Document:

Filed by sedaredgar.com - Newcastle Resources Ltd. - Exhibit 4.4

OPTION AND PURCHASE AGREEMENT 

THIS AGREEMENT made as of the 14th day of April, 2009.

BETWEEN: 

PREMIER GOLD MINES LIMITED, a
corporation incorporated under the laws of the Province of Ontario 

(the “Purchaser”) 

AND: 

NEWCASTLE RESOURCES LTD., a
corporation incorporated under the laws of the Province of Ontario 

(the “Vendor”) 

WHEREAS: 

A.        The Vendor owns
the surface and mineral rights in and to the Property (defined herein), as more
particularly described in Schedule “A” attached hereto; 

B.        The Purchaser is
involved in the exploration and development of precious minerals and is
interested in acquiring an interest in and to the Property; and 

C.        The Vendor has
agreed to grant to the Purchaser the right and option to purchase an interest in
and to the Property, subject to the Permitted Encumbrances (defined herein) and
the NSR (defined herein), on the terms and conditions herein contained. 

NOW THEREFORE THIS AGREEMENT WITNESSETH that for and in
consideration of the mutual covenants, agreements, representations and
warranties in this Agreement and other good and valuable consideration (the
receipt and sufficiency of which is acknowledged by each Party), it is hereby
agreed by and between the Parties as follows: 

	1. 	
      DEFINITIONS

	 	 	 
	1.1 	
      In this Agreement, unless something in the subject matter
      or context is inconsistent therewith:

	 	 	 
		(a) 	
      “Agreement” means this agreement, including its
      recitals and schedules, as may be amended from time to time in accordance
      with the provisions hereof.

	 	 	 
		(b) 	
      “Applicable Law” means: (i) any applicable
      federal, provincial or other laws including any statute, subordinate
      legislation or treaty, and (ii) any

2

	 		
      applicable guideline, directive, rule, standard,
      requirement, policy, order, judgment, injunction, award or decree of a
      Governmental Authority having the force of law.

	 	 	 	 
	 	(c) 	
      “Business Day” means a day other than a Saturday,
      Sunday or statutory holiday in the Province of Ontario or British
      Columbia.

	 	 	 	 
	 	(d) 	
      “Cash Consideration” has the meaning ascribed
      thereto in section 2.2(a).

	 	 	 	 
	 	(e) 	
      “Closing” means the closing of the transactions
      contemplated by this Agreement, as described in section 5.2.

	 	 	 	 
	 	(f) 	
      “Common Shares” means the common shares in the
      capital of the Purchaser.

	 	 	 	 
	 	(g) 	
      “Consideration Shares” has the meaning ascribed
      thereto in section 2.2(b).

	 	 	 	 
	 	(h) 	
      “Encumbrances” means mortgages, liens, pledges,
      charges, security interests, restrictions, claims, encumbrances, rights to
      use or acquire, ownership interests, actions, or registrations against
      title or any suits, proceedings, judgments, awards, assessments and
      reassessments or demands of any nature whatsoever which affect title to
      the Property.

	 	 	 	 
	 	(i) 	
      “Environmental Law” means any Applicable Law
      relating to the environment, including without limitation, those
      pertaining to:

	 	 	 	 
	 		(i) 	
      reporting, licensing, permitting, investigating,
      remediating and cleaning up in connection with any presence or Release, or
      the threat of the same, of Hazardous Substances, and

	 	 	 	 
	 		(ii) 	
      the manufacture, processing, distribution, use,
      treatment, storage, disposal, transport, handling and the like of
      Hazardous Substances, including those pertaining to occupational health
      and safety.

	 	 	 	 
	 	(j) 	
      “Exchange” means either the Toronto Stock Exchange
      or TSX Venture Exchange, as applicable.

	 	 	 	 
	 	(k) 	
      “Execution Date” means the date this Agreement is
      signed by the Vendor and Purchaser.

	 	 	 	 
	 	(l) 	
      “Exploration Expenditures” means all cash,
      expenses, obligations and liabilities of whatever kind or nature spent or
      incurred directly or indirectly in connection with the exploration,
      discovery, location, delineation or evaluation of any deposit of minerals
      within the Mineral Claims, including without limitation, aerial and
      surface reconnaissance, geophysical and geochemical work, geological
      mapping, drill-site preparation, road building, exploration drillings,
      trenching, excavation, laboratory work,

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      assays or metallurgical analyses, reclamation and
      restoration work on any drill sites, payment of any taxes, fees, charges,
      payments or rentals (including payments made in lieu of assessment work)
      or otherwise paid to keep the Property and Mineral Claims, or any portion
      thereof in good standing including any payment to or in respect of
      acquiring any agreement or confirmation from any holder of surface rights
      respecting the Property, overhead charges not to exceed 10% claimed by the
      Purchaser in providing supervision, management, administration and
      accounting, financing, marketing, engineering, legal and other support
      services in connection with the above-noted activities.

	 	 	 	 
	 	(m) 	
      “Governmental Authority” means any government
      (federal, provincial, municipal), judicial, or administrative body or
      person having or purporting to have jurisdiction over the Property or in
      relation to the activities contemplated under this Agreement.

	 	 	 	 
	 	(n) 	
      “Hazardous Substance” means any substance or
      material that is prohibited, controlled or regulated by any Governmental
      Authority, or pursuant to any Environmental Laws.

	 	 	 	 
	 	(o) 	
      “Indemnified Party” has the meaning set out in
      Section 9.3.

	 	 	 	 
	 	(p) 	
      “Indemnifying Party” has the meaning set out in
      Section 9.3.

	 	 	 	 
	 	(q) 	
      “Mineral Claims” means the Lennie Mineral rights
      located in the Red Lake Mining District, and granted by the Province of
      Ontario, as more particularly described in Schedule “A” attached
      hereto.

	 	 	 	 
	 	(r) 	
      “NSR” has the meaning ascribed thereto in section
      3.1.

	 	 	 	 
	 	(s) 	
      “Option” has the meaning ascribed thereto in
      Section 2.1.

	 	 	 	 
	 	(t) 	
      “Option Conditions” means payment of the Option
      Consideration in accordance with section 2.2.

	 	 	 	 
	 	(u) 	
      “Option Period” means the period of time
      commencing on the signing of this Agreement and ending on the earlier
      of:

	 	 	 	 
	 		(i) 	
      the date of the Closing;

	 	 	 	 
	 		(ii) 	
      three years after the Execution Date; and

	 	 	 	 
	 		(iii) 	
      the date of termination of this Agreement in accordance
      with section 12.

	 	 	 	 
	 	(v) 	
      “Original Option Agreement” means the Option
      Agreement dated August 31, 1995 between the Original Optionor and the
      Vendor (formerly Tri-

4

	 		
      Lateral Investments Corporation), a copy of which is
      attached hereto as Schedule “C”.

	 	 	 	 
	 	(w) 	
      “Original Optionor” means Crescent Resources Corp.
      (formerly International R.S.V. Resource Corporation), and its successors
      and assigns.

	 	 	 	 
	 	(x) 	
      “Original Royalty” means the royalty payable by
      the Vendor to the Original Optionor pursuant to the Original Optional
      Agreement.

	 	 	 	 
	 	(y) 	
      “Parties” means, collectively, the parties to this
      Agreement and “Party” means any one of them.

	 	 	 	 
	 	(z) 	
      “Permitted Encumbrances” means:

	 	 	 	 
	 		(i) 	
      reservations in Crown Patent and,

	 	 	 	 
	 		(ii) 	
      the Original Royalty.

	 	 	 	 
	 	(aa) 	
      “Property” means the Mineral Claims and surface
      rights identified in Schedule “A” attached hereto.

	 	 	 	 
	 	(bb) 	
      “Purchaser” means PREMIER GOLD MINES LIMITED, a
      corporation incorporated under the laws of the Province of
  Ontario.

	 	 	 	 
	 	(cc) 	
      “Purchaser Personnel” has the meaning ascribed
      thereto in section 5.3.

	 	 	 	 
	 	(dd) 	
      “Release” means any release or discharge of any
      Hazardous Substance including without limitation, any discharge, spray,
      injection, inoculation, abandonment, deposit, spillage, leakage, seepage,
      pouring, emission, emptying, throwing, dumping, placing, exhausting,
      escape, leach, migration, dispersal, dispensing or disposal.

	 	 	 	 
	 	(ee) 	
      “Third Party” has the meaning ascribed thereto in
      section 9.6(c).

	 	 	 	 
	 	(ff) 	
      “Third Party Claim” has the meaning ascribed
      thereto in section 9.4.

	 	 	 	 
	 	(gg) 	
      “Transfer Documents” has the meaning ascribed
      thereto in section 5.1.

	 	 	 	 
	 	(hh) 	
      “Vendor” means NEWCASTLE RESOURCES
  LTD.

	2. 	
      OPTION TO PURCHASE

	 	 
	2.1 	
      The Vendor hereby grants to the Purchaser the irrevocable
      option (the “Option”) for the duration of the Option Period to
      acquire a 100% interest in the Property free and clear of all Encumbrances
      save and except for Permitted Encumbrances and the NSR, subject to the
      terms and conditions set out in this
Agreement.

5

	2.2 	
      The Option shall be exercised by the Purchaser as
      follows:

	 	 	 
		(a) 	
      The Purchaser making the following cash payments (the
      “Cash Consideration”) to the Vendor as
follows:

	Time 	Cash Consideration 
	On the Execution
      Date 	$100,000.00 
	On or before the
      1st anniversary of the Execution Date 	$100,000.00 
	On or before the
      2nd anniversary of the Execution Date 	$100,000.00 
	On or before the
      3rd anniversary of the Execution Date 	$100,000.00 
	TOTAL: 	$400,000.00 

	 	(b) 	
      The Purchaser issuing Common Shares (the
      “Consideration Shares”) to the Vendor as
follows:

	Time 
	Consideration
      
Shares 
	On the Execution
      Date 	40,000 
	On or before the
      1st anniversary of the Execution Date 	40,000 
	On or before the
      2nd anniversary of the Execution Date 	40,000 
	On or before the
      3rd anniversary of the Execution Date 	40,000 
	TOTAL: 	160,000 

	 	(c) 	
      The Purchaser incurring the following Exploration
      Expenditures on the Property:

	Time 
	Exploration
      
Expenditures 
	Prior to the 1st
      anniversary of the Execution Date 	$250,000.00 
	Prior to the 2nd
      anniversary of the Execution Date 	$250,000.00 
	Prior to the 3rd
      anniversary of the Execution Date 	$250,000.00 
	TOTAL: 	$750,000.00 

The Cash Consideration identified in
section 2.2(a), the Consideration Shares identified in section 2.2(b) and the
Exploration Expenditures identified in section 2.2(c) are referred to as the
“Option Consideration”. 

	2.3 	
      The Parties acknowledge that the Consideration Shares may
      be subject to escrow in accordance with the rules and policies of the
      Exchange. In the event that the Consideration Shares are subject to such
      escrow, the Parties agree to place the Consideration Shares into escrow
      pursuant to an escrow agreement in a form to be mutually agreed to by the
      Parties and in accordance with the rules and policies of the
    Exchange.

6

	2.4 	
      The Purchaser may at its option accelerate any or all of
      the Cash Consideration or Share Consideration payments or Exploration
      Expenditures.

	 	 	 
	3. 	
      ROYALTY

	 	 	 
	3.1 	
      As additional consideration for the sale of the Property,
      the Purchaser will pay the Vendor a 3% net smelter return royalty
      (“NSR”), the principal terms of which are as set out in Schedule
      “B” attached hereto. Provided that the Purchaser has not acquired one-half
      (1/2) or greater of the Original Royalty, then one third (1/3) of the 3%
      NSR may be purchased by the Purchaser from the Vendor at any time during
      the Option Period in consideration of an immediate payment of $1.0 million
      in cash.

	 	 	 
	3.2 	
      The 3% NSR hereby provided to the Vendor is subject to
      the Vendor at all times being responsible for payment of the Original
      Royalty. Subject to the Purchaser complying with its obligations to remit
      the NSR to the Vendor, the Vendor shall at all times indemnify and save
      harmless the Purchaser for any liability in connection with the payment of
      the Original Royalty.

	 	 	 
	3.3 	
      In the event that the Vendor arranges to acquire all or
      any part of the Original Royalty, the Vendor shall grant the Purchaser the
      first right of refusal to acquire all or any part of the Original Royalty
      at a price to be negotiated by the Vendor and the Purchaser.

	 	 	 
	4. 	
      PURCHASER’S RIGHTS DURING OPTION PERIOD

	 	 	 
	4.1 	
      During the Option Period, and provided that the Purchaser
      is not in default of its obligations in section 2.2, the Purchaser, its
      employees, agents and independent contractors shall have the right and
      option to:

	 	 	 
		(a) 	
      enter the Property,

	 	 	 
		(b) 	
      have exclusive and quiet possession of the
    Property,

	 	 	 
		(c) 	
      do such prospecting, exploration or other development
      work as the Purchaser in its sole discretion may consider necessary,
      and

	 	 	 
		(d) 	
      remove and sell or otherwise dispose of minerals from the
      Property, but only for the purposes of assaying, analysis, bulk testing,
      or pilot plant operations.

	 	 	 
	4.2 	
      Provided the Purchaser is not in default of its
      obligations set out in section 2.2, the Purchaser may at any time during
      the Option Period abandon any one or more of the Mineral Claims which
      comprise the Property provided that:

	 	 	 
		(a) 	
      the Purchaser gives the Vendor notice in writing of any
      such abandonment,

7

	 	(b) 	
      the abandoned Mineral Claims will remain in good standing
      for a period of at least 90 days from notice of abandonment; and

	 	 	 
	 	(c) 	
      the Purchaser will execute any documents necessary
      (including an amendment to the Transfer Documents) to ensure that such
      Mineral Claims are excluded from the Property transferred to the Purchaser
      on the Closing.

		
      Irrespective of the Purchaser’s abandonment of the
      Mineral Claims pursuant to this section, the Purchaser will remain
      responsible for any environmental remediation, costs, or third party
      liability, which arises from the Purchaser’s activities on the Mineral
      Claims up to the date of the notice of abandonment.

	 	 	 
	4.3 	
      Provided the Purchaser is not in default of its
      obligations set out in section 2.2 and 5.5, at any time during the Option
      Period, the Purchaser may terminate this Agreement (and all further
      obligations to pay or provide the Option Consideration) by giving the
      Vendor 90 days notice in writing. Upon receipt of such notice this
      Agreement will be of no further force or effect provided, however that the
      Purchaser will:

	 	 	 
		(a) 	
      have the right and obligation to remove all equipment
      erected, installed or brought upon the Property by the
Purchaser,

	 	 	 
		(b) 	
      pay for any environmental clean-up or remediation costs
      or liability arising from the Purchaser’s activities on the
    Property,

	 	 	 
		(c) 	
      ensure that the Mineral Claims are in good standing for a
      period of at least 90 days after the termination of the Agreement,
    and

	 	 	 
		(d) 	
      deliver to the Vendor, all technical information,
      surveys, data, reports and other documents relating to the Property that
      was prepared by or on behalf of the Purchaser during the term of this
      Agreement.

	 	 	 
	5. 	
      CLOSING AND COVENANTS

	 	 	 
	5.1 	
      At the time of execution of this Agreement the Vendor
      shall deliver duly completed and executed transfer documents for the
      transfer of all of the Property to the Purchaser, in form and substance
      satisfactory to the Purchaser, acting reasonably including, without
      limitation, acknowledgements and directions for the electronic registry,
      and assignments or other applicable documents relating to the transfer of
      the Property (collectively, the “Transfer Documents”), which shall
      be deposited in trust with the Purchaser’s legal counsel to be held in
      escrow, subject to execution of an escrow agreement between the Parties
      and the Purchaser’s Counsel, and released to the Purchaser upon the
      payment or completion of the Option Consideration.

	 	 	 
	5.2 	
      Upon the Purchaser satisfying the conditions set out in
      this Agreement, including without limitation, the obligations set out in
      section 2.2:

8

	 	(a) 	
      the Purchaser shall without any further payment or action
      acquire and be deemed to have acquired and be vested with a 100% undivided
      right, title and interest in and to the Property, free and clear of all
      Encumbrances other than Permitted Encumbrances and the NSR; and

	 	 	 
	 	(b) 	
      the Transfer Documents shall be released to the
      Purchaser.

		
      The date the Transfer Documents are released to the
      Purchaser will be referred to as the “Closing”.

	 	 	 
	5.3 	
      The Vendor hereby acknowledges and covenants and agrees
      with the Purchaser that from the date of execution of this Agreement until
      the Closing, the Purchaser, its officers, directors, employees, agents,
      advisors and all other persons authorized by the Purchaser (the
      “Purchaser Personnel”) shall have the exclusive right to enter
      upon, take possession of, use and prospect, explore, and develop the
      Property in such manner as the Purchaser in its sole discretion may deem
      advisable and the Purchaser and the Purchaser Personnel shall be entitled
      to remove from the Property any material including, without limitation,
      geochemical samples, rock samples, drill cores, ore, concentrates, base or
      precious metals in any form, for the sole purpose of testing or otherwise
      analyzing the indicated or inferred minerals within the Mineral Claims,
      bulk testing or pilot plant operations, including without limitation,
      sampling, testing, analyzing, processing and selling, as the Purchaser may
      determine in its sole discretion.

	 	 	 
	5.4 	
      Nothing in this Agreement shall be construed as an
      attempt to assign any contract which, as a matter of law, is not
      assignable without the consent of the other party or parties thereto,
      unless such consent shall have been given, or any claim or demand
      thereunder as to which all the remedies for the enforcement thereof
      enjoyed by the Vendor would not, as a matter of law, pass to the Purchaser
      as an incident of the transfers to be made under this Agreement.

	 	 	 
	5.5 	
      During the Option Period, the Purchaser shall:

	 	 	 
		(a) 	
      maintain the Property in good standing by the doing and
      filing of assessment work or the making of payments in lieu thereof, by
      the payment of taxes and rentals, and the performance of all other actions
      which may be necessary in that regard and in order to keep such Property
      free and clear of all liens and other charges arising from the Purchaser’s
      activities thereon except those at the time contested in good faith by the
      Purchaser;

	 	 	 
		(b) 	
      duly record all exploration work carried out on the
      Property by the Purchaser as assessment work;

	 	 	 
		(c) 	
      permit the Vendor, or its representatives duly authorized
      in writing, to visit and inspect the Property at all reasonable times and
      intervals, and data

9

	 		
      obtained by the Purchaser as a result of its operations
      thereon, provided always that the Purchaser or its representatives shall
      abide by the rules and regulations laid down by the Purchaser relating to
      matters of safety and efficiency in its operations and, notwithstanding,
      the Purchaser shall be under no liability to the Vendor or its
      representatives for any personal injury, including death, or any damage to
      property other than such as might be occasioned by or through any
      negligence on the part of the Purchaser, its servants or agents;

	 	 	 
	 	(d) 	
      do all work on the Property in a good and workmanlike
      fashion and in accordance with good exploration, development, mining and
      reclamation practice and in compliance with all Applicable Laws,
      regulations, orders and ordinances of any Governmental
Authority;

	 	 	 
	 	(e) 	
      permit the Vendor, at its own expense, reasonable access
      to the results of the work done on the Property; and

	 	 	 
	 	(f) 	
      deliver to the Vendor, forthwith upon receipt thereof,
      copies of all reports, maps, assay results and other technical data
      compiled by or prepared at the direction of the Purchaser with respect to
      the Property.

	6. 	
      CONDITIONS FOR THE BENEFIT OF THE
  PURCHASER

	 	 	 
	6.1 	
      The purchase and sale of the Property is subject to the
      following conditions to be fulfilled or performed at or prior to the
      Closing, which conditions are for the exclusive benefit of the Purchaser
      and may be waived in whole or in part by the Purchaser in its sole
      discretion:

	 	 	 
		(a) 	
      The representations and warranties of the Vendor
      contained in this Agreement shall be true and correct as of the Closing
      with the same force and effect as if such representations and warranties
      had been made on and as of such date, and the Vendor shall also have
      executed and delivered a certificate to that effect. The receipt of such
      evidence and the Closing shall not be a waiver of the representations and
      warranties of the Vendor which are contained in this Agreement. Upon the
      delivery of such certificates, the representations and warranties of the
      Vendor in section 8.1 shall be deemed to have been made on and as of the
      Closing with the same force and effect as if made on and as of such
      date.

	 	 	 
		(b) 	
      The Vendor shall have fulfilled or complied with all
      covenants herein contained to be performed or caused to be performed by
      them at or prior to the Closing, and the Vendor shall have delivered a
      certificate to that effect. The receipt of such certificates and the
      Closing shall not be a waiver of the covenants of the Vendor which are
      contained in this Agreement.

10

	 	(c) 	
      All consents and authorizations and all other required
      consents and authorizations shall have been obtained on terms acceptable
      to the Purchaser, acting reasonably, in order to permit the Closing of the
      sale of the Property on the terms and conditions set out in this Agreement
      without adversely affecting, or resulting in the violation or a breach of
      or a default under or any termination, cancellation, amendment or
      acceleration of any obligation under any license, permit, lease or
      contract relating to the Property.

	 	 	 	 
	 	(d) 	
      The purchase of the Property shall not be prohibited by
      any Applicable Law nor shall any person have initiated any action or
      proceeding before any court or Governmental Authority seeking damages or
      other remedies against the Purchaser for having entered into this
      Agreement and/or seeking to enjoin the Purchaser from consummating the
      transactions contemplated by this Agreement. All necessary material
      consents, approvals, licenses, permits, orders and authorizations of, or
      registrations, declarations and filings with any Governmental Authority or
      any other person, with respect to any of the transactions contemplated by
      this Agreement shall have been duly obtained or made by the Vendor on
      terms and conditions satisfactory to the Purchaser, acting reasonably, and
      shall be in full force and effect.

	 	 	 	 
	 	(e) 	
      The Vendor shall have delivered or caused to be delivered
      to the Purchaser the following in form and substance satisfactory to the
      Purchaser, acting reasonably:

	 	 	 	 
	 		(i) 	
      at the Closing, the Transfer Documents;

	 	 	 	 
	 		(ii) 	
      at or before the Closing, evidence that all necessary
      steps and proceedings as approved by Purchaser’s legal counsel, acting
      reasonably, to permit all of the Property to be fully and validly
      transferred to the Purchaser pursuant to the terms of this Agreement have
      been taken; and

	 	 	 	 
	 		(iii) 	
      at or before the Closing, all necessary assurances,
      transfers, assignments and consents, and any other instruments necessary
      or reasonably required to effectively carry out the intent of this
      Agreement and any ancillary agreement(s) and to transfer the Property to
      the Purchaser, free and clear of all Encumbrances save and except for
      Permitted Encumbrances and the NSR in relation to the Property, pursuant
      to the terms of this Agreement.

	 	 	 	 
	 	(f) 	
      All proceedings to be taken in connection with the
      transactions contemplated by this Agreement shall be reasonably
      satisfactory in form and substance to the Purchaser and the Purchaser
      shall have received copies of all such instruments and other evidence as
      it may reasonably

11

	 		
      request in order to establish the consummation of such
      transactions and the taking of all proceedings in connection
    therewith.

	 	 	 
	 	(g) 	
      Since the date hereof, no law, proposed law, any change
      in any law, or the interpretation or enforcement of any law shall have
      been introduced, enacted or announced (including the introduction,
      enactment or announcement of any law respecting taxes or environmental
      matters or any change therein or in the interpretation or enforcement
      thereof), the effect of which will be to prevent the closing of the
      transactions contemplated herein.

	6.2 	
      If any condition, obligation or covenant of the Vendor to
      be performed hereunder at or prior to the Closing shall not have been
      fulfilled or performed by such time, the Purchaser may terminate this
      Agreement by notice in writing to the Vendor, and in such event the
      Parties shall be released from all obligations hereunder. Notwithstanding
      the foregoing, the Purchaser shall be entitled to waive compliance with
      any of such conditions, obligations or covenants in whole or in part if it
      sees fit to do so without prejudice to any of its rights of termination in
      the event of non-performance of any other condition, obligation, or
      covenant in whole or in part.

	 	 	 
	7. 	
      CONDITIONS FOR THE BENEFIT OF THE VENDOR

	 	 	 
	7.1 	
      The purchase and sale of the Property is subject to the
      following conditions to be fulfilled or performed at or prior to the
      Closing, which conditions are for the exclusive benefit of the Vendor and
      may be waived by the Vendor in its sole discretion:

	 	 	 
		(a) 	
      The representations and warranties of the Purchaser
      contained in this Agreement shall be true and correct as of the Closing
      with the same force and effect as if such representations and warranties
      had been made on and as of such date, and the Purchaser shall also have
      executed and delivered a certificate of a senior officer to that effect.
      The receipt of such evidence and the Closing shall not be a waiver of the
      representations and warranties of the Purchaser which are contained in
      this Agreement. Upon the delivery of such certificate, the representations
      and warranties of the Purchaser in section 7.2 shall be deemed to have
      been made on and as of the Closing Date with the same force and effect as
      if made on and as of such date.

	 	 	 
		(b) 	
      The Purchaser shall have fulfilled or complied with all
      covenants herein contained to be performed or caused to be performed by it
      at or prior to the Closing, including without limitation, the Purchaser’s
      covenants set out in section 5.5 and the Purchaser shall have delivered a
      certificate of a senior officer to that effect. The receipt of such
      certificate and the Closing shall not be a waiver of the covenants of the
      Purchaser which are contained in this
Agreement.

12

	 	(c) 	
      Since the date hereof, no law, proposed law, any change
      in any law, or the interpretation or enforcement of any law shall have
      been introduced, enacted or announced (including the introduction,
      enactment or announcement of any law respecting taxes or environmental
      matters or any change therein or in the interpretation or enforcement
      thereof), the effect of which will be to prevent the closing of the
      transactions contemplated herein.

	7.2 	
      If any condition, obligation or covenant of the Purchaser
      to be performed at or prior to the Closing shall not have been fulfilled
      or performed by such time, the Vendor may terminate this Agreement by
      notice in writing to the Purchaser, and in such event the Vendor and the
      Purchaser shall be released from all obligations hereunder.
      Notwithstanding the foregoing, the Vendor shall be entitled to waive
      compliance with any of such conditions, obligations or covenants in whole
      or in part if it sees fit to do so without prejudice to any of its rights
      of termination in the event of non-performance of any other condition,
      obligation, or covenant in whole or in part.

	 	 	 
	8. 	
      REPRESENTATIONS AND WARRANTIES

	 	 	 
	8.1 	
      The Vendor hereby represents and warrants to the
      Purchaser that:

	 	 	 
		(a) 	
      the Vendor is a corporation formed under the laws of the
      Province of Ontario and is validly existing and in good standing
      thereunder;

	 	 	 
		(b) 	
      at the time of entering in to this Agreement and at the
      time of Closing the transaction all necessary corporate action will have
      been taken by the Vendor to carry out its obligations hereunder;

	 	 	 
		(c) 	
      the Vendor has the right, power, authority and capacity
      to enter into and carry out its obligations under this Agreement and, save
      and except for the Permitted Encumbrances, to sell, assign and transfer to
      the Purchaser a 100% undivided interest in and to the Property, inclusive
      of surface and mineral rights, free and clear of all Encumbrances other
      than Permitted Encumbrances and the NSR;

	 	 	 
		(d) 	
      the Vendor is the registered and beneficial owner of the
      Property;

	 	 	 
		(e) 	
      to the best of the Vendor’s knowledge, conditions on and
      relating to the Property respecting all past and current operations by the
      Vendor thereon carried on by or on behalf of the Vendor is in compliance
      with all Applicable Laws;

	 	 	 
		(f) 	
      the Property (including all ores, concentrates, minerals,
      metals or products in, on or under the Property or which may be removed or
      extricated therefrom) and the Vendor’s interest therein are free and clear
      of any and all Encumbrances (including, without limitation, any order or
      judgment relating to the Property or any legal proceedings in process,
      pending or

13

	 		
      threatened which might result in any such order or
      judgment), royalties or other payments in the nature of a rent or royalty,
      or other interests of whatsoever nature or kind, recorded or unrecorded,
      save and except for Permitted Encumbrances;

	 	 	 
	 	(g) 	
      the Vendor has not received from any Governmental
      Authority any notice of, or communication relating to, any actual or
      alleged breach of any Environmental Laws, regulations, policies or
      requirements, and there are no outstanding work orders or actions required
      to be taken relating to environmental matters respecting the Property or
      any operations carried out thereon;

	 	 	 
	 	(h) 	
      none of the execution or delivery hereof or the
      performance by the Vendor of his obligations hereunder will cause default
      under, or conflict with, any provisions of any agreements to which the
      Vendor is a party;

	 	 	 
	 	(i) 	
      the Vendor is not a non-resident for the purposes of
      Section 116 of the

	 	 	 
	 		
      Income Tax Act (Canada);

	 	 	 
	 	(j) 	
      the Property are not subject to any outstanding
      obligations or liabilities whatsoever or any agreement with any third
      party, save and except for Permitted Encumbrances;

	 	 	 
	 	(k) 	
      there is no adverse claim against or challenge to the
      ownership of or title to any part of the Property nor is there any basis
      therefor;

	 	 	 
	 	(l) 	
      there are no outstanding or, to the best of the Vendor’s
      knowledge, pending actions, suits or claims affecting all or any part of
      the Property;

	 	 	 
	 	(m) 	
      to the best of the Vendor’s knowledge, all of the mineral
      claims comprising the Property have been validly and properly located,
      staked, tagged, and recorded in accordance with the Applicable Laws in
      which the Property is located and there are no disputes, threatened, now
      existing or of which the Vendor is aware, as to title or to the staking or
      recording of the Property;

	 	 	 
	 	(n) 	
      subject to the provisions of this Agreement, the Vendor
      agrees that during the currency in good standing of the Option the
      Purchaser shall have quiet enjoyment of the Property; and

	 	 	 
	 	(o) 	
      the transfer of the Property, is now and will be on
      Closing, compliant with the requirements of the Planning Act
      Ontario.

	8.2 	
      The Purchaser hereby represents and warrants to the
      Vendor that:

	 	 	 
		(a) 	
      the Purchaser is a corporation formed under the laws of
      the Province of Ontario and is validly existing and in good standing
      thereunder;

14

	 	(b) 	
      the Purchaser has the right, power and authority and
      capacity to enter into and carry out its obligations under this Agreement,
      including, without limitation, to allot and issue to the Vendor the
      Consideration Shares;

	 	 	 
	 	(c) 	
      at the time of entering into this Agreement and at the
      Time of Closing the Transaction, all necessary corporate action will have
      been taken by the Purchaser to carry out its obligations hereunder and to
      allot and authorize the issuance of the Consideration Shares to the
      Vendor, and such Consideration Shares will be validly issued and
      outstanding as fully paid and non-assessable shares in the capital of the
      Purchaser; and

	 	 	 
	 	(d) 	
      none of the execution or delivery hereof or the
      performance by the Purchaser of its obligations hereunder will cause
      default under, or conflict with, any provisions of any agreements to which
      it is a party.

The representations and warranties of
the Purchaser contained in this section 8.2 shall survive the Closing and,
notwithstanding such Closing or any investigation made by or on behalf of any of
the Vendor. 

	9. 	
      INDEMNIFICATION

	9.1 	
      The Vendor hereby agrees to indemnify and hold the
      Purchaser harmless from and against any claim, demand, action, cause of
      action, damage, loss (including lost profits), costs, liability or expense
      (including legal fees) which may be made or brought against the Purchaser
      or which the Purchaser may suffer or incur, directly or indirectly, in
      respect of as a result of, or arising out of:

	 	 	 
		(a) 	
      any non-fulfillment of any agreement or covenant on the
      part of the Vendor contained in this Agreement or any document or
      certificate given pursuant to this agreement; and

	 	 	 
		(b) 	
      any inaccuracy in or breach of any of the Vendor’s
      representations or warranties contained in this Agreement or any document
      or certificate given pursuant to this Agreement.

	 	 	 
	9.2 	
      The Purchaser hereby agrees to indemnify and hold the
      Vendor harmless from and against any claim, demand, action, cause of
      action, damage, loss (including lost profits), cost, liability or expense
      (including legal fees) which may be made or brought against the Vendor or
      which the Vendor may suffer or incur, in respect of, or arising out
    of:

	 	 	 
		(a) 	
      any non-fulfillment of any agreement or covenant on the
      part of the Purchaser contained in this Agreement or any document or
      certificate given pursuant to this Agreement;

	 	 	 
		(b) 	
      any inaccuracy in or breach of any of the Purchaser’s
      representations or warranties contained in this Agreement or any document
      or certificate given pursuant to this Agreement;
and

15

	 	(c) 	
      the Purchaser’s activities on the
  Property.

	9.3 	
      Following receipt from either the Vendor or the
      Purchaser, as the case may be (the “Indemnified Party”), of a
      written notice of a claim for indemnification which has not arisen in
      respect of a Third Party Claim, the Party who is in receipt of such notice
      (the “Indemnifying Party”) shall have 30 days to make such
      investigation of the claim as the Indemnifying Party considers necessary
      or desirable. For the purpose of such investigation, the Indemnified Party
      shall make available to the Indemnifying Party the information relied upon
      by the Indemnified Party to substantiate the claim. If the Indemnified
      Party and the Indemnifying Party agree at or prior to the expiration of
      such 30 day period (or any mutually agreed upon extension thereof) to the
      validity and amount of the claim, the Indemnifying Party shall immediately
      pay to the Indemnified Party the full agreed upon amount of the
    claim.

	 	 	 
	9.4 	
      The Indemnified Party shall notify the Indemnifying Party
      in writing as soon as reasonably practicable after being informed in
      writing that facts exist which may result in a claim originating from a
      Person other than the Indemnified Party (a “Third Party Claim”) and
      in respect of which a right of indemnification given pursuant to sections
      9.1 or 9.2 may apply. The Indemnifying Party shall have the right to
      elect, by written notice delivered to the Indemnified Party within 10 days
      of receipt by the Indemnifying Party of the notice from the Indemnified
      Party in respect of the Third Party Claim, at the sole expense of the
      Indemnifying Party, to participate in or assume control of the
      negotiation, settlement or defence of the Third Party Claim, provided
      that:

	 	 	 
		(a) 	
      such will be done at all times in a diligent and bona
      fide matter;

	 	 	 
		(b) 	
      the Indemnifying Party acknowledges in writing its
      obligation to indemnify the Indemnified Party in accordance with the terms
      contained in this Agreement in respect of that Third Party Claim;
    and

	 	 	 
		(c) 	
      the Indemnifying Party shall pay all reasonable
      out-of-pocket expenses incurred by the Indemnified Party as a result of
      such participation or assumption.

	 	 	 
	9.5 	
      If the Indemnifying Party elects to assume such control,
      the Indemnified Party shall cooperate with the Indemnifying Party and its
      counsel and shall have the right to participate in the negotiation,
      settlement or defence of such Third Party Claim at its own expense. If the
      Indemnifying Party does not so elect or, having elected to assume such
      control, thereafter fails to proceed with the settlement or defence of any
      such Third Party Claim in accordance with section 9.4, the Indemnified
      Party shall be entitled to assume such control. In such case, the
      Indemnifying Party shall cooperate where necessary with the Indemnified
      Party and its counsel in connection with such Third Party Claim and the
      Indemnifying Party shall be bound by the results obtained by the
      Indemnified Party with respect to such Third Party
Claim.

16

	9.6 	
      The obligation of the Parties to indemnify each other
      pursuant to this section 9 shall also be subject to the
  following:

	 	 	 
		(a) 	
      Notwithstanding the threshold contained in section
      9.6(b), an Indemnified Party shall only be entitled to make a claim for
      indemnification pursuant to this section 9 if written notice containing
      reasonable particulars of such claim is delivered to the Indemnifying
      Party within the time periods provided for in section 9.3.

	 	 	 
		(b) 	
      No claim for indemnification may be made until the
      aggregate value of all such claims, whether or not previously made by the
      Indemnified Party, exceeds $25,000. The parties acknowledge that this
      $25,000 threshold is not a deductible and the Indemnified Party shall be
      entitled to seek recovery of the full amount of all claims.

	 	 	 
		(c) 	
      If any Third Party Claim is of a nature such that the
      Indemnified Party is required by Applicable Law to make a payment to any
      person (a “Third Party”) with respect to such Third Party Claim
      before the completion of settlement negotiations or related legal
      proceedings, the Indemnified Party may make such payment and the
      Indemnifying Party shall, forthwith after demand by the Indemnified Party,
      reimburse the Indemnified Party for any such payment. If the amount of any
      liability under the Third Party Claim in respect of which such a payment
      was made, as finally determined, is less than the amount which was paid by
      the Indemnifying Party to the Indemnified Party, the Indemnified Party
      shall, forthwith after receipt of the difference from the Third Party, pay
      such difference to the Indemnifying Party.

	 	 	 
		(d) 	
      Except in the circumstances contemplated by section
      9.6(c) above, and whether or not the Indemnifying Party assumes control of
      the negotiation, settlement or defence of any Third Party Claim, the
      Indemnified Party shall not settle or compromise any Third Party Claim
      except with the prior written consent of the Indemnifying Party (which
      consent shall not be unreasonably withheld). A failure by the Indemnifying
      Party to respond in writing to a written request by the Indemnified Party
      for consent for a period of five (5) days or more shall be deemed a
      consent by the Indemnifying Party to such request.

	 	 	 
		(e) 	
      The Indemnifying Party and the Indemnified Party shall
      provide each other on an ongoing basis with all information which may be
      relevant to the other’s liability hereunder and shall supply copies of all
      relevant documentation promptly as they become available.

	 	 	 
		(f) 	
      Notwithstanding section 9.6(d), if the Indemnified Party
      has assumed control of the negotiation, settlement and defence of a Third
      Party Claim, the Indemnifying Party shall not settle any Third Party Claim
      or conduct any related legal or administrative proceeding in a manner
      which would, in

17

the opinion of the Indemnified Party,
acting reasonably, have a material adverse impact on the Indemnified Party,
unless the Indemnified Party fails to respond in writing to a written request by
the Indemnifying Party for consent to the proposed action by the Indemnifying
Party within five days. 

	9.7 	
      The rights or indemnification contained in this section 9
      are cumulative and are in addition to every other right or remedy of the
      Parties contained in this Agreement or otherwise, but the procedures in
      this section 9 shall apply to any claim asserted by a Party against
      another Party pursuant to this Agreement.

	 	 	 
	10. 	
      NOTICE

	 	 	 
	10.1 	
      Unless otherwise expressly provided in this Agreement,
      any notice, direction, instrument or other communication required or
      permitted to be given under this Agreement shall be in writing and shall
      be delivered in person, transmitted by facsimile or similar means of
      recorded electronic communication or sent by registered mail, charges
      prepaid, addressed as follows:

	 	 	 
		(a) 	
      to the Purchaser at:

	 	 	 
			
      PREMIER GOLD MINES LIMITED 
401 – 1113 Jade Court
      
Thunder Bay, ON P7B 6M7

	 	 	 
			
      Attention: Ewan Downie 
Facsimile: (807)
    346-0100

with a copy to: 

	 		
      Carrel+Partners LLP 
1136 Alloy Drive 
Thunder Bay,
      ON P7B 6M7

	 	 	 
	 		
      Attention: Roderick W. Johansen 
Facsimile: (807)
      346-3600

	 	 	 
	 	(b) 	
      to the Vendor at:

	 	 	 
	 		
      NEWCASTLE RESOURCES LTD. 
605 – 475 Howe Street
      
Vancouver, BC V6C 2B3

	 	 	 
	 		
      Attention: Brent Petterson 
Phone: 604-684-4312
      
Facsimile: 604-608-4740

	 	 	 
	 		
      with a copy to:

18

Clark Wilson LLP 
800 - 885 West
Georgia Street 
Vancouver, BC V6C 3H1 
Canada 
Attention: Virgil Z.
Hlus 

Facsimile: (604) 687-6314 
Phone:
(604) 687-5700

	10.2 	
      Any such notice, direction, instrument or other
      communication shall be deemed to have been given and received on the day
      on which it was delivered or transmitted (or, if such day is not a
      Business Day, on the next following Business Day) or, if mailed, on the
      third Business Day following the date of mailing; provided, however, that
      if at the time of mailing or within three Business Days thereafter there
      is or occurs a labour dispute or other event that might reasonably be
      expected to disrupt the delivery of documents by mail, any notice or other
      communication hereunder shall be delivered or transmitted by means of
      recorded electronic communication as aforesaid.

	 	 	 
	10.3 	
      Any Party may at any time change its address for service
      from time to time by giving notice to the other Parties in accordance with
      this section 10.

	 	 	 
	11. 	
      DISPUTE RESOLUTION

	 	 	 
	11.1 	
      In the event of any dispute, claim, question or
      difference arising out of or relating to this Agreement or any agreement
      executed pursuant to this Agreement or any breach hereof, the Parties
      hereto shall use their best endeavours to settle such dispute, claim,
      question or difference. To this effect, they shall consult and negotiate
      with each other, in good faith and understanding of their mutual
      interests, to reach a just and equitable solution satisfactory to all
      Parties.

	 	 	 
	11.2 	
      Except as is expressly provided in this Agreement, if the
      Parties do not reach a solution pursuant to section 11.1 within a period
      of 15 Business Days following the first notification in writing by any
      Party to another Party of any dispute, claim, question or difference, then
      upon written notice by any Party to the others, the dispute, claim,
      question or difference shall be finally settled by arbitration in
      accordance with the provisions of the Arbitration Act, 1991
      (Ontario), as amended, based upon the following:

	 	 	 
		(a) 	
      the arbitration tribunal shall consist of one arbitrator
      appointed by mutual agreement of the parties, or in the event of failure
      to agree within 10 Business Days, any Party may apply to a judge of the
      Ontario Superior Court of Justice to appoint an arbitrator. The arbitrator
      shall be qualified by education and training to pass upon the particular
      matter to be decided;

19

	 	(b) 	
      the arbitrator shall be instructed that time is of the
      essence in proceeding with his determination of any dispute, claim,
      question or difference and, in any event, the arbitration award must be
      rendered within 30 days of the submission of such dispute to
      arbitration;

	 	 	 
	 	(c) 	
      the arbitration shall take place in Thunder Bay,
      Ontario;

	 	 	 
	 	(d) 	
      the arbitration award shall be given in writing and shall
      be final and binding on the parties, and shall deal with the question of
      costs of arbitration and all matters related thereto;

	 	 	 
	 	(e) 	
      judgment upon the award rendered may be entered in any
      court having jurisdiction, or, application may be made to such court for a
      judicial recognition of the award or an order of enforcement thereof, as
      the case may be.

	12. 	
      TERMINATION OF AGREEMENT

	 	 	 
	12.1 	
      This Agreement shall terminate upon:

	 	 	 
		(a) 	
      the mutual agreement in writing of all the parties
      hereto,

	 	 	 
		(b) 	
      if the Closing does not occur on or before May 30, 2012
      or such later date as the parties may agree, or

	 	 	 
		(c) 	
      the Purchaser electing to terminate the Option in
      accordance with section 4.3 of this Agreement, or

	 	 	 
		(d) 	
      upon notice by a Party of termination of this Agreement
      due to a breach of the terms of this Agreement by another Party hereto,
      provided such breach has not been cured to the reasonable satisfaction of
      the other Party within 30 Business Days of receiving written notice
      thereof.

	 	 	 
	12.2 	
      Section 9, section 13.1 and section 13.2 of this
      Agreement shall survive the termination of this Agreement.

	 	 	 
	13. 	
      MISCELLANEOUS

	 	 	 
	13.1 	
      Each Party will be responsible for its own expenses,
      including legal and other professional fees, in connection with the
      Transaction.

	 	 	 
	13.2 	
      The Vendor agrees that they shall not disclose to any
      third party any information concerning this Agreement, the Property or the
      activities thereon, without the written consent of the Purchaser. The
      Parties shall consult with each other before issuing any press release or
      making any other public announcement with respect to this Agreement or the
      Transaction and, except as required by any Applicable Law or stock
      exchange having jurisdiction, no Party shall issue any such
  press

20

		
      release or make any such public announcement without the
      prior written consent of the others, which consent shall not be
      unreasonably withheld or delayed.

	 	 
	13.3 	
      Each of the Parties shall promptly do, make, execute,
      deliver, or cause to be done, made, executed or delivered, all such
      further acts, documents and things as the other Parties hereto may
      reasonably require from time to time after Closing at the expense of the
      requesting Party for the purpose of giving effect to this Agreement and
      shall use reasonable efforts and take all such steps as may be reasonably
      within its power to implement to their full extent the provisions of this
      Agreement.

	 	 
	13.4 	
      Time shall be of the essence of this Agreement.

	 	 
	13.5 	
      It is understood and agreed that the headings used in
      this Agreement are inserted for convenience only and shall be disregarded
      in construing this Agreement.

	 	 
	13.6 	
      This Agreement shall enure to the benefit of and be
      binding upon the Parties hereto and their respective heirs, executors,
      administrators, successors and permitted assigns.

	 	 
	13.7 	
      This Agreement shall be interpreted and governed in
      accordance with the laws of the Province of Ontario and the laws of Canada
      applicable therein.

	 	 
	13.8 	
      This Agreement constitutes the entire agreement between
      the Parties pertaining to the subject matter hereof and supersedes all
      prior and contemporaneous agreements, understandings, negotiations and
      discussions, whether oral or written, of the Parties and there are no
      warranties, representations or other agreements between the Parties in
      connection with the subject matter hereof, except as specifically set
      forth. No supplement, modification or waiver of this Agreement shall be
      binding unless executed in writing by the Parties to be bound
    thereby.

	 	 
	13.9 	
      None of the rights or obligations hereunder shall be
      assignable or transferable by any Party without the prior written consent
      of the other Parties.

	 	 
	13.10 	
      This Agreement may be executed in counterparts, each of
      which shall constitute an original and all of which taken together shall
      constitute one and the same instrument.

	 	 
	13.11 	
      Unless otherwise expressly stated all references to
      currency are references to Canadian currency.

	 	 
	13.12 	
      The provisions contained in this Agreement shall survive
      the completion of the transactions completed hereby in accordance with the
      express terms hereof and shall not merge in any conveyance, transfer,
      assignment, novation agreement or other document or instrument delivered
      pursuant hereto or in connection herewith.

22

SCHEDULE “A”

PROPERTY 

	  	          
      LENNIE CLAIMS 	PIN 
	 	 	 
	A. 	SURFACE
      RIGHTS 	  
	 	 	 
		1.       PCL
      4860 SEC DPF SRO; KRL22687, KRL21199, KRL21200,
      KRL21201, KRL21202,
      
          KRL21203,
      KRL21204, KRL21205, KRL21206 and KRL21207 Balmer, Red Lake
    	42012-0111 
	 	 	 
	B. 	MINING
      RIGHTS 	  
	 	 	 
	  	1.      PCL
      2305 SEC DPF MRO; KRL21199 Balmer, Red Lake
	42012-0099 
	 	 	 
	  	2.      PCL
      2306 SEC DPF MRO; KRL21200 Balmer, Red Lake
	42012-0100 
	 	 	 
	  	3.      PCL
      2307 SEC DPF MRO; KRL21201 Balmer, Red Lake
	42012-0101 
	 	 	 
	  	4.      PCL
      2308 SEC DPF MRO; KRL21202 Balmer, Red Lake
	42012-0106 
	 	 	 
	  	5.      PCL
      2309 SEC DPF MRO; KRL21203 Balmer, Red Lake
	42012-0105 
	 	 	 
	  	6.      PCL
      2310 SEC DPF MRO; KRL21204 Balmer, Red Lake
	42012-0104 
	 	 	 
	  	7.      PCL
      2311 SEC DPF MRO; KRL21205 Balmer, Red Lake
	42012-0109 
	 	 	 
	  	8.      PCL
      2312 DEC DPF MRO; KRL21206 Balmer, Red Lake 	42012-0110 
	 	 	 
	  	9.      PCL
      2313 SEC DPF MRO; KRL21207 Balmer, Red Lake
	42012-0103 
	 	 	 
	  	10.    PCL 2304 SEC
      DPF MRO; KRL22687 Balmer, Red Lake 	42012-0102 

23

SCHEDULE “B” 

NET SMELTER RETURN ROYALTY 

Capitalized terms used in this Schedule “B” and not otherwise
defined herein shall have the meanings set forth in the Agreement. 

	1. 	
      OBLIGATION

	 	 	 
	1.1 	
      In accordance with section 3.1 of the Agreement, the
      Purchaser will pay the Vendor, a 3% Net Smelter Return Royalty
      (“NSR”) on the minerals extracted from the Property after the
      Closing, which NSR will be calculated in accordance with this Schedule
      “B”.

	 	 	 
	1.2 	
      The Purchaser will within 60 days of the end of each
      calendar quarter, as and when any NSR are available for
    distribution:

	 	 	 
		(a) 	
      pay or cause to be paid to the Vendor the NSR;
  and

	 	 	 
		(b) 	
      deliver to the Vendor a statement indicating the amount
      of the NSR to which that Vendor is entitled.

	 	 	 
	1.3 	
      The Purchaser acknowledges that two-thirds of the NSR may
      be paid directly by the Purchaser to the Original Optionor if directed by
      the Vendor.

	 	 	 
	1.4 	
      The Parties agree that on the request of the Vendor, the
      Parties will execute and deliver such documents as may be necessary to
      permit the Vendor to record its NSR right against the Property.

	 	 	 
	2. 	
      ROYALTY

	 	 	 
	2.1 	
      “NSR” means the net proceeds actually paid to the
      Purchaser from the sale by the Purchaser of minerals mined and removed
      from the Property, after deduction of the following:

	 	 	 
		(a) 	
      smelting costs, treatment charges and penalties
      including, but not being limited to, metal losses, penalties for
      impurities and charges for refining, selling, and handling by the smelter,
      refinery or other purchaser; provided, however, in the case of leaching
      operations or other solution mining or beneficiation techniques, where the
      metal being treated is precipitated or otherwise directly derived from
      such leach solution, all processing and recovery costs incurred by the
      Purchaser, beyond the point at which the metal being treated is in
      solution, shall be considered as treatment charges;

	 	 	 
		(b) 	
      costs of handling, transporting and insuring ores,
      minerals and other material or concentrates from the Property or from a
      concentrator, whether

24

	 		
      situated on or off the Property, to a smelter, refinery
      or other place of treatment; and

	 	 	 
	 	(c) 	
      ad valorem taxes and taxes based upon production, but not
      income taxes.

		
      In the event the Purchaser commingles minerals from the
      Property with minerals from other properties, the Purchaser shall
      establish procedures, in accordance with sound mining and metallurgical
      techniques, for determining the proportional amount of the total
      recoverable metal content in the commingled minerals attributable to the
      input from each of the properties by calculating the same on a
      metallurgical basis, in accordance with sampling schedules and mining
      efficiency experience, so that production royalties applicable to minerals
      produced from the Property may reasonably be determined.

	 	 
	2.2 	
      Payment of NSR will be made quarterly within 45 days
      after the end of each fiscal quarter of the Purchaser and will be
      accompanied by unaudited financial statements pertaining to the mining
      operations carried out on the Property. Within 90 days after the end of
      each fiscal year the records relating to the calculation of NSR for such
      year will be audited by the Purchaser’s external independent auditor and
      any resulting adjustments in the payment of NSR payable to the Vendor will
      be made forthwith. A copy of said auditor’s report and accompanying
      financial information will be delivered to the Vendor within 30 days of
      the end of such 90-day period.

	 	 
	2.3 	
      Each annual audit will be final and not subject to
      adjustment unless the Vendor delivers to the Purchaser written exceptions
      in reasonable detail within six months after the Vendor receives the
      report. The Vendor, or its representative duly authorized in writing, at
      its expense, will have the right to audit the books and records of the
      Purchaser related to NSR to determine the accuracy of the report, but will
      not have access to any other books and records of the Purchaser. The audit
      will be conducted by a chartered or certified public accountant of
      recognized standing. The Purchaser will have the right to condition access
      to its books and records on execution of a written agreement by the
      auditor that all information will be held in confidence and used solely
      for purposes of audit and resolution of any disputes related to the
      report. A copy of the Vendor’s report will be delivered to the Purchaser
      upon completion, and any discrepancy between the amount actually paid by
      the Purchaser and the amount which should have been paid according to the
      Vendor’s report will be paid forthwith, one Party to the other or at the
      election of the Purchaser any difference may be referred to arbitration
      under the Dispute Resolution provisions of the Agreement.

	 	 
		
      No error in accounting or calculation of the NSR will be
      the basis for a claim of breach of fiduciary duty, or the like. or give
      rise to a claim for exemplary or punitive damages or for termination or
      rescission of the Agreements or the estate and rights in the Property held
      by the Purchaser under the terms of the
Agreement.

25

SCHEDULE “C” 

ORIGINAL OPTION AGREEMENTWWW.EXFILE.COM, INC. -- 888-775-4789 -- SCHNITZER STEEL INDUSTRIES, INC. -- EXHIBIT 10.1 TO FORM 8K

     

    
      
        
          
            	
                    

                  	
                    SCHNITZER
      STEEL INDUSTRIES, INC.

                    3200
      NW Yeon Avenue   P.O. Box 10047   Portland,
      Oregon 97296-0047

                    Phone  (503)
      224-9900   Fax  (503)
    321-2649 

                  

          

        

      

    

     

    June 29,
2009

    

    Gary A.
Schnitzer

    50
Normandie Terrace

    San
Francisco, California 94115

    

    Dear
Gary:

    

    On behalf
of Schnitzer Steel Industries, Inc. (Company), I am pleased to confirm the terms
of your return to employment with the Company.   The following
are the particulars regarding the position you are being offered:

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  Position:

                                   

                                	 	
                                  Executive
      Vice President, Business Development, subject to approval of the Audit and
      Compensation Committees of the Board of Directors.

                                   

                                  This
      position is Regular, Part-Time as defined by the Employee Handbook,
      Section 2.3, and therefore benefit eligible.

                                   

                                
	
                                  Position
      Summary:

                                   

                                	 	
                                  Your
      role will include the following responsibilities: Identifying and
      evaluating M&A opportunities and/or business investment opportunities
      for the Company, and leading/assisting as requested in the negotiation of
      agreements related to those opportunities.  Additionally, the
      Chief Executive Officer may identify other policy development actions,
      projects or activities for your personal involvement or leadership
      responsibility.

                                   

                                
	
                                  Primary
      Work Location:

                                   

                                	 	
                                  Schnitzer
      Steel Industries, Inc. – Oakland, CA offices

                                
	
                                  Reporting
      To:

                                	 	
                                  Tamara
      L. Lundgren, President and Chief Executive Officer, or other designee as
      may be assigned in the future

                                   

                                
	
                                  Rehire
      Date:

                                   

                                	 	
                                  June
      22, 2009 (“Rehire Date”).  The Consulting Agreement between you
      and the Company dated January 5, 2009 shall terminate on the Rehire
      Date.

                                   

                                
	
                                  Compensation:

                                   

                                	 	
                                  $
      9,400 bi-weekly (equivalent of $244,400 annually).

                                
	
                                  Bonus
      Eligibility:

                                	 	
                                  You
      are eligible to participate in the Company’s Annual Incentive Compensation
      Plan (AICP), which is based on our fiscal year from September 1st
      to August 31st
      provided you worked for the Company a minimum of 90 days prior to the end
      of the fiscal year.  Your bonus target is 60%, subject to the
      AICP Plan, and is based on Company and individual performance; therefore
      bonuses are not guaranteed.

                                   

                                  In
      your case, you will be an eligible participant based on the period from
      September 1, 2008 through December 31, 2008 (“Retirement Date”), and then
      from the Rehire Date through the end of the eligible period (your date of
      termination or August 31, 2009, whichever is earlier) given that you
      have

                                

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      
        Gary A.
Schnitzer, Continued

        Page 2 of
3

        June 29,
2009

      

       

    

    
      
        
          
            
              
                
                  
                    
                      	
                               

                            	 	
                              satisfied
      the 90 days of service during the Plan year. Further participation is
      subject to the terms and conditions of the AICP Plan.

                               

                            
	
                              Stock
      Options:

                            	 	
                              The
      period within which Employee may exercise any SSI stock options which are
      outstanding but unexercised on the Rehire Date is extended to the earlier
      of (1) 12 months following the date of Employee’s retirement from
      employment by the Company following the Rehire Date and (b) the 10th
      anniversary of the grant date of the option.  All other provisions of
      the Company’s 1993 Stock Incentive Plan, as amended, and the award
      agreements for the Employee’s options shall continue and govern the
      options.

                               

                            
	
                              Long-Term
      Incentive Program:

                            	 	
                              As
      a member of our senior management team, you will be recommended to
      participate in the Company’s Long-Term Incentive Program
      (“LTIP”).  However, actual participation and award levels are
      subject to approval by the Compensation Committee of the Board of
      Directors, are not automatic in nature and cannot be guaranteed until
      approved.  Further, participation is conditioned upon entering
      into the Company’s participation agreements that set forth the rules of
      the LTIP.

                               

                            
	
                              Annual
      Salary Reviews:

                            	 	
                              Normally,
      annual salary reviews are conducted in the second calendar quarter of each
      year.  You will be eligible for a salary review, provided you
      work a minimum of one full quarter prior to the review
      cycle.  Increases, if any, are based on individual performance
      and Company financial considerations; therefore salary increases are not
      guaranteed.

                               

                            
	
                              Performance
      Reviews:

                            	 	
                              Performance
      reviews are normally conducted at the end of the fiscal
      year.  At this time, individual performance and goals from the
      prior year are reviewed and new individual goals are developed for the
      upcoming year.

                               

                            
	
                              Health,
      Life, and Disability Benefits:

                               

                            	 	
                              You
      will be eligible for health (including the executive medical plan) and
      life insurance benefits as of July 1, 2009. You will be eligible for
      disability benefits as of September 1, 2009. You will be provided with
      further details regarding insurance coverages and employee
      premiums.

                               

                            
	
                              401(k):

                            	 	
                              You
      will be eligible to participate in the 401(k) plan effective July 1,
      2009.  You will be provided with further details regarding plan
      benefits.

                               

                            
	
                              Paid
      Time Off (“PTO”):

                            	 	
                              PTO
      will accrue as per the timeframes described in the Company’s Human
      Resource Policy #525.  Given that you are being rehired within
      six months of your earlier retirement, you will retain your original hire
      date of February 9, 1965. As such, you will accrue PTO based on your
      length of service from your original hire date. As additional
      consideration, the Company will provide to you a starting balance of PTO
      in the amount of 120 hours.

                               

                            
	
                              SSI
      SERBP and other
      retirement benefits:

                            	 	
                              You
      will continue to be an eligible participant in the Company’s Supplemental
      Executive Retirement Bonus Plan. Your benefit under
      the Company’s SERBP will not be increased or reduced by virtue of your
      employment under this agreement, and the Company will reimburse
      you,

                               

                            

                    

                  

                

              

            

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
          Gary A.
Schnitzer, Continued

          Page 3 of
3

          June 29,
2009

        

         

      

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	
                                               

                                            	 	
                                              on
      an after-tax basis, for any decrease in the value of any vested benefits
      to which you were entitled on the Rehire Date caused by your reemployment
      by the Company pursuant to this agreement.

                                               

                                            
	
                                              Legal
      Fees:

                                            	 	
                                              The
      Company will reimburse you up to $2,500 gross for attorney’s fees in
      connection with your independent review of this
  agreement.

                                            

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

         

      

    

    We
greatly look forward to having you rejoin our Company. However, we recognize
that you retain the option, as does the Company, of ending your employment with
the Company at any time, with or without notice and with or without cause. As
such, your employment with the Company is “at-will” and neither this letter nor
any other oral or written representations may be considered a contract for any
specific period of time.

     

    As
always, the Company reserves the right to change, alter or eliminate Company
sponsored benefits and/or programs.

     

    We hope
you find this offer acceptable and we look forward to having you rejoin our
Schnitzer team.  Should you have any questions, please do not hesitate
to contact me.

     

     

    Sincerely,

     

     

    
      	
              /s/ Tamara L. Lundgren 

                
                  
      

              

              Tamara
      L. Lundgren

              President
      and Chief Executive Officer 

            	 

    

     

     

    
      Accepted,

    

     

     

    
      	
              /s/ Gary A. Schnitzer 

                
      

              Gary
      A. Schnitzer

              Employee 

            	
              6/24/09
      

                
      

              Date 

            

    

     

    

    

    cc:  Employee
File

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