Document:

Exhibit
4.5

    

       

    
      AMENDED
AND RESTATED GUARANTY

       

      GUARANTY (the “Guaranty”),
dated as of July 10, 2008, by Gregory Gold Producers, Incorporated, a Colorado
corporation, and Hunter Bates Mining Corporation, a Minnesota corporation, with
an address of each with an address of 900 IDS Center, 80 South Eighth Street,
Minneapolis, Minnesota 55402 (each a “Guarantor”, and collectively with any
other party executing this Guaranty, the “Guarantors”), in favor of Platinum
Long Term Growth V, LLC, a Delaware limited liability company, with an office at
152 West 57th Street,
54th
Floor, New York, NY 10019 (the “Secured Party”).

      

      WHEREAS, the Gregory Gold Producers, a
wholly owned subsidiary of Wits Basin Precious Minerals Inc. (the “Borrower”)
has previously issued a Guaranty dated February 11, 2008 in favor of the Secured
Party in accordance with a certain senior secured convertible note, dated as of
February 11, 2008 (the “Original Note”), executed by the Borrower, and certain
related agreements between the Borrower and the Secured Party (collectively, as
amended, restated, or extended from time to time, the “Loan Documents”), the
Secured Party has agreed to loan to the Borrower up to One Million Twenty
Thousand Dollars ($1,020,000) (the “Original Loan”); and

      

      WHEREAS, pursuant to the Loan
Documents, the Guarantors, as wholly owned subsidiaries of the Borrower, are
obligated to guaranty the obligations of the Borrower, and have accordingly
agreed to enter into this Amended and Restated Guaranty; and

      

      WHEREAS, the Guarantors are affiliates
of the Borrower; and

      

      WHEREAS, the Secured Party will extend
another loan to the Borrower on or about the date hereof in the principal amount
of One Hundred Ten Thousand Dollars ($110,000) (the referred to as the
“Additional Loan”, and, together with the Original Loan, referred to as the
“Loans”) which Additional Loan will be evidenced by an additional note of the
Borrower (the “Additional Note” and together with the Original Note, referred to
as the “Notes”);

      

      WHEREAS, in connection with the
Additional Loan, the Guarantors will amend and restate the Guaranty in favor of
the Secured Party;

      

      WHEREAS,
the obligation of the Secured Party to continue to extend the Loans is
conditioned, among other things, upon Guarantors executing and delivering this
Guaranty; and

      

      WHEREAS, the aforesaid Loans will be
beneficial to the Guarantors inasmuch as the proceeds of the Loans to the
Borrower will indirectly benefit the Guarantors;

      

      NOW, THEREFORE, in order to induce the
Secured Party to make the Loans to the Borrower pursuant to the Loan Documents,
and for other good and valuable consideration, the receipt of which is hereby
acknowledged by each of the Guarantors, the Guarantors hereby agree as
follows:

      

      
        
           

        

        
           

          
            

          

        

        
           

        

         

      

      1.           Guaranty of Payment and
Performance.  The Guarantors hereby jointly and severally
guarantee to the Secured Party the full and punctual payment when due (whether
at maturity, by acceleration or otherwise), and the performance, of all
liabilities, agreements and other obligations of the Borrower to the Secured
Party, whether direct or indirect, absolute or contingent, due or to become due,
secured or unsecured, now existing or hereafter arising or acquired (whether by
way of discount, letter of credit, lease, loan, overdraft or otherwise),
including without limitation all obligations under the Notes (collectively, the
“Obligations”).  This Guaranty is an absolute, unconditional and
continuing guaranty of the full and punctual payment and performance of the
Obligations and not of their collectbility only and is in no way conditioned
upon any requirement that the Secured Party first attempt to collect any of the
Obligations from the Borrower or resort to any security or other means of
obtaining their payment.  Should the Borrower default in the payment
or performance of any of the Obligations, the obligations of each Guarantor
hereunder shall become immediately due and payable to the Secured Party, without
demand or notice of any nature, all of which are expressly waived by each
Guarantor.  Payments by each Guarantor hereunder may be required by
the Secured Party on any number of occasions.

      

      2.           Guarantors’ Agreement to
Pay.  Each Guarantor further agrees, as the principal obligor
and not as a guarantor only, to pay to the Secured Party, on demand, all
reasonable costs and expenses (including court costs and reasonable legal
expenses) incurred or expended by the Secured Party in connection with
enforcement of this Guaranty, together with interest on amounts recoverable
under this Guaranty from the time such amounts become due under this Guaranty
until payment, at the rate per annum equal to the default rate set forth in the
Notes; provided that if such interest exceeds the maximum amount permitted to be
paid under applicable law, then such interest shall be reduced to such maximum
permitted amount.

      

      3.           Unlimited
Guaranty.  The liability of each Guarantor hereunder shall be
unlimited.

      

      4.           Waivers by Guarantors; Secured
Party’s Freedom to Act.  Each Guarantor agrees that the
Obligations will be paid and performed strictly in accordance with their
respective terms regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Secured Party with respect thereto.  Each Guarantor waives
presentment, demand, protest, notice of acceptance, notice of Obligations
incurred and all other notices of any kind, all defenses which may be available
to Borrower by virtue of any valuation, stay, moratorium law or other similar
law now or hereafter in effect, any right to require the marshalling of assets
of the Borrower, and all suretyship defenses generally. Without limiting the
generality of the foregoing, each Guarantor agrees to the provisions of any
instrument evidencing, securing or otherwise executed in connection with any
Obligation and agrees that the obligations of each Guarantor hereunder shall not
be released or discharged, in whole or in part, or otherwise affected by
(i) the failure of the Secured Party to assert any claim or demand or to
enforce any right or remedy against the Borrower; (ii) any extensions or
renewals of any Obligation; (iii) any rescissions, waivers, amendments or
modifications of any of the terms or provisions of any agreement evidencing,
securing or otherwise executed in connection with any Obligation; (iv) the
substitution or release of any entity primarily or secondarily liable for any
Obligation; (v) the adequacy of any rights the Secured Party may have
against any collateral or other means of obtaining repayment of the Obligations;
(vi) the impairment of any collateral securing the Obligations, including
without limitation the failure to perfect or preserve any rights the Secured
Party might have in such collateral or the substitution, exchange, surrender,
release, loss or destruction of any such collateral; or (vii) any other act
or omission which might in any manner or to any extent vary the risk of any
Guarantor or otherwise operate as a release or discharge of any other Guarantor,
all of which may be done without notice to any Guarantor.

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

         

      

      5.           Unenforceability of Obligations
Against Borrower.  If for any reason the Borrower has no legal
existence or is under no legal obligation to discharge any of the Obligations,
or if any of the Obligations have become irrecoverable from the Borrower by
operation of law or for any other reason, this Guaranty shall nevertheless be
binding on each Guarantor to the same extent as if each Guarantor at all times
had been the principal obligor on all such Obligations. In the event that
acceleration of the time for payment of the Obligations is stayed upon the
insolvency, bankruptcy or reorganization of the Borrower, or for any other
reason, all such amounts otherwise subject to acceleration under the terms of
any agreement evidencing, securing or otherwise executed in connection with any
Obligation shall be immediately due and payable by each Guarantor.

      

      6.           Subrogation;
Subordination.  Until the payment and performance in full of
all Obligations and any and all obligations of the Borrower to any affiliate of
the Secured Party, no Guarantor shall exercise any rights against the Borrower
arising as a result of payment by any Guarantor hereunder, by way of subrogation
or otherwise, and will not prove any claim in competition with the Secured Party
or its affiliates in respect of any payment hereunder in bankruptcy or
insolvency proceedings of any nature; no Guarantor will claim any set-off or
counterclaim against the Borrower in respect of any liability of any Guarantor
to the Borrower; and each Guarantor waives any benefit of and any right to
participate in any collateral which may be held by the Secured Party or any such
affiliate.  The payment of any amounts due with respect to any
indebtedness of the Borrower now or hereafter held by any Guarantor is hereby
subordinated to the prior payment in full of the Obligations.  Each
Guarantor agrees that after the occurrence of any default in the payment or
performance of the Obligations, after the expiration of any applicable cure
period, it will not demand, sue for or otherwise attempt to collect after such
time any such indebtedness of the Borrower to such Guarantor until the
Obligations shall have been paid in full. If, notwithstanding the foregoing
sentence, any Guarantor shall collect, enforce or receive any amounts in respect
of such indebtedness, such amounts shall be collected, enforced and received by
such Guarantor as trustee for the Secured Party and be paid over to the Secured
Party on account of the Obligations without affecting in any manner the
liability of any Guarantor under the other provisions of this
Guaranty.

      

      7.           Further
Assurances.  Each Guarantor agrees to do all such things and
execute all such documents, as the Secured Party may consider reasonably
necessary or desirable to give full effect to this Guaranty and to perfect and
preserve the rights and powers of the Secured Party hereunder.

      

      8.           Termination;
Reinstatement.  This Guaranty shall remain in full force and
effect until the Secured Party is given written notice of each Guarantor’s
intention to discontinue this Guaranty, notwithstanding any intermediate or
temporary payment or settlement of the whole or any part of the
Obligations.  No such notice shall be effective unless received and
acknowledged by an officer of the Secured Party at its head
office.  No such notice shall affect any rights of the Secured Party
or of any affiliate hereunder with respect to any Obligations incurred prior to
such notice.  This Guaranty shall continue to be effective or be
reinstated, notwithstanding any such notice or termination, if at any time any
payment made or value received with respect to an Obligation is rescinded or
must otherwise be returned by the Secured Party upon the insolvency, bankruptcy
or reorganization of the Borrower, or otherwise, all as though such payment had
not been made or value received.

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

         

      

      9.           Successors and
Assigns.  This Guaranty shall be jointly and severally binding
upon each Guarantor, its successors and assigns, and shall inure to the benefit
of and be enforceable by the Secured Party and its successors, transferees and
assigns.  Without limiting the generality of the foregoing sentence,
the Secured Party may assign or otherwise transfer any agreement or any note
held by it evidencing, securing or otherwise executed in connection with the
Obligations, or sell participations in any interest therein, to any other person
or entity, and such other person or entity shall thereupon become vested, to the
extent set forth in the agreement evidencing such assignment, transfer or
participation, with all the rights in respect thereof granted to the Secured
Party herein.

      

      10.           Amendments and
Waivers.  No amendment or waiver of any provision of this
Guaranty nor consent to any departure by any Guarantor therefrom shall be
effective unless the same shall be in writing and signed by the Secured
Party.  No failure on the part of the Secured Party to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other
right.

      

      11.           Notices.  All
notices and other communications called for hereunder shall be made in writing
and, unless otherwise specifically provided herein, shall be deemed to have been
duly made or given when delivered by hand or mailed first class mail postage
prepaid or, in the case of telegraphic or telexed notice, when transmitted,
answer back received, to the addresses set forth above, or at such address as
either party may designate in writing.

      

      12.           Governing Law; Consent to
Jurisdiction.  This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of New York without
reference to its conflicts of laws provisions.  Each Guarantor agrees
that any suit for the enforcement of this Guaranty may be brought in the courts
of the State of New York or any federal court sitting therein and consents to
the non-exclusive jurisdiction of such court and to service of process in any
such suit being made upon the Guarantors by mail at the address specified in
Section 11 hereof.  Each Guarantor hereby waives any objection that it
may now or hereafter have to the venue of any such suit or any such court or
that such suit was brought in an inconvenient court.  Any enforcement
action relating to this Guaranty may be brought by motion for summary judgment
in lieu of a complaint pursuant to Section 3213 of the New York Civil Practice
Law and Rules.

      

      13.           WAIVER
OF JURY TRIAL. EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THIS GUARANTY, THE
SECURED PARTY, HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH
RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF: (A) THIS GUARANTY OR ANY
OTHER INSTRUMENT OR DOCUMENT DELIVERED IN CONNECTION WITH THE OBLIGATIONS;
(B) THE VALIDITY, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF; OR
(C) ANY OTHER CLAIM OR DISPUTE HOWEVER ARISING BETWEEN ANY GUARANTOR AND
THE SECURED PARTY.

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

         

      

      14.           Certain
References.  All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.  The
terms “herein”, “hereof” or “hereunder” or similar terms used in this Guaranty
refer to this entire Guaranty and not only to the particular provision in which
the term is used.

      

      15.           Miscellaneous.  This
Guaranty, together with the Security Agreement, delivered by the Guarantors as
of the date hereof to the Secured Party, constitutes the entire agreement of the
Guarantors with respect to the matters set forth herein.  The rights
and remedies herein provided are cumulative and not exclusive of any remedies
provided by law or any other agreement, and this Guaranty shall be in addition
to any other guaranty of the Obligations.  The invalidity or
unenforceability of any one or more sections of this Guaranty shall not affect
the validity or enforceability of its remaining provisions. Captions are for the
ease of reference only and shall not affect the meaning of the relevant
provisions.  The meanings of all defined terms used in this Guaranty
shall be equally applicable to the singular and plural, masculine, feminine and
generic forms of the terms defined.

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

         

      

      IN WITNESS WHEREOF, each
Guarantor has caused this Guaranty to be executed and delivered as of the date
appearing in the introductory paragraph of this Guaranty.

       

      
        
          	 	      
                  GREGORY
      GOLD PRODUCERS, INCORPORATED

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/
      Mark D. Dacko	 
	 	 	Name:  Mark
      D. Dacko	 
	 	 	Title:  
       Chief Financial Officer	 
	 	 	 	 

        

         

      

      
        
          	 	      
                  HUNTER
      BATES MINING CORPORATION

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 /s/
      Mark D. Dacko 	 
	 	 	Name:  Mark
      D. Dacko	 
	 	 	Title:    Chief
      Financial Officer	 
	 	 	 	 

        

      

      

      

      

      

      Signature
Page

      to
Amended and Restated Guaranty

       

      
        
           

        

        
          6EXHIBIT
4.6

     

    DEED OF TRUST TO PUBLIC
TRUSTEE,

     

    MORTGAGE, SECURITY
AGREEMENT,

     

    ASSIGNMENT OF PRODUCTION AND
PROCEEDS,

     

    FINANCING
STATEMENT

     

    AND FIXTURE
FILING

     

    This Deed
of Trust to Public Trustee, Mortgage, Security Agreement, Assignment of
Production and Proceeds, Financing Statement and Fixture Filing (this “Instrument”), dated
as of April 27, 2009, is from Hunter Bates Mining Corporation, a Minnesota
corporation (Organizational I.D. No. 2820102-2) (“Debtor”), with a
principal office address of 900 IDS Center, 80 South 8th Street, Minneapolis,
MN  55402-8773, to the Public Trustee of Gilpin County, Colorado
(“Trustee”),
and to and for the benefit of Cabo Drilling (America), Inc., a Washington
corporation, as beneficiary (“Secured Party”), with
an address of 3rd Floor, 120 Lonsdale Avenue, North Vancouver, BC  V7M
2E8, Canada.

     

    DEFINITIONS

     

    Capitalized
terms used but not defined herein have the meanings provided in the Debenture
(as defined below).  In this Instrument, the following terms shall
have the following meanings:

     

    “Approvals” means each
and every approval, authorization, license, permit, consent, variance, land use
entitlement, franchise, agreement, performance of surety bond, filing or
registration by or with any governmental authority or other person necessary for
any stage (or all stages) of developing, operating, maintaining and closing a
mine on all or any part of the Lands (or any other lands any production from
which, or profits or proceeds from such production, is attributed to any
interest in the Lands), including construction of a mine and related
improvements and all other activities described above in clauses (a) through
(i) of the
definition of “Mine
Property”.

     

    “Environmental Laws”
shall mean all laws, ordinances, rules and regulations of the United States or
any other political subdivision, agency, or instrumentality exercising
jurisdiction over Debtor or the Collateral, which laws, ordinances, rules and
regulations are applicable to Debtor or the Collateral, governing, regulating or
otherwise pertaining to health, industrial hygiene or the environment, or
regulating, relating to or imposing liability (including strict liability) or
standards of conduct concerning any Hazardous Materials, as are now or at any
time hereafter in effect and as amended from time to time.

     

    “Hazardous Materials”
shall mean any hazardous waste, hazardous substance, pollutant, contaminant,
toxic substance, oil, hazardous material or chemical, or other substance
regulated by any Environmental Law.

     

    “Lands” means the
lands that are described in Exhibit A hereto, the
leasehold estates that are described in Exhibit A hereto, and
all now-existing or hereafter-arising leasehold, overriding royalty, royalty,
net profits or other interests in real property of the Debtor, together with all
appurtenant rights accruing to the owner thereof, including extralateral rights,
surface use rights and water rights relating to the lands and leasehold estates
identified on Exhibit
A hereto.

    
      
         

      

      
        - 1
-

        
          

        

      

      
         

      

    

     

    “Leases” means all
surface and mineral leases, subleases, assignments, options, licenses,
concessions, occupancy agreements, profits-à-prendre, work agreements, joint
venture agreements, partnerships (including mining partnerships), exploration
agreements, operating agreements, surface use agreements and surface use and
damage agreements, subsidence agreements, easements, licenses, net profits
agreements, royalty agreements, nominee agreements, options and all other
conveyances, transfers, agreements or arrangements (whether mineral or
otherwise, whether previously or hereafter made, and whether existing now or
hereafter) relating to all or any part of the Lands or any other lands any
production from which, or profits or proceeds from such production, is
attributed to any interest in Lands, together with all rentals, royalties and
other rights of Debtor thereunder.

     

    “Mine Property” means
all tangible property (whether now or hereafter existing or acquired, and
whether real, personal or mixed) owned by Debtor and located or found now or
hereafter on, in, or under all or any part of the Lands (or any other lands any
production from which, or profits or proceeds from such production, is
attributed to any interest in the Lands) that now or hereafter is (together with
all substitutions and replacements for, and all accessions, additions and
attachments to any thereof) used or useful in connection with mining gold or
Other Minerals (which as used herein shall include ores, compounds and
concentrates bearing the same) or in connection with any related activities,
including:

     

    (a)           exploration
for and evaluation of deposits of gold or Other Minerals,

     

    (b)           the
development, operation, shutdown and closure (temporary and permanent) of a mine
(whether an underground or a surface mine),

     

    (c)           handling,
processing, refining and beneficiation of gold or Other Minerals, including
crushing, screening, non-screen classifying, grinding, flotation, washing,
gravity separation, magnetic separation, chemical leaching, thickening,
filtration, drying, sintering, palletizing, briquetting, calcining,
crystallization, sorting, sizing, roasting, ion exchange, solvent extraction,
electrostatic separation, electrorefining, electrowinning and
smelting,

     

    (d)           storage
of gold or Other Minerals,

     

    (e)           transportation
of gold or Other Minerals by any means, including haulage within a mine and from
a mine to a mill or to any other handling, processing, beneficiation, storage or
marketing location, haulage between any of the foregoing locations, haulage of
mine waste (including waste rock and overburden) and tailings, slag and other
wastes resulting from handling, processing, and beneficiation and loading in
connection with any haulage,

     

    (f)           marketing,
and readying for market, gold or Other Minerals,

     

    (g)           disposal
(temporary and permanent) of mine waste (including waste rock and overburden)
and tailings, slag and other wastes from handling, processing and
beneficiation,

     

    (h)           monitoring,
maintaining, restoring and improving environmental quality, including
elimination, treatment and mitigation of air and water pollution,
and

     

    (i)           reclamation
of lands and other natural resources affected by any of the foregoing
activities.

     

    Without
restricting the foregoing, “Mine Property” shall
include the following property (together with all substitutions and replacements
for, and all accessions, additions and attachments to any thereof) now or
hereafter used or useful in connection with mining gold or Other Minerals or in
connection with related activities:

    
      
         

      

      
        - 2
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    (i)           generally
— buildings; structures; improvements; furnishings; fixtures; equipment;
apparatus; facilities; machinery; tools; vehicles; goods; supplies and
inventory; and

     

    (ii)           specifically  —
headframes; mine offices; maintenance and equipment repair shops; carpentry;
tool and electrical shops; parts and supplies warehouses; change houses;
laboratory and assay facilities; ore bins; air compressors; electrical
generators and buildings for same; dynamos; staff, workers’ and families’ living
and eating facilities; ventilation shafts and ducts; fans; refrigeration units;
underground workings (including injection wells and recovery wells; adits;
shafts; tunnels; crosscuts; laterals; drifts; raises; winzes; stopes; and other
openings to ore); pump rooms; underground hoist rooms; level stations;
underground equipment and machinery storage and repair areas; escape shafts; ore
storage areas; storehouses; hoist houses; drums; controls; and motors; wire rope
for hoists; ore skips and man cars; timber; roof supports; track (including
branch; cut-off, spur; industrial; switch; connecting; storage; yard; terminal
and other railroad tracks); roads and haulage ways; conveyor belts; electrical
wire; apparatus; and controls (including transformers and switch boxes); pipe;
water and fuel supply tanks, pumps and pipelines; rolling stock; including
locomotives and cars; mine vehicles; drills and related equipment; explosives
and explosives storage facilities; continuous miner machines; mucking equipment;
loaders and loading equipment; tipples; dewatering facilities; including pumps;
sewage facilities; waste water treatment and disposal facilities; water
treatment plants (including, without limitation, the water treatment plant
adjacent to the Mine headframe); wells for the extraction or injection of water,
or for the monitoring of water quality or supply; ditches; water drainage
courses; dams; and silt ponds; telephones and other communications equipment;
pipelines (including slurry and pneumatic pipelines); tractors; scrapers; power
shovels; backhoes; bucket-wheel excavators; draglines; dredges; haulage and
water and maintenance trucks; inclined skips; graders; electrical power lines;
ships; barges; port facilities; loading docks; tramways and aerial trams;
aircraft; airstrips; recreation facilities; company townsite and buildings; mill
or processing plants; sluices; wells; augers; overburden; waste rock or spoil;
and other mine wastes; load-haul-dump vehicles; conveyors (including screw and
bucket conveyors); crushers (including jaw crushers; gyratory crushers; wire
crushers; impact crushers; roil crushers; hammer mills; shredders and roller
mills); screens (including grizzlies); grinding mills (including ball mills; rod
mills; autogenous mills and semi-autogenous mills); flotation circuits
(including flotation cells; collection troughs and launders and flumes); washers
(including hydrocyclones); gravity separation devices (including jigs; sluices;
shaking tables; cones; spirals; vanners and heavy liquids); magnets; leaching
circuits; thickening tanks; filters (including drum; disk; belt; and plate
filters); driers; kilns; smelting furnaces (including reverberatory furnaces and
flash smelters); converters; slag; tailings and tailings ponds.

     

    “Mine-Related Agreements and
Plans” means all existing and future contracts, agreements, plans,
specifications, technical reports, surveys, designs, drawings and other matters
executed by Debtor and (or prepared by) any contractor, architect, engineer,
surveyor or other consultant, in each case in connection with the design,
construction or operation of the Mine Property, including all contracts and
agreements executed by Debtor and any landscape architect, civil engineer,
electrical engineer, soils engineer, mining engineer or mechanical engineer,
together with all plans and specifications prepared by any design architect for
the construction and improvements comprising Mine Property.

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

     

    “Mines” shall mean the
mine commonly referred to as the Bates Hunter Mine, located in Gilpin County,
Colorado, and any and all other mines now or hereafter located in, on or under
the Lands and the assets related thereto.

     

    “Other Minerals” means
all minerals other than gold, whether or not similar to gold or found or
produced in association with gold, including silver, coal, all existing and
future ores, minerals, mineral elements and compounds, veins, lodes and mineral
deposits, whether solid, liquid or gaseous, whether organic or inorganic,
metallic or nonmetallic, hydrocarbonaceous or non-hydrocarbonaceous, including
rock, gravel, sand, methane, water, and geothermal steam, geothermal heat and
geothermal resources, found or located on the Lands.

     

    “Permitted Liens”
means:

     

    (i)           Liens
for taxes, assessments or governmental charges not then due and delinquent or in
respect of which the Debtor has furnished such security as the Secured Party may
require and which are being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted;

     

    (ii)           Liens
in the nature of zoning restrictions, easements and rights and restrictions of
record on the use of real property, which do not materially interfere with the
conduct of the business of the Debtor and do not materially affect the value of
the property subject to such Liens;

     

    (iii)           undetermined
or inchoate Liens, including unregistered construction Liens, incidental to
current operations of the Debtor which have not at such time been filed pursuant
to laws against the Debtor and which relate to obligations neither due nor
delinquent;

     

    (iv)           Liens
in the form of security given to a public utility or any Governmental Authority
in connection with the operations of the Debtor in the ordinary course of its
business; and

     

    (v)           matters
of record as of the date hereof, itemized on Exhibit C, save and
except for the Subordinated Liens.

     

    “Rights of Way” means
(including any of the following that are described in Exhibit A hereto) all
now or hereafter existing or acquired easements, servitudes, permits, licenses,
tenements, hereditaments, rights of way, privileges, liberties, appendages,
appurtenances and similar rights appertaining or appurtenant to or beneficially
used or useful in connection with the Lands and/or the Mine Property, including
and together with all estates, claims, demand rights, title and interests in and
to any street, road, highway or alley, vacated or otherwise, adjoining or
beneficially used or useful in connection with the Lands and/or the Mine
Property.

     

    “Subordinated Liens”
means the Liens listed in Exhibit B
hereto.

     

    “Water Rights” means
all now or hereafter existing or acquired water and water rights, reservoirs and
reservoir rights, ditches and ditch rights, wells and well rights, whether
evidenced or initiated by permit, decree, well registration, appropriation not
decreed, shares of stock or other interests in mutual ditch or reservoir
companies or carrier ditch or reservoir companies or otherwise, appertaining or
appurtenant to or beneficially used or useful in connection with the Lands
and/or the Mines, together with all pumps, well casings, wellheads, electrical
installations, pumphouses, meters, monitoring wells and systems, parshall flumes
or other measuring devices, pipes, pipelines and other structures or personal
property which are or may be used to produce, regulate, measure, distribute,
store or use water from the said water and water rights, reservoirs and
reservoir rights, ditches and ditch rights, wells and well
rights.

    
      
         

      

      
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    COLLATERAL

     

    All of
Debtor’s right, title and interest in and to all the hereinafter described
properties, rights and interests, whether now owned or hereafter acquired, and
whether now or hereafter existing or created, is herein collectively called the
“Collateral”:

     

    (a)           the
Lands and the Rights of Way,

     

    (b)           the
gold and Other Minerals that originated from the Lands which are (i) on, in, or
under, extending from or into, (ii) produced or to be produced from, (iii)
stored, handled, processed, refined or beneficiated or to be stored, handled,
processed, refined or beneficiated on, or (iv) transported or marketed or to be
transported or marketed on or from, in each case, all or any part of the Lands
or any other lands any production from which (or profits or proceeds from such
production) is attributed to any interest in the Lands,

     

    (c)           without
duplication of any other provision of this granting clause all of Debtor’s now
or hereafter arising accounts, as-extracted collateral, chattel paper,
commercial tort claims, deposit accounts, documents, general intangibles, goods
(including all its consumer goods, equipment, farm products, fixtures and
inventory), instruments, investment property, letter-of-credit rights,
securities and supporting obligations (as such terms are defined in the
applicable Uniform Commercial Code), but only if, and only to the extent, any
such above-listed properties, rights or interests relate to, or arise out of,
Collateral that is described elsewhere other than in this subsection
(c),

     

    (d)           the
Leases,

     

    (e)           the
Mines and the Mine Property,

     

    (f)           the
Approvals,

     

    (g)           the
Mine-Related Agreements and Plans,

     

    (h)           the
Water Rights,

     

    (i)           all
awards, payments or judgments, including interest thereon, and the right to
receive the same, as a result of the exercise or threatened exercise of any
right of eminent domain, other injury to, taking up, or decrease in the value of
all or any portion of the Lands, the Mine Property, the Water Rights or any
other property described herein,

     

    (j)           all
other property or rights of any kind or character related to the Lands, the Mine
Property, the Water Rights or other property described herein, and

     

    
      
        
        

      

      
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    (k)           all
proceeds (as such term is defined in the applicable Uniform Commercial Code) and
products of the foregoing, together
with, to the extent Debtor may lawfully grant a security interest therein, any
and all corrections or amendments to, or renewals, extensions or ratifications
of, or replacements or substitutions for, any of the same, or any instrument
relating thereto, and all contracts, title instruments, title opinions, land
status reports, title abstracts, title insurance commitments or policies, title
materials and information, files, records, writings, data bases, information,
systems, maps, plats, surveys, geological and geophysical (including electrical,
electromagnetic, gravity and seismic), geochemical, and radiometric data and
information, drilling data, test data, mineral -samples (including drill cores),
mineral assay reports, interpretative and analytical reports of any kind or
nature (including reserve or deposit studies or evaluations), mine feasibility
reports, technical reports (including, without limitation, that certain
“Technical Report on the Bates Hunter Project”, dated July 15, 2008, by Orem
Inc.), mine development studies and plans, information concerning exploration
and development of deposits of gold and Other Minerals (including information
concerning mine operation, shutdown and closure and concerning reclamation of
lands and other resources affected by mining), environmental data and related
information and reports and studies, computer hardware and software and all
documentation therefor or relating thereto (including all licenses relating to
or covering such computer hardware, software and/or documentation), trade
secrets, business names and the goodwill of the business relating thereto,
unpatented inventions, patent applications and patents, lease records (including
rental and royalty payment records), payment of rental or maintenance fees, and
filings and recordings made with governmental authorities, the Approvals and
records and information concerning compliance therewith, mine development
programs and budgets, financial statements and audits, reclamation plans and
related data and reports, hedging agreements, interest rate protection
agreement, commodity hedging agreement or any other agreement evidencing a swap
or other derivative transaction, insurance policies, commingling agreements,
information and data and reports regarding the products and proceeds of mine
operations (including quantities produced, proceeds from sale or other
disposition, and disbursement of proceeds to persons entitled to a share
thereof), information and data and reports regarding all aspects of the Mine
Property (including transportation and marketing of mine products), development
rights, air rights, parcel maps, extralateral rights, condemnation awards,
franchises, easements, servitudes, permits, licenses, tenements, hereditaments,
appurtenances, rents, royalties, overriding royalties, revenues, avails, income,
security deposits, reclamation bonds, bonuses, accounts, returns, issues,
profits, advantages, claims against third parties, products, proceeds and all
other benefits, whether now or hereafter existing or arising, used or useful in
connection with, covering, relating to, or arising from or in connection with,
any of the aforesaid in this granting clause referenced, and all other things of
value and incident thereto which Debtor might at any time have or be entitled to
(including any and all liens, lien rights and security interests, and all
properties, rights and interests, whether now or hereafter existing or arising,
that Debtor uses or installs for use in connection with mining gold or Other
Minerals from all or any part of the Lands or any other lands any production
from which, or the profits or proceeds from such production, is attributed to
any interest in the Lands, or in connection with any related activities);
together with all strips and gores belonging, adjacent or pertaining to the
Lands; and any after-acquired title, additions to any of the foregoing,
including those which may be subjected to the lien and security interest of this
Instrument by means of supplements hereto, all the aforesaid properties, rights
and interests, together with any after-acquired title, additions and accretions
to any of the foregoing.

     

    GRANTING
CLAUSES

     

    In
consideration of ten dollars and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by Debtor, and the
matters hereinafter set forth, Debtor hereby:

    A.           Real
Property.  Grants, bargains, sells, mortgages, assigns,
transfers and conveys to Trustee, with POWER OF SALE, for the benefit of Secured
Party, that part of the Collateral that is real property (including any fixtures
that are real property under applicable state law), subject to the assignment of
severed and extracted gold and Other Minerals and the proceeds thereof made
under paragraph C below; TO HAVE AND TO HOLD all of the Collateral that is real
property (including any fixtures that are real property under applicable state
law), together with all of the rights, privileges, benefits, hereditaments and
appurtenances in any way belonging, incidental or pertaining thereto, to Trustee
and its successors and assigns, forever, IN TRUST, NEVERTHELESS, for the
security and benefit of Secured Party and its successors and assigns, subject to
all of the terms, conditions, covenants, agreements and trusts herein set
forth;

     

    
      
        
        

      

      
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    B.           Personal
Property.  Grants to Secured Party a security interest in that
part of the Collateral that is personal property (including any fixtures that
are personal property under applicable state law); and

     

    C.           Assignment of
Production.  Collaterally assigns to Secured Party all of the
severed and extracted ore, gold and Other Minerals produced from or allocated or
attributed to any of the Collateral or any other interest of Debtor (whether now
owned or hereafter acquired by operation of law or otherwise) in, to and under
or that covers, affects or otherwise relates to the Land or to any of the
estates, property rights or other interests described or referred to above,
together with all of the proceeds thereof.

     

    ARTICLE
I

     

    Secured
Obligations

     

    Section 1.1           Obligations
Secured.  This Instrument is executed, acknowledged and
delivered by Debtor to secure and enforce the following indebtedness,
liabilities and obligations (the “Secured
Obligations”):

     

    A.           Convertible
Debenture.  All indebtedness (including but not limited to the
Principal, Interest, Expenses and Extension Fee) evidenced by that certain
Convertible Debenture, of even date herewith, in the principal amount of U.S.
$511,589.59 made by Wits Basin Precious Minerals Inc., a Minnesota corporation
(“Borrower”),
and payable to the order of Secured Party, and any renewals, extensions or
restatements thereof, modifications, changes, amendments or supplements thereto
and substitutions therefor (the “Debenture”), as well
as all indebtedness payable by Debtor as a result of Debtor’s obligations in the
Debenture to guaranty the Borrower’s obligations under the
Debenture;

     

    B.           This
Instrument.  All indebtedness payable by Debtor pursuant to the
provisions of and evidenced by this Instrument, including, without limitation,
any amounts advanced to protect the liens and security interests herein granted
and all reasonable attorneys fees, court costs, and expenses of whatever kind or
character now existing or hereafter created or arising, incident thereto or to
the collection of the indebtedness, liabilities and obligations hereby secured
and enforcement of the liens and security interests herein granted and
created;

     

    C.           Other
Obligations.  All other indebtedness payable by Debtor to
Secured Party of whatever kind or character now existing or hereafter created or
arising, whether fixed, absolute or contingent, direct or indirect, primary or
secondary, joint, several or joint and several, due or to become due, and
however evidenced whether by note, open account, overdraft, endorsement,
security agreement, guarantee or otherwise, it being contemplated that Debtor
may hereafter become indebted to Secured Party in such further sum or sums;
and

     

    
      
         

      

      
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    D.           Renewals, Extensions and
Amendments.  All indebtedness evidenced by all renewals,
extensions and restatements of, modifications, changes, amendments and
supplements to and substitutions for, all or any part of the
foregoing.

     

    ARTICLE
II

     

    Warranties, Representations,
Covenants

    and
Indemnities

     

    Section 2.1             Representations and Warranties.  Debtor
warrants and represents as follows:

     

    A.             Power and
Authority.  Debtor has the power and authority to grant,
bargain, sell, mortgage, assign, transfer and convey the Collateral as provided
herein.

     

    B.             Title.  Exhibit A attached
hereto correctly describes, as of the date hereof, all of the land, mineral
estates, surface estates and real property leasehold estates (including, without
limitation, easements and rights of way) in which Debtor owns an interest and
all Water Rights owned by Debtor.  Subject to Permitted Liens and
Subordinated Liens, Debtor is the lawful owner of and has good and marketable
title to the Collateral free and clear of all Liens.  Debtor warrants
and will forever defend the title to the Collateral against the claims of all
persons claiming or to claim the same or any part thereof.   To
the best of the Debtor’s knowledge, each Lease is a valid and subsisting Lease
and is in full force and effect.  Each Lease or a certified copy or
memorandum thereof has been recorded in the real property records of the county
or counties in which the Lands covered thereby are located, and has been
delivered to Secured Party.  Each Lease (a) either is within its
primary term, or the primary term thereof has been extended by production of
gold or Other Minerals from the Lands covered thereby or otherwise by its terms;
(b) is prior to any deed of trust, mortgage or other lien or encumbrance upon
the fee interest in such Lands; and (c) is assignable without the prior written
consent of the lessor or any other third party.

     

    C.             Approvals.  To
the best of Debtor’s knowledge, without inquiry, other than recording or filing
of this Instrument, financing statements and similar instruments in favor of
Secured Party, Debtor is not required to submit any notice, report or other
filing with any governmental authority, person or entity in connection with
Debtor’s execution, delivery or performance of this Instrument, and no consent,
approval or authorization of any governmental authority, person or entity is
required to be obtained by Debtor in connection with Debtor’s execution,
delivery and performance of this Instrument or the consummation of the
transactions contemplated hereby.  To the best of the Debtor’s
knowledge, Debtor is duly qualified to own, hold and operate leases, easements,
rights-of-way, mineral agreements and other agreements covering, affecting or
otherwise relating to state lands.

     

    D.             Security
Interest.  Except for Permitted Liens, Trustee and Secured
Party, as the case may be, will obtain, as security for the Secured Obligations
a legally valid and binding first perfected lien on, and security interest in,
the Collateral.

     

    E.           Structure.  Debtor’s
name, identity, corporate structure, state of incorporation and organizational
identification number are correctly reflected in the preamble to this
Instrument.

     

    Section 2.2             Covenants.  Debtor
covenants and agrees as follows:

    
      
         

      

      
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    A.           Secured
Obligations.  Debtor shall pay when due and perform the Secured
Obligations in accordance with the terms thereof and hereof.

     

    B.           Recording and
Filing.  Debtor shall sign all documents reasonably requested
by Secured Party to assist Secured Party to create, perfect, maintain and
preserve the priority of the liens and security interests intended to be created
hereby as a first lien on real property and fixtures and a first priority
security interest in personal property and fixtures.

     

    C.           Modifications and
Dispositions.  Without the prior written consent of Secured
Party, except in the ordinary course of business Debtor shall not
(1) amend, modify or otherwise revise any lease, license or other agreement
described in Exhibit
A; (2) release, surrender, abandon or forfeit the Collateral or any
part thereof; (3) sell, convey, assign, lease, sublease, alienate, mortgage
or grant security interests in or otherwise dispose of or encumber the
Collateral or any part thereof, except to the extent explicitly permitted by the
Debenture and except sales of severed gold and Other Minerals in the ordinary
course of Debtor’s business and for fair consideration, and except for the liens
and security interests created by this Instrument and liens for taxes,
assessments and governmental charges not delinquent; or (4) consent to,
permit or authorize any such act by another party with respect to the Land, the
Collateral or any part thereof.

     

    D.           Defense of
Title.  If the title or interest of Debtor, Trustee or Secured
Party to the Collateral or any part thereof, or the lien or encumbrance created
by this Instrument, or the rights or powers of Secured Party or Trustee
hereunder, shall be attacked, either directly or indirectly, or if any legal
proceedings are commenced against Debtor or the Collateral, Debtor shall
promptly give written notice thereof to Secured Party and at Debtor’s own
expense shall take all reasonable steps diligently to defend against any such
attack or proceedings, employing attorneys reasonably acceptable to Secured
Party.

     

    E.           Environmental
Matters.  Debtor shall comply with all Environmental Laws and
shall maintain and obtain all permits, licenses and approvals required under
Environmental Laws.  Debtor shall not cause or permit the Collateral
or Debtor to be in violation of, or do anything or permit anything to be done
that will subject the Collateral, Debtor or Secured Party to any additional
remedial obligations under any applicable Environmental Laws, assuming
disclosure to the applicable governmental authorities of all relevant facts,
conditions and circumstances, if any, pertaining to the Collateral or
otherwise.  Debtor shall promptly notify Secured Party in writing of
any material existing, pending or threatened investigation or inquiry by any
governmental authority in connection with any applicable Environmental
Laws.

     

    F.           Further
Assurances.  Debtor shall execute, acknowledge and deliver, or
cause to be executed, acknowledged or delivered, to Secured Party such other and
further instruments and do such other acts as in the reasonable opinion of
Secured Party may be necessary or desirable to effect the intent of this
Instrument, promptly upon request of Secured Party and at Debtor’s
expense.

     

    Section 2.3             Costs, Expenses and
Indemnities.  Debtor agrees to pay and indemnify Secured Party
and Trustee as follows:

    
      
         

      

      
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    A.           Costs and
Expenses.  Debtor shall indemnify Secured Party and Trustee
from and reimburse and pay Secured Party for all fees, costs and expenses
(including without limitation, attorneys’ fees, court costs and legal expenses
and consultant’s and expert’s fees and expenses), incurred or expended by
Secured Party or Trustee in connection with (1) the breach by Debtor of any
representation or warranty contained in this Instrument, the Debenture or any
other documents and instruments evidencing, securing or otherwise relating to
the Secured Obligations, (2) the failure by Debtor to perform any
agreement, covenant, condition, indemnity or obligation contained in this
Instrument, the Debenture or any other documents and instruments evidencing,
securing or otherwise relating to the Secured Obligations, (3) Secured
Party’s or Trustee’s exercise of any of its rights and remedies under this
Instrument, the Debenture and the other documents and instruments evidencing,
securing or otherwise relating to the Secured Obligations, or (4) the
protection of the Collateral and the liens thereon and security interests
therein.  All such fees, costs and expenses shall be a demand
obligation owing by Debtor to Secured Party.  The liabilities of
Debtor as set forth in this Section 2.3(A)
shall survive the termination of this Instrument.

     

    B.           Indemnity.  Debtor
shall indemnify and hold harmless Secured Party and persons or entities owned or
controlled by or affiliated with Secured Party and their respective directors,
officers, shareholders, partners, employees, consultants and agents (herein
individually, an “Indemnified Party,”
and collectively, “Indemnified Parties”)
from and against, and reimburse and pay Indemnified Parties with respect to, any
and all direct claims, demands, liabilities, losses, damages (including without
limitation, actual, consequential, exemplary and punitive damages), causes of
action, judgments, penalties, fees, costs and expenses (including without
limitation, attorneys’ fees, court costs and legal expenses and consultant’s and
expert’s fees and expenses), of any and every kind or character, known or
unknown, fixed or contingent, that may be imposed upon, asserted against or
incurred or paid by or on behalf of any Indemnified Party on account of, in
connection with, or arising out of (1) any bodily injury or death or
property damage occurring in or upon or in the vicinity of the Collateral
through any cause whatsoever, (2) any act performed or omitted to be
performed hereunder or the breach of or failure to perform any warranty,
representation, indemnity, covenant, agreement or condition contained in this
Instrument, the Debenture or any other document or instrument evidencing,
securing or otherwise relating to the Secured Obligations, (3) any
transaction, act, omission, event or circumstance arising out of or in any way
connected with the Collateral or with this Instrument, the Debenture or any
other document or instrument evidencing, securing or otherwise relating to the
Secured Obligations, or (4) the violation of or failure to comply with any
statute, law, rule, regulation or order, including without limitation,
Environmental Laws and statutes, laws, rules, regulations and orders relating to
Hazardous Materials; provided however, that such
indemnities shall not apply to any Indemnified Party to the extent the subject
of the indemnification is caused by or arises out of the gross negligence or
willful misconduct of such Indemnified Party (as determined by a court of
competent jurisdiction).  The foregoing indemnities shall not survive
in the event that the Lender takes ownership of the Collateral, provided that
the forgoing indemnities will survive the release, foreclosure or other
termination of this Instrument in all other circumstances.  The
rights, powers and remedies herein conferred are cumulative, and not exclusive,
of any and all other rights, powers and remedies existing at law or in equity
(including without limitation, rights, powers and remedies under Environmental
Laws).

     

    Section 2.4             Performance by Secured
Party.  Debtor agrees that, if Debtor fails to perform any act
which Debtor is required to perform hereunder, Secured Party and Trustee may,
but shall not be obligated to, perform or cause to be performed such act, and
any expense so incurred by Secured Party or by Trustee in connection therewith
shall be a demand obligation owing by Debtor to Secured Party, and Secured Party
shall be subrogated to all of the rights of the party receiving such
payment.

    
      
         

      

      
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    ARTICLE
III

     

    Collection of Proceeds of
Production

     

    Section 3.1             Assignment of
Proceeds.  Pursuant to paragraph C of the granting clause
of this Instrument, Secured Party is absolutely assigned and entitled to receive
all of the severed and extracted ore, gold and Other Minerals produced from or
allocated or attributed to all of the Collateral, together with all of the
proceeds thereof and payments in lieu thereof.  Debtor acknowledges
and agrees that said assignment is intended to be an absolute and unconditional
assignment and not merely a pledge of or creation of a security interest in said
gold and Other Minerals and proceeds or an assignment as additional
security.  Debtor shall execute, acknowledge and deliver or cause to
be executed, acknowledged and delivered, transfer orders or letters-in-lieu
thereof directing all purchasers of ore, gold and Other Minerals to make
payments directly to Secured Party.  All parties producing,
purchasing, receiving or having in their possession any such ore, gold and Other
Minerals or proceeds are hereby authorized and directed by Debtor to treat and
regard Secured Party as the party entitled in Debtor’s place and stead to
receive such ore, gold and Other Minerals and proceeds; and said parties shall
be fully protected in so treating and regarding Secured Party and shall be under
no obligation to see to the application by Secured Party of any such proceeds
received by it.  Notwithstanding the foregoing or any provision
contained in this Deed of Trust, Secured Party agrees that, until and unless an
Event of Default occurs hereunder, Secured Party shall exercise no rights to
possession of any of the Collateral and shall permit Debtor to receive such ore,
gold and Other Minerals or proceeds until such time as Secured Party shall have
made written demand therefore following an Event of Default.  Such
election by Secured Party shall not in any way waive the right of Secured Party
to demand and receive such ore, gold and Other Minerals and proceeds thereafter
allocated or attributed to the Collateral and shall not in any way diminish the
absolute and unconditional right of Secured Party to receive all of such ore,
gold and Other Minerals and proceeds and cash proceeds not theretofore expended
or distributed by Debtor.  Following an Event of Default, any such
ore, gold and Other Minerals or proceeds received by Debtor shall, when
received, constitute trust funds in Debtor’s hands and shall be held by Debtor
for the benefit of Secured Party.  Debtor hereby agrees that upon the
first to occur of either (A) written demand of Secured Party, or
(B) the occurrence of any event which constitutes an Event of Default (as
hereinafter defined) or which upon the giving (or receiving) of notice or lapse
of time, or both, would constitute such an Event of Default, all cash, proceeds,
instruments and other property, of whatever kind or character, received by
Debtor on account of the Collateral, whether received by Debtor in the exercise
of its collection rights hereunder or otherwise, shall, in accordance with
instructions then given by Secured Party, be remitted to Secured Party or
deposited to an account designated by Secured Party, in the form received
(properly assigned or endorsed to the order of Secured Party or for collection
and in accordance with Secured Party’s instructions) not later than the first
banking business day following the day of receipt, to be applied as provided in
Section 3.2
hereof and, until so applied, may be held by Secured Party in a separate account
on which Debtor may not draw.  Debtor agrees not to commingle any such
property, following the receipt of any such demand from Secured Party or the
occurrence of an Event of Default, with any of its other funds or property and
agrees to hold the same upon an express trust for Secured Party until remitted
to Secured Party.

     

    Section 3.2             Application of
Proceeds.  Secured Party shall apply all of the proceeds
received pursuant to Section 3.1
hereof in satisfaction of the Secured Obligations as provided below, unless
otherwise agreed to by Secured Party and Debtor.  All such proceeds
received and to be applied by Secured Party up to the close of business on the
last day of each calendar month shall be applied by Secured Party on or before
the fifth business day of the next succeeding calendar month as follows (with
any balance remaining after such application to be paid to
Debtor):

    
      
         

      

      
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    A.           First,
to the payment to Secured Party and Trustee of all outstanding or unreimbursed
fees, costs and expenses incurred by Secured Party or Trustee pursuant hereto,
and any part of the Secured Obligations not evidenced by written instrument,
including without limitation, all charges and penalties, including interest
thereon, due Secured Party;

     

    B.           Second,
to the payment or prepayment of all interest accrued on the Secured Obligations;
and

     

    C.           Third,
to the payment or prepayment of the principal of the Secured Obligations in any
order the Secured Party may elect from time to time;

     

    Section 3.3             Inclusion in
Sale.  Upon any sale of any of the Collateral pursuant to Article V hereof
and expiration of any mandatory redemption periods, the ore, gold and Other
Minerals thereafter produced from or attributed to the part of the Collateral so
sold, and the proceeds thereof, shall be included in such sale and shall pass to
the purchaser free and clear of the provisions of this Article III.

     

    Section 3.4             No Liability in Secured
Party.  Except for negligent acts or willful misconduct,
Secured Party is hereby absolved from all liability for failure to enforce
collection of any such proceeds and from all other responsibility in connection
therewith, except the responsibility to account to Debtor for proceeds actually
received.

     

    Section 3.5             Rights of Secured
Party.  Subject to the terms and conditions contained herein,
Secured Party shall have the immediate and continuing right to demand, collect,
receive and receipt for all production, proceeds and payments assigned
hereunder.  In addition, Debtor agrees that, upon the request of
Secured Party and following an Event of Default, it will promptly execute and
deliver to Secured Party such transfer orders, payment orders, division orders
and other instruments as Secured Party may deem necessary, convenient or
appropriate in connection with the payment and delivery directly to Secured
Party of all proceeds, production, and payments assigned
hereunder.  Debtor hereby authorizes and directs that, upon the
request of Secured Party and following an Event of Default, all purchasers,
transporters and other parties now or hereafter purchasing mineral production
produced from or allocated or attributed to the Collateral or any other interest
of Debtor (whether now owned or hereafter acquired by operation of law or
otherwise), in, to or relating to the Land or to any of the estates, property,
rights or other interests included in the Collateral, or any part thereof, or
now or hereafter having in their possession or control any production from or
allocated to the Collateral or any other interest of Debtor (whether now owned
or hereafter acquired by operation of law or otherwise), in, to or relating to
the Land or to any of the estates, property, rights or other interests included
in the Collateral, or any part thereof, or now or hereafter otherwise owing
monies to Debtor under contracts and agreements herein assigned, shall, until
Secured Party directs otherwise, pay and deliver such proceeds, production or
amounts directly to Secured Party at Secured Party’s address set forth in the
introduction to this Instrument, or in such other manner as Secured Party may
direct such parties in writing, and this authorization shall continue until the
assignment of production and proceeds contained herein is released and
reassigned.  No payor making payments to Secured Party at its request
under the assignment of production and proceeds contained herein shall have any
responsibility to see to the application of any of such funds, and any party
paying or delivering proceeds, production or amounts to Secured Party under such
assignments shall be released thereby from any and all liability to Debtor to
the full extent and amount of all payments, production or proceeds so
delivered.

    
      
         

      

      
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    Section 3.6             Change of
Purchaser.  Should any purchaser taking the production from the
Collateral or any other interest of Debtor (whether now owned or hereafter
acquired by operation of law or otherwise), in, to or relating to the Land or to
any of the estates, property, rights or other interests included in the
Collateral, or any part thereof, fail to make any payment promptly to Secured
Party, in accordance with the assignment of production and proceeds herein made,
then Secured Party, to the fullest extent permissible under applicable law,
shall have the right to demand a change of purchaser and to designate another
purchaser of the ore, gold and Other Minerals included in the Collateral,
without any liability on the part of Secured Party in making such selection; and
failure of Debtor to consent to and promptly effect such change of purchaser
shall constitute an Event of Default under Article V
below.

     

    Section 3.7             No Delegation or
Assumption.  Nothing in this Instrument shall be deemed or
construed to create a delegation to or assumption by Secured Party, of the
duties and obligations of Debtor under any agreement or contract relating to the
Collateral or any portion thereof, and all of the parties to any such contract
shall continue to look to Debtor for performance of all covenants and other
obligations and the satisfaction of all representations, warranties, covenants,
indemnities and other agreements of Debtor thereunder, notwithstanding the
assignment of production and proceeds contained herein or the exercise by
Secured Party, prior to foreclosure, of any of its rights hereunder or under
applicable law.

     

    Section 3.8             Cumulative.  The
assignment of production and proceeds contained herein shall not be construed to
limit in any way the other rights and remedies of Secured Party hereunder,
including without limitation, its right to accelerate the indebtedness evidenced
by the Secured Obligations upon an Event of Default and the other rights and
remedies herein conferred, conferred in the other documents and instruments
evidencing, securing or relating to the Secured Obligations, or conferred by
operation of law.  Monies received under the assignment of production
and proceeds contained herein shall not be deemed to have been applied in
payment of the Secured Obligations unless and until such monies actually are
applied thereto by Secured Party.

     

    ARTICLE
IV

     

    Termination and
Release

     

    Section 4.1             Release Upon
Termination.  If all of the Secured Obligations shall be paid
in full and otherwise satisfied pursuant to the terms and conditions of this
Instrument and the other documents and instruments evidencing, securing or
relating to the Secured Obligations, and if Debtor shall have well and truly
performed all of the covenants and agreements herein contained, then all of the
Collateral shall revert to Debtor, the liens and security interests created by
this Instrument shall terminate and Secured Party shall, promptly after the
request of Debtor, execute, acknowledge and deliver to Debtor a request to the
Trustee to release this Instrument, and Secured Party shall execute such other
instruments as may be necessary to evidence the termination of the liens and
security interests created by this Instrument.

     

    Section 4.2             Partial
Release.  No partial release from the liens and security
interests created by this Instrument of any part of the Collateral by Trustee or
Secured Party shall in any way alter, vary or diminish the force or effect of
this Instrument or impair, release or subordinate the liens and security
interests created by this Instrument on the remainder of the
Collateral.

     

    ARTICLE
V

     

    Default

     

    Section 5.1             Events of
Default.  The occurrence of any of the following events which
continues five (5) Banking Days after written notice thereof by the Debtor shall
constitute an event of default (“Event of Default”)
and upon the occurrence thereof the liens and security interests created hereby
shall be subject to foreclosure in any manner provided for herein or provided
for by applicable law:

     

    
      
         

      

      
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    A.           Failure
of Debtor to pay as and when provided herein any fee or other amount due Secured
Party or Trustee under this Instrument when due;

     

    B.           Failure
of Debtor to perform or observe any covenant, agreement, indemnity, condition or
provision in this Instrument;

     

    C.           Any
of Debtor’s representations or warranties made in this Instrument or any
statement or certificate at any time given in writing pursuant hereto or in
connection herewith shall be false or misleading in any material respect as of
the date made or deemed made; or

     

    D.           An
“Event of Default” as defined in the Debenture shall occur.

     

    Section 5.2             Treatment of
Fixtures.  Upon the occurrence of any Event of Default, or at
any time thereafter, if deemed appropriate by Secured Party or if required by
applicable law, Secured Party may elect to treat the fixtures included in the
Collateral either as real property or as personal property, or both, and proceed
to exercise such rights as apply to the type of property selected.

     

    Section 5.3             Foreclosure.  Upon
the occurrence of any Event of Default, or at any time thereafter, in addition
to any other rights, powers and remedies herein conferred or conferred by
operation of law, Secured Party and Trustee shall have all of the rights, powers
and remedies of a secured party, a mortgagee, a beneficiary under a deed of
trust, and a public trustee under a deed of trust granted under applicable
law.  Secured Party may, with notice, proceed by one or more actions
in equity or at law for the seizure and sale of the Collateral or any portion
thereof, for the foreclosure or sale of the Collateral or any portion thereof by
judicial foreclosure by appropriate proceedings in any court of competent
jurisdiction, by a public trustee’s sale, or in any other manner then permitted
by law, for the specific performance of any covenant or agreement of Debtor
herein contained or in aid of the execution of any right, power or remedy herein
granted, or for the enforcement of any other appropriate equitable or legal
remedy and to recover judgment against Debtor.  In furtherance, and
not in limitation, thereof:

     

    A.           Deed of
Trust.  This Instrument shall constitute a trust deed under
Articles 37, 38 and 39 of Title 38 of the Colorado Revised Statutes,
as amended and as may be amended from time to time, or any future law containing
provisions under which the sale of property securing debts is authorized or
permitted; and upon an Event of Default, or any time thereafter, Trustee shall,
whenever requested by Secured Party, cause the Collateral to be sold in
accordance with the provisions thereof and hereof.

     

    B.           Mortgage.  This
Instrument shall also constitute a mortgage, and upon the occurrence of an Event
of Default and during the continuance thereof may be foreclosed as to any of the
Collateral by judicial action or in any manner then permitted by applicable law;
and to the extent, if any, required to cause this Instrument to be so effective
as a mortgage as well as a deed of trust, Debtor hereby mortgages the Collateral
to Secured Party.

     

    C.           Election.  Secured
Party may elect to treat this Instrument, from time to time and at any time,
either as a deed of trust to the public trustee or as a mortgage.  In
the event a public trustee’s sale of the Collateral shall be commenced by
Trustee, Secured Party may at any time before the sale of the Collateral, elect
to abandon the public trustee’s sale, and Secured Party may then institute a
suit for the collection of the Secured Obligations and for the foreclosure of
this Instrument by judicial action.  It is agreed that if Secured
Party should institute a suit for the foreclosure of this Instrument by judicial
action, Secured Party may at any time before the entry of a final judgment,
dismiss such suit, and then direct Trustee to cause the Collateral to be sold
pursuant to a public trustee’s sale in accordance with the provisions of this
Instrument.

    
      
         

      

      
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    D.           Additional
Actions.  This Instrument shall also constitute and may be
enforced from time to time as an assignment, chattel mortgage, contract, deed of
trust, mortgage, financing statement and security agreement, and from time to
time as any one or more thereof as appropriate under applicable
law.  Secured Party shall be entitled to all of the rights, remedies
and benefits of a secured party, mortgagee and a beneficiary granted under
applicable law; and, to the fullest extent of such law, shall be entitled to
enforce such rights, remedies and benefits.  Debtor intends and hereby
grants to Secured Party all rights, powers and remedies accorded a secured
party, mortgagee and a beneficiary under applicable law whether or not such
rights, powers and remedies are expressly granted or reserved
herein.

     

    E.           Notice, Place and Manner of
Sale.  Any sale of the Collateral under this Article V shall
take place at such place or places and otherwise in such manner and upon such
notice as may be required by law; or, in the absence of any such requirement, as
Secured Party may deem appropriate.  Debtor expressly agrees that
Secured Party or Trustee may offer the Collateral as a whole or in such parcels
or lots as Secured Party or Trustee elects, regardless of the manner in which
the Collateral may be described.

     

    F.           Postponement of
Sale.  Any sale of the Collateral conducted under this Article V may be
postponed from time to time as provided by applicable law; or, in the absence of
any such provisions, Secured Party may postpone the sale of the Collateral or
any part thereof by public announcement at the time and place of such sale, and
from time to time thereafter may further postpone such sale by public
announcement made at the time of sale fixed by the preceding
postponement.  Sale of a part of the Collateral will not exhaust the
power of sale, and sales may be made from time to time until all Collateral is
sold or the Secured Obligations are paid in full.

     

    G.           Secured Party’s Right to
Purchase.  Secured Party shall have the right to bid or to
become the purchaser at any sale made pursuant to the provisions of this Article V, and
shall have the right to credit upon the amount of the bid made therefor the
amount payable to it out of the net proceeds of such sale.

     

    H.           Conveyance to
Purchaser.  Any lawful sale of the Collateral or any portion
thereof pursuant to the provisions of this Article V will
operate to divest all right, title, interest, claim and demand of Debtor in and
to the property sold and will be a perpetual bar against Debtor and shall,
subject to applicable law, vest title in the purchaser free and clear of all
liens, security interests and encumbrances, including without limitation, liens,
security interests and encumbrances junior or subordinate to the liens, security
interests and encumbrances created by this Instrument.  Upon any
lawful sale of the Collateral or any portion thereof pursuant to the provisions
of this Article V, the
receipt by Secured Party, Trustee, the sheriff or other official or party
responsible for conducting the sale, shall be sufficient discharge to the
purchaser or purchasers at any sale for the purchase money, and such purchaser
or purchasers and the heirs, devisees, personal representatives, successors and
assigns thereof shall not, after paying such purchase money and receiving such
receipt of Secured Party, Trustee, the sheriff or such other official or party,
be obliged to see to the application thereof or be in anywise answerable for any
loss, misapplication or nonapplication thereof.  Any purchaser at a
sale will, subject to mandatory redemption periods, if any, receive immediate
possession of the Collateral purchased, and Debtor agrees that if Debtor retains
possession of the Collateral or any part thereof subsequent to such sale, Debtor
will be considered a tenant at sufferance of the purchaser, and will, if Debtor
remains in possession after demand to remove, be guilty of forcible detainer,
and will be subject to eviction and removal, forcible or otherwise, with or
without process of law and all damages to Debtor by reason thereof are hereby
expressly waived by Debtor.

    
      
         

      

      
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    Section 5.4             Personal
Property.  Upon the occurrence of any Event of Default, or at
any time thereafter, in addition to all other rights, powers and remedies herein
conferred or conferred by operation of law, Secured Party shall have all of the
rights and remedies of an assignee and secured party granted by applicable law,
including without limitation, the applicable Uniform Commercial Code as then in
effect, and shall, to the extent permitted by applicable law, have the right and
power, but not the obligation, to take possession of the personal property
included in the Collateral and any proceeds thereof wherever located, and for
that purpose Secured Party may enter upon any premises on which any or all of
such personal property is located and take possession of and operate such
personal property or remove the same therefrom.  Secured Party may
require Debtor to assemble such personal property and make it available to
Secured Party at a place to be designated by Secured Party that is reasonably
convenient to both parties.  The following presumptions shall exist
and shall be deemed conclusive with regard to the exercise by Secured Party of
any of its remedies with respect to personal property:

     

    A.           If
notice is required by applicable law, Debtor agrees that ten days’ prior written
notice of the time and place of any public sale or of the time after which any
private sale or any other intended disposition thereof is to be made shall be
deemed reasonable notice to Debtor.  No such notice is necessary if
such property is perishable, threatens to decline speedily in value or is of a
type customarily sold on a recognized market.

     

    B.           If
Secured Party in good faith believes that the Securities Act of 1933 or any
other state or federal law prohibits or restricts the customary manner of sale
or distribution of any of such property, Secured Party may sell such property
privately or in any other manner deemed advisable by Secured Party at such price
or prices as Secured Party determines in its sole discretion.  Debtor
recognizes that such prohibition or restriction may cause such property to have
less value than it otherwise would have and that, consequently, such sale or
disposition by Secured Party may result in a lower sales price than if the sale
were otherwise held.

     

    Section 5.5             Possession.  Upon
the occurrence of any Event of Default, or at any time thereafter, in addition
to all other rights, powers and remedies herein conferred or conferred by
operation of law, Secured Party shall, to the extent not prohibited by
applicable law, have the right and power, but not the obligation, to enter upon
and take immediate possession of the Collateral or any portion thereof, to
exclude Debtor therefrom, to hold, use, operate, manage, enjoy and control such
Collateral, to make all such repairs, replacements, alterations, additions and
improvements to the same as Secured Party may deem proper or expedient, to sell
all of the severed and extracted ore, gold and Other Minerals included in the
same subject to the provisions of Article III
hereof, to demand, collect and retain all other earnings, rents, issues,
profits, proceeds and other sums due or to become due with respect to such
Collateral accounting for and applying to the payment of the Secured Obligations
only the net earnings arising therefrom after charging against the receipts
therefrom all fees, costs, expenses, charges, damages and losses incurred by
reason thereof plus interest thereon without any liability to Debtor in
connection therewith.  Such possession shall at once be delivered to
Secured Party upon request, and on refusal or failure to so deliver possession,
the delivery of such possession may be enforced by Secured Party by any
appropriate civil suit or proceeding.

    
      
         

      

      
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    Section 5.6             Appointment of
Receiver.  Upon the occurrence of any Event of Default, or at
any time thereafter, in addition to all other rights, powers and remedies herein
conferred or conferred by operation of law, Secured Party shall be entitled to
the appointment of a receiver of the Collateral without the necessity of the
posting of a bond or notice; and shall, to the extent not prohibited by
applicable law, be entitled to such receiver as a matter of right, without
regard to the solvency or insolvency of Debtor, the value or adequacy of the
Collateral or the Collateral being in danger of being materially injured or
reduced in value as security by removal, destruction, deterioration,
accumulation of prior liens or otherwise; and such receiver may be appointed by
any court of competent jurisdiction upon ex parte application,
and without notice, notice being expressly waived.  Debtor does hereby
consent to the appointment of such receiver or receivers, waive any and all
defenses to such appointment, and agree not to oppose any application therefor
by Secured Party, and agree that such appointment shall in no manner impair,
prejudice or otherwise affect the rights of Secured Party under this Article V.  Nothing
herein is to be construed to deprive Secured Party of any other right, remedy or
privilege it may now or hereafter have under law to have a receiver
appointed.  Any money advanced by Secured Party in connection with any
such receivership shall be a demand obligation owing by Debtor to Secured
Party.  Any such receiver shall have all powers conferred by the court
appointing such receiver, which powers shall, to the extent not prohibited by
applicable law include, without limitation, the right to enter upon and take
immediate possession of the Collateral or any part thereof, to exclude Debtor
therefrom, to hold, use, operate, manage and control such Collateral, to make
all such repairs, replacements, alterations, additions and improvements to the
same as such receiver or Secured Party may deem proper or expedient, to lease,
sell or otherwise transfer the Collateral or any portion thereof as such
receiver or Secured Party may deem proper or expedient, to lease, sell or
otherwise transfer the Collateral or any portion thereof as such receiver or
Secured Party may deem proper or expedient, to sell all of the severed and
extracted ore, gold and Other Minerals included in the same subject to the
provisions of Article III
hereof, to demand and collect all of the other earnings, rents, issues, profits,
proceeds and other sums due or to become due with respect to such Collateral,
accounting for only the net earnings arising therefrom after charging against
the receipts therefrom all fees, costs, expenses, charges, damages and losses
incurred by reason thereof plus interest thereon without any liability to Debtor
in connection therewith which net earnings shall be turned over by such receiver
to Secured Party to be applied by Secured Party to the payment of the Secured
Obligations in the order set forth in Section 5.10.

     

    Section 5.7             Waiver by
Debtor.  To the extent not prohibited by applicable law, Debtor
agrees that Debtor shall not at any time have, invoke, utilize or assert any
right under any laws pertaining to the marshaling of assets or liens, the sale
of property in the inverse order of alienation, the exemption of homesteads, the
administration of estates of decedents, appraisement, moratorium, valuation,
stay, extension or redemption now or hereafter in force, and Debtor hereby
waives the benefit of all such laws to the fullest extent not prohibited by
applicable law.

     

    Section 5.8             Remedies
Cumulative.  All rights, powers and remedies herein conferred
are cumulative, and not exclusive, of (A) any and all other rights and
remedies herein conferred, (B) any and all rights, powers and remedies
existing at law or in equity, and (C) any and all other rights, powers and
remedies provided for in any other documents or instruments evidencing, securing
or relating to the Secured Obligations, and Secured Party shall, in addition to
the rights, powers and remedies herein conferred, be entitled to avail itself of
all such other rights, powers and remedies as may now or hereafter exist at law
or in equity for the collection of and enforcement of the Secured Obligations
and the enforcement of the warranties, representations, covenants, indemnities
and other agreements contained in this Instrument and the other documents and
instruments evidencing, securing or relating to the Secured Obligations and the
foreclosure of the liens and security interests created by this
Instrument.  Each and every such right, power and remedy may be
exercised from time to time and as often and in such order as may be deemed
expedient by Secured Party and the exercise of any such right, power or remedy
shall not be deemed a waiver of the right to exercise, at the same time or
thereafter, any other right, power or remedy.  No delay or omission by
Secured Party or by Trustee, the sheriff or other official or person in the
exercise of any right, power or remedy will impair any such right, power or
remedy or operate as a waiver thereof or of any other right, power or remedy
then or thereafter existing.

    
      
         

      

      
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    Section 5.9             Costs and
Expenses.  All fees, costs and expenses (including without
limitation, attorneys’ fees and legal expenses), incurred by or on behalf of
Secured Party or Trustee in protecting and enforcing their rights hereunder or
incident to the enforcement of this Instrument and the liens and security
interests created hereby, shall be a demand obligation owing by Debtor to
Secured Party.

     

    Section 5.10             Application of
Proceeds.  The proceeds of any sale of the Collateral or any
part thereof made pursuant to this Article V shall
be applied as may be required by applicable law, or in the absence of any such
requirements, as follows:

     

    A.           First,
to the payment of all fees, costs, expenses and penalties incident to the
enforcement of this Instrument and the liens and security interests created
hereby, including without limitation, the fees, costs and expenses described in
Section 5.9
hereof;

     

    B.           Second,
to the payment of all fees, costs, expenses and penalties remaining unpaid under
the Debenture;

     

    C.           Third,
to the payment or prepayment of accrued interest remaining unpaid on the
Debenture;

     

    D.           Fourth,
to the payment or prepayment of principal remaining unpaid on the Debenture in
such order as Secured Party may elect;

     

    E.           Fifth,
to the payment or prepayment of the Secured Obligations other than the Secured
Obligations evidenced by the Debenture in such order as Secured Party may elect;
and

     

    F.           Sixth,
the remainder, if any, shall be paid to Debtor or such other person or persons
as may be legally entitled thereto.

     

    Section 5.11           Limitation on Rights and
Waivers.  All rights, powers and remedies herein conferred
shall be exercisable by Trustee and Secured Party only to the extent not
prohibited by applicable law; and all waivers and relinquishments of rights and
similar matters shall only be effective to the extent such waivers or
relinquishments are not prohibited by applicable law.

     

    ARTICLE
VI

     

    Miscellaneous
Provisions

     

    Section 6.1             Waiver.  Any
and all covenants of Debtor in this Instrument may from time to time, be waived
by Secured Party by an instrument in writing signed by Secured Party to such
extent and in such manner as Secured Party may desire, but no such waiver will
ever affect or impair Secured Party’s rights hereunder, except to the extent
specifically stated in such written instrument.  All changes to,
amendments and modifications of this Instrument must be in writing and signed by
Secured Party.

     

    
      
         

      

      
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    Section 6.2             Severability.  If
any provision of this Instrument or of any of the instruments and documents
evidencing, securing or relating to the Secured Obligations is invalid or
unenforceable in any jurisdiction, such provision shall be fully severable from
this Instrument and the other provisions hereof and of said instruments and
documents shall remain in full force and effect in such jurisdiction and the
remaining provisions hereof shall be liberally construed in favor of Secured
Party and Trustee in order to carry out the provisions and intent
hereof.  The invalidity of any provision of this Instrument in any
jurisdiction shall not affect the validity or enforceability of any such
provision in any other jurisdiction.

     

    Section 6.3             Subrogation.  This
Instrument is made with full substitution and subrogation of Secured Party and
Trustee in and to all covenants and warranties by others heretofore given or
made with respect to the Collateral or any part thereof.

     

    Section 6.4             Financing
Statement.  This Instrument shall be deemed to be and may be
enforced from time to time as an assignment, contract, deed of trust, mortgage,
financing statement, real estate mortgage or security agreement, and from time
to time as any one or more thereof is appropriate under applicable state
law.  Debtor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Debtor at any time after the
execution of this Instrument, and hereby ratifies any thereof filed prior to the
execution of this Instrument.

     

    Section 6.5             Rate of
Interest.  Notwithstanding anything to the contrary contained
herein, no rate of interest required hereunder or under the Secured Obligations
shall exceed the maximum legal rate under applicable law, and, in the event any
such rate is found to exceed such maximum legal rate, Debtor shall be required
to pay only such maximum legal rate.

     

    Section 6.6             Governing
Law.  Insofar as permitted by otherwise applicable law, this
Instrument shall be construed under and governed by the laws of the state of
Colorado without giving effect to the conflicts of laws principles
thereof.

     

    Section 6.7             Recording.  All
recording references in the Exhibits hereto are to the official real property
records of the county in which the affected Land is located and in which records
such documents are or in the past have been customarily recorded, whether deed
records, oil and gas records, oil and gas lease records or other
records.  The references in this Instrument and in the Exhibits hereto
to liens, encumbrances and other burdens are for the purposes of defining the
nature and extent of Debtor’s warranties and shall not be deemed to ratify,
recognize or create any rights in third parties.

     

    Section 6.8             Execution in
Counterparts.  This Instrument may be executed in one or more
original counterparts.  To facilitate filing and recording, there may
be omitted from any counterpart the parts of Exhibit A containing
specific descriptions of the Collateral that relate to land located in counties
other than the county in which the particular counterpart is to be filed or
recorded.  Each counterpart shall be deemed to be an original for all
purposes, and all counterparts shall together constitute but one and the same
instrument.

     

    Section 6.9             Notices.  All
notices given hereunder shall be in writing, shall be given by certified mail,
return receipt requested, overnight courier service, telecopy, facsimile or copy
delivered by hand, and, (A) if mailed, shall be deemed received three
business days after having been deposited in a receptacle for United States
mail, postage prepaid, (B) if delivered by overnight air courier service,
shall be deemed received one business day after having been deposited with such
overnight air courier service, postage prepaid, and (C) if delivered by
telex, telecopy or hand delivery, shall be deemed received on the day the notice
is sent if the sender thereof exercises reasonable efforts to confirm receipt
thereof, in each case addressed as follows:

    
      
         

      

      
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    If to
Debtor:

     

    Hunter
Bates Mining Corporation

    900 IDS
Center

    80 South
8th Street

    Minneapolis,
MN  55402-8773

    Attention:
Mark D. Dacko

    Fax.
No.:  (612) 395-5276

     

    If to Secured
Party:

     

    Cabo
Drilling (America), Inc.

    3rd
Floor, 120 Lonsdale Avenue,

    North
Vancouver, BC  V7M 2E8, Canada

    Attention:
President

    Fax.
No.:  (604) 983-8056

     

    Any party
may, by written notice so delivered to the others, change the address or
facsimile number to which delivery shall thereafter be made.

     

    Section 6.10             Binding
Effect.  This Instrument shall bind and inure to the benefit of
the respective permitted successors and assigns of Debtor, Secured Party and
Trustee.

     

    Section 6.11             Filing.  Some
of the above described goods are or are to become fixtures on the Land described
in Exhibit
A.  This Instrument is to be filed for record in, among other
places, the real estate records of each county identified in Exhibit
A.  This instrument covers fixtures, as-extracted collateral
and minerals or the like or other substances of value which may be extracted
from the earth and the accounts relating thereto, including accounts resulting
from the sale thereof at the minehead thereof.  Debtor is the owner of
an interest of record in the real estate concerned.

     

    Executed
as of the date first above written.

     

    
      
        
          
            
              
                
                  
                    	
                            DEBTOR:

                          
	 
	
                            HUNTER
      BATES MINING CORPORATION

                          
	
                            a
      Minnesota corporation

                          
	 
      
	
                            By:  /s/
      Mark D. Dacko

                          
	 
	
                             
      Printed Name: Mark D. Dacko

                          
	
                             
      Title:
CFO

                          

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        - 20
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