar
              obligations; (viii) rights reserved to or vested in any governmental
              authority to control or regulate any interest in the Property in any
              manner, and all laws, rules and regulations of any governmental authority;
              and (ix) the production royalty payable to Shamrock Partners pursuant
              to that Quit Claim Deed described in Item 1 of Part 4 of Exhibit
              A.

          

     

    
      
         

      

      
        F-10

        
          

        

      

      
         

      

    

     

    	(e)  	
            Validity
              of Mining Lease.
              (i) MTM has not received any notice of default of any of the terms or
              provisions of the Mining Lease; (ii) the Mining Lease is in good
              standing; (iii) MTM has no knowledge of any act or omission or any
              condition on the properties covered thereby which could be considered
              or
              construed as a material default under the Mining Lease. MTM has delivered
              to or made available for inspection by EGI a true and correct copy
              of the
              Mining Lease.

          

     

    	(f)  	
            Title
              to Claims.
              With respect to the Claims, except as provided in Exhibit A
              and subject to the paramount title of the United States and the rights
              of
              third parties to use the surface of those Claims pursuant to applicable
              laws, to MTM’s knowledge: (i) all Governmental Fees required to
              maintain those Claims have been paid through the assessment year ending
              September 1, 2006; and (ii) evidence of payment of Governmental
              Fees, and other filings required to maintain those Claims in good standing
              have been properly and timely recorded or filed with appropriate
              governmental agencies. Nothing in this Section 4.1(f), however, shall
              be deemed to be a representation or a warranty as to the presence or
              absence of unpatented mining claims or millsites in conflict with the
              Claims, that the Claims constitute a compact group of contiguous claims
              free of interior gaps or fractions, or that any of the Claims contains
              a
              valuable mineral deposit. In addition, MTM does not make any
              representation or warranty as to whether or not MTM or its
              predecessors-in-title established or maintained pedis
              possessio
              rights with respect to any of the Claims, what rights MTM has to use
              the
              surface of any of the Claims for any purpose, or otherwise as to the
              validity of any of the Claims or the use of the same (except as
              specifically set forth above). 

          

     

    
      
         

      

      
        F-11

        
          

        

      

      
         

      

    

     

    	(g)  	
            Litigation.
              With respect to the Property, there are no pending or, to MTM’s knowledge,
              threatened, actions, suits, claims or
              proceedings.

          

     

    	(h)  	
            Permits.
              MTM has obtained all material permits, licenses, approvals, authorizations
              and qualifications of all federal, state and local authorities required
              for it to carry on its current operations at or on the Property
              (collectively, the “Permits”),
              as listed on Schedule 4.1(h).

          

     

    	(i)  	
            Taxes.
              All federal, state and local excise, property and other taxes and
              assessments assessed against the Property and due on or prior to the
              Effective Date have been timely and properly paid.
              

          

     

    	(j)  	
            Disclaimer
              of Certain Representations and Warranties.
              EXCEPT AS SPECIFICALLY PROVIDED IN THIS ARTICLE 4, MTM MAKES NO
              REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED (AND HEREBY DISCLAIMS
              ANY SUCH REPRESENTATIONS OR WARRANTIES) WITH RESPECT TO (A) THE
              PROPERTY, (B) LIABILITIES, INCLUDING ENVIRONMENTAL LIABILITIES,
              ASSOCIATED THEREWITH, OR (C) THE QUANTITY, QUALITY, SUITABILITY FOR
              MINING OR COSTS OF MINING OF ANY MINERAL RESERVES OR RESOURCES, IF
              ANY,
              INCLUDED IN THE PROPERTY.

          

     

    ARTICLE
      5

    REPRESENTATIONS
      AND WARRANTIES OF EGI

     

    	5.1  	
            Representations
              and Warranties of EGI.
              EGI represents and warrants to MTM as of the date hereof as follows,
              and
              covenants that these representations and warranties will be true and
              correct throughout the Option Period and through the
              Closing:

          

     

    	(a)  	
            Organization
              and Standing.
              EGI is a corporation duly organized, validly existing, and in good
              standing under the laws of the State of
              Montana.

          

     

    	(b)  	
            Corporate
              Power.
              EGI has the requisite corporate power and authority: (i) to enter
              into this Agreement and all other agreements contemplated hereby; and
              (ii) to carry out and perform its obligations under the terms and
              provisions of this Agreement and all agreements contemplated
              hereby.

          

     

    	(c)  	
            Authorization
              and Enforceability.
              All requisite corporate action on the part of EGI and its respective
              officers, directors and shareholders, necessary for the execution,
              delivery and performance of this Agreement and all other agreements
              contemplated hereby have been taken. This Agreement and all agreements
              and
              instruments contemplated hereby, when executed and delivered by EGI
              (assuming valid execution and delivery by MTM), will be the legal,
              valid,
              and binding obligations of EGI enforceable against it in accordance
              with
              their terms. The execution, delivery and performance of this Agreement
              by
              EGI will not violate any provision of the articles of incorporation
              or
              by-laws of EGI, or of any law; any order of any court or other agency
              of
              government; or any provision of any indenture, agreement or other
              instrument to which EGI is a party or by which its properties or assets
              are bound; or be in conflict with, result in a breach of or constitute
              (with due notice and lapse of time) a default under any such indenture,
              agreement or other instrument. There is no law, rule or regulation,
              nor is
              there any judgment, decree or order of any court or governmental authority
              binding on EGI which would be contravened by the execution, delivery,
              performance or enforcement of this Agreement or any instrument or
              agreement required hereunder. Notwithstanding the foregoing, no
              representation is made as to:  (i) the remedy of specific
              performance or other equitable remedies for the enforcement of this
              Agreement or any other agreement contemplated hereby; or (ii) rights
              to indemnity under this Agreement for securities law liability.
              Additionally, this representation is limited by applicable bankruptcy,
              insolvency, moratorium and other similar laws affecting generally the
              rights and remedies of creditors and secured
              parties.

          

     

    
      
         

      

      
        F-12

        
          

        

      

      
         

      

    

     

    	(d)  	
            EGI’s
              Due Diligence.
              EGI has conducted such due diligence investigations concerning the
              Property as it has determined to be appropriate. With respect to the
              exploration potential of the Property, title to or environmental
              conditions at or potential environmental liabilities associated with
              the
              Property, the validity of the Claims and all other matters concerning
              the
              Property which are not specifically addressed by MTM’s representations and
              warranties in this Agreement, EGI has relied exclusively upon its due
              diligence investigation of the Property, including the advice of its
              own
              experts or consultants, as EGI has determined to be necessary or desirable
              in its sole discretion.

          

     

    ARTICLE
      6

    NOTICES

     

    	6.1  	
            Notices.
              All notices given in connection herewith shall be in writing, and all
              such
              notices and deliveries to be made pursuant hereto shall be given or
              made
              in person, by certified or registered mail, by reputable overnight
              courier, or by facsimile with receipt confirmed. Such notices and
              deliveries shall be deemed to have been duly given and received when
              actually delivered in person or sent by facsimile (during normal business
              hours and with receipt confirmed), on the next business day following
              the
              date they are sent by courier, or three (3) business days after registered
              or certified mailing when deposited in a receptacle for United States
              mail, postage prepaid, and addressed as
              follows:

          

     

    
      
         

      

      
        F-13

        
          

        

      

      
         

      

    

     

    	(a)  	
            If
              to MTM:

          

     

    Montana
      Tunnels Mining, Inc.

    5655 South
      Yosemite Street, Suite 200

    Greenwood
      Village, Colorado 80111

    Attention:
      R. David Russell

    Facsimile
      No.: (720) 482-0957

    Telephone
      No.: (720) 886-9656

    

    with
      a
      copy to:

    

    Deborah
      Friedman

    Davis
      Graham & Stubbs LLP

    1550
      17th
      Street, Suite 500

    Denver,
      Colorado 80202

    Facsimile
      No.: (303) 893-1379

    Telephone
      No.: (303) 892-9400

    

    	(b)  	
            If
              to EGI:

          

     

    Elkhorn
      Goldfields, Inc.

    320 West
      Main Street

    Aspen,
      Colorado 81611

    Attention:
      Robert Trenaman

    Facsimile
      No.: (970)
      544-9155

    Telephone
      No.: (970)
      920-6944

    

    with
      a
      copy to:

    

    Mark E.
      Mendel, Esq.

    Mendel
      Blumenfeld, LLP

    5809
      Acacia Circle

    El Paso,
      Texas 79912

    Facsimile
      No.: (915) 587-8808

    Telephone
      No.: (915) 587-7878

     

    ARTICLE
      7

    INDEMNIFICATION

     

    	7.1  	
            By
              EGI.
              EGI agrees to defend, indemnify and hold harmless MTM, its Affiliates,
              successors, assigns, and its and their respective officers, directors
              and
              employees from and against any and all claims, actions, suits, losses,
              liabilities, damages, assessments, judgments, costs and expenses,
              including reasonable attorneys’ fees and the costs of defending the same
              (collectively, “Losses”),
              arising out of or related to:  (a) any breach by EGI of any
              representation, warranty or covenant set forth in this Agreement;
              (b) any activities conducted by or on behalf of EGI on or in
              connection with the Property; or (c) any Environmental Liabilities
              associated with the Property in connection with operations carried
              out by
              or at the direction of EGI.

          

     

    
      
         

      

      
        F-14

        
          

        

      

      
         

      

    

     

    	7.2  	
            By
              MTM.
              MTM agrees to defend, indemnify and hold harmless EGI, its Affiliates,
              successors, assigns, and its and their respective officers, directors
              and
              employees from and against any and all Losses arising out of or related
              to
              any breach by MTM of any representation, warranty or covenant set forth
              in
              this Agreement.

          

     

    	7.3  	
            Notification.
              Any Party who has a claim giving rise to indemnification liability
              pursuant to this Agreement (an “Indemnified
              Party”)
              which results from a claim by a third party or otherwise shall give
              prompt
              notice to the other Party (the “Indemnifying
              Party”)
              of such claim, together with a reasonable description thereof. Failure
              to
              provide such notice shall not relieve a Party of any of its obligations
              hereunder except to the extent materially prejudiced thereby. With
              respect
              to any claim by a third party against any Party to this Agreement which
              is
              subject to indemnification under this Agreement, the Indemnifying Party
              shall be afforded the opportunity, at its expense, to defend or settle
              the
              claim if it utilizes counsel reasonably satisfactory to the Indemnified
              Party, and promptly commences the defense of such claim and pursues
              such
              defense with diligence; provided,
              however,
              that the Indemnifying Party shall secure the consent of the Indemnified
              Party to any settlement, which consent shall not be unreasonably withheld.
              The Indemnified Party may participate in the defense of any claim at
              its
              expense, and until the Indemnifying Party has agreed to defend such
              claim,
              the Indemnified Party may file any motion, answer or other pleading
              or
              take such other action as it deems appropriate to protect its interests
              or
              those of the Indemnifying Party. If an Indemnifying Party does not
              elect
              to contest any third-party claim, the Indemnifying Party shall be bound
              by
              the results obtained with respect thereto by the Indemnified Party,
              including any settlement of such claim.

          

     

    ARTICLE
      8

    DEFAULT
      AND TERMINATION

     

    	8.1  	
            Termination
              by EGI.
              EGI shall have the right to terminate, surrender and relinquish this
              Agreement at any time during the Option Period by giving written notice
              to
              MTM of such election in accordance with the provisions of
              Section 2.2(b). Upon termination of this Agreement by EGI, EGI shall
              have no further liability or obligations hereunder or with respect
              to the
              Property, except with respect to the obligations set forth in
              Sections 2.3 (if such termination is effective after August 1 of
              the calendar year in question), 3.3, 3.5 (only
              with respect to indemnification),
              3.6, 3.7, 3.8, 7.1, 7.3, 8.1, 8.3, 8.4 and 8.5, and any other obligations
              that may have accrued prior to the effective date of such termination,
              and
              MTM shall have no further liability or obligations hereunder, except
              with
              respect to the obligations set forth in
              Section 3.7.

          

     

    	8.2  	
            Termination
              by MTM.
              In the event of a default hereunder on the part of EGI, MTM shall give
              to
              EGI written notice specifying the particular default or defaults asserted,
              and, in the case of a default other than with respect to the payment
              of
              money, EGI shall have 30 days after the receipt of said notice within
              which either to cure such specified defaults, or to undertake diligent
              efforts to cure the same. In the event such curative action is not
              so
              completed or diligent efforts to cure such defaults are not undertaken
              within the applicable 30-day period and thereafter diligently pursued
              to
              completion, MTM may elect to terminate this Agreement by notice to
              EGI as
              provided in Section 6.1, which such termination shall be effective
              immediately upon EGI’s receipt of such notice. In the case of a default by
              EGI relating to the payment of any funds to MTM, EGI shall have five
              days
              after receipt of notice of such default to rectify the same, failing
              which
              MTM may elect to terminate this Agreement by written notice to EGI
              as
              provided in Section 6.1. Upon termination of this Agreement pursuant
              to this Section 8.2, EGI shall have no further liability or
              obligations hereunder or with respect to the Property, except with
              respect
              to the obligations set forth in Sections 2.3 (if such termination is
              effective after August 1 of the calendar year in question) 3.3, 3.5
              (only with respect to indemnification), 3.6, 3.7, 3.8, 7.1, 7.3, 8.3,
              8.4
              and 8.5, and any other obligations that may have accrued prior to the
              effective date of such termination, and MTM shall have no further
              liability or obligations hereunder, except with respect to the obligations
              set forth in Section 3.7.

          

     

    
      
         

      

      
        F-15

        
          

        

      

      
         

      

    

     

    	8.3  	
            Return
              of Data.
              As soon as practicable upon the termination of this Agreement, if EGI
              has
              not exercised the Option, EGI shall return to MTM all title,
              environmental, metallurgical, geological, geophysical, milling and
              other
              data furnished to EGI by MTM. At such time, EGI shall make available
              to
              MTM for examination and copying all information relating to title to
              the
              Property or environmental conditions at or pertaining to the Property,
              and
              all surveys, maps, drill hole logs, samples, sample locations, mine,
              mill,
              processing and smelter records geological, geophysical, geochemical
              and
              engineering data from the Property, as well as assays developed by
              EGI
              with respect to the Property during the term of this Agreement and
              not
              previously made available to MTM; provided,
              however,
              that EGI shall have no obligation to make any interpretive data or
              reports
              developed by it or on its behalf available to MTM. EGI makes no
              representation or warranty as to the accuracy, reliability or completeness
              of any such information made available to MTM under this Section 8.3,
              and MTM shall rely on the same at its sole risk. 

          

     

    	8.4  	
            Release.
              Upon termination of this Agreement during the Option Period, if EGI
              has
              not exercised the Option, EGI shall provide MTM with a written release,
              in
              the nature of a quit claim deed or similar document in recordable form,
              of
              its rights hereunder with respect to the
              Property.

          

     

    	8.5  	
            Surrender
              of Possession and Removal of Equipment.
              Upon termination of this Agreement, if EGI has not exercised the Option,
              EGI shall surrender possession of the Property, subject to the condition
              that EGI shall have the right at any time within six months after such
              surrender or termination of this Agreement to remove all of its tools,
              equipment, machinery, supplies, fixtures, buildings, structures and
              other
              property erected or placed on such property by EGI. Title to such property
              not removed within the time period set forth above shall, at the election
              of MTM, pass to MTM.

          

     

    	8.6  	
            Survival
              of Terms Upon Exercise of Option.
              If EGI exercises the Option, the terms and conditions of
              Sections 2.4, 2.5, 7.1, this Section 8.6, and
              Sections 10.2, 10.3 and 10.8 shall survive, notwithstanding the
              execution and delivery of the Deed, and shall not be deemed merged
              into
              the Deed.

          

     

    
      
         

      

      
        F-16

        
          

        

      

      
         

      

    

     

    ARTICLE
      9

    ENTIRE
      AGREEMENT/AMENDMENT

     

    	9.1  	
            Entire
              Agreement.
              This Agreement is the complete expression of all agreements, contracts,
              covenants and promises among the Parties, and all negotiations,
              understandings, and agreements among the Parties are set forth in this
              Agreement, which solely and completely expresses their understanding,
              and
              shall be construed without reference to any such negotiations,
              understandings and agreements. 

          

     

    	9.2  	
            Amendments.
              Except as permitted by Section 10.2, this Agreement may not be
              amended or modified, nor may any obligation hereunder be waived, except
              by
              writing duly executed on behalf of all Parties, and unless otherwise
              specifically provided in such writing, any amendment, modification,
              or
              waiver shall be effective only in the specific instance and for the
              purpose it is given.

          

     

     

    ARTICLE
      10

    GENERAL
      PROVISIONS

     

    	10.1  	
            Governing
              Law.
              This Agreement, and the rights and liabilities of the Parties hereunder,
              shall be governed by and construed in accordance with the laws of the
              State of Colorado, other than its rules as to conflicts of law, and
              the
              Parties hereby submit to the non-exclusive jurisdiction of the Colorado
              state and federal courts with respect to any matters arising out of
              or
              pertaining to this Agreement, and hereby waive any defenses of lack
              of
              jurisdiction, inconvenient forum or improper
              venue.

          

     

    	10.2  	
            Parties
              in Interest; Assignment.
              All of the terms and provisions of this Agreement shall be binding
              upon
              and inure to the benefit of and be enforceable by the respective Parties
              hereto and their successors and permitted assigns. During the Option
              Period, EGI’s rights, powers, privileges, obligations and interests under
              this Agreement shall not be assigned or delegated to any third party,
              other than to an Affiliate of EGI; provided, however, that any such
              assignment or delegation to an Affiliate of EGI shall not relieve EGI
              of
              any obligations or liabilities under this Agreement. If
              EGI exercises the Option, it may assign or delegate its rights and
              obligations under this Agreement to any third party, provided that
              (a) such third party agrees in writing to be bound by all of the
              terms and conditions of this Agreement, and (b) any such assignment
              or delegation shall not relieve EGI of any obligations or liabilities
              under this Agreement.

          

     

    	10.3  	
            Other
              Business Opportunities.
              This Agreement is, and the rights and obligations of the Parties are,
              strictly limited to the matters set forth herein. Each of the Parties
              shall have the free and unrestricted right to independently engage
              in and
              receive the full benefits of any and all business ventures of any sort
              whatever, whether or not competitive with the matters contemplated
              hereby,
              without consulting the other or inviting or allowing the other to
              participate therein. The doctrines of “corporate opportunity” or “business
              opportunity” shall not be applied to any other activity, venture, or
              operation of either Party, whether adjacent to, nearby, or removed
              from
              the Property, and neither Party shall have any obligation to the other
              with respect to any opportunity to acquire any interest in any property
              outside the Property at any time, or within the Property after termination
              of this Agreement, regardless of whether the incentive or opportunity
              of a
              Party to acquire any such property interest may be based, in whole
              or in
              part, upon information learned during the course of operations or
              activities hereunder. 

          

     

    
      
         

      

      
        F-17

        
          

        

      

      
         

      

    

     

    	10.4  	
            No
              Partnership.
              Nothing contained in this Agreement shall be deemed to constitute either
              Party the partner of the other, nor, except as otherwise herein expressly
              provided, to constitute any Party the agent or legal representative
              of the
              other, nor to create any fiduciary relationship between them. It is
              not
              the intention of the Parties to create, nor shall this Agreement be
              construed to create, any mining, commercial, tax or other partnership.
              Neither Party shall have any authority to act for or to assume any
              obligation or responsibility on behalf of the other Party, except as
              otherwise expressly provided herein.

          

     

    	10.5  	
            Confidentiality.
              Except as set forth in Section 10.8, each of the Parties agrees to
              treat all data, reports, records and other information developed or
              made
              available to it by the other Party under this Agreement and applicable
              to
              the Property as confidential, and unless either Party is required by
              any
              law, rule, regulation, or order or by rule or regulation of a stock
              exchange or securities commission to disclose any of such information,
              information shall not be disclosed to any third party without the prior
              written consent of the non-disclosing Party, which consent shall not
              be
              unreasonably withheld.

          

     

    	10.6  	
            Memorandum
              for Recording.
              Promptly following the execution of this Agreement, the Parties agree
              to
              execute for recording purposes a written Short Form of Option Agreement,
              in a form mutually agreeable to the parties, setting forth the basic
              terms
              and conditions of this Agreement as necessitated by Montana law. Promptly
              after the execution and delivery of that Short Form of Option Agreement,
              EGI shall record that Short Form in the official records of Broadwater
              County, and provide a copy of the recorded Short Form to MTM. MTM may
              record a notice of non-responsibility as reasonably deemed necessary
              by
              MTM.

          

     

    	10.7  	
            Public
              Announcements.
              Disclosure of information relating to this Agreement or the Property
              may
              be made by either Party if such information is required to be disclosed
              to
              any federal, state, provincial or local government or appropriate agencies
              and departments thereof or if such information is required by law,
              stock
              exchange rule or regulation to be publicly announced. Otherwise, public
              announcements or reports by EGI of information relating to this Agreement
              or the Property shall be made only on the basis of agreed texts upon
              the
              prior written consent of MTM, which consent shall not be unreasonably
              withheld. EGI agrees that it will, not less than two business days
              in
              advance of making public any information referred to in this
              Section 10.7, give MTM written notice of the text of the proposed
              report and provide MTM with the opportunity to comment on the form
              and
              content thereof before the same is issued. MTM shall respond within
              two
              business days after receipt of such notice, or its silence will constitute
              a waiver of objection to the terms of the proposed
              text.

          

     

    	10.8  	
            Severability.
              In the event that any one or more of the provisions contained in this
              Agreement or in any other instrument or agreement contemplated hereby
              shall, for any reason, be held to be invalid, illegal, or unenforceable
              in
              any respect, such invalidity, illegality, or unenforceability shall
              not
              affect any other provision of this Agreement or any such other instrument
              or agreement.

          

     

    
      
         

      

      
        F-18

        
          

        

      

      
         

      

    

     

    	10.9  	
            Attorneys’
              Fees.
              In the event of any controversy, claim, or dispute between the Parties
              hereto, arising out of or relating to this Agreement or the breach
              thereof, the prevailing Party in any arbitration or litigation resolving
              the same shall be entitled to recover from the losing Party reasonable
              expenses, attorneys’ fees, and costs.

          

     

    	10.10  	
            Further
              Documents.
              At the request of either Party, the Parties shall execute and deliver
              any
              further instruments, agreements, documents or other papers reasonably
              requested by the other Party to effect the purposes of this Agreement
              and
              the transactions contemplated hereby. 

          

     

    	10.11  	
            Dispute
              Resolution.
              The Parties hereby agree that any dispute arising under this Agreement
              shall be subject to the informal dispute resolution procedure set forth
              in
              this Section 10.11. The Party asserting the existence of a dispute as
              to the interpretation of any provision of this Agreement or the
              performance by the other Party of any of its obligations hereunder
              shall
              notify the other Party of the nature of the asserted dispute. Within
              seven
              business days after receipt of such notice, a designated representative
              of
              MTM and a designated representative of EGI shall arrange for a personal
              or
              telephone conference in which they use good faith efforts to resolve
              such
              dispute. If those individuals are unable to resolve the dispute, they
              shall each prepare and, within seven business days after their conference,
              circulate to the President of MTM and the President of EGI a memorandum
              outlining in reasonable detail the nature of the dispute. Within five
              business days after receipt of the memoranda, the individuals to whom
              the
              memoranda were addressed shall arrange for a personal or telephone
              conference in which they attempt to resolve such dispute. If those
              individuals are unable to resolve the dispute, either Party may proceed
              with any legal remedy available to it; provided,
              however,
              that the Parties agree that any statement made as to the subject matter
              of
              the dispute in any of the conferences referred to in this
              Section 10.12 shall not be used in any legal proceeding against the
              Party that made such statement.

          

     

    	10.12  	
            Counterparts.
              This Agreement may be executed in multiple counterparts and by facsimile
              signatures, and all such counterparts taken together shall be deemed
              to
              constitute one and the same document.

          

     

    	10.13  	
            Rule
              Against Perpetuities.
              Any right or option to acquire any interest in real or personal property
              under this Agreement must be exercised, if at all, so as to vest such
              interest in the acquirer within 21 years after the Effective Date of
              this
              Agreement.

          

     

    	10.14  	
            Interpretation.
              Whenever the word “including” is used in this Agreement, it shall be
              deemed to mean “including without limitation.”

          

     

    [Signature
      Page Follows]

     

    
      
         

      

      
        F-19

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
      executed, delivered, and effective from the date first above
      written.

     

    ELKHORN
      GOLDFIELDS, INC., a Montana corporation

    

    

    By:_____________________________

    (name):
      Patrick Imeson

    (title): 
      President

    

    

    

    MONTANA
      TUNNELS MINING, INC., a Delaware corporation

    

    

    By:______________________________

    (name):
      R. David Russell

    (title): 
      President

     

    
      
         

      

      
        F-20

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