Document:

Exhibit
      10.1

     

    JOINT
      VENTURE AGREEMENT

     

    THIS
      AGREEMENT is
      dated
      effective December 18, 2006.

     

    AMONG:

     

    JOURNEY
      RESOURCES CORP.,
      a
      corporation existing under the laws of the Province of British Columbia and
      having an office at #1208 - 808 Nelson Street, Vancouver, British Columbia
      V6Z
      2H2 

     

    (hereinafter
      referred to as “Journey”)

     

    AND:

     

    MINERALES
      JAZZ S.A. DE C.V.,
      a
      corporation duly organized pursuant to the laws of Mexico and having an office
      at Avenida del Mar No. 1022 Oficina 5, Zona Costera, Mazatlan, Sin MEXICO
      82149

     

    (hereinafter
      referred to as “Jazz”, together with Journey, the “Operator”)

     

    AND:

     

    WITS
      BASIN PRECIOUS MINERALS INC.,
      a
      corporation existing under the laws of the State of Minnesota and having an
      office at 900 IDS Center, 80 South 8th
      Street,
      Minneapolis, Minnesota 55402

     

    (hereinafter
      referred to as “Wits”)

     

    WHEREAS:

     

    (A) The
      Operators are the recorded and beneficial owners of an undivided 100% interest
      in and to certain mineral concessions situated in Guerrero State, Mexico, as
      detailed in the specific description of the mineral concessions in Schedule
“A”
hereto (the “Property”); 

     

    (B) Pursuant
      to an option agreement (the “Option Agreement”) dated June 28, 2006, among the
      Operator and Wits, the Operator granted to Wits an exclusive right and option
      to
      acquire up to an undivided 50% right, title and interest in and to the Property;
      and

     

    (C) The
      Operator and Wits have agreed to form a joint venture with respect to their
      interests in the Option Agreement and mineral claims thereunder on the terms
      and
      conditions herein set forth.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    NOW,
      THEREFORE, in
      consideration of the promises and the mutual representations and covenants
      hereinafter set forth, the parties hereto do hereby agree as
      follows:

     

    PART
      1

     

    DEFINITIONS

     

    1.1  For
      the
      purposes of this Agreement:

     

    (a)  “Accounting
      Procedure”
means
      the accounting procedure prescribed from time to time by the Management
      Committee, which will initially be the accounting procedure forming part of
      this
      Agreement and set out in Schedule “C”;

     

    (b)  “Area
      of Interest”
means
      a
      part of the lands lying within two (2) kilometres from the external perimeter
      of
      the Property in existence as of the Effective Date, as described in Schedule
      “B”.;

     

    (c)  “Assets”
means
      the Property, other tenements, Facilities, Mineral Products and Supplies and
      all
      other assets acquired or held by the Participants with respect thereto or
      pursuant to this Agreement as the same may exist from time to time;

     

    (d)  “Associated
      Company”
in
      relation to a person and/or entity means:

     

    (i)  an
      operation which owns directly or through any other means more than 50% of the
      outstanding capital stock of an entity,

     

    (ii)  a
      corporation of which that person or entity owns directly or through any other
      means more than 50% of the outstanding capital stock, and

     

    (iii)  a
      corporation of which either of the persons or entities referred to in Sections
      1.1(d)(i) and 1.1(d)(ii) owns directly or through any other means more than
      50%
      of the outstanding capital stock.;

     

    (e)  “Commercial
      Production”
means
      the commercial exploitation of Mineral Products from the Property or any part
      of
      the Property as a mine, after implementation of a Production Program, but does
      not include milling for the purpose of testing or milling by a pilot
      plant;

     

    (f)  “Cost
      Share”
means
      the respective shares of Costs and other liabilities to be borne by each
      Participant, which will be equal to the respective Interests of each Participant
      as determined from time to time;

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    (g)  “Costs”
means
      Expenditures, Program Overruns, Production Program Costs, Production Program
      Overruns and Operating Costs, as applicable;

     

    (h)  “Effective
      Date”
means
      the date first written above;

     

    (i)  “Expenditures”
means,
      without duplication, all costs, expenses, obligations and liabilities of
      whatever kind of nature actually and directly incurred by either Participant,
      up
      to the implementation of a Production Program, in connection with the
      exploration and development of the Property, including without limiting the
      generality of the foregoing, monies expended in maintaining the Underlying
      Agreement in good standing, monies expended in maintaining the Property in
      good
      standing by doing and filing assessment work, in doing geophysical, geochemical,
      and geological surveys, drilling, drifting and other underground work, assaying
      and metallurgical testing and engineering, in acquiring Facilities, in paying
      the fees, wages, salaries, travelling expenses, and fringe benefits (whether
      or
      not required by law) of all persons engaged in work with respect to and for
      the
      benefit of the Property, in paying for the food, lodging and other reasonable
      needs of such persons and including all costs at prevailing charge out rates
      for
      any personnel or officers of the Operator who from time to time are engaged
      directly or indirectly in work on the Property and a charge made by the Operator
      as described in Section 6.2;

     

    (j)  “Facilities”
means
      all mines, plants and facilities including without limitation, all pits, shafts,
      haulageways, and other underground workings, and all buildings, plants,
      facilities and other structures, fixtures and improvements and all other
      property, whether fixed or moveable, as the same may exist at any time in,
      or on
      the Property and relating to the operation of the Property as a mine or outside
      the Property if for the exclusive benefit of the Property only;

     

    (k)  “Feasibility
      Report”
means
      a
      detailed report, showing the feasibility of placing any part of the Property
      into Commercial Production at an acceptable rate of return on capital, in such
      form and detail as is customarily required by institutional lenders of major
      financing for mining projects, and includes a reasonable assessment of the
      mineable ore reserves and their amenability to metallurgical treatment, a
      complete description of the work equipment and supplies required to bring such
      part of the Property into Commercial Production and the estimated cost thereof,
      a description of the mining methods to be employed and a financial appraisal
      of
      the proposed operations supported by explanations of the information set out
      in
      Section 10.2;

     

    (l)  “Interest”
means
      the undivided beneficial percentage interest of a Participant in the Assets
      and
      will be equal to its interest in the Property as determined pursuant to this
      Agreement;

     

    (m)  “Management
      Committee”
means
      a
      committee formed pursuant to Part 11;

     

    (n)  “Mineral
      Products”
means
      minerals derived for the account of the individual Participants from operating
      the Property as a mine to which has been applied the least number of treatments
      or processes necessary to render the minerals into a substance or state for
      which there is a commercially significant market, either within or outside
      North
      America, of arm’s length sales or purchases between unrelated
      parties;

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    (o)  “Operating
      Costs”
means,
      for any period after the commencement of Commercial Production, all costs,
      expenses, obligations, liabilities and charges of whatsoever kind or nature
      actually incurred or chargeable, directly by the Operator in connection with
      the
      operation of the Property as a mine during such period, which costs, expenses,
      obligations, liabilities and charges include, without duplication and without
      limiting the generality of the foregoing,

     

    (i)  all
      costs
      of or related to the mining and concentrating of ores or other products and
      the
      operation of the Facilities and all costs of or related to marketing of Mineral
      Products including transportation, commissions and/or discounts,

     

    (ii)  such
      amount of cash for working capital as, in the opinion of Operator, is required
      for the operation of the Property as a mine,

     

    (iii)  all
      costs
      of or related to operating employee facilities, including housing,

     

    (iv)  all
      duties, charges, levies, royalties, taxes (excluding taxes levied on the income
      of the parties) and other payments imposed by a government or municipality
      or
      department or agency thereof upon or in connection with operating the Property
      as a mine,

     

    (v)  fees,
      wages, salaries, traveling expenses and fringe benefits (whether or not required
      by law) of all persons directly engaged in respect of and for the benefit of
      the
      Property and all costs involved in paying for the food, lodging and other
      reasonable needs of such persons,

     

    (vi)  a
      charge
      made by Operator in accordance with Section 6.2 for unallocable overhead
      costs,

     

    (vii)  all
      reasonable costs of consulting, legal, accounting, insurance and other
      services,

     

    (viii)  all
      exploration expenditures incurred after the commencement of Commercial
      Production,

     

    (ix)  all
      capital costs of operating the Property as a mine including all costs of
      construction, equipment and mine development including maintenance, repairs
      and
      replacements and all capital expenditures relating to an improvement, expansion,
      modernization or replacement of the Facilities,

     

    (x)  all
      costs
      for pollution control, reclamation costs and any other related costs incurred
      or
      to be incurred by the Operator including deposits for such costs required by
      a
      governmental body or authority,

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    (xi)  any
      costs
      or expenses incurred or to be incurred relating to the termination of the
      operation of the Property as a mine,

     

    (xii)  uninsured
      losses on the Facilities, and

     

    (xiii)  all
      costs
      of maintaining in good standing or renewing from time to time the Property
      and
      other tenements or any interest therein, including payment of all government
      royalties and taxes of any nature whatsoever in connection
      therewith,

     

    less
      the
      amount of all insurance recoveries and settlements received during such period
      to the extent such recoveries and settlements were not deducted in a previous
      period and, except where specific provision is made otherwise, all Operating
      Costs will be determined in accordance with generally accepted accounting
      principals applied consistently from year to year, but such costs will not
      include any amount in respect of amortization of Costs, depletion or
      depreciation;

     

    (p)  “Operating
      Plan”
means
      a
      plan presented by Operator pursuant to Part 13 herein;

     

    (q)  “operating
      the Property as a mine”
or
      “operation
      of the Property as a mine”
means
      any or all of the mining, milling, leaching, smelting, and refining of ores,
      minerals, metals or concentrates derived from the Property.

     

    (r)  “Operator”
means
      the party acting as operator pursuant to this Agreement, and will be Journey,
      so
      long as Journey’s or one of its subsidiaries’ Interest is at least 25% , and
      otherwise will be such party as is determined by the Management
      Committee;

     

    (s)  “Participant”
means,
      Wits, Journey or Jazz, as the context requires, and its successors and permitted
      assigns and “Participants” means collectively Wits, Journey and Jazz, and their
      successors and permitted assigns;

     

    (t)  “person”
      means an
      individual, proprietorship, partnership, unincorporated organization or any
      other association, trust body corporate , firm, joint venture, government or
      any
      agency or department thereof, and a natural person in his or her capacity as
      trustee, executor, administrator or other legal representative;

     

    (u)  “Prime
      Rate”
means,
      for a month, the annual rate of interest declared by the Royal Bank of Canada
      as
      the reference rate of interest for determining Canadian dollar loans in Canada
      at noon on the first business day in that month;

     

    (v)  “Production
      Program”
means
      a
      Program contemplating achievement of Commercial Production pursuant to a
      Feasibility Report;

     

    (w)  “Production
      Program Costs”
means
      all cash, outlays and expenses, obligations and liabilities of whatever kind
      or
      nature spent or incurred directly or indirectly by the Participants in
      connection with a Production Program in order to equip the Property for
      Commercial Production, including working capital required for the initial six
      (6) month operation of the Property as a mine or such longer period as may
      be
      reasonably justified in the circumstances, and including the overhead charge
      made by the Operator under Section 6.2;

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    (x)  “Production
      Program Overruns”
means
      all Production Program Costs which exceed those estimated under a Production
      Program;

     

    (y)  “Program”
means,
      as the context requires:

     

    (i)  a
      program
      and budget to carry out work and incur Expenditures on the
      Property,

     

    (ii)  a
      document wherein there is specified in detail an outline of any and all
      research, prospecting and exploration and development work proposed to be
      carried out during such Program, the estimated Expenditures to be incurred
      in
      carrying out such work and the area of the Property on which such work is to
      be
      undertaken,

     

    (iii)  the
      preparation of a Feasibility Report and the preparation of a Production
      Program,

     

    (z)  “Program
      Overruns”
means
      Expenditures which exceed those estimated under a Program;

     

    (aa)  “Property”
means
      the located mineral claims more particularly described in Exhibit “A” and all
      other claims, leases and interests in minerals which are hereafter acquired
      within the Area of Interest, together with the other tenements surface rights,
      mineral rights, personal property and permits associated therewith, and will
      include any renewal thereof and any other form of successor or substitute title
      thereto or tenure derived from such mineral claims, leases and other
      tenements;

     

    (bb)  “SEC”
      means
      the United States Securities and Exchange Commission; 

     

    (cc)  “Supplies”
means
      tangible personal property of a non-capital nature (other than Mineral Products
      or Facilities) acquired or held by the parties with respect to the Property;
      and

     

    (dd)  “Underlying
      Agreement”
means
      the option agreement dated June 28, 2006, by and among Journey, Jazz and
      Wits.

    

    

    The
      following are Schedules to this Agreement:

    

    Schedule
      “A”         Description
      of Property;

    

    Schedule
      “B”         Area
      of
      Interest; and

    

    Schedule
      “C”         Accounting
      Procedure.

    

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    Interpretation

     

    1.2
      For
      the
      purposes of this Agreement, except as otherwise expressly provided
      herein:

     

    (a)“this
      Agreement” means this Joint Venture Agreement, including the Schedules hereto,
      as it may from time to time be supplemented or amended;

     

    (b)the
      words
“herein”, “hereof” and “hereunder” and other words of similar import refer to
      this Agreement as a whole and not to any particular Part, clause, subclause
      or
      other subdivision or Schedule;

     

    (c)the
      singular of any term includes the plural and vice versa and the use of any
      term
      is equally applicable to any gender and where applicable to a body
      corporate;

     

    (d)the
      word
“including” is not limiting (whether or not non-limiting language such as
“without limitation” or “but not limited to” or other words of similar import
      are used with reference thereto);

     

    (e)all
      accounting terms not otherwise defined in this Agreement have the meanings
      assigned to them in accordance with generally accepted accounting principles
      applicable in Canada, applied on a consistent basis with prior
      years;

     

    (f)a
      reference to a Part is to a Part of this Agreement, and the word Section
      followed by a number or some combination of numbers and letters refers to the
      section, paragraph, subparagraph, clause or subclause of this Agreement so
      designated;

     

    (g)the
      headings to the Parts and clauses of this Agreement are inserted for convenience
      only and do not form a part of this Agreement and are not intended to interpret,
      define or limit the scope, extent or intent of this Agreement or any provision
      hereof;

     

    (h)any
      reference to a corporate entity includes and is also a reference to any
      corporate entity that is a successor to such entity; and

     

    (i)the
      representations, warranties, covenants and agreements contained in this
      Agreement will not merge at the Closing and will continue in full force and
      effect from and after the Closing Date for the applicable period set out in
      this
      Agreement.

    

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    PART
      2

     

    REPRESENTATIONS,
      WARRANTIES AND COVENANTS

     

    2.1  Wits
      hereby represents, warrants and covenants to Journey and Jazz as
      follows:

     

    (a)  it
      is a
      company duly incorporated, organized and validly existing under the laws of
      the
      State of Minnesota;

     

    (b)  it
      has
      full power and authority to carry on its business and to enter into this
      Agreement and any agreement or instrument referred to or contemplated by this
      Agreement;

     

    (c)  neither
      the execution and delivery of this Agreement nor any of the agreements referred
      to herein or contemplated hereby, nor the consummation of the transactions
      hereby contemplated conflict with, result in the breach of or accelerate the
      performance required by, any agreement to which it is a party;

     

    (d)  the
      execution and delivery of this Agreement and the agreements contemplated hereby
      have been duly authorized by all necessary corporate action on its part and
      will
      not violate or result in the breach of the laws of any jurisdiction applicable
      or pertaining thereto or of its constating documents; 

     

    2.2  Each
      of
      Journey and Jazz, as the case may be, hereby represents, warrants and covenants
      to Wits as follows:

     

    (a)  Journey
      is a company duly incorporated, organized and validly existing under the laws
      of
      the Province of British Columbia;

     

    (b)  Jazz
      is a
      company duly incorporated, organized and validly existing under the laws of
      Mexico;

     

    (c)  each
      of
      Journey and Jazz has full power and authority to carry on its business and
      to
      enter into this Agreement and any agreement or instrument referred to or
      contemplated by this Agreement;

     

    (d)  neither
      the execution and delivery of this Agreement nor any of the agreements referred
      to herein or contemplated hereby, nor the consummation of the transactions
      hereby contemplated conflict with, result in the breach of or accelerate the
      performance required by, any agreement to which either Journey or Jazz is a
      party;

     

    (e)  the
      execution and delivery of this Agreement and the agreements contemplated hereby
      have been duly authorized by all necessary corporate action on the part of
      Journey and Jazz and will not violate or result in the breach of the laws of
      any
      jurisdiction applicable or pertaining thereto or of either of their constating
      documents;

     

    (f)  Journey
      is the holder of a valid and existing free miner certificate issued to it under
      the Mineral
      Tenure Act
      (British
      Columbia);

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    (g)  there
      is
      no consent, approval or condition precedent to the performance of Journey or
      Jazz under this Agreement that has not been obtained, as of the Effective Date,
      other than acceptance of the Underlying Agreement by the TSX Venture
      Exchange;

     

    (h)  Journey
      is the 100% beneficial holder of the Property free and clear of all liens,
      claims and encumbrances, through its wholly owned subsidiary Jazz;

     

    (i)  the
      Property has been accurately described in Schedule “A”, the claims comprising
      the Property have been validly staked, located and recorded in the name of
      Jazz
      and are in good standing pursuant to all applicable laws, and all taxes, rents,
      charges and assessments with respect thereto have been paid or satisfied in
      full
      as of the Effective Date;

     

    (j)  other
      than the Underlying Agreement, there are no outstanding agreements or options
      to
      acquire or purchase any of the mineral rights comprising the Property, no person
      has any royalty or other interest whatsoever in any production therefrom, and
      to
      the knowledge of either Journey or Jazz, there is no adverse claim or challenge
      against or to the ownership of or title to the Property nor any basis
      therefor;

     

    (k)  no
      environmental audit, assessment, study or test has been conducted in relation
      to
      the Property by or on behalf of Journey or Jazz nor is Journey or Jazz aware
      of
      any of the same having been conducted by or on behalf of any other person
      (including any governmental authority) and, to their knowledge after due
      inquiry, there is no outstanding directive or order or similar notice issued
      by
      any regulatory agency or authority, including any agency or authority
      responsible for environmental matters, affecting the Property. There is not
      any
      reason to believe that such an order, directive or similar notice is pending
      and
      all work conducted on the Property to the date hereof has been conducted in
      full
      compliance with all laws;

     

    (l)  neither
      Journey nor Jazz has received any notice nor do they have any knowledge of
      any
      proposal to terminate or vary the terms of or rights attaching to any of the
      mineral rights comprising the Property from any governmental, regulatory agency
      or authority;

     

    (m)  there
      is
      no adverse claim or challenge against the right of Wits to earn up to a 50%
      Interest in the Property, nor to the knowledge of Journey or Jazz after due
      inquiry, is there any basis therefor;

     

    (n)  to
      the
      knowledge of Journey and Jazz after due inquiry, there are no obligations or
      commitments for reclamation, closure or other environmental corrective, clean-up
      or remediation action directly or indirectly relating to the Property, to their
      knowledge neither Journey nor Jazz has directly or indirectly caused, permitted
      or allowed any contaminants, pollutants, wastes or toxic substances
      (collectively in this subsection, “Hazardous Substances”) to be released,
      discharged, placed, escaped, leached or disposed of on, into, under or through
      the Property (including watercourses, improvements thereon and contents thereof)
      or nearby land and, to their knowledge, no Hazardous Substances or underground
      storage tanks are contained, harboured or otherwise present in or upon the
      Property (including watercourses, improvements thereon and contents thereof)
      or
      nearby land;

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    (o)  to
      the
      knowledge of Journey and Jazz, there are no actions, suits, investigations
      or
      proceedings before any court, arbitrator, administrative or regulatory agency
      or
      authority or other tribunal or governmental authority, whether current, pending
      or threatened, which directly or indirectly relate to or affect the Property
      (including the ownership or existing or past uses thereof) or compliance with
      laws nor is Journey or Jazz aware of any facts which would lead it to suspect
      that the same might be initiated or threatened;

     

    (p)  Journey
      and Jazz have fully complied with all laws, rules, assessment work and filing
      requirements with respect to the Property, including without limitation,
      applicable environmental laws, and has received no notice of any breach,
      violation or default with respect to the Property;

     

    (q)  Journey
      and Jazz have made available to Wits all material information in their
      respective possession or control relating to the Property and will continue
      to
      make available to Wits all information in their possession or control relating
      to the Property; 

     

    (r)  Journey
      and Jazz possess all such permits, authorizations and approvals and rights
      that
      are necessary to engage in the transactions contemplated by this Agreement.
      Wits
      has no reasonable basis to conclude that Journey and Jazz will not be able
      to
      obtain any license, permit, authorization, approval, and right that may be
      required to perform their respective obligations herein; and

     

    (s)  on
      a
      regular basis and as activities of Operator dictate, Operator will provide
      detailed drilling reports to Wits, the form of which will comply with “NI 43-101
      requirements” governing international drilling reports.

     

    PART
      3 

     

    CONDITIONS

     

    3.1   
      In
      addition to making the payment to Journey as described in Section 5.1,
      Wits’
      additional 25% Interest, for a total of a 50% interest, will be subject to
      the
      satisfaction of the following conditions:

     

    (a)
      pursuant
      to the Underlying Agreement, on or before January 15, 2007, Wits will issue
      500,000 fully paid, non-assessable shares of its common stock to Journey. Such
      shares will have piggy back rights and will be the subject of a registration
      statement with the SEC, within 60 days of issuance of same, or within such
      time
      as is reasonably practical and mutually agreed by the parties; and

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    (b)
      pursuant
      to the Underlying Agreement, on or before September 30, 2007, Wits will
      contribute an additional aggregate amount of $500,000 to the joint venture
      to
      assist the funding of a Phase II drilling project.

     

    3.2  
       If
      the
      conditions set forth in Section 3.1(a) or Section 3.1(b) are not satisfied,
      upon
      written demand by Journey to Wits, Wits will immediately forfeit its right
      to
      earn an additional 25% Interest and will retain only a 25% interest in and
      to
      the Property.

     

    3.3  
      Subject
      to the payment described in Section 5.1, if the conditions set forth in Section
      3.1(a) and Section 3.1(b) are satisfied, Wits will be deemed to have earned
      an
      additional 25% Interest in and to the Property. For purposes of clarity, if
      Wits
      satisfies Section 3.1(a) and 3.1(b), it will hold a 50% Interest in and to
      the
      Property.

     

    3.4  
      The
      representations and warranties set forth in Sections 2.1 and 2.2 are conditions
      on which the parties have relied on in entering this Agreement and each of
      the
      parties will indemnify and save the other harmless from all loss, damage, costs,
      actions and suits arising out of or in connection with any material breach
      of
      any representation, warranty, covenant, agreement or condition made by them
      and
      contained in this Agreement, except as otherwise set forth herein.

     

    PART
      4 

     

    ASSOCIATION
      AND PARTICIPANTS

     

    4.1  Wits,
      Journey and Jazz hereby agree to associate as joint venturers under this
      Agreement for the following limited functions and purposes:

     

    (a)  to
      acquire additional interests in minerals within the Area of Interest and to
      carry out work on the Property in accordance with the terms of this
      Agreement;

     

    (b)  to
      further explore and if deemed warranted as herein provided, to develop the
      Property and equip it for Commercial Production;

     

    (c)  to
      operate the Property as a mine; and

     

    (d)  to
      engage
      in such other activity as may be considered by the Participants to be necessary
      or desirable in connection with the foregoing.

     

    4.2  All
      transactions, contracts, employments, purchases, operations, negotiations with
      third parties and any other matter or act undertaken on behalf of the
      Participants in connection with the Assets will be done, transacted, undertaken
      or performed in the name of the Operator only, and no party will do, transact,
      perform or undertake anything in the name of the other parties or in the joint
      names of the Participants.

     

    4.3  The
      rights and obligations of the Operator and Wits will be, in each case, several,
      and will not be or be construed to be either joint or joint and
      several.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    4.4  Nothing
      contained in this Agreement will, except to the extent specifically authorized
      hereunder, be deemed to constitute a Participant as a partner, an agent or
      legal
      representative of any other party.

     

    4.5  It
      is
      intended that this Agreement will not create the relationship of a partnership
      between Operator and Wits and that no act done by Operator or Wits pursuant
      to
      the provisions hereof will operate to create such a relationship.

     

    4.6  Each
      Participant will be liable for its Cost Share of Costs and any other debts
      liabilities or obligations associated with the exploration, development or
      operation of the Property as a mine at such time as the liability is incurred
      by
      the Operator.

     

    4.7  Except
      as
      otherwise set forth herein, each Participant, in proportion to its Interest,
      will indemnify and hold harmless the other Participants from any claim of or
      liability to any third person asserted upon the ground that an action taken
      under this Agreement has resulted in or will result in loss or damage to such
      third person, to the extent, but only to the extent that such claim or liability
      is paid by such other Participants in an amount in excess of such other
      Participants’ Interests.

     

    4.8  Each
      Participant will devote such time as may be required to fulfill any obligation
      assumed by it hereunder but, except for the parties’ respective obligations
      hereunder in relation to the Property and the Area of Interest:

     

    (a)  each
      Participant will be at liberty to engage in any other business or activity
      outside the joint venture constituted hereby, including the ownership and
      operation of any other mining permits, licenses, claims and leases;

     

    (b)  each
      Participants will not be under any fiduciary or other obligation to the other
      Participants which will prevent or impede such Participant from participating
      in, or enjoying the benefits of, competing endeavours of a nature similar to
      the
      business or activity undertaken by the Participants hereunder; and

     

    (c)  the
      legal
      doctrines of “corporate opportunity” or “business opportunity” sometimes applied
      to persons occupying a relationship similar to that of the Participants will
      not
      apply with respect to participation by either Participant in any business
      activity or endeavour outside the joint venture constituted hereby, and, without
      implied limitation, a Participant will not be accountable to the other for
      participation in any such business activity or endeavour outside the joint
      venture constituted hereby which is in direct competition with the business
      or
      activity undertaken by the joint venture.

     

    
      
         

      

      
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    PART
      5

     

    INTEREST
      OF PARTICIPANTS

     

    5.1  Subject
      to Sections 3.2 and 3.3 herein, as of the Effective Date, Wits will have a
      25%
      undivided Interest in the Property and Journey and Jazz, collectively, will
      have
      a 75% undivided Interest in the Property. In consideration of Wit’s Interest and
      upon execution of this Agreement by all parties hereto, Wits will deliver the
      aggregate amount of One Hundred Twenty Thousand Dollars ($120,000) by wire
      transfer to an account designated by Journey.

     

    5.2  Each
      of
      the respective Participants will be deemed to have the following respective
      Interests and to have incurred the following Expenditures as of the Effective
      Date:

     

    
      	
              Participant

            	 	
              Interest

            	 	
              Deemed

              Expenditures

            	 
	
              Wits

            	 	 	
              25

            	
              %

            	
              $

            	
              ___[PV
                x 25%]____

            	 
	
              Operator
                

            	 	 	
              75

            	
              %

            	
              $

            	
              ____[PV
                x 75%]___

            	 

    

     

    5.3  The
      project will be run on a 75%/25% basis, in accordance with
      the
      terms
      hereunder, with the Participants contributing to all Costs in operating
      the joint venture in proportion
      to its percentage of undivided Interest. The aggregate
      amount of Expenditures
      as at
      the Effective Date is deemed to be the current value of the project (the
“PV”).
      The
      PV will be updated each time an additional
      expenditure
      is made.

     

    5.4  Except
      as
      set forth in Section3.2 and 3.3, the percentage level of the respective
      Interests of Wits, Journey and Jazz will not change, so long as each Participant
      contributes its respective Cost Share of Costs.

     

    5.5  If
      a
      Participant elects not to contribute, or fails to contribute its respective
      Cost
      Share, then the other Participants have the right to contribute to the
      non-contributing Participant’s Cost Share resulting
      in a diluted
      Interest
      of the non-contributing Participant, and
      the
      percentage level of the Participants’ Interest will be adjusted pursuant to the
      following formula: 

     

    (a)  the
      amount of such Participant’s contributions or deemed contributions to Costs,
      divided by

     

    (b)  the
      amount of all contributions or deemed contributions to Costs by all
      Participants.

     

    5.6  If,
      as a
      result of adjustment pursuant to Section 5.5, a Participant’s Interest is
      reduced to 10% or less, the Interest of such Participant will be automatically
      converted to a 5% net project interest .

     

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

     

    PART
      6

     

    OPERATOR

     

    6.1  Journey
      and Jazz, collectively, will act as the Operator under this Agreement, so long
      as their collective Interest is 25% or more, or as otherwise set forth in this
      Part 6.

     

    6.2  An
      Operator
      fee (the
“Operator Fee”) will be paid based on a percentage of Expenditures, as
      follows:
      

     

    (a)  to
      Operator during the Option Period: 10%;

     

    (b)    
      to
      Operator commencing on Effective Date: 5%
      of all
      qualified Expenditures incurred; and

     

    (c)    
       to
      Operator after full Feasibility Report accepted: 5% of
      all
      qualified Expenditures during construction, development and operations
      of the mine.

    

    6.3  The
      Operator Fee will include, but not be limited to all Operator’s office
overhead costs
      and
      all
      general and administrative expenses including telephone, faxes, and direct
      management salaries
      and
      wages.  

     

    6.4  the
      Operator Fee will be payable monthly in arrears for the Expenditures incurred
      in
      that month, which charge will be an amount sufficient to reimburse Operator
      fully for its services as Operator, but not sufficient to enable Operator to
      profit thereby and such fees will be reviewed and if proven to be excessive
      or
      insufficient will be adjusted by the Management Committee on the basis that
      Operator should neither profit nor lose by acting as such; and

     

    6.5  prescribe
      the administrative and accounting procedure governing the conduct of Programs
      or
      Production Programs or the operation of the Property as a mine, including the
      basis for charges and credit related thereto, except where any such procedure
      is
      in conflict with the provisions of this Agreement, in which event the provisions
      of this Agreement will prevail.

     

    6.6  The
      initial Accounting Procedure, subject to change from time to time by the
      Management Committee, is attached as Schedule “C”.

     

    6.7  Operator
      may resign at any time by giving thirty (30) days’ prior written notice to Wits
      and within such 30-day period, the Management Committee will appoint another
      party who covenants to act as the Operator upon such terms as the parties will
      agree.

     

    6.8  If
      following its appointment as Operator, Operator fails to perform in a manner
      consistent with its powers and duties under this Agreement, any Participant
      may
      give to Operator written notice setting forth particulars of Operator’s
      default.

     

    6.9  Operator
      will within thirty (30) days after receipt of such notice described in Section
      6.8 either dispute the occurrence of such default or commence to remedy the
      default within the time limit aforesaid (and thereafter, in the latter case,
      will proceed continuously and diligently to complete all required remedial
      action).

     

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

     

    6.10  Operator
      may take action to remedy an alleged default under Section 6.8 without prejudice
      to its right to dispute the occurrence of the default and to claim recovery
      of
      expenses incurred in remedial work not occasioned by its default.

     

    6.11  If
      Operator disputes any alleged default under Section 6.8 or if the Participant
      alleging a default provides to Operator a further written notice that Operator
      has failed to proceed continuously and diligently to complete all required
      remedial action to remedy a default previously alleged by such Participant,
      then
      the matter will be referred to arbitration under Section 20.7.

     

    6.12  Operator
      will be deemed to have offered its resignation upon the occurrence of any of
      the
      following events:

     

    (a)  if
      an
      attachment in respect to any material liability of Operator is made on the
      Property which is not related to the business of the joint venture;

     

    (b)  If
      Operator:

     

    (i)  admits
      in
      writing its inability to pay its debts as they become due other than
      indebtedness (“non-recourse financing”) for money borrowed or guaranteed where
      the recourse of the holder thereof is restricted to realization upon specific
      assets none of which consist of any Interest, and whether failure to pay the
      indebtedness does not result in the creation of an unsecured obligation of
      Operator,

     

    (ii)  makes
      an
      assignment for the benefit of creditors,

     

    (iii)  consents
      to the appointment of a receiver (other than a receiver appointed under
      non-recourse financing) for all or a substantial part of its
      assets,

     

    (iv)  files
      a
      petition in bankruptcy or for a reorganization or an arrangement under
      applicable bankruptcy, insolvency or creditors’ relief laws, or otherwise seeks
      the relief therein provided, or

     

    (v)  is
      adjusted bankrupt or insolvent;

     

    (c)  if
      a
      court order is pronounced in respect to Operator appointing a receiver or
      trustee for all or a substantial part of its property (other than property
      securing non-recourse financing), or approving a petition in bankruptcy or
      for a
      reorganization under applicable bankruptcy, insolvency or creditor’s relief laws
      or for any judicial modification or alteration of the rights of creditors;
      or

     

    (d)  the
      Interest of the Operator is reduced to less than 25% for thirty (30) consecutive
      days.

     

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

     

    6.13  Upon
      ceasing to be Operator, the former Operator will forthwith deliver to its
      successor all Assets, books, records and other property both real and personal
      relating to this Agreement or its role as Operator under this
      Agreement.

     

    6.14  The
      former Operator will use its best efforts to transfer to its successor, as
      of
      the effective date of the former Operator’s resignation or removal, its rights
      and obligations, if any, as Operator under all contracts relating to the Assets,
      and pending such transfer and in relations to all other contracts relating
      to
      the Assets, the former Operator will hold its right and interest as Operator
      from the date of resignation or removal for the account and to the order of
      the
      new Operator.

     

    6.15  All
      reasonable costs of termination of employment of employees of the Operator
      arising from any removal, but not resignation, of the Operator will be deemed
      to
      be Expenditures and the former Operator will be reimbursed therefor by the
      Participants promptly after submission of invoices to the successor
      Operator.

     

    6.16  The
      successor Operator will be under no obligation to provide alternative employment
      to any employee engaged or primarily engaged by the former
      Operator.

     

    6.17  As
      soon
      as practicable after the effective date of resignation or removal of Operator,
      the Management Committee will have the accounts of Operator relating to the
      Assets audited by an independent auditor (who may be the auditor of a
      Participant), and will conduct an inventory of all Assets and such inventory
      will be used in the return of and the accounting for the Assets by the Operator
      who has resigned or has been removed.

     

    6.18  All
      costs
      and expenses incurred in connection with such audit and inventory will be deemed
      to be Expenditures.

     

    6.19  Operator
      will not act or hold itself out as agent for any of the parties nor make any
      commitments on their individual behalf unless specifically permitted by this
      Agreement or directed in writing by a party.

     

    PART
      7

     

    POWER
      AND AUTHORITY OF OPERATOR

     

    7.1  Subject
      to the control and direction of the Management Committee, Operator will have
      full right, power and authority to do everything necessary or desirable in
      accordance with good mining practice in connection with the exploration and
      development of the Property and to determine the manner of operation of the
      Property as a mine, including and without limiting the generality of the
      foregoing, the right, power and authority to:

     

    (a)  prepare
      and present to the Management Committee Programs, Production Programs, Operating
      Plans and any Feasibility Report in respect of the Property, as
      applicable;

    

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

     

    (b)  implement
      any Program in accordance with Part 9 and any Production Program in accordance
      with a Feasibility Report approved by the Participants in accordance with Part
      10;

    

    (c)  regulate
      access to the Property subject only to the right of the Participants to have
      access to the Property at all reasonable times for the purpose of inspecting
      work being done thereon but at their own risk and expense;

    

    (d) employ
      and engage such employees, agents, and independent contractors as it may
      consider necessary or advisable to carry out its duties and obligations
      hereunder and in this connection to delegate any of its powers and rights to
      perform its duties and obligations hereunder, but Operator will not enter into
      contractual relationships with an Associated Company except on terms which
      are
      commercially competitive;

     

    PART
      8

     

    DUTIES
      AND OBLIGATIONS OF OPERATOR

     

    8.1  Operator
      will have such duties and obligations as the Management Committee may from
      time
      to time determine including, without limiting the generality of the foregoing,
      the following duties and obligations:

     

    (a)  to
      propose to the Participants and, if approved, to implement Programs, Operating
      Plans and the Production Program;

     

    (b)  to
      manage, direct and control all exploration, development and producing operations
      in and under the Property, in a prudent and workmanlike manner, and in
      compliance with all applicable Federal, Provincial and local laws, rules, order
      and regulations;

     

    (c)  to
      prepare and deliver to the Participants during periods of active field work
      monthly progress reports of the work in progress, which include statements
      of
      Costs and comparisons of such Costs to the approved Programs or Production
      Program and comprehensive annual reports, on or before February 28 of each
      year
      covering the activities hereunder and results obtained during the calendar
      year
      ending on December 31 immediately preceding and timely current reports and
      information on any material results obtained together with such other reports
      as
      either Participant may reasonably request;

     

    (d)  subject
      to the terms and conditions of this Agreement, to keep the Property in good
      standing free of liens, charges and encumbrances of every character arising
      from
      operations (except liens for taxes not yet due, other inchoate liens and liens
      contested in good faith by Operator, and to proceed with all diligence to
      contest or discharge any lien that is filed;

     

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

     

    (e)  to
      account to the Participants for all contributions to Costs and to use all
      reasonable efforts to limit or curtail Program Overruns or Production Program
      Overruns;

     

    (f)  to
      maintain true and correct books, accounts and records of operations
      hereunder;

     

    (g)  to
      permit
      the Participants, at their own expense, to inspect, have access to, take
      abstracts from or audit all maps, drill logs, core tests, reports, surveys,
      essays, analyses, production reports, operations, technical, accounting and
      financial records, including any or all of the records and accounts referred
      to
      in Section 8.1(f), during normal business hours;

     

    (h)  to
      obtain
      and maintain, or cause any contractor engaged hereunder to obtain and maintain,
      during any period in which active work is carried out hereunder, adequate
      insurance coverage with a reasonable bodily injury, death and property damage
      limit per occurrence;

     

    (i)  to
      permit
      the Participants or their representatives so appointed, at their own expense
      and
      risk, access to the Property and all data derived from carrying out work
      thereon;

     

    (j)  to
      arrange for and maintain workers’ compensation or equivalent coverage for all
      eligible employees engaged by Operator in accordance with applicable statutory
      requirements;

     

    (k)  to
      perform its duties and obligations in a manner consistent with good exploration
      and mining practices; and

     

    (l)  to
      transact, undertake and perform all transactions, contracts, employments,
      purchases, operations and negotiations on behalf of the parties in the
      Operator’s name.

     

    PART
      9

     

    PROGRAMS

     

    9.1  Following
      one hundred and twenty (120) days after the Effective Date, Expenditures will
      only be incurred under and pursuant to Programs prepared by Operator and
      delivered to the Management Committee as provided in this Part 9.

     

    9.2  If
      no
      Program has been approved or completed in a calendar year, Operator will prepare
      and submit to the Management Committee a Program proposed by
      Operator.

     

    9.3  Within
      thirty (30) days after the approval of a Program by the Management Committee,
      each Participant will give written notice to the Operator stating whether or
      not
      it elects to contribute its Cost Share of such Program.

     

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

     

    9.4  Failure
      to give notice pursuant to Section 9.3 within such thirty (30) day period will
      be deemed to be an election by a Participant not to contribute its Cost Share
      of
      such Program.

     

    9.5  If
      a
      Participant elects or is deemed to have elected not to contribute its Cost
      Share
      of a Program approved by the Management Committee, the other Participant (the
      “Contributing Participant”) may give notice in writing to Operator that such
      Contributing Participant will contribute the Cost Share of the non-contributing
      Participant to be incurred under, or pursuant to such Program and thereafter
      the
      Operator will proceed with such Program.

     

    9.6  In
      such
      event, the Participants’ respective Interests will thereafter be adjusted
      pursuant to the formula set forth in Section 5.5.

     

    9.7  Operator
      will not proceed with any Program which is not fully subscribed.

     

    9.8  An
      election to fund a Program will make a Participant liable to pay its Cost Share
      of all of the Expenditures actually incurred under or pursuant to such Program,
      including Program Overruns up to but not exceeding 10% of estimated
      Expenditures.

     

    9.9  After
      having elected to fund a Program which is proceeded with, each Participant
      will,
      within thirty (30) days after being requested in writing to do so by Operator,
      pay such amount of Expenditures incurred or to be incurred under or pursuant
      to
      such Program as Operator may require, but Operator will not require payment
      of
      any funds more than one month in advance of the period during which the same
      are
      to be expended.

     

    9.10  Monthly
      Expenditure projections will be delivered by Operator to the Participants once
      each calendar quarter for the next succeeding three (3) months.

     

    9.11  If
      it
      appears that Expenditures will exceed by more than 30% those estimated under
      a
      Program, Operator will immediately give written notice to the Participants
      outlining the nature and extent of the Program Overruns.

     

    9.12  If
      such
      Program Overruns are accepted by the Participants then, within thirty (30)
      days
      after the receipt of a written request from Operator, each Participant will
      pay
      to the Operator its Cost Share of such Program Overruns.

     

    9.13  If
      a
      Participant does not accept such Program Overruns, or fails to pay the same,
      Operator will be entitled to curtail or abandon such Program and any of the
      other Participants will be entitled to pay the Cost Share of such
      Participant.

     

    9.14  If
      a
      Participant pays such Cost Share of another Participant for such Program
      Overruns, it will be entitled to recoup such amount, together with interest
      at
      the Prime Rate pursuant to Section 14.3, and such amount will not be included
      in
      the calculation of each Participant’s Interest under Section 5.5. 

     

    
      
         

      

      
        -19-

        
          

        

      

      
         

      

    

     

    9.15  If
      a
      Participant at any time fails to pay such amount of Expenditures as is requested
      by Operator in accordance with Section 9.9 after having elected to do so or
      accepted Program Overruns in accordance with Section 9.12, Operator may give
      written notice to such Participant demanding payment, and if such Participant
      has not paid such amount within thirty (30) days after receipt of such notice,
      such Participant will be deemed to

     

    (i)  be
      in
      default under Section 9.9 or Section 9.12, as applicable, and

     

    (ii)  have
      lost
      its right to contribute to such Program,

     

    and
      thereafter the other Participants will have the right to contribute all Costs
      to
      be incurred under or pursuant to that Program, and Operator will have the right
      to curtail or abandon that Program.

     

    PART
      10

     

    PRODUCTION
      PROGRAMS

     

    10.1  If
      Operator determines that the economic potential of any part of the Property
      warrants the preparation of a Feasibility Report, the Operator will present
      a
      Program in accordance with Part 9 contemplating the preparation of a Feasibility
      Report.

     

    10.2  Operator
      will deliver to the Management Committee any internal or draft report or reports
      on the economics of Commercial Production and on completion of the Feasibility
      Report pursuant to such Program, Operator will deliver to the Participants
      a
      Feasibility Report and if in the opinion of Operator it is warranted based
      on
      the conclusions reached in the Feasibility Report, a Production Program in
      respect to such part of the Property which will include at least the
      following:

     

    (a)  a
      description of that part of the Property to be covered by the proposed
      mine,

     

    (b)  the
      estimated recoverable reserves of minerals and the estimated composition and
      content thereof,

     

    (c)  the
      proposed procedure for development, mining and production,

     

    (d)  results
      of ore amenability test (if any),

     

    (e)  the
      nature and extent of the Facilities proposed to be acquired which may include
      mill facilities, if the size, extent and location of the ore body makes such
      mill facilities feasible, in which event the study will also include a
      preliminary design for such mill,

     

    (f)  the
      total
      costs, including capital budget, which are reasonably required to obtain
      permitting for and to purchase, construct and install all structures, machinery
      and equipment required for the proposed mine, including a schedule of timing
      of
      such requirements,

     

    (g)  all
      environmental, socio-economic and heritage baseline impact studies and
      costs,

     

    (h)  the
      period in which it is proposed the Property will be brought to Commercial
      Production,

     

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

     

    (i)  such
      other data and information as are reasonably necessary to substantiate the
      existence of an ore deposit of sufficient size and grade to justify development
      of a mine, taking into account all relevant business, tax and other economic
      consideration, and

     

    (j)  working
      capital requirements for the initial six (6) month operations as a mine or
      such
      longer period as may be reasonably justified in the circumstances.

     

    10.3  So
      long
      as it has not lost its right to contribute to Programs and to Production
      Programs, a Participant may at any time request Operator to present a Program
      contemplating the preparation of a Feasibility Report.

     

    10.4  Upon
      completion of a Feasibility Report, a Production Program will be presented
      to
      Participants if, in the opinion of Operator, it is warranted based on the
      conclusions reached in the Feasibility Report.

     

    10.5  If
      the
      Participant who did not contribute to the preparation of the Feasibility Report
      and the Production Program elects pursuant to Section 9.3 to participate in
      a
      Production Program based on the Feasibility Report prepared by another
      Participant, the Participant who did not contribute will reimburse the other
      an
      amount in respect of the cost of the Feasibility Report equal to such
      Participant’s Cost Share before taking the cost of the Feasibility Report into
      account together with interest from the date contributed at a per annum rate
      of
      the Prime Rate plus 2% per year.

     

    10.6  Within
      thirty (30) days after the delivery to the Participants of a Production Program
      and Feasibility Report,pursuant to either Section 9.3 or Section 9.5, each
      Participant will give written notice to Operator stating whether it elects
      to
      contribute its Cost Share of the Production Program.

     

    10.7  Failure
      to give such notice within such thirty (30) day period will be deemed to be
      an
      election not to contribute to such Production Program and the provisions of
      Section 9.5 will apply.

     

    10.8  If
      all
      Participants elect to contribute their respective Cost Shares of the Production
      Program, Operator will implement the Production Program.

     

    10.9  Operator
      will not proceed with any Production Program which is not fully
      subscribed.

     

    10.10  An
      election to fund a Production Program will make a Participant liable to pay
      its
      Cost Share of:

     

    (a)  all
      of
      the Production Program Costs actually incurred under or pursuant to such
      Production Program, including Production Program Overruns up to but not
      exceeding 10% of estimated Production Program Costs,

     

    
      
         

      

      
        -21-

        
          

        

      

      
         

      

    

     

    (b)  Operating
      Costs and any other costs associated with establishing and operating the
      Property as a mine at such time as the liability is incurred by Operator;
      and

     

    (c)  any
      debts, liabilities or obligations arising from operations hereunder, except
      financing costs incurred by the other Participant in connection with such other
      Participants’ contributions to the Production Program.

     

    10.11  Commencing
      thirty (30) days after having elected to fund a Production Program which is
      proceeded with, each Participant will, within thirty (30) days after being
      requested in writing to do so by the Operator, pay such amount of Production
      Program Costs incurred or to be incurred under or pursuant to such Production
      Program as Operator may require, but Operator will not require of any funds
      more
      than one (1) month in advance of the period during which they are to be
      expended.

     

    10.12  If
      it
      appears that Production Program Costs will exceed by more than 30% those
      estimated under a Production Program, Operator will immediately give written
      notice to the Participants outlining the nature and extent of the Production
      Program Overruns.

     

    10.13  If
      such
      Production Program Overruns are accepted by the Participants then, within thirty
      (30) days after the receipt of a written request from Operator, each Participant
      will pay to Operator its Cost Share of such Production Program
      Overruns.

     

    10.14  If
      any
      Participant does not accept such Production Program Overruns, or fails to pay
      the same, any other Participant will be entitled to pay the Cost Share of such
      Participant.

     

    10.15  If
      a
      Participant pays such Cost Share, it will be entitled to recoup such amount
      together with interest at the Prime Rate pursuant to Section 14.3. 

     

    10.16  If
      a
      Participant:

     

    (a)  at
      any
      time fails to pay such amount of Production Program Costs as is requested by
      the
      Operator in accordance with Section 9.9, or

     

    (b)  at
      any
      time fails to pay such amount of Production Program Overruns as was accepted
      by
      such Participant in accordance with Section 9.12,

     

    Operator
      may give written notice to such Participant demanding payment, and if such
      Participant has not paid such amount within thirty (30) days after receipt
      of
      such notice, such Participant will be deemed to be in default under Section
      9.9
      or Section 9.12 and have lost its right to contribute to the Production Program
      and the other Participant will have the right to contribute all Production
      Program Costs to be incurred under or pursuant to the Production Program and
      the
      Operator will proceed with the Production Program and the Participants’
respective Interests will thereafter be adjusted in accordance with Section
      5.5.

     

    
      
         

      

      
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PART
      11

     

    MANAGEMENT
      COMMITTEE

     

    11.1 The
      Participants will, as soon as is practicable following the Effective Date,
      establish a Management Committee consisting of one (1) member and one (1)
      alternate member of each Participant.

     

    11.2 Each
      Participant will designate in writing to the other the names of its member
      and
      alternate member of the Management Committee.

     

    11.3 A
      Participant may from time to time revoke in writing the appointment of its
      member to the Management Committee and appoint in writing another in his
      place.

     

    11.4 A
      Participant may from time to time in writing appoint one alternate member for
      any member theretofore appointed by such Participant.

     

    11.5 Alternate
      members may attend meetings of the Management Committee, and in the absence
      of
      the member, his alternate member votes or acts, his votes or actions will for
      all purposes of this Agreement be considered the actions of the Participant
      whom
      he represents.

     

    11.6 The
      Participants will give written notice to each other from time to time as to
      names, addresses, telephone numbers and facsimile numbers of their respective
      members and alternates on the Management Committee.

     

    11.7 Meetings
      of the Management Committee will be held at such times as the Management
      Committee deems appropriate, but in any event not less frequently than once
      every three (3) months.

     

    11.8 A
      meeting
      of the Management Committee may take place by means of counterpart resolutions
      delivered by facsimile, mail or courier or by means of conference telephones
      or
      other communication facilities by which means all Participants or their
      alternates participating in the meeting can hear each other.

     

    11.9 The
      persons participating in a meeting in accordance with Section 11.8 will be
      deemed to be present at the meeting and to have so agreed and will be counted
      in
      the quorum therefor and be entitled to speak and vote thereat.

     

    11.10 Notwithstanding
      Section 11.7, meetings of the Management Committee may be called by Operator
      or
      any Participant by giving thirty (30) days’ notice in writing to the other
      Participants, except that thirty (30) days’ notice will be given in respect of a
      meeting to consider a pre-Feasibility Report or Feasibility Report and
      Production Program, unless otherwise agreed to by the Participants.

     

    11.11 Operator’s
      representative will be designated as the chairman of the Management Committee
      (the “Chairman”).

     

    
      
         

      

      
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    11.12 Operator
      will consult freely with the Management Committee and the members thereof,
      and
      keep them fully advised of the present and prospective operations and plans
      and
      will furnish the Management Committee with quarterly reports relating to the
      status of the Property together with timely current reports and information
      on
      any material results relating to the Property.

     

    11.13 Voting
      by
      the Management Committee may be conducted by verbal, written, facsimile or
      telex
      ballot.

     

    11.14 Except
      as
      hereinafter provided, a quorum of any meeting of the Management Committee will
      consist of two (2) members, two (2) alternate members or any combination
      consisting of one (1) member or one (1) alternate of each
      Participant.

     

    11.15 If
      a
      quorum is not present within sixty (60) minutes after the time fixed for holding
      any such meeting, the meeting will be adjourned to the same day in the next
      week
      (unless such day is not a business day in which case it will be adjourned to
      the
      next business day) at the same time and place.

     

    11.16 At
      the
      adjourned meeting the members or alternate members present in person (which
      may
      include only one person) will form a quorum and may transact the business for
      which the meeting was originally convened.

     

    11.17 Decisions
      of the Management Committee will
      be made
      by simple majority of the votes cast at meetings.  The
      representative of each Participant in the Management Committee will have such
      number of votes as equals such party’s Participating Interest at the time of the
      vote

     

    11.18 All
      decisions of the Management Committee will be by the affirmative vote of a
      majority of the votes entitled to be cast by members.

     

    11.19 In
      the
      case where the parties have an equal Interest, or there is an equity of votes
      which can not be resolved, the representative of the Operator will have the
      deciding vote of the Management Committee. 

     

    11.20 There
      will be included with a notice of meeting such material and data as may be
      reasonably required to enable the members of the Management Committee to
      determine the position they should take in respect of any vote or election
      to be
      made at such meeting.

     

    11.21 Operator
      will have the responsibility of preparing and distributing notices and agendas
      of meetings and keeping records of the proceedings at such meetings and
      distributing same to the parties.

     

    
      
         

      

      
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    PART
      12

     

    POWERS
      OF MANAGEMENT COMMITTEE

     

    12.1 The
      Management Committee will, without limiting any of its powers as specified
      elsewhere in this Agreement, have the exclusive right, power and authority
      to:

     

    (a) approve,
      modify, or reject any Program, Feasibility Report or Production Program proposed
      by Operator or any Feasibility Report or Production Program proposed by a
      Participant;

     

    (b) appoint
      a
      new Operator if the Operator is terminated , resigns pursuant to Section 6.7
      or
      is deemed to have resigned pursuant to Section 6.12;

     

    (c) determine
      the terms of engagement of Operator, including any remuneration payable to
      Operator on the basis that the Operator should neither profit nor suffer a
      loss
      for acting as such;

     

    (d) approve
      or reject the sale, abandonment or disposition of any part of the Assets (other
      than the Property), which, in the case of any assets or series of related assets
      having a value in excess of $100,000, will require the consent of a Participant
      or Participants holding at least a 51% Interest; and

     

    (e) establish
      accounting procedures from time to time for Operator.

     

    PART
      13

     

    OPERATING
      PROGRAMS, BUDGETS AND PAYMENTS

     

    13.1 As
      of the
      Effective Date, all mining operations and the Property will be planned and
      conducted and all estimates, reports and statements will be prepared and made
      on
      the basis of an operating year and in accordance with the Accounting
      Procedure.

     

    13.2 The
      first
      operating year will be the period from commencement of Commercial Production
      to
      December 31 of the same calendar year and thereafter each operating year will
      coincide with the calendar year (an “Operating Year”).

     

    13.3 Before
      the beginning of each Operating Year, Operator will prepare and deliver to
      the
      Participants an Operating Plan for that Operating Year.

     

    13.4 The
      Operating Plan applicable to the initial Operating Year will be submitted not
      later than three months prior to the date estimated by the Operator as the
      date
      of commencement of Commercial Production. 

     

    
      
         

      

      
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    13.5 Each
      Operating Plan will contain, with reference to the Operating Year to which
      it
      relates, the following:

     

    (a) a
      plan of
      proposed mining operations including, without limiting the generality of the
      foregoing, particulars of any special items such as:

     

    (i) an
      increase of 10% or more in the capacity or through put of the concentrating
      mill
      or mining capacity,

     

    (ii) additional
      general exploration of the Property outside the mine,

     

    (iii) opening
      and equipping an additional mine or mines on the Property,

     

    (iv) any
      departure from development or mining plans previously followed by
      Operator,

     

    (v) any
      plans
      for stockpiling of Mineral Products, or

     

    (vi) any
      development work to be completed in any Operating Year, if such work is not
      required in the ordinary course to continue mining as contemplated by the
      approved Operating Plan and Costs therefor are reasonably estimated by Operator
      to exceed $50,000;

     

    (b) a
      detailed estimate of all Operating Costs plus a reasonable allowance for
      contingencies;

     

    (c) an
      estimate of the quantity of Mineral Products to be produced from the Property;
      

     

    (d) such
      other facts and figures as may be necessary to give the other parties a
      reasonably complete picture of the results Operator plans to achieve; and

     

    (e) and
      Operator will promptly supply to each Participant any additional or supplemental
      information which that Participant may reasonably require in respect to the
      Operating Plan.

     

    13.6 Each
      Participant will have thirty (30) days after receipt of any annual Operating
      Plan within which to consider such Operating Plan, following which a meeting
      of
      the Management Committee will be called to deal with any objections and
      alternative proposals.

     

    13.7 The
      proposed Operating Plan will then be voted on by the Management
      Committee.

     

    13.8 If
      a
      Participant objects to an Operating Plan on the basis of any of the items as
      set
      out in Section 13.5(a)(i) to Section 13.5(a)(vi), Operator will have the rights
      to either modify the Operating Plan or to bear all of the Operating Costs
      relating to such items, in which event it will be entitled to recoup such amount
      together with interest at the Prime Rate plus 1%.

     

    13.9 Based
      upon the budgets submitted to and approved by the Management Committee, as
      the
      same may be revised from time to time, Operator will submit to each Participant
      an estimate of the case requirements. 

     

    
      
         

      

      
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    13.10 Within
      thirty (30) days after receipt of each such cash estimate, the Participants
      will
      remit to the Operator their respective Cost Shares required under Section 13.9
      and if any Participant fails to pay all or any part of its Cost Share pursuant
      to Section 13.9 the Operator will be entitled to pay the unpaid share of that
      Participant.

     

    13.11 Before
      incurring any Operating Cost hereunder or as soon as reasonably practicable
      thereafter, the Operator will open an account or accounts in bank(s) approved
      by
      the Participants for the purpose of establishing and maintaining therein at
      all
      times a cash fund (the “Operating Fund”) from which Operating Costs will be paid
      by Operator or from which Operator may be reimbursed for Operating Costs spent
      by it.

     

    13.12 All
      money
      received by Operator from the Participants and the payment of Operator’s
      invoices for accrued Operating Costs will be deposited in the Operating Fund
      and, in addition, each Participant will deposit or cause to be deposited in
      the
      Operating Fund at the times and in the manner provided in Section 13.9 the
      sums
      provided for therein.

     

    13.13 The
      total
      amount of deposits in the Operating Fund, regardless of the source thereof,
      will
      at no time exceed the gross Operating Costs of Operator for the then current
      and
      next succeeding month as estimated in the Operating Plan then in
      effect.

     

    13.14 As
      soon
      as reasonably possible following the commencement of Commercial Production,
      Operator will establish and administer a contingency fund (the “Contingency
      Fund”), in addition to all required statutory funds, to be maintained as a
      separate account for the purpose of paying all costs, outlays, expenses,
      obligations, liabilities and charges of whatever kind or nature incurred or
      chargeable, directly or indirectly, by the Participants for environmental
      protection, reclamation, pollution control, testing, monitoring, clean-up,
      containment and removal of hazardous substances from the Property, remediation,
      decommissioning, shutdown and other similar matters (“Reclamation and
      Remediation Costs”), severance pay and pensions for employees arising as a
      result of operations and in connection with the permanent or temporary shutdown
      in whole or in part of any mine on the Property.

     

    13.15 At
      the
      time such Contingency Fund is established, Operator will estimate the amount
      required to be contributed by each Participant in accordance with its Interest
      on an annual basis or from time to time in the case of special or unexpected
      Reclamation and Remediation Costs.

     

    13.16 Such
      Contingency Fund will be invested and reinvested by Operator in such liquid
      investments as the Management Committee may from time to time
      authorize.

     

    PART
      14

     

    DISPOSITION
      OF PRODUCTION

     

    14.1 Subject
      to the provisions of Section 14.3 and Section 14.4, following the commencement
      of Commercial Production and provided that each Participant has paid to Operator
      its respective Cost Share of Operating Costs for that period, the Participants
      will take in kind and separately dispose of Mineral Products in the ratio of
      their respective Interests.

     

    
      
         

      

      
        -27-

        
          

        

      

      
         

      

    

     

    14.2 For
      purposes of determining the value of Mineral Products taken in kind pursuant
      to
      Section 14.3 or Section 14.4, each Participant’s share of Mineral Products will
      be valued at the time of delivery to the Participants (or purchase or sale
      by
      Operator pursuant to Section 14.6) and at a value equal to that received by
      the
      Participant acting as Operator for its share of such Mineral Products after
      deduction of:

     

    (a) all
      costs
      of transporting Mineral Products, including insurance, from the Property to
      the
      place of delivery designated by the purchaser of such Mineral
      Products,

     

    (b) such
      reasonable charge for marketing Mineral Products as is consistent with generally
      accepted industry marketing practices, and

     

    (c) all
      taxes
      (other than income taxes), royalties or other charges or imposts provided for
      pursuant to any law or legal obligation imposed by any governmental if paid
      by
      such Participant in connection with the disposition of Mineral Products taken
      in
      kind.

     

    14.3 If
      Operator makes any payment on behalf of a Participant pursuant to Section 13.10,
      it will have the prior and preferred right to receive that Participant’s share
      of Mineral Products pursuant to Section 14.1, until Operator has received
      Mineral Products in kind of a value equal to 50% of the actual payment made
      as
      provided in Section 14.2.

     

    14.4 If
      a
      Participant makes any payment on behalf of a Participant pursuant to Section
      9.5
      or Section 10.16, it will have the prior and preferred right to receive that
      Participant’s share of Mineral Products pursuant to Section 14.1 until the
      Contributing Participant has received Mineral Products in kind of a value equal
      to the actual payment made by the Contributing Participant pursuant to Section
      9.5 or Section 10.16, together with interest at the Prime Rate, calculated
      on
      the outstanding balance from time to time from the date of advance of such
      funds.

     

    14.5 Any
      extra
      Expenditure incurred by reason of the taking in kind or separate disposition
      by
      a Participant of its proportionate share of Mineral Products will be borne
      by
      that Participant and that Participant will be required to construct, operate
      and
      maintain, at its own expense, any and all facilities which may be necessary
      to
      receive, store and dispose of its share of Mineral Products.

     

    14.6 If
      any
      Participant fails to make the necessary arrangements to take in kind or
      separately dispose of its proportionate share of Mineral Products, Operator
      as
      agent may purchase for its own account or sell such share, subject to the right
      of the Participant owning such share to revoke at will Operator’s authority
      under this Section 14.6 in respect of Mineral Products not then purchased by
      Operator or committed for sale to others, and Operator will be entitled to
      deduct from the sale proceeds all costs of or related to marketing such Mineral
      Products including, without limitation, transportation, storage, commissions,
      and discounts but all contracts of sale executed by Operator for a Participant’s
      share of Mineral Products will be only for such reasonable periods of time
      as
      are consistent with the minimum needs of the industry under the circumstances
      and in no event will any such contract be for a period in excess of one (1)
      year.

     

    
      
         

      

      
        -28-

        
          

        

      

      
         

      

    

     

    14.7 Proceeds,
      if any, from the sale by Operator of Mineral Products pursuant to Section 14.6
      will be calculated by Operator separately for each Participant at the end of
      each calendar month and will be paid monthly within five (5) days after the
      end
      of each such calendar month following payment to Operator by each Participant
      of
      its respective Cost Share of Operating Costs outstanding as at the end of that
      calendar month.

     

    14.8 If
      a
      Participant, any Associated Company of a Participant or any person with whom
      a
      Participant is not dealing at arm’s length is a purchaser of Mineral Products
      from a Participant, and if the value of such Mineral Products is to be used
      to
      determine any matter arising under this Part 14, such Participant will be deemed
      to receive prevailing market prices for all Mineral Products so
      sold.

     

    PART
      15

    

    AUDIT

    

    15.1 The
      records relating to Mineral Products taken in kind or to the calculation of
      proceeds from the sale thereof will be audited annually at the end of each
      fiscal year of Operator and:

    (a) any
      adjustments required by such audit will be made forthwith, and

    

    (b) a
      copy of
      the audited statements will be delivered to the Participants,

     

    and
      all
      such accounts and records will be deemed to be correct and accurate unless
      questioned by a party within six (6) months after the end of the calendar year
      to which the accounts relate.

     

    15.2 The
      Participants, or any of them, at reasonable times and upon notice in writing
      to
      Operator, will have the right to inspect, audit and copy Operator’s accounts and
      records relating to the accounting for Mineral Products taken in kind or to
      the
      determination of proceeds from the sale thereof for any calendar year within
      three (3) months after the end of such calendar year.

     

    15.3 The
      Participants will make all reasonable efforts to conduct audits in a manner
      which will result in a minimum inconvenience to Operator and any such audit
      will
      be conducted at that Participant’s sole cost and expense.

     

    PART
      16

     

    INFORMATION
      SHARING AND CONFIDENTIALITY

     

    16.1 Subject
      to Section 16.2, each party agrees that all information obtained hereunder
      will
      be the exclusive property of the parties and not publicly disclosed or used
      other than for the activities contemplated hereunder, except as required by
      law
      or by the rules and regulations of any regulatory authority or stock exchange
      having jurisdiction, or with the written consent of the other parties, such
      consent not to be unreasonably withheld.

     

    16.2 Consent
      to disclosure of information pursuant to Section 16.1 will not be unreasonably
      withheld where a party wishes to disclose any such information to a third party
      for the purpose of arranging bona fide financings for its contributions to
      Costs
      hereunder or for the purpose of selling its Interest, provided that such third
      party gives its undertaking to the parties that any such information not
      theretofore publicly disclosed will be kept confidential and not disclosed
      to
      others.

     

    
      
         

      

      
        -29-

        
          

        

      

      
         

      

    

     

    16.3 No
      party
      will be liable to any other for the fraudulent or negligent disclosure of
      information by any of its employees, servants or agents, provided that such
      Participant has taken reasonable steps to ensure the preservation of the
      confidential nature of such information.

     

    PART
      17

     

    LIMITED
      CHARGING

     

    17.1 Each
      Participant hereby covenants and agrees with the other to cooperate fully in
      connection with any production financing for the Property which is presented
      on
      reasonable commercial terms for projects of a similar nature, size and financial
      risk and to hold its Interest free and clear of all liens, charges and
      encumbrances including any floating charge (except liens for taxes not yet
      due
      and other inchoate liens and arising from operations on the Property being
      contested in good faith), and each Participant will, if so required by the
      terms
      of such project financing and upon the written consent of all Participants,
      issue to any lender providing such financing, bonds, debentures or other
      security instruments charging its Interest, inter alia, by way of a specific
      first mortgage and charge limited to its Interest.

     

    17.2 No
      such
      project financing will require a Participant to give any guarantee to any third
      party on behalf of the other Participant, to be jointly and severally liable
      for
      the repayment of such financing or to give security to any lender in respect
      of
      such financing in an amount greater than its Interest.

     

    17.3 If
      a
      joint financing for the Production Program is not arranged as contemplated
      in
      Section 17.1, then notwithstanding the provisions of Part 17, for the purpose
      of
      financing its Cost Share of the Production Program a Participant may, at any
      time and upon the written consent of all Participants, mortgage, charge or
      otherwise encumber the whole or any party of its Interest, but only upon the
      condition that the holder of such encumbrance, (hereinafter called the
“Chargee”), first enters into a written agreement with the other party in form
      satisfactory to counsel for such other party, binding upon the Chargee, to
      the
      effect that:

     

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

     

    (b) the
      Chargee’s remedies under the encumbrance will be limited to the sale of the
      whole, (but only of the whole), of the encumbering party’s Interest to the other
      Participants, or failing such disposition, at a public auction to be held after
      sixty (60) days’ notice to the other party, such sale to be subject to the
      purchaser entering into a written agreement with the other party whereby such
      purchaser assumes all obligations of the encumbering party under the terms
      of
      this Agreement; and

     

    
      
         

      

      
        -30-

        
          

        

      

      
         

      

    

     

    (c) if
      the
      Interest of any Participant is forfeited, the right of such Participant to
      act
      as Operator will cease.

     

    PART
      18

     

    RESTRICTIONS
      ON ALIENATION

     

    18.1 Except
      in
      accordance with this Agreement, each Participant will not transfer, convey,
      assign, mortgage or grant an option in respect of or grant a right to purchase
      or in any manner transfer or alienate any or all of its Interest or transfer
      or
      assign any of its rights under this Agreement.

     

    18.2 Each
      Participant will not sell any of its respective Interest or transfer or assign
      any of its rights under this Agreement except upon the written consent of all
      Participants and:

     

    (a) in
      its
      entirety, unless specifically provided otherwise hereunder,

     

    (b) as
      a
      single transaction not directly or indirectly part of some other sale or
      purchase or agreement for any additional consideration of any nature whatsoever,
      and

     

    (c) when
      there is no default of any of the covenants and agreements herein contained
      by
      such party.

     

    18.3 Nothing
      in this Part 18 will prevent:

     

    (a) a
      sale by
      a Participant of all of its Interest or an assignment of all its rights under
      this Agreement to an Associated Company provide that such Associated Company
      first complies with the provisions of Section 18.11 and agrees with the other
      Participants in writing to retransfer such Interest to the originally assigning
      party before ceasing to be an Associated Company of such party, or

     

    (b) a
      joint
      disposition of the Property, or all or any part of the other assets constituting
      any part of the Assets to a third party by the parties as agreed to in
      writing.

     

    18.4 Subject
      to Section 18.1 and Section 18.2, any Participant (in this Part 18 referred
      to
      as the “Offeror”) intending to sell its Interest or assign its rights under this
      Agreement will first give notice in writing to the other party hereto (in this
      Part 18 referred to as the “Offeree”) of such intention together with the terms
      and conditions on which the Offeror intends to sell its Interest or assign
      its
      rights under this Agreement.

     

    18.5 Subject
      to Section 18.7, if a Participant receives any offer to sell its Interest or
      assign its rights under this Agreement which its intends to accept, the Offeror
      will not accept the same unless and until the Offeror has first offered to
      sell
      such Interest or rights to the other party hereto on the same terms and
      conditions as in the offer received and the same has not been accepted by the
      Offerees in accordance with Section 18.6.

     

    
      
         

      

      
        -31-

        
          

        

      

      
         

      

    

     

    18.6 Any
      communication of an intention to sell pursuant to Section 18.4 and Section
      18.5
      (the “Offer” for the purposes of this Part 18 only) will be in writing delivered
      in accordance with Section 20.4 and will:

     

    (a) set
      out
      fully and clearly all of the terms and conditions of any intended
      sale,

     

    (b) if
      it is
      made pursuant to Section 18.5, include a photocopy of the Offer and clearly
      identify the offering party and include such information as is known by the
      Offeror about such offering party,

     

    and
      such
      communication will be deemed to constitute an Offer by the Offeror to the
      Offeree to sell the Offeror’s Interest or transfer or assigns its rights under
      this Agreement to the Offeree on the terms and conditions set out in such
      Offer.

     

    18.7 In
      the
      event that a Participant receives an offer to sell its Interest that is
      consideration other than cash or cash plus deferred payments of cash, the other
      Participant or Participants, as the case may be, will have the right to pay
      the
      cash equivalent of such other consideration. If the parties hereto cannot agree
      on the amount of such cash equivalent within thirty (30) days of the offer
      to
      sell such Interest to the other Participant or Participants, as the case may
      be,
      either of such parties may, upon thirty (30) days written notice to the other,
      initiate arbitration proceedings as contemplated under Part 20 for determination
      of the cash equivalent

     

    18.8 Any
      Offer
      made as contemplated in Section 18.7 will be open for acceptance by the Offeree
      for a period of thirty (30) days after the date of receipt by the
      Offeree.

     

    18.9 If
      the
      Offeree accepts the Offer within the time limited such acceptance will
      constitute a binding agreement of purchase and sale between the Offeror and
      the
      Offeree for the Interest or its rights under this Agreement on the terms and
      conditions set out in such Offer.

     

    18.10 If
      the
      Offeree does not accept the Offer within the time limited the Offeror may
      complete a sale and purchase of its Interest or its rights under this Agreement
      on exactly the same terms and conditions set out in the Offer as contemplated
      in
      Section 18.5, and in any event such sale and purchase will be completed within
      ninety (90) days after the expiration of the right of the Offeree to accept
      such
      Offer or the Offeror must again comply with the provisions of this Part
      18.

     

    18.11 While
      any
      Offer is outstanding no other Offer may be made until the first mentioned Offer
      is disposed of and any sale resulting therefrom completed in accordance with
      the
      provisions of this Part 18.

     

    18.12 Before
      the completion of any sale by a Participant of its Interest or rights under
      this
      Agreement, to an Associated Company or otherwise, the purchasing party will,
      at
      the election of the parties not selling enter into an agreement with the party
      not selling on the same terms and conditions as set out in this
      Agreement.

     

    18.13 Each
      party hereto agrees that its failure to comply with the restrictions set out
      in
      this Part 18 would constitute an injury and damage to the other party impossible
      to measure monetarily and, if there is any such failure the other party will,
      in
      addition and without prejudice to any other rights and remedies at law or in
      equity, be entitled to injunctive relief restraining or enjoining any sale
      of
      any Interest or assignment of any rights under this Agreement save in accordance
      with the provisions of this Part 18 and any party intending to make a sale
      or
      making a sale contrary to the provisions of this Part 18 hereby waives any
      defence it might have in law to such injunctive relief.

     

    
      
         

      

      
        -32-

        
          

        

      

      
         

      

    

     

    18.14 If
      the
      Operator sells its Interest or transfers or assigns its rights under this
      Agreement to a third party, its right as Operator under this Agreement will
      be
      included in such sale only if the third party is acceptable to the remaining
      Participant and is capable of assuming and performing the duties and obligations
      of Operator imposed under this Agreement.

     

    18.15 The
      provisions of this Part 17 will not prevent a party from entering into an
      amalgamation or corporate reorganization which will have the effect in law
      of
      the amalgamated or surviving company possessing all the property, rights and
      interests and being subject to all the debts, liabilities and obligations of
      each amalgamating or predecessor company.

     

    PART
      19

    

    ENCUMBRANCE,
      PARTITION AND INDEMNIFICATION

    

    19.1 Except
      as
      provided in Parts 17 and 18, a Participant will not encumber or suffer to exist
      any lien, charge or encumbrance on its Interest.

     

    19.2 No
      Participant will partition or seek partition, whether through order of any
      court
      or otherwise, of the Property or other assets constituting any part of the
      Assets.

     

    19.3 A
      Participant will not have authority to act for or assume any obligations or
      liabilities on behalf of any other Participant except such as are specifically
      authorized pursuant to and in accordance with the terms of this Agreement,
      and
      each Participant will indemnify and hold the others, and their officers,
      employees, and agents, harmless from and against any and all losses, claims,
      damages and liabilities arising out of any act or any assumption of any
      obligations by it done or undertaken on behalf of the other Participants other
      than as provided herein.

     

    PART
      20

     

    GENERAL

     

    20.1 Default.
      Notwithstanding anything in this Agreement to the contrary (other than the
      provisions of this Agreement providing for elections to contribute and
      contributions to any Program and any Production Program for which no notice
      of
      default need be ), if any party (a “Defaulting Party”) is in default of any
      requirement herein set forth the party affected by such default will give
      written notice to the Defaulting Party specifying the default and the Defaulting
      Party will not lose any rights under this Agreement, unless within thirty (30)
      days after the giving of notice of default by the affected party the Defaulting
      Party has failed to take reasonable steps to cure the default by the appropriate
      performance and if the Defaulting Party fails within such period to take
      reasonable steps to cure any such default, the affected party will be entitled
      to seek any remedy it may have on account of such default.

     

    
      
         

      

      
        -33-

        
          

        

      

      
         

      

    

     

    20.2 Further
      Agreement.
      After
      the commencement of Commercial Production, either Participant may give notice
      to
      the other Participant requiring that Participant to enter into negotiations
      to
      settle an operating agreement to supersede this Agreement.

     

    20.3 Both
      Participants will endeavour to settle such an agreement but if they fail to
      do
      so this Agreement will remain in full force and effect.

     

    20.4 Notice.
      Each
      notice, demand or other communication required or permitted to be given under
      this Agreement (“Notice”) to the Operator or Wits by the other will be in
      writing and will be sent by personal delivery, fax or prepaid registered mail
      to
      the addresses of the parties as follows:

     

    
      	 	
              (a)

            	
              if
                to Journey or Jazz:

            

    

     

    #1208
      -
      808 Nelson Street

    Vancouver,
      British Columbia V6Z 2H2

    Facsimile:
      (604) 633-2462

    Attention:
      Jack Bal

    
       

      
        	 	
                (b)

              	if to Wits:

      

       

    

    900
      IDS
      Center, 80 South 8th Street

    Minneapolis,
      Minnesota, USA 55402

    Facsimile:
      (612) 395-5276

    Attention:
      H. Vance White

     

    20.5 The
      date
      of receipt of such Notice will be the date of delivery or fax thereof if
      delivered or faxed during business hours, or, if given by registered mail as
      aforesaid, will be deemed conclusively to be the third day after the same will
      have been so mailed except in the case of interruption of postal services for
      any reason whatever, in which case the date of receipt will be the date on
      which
      the Notice is actually received by the addressee.

     

    20.6 Either
      party may at any time and from time to time notify the other party in writing
      of
      a change of address and the new address to which Notices will be given to it
      thereafter until further change.

     

    20.7 Arbitration.
      Any
      dispute arising between the parties in respect of the interpretation of this
      Agreement or any matter to be agreed upon hereunder will be determined by a
      single arbitrator to be appointed by both parties.

     

    20.8 Either
      party may, upon written notice to the other as provided in Section 20.4, demand
      arbitration of any dispute hereunder.

     

    20.9 Upon
      such
      written demand and within thirty (30) days after the date of giving of such
      demand, the parties will agree on the appointment of an arbitrator.

     

    
      
         

      

      
        -34-

        
          

        

      

      
         

      

    

     

    20.10 The
      award
      of the arbitrator will be made within thirty (30) days after his appointment
      subject to any reasonable delay due to unforeseen circumstances.

     

    20.11 The
      award
      of the arbitrator will be in writing and signed by the arbitrator and will
      be
      final and binding upon the parties who will abide by the award.

     

    20.12 If
      the
      parties cannot agree on a single arbitrator as provided herein the matter in
      dispute will be determined by reference to the procedure set out in the
      Commercial Arbitration Act (British Columbia).

     

    20.13 Further
      Assurances.
      The
      parties will execute such further and other documents and do such further and
      other things as may be necessary or convenient to carry out and give effect
      to
      the intent of this Agreement.

     

    20.14 Currency.
      All
      references to monies hereunder will be in United States Dollars.

     

    20.15 Method
      of Payment.
      All
      payments to be made to any party hereunder may be made by check mailed or
      delivered to such party at its address for notice purposes as provided herein,
      or wire transfer to the account of such party at such bank as may be designated
      from time to time by written notice.

     

    20.16 Timing.
      Time
      will be of the essence in the performance of this Agreement.

     

    20.17 Headings.
      The
      headings of the Parts and Sections of this Agreement are for convenience only
      and do not form a part of this Agreement nor are they intended to affect the
      construction or meaning of anything herein contained or govern the rights and
      liabilities of the parties.

     

    20.18 Enurement.
      This
      Agreement will inure to the benefit of and be binding upon the parties and
      their
      respective successors and permitted assigns.

     

    20.19 Force
      Majeure.
      No
      party will be liable for its failure to perform any of its obligations under
      this Agreement due to a cause beyond its control (except those caused by its
      own
      lack of funds and the monetary provisions of Parts 9 and 10 ) including, but
      not
      limited to, adverse weather conditions, environmental protests or blockages,
      acts of God, fire, flood, explosion, strikes, lockouts or other industrial
      disturbances, laws, rules and regulations or orders of any duly constituted
      governmental authority or non-availability of materials or transportation (each
      an “Intervening Event”). All time limits imposed by this Agreement will be
      extended by a period equivalent to the period of delay resulting from an
      Intervening Event described in this Section.

     

    20.20 A
      party
      relying on the provisions of Section 20.19 will take all reasonable steps to
      eliminate any Intervening Event and, if possible, will perform its obligations
      under this Agreement as fair and practical, but nothing herein will require
      such
      party to settle or adjust any labour dispute or to question or to test the
      validity of any law, rule, regulation or order of any duly constituted
      governmental authority or to complete its obligations under this Agreement
      if an
      Intervening Event renders completion impossible.

     

    
      
         

      

      
        -35-

        
          

        

      

      
         

      

    

     

    20.21 Entire
      Agreement.
      Save
      and except for Part 9 of the Underlying Agreement, this Agreement and the
      Schedules hereto constitutes the entire agreement between the parties and,
      except as hereafter set out, and supersedes all previous agreements, memoranda,
      correspondence, communications, negotiations and representations, whether oral
      or written, express or implied, statutory or otherwise between the parties
      with
      respect to the subject matter herein.

     

    20.22 Governing
      Law.
      This
      Agreement will be governed by and construed according to the laws of the
      Province of British Columbia
      and the
      laws of Canada applicable therein.

     

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

    

    
      	
              JOURNEY
                RESOURCES CORP.

               

            
	 
	
              By: 
                _______________________________________________

            
	
              Authorized
                Signatory

            
	 
	 
	
               

              MINERALES
                JAZZ S.A. DE C.V.

               

            
	 
	
              By: 
                _______________________________________________

            
	
              Authorized
                Signatory

            
	 
	 
	
              WITS
                BASIN PRECIOUS MINERALS INC.

               

            
	 
	
              By: 
                _______________________________________________

            
	
              Authorized
                Signatory

            

    

     

    
      
         

      

      
        -36-

        
          

        

      

      
         

      

    

     

    SCHEDULE
      “A”

     

    Description
      of Property

     

    

    The
      Vianey Mine Concession located in Guerrero State, Mexico.

    

    The
      concession constitutes 5,022 contiguous hectares(1),
      centered on UTM coordinates 431,330m E, 1,987,020m N (WGS 84, Zone 14), or
      -99.6485 degrees E, 17.9704 degrees N. The property is held under Exploitation
      concession (Number 164151, Exp. No. 5929, issued March 5, 1979).

    

    Minerales
      Jazz S.A. de C.V. (a wholly owned subsidiary of Journey Resources Corporation)
      acquired 100% interest in the property from Minera LMX, Minera Chilpancingo,
      S.A. de C.V. and the underlying owner, Mr. Jorge Briones de Garcia, in
      2004.

    

    (1)
      Amended
      to include the additionally held claims in the area of interest, notwithstanding
      that they may be held at this time under the name of a third party. Such
      additional claims are currently in the process of being transferred into the
      name of Minerales Jazz S.A. de C.V. 

     

    
      
         

      

      
        -37-

        
          

        

      

      
         

      

    

     

    SCHEDULE
      “B” 

    

    Area
      of Interest

    
      
         

      

      
        -38-

        
          

        

      

      
         

      

    

    SCHEDULE
      “C” 

    

    Accounting
      Procedure

     

    
      
         

      

      
        -39-Exhibit
      10.1

     

    EXECUTIVE
      EMPLOYMENT
      AGREEMENT

    

    This
      EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made effective this January
      1, 2007, by and between CAPITAL GOLD CORPORATION, a Delaware corporation
      (“Employer”), and J. SCOTT HAZLITT, a Colorado resident
      (“Executive”).

    

    WHEREAS,
      Executive agrees to be employed by Employer for the period and upon and subject
      to the terms herein provided; and

    

    WHEREAS,
      Employer agrees to employ Executive for the period and upon and subject to
      the
      terms herein provided; 

    

    THEREFORE,
      in consideration of the foregoing and of the mutual promises, covenants and
      agreements contained herein, the legal sufficiency of which is hereby
      acknowledged, and intending to be legally bound, Employer and Executive agree:
      

    

    1. Employment.
      Upon
      and subject to the terms provided herein, Employer agrees to employ Executive,
      and Executive hereby agrees to be employed by Employer, as Employer’s Vice
      President of Mine Development, or other substantially similar
      position.

    

    2. Term
      of Employment.
      Subject
      to the terms set forth in this Agreement, Employer agrees to employ Executive
      and Executive hereby agrees to be employed by Employer for a period (the
“Employment Period”) commencing from the date hereof until the third anniversary
      of the date hereof. The Employment Period shall automatically renew for
      successive one-year periods unless either party provides the other party with
      written notice of its intent not to renew at least thirty (30) days prior to
      the
      expiration of the then current Employment Period.

    

    3. Compensation.

    

    (a) Base
      Salary.
      As
      compensation for the services rendered pursuant to this Agreement, Employer
      agrees to pay Executive a base salary at an annual rate of not less than
      $105,000, payable in installments in accordance with Employer’s standard payroll
      practices, subject to such payroll and withholding deductions as are required
      by
      law or authorized by Executive. The amount of the base salary shall be reviewed
      periodically and may be increased at the sole discretion of Employer.

    

    (b) Bonus.
      Executive shall be eligible for any annual incentive bonus opportunity offered
      by Employer to employees at Executive’s level. In the event of any conflict
      between this Agreement and any incentive bonus plan adopted by Employer for
      its
      officers and employees, this Agreement shall control. The amount of this bonus,
      as well as the criteria necessary to earn a bonus, may be changed at any time
      by
      Employer and shall be within the sole discretion of Employer. All bonuses paid
      pursuant to this Agreement will be subject to applicable withholdings and
      deductions and will be paid no earlier than fifteen (15) days and no later
      than
      ninety (90) days after Employer’s fiscal year end for which the bonus is earned.
      If Executive’s employment terminates, voluntarily or involuntarily, prior to the
      last day of the fiscal year for which the bonus applies, Executive acknowledges
      that he is not entitled to any bonus not yet paid at the time of the termination
      because any such unpaid bonus will not be earned, vested, due, or owing.
      Executive hereby expressly forfeits and waives any such unpaid
      bonus.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (c) Vacation. For
      each
      full twelve (12) months of employment, Executive shall be entitled to receive
      four (4) weeks paid vacation. One (1) week of paid vacation may be carried
      forward from one calendar year to the next calendar year only (the “Carried
      Forward Vacation”). If applicable, Executive’s first week of vacation each
      calendar year shall be deemed the Carried Forward Vacation. 

    

    (d) Benefits.
      Executive shall be entitled to participate in the employee benefits plans
      offered to all employees of Employer. Employer shall not be required to
      establish or continue any benefit plans or take any action to cause Executive
      to
      be eligible for any such benefits on a basis more favorable than that applicable
      to all its employees generally. 

    

    (e) Stock
      Options. Executive
      will be eligible to participate in any stock option or other equity compensation
      plan adopted by Employer during the term of this Agreement and applicable to
      other employees at Executive’s level (the “Equity Plan”). The number of options,
      vesting schedule, exercise price, and all other terms and conditions of the
      stock options shall be set forth in an option agreement pursuant to the
      applicable plan and shall be commensurate with Executive’s position, as
      determined by the Committee of Employer’s Board of Directors charged with
      administering the Equity Plan, in its sole discretion. Employer may, consistent
      with its obligations under such a plan or plans, amend or discontinue any or
      all
      stock option plans at any time. 

    

    (f) Expense
      Reimbursement.
      Employer shall reimburse Executive for all reasonable and documented travel,
      entertainment and other business expenses actually and properly incurred by
      him
      in relation to Employer’s business, as they are incurred. No such expense
      reimbursement shall be allowed with regard to such expenses that exceed $5,000
      unless such expenses have been pre-approved by Employer in writing.

    

    (g) Office
      and Duties.
      Executive shall report to the President and Chief Executive Officer or such
      other supervisor as designated by the President and Chief Executive Officer
      of
      Employer. Executive shall perform such tasks commensurate with this position
      as
      may from time to time be assigned by Employer. Executive shall devote all
      business time, labor, skill, undivided attention and best ability to the
      performance of Executive’s duties hereunder in a manner which will faithfully
      and diligently further the business and interests of Employer. During the term
      of employment, Executive shall not directly or indirectly pursue any other
      business activity without the prior written consent of Executive’s supervisor,
      with the exception of passive personal investments not in breach of any other
      term or provision hereof. Executive agrees to travel to whatever extent is
      reasonably necessary in the conduct of Employer’s business, at Employer’s
      expense and pursuant to Employer’s standard policies and
      procedures.

    

    4. Termination
      of Employment.
      Notwithstanding any other provision of this Agreement, Executive’s employment
      may be terminated as follows:

    

    (a) Expiration.
      This
      Agreement may be terminated upon expiration of the term hereof. Following
      termination pursuant to this Section 4(a), Employer’s only obligation to
      Executive shall be to pay to Executive all accrued base salary, all accrued
      vacation time and any reasonable and necessary business expenses incurred by
      Executive in connection with his duties, all to the date of termination and
      payable in a lump sum, less applicable deductions and withholdings, as soon
      as
      administratively practicable following Executive’s termination.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    

    (b) Termination
      for Cause.
      This
      Agreement may be terminated by Employer for Cause. For purposes of this
      Agreement, “Cause” justifying the termination of this Agreement by Employer is
      defined as: (1) failure or refusal to perform the services required hereunder;
      (2) a material breach by Executive of any of the terms of this Agreement; or
      (3)
      Executive’s conviction of a crime that either results in imprisonment or
      involves embezzlement, dishonesty, or activities injurious to Employer or its
      reputation. Whether Cause exists under this Agreement shall be determined by
      the
      Employer in its reasonable discretion. Following termination pursuant to this
      Section 4(b), Employer’s only obligation to Executive shall be to pay to
      Executive all accrued base salary, all accrued vacation time and any reasonable
      and necessary business expenses incurred by Executive in connection with his
      duties, all to the date of termination and payable in a lump sum, less
      applicable deductions and withholdings, as soon as administratively practicable
      following Executive’s termination. 

    

    (c) Disability.
      This
      Agreement may be terminated by Employer upon at least thirty (30) days’ written
      notice if Executive is prevented by illness, accident or other disability
      (mental or physical) from performing the essential functions of the position
      for
      one or more periods cumulatively totaling three (3) months during any
      consecutive twelve (12) month period. In the event this Agreement is terminated
      pursuant to this Section 4(c), Employer shall pay to Executive all accrued
      base salary, all accrued vacation time and any reasonable and necessary business
      expenses incurred by Executive in connection with his duties, all to the date
      of
      termination and payable in a lump sum, less applicable deductions and
      withholdings. In addition, Employer shall pay to Executive severance payments
      in
      an amount equal to one (1) month of Executive’s base salary, payable in a lump
      sum, less applicable deductions and withholdings, as soon as administratively
      practicable following Executive’s termination (“Disability Severance Payments”).
      Severance payments made by Employer to Executive pursuant to this
      Section 4(c) are conditioned on the Executive signing a Confidential
      Severance Agreement and Release substantially in the form attached hereto as
      Exhibit A.

    

    (d) Death.
      This
      Agreement shall be automatically terminated in the event of Executive’s death
      during the term of employment. In the event this Agreement terminates upon
      Executive’s death, Employer shall pay Executive’s estate or beneficiary, as
      applicable, all accrued base salary, all accrued vacation time and any
      reasonable and necessary business expenses incurred by Executive in connection
      with his duties, all to the date of termination and all payable in a lump sum,
      less applicable deductions and withholdings, as soon as administratively
      practicable following Executive’s termination. 

    

    (e) Without
      Cause. This
      Agreement may be terminated by Employer without Cause by giving notice at least
      thirty (30) days prior to the effective termination date; provided that
      Employer
      pays Executive each of the following:

    

    (i) Employer
      shall pay Executive severance payments (the “Cash Severance Payments”) in an
      amount equal to Executive’s base salary for three (3) months after the first
      anniversary of Executive’s original employment with Employer regardless of the
      date of this agreement, plus an additional one (1) month of base salary for
      each
      additional full year of employment (the “Cash Severance Payments”).
      Notwithstanding the foregoing, Cash Severance Payments shall not exceed 12
      months of base salary. Such Cash Severance Payments shall be paid in equal
      monthly installments to Executive beginning
      in the month following Executive’s termination.
      In
      addition, Employer shall pay to Executive all accrued base salary, all accrued
      vacation time and any reasonable and necessary business expenses incurred by
      Executive in connection with his duties, all to the date of termination and
      payable in a lump sum,
      less
      applicable deductions and withholdings,
      as soon
      as administratively practicable following Executive’s termination. 

    

    (ii) If
      and
      when the Company adopts a health insurance plan for its employees and Executive
      is covered under such plan, provided that Executive timely elects continuation
      coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985,
      as
      amended (“COBRA”), Employer shall pay, on Executive’s behalf, the portion of
      premiums of Executive’s group health insurance, including coverage for
      Executive’s eligible dependents, that Employer paid immediately prior to
      Executive’s separation of employment with Employer (“COBRA Payments”) for a
      period of twelve (12) months (“COBRA Period”). Employer will pay such COBRA
      Payments for Executive’s eligible dependents only for coverage for which those
      dependents were enrolled immediately prior to the date of Executive’s separation
      of employment. Executive will continue to be required to pay that portion of
      the
      premium of Executive’s health coverage, including coverage for Executive’s
      eligible dependents, that Executive was required to pay as an active employee
      immediately prior to the date of Executive’s separation of employment. For the
      balance of the period that Executive is entitled to coverage under COBRA after
      the COBRA Period, if any, Executive shall be entitled to maintain coverage
      for
      Executive and Executive’s eligible dependents at Executive’s sole
      expense.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    

    (iii) The
      Cash
      Severance Payments and the COBRA Payments (if any) shall be paid so long as
      Executive is not in breach of any term of this Agreement, including, without
      limitation, Sections 5, 6, and 7 hereof. The Cash Severance Payments and COBRA
      Payments (if any) made by Employer to, or on behalf of, Executive pursuant
      to
      this Section 4(e) are conditioned on the Executive signing a Severance
      Agreement and Release substantially in the form attached hereto as Exhibit A.

    

    (f) Material
      Breach. This
      Agreement may be terminated by Executive for a material breach by Employer
      of
      any of the terms of this Agreement, upon thirty (30) days’ written notice
      specifying the breach, and failure of Employer to either (i) cure or diligently
      commence to cure the breach within the 30-day notice period, or (ii) dispute
      in
      good faith the existence of the material breach. Following termination pursuant
      to this Section 4(f), Employer shall pay to Executive Cash Severance
      Payments (as defined and calculated in section 4(e)(i)). Such severance payments
      shall be paid in equal monthly installments to Executive beginning
      in the month following Executive’s termination.
      Such
      severance payments shall be paid so long as Executive is not in breach of any
      term of this Agreement, including, without limitation, Sections 5, 6, and 7
      hereof. In addition, Employer shall pay to Executive all accrued base salary,
      all accrued vacation time and any reasonable and necessary business expenses
      incurred by Executive in connection with his duties, all to the date of
      termination and payable in a lump sum,
      less
      applicable deductions and withholdings,
      as soon
      as administratively practicable following Executive’s termination. Severance
      payments made by Employer to Executive pursuant to this Section 4(f) are
      conditioned on the Executive signing a Confidential Severance Agreement and
      Release substantially in the form attached hereto as Exhibit A.

    

    (g) Resignation.
      This
      Agreement may be terminated by Executive for any reason or no reason at all
      by
      giving notice to Employer of Executive’s resignation at least sixty (60) days
      prior to the effective resignation date. Following termination pursuant to
      this
      Section 4(g), Employer’s only obligation to Executive shall be to pay to
      Executive all accrued base salary, all accrued vacation time and any reasonable
      and necessary business expenses incurred by Executive in connection with his
      duties, all to the date of termination and payable in a lump sum, less
      applicable deductions and withholdings.

    

    (h) Termination
      Upon a Change of Control.
      In the
      event of a Termination Upon a Change of Control as defined in the Agreement
      Regarding Change In Control (“Change In Control Agreement”) attached hereto as
Exhibit B,
      Employer’s obligation to Executive shall be as set forth in the Change In
      Control Agreement.

    

    5. Proprietary
      Information.

    

    (a) Executive
      represents and warrants to Employer that (i) Executive is not subject to any
      limitation or agreement restricting employment by Employer or performance of
      Executive’s duties hereunder, and (ii) neither Executive nor any third party has
      any right or claim to Executive’s work produced on behalf of Employer or using
      the property, personnel, or facilities of Employer. Executive shall not
      misappropriate proprietary rights of Employer or any third party.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    

    (b) Executive
      further agrees not to make, use, disclose to any third party, or permit to
      be
      made, used, or disclosed, any records, plans, papers, articles, notes,
      memoranda, reports, lists, records, drawings, sketches, specifications, software
      programs, data, or other materials of any nature relating to any matter within
      the scope of the business of Employer or concerning any of its dealings or
      affairs (“Materials”), whether or not developed, in whole or in part, by
      Executive and whether or not embodying Confidential Information (defined below),
      otherwise than for the benefit of Employer. Executive shall not, after the
      termination of employment, use, disclose, or permit to be used or disclosed,
      any
      such Materials, it being agreed that all such Materials shall be and remain
      the
      sole and exclusive property of Employer. Immediately upon the termination of
      employment, Executive shall deliver all such Materials, and all copies thereof,
      to Employer, at its designated office.

    

    6. Non-Competition;
      Non-Solicitation; Anti-Raiding; Non-Disparagement.
      Without
      the prior written approval of the President or Chief Executive Officer of
      Employer, Executive shall not, directly or indirectly, during his employment
      and
      until the end of one (1) year after termination of employment (however such
      termination occurs, including, without limitation, termination pursuant to
      Section 4(a), 4(b), 4(c), 4(e), 4(f), or 4(g)):

    

    (a) Engage
      in
      a “Competing Business’’ in the “Territory”, as those terms are defined below,
      whether as a sole proprietor, partner, corporate officer, employee, director,
      shareholder, consultant, agent, independent contractor, trustee, or in any
      other
      manner by which Executive holds any beneficial interest in a Competing Business,
      derives any income from any interest in a Competing Business, or provides any
      service or assistance to a Competing Business. “Competing Business” shall mean
      any business that mines or produces minerals which is competitive with the
      business of Employer or any of its Affiliates (defined below), as conducted
      or
      under development at any time during the term of employment. “Affiliates” shall
      mean any entity controlled by or under common control with Employer or any
      joint
      venture, partnership or other similar entity to which Employer is a party.
      “Territory” shall mean anywhere within a 50 mile radius of Caborca in the state
      of Sonora, Mexico. The provisions of this Section 6 will not restrict
      Executive from owning less than five percent of the outstanding stock of a
      publicly-traded corporation engaged in a Competing Business;

    

    (b) Acquire,
      lease or otherwise obtain or control any beneficial, direct or indirect interest
      in mineral rights, or other rights or lands necessary to develop, any mineral
      property in which Employer or any of its Affiliates at the time of termination
      as a beneficial interest or is actively seeking to acquire, or that is within
      a
      distance of five (5) kilometers from any point on the outer perimeter of any
      such property in which Employer or any of its affiliates has a beneficial
      interest or that it is seeking to acquire;

    

    (c) Conduct
      any exploration or production activities or otherwise work on or in respect
      of
      any mineral property within a distance of five (5) kilometers from any point
      on
      the outer perimeter of any mineral property in which Employer or any of its
      affiliates then has a beneficial interest or is actively seeking to
      acquire;

    

    (d) (i) Contact
      or solicit, or direct or assist others to contact or solicit, for the purpose
      of
      promoting any person’s or entity’s attempt to compete with Employer or any of
      its Affiliates, in any business carried on by Employer or any of its Affiliates
      during the period in which Executive was an employee of Employer, any suppliers,
      independent contractors, vendors, or other business associates of Employer
      or
      any of its Affiliates that were existing or identified prospective suppliers,
      independent contractors, vendors, or business associates during such period,
      or
      (ii) otherwise interfere in any way in the relationships between Employer
      or any of its Affiliates and their suppliers, independent contractors, vendors,
      and business associates;

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    

    (e) (i) Solicit,
      offer employment to, otherwise attempt to hire, or assist in the hiring of
      any
      employee or officer of Employer or any of its Affiliates; (ii) encourage,
      induce, assist or assist others in inducing any such person to terminate his
      or
      her employment with Employer or any of its Affiliates; or (iii) in any way
      interfere with the relationship between Employer or any of its Affiliates and
      their employees; or

    

    (f) Make
      any
      public statement or perform or do any other act prejudicial or injurious to
      the
      reputation or goodwill of Employer or any of its Affiliates or otherwise
      interfere with the business of Employer or any of its Affiliates.

    

    7. Confidentiality.

    

    (a) The
      term
“Confidential Information” shall include, but not be limited to, the whole or
      any portion or phase of (i) any confidential, or proprietary or trade secret,
      technical, business, marketing or financial information, whether pertaining
      to
      (1) Employer or its Affiliates, (2) its or their suppliers, or (3) any third
      party which Employer or its Affiliates is under an obligation to keep
      confidential including, but not limited to, methods, know-how, techniques,
      systems, processes, software programs, works of authorship, supplier lists,
      projects, plans, and proposals, and (ii) any software programs and programming
      prepared for Employer’s benefit whether or not developed, in whole or in part by
      Executive. For purposes of this Agreement, “Confidential Information” shall
      include, but shall not be limited to, strategies, analysis, concepts, ideas,
      or
      plans; operating techniques; demographic and trade area information; prospective
      site locations know-how; improvements; discoveries, developments; designs,
      techniques, procedures; methods; machinery, devices; drawings; specifications;
      forecasts; new products; research data, reports, or records; marketing or
      business development plans, strategies, analysis, concepts or ideas; contracts;
      general financial information about or proprietary to Employer, including,
      but
      not limited to, unpublished financial statements, budgets, projections,
      licenses, and costs; pricing; personnel information; and any and all other
      trade
      secrets, trade dress, or proprietary information, and all concepts or ideas
      in
      or reasonably related to Employer’s business. All such Confidential Information
      is extremely valuable and is intended to be kept secret to Employer; is the
      sole
      and exclusive property of Employer or its Affiliates; and, is subject to the
      restrictive covenants set forth herein. The term Confidential Information shall
      not include any information generally available to the public or publicly
      disclosed by Employer (other than by the act or omission of Executive),
      information disclosed to Executive by a third party under no duty of
      confidentiality to Employer or its Affiliates, or information required by law
      or
      court order to be disclosed by Executive.

    

    (b) Executive
      shall not, without Employer’s prior written approval, use, disclose, or reveal
      to any person or entity any of Employer’s Confidential Information, except as
      required in the ordinary course of performing duties hereunder. Executive shall
      not use or attempt to use any Confidential Information in any manner which
      has
      the possibility of injuring or causing loss, whether directly or indirectly,
      to
      Employer or any of its Affiliates.

    

    (c) In
      the
      event that Executive’s employment with Employer is terminated for any reason
      whatsoever, he shall return to Employer, promptly upon Employer’s written
      request therefore, any documents, photographs, tapes, discs, memory devices,
      and
      other property containing Confidential Information which were received by him
      during his employment, without retaining copies thereof.

    

    8. Acknowledgments.
      Executive acknowledges that the covenants contained in Sections 5, 6, and 7,
      including those related to duration, geographic scope, and the scope of
      prohibited conduct, are reasonable and necessary to protect the legitimate
      interests of Employer. He further acknowledges that the covenants contained
      in
      Sections 5, 6, and 7 are designed, intended, and necessary to protect, and
      are
      reasonably related to the protection of, Employer’s trade secrets, to which he
      will be exposed and with which he will be entrusted. Specifically, without
      limitation, Executive is entrusted with trade secrets regarding: the strategic
      planning initiatives; business development plans; budgets; financial
      information; management training; future business plans; and operational
      strategies and procedures. 

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    

    9. Forfeiture
      of Severance Payments.
      If
      Executive breaches Sections 5, 6, or 7 of this Agreement
      during
      the term that severance payments are made pursuant to Sections 4(c), 4(e),
      or
      4(f) of this Agreement, Executive shall pay back to Employer all severance
      payments received to date.
      Nothing
      contained in this Section 9 shall be construed as prohibiting Employer from
      pursuing any other remedies available to it in the event of the breach of
      Sections 5, 6, or 7, including the equitable remedies set forth in Section
      11. 

    

    10. Non-exclusivity
      of Rights.
      Amounts
      that are vested benefits or that Executive is otherwise entitled to receive
      under any plan, policy or program of, or contract or agreement with Employer
      at
      or subsequent to termination of employment (however
      such termination occurs, including, without limitation, termination pursuant
      to
      Section 4(a), 4(b), 4(c), 4(e), 4(f), 4(g), or 4(h)) shall be payable in
      accordance with such plan, policy or program of, or any contract or agreement
      except as explicitly modified by this Agreement.

    

    11. Equitable
      Remedies.
      The
      services to be rendered by Executive and the Confidential Information entrusted
      to Executive as a result of his employment by Employer are of a unique and
      special character, and any breach of Sections 5, 6, or 7 will cause Employer
      immediate and irreparable injury and damage, for which monetary relief would
      be
      inadequate or difficult to quantify. Employer will be entitled to, in addition
      to all other remedies available to it, injunctive relief and specific
      performance to prevent a breach and to secure the enforcement of Sections 5,
      6,
      or 7. Executive acknowledges that injunctive relief may be granted immediately
      upon the commencement of any such action without notice to Executive and in
      addition may recover monetary damages. In the event a court requires posting
      of
      a bond, the parties agree to a maximum $5,000 bond. Executive further
      acknowledges that his duties under this Agreement shall survive termination
      of
      his employment, whether the termination is voluntary or involuntary, rightful
      or
      wrongful, and shall continue until Employer consents in writing to the release
      of Executive’s obligations under this Agreement. The parties further agree that
      the provisions of Sections 5, 6, and 7 are separate from and independent of
      the
      remainder of this Agreement and that these provisions are specifically
      enforceable by Employer notwithstanding any claim made by Executive against
      Employer. 

    

    12. Attorney’s
      Fees.
      In the
      event Executive breaches, or threatens to breach, any provision of this
      Agreement, Executive acknowledges that he shall be solely and fully responsible
      for all fees and costs, including without limitation, all attorney’s fees and
      costs, incurred by Employer in enforcing this Agreement if Employer is the
      prevailing party in any litigation.

    

    13. Entire
      Agreement; Amendments.
      This
      Agreement (including all exhibits) constitute the entire understanding between
      the parties with respect to the subject matter herein and therein, and they
      supersede any prior or contemporaneous understandings or agreements. This
      Agreement may be amended, supplemented, or terminated only by a written
      instrument duly executed by each of the parties.

    

    14. Headings.
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      affect its interpretation. References to Sections are to Sections
      hereof.

    

    15. Gender;
      Number.
      Words
      of gender may be read as masculine, feminine, or neuter, as required by context.
      Words of number may be read as singular or plural, as required by
      context.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    

    16. Severability.
      The
      covenants in this Agreement shall be construed as independent of one another,
      and as obligations distinct from one another and any other contract between
      Executive and Employer. If any provision of this Agreement is held illegal,
      invalid, or unenforceable, such illegality, invalidity, or unenforceability
      shall not affect any other provisions hereof. It is the intention of the parties
      that in the event any provision is held illegal, invalid, or unenforceable,
      that
      such provision be limited so as to effect the intent of the parties to the
      fullest extent permitted by applicable law. Any claim by Executive against
      Employer shall not constitute a defense to enforcement by Employer of this
      Agreement.

    

    17. Survival.
      The
      provisions of Sections 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 16, 17, 18, 19, 20,
      21
      and 22 shall survive the termination of this Agreement.

    

    18. Notices.
      All
      notices, demands, waivers, consents, approvals, or other communications required
      hereunder shall be in writing and shall be deemed to have been given if
      delivered personally, if sent by facsimile with confirmation of receipt, if
      sent
      by certified or registered mail, postage prepaid, return receipt requested,
      or
      if sent by same day or overnight courier service to the following
      addresses:

    

    If
      to Employer, to:

    Capital
      Gold Corporation 

    76
      Beaver Street, 26th
      Floor

    New
      York, New York 10005

    Attention:
      Gifford A. Dieterle

    Telephone:
      (212) 344-2785

    Facsimile:
      (212) 344-4537

    

    If
      to
      Executive, to:

    J.
      Scott
      Hazlitt

    9428
      W.
      Highway 50

    Salida.
      CO 81201

    Telephone:
      (719) 539-0515

    Facsimile:
      (719) 539-0510

    

    Notice
      of
      any change in any such address shall also be given in the manner set forth
      above. Whenever the giving of notice is required, the giving of such notice
      may
      be waived by the party entitled to receive such notice.

    

    19. Waiver.
      The
      failure of any party to insist upon strict performance of any of the terms
      or
      conditions of this Agreement shall not constitute a waiver of any of such
      party’s rights hereunder.

    

    20. Assignment.
      Other
      than as provided below, neither party may assign any rights or delegate any
      of
      obligations hereunder without the prior written consent of the other party,
      and
      such purported assignment or delegation shall be void; provided that Employer
      may assign the Agreement to any entity that purchases the stock or assets of,
      or
      merges with, Employer or any Affiliate. This Agreement binds, inures to the
      benefit of, and is enforceable by the successors and permitted assigns of the
      parties and does not confer any rights on any other persons or
      entities.

    

    21. Governing
      Law.
      This
      Agreement shall be construed and enforced in accordance with New York law except
      for any New York conflict-of-law principle that might require the application
      of
      the laws of another jurisdiction.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    

    22. Submission
      to Jurisdiction: Service: Waivers.
      With
      respect to any claim arising out of this Agreement, each party hereto (a)
      irrevocably submits, for itself and its property, to the jurisdiction of the
      state court located in the City and County of New York, New York, the federal
      court located in New York, New York, and appellate courts therefrom, (b) agrees
      that the venue for any suit, action or proceeding arising out of or relating
      to
      this Agreement shall be exclusive to and limited to such courts, and (c)
      irrevocably waives any objection it may have at any time to the laying of venue
      of any suit, action or proceeding arising out of or relating to this Agreement
      brought in any such court, irrevocably waives any claim that any such suit,
      action or proceeding brought in any such court has been brought in an
      inconvenient forum and further irrevocably waives the right to object, with
      respect to such claim, suit, action or proceeding brought in any such court
      that
      such court does not have jurisdiction over it. Each party irrevocably consents
      to the service of process in any suit, action or proceeding in any of the
      aforesaid courts by the mailing of copies of process to the other party or
      parties hereto, by certified or registered mail at the address specified in
      Section 18. 

    

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement on the date first
      above written. 

    
      	 	 	 
	 	
              EMPLOYER
                :

               

              CAPITAL
                GOLD CORPORATION

            
	 
 	 
 	 
 
	 	By:  	/s/ Gifford
              A
              Dieterle 
	 	
              

              Gifford
                A Dieterle, President

            

    

     

    
      	 	        	 
	 	EXECUTIVE:
	 	 
	 	 
	 	
              /s/ J. Scott Hazlitt 

              
                

              

              
                J.
                  Scott Hazlitt 

              

            

    

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    EXHIBIT A

    

    FORM
      OF

    SEVERANCE
      AGREEMENT AND RELEASE

    

    This
      SEVERANCE AGREEMENT AND RELEASE (this “Agreement”) is made between (i)
      ___________________________ (“Employee”)
      and (ii) CAPITAL GOLD CORPORATION, a Delaware corporation (the “Company”).
      Employee and the Company are referred to collectively as the “Parties” and
      individually as a “Party.”

    

    RECITALS

    

    WHEREAS,
      Employee’s employment with the Company ended effective
      ___________________;

    

    WHEREAS,
      the Parties wish to resolve fully and finally any potential disputes regarding
      Employee’s employment with the Company and any other potential disputes between
      the Parties; and

    

    WHEREAS,
      in order to accomplish this end, the Parties are willing to enter into this
      Agreement.

    

    NOW
      THEREFORE, in consideration of the mutual promises and undertakings contained
      herein, the sufficiency of which is acknowledged by the Parties, the Parties
      to
      this Agreement agree as follows:

    

    TERMS

    

    1. Separation
      and Effective Date.
      Employee’s employment with the Company ended on _________________________. This
      Agreement shall become effective (the “Effective Date”) on the eighth day after
      Employee’s execution of this Agreement, provided that employee has not revoked
      Employee’s acceptance pursuant to Section 6(g) below.

    

    2. Severance
      Payments.

    

    (a) After
      the
      expiration of the Effective Date, and on the express condition that Employee
      has
      not revoked this Agreement, the Company will pay Employee severance payments
      in
      an amount and in the manner set forth in Section 4 of Employee’s Employment
      Agreement dated effective January 1, 2007 (the “Employment Agreement”), less
      applicable withholdings and deductions (“Severance Payments”). The Severance
      Payments will be mailed to Employee or direct deposited to an account designated
      by Employee.

    

    (b) Reporting
      of and withholding on any Severance Payment under this Section 2 for tax
      purposes shall be at the discretion of the Company in conformance with
      applicable tax laws. If a claim is made against the Company for any additional
      tax or withholding in connection with or arising out of the Severance Payments
      pursuant to Section 2(a), Employee shall pay any such claim within thirty (30)
      days of being notified by the Company and agrees to indemnify the Company and
      hold it harmless against such claims, including but not limited to any taxes,
      attorneys’ fees, penalties or interest, which are or become due from the
      Company.

    

    3. General
      Release.

    

    (a) Employee,
      for himself and for his affiliates, successors, heirs, subrogees, assigns,
      principals, agents, partners, employees, associates, attorneys, and
      representatives, voluntarily, knowingly and intentionally releases and
      discharges the Company and its predecessors, successors, parents, subsidiaries,
      affiliates, and assigns and each of their respective officers, directors,
      principals, shareholders, agents, attorneys, board members, and employees from
      any and all claims, actions, liabilities, demands, rights, damages, costs,
      expenses, and attorneys’ fees (including but not limited to any claim of
      entitlement for attorneys’ fees under any contract, statute, or rule of law
      allowing a prevailing party or plaintiff to recover attorneys’ fees), of every
      kind and description from the beginning of time through the Effective Date
      (the
“Released Claims”).

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

    

    (b) The
      Released Claims include but are not be limited to those which arise out of,
      relate to, or are based upon: (i) Employee’s employment with the Company or the
      termination thereof; (ii) statements, acts, or omissions by the Parties
      whether in their individual or representative capacities; (iii) express or
      implied agreements between the Parties (except as provided herein) and claims
      under any severance plan; (iv) any stock or stock option grant, agreement,
      or plan; (v) all federal, state, and municipal statutes, ordinances, and
      regulations, including, but not limited to, claims of discrimination based
      on
      race, age, sex, disability, whistleblower status, public policy, or any other
      characteristic of Employee under the Age Discrimination in Employment Act,
      the
      Older Workers Benefit Protection Act, the Americans with Disabilities Act,
      the
      Fair Labor Standards Act, the Equal Pay Act, Title VII of the Civil Rights
      Act
      of 1964 (as amended), the Employee Retirement Income Security of 1974, the
      Rehabilitation Act of 1973, the Worker Adjustment and Retraining Notification
      Act, or any other federal, state, or municipal law prohibiting discrimination
      or
      termination for any reason; (vi) state and federal common law; and
      (vii) any claim which was or could have been raised by Employee, including
      any claim that this Agreement was fraudulently induced.

    

    4. Unknown
      Facts.
      This
      Agreement includes claims of every nature and kind, known or unknown, suspected
      or unsuspected. Employee hereby acknowledges that he may hereafter discover
      facts different from, or in addition to, those which he now knows or believes
      to
      be true with respect to this Agreement, and he agrees that this Agreement and
      the release contained herein shall be and remain effective in all respects,
      notwithstanding such different or additional facts or the discovery
      thereof.

    

    5. No
      Admission of Liability.
      The
      Parties agree that nothing contained herein, and no action taken by any Party
      hereto with regard to this Agreement, shall be construed as an admission by
      any
      Party of liability or of any fact that might give rise to liability for any
      purpose whatsoever.

    

    6. Warranties.
      Employee warrants and represents as follows:

    

    a. He
      has
      read this Agreement, and he agrees to the conditions and obligations set forth
      in it.

    

    b. He
      voluntarily executes this Agreement after having been advised to consult with
      legal counsel and after having had opportunity to consult with legal counsel
      and
      without being pressured or influenced by any statement or representation or
      omission of any person acting on behalf of the Company including, without
      limitation, the officers, directors, board members, committee members,
      employees, agents, and attorneys for the Company.

    

    c. He
      has no
      knowledge of the existence of any lawsuit, charge, or proceeding against the
      Company or any of its officers, directors, board members, committee members,
      employees, or agents arising out of or otherwise connected with any of the
      matters herein released.

    

    d. Prior
      to
      Employee’s execution of this Agreement, he has not used or disclosed any
      information in a manner that would be a violation of Sections 7 or 8 set
      forth below if such use or disclosure were to be made after the execution of
      this Agreement.

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

    

    e. He
      has
      full and complete legal capacity to enter into this Agreement.

    

    f. He
      has
      had at least twenty-one days in which to consider the terms of this Agreement.
      In the event that Employee executes this Agreement in less time, it is with
      the
      full understanding that he had the full twenty-one days if he so desired and
      that he was not pressured by the Company or any of its representatives or agents
      to take less time to consider the Agreement. In such event, Employee expressly
      intends such execution to be a waiver of any right he had to review the
      Agreement for a full twenty-one days.

    

    g. He
      understands that this Agreement waives any claim he may have under the Age
      Discrimination in Employment Act. Employee may revoke this Agreement for up
      to
      seven days following its execution, and this Agreement shall not become
      enforceable and effective until seven days after such execution. If Employee
      chooses to revoke this Agreement, he must provide written notice to the
      President and Chief Executive Officer of the Company by hand delivery and by
      facsimile within seven calendar days of Employee’s execution of this Agreement.
      If Employee does not revoke within the seven-day period, the right to revoke
      is
      lost.

    

    h. He
      admits, acknowledges, and agrees that he is not otherwise entitled to the
      Severance Payments set forth in Section 2, and that such Severance Payments
      are good and sufficient consideration for this Agreement. He admits,
      acknowledges, and agrees that he has been fully and finally paid or provided
      all
      wages, compensation, vacation, expenses (including, but not limited to,
      relocation and travel expenses), bonuses, stock, stock options, or other
      benefits from the Company which are or could be due to Employee from the
      Company.

    

    i. He
      has
      not taken any action or made any statement adverse to the Company’s interests
      prior to signing this Agreement.

    

    7. Confidential
      Information.
      Except
      as herein provided, all discussions regarding this Agreement, including, but
      not
      limited to, the amount of consideration, offers, counteroffers or other terms
      or
      conditions of the negotiations, shall be kept confidential by Employee from
      all
      persons and entities other than the Parties to this Agreement. Employee may
      disclose the amount received in consideration of the Agreement only if necessary
      (i) for the limited purpose of making disclosures required by law to agents
      of the local, state, or federal governments; (ii) for the purpose of
      enforcing any term of this Agreement; or (iii) in response to compulsory
      process, and only then after giving the Company ten days advance notice of
      the
      compulsory process and affording the Company the opportunity to obtain any
      necessary or appropriate protective orders. Otherwise, in response to inquiries
      about this matter, Employee shall state, “My employment with the Company has
      ended,” and nothing more. Employee hereby expressly acknowledges that any breach
      of this Section 7 shall result in a claim for injunctive relief, damages and/or
      criminal sanctions and penalties against Employee by the Company, and possibly
      others.

    

    8. Non-Disparagement.
      Employee agrees not to make to any person any statement that disparages the
      Company or reflects negatively on the Company, including, but not limited to,
      statements regarding the Company’s financial condition, employment practices, or
      its officers, directors, board members, employees, affiliates, attorneys,
      customers, or vendors.

    

    9. Return
      of Company Property and Information.
      Employee represents and warrants that, prior to his execution of this Agreement,
      he will return to the Company any and all property, documents, and files,
      including any documents (in any recorded media, such as papers, computer disks,
      copies, photographs, maps, transparencies, and microfiche) that relate in any
      way to the Company or the Company’s business whether or not developed, produced,
      or conceived, in whole or in part, by Employee during the term of his employment
      with the Company. Employee agrees that, to the extent that he possesses any
      files, data, or information relating in any way to the Company or the Company’s
      business on any personal computer, he will delete those files, data, or
      information (and will retain no copies in any form). Employee also will return
      any Company tools, equipment, calling cards, credit cards, access cards or
      keys,
      any keys to any filing cabinets, vehicles, vehicle keys, and all other Company
      property in any form prior to the date he executes this Agreement. Employee
      hereby expressly acknowledges that the foregoing steps are necessary to protect
      the Company’s proprietary interests in its trade secrets, confidential
      information, and copyrights, and that Employee is not entitled to use, disclose,
      or otherwise benefit from the Company’s proprietary interests.  Employee
      understands that any breach of this Section 9 will also constitute a
      misappropriation of the Company’s proprietary rights, and may constitute a theft
      of the Company’s trade secrets under applicable local, state, and federal
      statutes, and will result in a claim for injunctive relief, damages, and/or
      criminal sanctions and penalties against Employee by the Company, and possibly
      others.

     

    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

    

    

    10. Severability.
      If any
      provision of this Agreement is held illegal, invalid, or unenforceable, such
      holding shall not affect any other provisions hereof. In the event any provision
      is held illegal, invalid, or unenforceable, such provision shall be limited
      so
      as to effect the intent of the Parties to the fullest extent permitted by
      applicable law. Any claim by Employee against the Company shall not constitute
      a
      defense to enforcement by the Company.

    

    11. Assignment.
      The
      Company may assign its rights under this Agreement. Employee cannot assign
      his
      rights under this Agreement without the written consent of the
      Company.

    

    12. Enforcement.
      The
      releases contained herein do not release any claims for enforcement of the
      terms, conditions, or warranties contained in this Agreement. The Parties shall
      be free to pursue any remedies available to them to enforce this
      Agreement.

    

    13. Survival
      of Employment Agreement Terms and Agreement Regarding Change In
      Control.
      This
      Agreement in no way affects or alters the surviving provisions set forth in
      Section 17 of the Employment Agreement, or the Agreement Regarding Change In
      Control dated effective January 1, 2007 between the Employer and the Employee
      (“CC Agreement”). Those provisions and the CC Agreement are hereby incorporated
      by reference and serve as part of the consideration for this Agreement. Employee
      agrees to continue to abide by the surviving provisions set forth in Section
      17
      of the Employment Agreement to the extent that those provisions impose any
      obligation upon Employee.

    

    14. Entire
      Agreement.
      This
      Agreement, the surviving provisions set forth in Section 17 of the Employment
      Agreement and the CC Agreement constitute the entire agreement between the
      Parties with respect to the subject matter contained herein. This Agreement
      supersedes any and all prior oral or written promises or agreements between
      the
      Parties, except as otherwise provided herein. Employee acknowledges that he
      has
      not relied on any promise, representation, or statement other than those set
      forth in this Agreement. This Agreement cannot be modified except in writing
      signed by all Parties.

    

    15. Venue
      and Applicable Law.
      This
      Agreement shall be interpreted and construed in accordance with the laws of
      the
      State of New York, without regard to its conflicts of law provisions. Venue
      and
      jurisdiction shall be in the federal or state courts in New York, New
      York.

    

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the Parties have executed this Agreement on the dates written
      below. 

     

    
      	
              EMPLOYEE:

               

               

            	 	 	 
	
              
                
Name     

            	 	 	
              
                
Date

            
	
               

              THE
                COMPANY:

               

              CAPITAL
                GOLD CORPORATION 

            	 	 	 
	
               

               

            	 	 	 
	By:
	 	 	 
	
              
                

              

              Name:        

              Title:

            	 	 	
              
                
Date

            

    

     

    
      
        
        

      

      
        A-5

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    

    AGREEMENT
      REGARDING

    CHANGE
      IN CONTROL

    

    THIS
      AGREEMENT (“Agreement”), is made and entered into effective as of the
      1st
      day of
      January, 2007 (the “Effective Date”) by and between Capital Gold Corporation
      (the “Company”) and J. Scott Hazlitt (the “Executive”) 

    

    WITNESSETH
      THAT:

    

    WHEREAS,
      the Company considers it essential to the best interests of its stockholders
      to
      foster the continuous engagement of key management personnel, and the Board
      of
      Directors of the Company (the “Board”) recognizes that, as is the case with many
      publicly held corporations, a change in control might occur and that such
      possibility, and the uncertainty and questions which it may raise among
      management, may result in the departure or distraction of management personnel
      to the detriment of the Company and its stockholders; and

    

    WHEREAS,
      the Board has determined that appropriate steps should be taken to reinforce
      and
      encourage the continued attention and dedication of members of the Company’s
      management, including the Executive, to their engagement without distraction
      in
      the face of potentially disturbing circumstances arising from the possibility
      of
      a change in control of the Company;

    

    NOW,
      THEREFORE, to induce the Executive to remain engaged by the Company and in
      consideration of the premises and mutual covenants set forth herein, IT IS
      HEREBY AGREED by and between the parties as follows:

    

    1. AGREEMENT
      TERM. The initial “Agreement Term” shall begin on the Effective Date and shall
      continue through December 31, 2010. As of December 31, 2010, and as of each
      December 31 thereafter, the Agreement Term shall extend automatically to the
      third anniversary thereof unless the Company gives notice to the Executive
      prior
      to the date of such extension that the Agreement Term will not be extended.
      Notwithstanding the foregoing, if a Change in Control (as defined in Section
      7
      below), occurs during the Agreement Term, the Agreement Term shall continue
      through and terminate on the second anniversary of the date on which the Change
      in Control occurs.

    

    2.
       ENTITLEMENT
      TO CHANGE IN CONTROL BENEFITS. The Executive shall be entitled to the Change
      in
      Control Benefits described in Section 3 hereof if the Executive’s engagement by
      the Company is terminated during the Agreement Term but after a Change in
      Control (i) by the Company for any reason other than Permanent Disability or
      Cause, (ii) by the Executive for Good Reason or (iii) by the Executive for
      any
      reason during the 30-day period commencing on the first date which is six months
      after the date of the Change in Control. For purposes of this
      Agreement:

    

    (a) A
      termination of the Executive’s engagement shall be treated as a termination by
      reason of “Permanent Disability” only if, due to a mental or physical
      disability, the Executive is absent from the performance of services for the
      Company for a period of at least twelve consecutive months and fails to return
      to the performance of services within 30 days after receipt of a written demand
      by the Company to do so.

    

    (b) The
      term
“Cause” shall mean the willful engaging by the Executive in illegal conduct or
      gross misconduct which is demonstrably and materially injurious to the Company.
      For purposes of this Agreement, no act, or failure to act, on the Executive’s
      part shall be deemed “willful” unless done, or omitted to be done, by the
      Executive not in good faith and without reasonable belief that the Executive’s
      action or omission was in the best interest of the Company. Notwithstanding
      the
      foregoing, the Executive shall not be deemed to have been terminated for Cause
      unless and until the Company delivers to the Executive a copy of a resolution
      duly adopted by the affirmative vote of not less than three-quarters of the
      entire membership of the Board at a meeting of the Board called and held for
      such purpose (after reasonable notice to the Executive and an opportunity for
      the Executive, together with counsel, to be heard before the Board) finding
      that, in the good faith opinion of the Board, the Executive was guilty of
      conduct set forth above and specifying the particulars thereof in
      detail.

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

    

    (c) The
      term
“Good Reason” shall mean the occurrence of any of the following circumstances
      without the Executive’s express written consent: 

    

    (i)
      a
      significant adverse change in the nature, scope or status of the Executive’s
      position, authorities or services from those in effect immediately prior to
      the
      Change in Control, including, without limitation, if the Executive was,
      immediately prior to the Change in Control, an executive officer of a public
      company, the Executive ceasing to be an executive officer of a public
      company;

    

    (ii)
      the
      failure by the Company to pay the Executive any portion of the Executive’s
      current compensation, or to pay the Executive any portion of any installment
      of
      deferred compensation under any deferred compensation program of the Company,
      within seven days of the date such compensation is due; 

    

    (iii)
      a
      reduction in the Executive’s annual base compensation (or a material change in
      the frequency of payment) as in effect immediately prior to the Change in
      Control as the same may be increased from time to time;

    

    (iv) the
      failure by the Company to award the Executive an annual bonus in any year which
      is at least equal to the annual bonus awarded to the Executive for the year
      immediately preceding the year of the Change in Control;

    

    (v) the
      failure by the Company to award the Executive equity-based incentive
      compensation (such as stock options, shares of restricted stock, or other
      equity-based compensation) on a periodic basis consistent with the Company’s
      practices with respect to timing, value and terms prior to the Change in
      Control;

    

    (vi) the
      failure of the Company to award the Executive incentive compensation of any
      nature based on attained milestones when such milestones are attained.

    

    (vii) the
      failure of the Company to obtain a satisfactory agreement from any successor
      to
      the Company to assume and agree to perform this Agreement as contemplated by
      Section 14.

    

    For
      purposes of any determination regarding the existence of Good Reason, any good
      faith determination by the Executive that Good Reason exists shall be
      conclusive.

    

    3. 
      CHANGE
      IN CONTROL BENEFITS. In the event of a termination of engagement entitling
      the
      Executive to benefits in accordance with Section 2, the Executive shall receive
      the following:

    

    (a) The
      Executive shall be entitled to a lump sum payment in cash no later than twenty
      business days after the Executive’s date of termination equal to the sum
      of:

    

    (i) an
      amount
      equal to three times the Executive’s base salary in effect on the date of the
      Change in Control or, or if greater, as in effect immediately prior to the
      date
      of termination; plus

    

    (ii) an
      amount
      equal to three times the Executive’s bonus award for the year immediately
      preceding the year of the Change in Control. 

    

    The
      amount payable under this paragraph (d) shall be inclusive of the amounts,
      if
      any, to which the Executive would otherwise be entitled or by law and shall
      be
      in addition to (and not inclusive of) any amount payable under any written
      agreement(s) directly between the Executive and the Company or any of its
      subsidiaries. 

    

    (b) The
      exercise price of all of the Company options owned by the Executive shall
      decrease to $0.01 per share.

     

    
      
        
        

      

      
        B-2

        
          

        

      

      
        
        

      

    

    

    (c) The
      Company shall provide the Executive with outplacement services and tax and
      financial counseling suitable to the Executive’s position through the third
      anniversary of the date of the Executive’s termination of engagement, or, if
      earlier, the date on which the Executive becomes employed by another
      employer.

    

    4. MITIGATION.
      The Executive shall not be required to mitigate the amount of any payment
      provided for in this Agreement by seeking other engagement or otherwise. The
      Company shall not be entitled to set off against the amounts payable to the
      Executive under this Agreement any amounts owed to the Company by the Executive,
      any amounts earned by the Executive in other engagement after the Executive’s
      termination of engagement with the Company, or any amounts which might have
      been
      earned by the Executive in other engagement had the Executive sought such other
      engagement.

    

    5. MAKE-WHOLE
      PAYMENTS. If any payment or benefit to which the Executive (or any person on
      account of the Executive) is entitled, whether under this Agreement or
      otherwise, in connection with a Change in Control or the Executive’s termination
      of engagement (a “Payment”) constitutes a “parachute payment” within the meaning
      of section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),
      and as a result thereof the Executive is subject to a tax under section 4999
      of
      the Code, or any successor thereto, (an “Excise Tax”), the Company shall pay to
      the Executive an additional amount (the “Make-Whole Amount”) which is intended
      to make the Executive whole for such Excise Tax. The Make-Whole Amount shall
      be
      equal to (i) the amount of the Excise Tax, plus (ii) the aggregate amount of
      any
      interest, penalties, fines or additions to any tax which are imposed in
      connection with the imposition of such Excise Tax, plus (iii) all income, excise
      and other applicable taxes imposed on the Executive under the laws of any
      Federal, state or local government or taxing authority by reason of the payments
      required under clauses (i) and (ii) and this clause (iii). 

    

    (a) For
      purposes of determining the Make-Whole Amount, the Executive shall be deemed
      to
      be taxed at the highest marginal rate under all applicable local, state, federal
      and foreign income tax laws for the year in which the Make-Whole Amount is
      paid.
      The Make-Whole Amount payable with respect to an Excise Tax shall be paid by
      the
      Company coincident with the Payment with respect to which such Excise Tax
      relates.

    

    (b)
       All
      calculations under this Section 5 shall be made initially by the Company and
      the
      Company shall provide prompt written notice thereof to the Executive to enable
      the Executive to timely file all applicable tax returns. Upon request of the
      Executive, the Company shall provide the Executive with sufficient tax and
      compensation data to enable the Executive or the Executive’s tax advisor to
      independently make the calculations described in subparagraph (a) above and
      the
      Company shall reimburse the Executive for reasonable fees and expenses incurred
      for any such verification.

    

    (c) If
      the
      Executive gives written notice to the Company of any objection to the results
      of
      the Company’s calculations within 60 days of the Executive’s receipt of written
      notice thereof, the dispute shall be referred for determination to independent
      tax counsel selected by the Company and reasonably acceptable to the Executive
      (“Tax Counsel”). The Company shall pay all fees and expenses of such Tax
      Counsel. Pending such determination by Tax Counsel, the Company shall pay the
      Executive the Make-Whole Amount as determined by it in good faith. The Company
      shall pay the Executive any additional amount determined by Tax Counsel to
      be
      due under this Section 5 (together with interest thereon at a rate equal to
      120%
      of the Federal short-term rate determined under section 1274(d) of the Code)
      promptly after such determination.

    

    (d) The
      determination by Tax Counsel shall be conclusive and binding upon all parties
      unless the Internal Revenue Service, a court of competent jurisdiction, or
      such
      other duly empowered governmental body or agency (a “Tax Authority”) determines
      that the Executive owes a greater or lesser amount of Excise Tax with respect
      to
      any Payment than the amount determined by Tax Counsel. 

    

    (e) If
      a
      Taxing Authority makes a claim against the Executive which, if successful,
      would
      require the Company to make a payment under this Section 5, the Executive agrees
      to contest the claim with counsel reasonably satisfactory to the Company, on
      request of the Company subject to the following conditions:

    

    (i)
      The
      Executive shall notify the Company of any such claim within 10 days of becoming
      aware thereof. In the event that the Company desires the claim to be contested,
      it shall promptly (but in no event more than 30 days after the notice from
      the
      Executive or such shorter time as the Taxing Authority may specify for
      responding to such claim) request the Executive to contest the claim. The
      Executive shall not make any payment of any tax which is the subject of the
      claim before the Executive has given the notice or during the 30-day period
      thereafter unless the Executive receives written instructions from the Company
      to make such payment together with an advance of funds sufficient to make the
      requested payment plus any amounts payable under this Section 5 determined
      as if
      such advance were an Excise Tax, in which case the Executive will act promptly
      in accordance with such instructions.

     

    
      
        
        

      

      
        B-3

        
          

        

      

      
        
        

      

    

    

    (ii)
      If
      the Company so requests, the Executive will contest the claim by either paying
      the tax claimed and suing for a refund in the appropriate court or contesting
      the claim in the United States Tax Court or other appropriate court, as directed
      by the Company; PROVIDED, HOWEVER, that any request by the Company for the
      Executive to pay the tax shall be accompanied by an advance from the Company
      to
      the Executive of funds sufficient to make the requested payment plus any amounts
      payable under this Section 5 determined as if such advance were an Excise Tax.
      If directed by the Company in writing the Executive will take all action
      necessary to compromise or settle the claim, but in no event will the Executive
      compromise or settle the claim or cease to contest the claim without the written
      consent of the Company; PROVIDED, HOWEVER, that the Executive may take any
      such
      action if the Executive waives in writing the Executive’s right to a payment
      under this Section 5 for any amounts payable in connection with such claim.
      The
      Executive agrees to cooperate in good faith with the Company in contesting
      the
      claim and to comply with any reasonable request from the Company concerning
      the
      contest of the claim, including the pursuit of administrative remedies, the
      appropriate forum for any judicial proceedings, and the legal basis for
      contesting the claim. Upon request of the Company, the Executive shall take
      appropriate appeals of any judgment or decision that would require the Company
      make a payment under this Section 5. Provided that Executive is in compliance
      with the provisions this section, the Company shall be liable for and indemnify
      the Executive against any loss in connection with, and all costs and expenses,
      including attorneys’ fees, which may be incurred as a result of, contesting the
      claim, and shall provide to the Executive within 30 days after each written
      request therefor by the Executive cash advances or reimbursement for all such
      costs and expenses actually incurred or reasonably expected to be incurred
      by
      the Executive as a result of contesting the claim.

    

    (f) Should
      a
      Tax Authority finally determine that an additional Excise Tax is owed, then
      the
      Company shall pay an additional Make-Whole Amount to the Executive in a manner
      consistent with this Section 5 with respect to any additional Excise Tax and
      any
      assessed interest, fines, or penalties. If any Excise Tax as calculated by
      the
      Company or Tax Counsel, as the case may be, is finally determined by a Tax
      Authority to exceed the amount required to be paid under applicable law, then
      the Executive shall repay such excess to the Company within 30 days of such
      determination; provided that such repayment shall be reduced by the amount
      of
      any taxes paid by the Executive on such excess which is not offset by the tax
      benefit attributable to the repayment.

    

    6. TERMINATION
      DURING POTENTIAL CHANGE IN CONTROL. If a Potential Change in Control (as defined
      in Section 8) occurs during the Agreement Term, and the Company terminates
      the
      Executive’s engagement for reasons other than Permanent Disability or Cause
      during such Potential Change in Control, the Executive shall be entitled to
      receive the benefits that the Executive would have received under Section 3,
      such benefits to be calculated based upon the Executive’s compensation prior to
      the actual termination of engagement but paid within 20 business days of the
      date of such termination. 

    

    7.
       CHANGE
      IN
      CONTROL. For purposes of this Agreement, a “Change in Control” shall be deemed
      to have occurred on the earliest of the following dates:

    

    (a) the
      date
      any Person is or becomes the Beneficial Owner, directly or indirectly, of
      securities of the Company representing 30% or more of the combined voting power
      of the Company’s then outstanding securities, excluding any Person who becomes
      such a Beneficial Owner in connection with a transaction described in clause
      (i)
      of paragraph (c) below; or 

    

    (b)
       the
      date
      on which the following individuals cease for any reason to constitute a majority
      of the number of directors then serving: individuals who, on the date hereof,
      constitute the Board and any new director (other than a director whose initial
      assumption of office is in connection with an actual or threatened election
      contest, including but not limited to a consent solicitation, relating to the
      election of directors of the Company) whose appointment or election by the
      Board
      or nomination for election by the Company’s stockholders was approved or
      recommended by a vote of at least two-thirds (2/3) of the directors then still
      in office who either were directors on the date hereof or whose appointment,
      election or nomination for election was previously so approved or recommended;
      or 

     

    
      
        
        

      

      
        B-4

        
          

        

      

      
        
        

      

    

    

    (c)
       the
      date
      on which there is consummated a merger or consolidation of the Company or any
      direct or indirect subsidiary of the Company with any other corporation or
      other
      entity, other than (i) a merger or consolidation (A) immediately following
      which
      the individuals who comprise the Board immediately prior thereto constitute
      at
      least a majority of the board of directors of the Company, the entity surviving
      such merger or consolidation or, if the Company or the entity surviving such
      merger or consolidation is then a subsidiary, the ultimate parent thereof and
      (B) which results in the voting securities of the Company outstanding
      immediately prior to such merger or consolidation continuing to represent
      (either by remaining outstanding or by being converted into voting securities
      of
      the surviving entity or any parent thereof), in combination with the ownership
      of any trustee or other fiduciary holding securities under an employee benefit
      plan of the Company or any subsidiary of the Company, at least 50% of the
      combined voting power of the securities of the Company or such surviving entity
      or any parent thereof outstanding immediately after such merger or
      consolidation, or (ii) a merger or consolidation effected to implement a
      recapitalization of the Company (or similar transaction) in which no Person
      is
      or becomes the Beneficial Owner, directly or indirectly, of securities of the
      Company representing 30% or more of the combined voting power of the Company’s
      then outstanding securities; or

    

    (d)
       the
      date
      on which the stockholders of the Company approve a plan of complete liquidation
      or dissolution of the Company or there is consummated an agreement for the
      sale
      or disposition by the Company of all or substantially all of the Company’s
      assets, other than a sale or disposition by the Company of all or substantially
      all of the Company’s assets to an entity, at least 50% of the combined voting
      power of the voting securities of which are owned by stockholders of the
      Company, in combination with the ownership of any trustee or other fiduciary
      holding securities under an employee benefit plan of the Company or any
      subsidiary of the Company, in substantially the same proportions as their
      ownership of the Company immediately prior to such sale.

    

    Notwithstanding
      the foregoing, a “Change in Control” shall not be deemed to have occurred by
      virtue of the consummation of any transaction or series of integrated
      transactions immediately following which the record holders of the common stock
      of the Company immediately prior to such transaction or series of transactions
      continue to have substantially the same proportionate ownership in an entity
      which owns all or substantially all of the assets of the Company immediately
      following such transaction or series of transactions. 

    

    For
      purposes of this Agreement: “Affiliate” shall have the meaning set forth in Rule
      12b-2 promulgated under Section 12 of the Exchange Act; “Beneficial Owner” shall
      have the meaning set forth in Rule 13d-3 under the Exchange Act; “Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended from time to time;
      and “Person” shall have the meaning given in Section 3(a)(9) of the Exchange
      Act, as modified and used in Sections 13(d) and 14(d) thereof, except that
      such
      term shall not include (i) the Company or any of its subsidiaries, (ii) a
      trustee or other fiduciary holding securities under an employee benefit plan
      of
      the Company or any of its Affiliates, (iii) an underwriter temporarily holding
      securities pursuant to an offering of such securities, or (iv) a corporation
      owned, directly or indirectly, by the stockholders of the Company in
      substantially the same proportions as their ownership of stock of the
      Company.

    

    8.
       POTENTIAL
      CHANGE IN CONTROL. A “Potential Change in Control” shall exist during any period
      in which the circumstances described in paragraphs (a), (b), (c) or (d), below,
      exist (provided, however, that a Potential Change in Control shall cease to
      exist not later than the occurrence of a Change in Control): 

    

    (a) The
      Company enters into an agreement, the consummation of which would result in
      the
      occurrence of a Change in Control, provided that a Potential Change in Control
      described in this paragraph (a) shall cease to exist upon the expiration or
      other termination of all such agreements; 

    

    (b) Any
      Person (without regard to the exclusions set forth in subsections (i) through
      (iv) of such definition) publicly announces an intention to take or to consider
      taking actions the consummation of which would constitute a Change in Control;
      provided that a Potential Change in Control described in this paragraph (b)
      shall cease to exist upon the withdrawal of such intention, or upon a
      determination by the Board that there is no reasonable chance that such actions
      would be consummated;

     

    
      
        
        

      

      
        B-5

        
          

        

      

      
        
        

      

    

    

    (c)
       Any
      Person becomes the Beneficial Owner, directly or indirectly, of securities
      of
      the Company representing 20% or more of either the then outstanding shares
      of
      common stock of the Company or the combined voting power of the Company’s then
      outstanding securities; 

    

    (d)
       The
      Board
      adopts a resolution to the effect that, for purposes of this Agreement, a
      Potential Change in Control exists; provided that a Potential Change in Control
      described in this paragraph (d) shall cease to exist upon a determination by
      the
      Board that the reasons that gave rise to the resolution providing for the
      existence of a Potential Change in Control have expired or no longer exist.
      

    

    9.
       NONALIENATION.
      The interests of the Executive under this Agreement are not subject in any
      manner to anticipation, alienation, sale, transfer, assignment, pledge,
      encumbrance, attachment, or garnishment by creditors of the Executive or the
      Executive’s beneficiary.

    

    10. AMENDMENT.
      This Agreement may be amended or canceled only by mutual agreement of the
      parties in writing without the consent of any other person. So long as the
      Executive lives, no person, other than the parties hereto, shall have any rights
      under or interest in this Agreement or the subject matter hereof.

    

    11.
       APPLICABLE
      LAW. The provisions of this Agreement shall be construed in accordance with
      the
      laws of the State of New York, without regard to the conflict of law provisions
      of any state.

     

    12.
       SEVERABILITY.
      The invalidity or unenforceability of any provision of this Agreement will
      not
      affect the validity or enforceability of any other provision of this Agreement,
      and this Agreement will be construed as if such invalid or unenforceable
      provision were omitted (but only to the extent that such provision cannot be
      appropriately reformed or modified).

    

    13.
       WAIVER
      OF
      BREACH. No waiver by any party hereto of a breach of any provision of this
      Agreement by any other party, or of compliance with any condition or provision
      of this Agreement to be performed by such other party, will operate or be
      construed as a waiver of any subsequent breach by such other party of any
      similar or dissimilar provisions and conditions at the same or any prior or
      subsequent time. The failure of any party hereto to take any action by reason
      of
      such breach will not deprive such party of the right to take action at any
      time
      while such breach continues.

    

    14.
       SUCCESSORS,
      ASSUMPTION OF CONTRACT. This Agreement shall be binding upon and inure to the
      benefit of the Company and any successor of the Company. The Company will
      require any successor (whether direct or indirect, by purchase, merger,
      consolidation or otherwise) to all or substantially all of the business and/or
      assets of the Company to expressly assume and agree to perform this Agreement
      in
      the same manner and to the same extent that the Company would be required to
      perform it if no succession had taken place. This Agreement is personal to
      the
      Executive and may not be assigned by the Executive without the written consent
      of the Company. However, to the extent that rights or benefits under this
      Agreement otherwise survive the Executive’s death, the Executive’s heirs and
      estate shall succeed to such rights and benefits pursuant to the Executive’s
      will or the laws of descent and distribution; provided that the Executive shall
      have the right at any time and from time to time, by notice delivered to the
      Company, to designate or to change the beneficiary or beneficiaries with respect
      to such benefits. 

    

    15.
       NOTICES.
      Notices and all other communications provided for in this Agreement shall be
      in
      writing and shall be delivered personally or sent by registered or certified
      mail, return receipt requested, postage prepaid (provided that international
      mail shall be sent via overnight or two-day delivery), or sent by facsimile
      or
      prepaid overnight courier to the parties at the addresses set forth below.
      Such
      notices, demands, claims and other communications shall be deemed
      given:

    

    (a) in
      the
      case of delivery by overnight service with guaranteed next day delivery, the
      next day or the day designated for delivery; 

    

    (b) in
      the
      case of certified or registered U.S. mail, five days after deposit in the U.S.
      mail; or 

     

    
      
        
        

      

      
        B-6

        
          

        

      

      
        
        

      

    

    

    (c) in
      the
      case of facsimile, the date upon which the transmitting party received
      confirmation of receipt by facsimile, telephone or otherwise; 

    

    provided,
      however, that in no event shall any such communications be deemed to be given
      later than the date they are actually received. Communications that are to
      be
      delivered by the U.S. mail or by overnight service or two-day delivery service
      are to be delivered to the addresses set forth below:

    

    to
      the
      Company:

    

    Capital
      Gold Corporation

    76
      Beaver
      Street

    26th
      Floor

    New
      York,
      NY 10005

    

    with
      a
      copy (which shall not constitute notice) to:

    

    Chief
      Financial Officer

    Capital
      Gold Corporation

    76
      Beaver
      Street

    26th
      Floor

    New
      York,
      NY 10005

    

    or
      to the
      Executive:

     

    J.
      Scott
      Hazlitt

    9428
      W.
      Highway 50

    Salida.
      CO 81201

    

    Each
      party, by written notice furnished to the other party, may modify the applicable
      delivery address, except that notice of change of address shall be effective
      only upon receipt.

    

    16. LEGAL
      AND
      ENFORCEMENT COSTS. The provisions of this Section 16 shall apply if it becomes
      necessary or desirable for the Executive to retain legal counsel or incur other
      costs and expenses in connection with enforcing any and all rights under this
      Agreement or any other compensation plan maintained by the Company;

    

    (a) The
      Executive shall be entitled to recover from the Company reasonable attorneys’
fees, costs and expenses incurred in connection with such enforcement or
      defense.

    

    (b) Payments
      required under this Section 16 shall be made by the Company to the Executive
      (or
      directly to the Executive’s attorney) promptly following submission to the
      Company of appropriate documentation evidencing the incurrence of such
      attorneys’ fees, costs, and expenses.

    

    (c) The
      Executive shall be entitled to select legal counsel; provided, however, that
      such right of selection shall not affect the requirement that any costs and
      expenses reimbursable under this Section 16 be reasonable.

    

    (d) The
      Executive’s rights to payments under this Section 16 shall not be affected by
      the final outcome of any dispute with the Company.

    

    17.
       SURVIVAL
      OF AGREEMENT. Except as otherwise expressly provided in this Agreement, the
      rights and obligations of the parties to this Agreement shall survive the
      termination of the Executive’s engagement with the Company. 

    

    18.
       ENTIRE
      AGREEMENT. Except as otherwise provided herein, this Agreement constitutes
      the
      entire agreement between the parties concerning the subject matter hereof and
      supersedes all prior or contemporaneous agreements, between the parties relating
      to the subject matter hereof; provided, however, that nothing in this Agreement
      shall be construed to limit any policy or agreement that is otherwise applicable
      relating to confidentiality, rights to inventions, copyrightable material,
      business and/or technical information, trade secrets, solicitation of employees,
      interference with relationships with other businesses, competition, and other
      similar policies or agreement for the protection of the business and operations
      of the Company and the subsidiaries.

     

    
      
        
        

      

      
        B-7

        
          

        

      

      
        
        

      

    

    

    19.
       COUNTERPARTS.
      This Agreement may be executed in two or more counterparts, any one of which
      shall be deemed the original without reference to the others.

    

    IN
      WITNESS THEREOF, the Executive has hereunto set his hand, and the Company has
      caused these presents to be executed in its name and on its behalf, and its
      corporate seal to be hereunto affixed on this 5th
      day of
      December, 2006, all as of the Effective Date.

     

    
      	 

              /s/
                J. Scott Hazlitt

              
                

              

              J.
                Scott Hazlitt

            	 	 	 
	
               

              CAPITAL
                GOLD CORPORATION

               

            	 	 	 
	By:
              /s/ Gifford A Dieterle	 	 	 
	
              
                

              

              Gifford
                A. Dieterle, President

            	 	 	
            
	
               

              ATTEST:

            	 	 	 
	
               

              /s/
                Christopher Chipman 

                

              

              Christopher
                Chipman, CFO  

            	 	 	 

    

    

    
      
        
        

      

      
        B-8

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