Document:

<PAGE>
                                                                   EXHIBIT 10.25

                            JOINT OPERATING AGREEMENT

                                  MADE BETWEEN

                               BOGOSO GOLD LIMITED

                                       AND

                         PRESTEA GOLD RESOURCES LIMITED

                                      DATED

                                JANUARY 31, 2002

<PAGE>
JOINT OPERATING AGREEMENT                                               PAGE (i)
--------------------------------------------------------------------------------

                                TABLE OF CONTENTS

Section 1        -      Definitions and Interpretation

        2        -      Scope of Agreement

        3        -      Consultations and Cooperation

        4        -      Safety and Environment

        5        -      Infrastructure Mitigation Plan

        6        -      Default

        7        -      Dispute Resolution

        8        -      Representations and Warranties

        9        -      General

Schedule A       -      Lease Area

         B       -      Infrastructure Mitigation Plan
<PAGE>
JOINT OPERATING AGREEMENT                                                 PAGE 1
--------------------------------------------------------------------------------

AGREEMENT made January 31, 2002 between Bogoso Gold Limited, a company
incorporated under the laws of Ghana ("BGL"), and Prestea Gold Resources
Limited, a company incorporated under the laws of Ghana ("PGR").

RECITALS

A.       The Parties entered into an agreement dated May 21, 2001 (the "Letter
         Agreement") pursuant to which, among other things, it was agreed that
         PGR would surrender a mining lease held by it and the Parties would
         procure the issue of two new mining leases covering the same area, of
         which one would permit underground mining and the other surface mining
         for gold and related minerals.

B.       Subsequent to such date, PGR surrendered its existing lease, the
         Government of Ghana issued the BGL Lease and PGR Lease (as defined
         below) and GSR entered into and completed an agreement with Barnato
         Exploration Limited, all as provided for in the Letter Agreement.

C.       Subsequent to such date PGR and PGL entered into an agreement dated
         November 16, 2001 (the "Investment Agreement") confirming the
         understandings of the Letter Agreement.

D.       The Investment Agreement was amended and supplemented by letters dated
         December 4, 2001 and January 31, 2002.

E.       BGL has advanced to PGR $2,099,999.00 of the $2,100,000.00 which it
         undertook pay to PGR as the First Option Payment (as defined in the
         Investment Agreement).

F.       BGL has commenced mining on the Prestea property at the area known as
         Buesichem and intends to commence mining activities on the central
         portion of the Prestea property in the areas known as North Shaft and
         Plant around mid-2002 once the necessary approvals have been obtained
         from the Environmental Protection Agency and the Mines Department.

G.       The Parties are entering into this joint operating agreement as
         provided for in the Investment Agreement as so amended and
         supplemented.

IN CONSIDERATION OF THE MUTUAL COVENANTS IN THIS AGREEMENT, THE PARTIES AGREE AS
FOLLOWS:

                                    ARTICLE 1
                         DEFINITIONS AND INTERPRETATIONS

1.1      As used in this Agreement:

"AFFILIATE" means any legal entity, wherever incorporated or constituted, which
directly or indirectly controls, is controlled by, or is under common control
with a Party and, for this purpose, "control" means the ownership of or right to
exercise control of more then fifty percent (50%) of the voting rights at a
general meeting of shareholders or other equivalent constitutional meeting and,
through such ownership or right, to elect at least a majority of the

<PAGE>
JOINT OPERATING AGREEMENT                                                 PAGE 2
--------------------------------------------------------------------------------

Board or other persons with substantially equivalent power to manage and direct
the affairs of such legal entity.

"AGREEMENT" means this joint operating agreement and all schedules and
instruments in amendment or confirmation of it; "hereof", "hereto", and
"hereunder" and similar expressions mean and refer to this Agreement and not to
any particular Article, Section, Subsection or other subdivision; "Article",
"Section", "Subsection" or other subdivision of this Agreement followed by a
number means and refers to the specified Article, Section, Subsection or other
subdivision of this Agreement;

"APPLICABLE LAW" means all applicable laws of the Republic of Ghana, including,
without limitation, the PNDCL 153;

"BGL" means Bogoso Gold Limited, registration no. 29,939, a company incorporated
according to the laws of the Republic of Ghana.

"BGL LEASE" means the mining lease dated June 29, 2001 issued by the Government
to BGL pursuant to Section 45 of the PNDCL 153 whereby BGL has been granted
exclusive mining rights over the Lease Area to mine for a period of 30 years for
gold and associated mineral substances lying and being under the surface to a
vertical depth 150.37 metres below sea level (the "150 Metre Depth") and
includes all necessary consents and ratifications to perfect BGL's title
thereunder;

"BUSINESS DAY" means any day other than a Saturday, Sunday or official public
holiday in the city of Accra, Ghana or in the city of Denver, U.S.A.

"CHIEF INSPECTOR OF MINES" means the chief inspector of mines appointed from
time to time by the Minister in accordance with the Minerals and Mining Law,
1986, as amended.

"DAY" means a calendar day;

"DECOMMISSIONING" means closure of the Plant in compliance with the requirements
of Article 5.

"DOLLARS" OR "$" means the currency which is, from time to time, legal tender
for the payment of all private and public debts in the United States of America.

"EFFECTIVE DATE" means January 31, 2002.

"FINANCIAL YEAR" means a period of twelve (12) months ending on December 31 or
such other date as may be determined by the Parties from time to time.

"FORCE MAJEURE" means any cause, whether foreseeable or unforeseeable, beyond a
Party's reasonable control, including, without limitation, labour disputes
(however arising and whether or not employee demands are reasonable or within
the power of such Party to grant); acts of God; laws, regulations, orders,
proclamations, instructions or requests of any government or governmental
entity; judgments or orders of any court; inability to obtain on reasonably
acceptable terms any public or private license, permit or other authorization;
curtailment or suspension of activities to remedy or avoid an actual or alleged,
present or prospective violation of federal, state or local environmental
standards; acts of war or

<PAGE>
JOINT OPERATING AGREEMENT                                                 PAGE 3
--------------------------------------------------------------------------------

conditions arising out of or attributable to war, whether declared or
undeclared; riot, civil strife, insurrection or rebellion; fire, explosion,
earthquake, storm, flood, sinkholes, drought or other adverse weather condition;
delay or failure by suppliers or transporters of materials, parts, supplies,
services or equipment; contractor' or subcontractors' shortage of, or inability
to obtain, labour, transportation, materials, machinery, equipment, supplies,
utilities or services; accidents; breakdown of equipment, machinery or
facilities; or any other cause whether similar or dissimilar to the foregoing.

"GOVERNMENT" means the duly constituted government of the Republic of Ghana or
any political subdivision thereof, whether Central, Regional, District or local,
or any judicial body, agency or instrumentality of any such government or
political subdivision (and is deemed to include, for the purposes of any
required approvals to be obtained hereunder, the Bank of Ghana);

"INFRASTRUCTURE MITIGATION PLAN" means an infrastructure mitigation plan,
complying with the requirements of Schedule B, designed to set out the broad
understanding of the Parties as to how surface infrastructure to be impacted by
the surface mining operations to be conducted by BGL under the BGL Lease will be
mitigated to ensure that there is no significant adverse impact on the
operations of PGR pursuant to their rights under the PGR Lease;

"AGREEMENT " means this joint operating agreement and all schedules and
instruments in amendment or confirmation of it; "hereof', "hereto", and
"hereunder" and similar expressions mean and refer to this Agreement and not to
any particular Article, Section, Subsection or other subdivision; "Article",
"Section", "Subsection" or other subdivision of this Agreement followed by a
number means and refers to the specified Article, Section, Subsection or other
subdivision of this Agreement;

"LEASE AREA" means the area of approximately 129.05 square kilometers, as more
particularly described in Schedule A;

"LICENCE" means any licence, permit, approval, right, privilege, concession or
franchise issued, granted, conferred or otherwise created by the Government;

"MINING LEASE", "MINERAL OPERATIONS", "MINING OPERATIONS", "MINERAL RIGHT" and
"MINERALS" shall have the meanings given to such terms in PNDCL 153;

"MINISTER" means the Minister responsible for mines in the Republic of Ghana;

"MANAGEMENT COMMITTEE" means the management committee as described in Section 4.

"MINING COMMENCEMENT DATE" means the date as of which BGL commences mining
operations on the BGL Lease in the area marked as "Plant Deposit" on Schedule A;

"OPTION" means the option granted by PGR to BGL to acquire shares in PGR, as
provided in Section 6 of the Investment Agreement;

"PARTIES" means, collectively, BGL and PGR and "Party" means any one of them.

"PERSON" shall be broadly interpreted and includes an individual, body
corporate, partnership, joint venture, trust, association, unincorporated
organization, the Government

<PAGE>
JOINT OPERATING AGREEMENT                                                 PAGE 4
--------------------------------------------------------------------------------

(including any agency, authority, tribunal or commission) or any other entity
recognized by law;

"PGR" means Prestea Gold Resources Limited a company incorporated according to
the laws of the Republic of Ghana.

"PGR LEASE" means the mining lease dated June 29, 2001 issued by the Government
to PGR pursuant to Section 45 of the PNDCL 153, whereby PGR has been granted
mineral rights over the Lease Area for a period of 30 years for gold and other
associated mineral substances lying and being under the 150 Metre Depth and
includes all necessary consents and ratifications to perfect PGR's title
thereunder;

"PLANT" means PGR's existing processing plant located on the Lease Area;

"PNDCL 153" means the Minerals and Mining Law, 1986 (PNDCL 153) of Ghana, as
amended;

"PARTIES" means, collectively, BGL and PGR and "Party" means any one of them.

"PRESTEA ASSETS" means all assets owned by SGMC which are located on the
property covered by the PGR Lease;

"PRESTEA MINING AREA" means the area shown on Schedule A and marked as "Prestea
Mining Area";

"SGMC" means The State Gold Mining Corporation Limited;

1.2      Any reference in this Agreement to gender shall include all genders,
         and words importing the singular number only shall include the plural
         and vice versa.

1.3      The division of this Agreement into Articles, Sections, Subsections and
         other subdivisions and the insertion of headings are for convenience of
         reference only and shall not affect or be utilized in the construction
         or interpretation of this Agreement.

1.4      Any Article, Section, Subsection or other subdivision of this Agreement
         or any other provision of this Agreement which is, or becomes, illegal,
         invalid or unenforceable shall be severed from this Agreement and be
         ineffective only to the extent of such illegality, invalidity or
         unenforceability and shall not affect or impair the remaining
         provisions hereof.

1.5      This Agreement constitutes the entire agreement between the Parties
         pertaining to the subject matter hereof and supersedes all prior
         agreements, understandings, negotiations and discussions, whether oral
         or written, of the Parties.

1.6      This Agreement may only be amended, modified or supplemented by a
         written agreement signed by all of the Parties.

1.7      No waiver of any of the provisions of this Agreement by any Party shall
         be deemed to constitute a waiver of such provision by any other Party
         or a waiver by such Party of any other provision, (whether or not
         similar), nor shall such waiver constitute a

<PAGE>
JOINT OPERATING AGREEMENT                                                 PAGE 5
--------------------------------------------------------------------------------

         continuing waiver unless otherwise expressly provided in writing duly
         executed by the Party to be bound thereby.

1.8      Where the word "including" or "includes" is used in this Agreement it
         means "including (or includes) and without limitation".

1.9      Any references herein to any law, by-law, rule, regulation, order or
         act of any government, governmental body or other regulatory body shall
         be construed as a reference thereto as enacted at the date hereof as
         such law, by-law, rule, regulation, order of or act may be amended,
         re-enacted or superseded from time to time.

                                    ARTICLE 2
                               SCOPE OF AGREEMENT

2.1      This Agreement sets out the protocols and procedures to be observed by
         BGL and PGR in the day-to-day operations of the surface and underground
         mining operations on the Lease Area with effect from the Effective Date
         and grants to BGL certain rights the exercise of which is necessary for
         purposes of conducting mining upon the BGL Lease. The matters to be
         discussed and agreed to by the Parties pursuant to this Agreement shall
         include, but not be limited to, safety, communication between the
         Parties, access, disturbances, mitigation of disturbances, air and
         water ingress to the underground mine from the surface excavations,
         blasting operations, notification of blasting operations, survey and
         notification of underground openings, community relations,
         confidentiality, statements to the media, joint emergency response, and
         security operations.

2.2      The Agreement does not constitute a commercial arrangement between the
         Parties and only deals with how the Parties will cooperate to ensure
         that their individual operations and activities on the Lease Area will
         have minimal impact on the operations and activities of the other
         Party.

2.3      This Agreement shall remain in force so long as BGL is the holder of
         the BGL Leased or other mining rights in the Lease Area and PGR is the
         holder of the PGR Lease or other mining rights in the Lease Area. Its
         validity and continuance in force shall not be affected in any way by
         (a) BGL's failure to make payment of the balance of the First Option
         Payment, where such failure results from PGR's inability or failure to
         satisfy one or more closing conditions, or BGL's own exercise of the
         Option. In this regard PGR hereby acknowledges the adequacy of the
         payments already made to it by BGL as consideration for their entering
         into of this Agreement

<PAGE>
JOINT OPERATING AGREEMENT                                                 PAGE 6
--------------------------------------------------------------------------------

                                    ARTICLE 3
                          CONSULTATION AND COOPERATION

3.1      Management Committee

         (a)      The Parties will form a Management Committee comprised of
                  equal numbers of BGL and PGR representatives, but no more than
                  ten (10), from BGL and ten (10) from PGR at any time.

         (b)      The Management Committee shall meet as often as required but
                  at least monthly. The Chairmanship of the Management Committee
                  shall alternate between BGL and PGR. BGL shall chair the first
                  meeting, then PGR shall chair the second meeting and so on.

         (c)      The Management Committee will consider and decide on issues
                  that affect the operations and activities of both BGL and PGR
                  within the Lease Area. Issues will be decided by mutual
                  agreement between the Parties.

         (d)      Undecided or unresolved issues will be deferred for further
                  investigation by the Parties and consideration by the
                  Management Committee. Any unresolved issue or disputed issue
                  may be resolved by arbitration as set out in Clause 8.

         (e)      Minutes of all meetings of the Management Committee shall be
                  recorded and then approved by the Parties at the next meeting
                  of the Management Committee.

3.2      Mining Plans

         (a)      The Parties shall provide documented mining plans and
                  schedules for each Financial Year to the other Party no later
                  than 30 days prior to the commencement of the Financial Year.
                  For 2002 the plans and sections will be provided no later than
                  ten (10) days after the execution of t his letter.

         (b)      The Parties shall provide a detailed mining plan and schedule
                  to the other Party for each Month no later than seven days
                  prior to the commencement of each Month.

         (c)      No Party shall deviate from any mining plan or schedule
                  provided to the other without first having given the other
                  Party ten days notice of its intention to do so.

         (d)      No Party shall conduct any mining operations or activities
                  within 20 metres of the 150 Metre Depth without first having
                  presented a Feasibility Study on the activity to the other
                  Party and the Chief Inspector of Mines, and received their
                  written Agreement to do so.

3.3      Systems and Procedures

         (a)      The Parties shall establish systems and procedures to control
                  their operations and activities.

<PAGE>
JOINT OPERATING AGREEMENT                                                 PAGE 7
--------------------------------------------------------------------------------

         (b)      The systems and procedures shall deal with blast times, blast
                  monitoring, sharing of survey information, surface mining near
                  voids, storm water control, dewatering, surface access and
                  control, development of infrastructure by the Parties on the
                  Lease Area, and authorisations to third parties to work or
                  develop infrastructure on the Lease Area.

3.4      Announcements and Community Relations

         (a)      All announcement regarding the activities of the Parties
                  within the Lease Area shall require the approval of the other
                  Party, such approval not to be unreasonably withheld, and
                  shall be deemed to have been granted in the event that no
                  response is received from the approving Party within 72 hours
                  of hand delivery.

         (b)      The Parties shall coordinate all meetings with the local
                  government, traditional rulers and the local community
                  regarding their respective mining plans and activities within
                  the Lease Area and shall ensure that both Parties are
                  represented at any such hearings.

         (c)      The restriction at Section 3.4 (a) shall not apply in the
                  event of any press release required by law or the rules and
                  regulations of a stock exchange having jurisdiction.

                                    ARTICLE 4
                             SAFETY AND ENVIRONMENT

4.1      Each Party shall ensure that all of its operations within the Lease
         Area are carried out in accordance with all applicable safety and
         environmental laws and guidelines in effect for such operations and in
         accordance with the terms of any environmental or mining permits issued
         to them.

4.2      The Parties covenant to accept the final decision of the Chief
         Inspector of Mines on any safety or environmental matter or dispute
         between the Parties.

                                    ARTICLE 5
                         INFRASTRUCTURE MITIGATION PLAN

5.1      The Parties recognize the importance of, and need for, the adoption and
         implementation of the Infrastructure Mitigation Plan ("Plan") designed
         to minimize the impact of surface mining operations to be conducted by
         BGL under the BGL Lease.

5.2      The Parties hereby adopt with immediate effect the Plan attached as
         Schedule B.

5.3      The Parties undertake to regularly review the Plan and to amend it as
         required from time to time to reflect changing circumstances and new
         information on the Parties respective mining plans which was not
         previously known.

<PAGE>
JOINT OPERATING AGREEMENT                                                 PAGE 8
--------------------------------------------------------------------------------

5.4      In recognition of the need for BGL to be able to relocate certain
         infrastructure pursuant to the Plan:

         (a)      PGR hereby grants BGL the right to acquire for $1.00 such of
                  the Prestea Assets that BGL is required to replace or relocate
                  as a result of the implementation of the Plan; provided that
                  (i) such replaced or relocated assets shall become the
                  property of PGR, and (ii) BGL may acquire title to such
                  replaced or relocated assets by paying to PGR an amount not in
                  excess of the consideration paid by PGR to SGMC to acquire
                  them plus reasonable expenses incurred in the acquisition;

         (b)      PGR agrees to transfer to BGL, for nominal consideration, such
                  of the Prestea Assets as are agreed between the Parties to be
                  necessary for BGL's own operations by a transfer agreement in
                  form and substance satisfactory to the Parties;

         (c)      PGR agrees that BGL shall be entitled to realize whatever
                  value possible, directly or indirectly, from the Prestea
                  Assets acquired by it in accordance with clause 5.4 (b) to
                  defray its costs and expenses incurred in executing the Plan;

         (d)      PGR agrees that the Prestea Assets, which will be acquired in
                  accordance with this clause, includes, among other things, the
                  Plant, and that the area on which the Plant is located will be
                  required for mining within the first six months of this
                  Agreement, and it is envisaged that about three months will be
                  required for the Decommissioning of the Plant. In this regard:

                  (i)      BGL shall provide PGR with at least thirty (30) days
                           notice of the date of Decommissioning upon which PGR
                           shall cease delivering ore to the Plant;

                  (ii)     Immediately following Decommissioning, BGL will have
                           the right to secure the Plant. PGR employees will be
                           granted access, on a 24-hour basis, for seven
                           consecutive days immediately thereafter in order to
                           effect a clean-up of the Plant and its inventories.
                           During this period, PGR employees shall have the
                           right to process any gold-bearing material in order
                           to produce a smelted product ("Gold Dore"). Only Gold
                           Dore and left-over reagents, inclusive of loaded
                           carbon, will remain the property of PGR and may be
                           removed during the aforementioned seven-day period.
                           After such seven-day clean-up period, any remaining
                           materials will become the property of BGL; and

                  (iii)    BGL shall have the right to monitor all clean-up
                           operations conducted by PGR after Decommissioning.
                           Physical clean-up may be conducted on all machinery
                           and structures within the Plant boundary, provided
                           such cleaning actions are non-destructive, and
                           provided no dismantling or disassembly of any
                           equipment takes place. No cleaning may take place
                           which, in BGL's opinion, will physically alter,
                           degrade or render unserviceable any civil or
                           mechanical structure;

         (e)      From Decommissioning until such time as BGL is able to provide
                  alternative processing facilities ("Alternative Facilities")
                  for use by PGR to process its

<PAGE>
JOINT OPERATING AGREEMENT                                                 PAGE 9
--------------------------------------------------------------------------------

                  underground ore, BGL shall be obligated to treat ore mined by
                  PGR on a toll processing basis at its processing facilities
                  under the terms and conditions set out in Schedule I of the
                  Investment Agreement.

         (f)      The Alternative Facilities will consist of, at BGL's option
                  but subject to PGR's approval, not to be unreasonably
                  withheld, either the relocation of the Plant or the
                  acquisition and upgrading, with the use of existing plant
                  equipment, of the processing plant currently used by Prestea
                  Sankofa Gold Limited, subject to its being available for this
                  purpose.

         (g)      The Alternative Facilities shall be constructed with due
                  regard to the metallurgical flowsheet, capacity and
                  performance of the Plant and their designed overall unit cost
                  per tonne shall not be more than and, recovery shall not be
                  less than, those of the Plant;

         (h)      Provided that BGL has commenced mining operations on the BGL
                  Lease in the area marked as "Plant Deposit" on Schedule A, or
                  alternatively, in the event that BGL ceases mining operations
                  on the BGL Lease prior to the Mining Commencement date, BGL
                  shall, upon the establishment of the Alternative Facilities,
                  transfer the Alternative Facilities to PGR for a purchase
                  price equal to the difference between (i) the cost of the
                  Alternative Facilities, and (ii) the price paid by PGR or BGL
                  to SGMC for the Plant. The purchase consideration shall be a
                  non-interest bearing demand loan note re-payable on December
                  31, 2999 secured by a fixed charge over the Alternative
                  Facilities.

         (i)      In the unlikely event that the Alternative Facilities are
                  established prior to the Mining Commencement Date, the
                  Alternative Facilities shall be and remain the property of BGL
                  and shall be made available to PGR for so long as it needs
                  them without charge; provided that (i) PGR shall be
                  responsible for maintaining the Alternative Facilities in good
                  repair and operating condition, and (ii) shall not be entitled
                  to modify them without BGL's prior consent, not to be
                  unreasonably withheld; and

         (j)      The Parties may agree to continue such toll processing
                  arrangement in lieu of BGL making the Alternative Facilities
                  available.

5.5      For greater certainty the Parties hereby confirm and agree that the
         provisions of Clause 5.4 are intended to be enforceable independently
         of the similar provisions contained in Clause 7.1 of the Investment
         Agreement.

                                    ARTICLE 6
                                     DEFAULT

6.1      A Party shall be in default under this Agreement if, at any time (a)
         such Party is in breach of any of its material obligations under this
         Agreement and which continues for seven (7) days after notice by the
         other Party specifying such breach; (b) bankruptcy, insolvency, or
         similar events effecting such Party.

<PAGE>
JOINT OPERATING AGREEMENT                                                PAGE 10
--------------------------------------------------------------------------------

6.2      For the purposes of Clause 6.1 a break of material obligations shall
         include but not be limited to breach of the obligations contained in
         Clauses 3.2, 3.3, 4.1 and 5.3 and shall be enforceable by application
         to a court having jurisdiction over the Parties.

                                    ARTICLE 7
                               DISPUTE RESOLUTION

7.1      Any dispute, controversy or claim arising under or in connection with
         this Agreement, and which cannot be resolved within sixty (60) days of
         attempted negotiations between the Parties, shall be settled by
         arbitration in accordance with this section.

7.2      Matters subject to arbitration shall be settled by arbitration in
         accordance with the rules and regulations of the London Court of
         International Arbitration in effect on the date of this agreement.

7.3      The place of arbitration shall be Accra, Ghana or such other place as
         the Parties may agree.

7.4      The language of the arbitration shall be English.

7.5      The arbitration shall be the sole and exclusive forum for resolution of
         the dispute or controversy and the award shall be final and binding.

7.6      A Party may demand arbitration by delivering a written notice thereof
         to the other Party setting forth a complete, concise statement of the
         issue(s) in dispute, the amount involved and the remedy requested.

7.7      The arbitrators shall render a written decision within six months after
         having been appointed.

7.8      Notwithstanding anything herein, the arbitral panel shall have the
         power to decide any dispute ex aequo et bono, with the objective of
         deciding such matters fully in accordance with the intent of the
         Parties as indicated by this Agreement.

7.9      The arbitrators shall have the right to award or include in their award
         any relief which they deem proper in the circumstances, including,
         without limitation, money damages (with interest on unpaid amounts from
         date due), specific performance, injunctive relief and legal fees and
         costs in accordance with this section.

7.10     The arbitrators shall not have the authority to award exemplary,
         punitive, consequential or special damages and each Party shall be
         limited to the recovery of any actual damages sustained by it.

7.11     The number of arbitrators shall be three. One arbitrator shall be
         nominated by each of the Parties and shall then agree on the
         appointment of a third arbitrator, who shall be disinterested in the
         dispute and shall have no connection with any Party.

7.12     All arbitrators shall be persons having relevant experience in the
         minerals industry.

<PAGE>
JOINT OPERATING AGREEMENT                                                PAGE 11
--------------------------------------------------------------------------------

7.13     Unless the three arbitrators have been appointed within thirty (30)
         days after the date on which either Party requests the settlement of
         any dispute by arbitration pursuant to this Section, the London court
         of International Arbitration shall appoint the three arbitrators
         referred to above. The appointing authority may appoint from among
         nationals of any country, whether or not a Party is a national of that
         country.

                                    ARTICLE 8
                         REPRESENTATIONS AND WARRANTIES

8.1      The Parties represent and warrant to each of the other Parties that:

         (a)      it is a body corporate duly incorporated, organized and
                  validly subsisting under the laws of its incorporating
                  jurisdiction;

         (b)      it has full power and authority to carry on its business and
                  to enter into this Agreement;

         (c)      neither the execution and delivery of this Agreement 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 does not violate
                  or result in the breach of its constating documents or of the
                  laws of any applicable jurisdiction; and

         (e)      this Agreement has been duly authorized by all necessary
                  corporate action of its directors and shareholders and
                  constitutes a legal, valid and binding obligation enforceable
                  against it in accordance with its terms.

                                    ARTICLE 9
                                     GENERAL

9.1      Further Assurances

         Each of the Parties will from time to time execute and deliver all
         further documents and instruments and do all acts and things as the
         other Party may, either before or after the Closing Date, reasonably
         require to effectively carry out or better evidence or perfect the full
         intent and meaning of this Agreement.

9.2      Legal Fees

         Each of the Parties hereto will pay their respective legal and
         accounting costs and expenses incurred in connection with the
         preparation, execution and delivery of this Agreement, and all other
         documents and instruments executed pursuant hereto and any other costs
         and expenses whatsoever and howsoever incurred.

<PAGE>
JOINT OPERATING AGREEMENT                                                PAGE 12
--------------------------------------------------------------------------------

9.3      Confidentiality

         No Party shall disclose the making of this Joint Operating Agreement
         nor its terms nor any other agreement referred to in this Joint
         Operating Agreement (except those matters set out in the press release
         in the agreed form) nor any details of each Parties mining plans and
         activities which may be shared with the other Party in the performance
         of this Joint Operating Agreement unless agreed in writing by the other
         Parties (such agreement not to be unreasonably withheld) and each Party
         shall procure that each of its Related Persons shall not make any such
         disclosure without the prior consent of the other Parties unless
         disclosure is:

         (a)      to its professional advisers; or

         (b)      required by law; or

         (c)      required by the rules or standards of any stock exchange,
                  securities regulator that a Party is a reporting issuer of or
                  such other regulatory body agreed between the Parties and
                  disclosure shall then only be made by that Party:

                  (i)      after it has taken all such steps as may be
                           reasonable in the circumstances to agree the contents
                           of such announcement with the other Parties before
                           making such announcement and provided that any such
                           announcement shall be made only after notice to the
                           other Parties; and

                  (ii)     to the person or persons and in the manner required
                           by law or the rules of the stock exchange, securities
                           regulator or or such other regulatory body or as
                           otherwise agreed between the Parties.

         The restrictions contained in Article 9.3 shall apply without limit of
         time.

9.4      Entire Agreement

         This Agreement constitutes the entire agreement among the Parties with
         respect to the subject matter hereof and cancels and supersedes any
         prior understandings and agreements between the Parties hereto with
         respect thereto.

9.5      Amendments and Waiver

         No modification of or amendment to this Agreement will be valid or
         binding unless set forth in writing and duly executed by all of the
         Parties and no waiver of any breach of any term or provision of this
         Agreement will be effective or binding unless made in writing and
         signed by the Party purporting to give the same and, unless otherwise
         provided, will be limited to the specific breach waived.

9.6      Assignment

         No Party may assign this Agreement to another party.

<PAGE>
JOINT OPERATING AGREEMENT                                                PAGE 13
--------------------------------------------------------------------------------

9.7      Benefit of the Agreement

         This Agreement will enure to the benefit of and be binding upon the
         respective successors of the Parties.

9.8      Notices

         Any demand, notice or other communication to be given in connection
         with this Agreement must be given in writing by personal delivery or by
         electronic means of communication addressed to the recipient as
         follows:

         (a)      To PGR:
                  Prestea Gold Resources Limited
                  PO Box 701
                  Accra Ghana

                  Attention:     Chairman
                  Facsimile No.: +233 21 66 5563

         (b)      To BGL:
                  Bogoso Gold Limited
                  32 Akosombo Road
                  Airport Residential
                  PO Box 16075, Airport
                  Accra Ghana

                  Attention:     Managing Director
                  Facsimile No.: +233 21 77 7700

         or to such other address, individual or electronic communication number
         as may be designated by notice given by either Party to the other. Any
         demand, notice or other communication given by personal delivery will
         be conclusively deemed to have been given on the day of actual delivery
         thereof and, if given by electronic communication, on the day of
         transmittal thereof if given during the normal business hours of the
         recipient and on the Business Day during which such normal business
         hours next occur if not given during such hours on any day.

9.9      Governing Law

         This Agreement is governed by and must be construed in accordance with
         the laws of Ghana.

9.10     Attornment

         For the purpose of all legal proceedings this Agreement shall be deemed
         to have been performed in Ghana and the courts of Ghana will have
         jurisdiction to entertain any action arising under this Agreement. Each
         Party hereby attorns to the jurisdiction of the courts of Ghana.

<PAGE>
JOINT OPERATING AGREEMENT                                                PAGE 14
--------------------------------------------------------------------------------

9.11     Counterparts

         This Agreement may be executed in any number of counterparts, each of
         which will be deemed to be an original and all of which when taken
         together constitute one and the same agreement.

9.12     Execution by Facsimile Transmission

         Delivery of this Agreement by may be made by facsimile transmission. A
         copy of this Agreement duly executed in several counterparts by the
         Parties and delivered by facsimile transmission constitutes a valid and
         binding Agreement.

9.13     Force Majeure

         The obligations of the Parties will be suspended for the duration of a
         Force Majeure event.

In witness whereof the Parties have executed this Agreement as of the date first
above written

BOGOSO GOLD LIMITED

By:    /s/ Peter Bradford
       -----------------------------
Name:  Peter Bradford
Title: Chairman

By:    /s/ Richard Gray
       -----------------------------
Name:  Richard Gray
Title: Managing Director

PRESTEA GOLD RESOURCES LIMITED

By:    /s/ Robert Cole
       -----------------------------
Name:  Robert Cole
Title: Chairman

By:    /s/ Jerome Essilfie
       -----------------------------
Name:  Jerome Essilfie
Title: Mine Manager and Director<PAGE>
                                                                   EXHIBIT 10.26

                             MEMORANDUM OF AGREEMENT

                                     BETWEEN

                         PRESTEA GOLD RESOURCES LIMITED

                                       AND

                               BOGOSO GOLD LIMITED

                                       AND

                           PRESTEA GOLDFIELDS LIMITED

                                       AND

                        STATE GOLD MINING COMPANY LIMITED

                                       AND

                   GHANA MINEWORKERS UNION OF THE TUC (GHANA)

                                       AND

                              THE REPUBLIC OF GHANA

                              DATED MARCH 14, 2002

<PAGE>
MEMORANDUM OF AGREEMENT made the 14 day of March, 2002 between:

         Prestea Gold Resources Limited a company registered under the laws of
         the Republic of Ghana (hereafter referred to as "PGR"),

         Bogoso Gold Limited a company registered under the laws of the Republic
         of Ghana (hereafter referred to as "BGL"),

         Prestea Goldfields Limited a company registered under the laws of the
         Republic of Ghana (hereafter referred to as "PGL"),

         State Gold Mining Company Limited a Public Limited Liability Company
         registered under the laws of Ghana of P. O. Box 3634 Accra in the
         Greater Accra Region (hereinafter referred to as "SGMC"),

         Ghana Mineworkers Union of the TUC (Ghana) as the majority shareholder
         of PGR and as representative of the unionised employees of PGR
         (hereinafter referred to as "GMWU"), and,

         The Republic of Ghana, acting through the Minister of Mines
         (hereinafter referred to as "Government"),

WHEREAS:

A.       In 1994 Government, acting through the Divestiture Implementation
         Committee divested its interest in PGL to JCI Limited and accordingly
         the Government also granted a 30 year gold Mining Lease to the said
         Company over the Prestea Concession Area (the "JCI Mining Lease").

B.       Pursuant to the said divestiture a certain Project Development and
         Prestea Main Agreement respectively dated September 13, 1995 and May
         20, 1996 were made between JCI Limited, Barnato Exploration Limited,
         Barnex (Prestea) Limited (collectively the "JCI Group") the Government,
         SGMC and PGL (the "Prestea Agreements") whereby certain specific rights
         were acquired and obligations assumed by the parties thereto in
         relation to the Prestea Concession Area including the right of the JCI
         Group to acquire at its sole discretion all or any of the Underground
         Mining Assets.

C.       In accordance with the Prestea Agreements the JCI Group assumed
         management of the Underground Mine until September 16, 1998 when the
         JCI Group informed the Government that it could no longer operate the
         Underground Mine economically and therefore ceased same whilst
         retaining the JCI Mining Lease.

D.       SGMC is the beneficial owner of the Underground Mining Assets through
         its 100% owned and controlled subsidiary PGL which is the legal owner
         of the Underground Mining Assets.

E.       In December 1998, PGR upon application to the Government through the
         Divestiture Implementation Committee obtained the consent and approval
         of the Government, the JCI Group, and SGMC to take over and operate the
         Underground Mine using therefor

<PAGE>
MEMORANDUM OF AGREEMENT                                                   PAGE 2
--------------------------------------------------------------------------------

         the Underground Mining Assets on an interim basis and subject
         specifically to the rights vested in the JCI Group under the subsisting
         Prestea Agreements.

F.       In October 2000 or thereabouts some differences arose between the
         Government and the JCI Group in relation to the subsisting Prestea
         Agreements, the JCI Mining Lease and the competing interests of third
         parties including PGR, PSGL and BGL in relation to the Prestea
         Concession Area.

G.       In an effort to find a compromise solution to the major issues relating
         to the Prestea Concession Area, the Government by letter dated March
         29, 2001 appointed the then Chief Executive Officer of the Ghana
         Chamber of Mines, Mr. Bentum Williams as Mediator with a specific
         mandate to find a negotiated solution that would harmonise the
         interests of the JCI Group, PGR, PSGL and BGL in the Prestea Concession
         Area and also ensure sustainable mining operations within the Prestea -
         Bogoso area. The Mediator issued a final report to the Government dated
         May 21, 2001 which said report is attached as Schedule "A" making
         therein specific recommendations in relation to the Prestea Concession
         Area which said recommendations were subsequently accepted by
         Government and provide the basis for the entry into and implementation
         of new commercial arrangements relating to the Prestea Concession Area
         among various parties.

H.       In furtherance of the new commercial arrangements, (i) Golden Star
         Resources Ltd ("Golden Star"), the parent of BGL, entered into the
         Barnex Agreement whereby Golden Star committed to pay approximately $12
         million in Golden Star stock and royalties to Barnato Exploration
         Limited, (ii) BGL entered into the Investment Agreement with PGR
         whereby PGR surrendered its then rights over the Prestea Concession
         Area in favour of the grant of the PGR Mining Lease and cash payments
         of up to $4.0 million from BGL, of which $2.1 million has been paid,
         and (iii) the parties to the Prestea Agreements decided to terminate
         the Prestea Agreements on mutually agreed terms and conditions to
         facilitate the entry into and implementation of various new agreements
         relating to the Prestea Concession Area with a view to permitting the
         co-existence of underground mining operations and surface mining
         operations.

I.       PGR was granted the PGR Mining Lease by the Government on June 29, 2001
         conferring on PGR the exclusive right to conduct underground gold
         mining operations within the Prestea Concession Area below a depth of
         150 metres below sea level for a period of thirty (30) years effective
         from the date of the said PGR Mining Lease as specifically defined in
         the said PGR Mining Lease.

J.       Similarly, BGL was granted the BGL Mining Lease by the Government on
         June 29, 2001 conferring on the company the exclusive right to conduct
         surface gold mining operations over the Prestea Concession Area for a
         period of thirty (30) years effective from the date of the said BGL
         Mining Lease as specifically defined in the said BGL Mining Lease.

K.       PGR and BGL have with the consent and approval of the Government
         entered into the Investment Agreement to promote jointly both surface
         and, if feasible, underground gold mining operations on the Prestea
         Concession Area.

L.       Pursuant to the Investment Agreement, BGL has paid $2.1 million to PGR
         and the parties have entered into the Joint Operating Agreement.

<PAGE>
MEMORANDUM OF AGREEMENT                                                   PAGE 3
--------------------------------------------------------------------------------

M.       PGR, PGL and SGMC have entered into the Licence Agreement, whereby PGR
         has the right to utilize the Underground Mining Assets in return for
         the payment of rent to PGL.

N.       PGR discontinued underground gold mining operations on January 21, 2002
         due to an industrial action.

O.       PGR is highly indebted with total liabilities to creditors (excluding
         employee liabilities) of approximately $10.5 million and has been
         operating at a loss.

P.       Government intends to use best endeavours to cause the creditors of
         PGR, in so far as it is able, to enter into an arrangement with PGR.

IN CONSIDERATION OF THE MUTUAL COVENANTS IN THIS MEMORANDUM OF AGREEMENT, THE
PARTIES AGREE AS FOLLOWS:

                   ARTICLE 1 - DEFINITIONS AND INTERPRETATIONS

1.0 As used in this Agreement:

"AGREEMENT" means this Memorandum of Agreement and all schedules and instruments
in amendment or confirmation of it; "hereof', "hereto", and "hereunder" and
similar expressions mean and refer to this Memorandum of Agreement and not to
any particular Article, Section, Subsection or other subdivision; "Article",
"Section", "Subsection" or other subdivision of this Memorandum of Agreement
followed by a number means and refers to the specified Article, Section,
Subsection or other subdivision of this Memorandum of Agreement;

"APPLICABLE LAW" means all applicable laws of the Republic of Ghana, including,
without limitation, the PNDCL 153;

"ASSESSMENT" means the assessment of the Underground Mine more fully described
in Article 4.2;

"BACK PAY" means the salary arrears of approximately $1,500,000 owed to the PGR
Employees and PGR Casual Employees for the five month period from August 20,
2001 to January 20, 2002;

 "BGL" means Bogoso Gold Limited, a company incorporated under the laws of Ghana
having its registered office at 32 Akosombo Road, Airport Residential, Accra,
Ghana;

"BGL MINING LEASE" means the mining lease dated June 29, 2001 attached as
Schedule "C" issued by the Government to BGL pursuant to Section 45 of the PNDCL
153;

"BUSINESS DAY" means any day other than a Saturday, Sunday or official public
holiday in the city of Accra, Ghana or in the city of Denver, U.S.A.;

"CARE & MAINTENANCE" means the continued operation, following the cessation of
active mining operations in the Underground Mine, of the Underground Mine
dewatering pumps to keep the Underground Mine dewatered as well as the routine
and periodic maintenance of essential mine equipment to ensure that its
mechanical condition does not deteriorate;

"DECISION TO MINE" means the decision to start commercial production from the
underground but excludes any production that may occur as result of sweeping and
vamping operations conducted during the assessment period;

<PAGE>
MEMORANDUM OF AGREEMENT                                                   PAGE 4
--------------------------------------------------------------------------------

"DEED OF WARRANTY" means the Deed of Warranty dated December 17, 1987 between
BGL (formerly known as Canadian Bogosu Resources Limited) and Government and
bearing registration number AC6099c/87;

"DOLLARS" or "$" means the currency that is from time to time, legal tender for
the payment of all private and public debts in the United States of America;

"EFFECTIVE DATE" means March 15, 2002;

"ENVIRONMENTAL INDEMNITY" means the environmental indemnity agreement between
PGR and Government executed on December 21, 2001 attached as Schedule "E";

"EXPLOITATION COMPANY" means the business entity or legal structure through
which the JV Parties shall hold the JV Assets and conduct Operations pursuant to
the Joint Venture Agreement. The Exploitation Company shall be determined by the
JV Parties giving due regard to the tax, legal liability, and other
considerations of each JV Party, as well as any necessary Government approvals;

"FEASIBILITY STUDY" means a comprehensive description of the construction,
development, mining, processing, and marketing plan for a mine to exploit
Minerals from the PGR Mining Lease in such form and substance as would
reasonably be required by a commercial bank involved in project finance, in
making an investment decision to place such a mine into production. The
Feasibility Study shall include the confirmation of Ore Reserves by the conduct
of detailed drilling works, hydrological and geo-technical works, environmental
studies, and, if deemed necessary by the Manager, the mining of one or more bulk
samples of mineralisation for metallurgical studies which may require the
construction of one or more shafts, the construction of an incline, or works
associated with a trial mine. The Feasibility Study shall contain estimates of
both capital and operating costs and shall analyse how to proceed with mining
operations to economically and commercially extract the target Mineral(s),
identify the optimum structure for the mining venture, and include reference to
relevant marketing and financial aspects;

"FORCE MAJEURE" means any cause, whether foreseeable or unforeseeable, beyond a
Party's reasonable control, including, without limitation, labour disputes
(however arising and whether or not employee demands are reasonable or within
the power of such Party to grant); acts of God; laws, regulations, orders,
proclamations, instructions or requests of any government or governmental
entity; judgments or orders of any court; inability to obtain on reasonably
acceptable terms any public or private license, permit or other authorization;
curtailment or suspension of activities to remedy or avoid an actual or alleged,
present or prospective violation of federal, state or local environmental
standards; acts of war or conditions arising out of or attributable to war,
whether declared or undeclared; riot, civil strife, insurrection or rebellion;
fire, explosion, earthquake, storm, flood, sinkholes, drought or other adverse
weather condition; delay or failure by suppliers or transporters of materials,
parts, supplies, services or equipment; contractor' or subcontractors' shortage
of, or inability to obtain, labour, transportation, materials, machinery,
equipment, supplies, utilities or services; accidents; breakdown of equipment,
machinery or facilities; or any other cause whether similar or dissimilar to the
foregoing;

"GMWU" means the Ghana Mineworkers Union of the TUC (Ghana);

"GOVERNMENT" means the duly constituted government of the Republic of Ghana or
any political subdivision thereof, whether Central, Regional, District or local,
or any judicial body, agency or instrumentality of any such government or
political subdivision;

<PAGE>
MEMORANDUM OF AGREEMENT                                                   PAGE 5
--------------------------------------------------------------------------------

"INVESTMENT AGREEMENT" means the Agreement between PGR and BGL executed on
November 16, 2001, as amended and supplemented by letters dated December 4,
2001, January 31, 2002 and March 4, 2002;

"JOINT OPERATING AGREEMENT" means the Joint Operating Agreement between PGR and
BGL executed on January 31, 2002 attached as Schedule "F";

"JV" means the joint venture, either unincorporated or incorporated, as more
fully described in Article 5, between Government, PGR and BGL formed to assess,
redevelop and operate the Underground Mine;

"JV PARTIES" means collectively, BGL, PGR and Government and "JV PARTY" means
any one of them;

"JOINT VENTURE AGREEMENT" means the more detailed joint operating agreement
which will set out the basis upon which the JV Parties shall, through the
formation of the Exploitation Company, mutually evaluate, develop, mine,
extract, produce, use, sell and export of Minerals and associated mineral
resources and, accordingly, hold all mining rights, mining claims, water rights,
surface lands, licenses and permits, other than as described herein;

"JOINT VENTURE ASSET" means the following:

a)       all interests, rights, and privileges (whether absolute or conditional,
         whether existing or future) in real property, mineral rights, and
         surface lands falling with the Prestea Concession Area, including,
         without limitation, all licenses, permits, leases, concessions, and
         other entitlements, but excluding the BGL Mining Lease;

b)       all minerals, Product, and materials of commercial value produced or
         derived from the PGR Mining Lease under this Agreement;

c)       all equipment acquired by the JV and used in the Operations; all
         inventory; all personalty, tangible and intangible, consumable and
         non-consumable, obtained by the Joint Venture in connection with the
         conduct of Operations, including, without limitation, all geological
         data, surveys, assays, analysis and other data and information acquired
         in the course of Operations covered by this Agreement, excluding,
         however, all such items which are specifically intended to remain the
         separate property BGL for its surface mining operations or are rented
         or leased to or for the benefit of the JV;

"LICENCE AGREEMENT" means the Licence Agreement between SGMC, PGL and PGR dated
January 16, 2002 attached as Schedule "G";

"MANAGER" means the person or entity with overall management responsibility for
the JV in accordance with this Agreement and the Joint Operating Agreement,
which for as long as BGL has a participating interest of greater than or equal
to 30%, shall be BGL. The Manager shall be bestowed with power sufficient to
undertake, manage, direct and control all day-to-day activities and decisions
reasonably necessary to fulfil the purposes of this Agreement, and such
activities shall be performed in accordance with international mining industry
practice. The Joint Venture Agreement, or a separate management agreement, will
specify with more particularity the Manager's responsibilities, rights and
obligations;

"MANAGEMENT COMMITTEE" shall have the meaning ascribed to it in Article 5. The
Management Committee will (i) review the conduct of Operations by the Manager,
(ii) determine the policies, nature, and content of work programs and budgets
for Operations, (iii) give general directions to the manner in which the Manager
must carry out Operations,

<PAGE>
MEMORANDUM OF AGREEMENT                                                   PAGE 6
--------------------------------------------------------------------------------

(iv) approve budgets, and (v) have any other functions as may be mutually agreed
upon by the JV Parties under the terms of the Joint Operating Agreement;

"MINING LEASE", "MINERAL OPERATIONS", "MINING OPERATIONS", "MINERAL RIGHT" and
"MINERALS" shall have the meanings given to such terms in PNDCL 153;

"NI 43-101" means Canada's National Instrument 43-101 titled Standards of
Disclosure for Mineral Projects;

"OPERATIONS" means all activities carried out in connection with the
prospecting, exploring, evaluation, development, and mining of Minerals falling
within the PGR Mining Lease, including, without limitation, prospecting,
exploration, the development of a mine, the mining, extraction, treatment,
storage and processing of Minerals, distribution and sale of Product, the
acquisition and relinquishment of properties or the construction of any
improvements, personalty, fixtures or equipment reasonably necessary therefor,
and any other activities or operations related to or necessary for exploration,
development, and mining of Minerals in the PGR Mining Lease;

"ORE RESERVES" shall have the meaning contained in NI 43-101;

"PARTICIPATING INTERESTS" means an undivided ownership interest held by PGR, BGL
and Government under this Agreement and the Joint Venture Agreement and which
entitles the holder to that share of the Joint Venture or the Exploitation
Company and the JV Assets thereof and which requires the holder (other than
Government) to contribute to that share of the costs and expenses of the
development and operations thereof;

"PARTIES" means, collectively, BGL, PGR, PGL, SGMC, GMWU and Government and
"PARTY" means any one of them;

"PGL" means Prestea Goldfields Limited a company incorporated under the laws of
Ghana having its registered office at 9, Switchback Road, Cantonments, Accra,
Ghana;

"PGR" means Prestea Gold Resources Limited, a company incorporated under the
laws of Ghana having its registered office at PO Box 30, Prestea, Western
Region, Ghana;

"PGR CASUAL EMPLOYEES" means those part-time or full-time employees of PGR
classed as casual as at January 21, 2002;

"PGR EMPLOYEES" means all the permanent, full-time employees of PGR, both junior
staff and senior staff, as at January 21, 2002;

"PGR MINING LEASE" means the mining lease dated June 29, 2001 attached as
Schedule "D" issued by the Government to PGR pursuant to Section 45 of the PNDCL
153;

"PLANT-NORTH" means the area marked as "Plant-North" on Schedule "B";

"PNDCL" means the Minerals and Mining Law, 1986 (PNDCL 153) of Ghana, as
amended;

"PRESTEA CONCESSION AREA" means the area of the Prestea concession covering an
area of 129.05 km(2) comprising both the PGR Mining Lease and the BGL Mining
Lease as shown in the map attached as Schedule "B";

"PRESTEA PROCESSING PLANT" means the processing plant owned by PGL situated on
the Prestea Concession Area and marked as such on the map at Schedule "B";

"PRICEWATERHOUSECOOPERS" means the independent accounting firm of
PricewaterhouseCoopers having its registered office in Ghana at Gulf House, 4th
Floor, Tetteh Quarshie Roundabout, Legon Road, Accra, Ghana, or such other firm
of independent, internationally recognized accountants agreed in writing between
the JV Parties;

<PAGE>
MEMORANDUM OF AGREEMENT                                                   PAGE 7
--------------------------------------------------------------------------------

"PRODUCT" means gold and other associated mineral substances produced by the JV
from ore mined from the PGR Mining Lease;

"PSGL" means Prestea Sankofa Gold Limited, a company incorporated in accordance
with the laws of Ghana operating on the Prestea Concession Area in accordance
with a mining lease granted by Government over certain tailings and mineralised
waste materials;

"RESTRICTED ACCOUNT" means that restricted operating account of PGR with Ghana
Commercial Bank, Kwame Nkrumah Circle Branch, Accra, Ghana (account number
214103), which requires signatories from both PGR and BGL;

"SEVERANCE BENEFIT" means the agreed severance benefit being Eighteen (18) days
(based on 27 working days per month) per year of service up to the Effective
Date to be paid to the PGR Employees as provided for in Article 3;

"SGMC" means State Gold Mining Company Limited a Public Limited Liability
Company registered under the laws of Ghana of P. O. Box 3634 Accra in the
Greater Accra Region;

"UNDERGROUND MINE" means the Prestea underground mining operation; and

"UNDERGROUND MINING ASSETS" means those underground mining assets owned by PGL
located at Prestea as set out in the First Schedule of the License Agreement.

1.2      Any reference in this Agreement to gender shall include all genders,
         and words importing the singular number only shall include the plural
         and vice versa.

1.3      The division of this Agreement into Articles, Sections, Subsections and
         other subdivisions and the insertion of headings are for convenience of
         reference only and shall not affect or be utilized in the construction
         or interpretation of this Agreement.

1.4      Any Article, Section, Subsection or other subdivision of this Agreement
         or any other provision of this Agreement which is, or becomes, illegal,
         invalid or unenforceable shall be severed from this Agreement and be
         ineffective only to the extent of such illegality, invalidity or
         unenforceability and shall not affect or impair the remaining
         provisions hereof.

1.5      This Agreement constitutes the entire agreement between the Parties
         pertaining to the subject matter hereof and supersedes all prior
         agreements, understandings, negotiations and discussions, whether oral
         or written, of the Parties, unless otherwise stated herein.

1.6      This Agreement may only be amended, modified or supplemented by a
         written agreement signed by all of the Parties.

1.7      No waiver of any of the provisions of this Agreement by any Party shall
         be deemed to constitute a waiver of such provision by any other Party
         or a waiver by such Party of any other provision, (whether or not
         similar), nor shall such waiver constitute a continuing waiver unless
         otherwise expressly provided in writing duly executed by the Party to
         be bound thereby.

1.8      Where the word "including" or "includes" is used in this Agreement it
         means "including (or includes) and without limitation".

1.9      Any references herein to any law, by-law, rule, regulation, order or
         act of any government, governmental body or other regulatory body shall
         be construed as a reference thereto as enacted at the date hereof as
         such law, by-law, rule, regulation, order of or act may be amended,
         re-enacted or superseded from time to time.

<PAGE>
MEMORANDUM OF AGREEMENT                                                   PAGE 8
--------------------------------------------------------------------------------

                      ARTICLE 2 - PURPOSE AND LEGAL EFFECT

2.1      The Parties hereto hereby irrevocably agree to carry out the following
         subject only to the terms and conditions of this Agreement:

         (a)      Securing funding from BGL for the payment of (i) the Back Pay
                  to the PGR Employees and PGR Casual Employees, and (ii) the
                  Severance Benefit to the PGR Employees;

         (b)      Putting the Underground Mine on Care & Maintenance while the
                  Assessment is carried out to determine if the future operation
                  of the Underground Mine is economically viable;

         (c)      Consolidating the management of the Underground Mine with the
                  mining operations of BGL by forming a JV between BGL, PGR and
                  Government;

         (d)      Effecting the immediate decommissioning and demolition of the
                  Prestea Processing Plant so that BGL may progress its surface
                  mining plans; and

         (e)      Government, SGMC and PGL agreeing to undertake certain acts or
                  things to the extent permitted by Applicable Law to facilitate
                  the surface mining by BGL on the BGL Mining Lease.

2.2      This Agreement will govern the rights and obligations of the Parties
         and will be binding on the Parties.

2.3      Until superseded by the Joint Venture Agreement, the terms and
         conditions set forth in this Agreement will govern the rights and
         obligations of, and shall be binding on, the JV Parties. If a Joint
         Venture Agreement is executed, the portions of this Agreement related
         to the Joint Venture Agreement will be superseded. The Joint Venture
         Agreement will contain the terms set forth in this Agreement and such
         other terms as the JV Parties mutually agreed upon. The JV Parties will
         in good faith endeavour to cause the Joint Venture Agreement to be
         executed within thirty (30) Business Days of the Decision to Mine.

2.4      The Investment Agreement shall no longer have any binding effect on the
         parties to such Investment Agreement.

2.5      For the avoidance of doubt the following agreements in which PGR is a
         party shall continue to have effect, however PGR's rights and
         obligations under such agreements shall, subject to the approval of
         Government (which is deemed to have been granted by Government as party
         to this Agreement), be transferred , as contemplated herein:

         (a)      Joint Operating Agreement shall be transferred to the JV,

         (b)      Environmental Indemnity shall be transferred to the JV,

         (c)      Licence Agreement shall be transferred to the JV, and

         (d)      PGR Mining Lease shall be transferred to BGL to be held by BGL
                  for the benefit of the JV until the earlier of (i) BGL
                  electing to terminate this Agreement, and (ii) the
                  Exploitation Company is formed.

<PAGE>
MEMORANDUM OF AGREEMENT                                                   PAGE 9
--------------------------------------------------------------------------------

                            ARTICLE 3 - PGR EMPLOYEES

3.1      Immediately upon the receipt of the consent of Government for the
         transfer of the PGR Mining Lease to BGL, as more fully described in
         Article 7.3 and 9.3 and provided PGR have delivered the settlement
         agreement as more fully described in 5.1 and 7.4:

         (a)      BGL, on behalf of the JV, shall pay to the Restricted Account,
                  in immediately available funds, $1,600,000, to be applied to
                  the payment of the Back Pay as described below.

         (b)      PGR, under the supervision of PricewaterhouseCoopers, shall
                  immediately distribute the Back Pay.

         (c)      Once all Back Pay has been paid, PGR shall provide the JV with
                  a written statement from PricewaterhouseCoopers detailing the
                  amount paid to each of the PGR Employees and PGR Casual
                  Employees and verifying that no further Back Pay entitlements
                  are owed.

         (d)      Any funds remaining from the $1,600,000 provided by the JV not
                  required to pay Back Pay shall be retained in the Restricted
                  Account.

3.2      The Parties agree that the employment of all PGR Employees and PGR
         Casual Employees shall be severed and that the PGR Employees shall be
         entitled to the Severance Benefit. PricewaterhouseCoopers shall audit
         the Severance Benefit calculation to be provided by PGR.

3.3      Immediately upon the completion of the demolition of the Prestea
         Processing Plant and the receipt by BGL of all approvals and consents
         necessary to commence mining at Plant-North:

         (a)      BGL, on behalf of the JV, shall pay to the Restricted Account,
                  in immediately available funds, $800,000, to be applied to the
                  payment of the Severance Benefit;

         (b)      PGR, under the supervision of PricewaterhouseCoopers, shall
                  immediately distribute the Severance Benefit to the PGR
                  Employees;

         (c)      once all Severance Benefits have been distributed to the PGR
                  Employees, PGR shall provide the JV with a written statement
                  from PricewaterhouseCoopers detailing Severance Benefit made
                  to each bona fide PGR Employee and verifying that PGR has no
                  unpaid Severance Benefit liabilities; and

         (d)      any funds remaining from the total $2,400,000 of funding
                  provided by the JV shall be retained in the Restricted
                  Account.

                         ARTICLE 4 - CARE & MAINTENANCE

4.1      The Parties agree that effective immediately upon the signing of this
         Agreement:

         (a)      the Underground Mine shall be placed on Care & Maintenance
                  under the direction of the Manager;

         (b)      the JV shall keep the Underground Mine dewatered and secure;
                  and

<PAGE>
MEMORANDUM OF AGREEMENT                                                  PAGE 10
--------------------------------------------------------------------------------

         (c)      the JV shall employ such number of employees required for the
                  Care & Maintenance and shall give preference to the PGR
                  Employees provided that such PGR Employees have the requisite
                  skills.

4.2      The JV shall conduct an Assessment to determine the (i) safety
         conditions and practices at the Underground Mine, (ii) environmental
         practices at the Underground Mine, (iii) resource potential of the PGR
         Mining Lease, and (iv) economic viability of a new mining operation on
         the PGR Mining Lease. The broad principles covering the Assessment are
         as follows:

         (a)      the Assessment will be carried out by the JV primarily using
                  consultants;

         (b)      the Assessment will be funded by the JV which shall be sole
                  funded by BGL;

         (c)      the Assessment is expected to take twenty-four (24) months but
                  could be longer or shorter depending on the findings; and

         (d)      during the Assessment, the JV Parties will receive regular,
                  quarterly reports on the progress of the Assessment as well as
                  copies of any definitive reports on the various aspects of the
                  Assessment.

4.3      Upon the completion of the Assessment the JV Parties and provided that
         the Feasibility Study demonstrates that such redevelopment of the
         Underground Mine is economically justified, the JV Parties shall
         consider the redevelopment of the Underground Mine and make a Decision
         to Mine.

4.4      Upon the Decision to Mine, or earlier by mutual agreement, the JV
         Parties will enter into the Joint Venture Agreement and establish the
         Exploitation Company in Ghana.

4.5      Upon the establishment of the Exploitation Company, BGL shall transfer
         the PGR Mining Lease to the Exploitation Company.

                     ARTICLE 5 - FORMATION OF JOINT VENTURE

5.1      On the Effective Date, the JV Parties shall form the JV by:

         (a)      PGR contributing (i) the PGR Mining Lease, (ii) its mining
                  assets and inventory, (iii) its interest in certain
                  agreements, as detailed in Article 7.2, and (iv) its Back Pay
                  and Severance Benefit obligations totalling not more than
                  $2,400,000 to the JV;

         (b)      BGL obligating $2,400,000 to the JV;

         (c)      The Government approving the transfer of the PGR Mining Lease
                  to BGL, to be held by BGL for the benefit of the JV until the
                  earlier of (i) BGL electing to terminate this Agreement, and
                  (ii) the Exploitation Company is formed;

         (d)      PGR transferring, for the duration of the JV, the rights and
                  obligations of PGR under the Joint Operating Agreement, the
                  Environmental Indemnity, and the Licence Agreement to the JV;
                  and

         (e)      PGR delivering, within seven (7) calendar days of the
                  Effective Date, a settlement agreement between PGR and its
                  employees accepting the Back Pay and Severance Benefit (as
                  more fully described in Article 3) as a full and final
                  settlement for the termination of their employment with PGR.

<PAGE>
MEMORANDUM OF AGREEMENT                                                  PAGE 11
--------------------------------------------------------------------------------

5.2      Upon the Decision to Mine, or earlier by mutual agreement, the JV
         Parties will enter into the Joint Venture Agreement. The JV Parties
         undertake to negotiate the definitive Joint Venture Agreement in good
         faith.

5.3      Except as otherwise provided in this Agreement, all JV Assets held or
         acquired by the Manager in fulfilment of its obligations for the Joint
         Venture, or by a JV Party, are beneficially owned by the JV Parties in
         undivided shares as tenants-in-common in proportion to their respective
         Participating Interests from time to time, and the Parties hereby waive
         all rights of partition and of sale in lieu of partition (including as
         arise under Law) with respect to that property. The JV Parties hereby
         agree that, notwithstanding any provision hereof to the contrary, if
         they are jointly and severally liable in Ghana and elsewhere under this
         Agreement, they must indemnify and hold each other harmless, subject to
         this Agreement, to the extent they incur liability in respect thereof
         in excess of their Participating Interest share of that liability.

5.4      None of the JV Parties will have any liability for any indebtedness or
         liabilities of the other JV Parties.

5.5      As long as BGL's Participating Interest is equal to or greater than
         30%, BGL will have the continuing right to act as Manager of the JV.
         The Manager shall be responsible for the day-to-day management,
         conduct, and control of the Operations, subject to approved work plans
         and budgets and the direction of the Management Committee referred to
         below. The JV Parties shall in good faith negotiate and specify the
         powers and obligations of the Manager which shall be included in the
         Joint Venture Agreement.

5.6      Notwithstanding anything contained herein to the contrary, the Manager
         will not be liable to any JV Party for any act or omission resulting in
         damages or loss except to the extent caused by or attributable to the
         Manager's wilful misconduct or gross negligence.

5.7      The Manager will be entitled to charge a management fee of 2% of
         expenditure. The purpose of this fee will not be to provide the Manager
         with a profit, but to allow the Manager to recover indirect costs it
         incurs in fulfilling its obligations as Manager. As a result, the JV
         Parties must review the fee annually and the fee will be adjusted
         annually if unanimously approved by all JV Parties and if the JV
         Parties unanimously determine it to be insufficient or excessive. This
         management fee will be considered to be an ordinary operating expenses
         of the JV and will therefore be paid by each JV Party in accordance
         with its Participating Interest.

5.8      Except as otherwise provided in this Agreement, until completion of the
         Feasibility Study all final decisions relating to Operations shall be
         made and undertaken by BGL, but reasonable consultation on these
         decisions prior to their execution will be held with the JV Parties,
         and the agreement or disagreement of the JV Parties formally recorded.
         Upon completion of the Feasibility Study, all decisions relating to the
         conduct of Operations and relating to the Joint Operating Agreement
         shall be made by the Management Committee, a governing body to be
         appropriately structured to serve the type of business entity chosen
         under the Joint Venture Agreement. Prior to execution of the Joint
         Venture Agreement, the JV Parties hereby designate their respective
         representatives on the Management Committee to be as follows:

         (a)      for BGL:           Managing Director

         (b)      for PGR:           Chairman, and

<PAGE>
MEMORANDUM OF AGREEMENT                                                  PAGE 12
--------------------------------------------------------------------------------

         (c)      for Government     one representative.

5.9      The JV Parties shall have on the Management Committee a number of votes
         proportionate to their respective Participating Interest, regardless of
         the number of representatives, and each shall designate one person or
         an alternate to cast such votes.

5.10     All decisions of the Management Committee will be taken by simple
         majority vote. BGL, if continuing to hold a 30% or greater interest in
         the project, shall determine, at its sole election, whether to proceed
         with the Feasibility Study.

5.11     Prior to completion of the Feasibility Study, it is the intention of
         the JV Parties that the Management Committee shall hold informal but
         periodic reviews (at least quarterly unless otherwise agreed to by the
         JV Parties) of Operations. Following completion of the Feasibility
         Study, the Management Committee shall hold quarterly meetings in Accra,
         Ghana, or such other mutually agreed place. Although the JV Parties
         contemplate holding meetings to review work plans and budgets for each
         phase of work undertaken, the JV Parties do not contemplate holding
         regular formal meetings prior to completion of the Feasibility Study.
         Meetings may be held by telephone.

5.12     As of the Effective Date BGL will have a 45% Participating Interest,
         PGR will have a 45% Participating Interest, and Government will have a
         10% Carried Interest.

5.13     Notwithstanding anything contained in this Agreement, the JV Parties
         agree that, in addition to the initial $2,400,000 contribution to the
         JV, BGL shall be entitled to and obligated to be the sole provider of
         funding for (i) the Care & Maintenance, (ii) the Assessment, and (iii)
         the completion of a Feasibility Study.

5.14     From the Effective Date until the completion of the Feasibility Study,
         or in the event that a JV Party (other than Government) following the
         completion of the Feasibility Study fails to advance funds as required
         under this Agreement or the Joint Operating Agreement, then its
         Participating Interest will be diluted in accordance with the following
         formula:

         PC#1 + PC#2 + PC#3
         ------------------
         JV#1 + JV#2 + JV#3                 times 90%; where

         PC#1 means JV Party's initial contributions (deemed to be $2.4 million
         for both BGL and PGR);

         PC#2 means JV Party's additional contributions;

         PC#3 means the amount, if any, that the JV Party elects to contribute
         to the approved work plan and budget;

         JV#1 means the initial contributions of all JV Parties (deemed to be
         $4.8 million);

         JV#2 means the additional contributions of all JV Parties; and

         JV#3 means the amount that all JV Parties elect to contribute to the
         approved work plan and budget.

5.15     For the avoidance of doubt, the Governments interest shall not be
         diluted and at all times shall be 10%.

5.16     If a JV Party (other than Government) fails within a reasonable period
         to make a contribution or cash call which it previously committed to
         make under an approved work plan and budget, it shall be in default and
         shall be diluted on a straight line basis to a minimum 10%
         participating interest at which time the diluted JV Party will be
         assigned a 2.5% net profits interest.

<PAGE>
MEMORANDUM OF AGREEMENT                                                  PAGE 13
--------------------------------------------------------------------------------

5.17     For a period of ninety (90) Business Days after the completion of the
         Feasibility Study, BGL shall have the right, at it sole election, to
         acquire the rights and obligations of PGR in the Joint Venture for a
         total consideration of $6.5 million.

5.18     BGL may withdraw from this Agreement upon completion of the Assessment
         and determining that the redevelopment of the underground mine is not
         viable to the extent that the project is not bankable with a reputable
         international financial institution.

5.19     In the event that any JV Party (other than Government) elects to enter
         into voluntary insolvency or becomes insolvent in accordance with the
         Bodies Corporate (Official Liquidations) Act 1963 (Act. 180), the
         insolvent party shall be deemed to have retired from the JV and their
         rights and obligations under this agreement shall be forfeited. In the
         event of retirement, the rights and obligation of the retiring party
         shall be assumed by the remaining JV Parties (other than Government) in
         proportion to their holdings in the JV at the time of retirement.

                   ARTICLE 6 - BGL'S SURFACE MINING OPERATIONS

6.1      The Parties agree that BGL shall be entitled to continue its
         development of the BGL Mining Lease.

6.2      The Parties undertake to use their utmost endeavours to assist BGL to
         implement the infrastructure mitigation plan incorporated in the Joint
         Operating Agreement.

                         ARTICLE 7 - UNDERTAKINGS BY PGR

7.1      PGR hereby agrees that the notice required under Clause 5.4 (d) (i) of
         the Joint Operating Agreement for the decommissioning and demolition of
         the Prestea Processing Plant has been given and that such demolition
         may commence immediately upon the Effective Date.

7.2      PGR hereby agrees to and assigns its rights and obligations in the
         Joint Operating Agreement, Licence Agreement and Environmental
         Indemnity to the JV.

7.3      PGR hereby agrees to the transfer of the PGR Mining lease to BGL, to be
         held by BGL for the benefit of the JV until the earlier of (i) BGL
         electing to terminate this Agreement, and (ii) the Exploitation Company
         is formed.

7.4      PGR hereby undertakes to deliver, within seven (7) calendar days of the
         Effective Date, a settlement agreement between PGR and its employees
         accepting the Back Pay and Severance Benefit (as more fully described
         in Article 3) as a full and final settlement for the termination of
         their employment with PGR.

7.5      PGR undertakes to meet with its creditors to arrive at a settlement.
         This could be an agreement by the creditors to wait until some future
         time when the underground mine is redeveloped or an agreement by the
         creditors to take shares in PGR in lieu of the monies owed to them.

                    ARTICLE 8 - UNDERTAKINGS BY SGMC AND PGL

8.1      SGMC and PGL hereby agree that the notice required in Clause 5 of the
         Licence Agreement to demolish the assets described in Fourth Schedule
         to the Licence

<PAGE>
MEMORANDUM OF AGREEMENT                                                  PAGE 14
--------------------------------------------------------------------------------

         Agreement has been given and that immediately upon the Effective Date,
         BGL may commence such demolition.

8.2      SGMC and PGL hereby agree that the rights and obligations of PGR under
         the Licence Agreement shall be assigned to the JV.

                     ARTICLE 9 - UNDERTAKINGS BY GOVERNMENT

9.1      Government hereby agrees with the commencement of the Infrastructure
         Mitigation Plan as contemplated in the Joint Operating Agreement.

9.2      Government hereby agrees to the assignment by PGR of its rights and
         obligations in the Environmental Indemnity to the JV.

9.3      Government hereby agrees to the transfer of the PGR Mining lease to
         BGL, to be held by BGL for the benefit of the JV until the earlier of
         (i) BGL electing to terminate this Agreement, and (ii) the Exploitation
         Company is formed.

9.4      Government hereby agrees to the transfer of the PGR Mining lease from
         BGL to the Exploitation Company once such a company is formed.

9.5      Government hereby agrees to the modification of the Deed of Warranty to
         include the BGL Mining Lease and the PGR Mining Lease and undertakes to
         do all acts and things necessary to perfect such modification or to
         replace such Deed of Warranty with a new deed of warranty containing
         the same terms and conditions.

9.6      Government hereby undertakes to use its best endeavours to cause its
         agencies and utilities to expedite, to the extent possible under law,
         any consents and approvals required for BGL to exercise its mining
         rights on the BGL Mining Lease.

9.7      Government undertakes to use its best endeavours to assist BGL in
         curtailing any illegal mining on the Prestea Concession Area.

9.8      Government hereby undertakes to cause its agencies to segregate the
         Prestea town power from the power supply for the Underground Mine.

9.9      Government, being the majority creditor as a result of, but not limited
         to, statutory liabilities owed by PGR and debts accrued by PGR to VRA
         and SGMC, hereby undertakes to use best endeavours in so far as it is
         able to cause the creditors of PGR to enter into an arrangement with
         PGR. This arrangement will result in either an agreement to defer
         settlement until such future date as the underground mine may be
         redeveloped or an agreement to exchange their indebtedness in PGR for
         equity in PGR.

                        ARTICLE 10 - UNDERTAKINGS BY BGL

10.1     BGL hereby agrees to the assignment to the JV of the rights and
         obligations of PGR under the Joint Operating Agreement.

10.2     BGL hereby agrees to the transfer of the PGR Mining Lease from PGR to
         BGL and undertakes to hold the PGR Mining lease for the benefit of the
         JV and to immediately transfer the PGR Mining Lease to the Exploitation
         Company once such Exploitation Company has been formed.

10.3     BGL hereby agrees to the initial commitment of $2,400,000 of funding to
         the JV in two tranches to be paid to PGR for the payment of the Back
         Pay and the Severance

<PAGE>
MEMORANDUM OF AGREEMENT                                                  PAGE 15
--------------------------------------------------------------------------------

         Benefit. The two tranches are (i) $1,600,000 on the completion of the
         conditions detailed in clause 5.1 (c). (d) and (e) and (ii) $800,000
         upon the demolition of the Prestea Processing Plant and the receipt by
         BGL of the necessary approvals and consents to commence mining at
         Plant-North.

10.4     BGL hereby agrees to provide sufficient funding to the JV to cover the
         costs of the Care & Maintenance, the Assessment, and the Feasibility
         Study.

10.5     BGL hereby undertakes to carry out the Assessment in a timely fashion
         and in accordance with the standards of NI 43-101.

                        ARTICLE 11 - UNDERTAKINGS BY GMWU

11.1     GMWU, as the majority shareholder of PGR, hereby agrees to the
         undertakings by PGR and undertakes to do all acts and things and to
         sign all such documents and other agreements necessary to effect the
         agreements in this Agreement.

11.2     GMWU, as the representative of the unionised employees of PGR, hereby
         agrees to the Back Pay and Severance Benefit settlement contemplated in
         Article 3 of this Agreement and undertakes to have this agreement
         ratified by such unionised employees of PGR within seven (7) calendar
         days of the signing of the Effective Date.

                         ARTICLE 12 - DISPUTE RESOLUTION

12.1     Any dispute, controversy or claim arising under or in connection with
         this Agreement, and which cannot be resolved within sixty (60) days of
         attempted negotiations between the Parties, shall be settled by
         arbitration in accordance with this section.

12.2     Matters subject to arbitration shall be settled by arbitration in
         accordance with the rules and regulations of the London Court of
         International Arbitration in effect on the date of this Agreement.

12.3     The place of arbitration shall be Accra, Ghana or such other place as
         the parties may agree.

12.4     The language of the arbitration shall be English.

12.5     The arbitration shall be the sole and exclusive forum for resolution of
         the dispute or controversy and the award shall be final and binding.

12.6     A Party may demand arbitration by delivering a written notice thereof
         to the other Party setting forth a complete, concise statement of the
         issue(s) in dispute, the amount involved and the remedy requested.

12.7     The arbitrators shall render a written decision within six months after
         having been appointed.

12.8     Notwithstanding anything herein, the arbitral panel shall have the
         power to decide any dispute ex aequo et bono, with the objective of
         deciding such matters fully in accordance with the intent of the
         Parties as indicated by this Agreement.

12.9     The arbitrators shall have the right to award or include in their award
         any relief, which they deem proper in the circumstances, including,
         without limitation, money damages (with interest on unpaid amounts from
         date due), specific performance, injunctive relief and legal fees and
         costs in accordance with this section.

<PAGE>
MEMORANDUM OF AGREEMENT                                                  PAGE 16
--------------------------------------------------------------------------------

12.10    The arbitrators shall not have the authority to award exemplary,
         punitive, consequential or special damages and each Party shall be
         limited to the recovery of any actual damages sustained by it.

12.11    The number of arbitrators shall be three. One arbitrator shall be
         nominated by each of the Parties and shall then agree on the
         appointment of a third arbitrator, who shall be disinterested in the
         dispute and shall have no connection with any Party.

12.12    All arbitrators shall be persons having relevant experience relevant to
         the disputed matter.

12.13    Unless the three arbitrators have been appointed within thirty (30)
         days after the date on which either Party requests the settlement of
         any dispute by arbitration pursuant to this Section, the London Court
         of International Arbitration shall appoint the three arbitrators
         referred to above. The appointing authority may appoint from among
         nationals of any country, whether or not a Party is a national of that
         country.

                   ARTICLE 13 - REPRESENTATIONS AND WARRANTIES

13.1     BGL and PGR each represent and warrant to each of the other Parties
         that:

         (a)      it is a body corporate duly incorporated, organized and
                  validly subsisting under the laws of its incorporating
                  jurisdiction;

         (b)      it has full power and authority to carry on its business and
                  to enter into this Agreement;

         (c)      neither the execution and delivery of this Agreement 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 does not violate
                  or result in the breach of its constating documents or of the
                  laws of any applicable jurisdiction; and

         (e)      this Agreement has been duly authorized by all necessary
                  corporate action of its directors and shareholders and
                  constitutes a legal, valid and binding obligation enforceable
                  against it in accordance with its terms.

                              ARTICLE 14 - GENERAL

14.1     Further Assurances

         Each of the Parties will from time to time execute and deliver all
         further documents and instruments and do all acts and things as the
         other Party may reasonably require to effectively carry out or better
         evidence or perfect the full intent and meaning of this Agreement.

14.2     Legal Fees

         Each of the Parties hereto will pay their respective legal and
         accounting costs and expenses incurred in connection with the
         preparation, execution and delivery of this Agreement, and all other
         documents and instruments executed pursuant hereto and any other costs
         and expenses whatsoever and howsoever incurred.

<PAGE>
MEMORANDUM OF AGREEMENT                                                  PAGE 17
--------------------------------------------------------------------------------

14.3     Confidentiality

         No Party shall disclose the making of this Agreement nor its terms nor
         any other agreement referred to in this Agreement (except those matters
         set out in the press release in the agreed form) unless agreed in
         writing by the other Parties (such agreement not to be unreasonably
         withheld) and each Party shall procure that each of its Related Persons
         shall not make any such disclosure without the prior consent of the
         other Parties unless disclosure is:

         (a)      to its professional advisers; or

         (b)      required by law; or

         (c)      required by the rules or standards of any stock exchange,
                  securities regulator that a Party is a reporting issuer of or
                  such other regulatory body agreed between the Parties and
                  disclosure shall then only be made by that Party:

                  (i)      after it has taken all such steps as may be
                           reasonable in the circumstances to agree the contents
                           of such announcement with the other Parties before
                           making such announcement and provided that any such
                           announcement shall be made only after notice to the
                           other Parties; and

                  (ii)     to the person or persons and in the manner required
                           by law or the rules of the stock exchange, securities
                           regulator or such other regulatory body or as
                           otherwise agreed between the Parties.

         The restrictions contained in Clause 14.3 shall apply without limit of
         time.

14.4     Entire Agreement

         Unless otherwise provided herein, this Agreement constitutes the entire
         agreement among the Parties with respect to the subject matter hereof
         and cancels and supersedes any prior understandings and agreements
         between the Parties hereto with respect thereto.

14.5     Amendments and Waiver

         No modification of or amendment to this Agreement will be valid or
         binding unless set forth in writing and duly executed by all of the
         Parties and no waiver of any breach of any term or provision of this
         Agreement will be effective or binding unless made in writing and
         signed by the Party purporting to give the same and, unless otherwise
         provided, will be limited to the specific breach waived.

14.6     Assignment

         BGL may assign in whole or in part its rights and obligations under
         this Agreement to any of its affiliates that are ultimately controlled
         by GSR. In such event, BGL will remain liable for all its obligations
         under this Agreement after such assignment as if such assignment had
         not taken place. Except as provided herein, neither BGL nor PGR may
         assign any of their rights or obligations hereunder without the prior
         written consent of the other party, which consent may not be
         unreasonably withheld.

<PAGE>
MEMORANDUM OF AGREEMENT                                                  PAGE 18
--------------------------------------------------------------------------------

14.7     Pre-emptive Rights

         Except as provided for in Clause 5.17, or by Applicable Law, no JV
         Party shall be entitled to sell its interest in the Joint Venture until
         the Decision to Mine. Thereafter, if any JV Party receives a binding
         written proposal from a third party, the remaining JV Parties shall be
         entitled, for a period of sixty (60) Business Days following
         notification of the intended sale, to acquire the interest being sold
         at the same price offered by the third party.

14.7     Benefit of the Agreement

         This Agreement will enure to the benefit of and be binding upon the
         respective successors of the Parties.

14.8     Notices

         Any demand, notice or other communication to be given in connection
         with this Agreement must be given in writing by personal delivery or by
         electronic means of communication addressed to the recipient as
         follows:

         (a)      To PGR:

                  Prestea Gold Resources Limited
                  PO Box 701
                  Accra Ghana

                  Attention:     Chairman
                  Facsimile No.: +233 21 66 5563

         (b)      To BGL:

                  Bogoso Gold Limited
                  32 Akosombo Road
                  Airport Residential Area
                  PO Box 16075, Airport Post Office
                  Accra Ghana

                  Attention:     Managing Director
                  Facsimile No.: +233 21 77 7700

         (c)      To SGMC:

                  State Gold Mining Company Limited
                  C/O Minerals Commission
                  9, Switchback Road, Cantonments
                  PO Box 3634
                  Accra Ghana

                  Attention:     Chief Executive
                  Facsimile No.: +233 21 77 2903 or 77 3324

<PAGE>
MEMORANDUM OF AGREEMENT                                                  PAGE 19
--------------------------------------------------------------------------------

         (d)      To PGL:

                  Prestea Goldfields Limited
                  C/O Minerals Commission
                  9, Switchback Road, Cantonments
                  PO Box 3634
                  Accra Ghana

                  Attention:     Chief Executive
                  Facsimile No.: +233 21 77 2903 or 77 3324

         (e)      To GMWU:

                  Ghana Mineworkers Union
                  PO Box 701
                  Accra Ghana

                  Attention:     General Secretary
                  Facsimile No.: +233 21 66 5563

         (f)      To Government:

                  Ministry of Mines
                  Private Mail Bag
                  Ministries Post Office
                  Accra Ghana

                  Attention:     Minister of Mines
                  Facsimile No.: +233 21 66 6801

<PAGE>
MEMORANDUM OF AGREEMENT                                                  PAGE 20
--------------------------------------------------------------------------------

         or to such other address, individual or electronic communication number
         as may be designated by notice given by either Party to the other. Any
         demand, notice or other communication given by personal delivery will
         be conclusively deemed to have been given on the day of actual delivery
         thereof and, if given by electronic communication, on the day of
         transmittal thereof if given during the normal business hours of the
         recipient and on the Business Day during which such normal business
         hours next occur if not given during such hours on any day.

14.9     Governing Law

         This Agreement is governed by and must be construed in accordance with
         the laws of Ghana.

14.10    Attornment

         For the purpose of all legal proceedings this Agreement shall be deemed
         to have been performed in Ghana and the courts of Ghana will have
         jurisdiction to entertain any action arising under this Agreement. Each
         Party hereby attorns to the jurisdiction of the courts of Ghana.

14.11    Counterparts

         This Agreement may be executed in any number of counterparts, each of
         which will be deemed to be an original and all of which when taken
         together constitute one and the same agreement.

14.12    Execution by Facsimile Transmission

         Delivery of this Agreement may be made by facsimile transmission. A
         copy of this Agreement duly executed in several counterparts by the
         Parties and delivered by facsimile transmission constitutes a valid and
         binding agreement.

14.13    Force Majeure

         The obligations of the Parties will be suspended for the duration of a
         Force Majeure event.

14.14    Default

         A Party shall be in default under this Agreement if, at any time such
         Party is in breach of any of its material obligations under this
         Agreement and which continues for seven (7) days after notice by a
         non-defaulting Party specifying such breach.

         For the purposes of Clause 5.18 a breach of material obligations shall
         include but not be limited to breach of the obligations contained in
         Articles 7, 8, 9,10 and 13 and shall be enforceable by application to a
         court having jurisdiction over the Parties

                             [SIGNING PAGES FOLLOW]

<PAGE>
MEMORANDUM OF AGREEMENT                                                  PAGE 21
--------------------------------------------------------------------------------

In witness whereof the Parties have executed this Agreement as of the date first
above written:

BOGOSO GOLD LIMITED

By:      /s/ Peter Bradford
         -------------------------------------------------
Name:    Peter Bradford
Title:   Chairman

By:      /s/ Richard Gray
         -------------------------------------------------
Name:    Richard Gray
Title:   Managing Director

PRESTEA GOLD RESOURCES LIMITED

By:      /s/ Robert Cole
         -------------------------------------------------
Name:    Robert Cole
Title:   Chairman

By:      /s/ Jerome Essilfie
         -------------------------------------------------
Name:    Jerome Essilfie
Title:   Mine Manager and Director

PRESTEA GOLDFIELDS LIMITED

By:      /s/ E.K. Ofosu-Offei
         -------------------------------------------------
Name:    E.K. Ofosu-Offei
Title:   Ag. Chief Executive

By:      /s/ Kwasi Anokye-Yesuo
         -------------------------------------------------
Name:    Kwasi Anokye-Yesuo
Title:   Group Management Accountant

<PAGE>
MEMORANDUM OF AGREEMENT                                                  PAGE 22
--------------------------------------------------------------------------------

STATE GOLD MINING COMPANY LIMITED

By:      /s/ E.K. Ofosu-Offei
         -------------------------------------------------
Name:    E.K. Ofosu-Offei
Title:   Ag. Chief Executive

By:      /s/ Kwasi Anokye-Yesuo
         -------------------------------------------------
Name:    Kwasi Anokye-Yesuo
Title:   Group Management Accountant

GHANA MINEWORKERS UNION (AS MAJORITY SHAREHOLDER OF PGR AND AS REPRESENTATIVE
OF THE UNIONIZED EMPLOYEES OF PGR)

By:      /s/ John Brimpong
         -------------------------------------------------
Name:    John Brimpong
Title:   National Chairman

By:      /s/ Robert Cole
         -------------------------------------------------
Name:    Robert Cole
Title:   General Secretary

REPUBLIC OF GHANA

By:      /s/ Hon Kwadwo Adjei-Darko
         -------------------------------------------------
Name:    Hon Kwadwo Adjei-Darko
Title:   Minister of Mines

By:      /s/ Mrs Ernestina Tekpertey
         -------------------------------------------------
Name:    Mrs Ernestina Tekpertey
Title:   Chief Director

<PAGE>
MEMORANDUM OF AGREEMENT                                                  PAGE 23
--------------------------------------------------------------------------------

The following Schedules are attached to and made a part of this Agreement:

A. Final Report of the Mediator to the Government dated May 21, 2001;

B. Prestea Concession Area Map;

C. BGL Mining Lease;

D. PGR Mining Lease;

E. Environmental Indemnity;

F. Joint Operating Agreement; and

G. Licence Agreement.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}]]