Converse Uranium Project, Exploration, Development and Mine Operating Agreement

Exhibit 10.9

CONVERSE URANIUM PROJECT
EXPLORATION, DEVELOPMENT AND
MINE OPERATING AGREEMENT

TABLE OF CONTENTS

						Page
ARTICLE I		DEFINITIONS AND CROSS-REFERENCES					1
		1.1		Definitions			1
		1.2		Cross-References			1
ARTICLE II		NAME, PURPOSES AND TERM					1
		2.1		General			1
		2.2		Name			2
		2.3		Purposes			2
		2.4		Limitation			2
		2.5		Term			2
ARTICLE III		REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS; INDEMNITIES					3
		3.1		Representations and Warranties of Both Participants			3
		3.2		Representations and Warranties of Canyon			3
		3.3		Disclosures			5
		3.4		Record Title			5
		3.5		Loss of Title			5
		3.6		Royalties, Production Taxes and Other Payments Based on Production			6
		3.7		Indemnities/Limitation of Liability			6
ARTICLE IV		RELATIONSHIP OF THE PARTICIPANTS					8
		4.1		No Partnership			8
		4.2		Federal Tax Elections and Allocations			8
		4.3		State Income Tax			8
		4.4		Tax Returns			8
		4.5		Other Business Opportunities			8
		4.6		Waiver of Rights to Partition or Other Division of Assets			9
		4.7		Transfer or Termination of Rights to Properties			9
		4.8		Implied Covenants			9
		4.9		No Third Party Beneficiary Rights			9

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ARTICLE V		CONTRIBUTIONS BY PARTICIPANTS					9
		5.1		Participants’ Initial Contributions			9
		5.2		Failure to Make Initial Contribution			11
		5.3		Additional Contributions			12
ARTICLE VI		INTERESTS OF PARTICIPANTS					13
		6.1		Initial Participating Interests			13
		6.2		Changes in Participating Interests			13
		6.3		Elimination of Minority Interest			14
		6.4		Continuing Liabilities Upon Adjustments of Participating Interests			15
		6.5		Documentation of Adjustments to Participating Interests			15
		6.6		Grant of Lien and Security Interest			16
		6.7		Subordination of Interests			16
ARTICLE VII		MANAGEMENT COMMITTEE					16
		7.1		Organization and Composition			16
		7.2		Decisions			17
		7.3		Meetings			17
		7.4		Action Without Meeting in Person			18
		7.5		Matters Requiring Approval			18
ARTICLE VIII		MANAGER					18
		8.1		Appointment			18
		8.2		Powers and Duties of Manager			19
		8.3		Standard of Care			23
		8.4		Resignation; Deemed Offer to Resign			24
		8.5		Payments To Manager			25
		8.6		Transactions With Affiliates			25
		8.7		Activities During Deadlock			25

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ARTICLE IX		PROGRAMS AND BUDGETS					25
		9.1		Initial Program and Budget			25
		9.2		Operations Pursuant to Programs and Budgets			25
		9.3		Presentation of Programs and Budgets			25
		9.4		Review and Adoption of Proposed Programs and Budgets			26
		9.5		Election to Participate			26
		9.6		Recalculation or Restoration of Reduced Interest Based on Actual Expenditures			27
		9.7		Pre-Feasibility Study Program and Budgets			28
		9.8		Completion of Pre-Feasibility Studies and Selection of Approved Alternatives			30
		9.9		Programs and Budgets for Feasibility Study			31
		9.10		Development Programs and Budgets; Project Financing			31
		9.11		Expansion or Modification Programs and Budgets			32
		9.12		Budget Overruns; Program Changes			32
		9.13		Emergency or Unexpected Expenditures			32
ARTICLE X		ACCOUNTS AND SETTLEMENTS					33
		10.1		Monthly Statements			33
		10.2		Cash Calls			33
		10.3		Failure to Meet Cash Calls			33
		10.4		Cover Payment			34
		10.5		Remedies			34
		10.6		Audits			35
ARTICLE XI		DISPOSITION OF PRODUCTION					36
		11.1		Taking In Kind			36
		11.2		Failure of Participant to Take In Kind			36
		11.3		Hedging			36

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ARTICLE XII		WITHDRAWAL AND TERMINATION					37
		12.1		Termination by Expiration or Agreement			37
		12.2		Termination by Deadlock			37
		12.3		Withdrawal			37
		12.4		Continuing Obligations and Environmental Liabilities			37
		12.5		Disposition of Assets on Termination			37
		12.6		Non-Compete Covenants			38
		12.7		Right to Data After Termination			38
		12.8		Continuing Authority			38
ARTICLE XIII		ACQUISITIONS WITHIN AREA OF INTEREST					39
		13.1		General			39
		13.2		Notice to Non-Acquiring Participant			39
		13.3		Option Exercised			39
		13.4		Option Not Exercised			40
ARTICLE XIV		ABANDONMENT AND SURRENDER OF PROPERTIES					40
ARTICLE XV		SUPPLEMENTAL BUSINESS AGREEMENT
		15.1		Supplemental Business Agreement			40
		15.2		Subdivided Area of Interest			41
ARTICLE XVI		TRANSFER OF INTEREST; PREEMPTIVE RIGHT					41
		16.1		General			41
		16.2		Limitations on Free Transferability			41
		16.3		Preemptive Right			43
ARTICLE XVII		DISPUTES					44
		17.1		Governing Law			44
		17.2		Venue			44
		17.3		Alternative Dispute Resolution			44
		17.4		Fees and Costs			45

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ARTICLE XVIII		CONFIDENTIALITY, OWNERSHIP, USE AND DISCLOSURE OF INFORMATION					45
		18.1		Business Information			45
		18.2		Participant Information			45
		18.3		Permitted Disclosure of Confidential Business Information			46
		18.4		Disclosure Required By Law			46
		18.5		Public Announcements			47
ARTICLE XIX		GENERAL PROVISIONS					47
		19.1		Notices			47
		19.2		Gender			48
		19.3		Currency			48
		19.4		Headings			48
		19.5		Waiver			48
		19.6		Modification			48
		19.7		Force Majeure			49
		19.8		Rule Against Perpetuities			49
		19.9		Further Assurances			49
		19.10		Entire Agreement; Successors and Assigns			50
		19.11		Memorandum			50
		19.12		Counterparts			50
EXHIBIT A		ASSETS AND AREA OF INTEREST
EXHIBIT B		ACCOUNTING PROCEDURES
EXHIBIT C		TAX MATTERS
EXHIBIT D		DEFINITIONS
EXHIBIT E		PRODUCTION ROYALTY
EXHIBIT F		INITIAL PROGRAM AND BUDGET

CONVERSE URANIUM PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

          This CONVERSE URANIUM PROJECT EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT (“Agreement”) is made as of January 23, 2006 (“ Effective Date”) between Canyon Resources Corporation, a Delaware corporation (“Canyon”), with an office located at 14142 Denver West Parkway, Suite 250, Golden, CO 80401 and New Horizon Uranium Corporation, a British Columbia corporation (“ Horizon”), with an office located at 2221 East Street, Suite 200, Golden, Colorado 80401.

RECITALS

          A. Canyon owns or controls certain Properties and other Assets located in or concerning Converse and Niobrara Counties, State of Wyoming, which Properties and other Assets are described further in Exhibit A and defined in Exhibit D.

          B. Horizon wishes to participate with Canyon in the exploration, evaluation and if justified the development and mining of mineral resources within the Properties, and Canyon is willing to grant such rights to Horizon.

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

ARTICLE I
DEFINITIONS AND CROSS-REFERENCES

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

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

ARTICLE II
NAME, PURPOSES AND TERM

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

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

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

	(a)		to conduct Exploration within the Area of Interest,
	(b)		to acquire additional real property and other interests within the Area of Interest including contractual rights of access and use of land, water, and utilities,
	(c)		to evaluate the possible Development and Mining of the Properties, and, if justified, to engage in Development and Mining,
	(d)		to engage in Operations on the Properties,
	(e)		to engage in marketing Products, to the extent provided by Article XI,
	(f)		to complete and satisfy all Environmental Compliance obligations and Continuing Obligations affecting the Properties, and
	(g)		to perform any other activity necessary, appropriate, or incidental to any of the foregoing.

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

          2.5 Term. The term of this Agreement shall be for thirty (30) years from the Effective Date and for so long thereafter as Products are produced from the Properties on a continuous basis, and thereafter until all materials, supplies, equipment and infrastructure have been salvaged and disposed of, any required Environmental Compliance is completed and accepted and the Participants have agreed to a final accounting, unless the Business is earlier terminated as herein provided. For purposes hereof, Products shall be deemed to be produced from the Properties on a “continuous

basis” so long as production in commercial quantities is not halted for more than one year for reasons other than Force Majeure as provided for in Section 19.7.

ARTICLE III
REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS; INDEMNITIES

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

               (a) it is a corporation duly organized and in good standing in its state or province of incorporation and it shall become qualified to do business and shall be in good standing in those states where necessary in order to carry out the purposes of this Agreement within thirty (30) calendar days following the Effective Date;

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

               (c) it will not breach any other agreement or arrangement by entering into or performing this Agreement;

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

               (e) this Agreement has been duly executed and delivered by it and is valid and binding upon it in accordance with its terms.

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

               (a) Canyon does not own any of the Properties in fee simple.

               (b) With respect to those Properties in which Canyon holds an interest under leases or other contracts: (i) Canyon is in exclusive possession of such Properties; (ii) Canyon has not received any notice of default of any of the terms or provisions of such leases or other contracts; (iii) Canyon has the authority under such leases or other contracts to perform fully its obligations under this Agreement; (iv) to Canyon’s knowledge, such leases and other contracts are valid and are in good standing; (v) Canyon has no knowledge of any act or omission or any condition on the Properties which could be considered or construed as a default under any such lease or other

contract; and (vi) to Canyon’s knowledge, such Properties are free and clear of all Encumbrances or defects in title except for those specifically identified in Paragraph 1.1 of Exhibit A.

               (c) Canyon has delivered to or made available for inspection by Horizon all Existing Data in its possession or control, and true and correct copies of all leases or other contracts relating to the Properties.

               (d) With respect to unpatented mining claims located by Canyon that are included within the Properties, except as provided in Paragraph 1.1 of Exhibit A and subject to the paramount title of the United States: (i) the unpatented mining claims were properly laid out and monumented; (ii) all required location and validation work was properly performed; (iii) location notices and certificates were properly recorded and filed with appropriate governmental agencies; (iv) all assessment work required to hold the unpatented mining claims has been performed and all Governmental Fees have been paid in a manner consistent with that required of the Manager pursuant to Subsection 8.2(k) through the assessment year ending August 31, 2006; (v) all affidavits of assessment work, evidence of payment of Governmental Fees, and other filings required to maintain the claims in good standing have been properly and timely recorded or filed with appropriate governmental agencies; (vi) the claims are free and clear of Encumbrances or defects in title; and (vii) Canyon has no knowledge of conflicting mining claims. Nothing in this Subsection, however, shall be deemed to be a representation or a warranty that any of the unpatented mining claims contains a valuable mineral deposit.

               (e) The Properties do not include any unpatented mining claims not located by Canyon.

               (f) With respect to the Properties, to Canyon’s knowledge, there are no pending or threatened actions, suits, claims or proceedings, and there have been no previous transactions affecting its interests in the Properties which have not been for fair consideration.

               (g) Except as to matters otherwise disclosed in writing to Horizon prior to the Effective Date,

                    (i) to Canyon’s knowledge, the conditions existing on or with respect to the Properties and its ownership and operation of the Properties are not in violation of any Laws (including without limitation any Environmental Laws), nor causing or permitting any damage (including Environmental Damage, as defined below) or impairment to the health, safety, or enjoyment of any person at or on the Properties or in the general vicinity of the Properties;

                    (ii) to Canyon’s knowledge, there have been no past violations by it or by any of its predecessors in title of any Environmental Laws or other Laws affecting or pertaining to the Properties, nor any past creation of damage or threatened damage to the air, soil, surface waters, groundwater, flora, fauna, or other natural resources on, about or in the general vicinity of the Properties (“Environmental Damage”); and

                    (iii) Canyon has not received inquiry from or notice of a pending investigation from any governmental agency or of any administrative or judicial proceeding concerning the violation of any Laws.

               The representations and warranties set forth above shall survive the execution and delivery of any documents of Transfer provided under this Agreement. For a representation or warranty made to a Participant’s “knowledge,” the term “knowledge” shall mean actual knowledge on the part of the officers, employees, and agents of the representing Participant or of facts that would reasonably lead to the indicated conclusions.

          3.3 Disclosures. Each of the Participants represents and warrants that at the time this Agreement is entered into and as of the Effective Date, if different, it is unaware of any material facts or circumstances that have not been disclosed in this Agreement, which should be disclosed to the other Participant in order to prevent the representations and warranties in this Article from being materially misleading. Canyon has disclosed to Horizon all information it believes to be relevant concerning the Assets, including without limitation all information in its possession concerning Environmental Liabilities, and has provided to or made available for inspection by Horizon all such information, but does not make any representation or warranty, express or implied, as to the accuracy or completeness of the information (except as provided in Section 3.2) or as to the boundaries or value of the Assets. Each Participant represents to the other that in negotiating and entering into this Agreement it has relied solely on its own appraisals and estimates as to the value of the Assets and upon its own geologic and engineering interpretations related thereto.

          3.4 Record Title. Until directed otherwise by the Management Committee, title to the Assets shall be held by Canyon for Canyon and Horizon, as their Participating Interests are determined pursuant to this Agreement.

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

          3.6 Royalties, Production Taxes and Other Payments Based on Production. The Manager shall make all required payments of production royalties, taxes based on production of Products, and other payments out of production to private parties and governmental entities with such payments subject to timely reimbursement from each Participant in proportion to its Participating Interest. The Manager undertakes to make such payments timely and otherwise in accordance with applicable laws and agreements. The Manager may require each Participant to advance its proportionate share and each Participant shall timely advance such funds. The Manager shall record all funds received in the Business Account and maintain evidence of timely payment for all such required payments. In the event that either Participant fails to advance or reimburse its proportionate share of any such required payment, the other Participant shall have the right to advance such funds to cover such payment and shall thereby become subrogated to the rights of such third party; provided, however, that the reimbursement or advance of funds by the paying Participant to cover the share of the other Participant shall not constitute acceptance by the paying Participant of any liability to such third party for the underlying obligation.

          3.7 Indemnities/Limitation of Liability.

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

                    (i) any failure by a Participant to timely advance or reimburse funds to the Manager for the Participant’s proportionate share of required royalties, production taxes and other payments out of production due to third parties as required by Section 3.6;

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

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

                    (iv) any Transfer that causes termination of the tax partnership established by Section 4.2, against which the transferring Participant shall indemnify the non-transferring Participant as provided in Article V of Exhibit C; and

                    (v) failure of a Participant or its Affiliates to comply with the preemptive right under Section 16.3.

               A Material Loss shall not be deemed to have occurred until, in the aggregate, an Indemnified Participant incurs losses, costs, damages or liabilities in excess of One Hundred Thousand Dollars ($100,000) relating to breaches of warranties, representations and covenants contained in this Agreement. Canyon’s aggregate liability to all Indemnified Participants under this Section for breaches of the representations in Subsection 3.2(g) shall not, however, exceed Five Hundred Thousand Dollars ($500,000).

               (b) If any claim or demand is asserted against an Indemnified Participant in respect of which such Indemnified Participant may be entitled to indemnification under this Agreement, written notice of such claim or demand shall promptly be given to the Indemnifying Participant. The Indemnifying Participant shall have the right, but not the obligation, by notifying the Indemnified Participant within thirty (30) days after its receipt of the notice of the claim or demand, to assume the entire control of (subject to the right of the Indemnified Participant to participate, at the Indemnified Participant’s expense and with counsel of the Indemnified Participant’s choice), the defense, compromise, or settlement of the matter, including, at the Indemnifying Participant’s expense, employment of counsel of the Indemnifying Participant’s choice. Any damages to the assets or business of the Indemnified Participant caused by a failure by the Indemnifying Participant to defend, compromise, or settle a claim or demand in a reasonable and expeditious manner requested by the Indemnified Participant, after the Indemnifying Participant has given notice that it will assume control of the defense, compromise, or settlement of the matter, shall be included in the damages for which the Indemnifying Participant shall be obligated to indemnify the Indemnified Participant. Any settlement or compromise of a matter by the Indemnifying Participant shall include a full release of claims against the Indemnified Participant which has arisen out of the indemnified claim or demand.

ARTICLE IV
RELATIONSHIP OF THE PARTICIPANTS

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

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

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

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

          4.5 Other Business Opportunities. Except as expressly provided in this Agreement, each Participant shall have the right to engage in and receive full benefits from any independent business activities or operations, whether or not competitive with this Business, without consulting with, or obligation to, the other Participant. The doctrines of “corporate opportunity” or “business opportunity” shall not be applied to this Business nor to any other activity or operation of either Participant. Neither Participant shall have any obligation to the other with respect to any opportunity to acquire any property outside the Area of Interest at any time, or, except as otherwise provided in Section 12.6, within the Area of Interest after the termination of the Business. Unless otherwise agreed in writing, neither Participant shall have any obligation to process or otherwise treat any Products in any facility owned or controlled by such Participant.

          4.6 Waiver of Rights to Partition or Other Division of Assets. The Participants hereby waive and release all rights of partition, or of sale in lieu thereof, or other division of Assets except as provided in Article XV, including any such rights provided by Law.

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

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

          4.9 No Third Party Beneficiary Rights. This Agreement shall be construed to benefit the Participants and their respective successors and assigns only, and shall not be construed to create third party beneficiary rights in any other party or in any governmental organization or agency, except to the extent required by Project Financing and as provided in Subsection 3.7(a).

ARTICLE V
CONTRIBUTIONS BY PARTICIPANTS

          5.1 Participants’ Initial Contributions.

               (a) Canyon, as its Initial Contribution, hereby contributes the Assets described in Exhibit A to the purposes of this Agreement. The amount of Two Million Dollars ($2,000,000) shall be credited to Canyon’s Equity Account on the Effective Date with respect to Canyon’s Initial Contribution.

               (b) Subject to Horizon’s right of withdrawal as set forth in Section 5.2, Horizon, as its Initial Contribution shall fund Operations under Subsection 5.1(e) totaling One Million Dollars ($1,000,000.00) on or before the third anniversary of the Effective Date, with Two Hundred Thousand Dollars ($200,000) of the Initial Contribution estimated as the minimum to be funded in the first year following the Effective Date, Three Hundred Thousand Dollars ($300,000) of the Initial Contribution estimated to be funded in the second year following the Effective Date, and the remaining Five Hundred Thousand Dollars ($500,000) of the Initial Contribution estimated to be funded in the third year following the Effective Date. All funding by Horizon in excess of the stated amount for each year shall be credited towards Horizon’s subsequent year(s) funding commitment. Horizon may elect, at any time during the period ending on the third anniversary of the Effective Date to complete the funding of the One Million Dollars ($1,000,000) Initial Contribution amount, including by lump sum payment made to the Business Account

equal to the remaining unfunded portion of the One Million Dollar ($1,000,000) Initial Contribution amount. In determining whether Horizon’s funding obligation has been met, only costs that are properly chargeable to the Business Account under Exhibit B shall be included (“Qualifying Expenses”); provided, however, Horizon shall not be entitled to an Administrative Charge during the time it is making Qualifying Expenses. Upon completion of the Initial Contribution funding, such amount shall be credited to Horizon’s Equity Account.

          (c) Upon Horizon’s completion of its Initial Contribution under Subsection 5.1(b) and concurrent with Horizon’s earn-in of its Initial Participating Interest set forth in Section 6.1, Horizon shall tender to Canyon five hundred thousand (500,000) Horizon common shares for no additional consideration. Issuance of such common shares is subject to approval of Horizon’s listing of common shares on the TSX Venture Exchange or an alternate stock exchange solely at Horizon’s election of such exchange. Should Horizon not have such approval within one hundred eighty (180) days of the Effective Date, the common shares shall be issued from Horizon’s treasury shares.

          (d) Upon Horizon’s completion of its Initial Contribution under Subsection 5.1(b) and concurrent with Horizon’s earn-in of its Initial Participating Interest set forth in Section 6.1, Horizon shall also tender to Canyon a warrant for the acquisition of an additional five hundred thousand (500,000) Horizon common shares at a price equal to one hundred twenty five percent (125%) of the then current market price of Horizon stock. The “then current market price” shall be: i) if Horizon is a public company trading on any Canadian or United States stock exchange at the date of tender, the thirty (30) day trailing average price of Horizon common shares sold on the stock exchange on which Horizon is traded on the date five (5) business days prior to tender; or ii) if Horizon is not a publicly traded company at the date of tender, the price of the most recent private placement completed for ownership in Horizon.

          (e) Subject only to the provisions of Sections 9.1 and 7.2, until Horizon has completed its Initial Contribution, and if Horizon has elected to fund Additional Contribution(s) under Subsections 5.3(a) and (b) then for so long thereafter as Horizon bears all Qualifying Expenses for Operations, Horizon shall have the sole right to determine the nature, timing, scope, extent and method of all Operations without obtaining the approval or consent of Canyon or the Management Committee. In conducting such Operations, Horizon shall exercise the standard of care set forth in Section 8.3. Horizon has agreed to fulfill the Manager’s monthly reporting requirements set forth in Section 8.2(o) beginning as of the Effective Date. With the exception of Section 8.2(o), for so long as Horizon bears all Qualifying Expenses for Operations, Horizon shall be entitled, but shall not be obligated, to exercise any of the applicable powers of the Manager in Section 8.2, except that until Horizon has completed its Initial Contribution it shall not be entitled or required to perform the activities described in Subsections 8.2(g), (i), (l) and (s) that would otherwise require consent of the Management Committee or of

Canyon. For all such Operations, Horizon shall provide for accrual of reasonably anticipated Environmental Compliance expenses, which shall constitute Qualifying Expenses, and upon completion of its Initial Contribution, Horizon shall transfer any accrued but unexpended amounts to the Environmental Compliance Fund established under Paragraph 2.14 of Exhibit B.

               (f) Canyon shall provide Horizon with written notice of any exceptions it may have to the statement of Qualifying Expenses submitted to it as provided above within three (3) months after receipt of the statement. Failure to provide such notice within the three (3) month period shall constitute acceptance by Canyon of the stated Qualifying Expenses, subject to audit provisions of Section 10.6.

          5.2 Failure to Make Initial Contribution.

               (a) Horizon’s failure to make its Initial Contribution in accordance with the provisions of this Article V, if not cured within thirty (30) days after notice by Canyon of such default, shall be deemed to be a withdrawal of Horizon from the Business, the termination of its Participating Interest hereunder and a transfer of its Participating Interest and Capital Account to Canyon. Upon such deemed withdrawal, Horizon shall have no further right, title or interest in the Assets and it shall take such actions as are necessary to ensure that all Assets are free and clear of any Encumbrances arising by, through or under it, except for such Encumbrances to which the Participants may have agreed. Subject to Subsection 5.2(b) below, Horizon’s withdrawal shall be effective upon such failure, but such withdrawal shall not relieve Horizon of its obligation to Canyon to fund Operations up to the amount of Horizon’s contractual obligations to third parties, nor shall such withdrawal relieve Horizon of its responsibility to fund and satisfy Horizon’s share of liabilities to third persons (regardless of whether such liabilities accrue before or after such withdrawal), including Environmental Liabilities, Continuing Obligations and Environmental Compliance, arising prior to Horizon’s withdrawal, which responsibility shall be based on Horizon’s initial Participating Interest.

               (b) Notwithstanding Subsection 5.2(a) above, Horizon shall have the right, within ninety (90) days after the Effective Date, to conduct an investigation and perform a baseline assessment of the environmental conditions of the Properties including sampling and analyses as Horizon deems advisable. Upon completion of such baseline assessment, Horizon shall promptly provide the report and any analytical results to Canyon. If Horizon determines that conditions may exist on the Properties which may, in Horizon’s judgment, result in violation of Environmental Laws, Horizon shall have the right to withdraw from the Business by giving written notice to Canyon of such withdrawal. Horizon’s withdrawal shall be effective upon receipt by Canyon of such notice, but such withdrawal shall not relieve Horizon of its obligation to fund Operations up to the amount of Horizon’s agreed contribution to the Initial Program and Budget. Such withdrawal shall, however, relieve Horizon of its responsibility to fund and satisfy

Horizon’s share of liabilities to third parties (regardless of whether such liabilities accrue before or after such withdrawal), including Environmental Liabilities, Continuing Obligations and Environmental Compliance, other than those arising out of Operations conducted by Horizon after the Effective Date and prior to its withdrawal. Horizon shall fund and satisfy one hundred percent (100%) of such liabilities only until it has contributed the full amount of its agreed contribution to the Initial Program and Budget. Except as provided in this Subsection and except as may be otherwise expressly provided herein, Horizon’s withdrawal shall relieve Horizon from any other obligation to make contributions hereunder.

     5.3 Additional Contribution(s). At such time as Horizon has contributed the full amount of its Initial Contribution under Subsection
5.1(b), Horizon may elect to increase its Participating Interest by funding one or both Additional Contribution(s) described in Subsections 5.3(a) and(b) below.

          (a) Horizon may elect, at its sole discretion, by advance notice to Canyon within forty-five (45) days prior to the completion of its Initial Contribution, to solely fund the next One Million Dollars ($1,000,000) of Operations within the two (2) year period following completion of the funding of its Initial Contribution and thereby earn an additional twenty percent (20%) Participating Interest. During this period of sole funding by Horizon, Canyon shall have no obligation to fund its pro rata share of expenditures and Horizon shall have the sole right and control over Operations consistent with Subsection 5.1(e). Upon completion of Horizon’s Additional Contribution described within this Subsection, One Million Dollars ($1,000,000) shall be credited to Horizon’s Equity Account, Horizon’s Participating Interest shall be increased by twenty percent (20%) to a total of seventy percent (70%), and Canyon’s Participating Interest shall be decreased by twenty percent (20%) to a total of thirty percent (30%).

          (b) Horizon may elect, at its sole discretion and by advance notice to Canyon within forty-five (45) days prior to the completion of its funding of the second One Million Dollar ($1,000,000) contribution described in Subsection 5.3(a), to acquire an additional twenty percent (20%) Participating Interest, by funding a Feasibility Study prepared by a Feasibility Contractor and thereby earning an additional five percent (5%) Participating Interest, for a total of seventy-five percent (75%) Participating Interest at the time the Feasibility Study is completed and paid for. If Horizon elects to fund a Feasibility Study prepared by a Feasibility Contractor, Horizon shall proceed with reasonable diligence to complete the same within a reasonable time following completion of Horizon’s funding of the second One Million Dollar ($1,000,000) contribution. During this period of sole funding by Horizon, Canyon shall have no obligation to fund its pro rata share of expenditures and Horizon shall have the sole right and control over Operations consistent with Subsection 5.1(e). Upon completion of such funding, an amount equal to the cost of such Feasibility Study shall be credited to Horizon’s Equity Account, Horizon’s Participating Interest shall be increased by five percent (5%) to a total of seventy-five

percent (75%), and Canyon’s Participating Interest shall be decreased by five percent (5%) to a total of twenty-five percent (25%).

          (c) Upon the Management Committee’s decision to construct a Mining facility based on the Feasibility Study and subject to applicable securities laws and regulations, Horizon shall tender to Canyon either the number of common shares of Horizon equal in value to Two Million Dollars ($2,000,000) if at that date Horizon is a publicly traded company, or a payment of Two Million Dollars ($2,000,000) if Horizon is not a publicly traded company. The price to be used for the determination of the number of such shares to be transferred to Canyon shall be consistent with the pricing mechanism set forth in Subsections 5.1(d)(i) and (ii).

          (d) If Horizon does not elect to increase its initial Participating Interest pursuant to Subsections 5.3(a) and (b), the Participants, subject to any election permitted by Subsection 9.5(a), shall be obligated to contribute funds to adopted Programs and Budgets in proportion to their respective initial Participating Interests set forth in Section 6.1.

ARTICLE VI
INTERESTS OF PARTICIPANTS

     6.1 Initial Participating Interests. Horizon’s initial Participating Interest set forth below shall become effective immediately once Horizon has fulfilled its Initial Contribution obligations set forth in Section 5.1. Once Horizon has earned its initial Participating Interest, the Participants shall have the following Participating Interests:

Canyon			50	%
Horizon			50	%

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

          (a) Upon withdrawal or deemed withdrawal as provided in Sections 5.2, 6.3, and Article XII;

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

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

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

          (e) Upon acquisition by either Participant of part or all of the Participating Interest of the other Participant, including any elections by Horizon to increase its Participating Interest by completing Additional Contribution(s) in accordance with Section 5.3.

     6.3 Elimination of Minority Interest.

          (a) At such time as a Reduced Participant’s Recalculated Participating Interest drops to less than fifteen percent (15%), its Recalculated Participating Interest shall automatically be converted to a three percent (3%) production royalty as calculated in accordance with Exhibit E (“Production Royalty”). Once converted to a Production Royalty, the Reduced Participant shall be deemed to have relinquished its entire Participating Interest free and clear of any Encumbrances arising by, through or under the Reduced Participant, except any such Encumbrances listed in Paragraph 1.1 of Exhibit A or to which the Participants have agreed. Such relinquished Participating Interest shall be deemed to have accrued automatically to the other Participant. The Reduced Participant’s Capital Account shall be transferred to the remaining Participant. Upon conversion of its Recalculated Participating Interest to the Production Royalty, and subject to Section 6.4, the Reduced Participant shall thereafter have no other further right, title, or interest in the Assets or under this Agreement, and the tax partnership established by Exhibit C shall dissolve pursuant to Paragraph 4.2 of Exhibit C. In such event, the Reduced Participant shall execute and deliver an appropriate conveyance of all of its right, title and interest in the Assets to the remaining Participant in consideration of the other Participant’s execution and delivery of a royalty deed conveying the Production Royalty.

          (b) The relinquishment, withdrawal and entitlements for which this Section provides shall be effective as of the effective date of the recalculation under Sections 9.5 or 10.5. However, if the final adjustment provided under Section 9.6 for any recalculation under Section 9.5 results in a Recalculated Participating Interest of fifteen percent (15%) or more: (i) the Recalculated Participating Interest shall be deemed, effective retroactively as of the first day of the Program Period, to have automatically revested; (ii) the Reduced Participant shall be reinstated a Participant, with all of the rights and obligations pertaining thereto; (iii) the right to the Production Royalty under Subsection 6.3(a) shall terminate; and (iv) the Manager, on behalf of the Participants, shall make any necessary reimbursements, reallocations of Products, contributions and other adjustments as provided in Subsection 9.6(d). Similarly if such final adjustment under Section 9.6 results in a Recalculated Participating interest of less than fifteen percent (15%) for a Program Period as to which the provisional calculation under Section 9.5 had not resulted

in a Participating Interest of less than fifteen percent (15%), then such Participant, at its election within thirty (30) days after notice of the final adjustment, may contribute an amount resulting in a revised final adjustment and resultant Recalculated Participating Interest of fifteen percent (15%). If no such election is made, such Participant shall be deemed to have withdrawn under the terms of Subsection 6.3(a) as of the beginning of such Program Period, and the Manager, on behalf of the Participants, shall make any necessary reimbursements, reallocations of Products, contributions, and other adjustments as provided in Subsection 9.6(d), to which such Participant may be entitled for such Program Period.

     6.4 Continuing Liabilities Upon Adjustments of Participating Interests. Any reduction or conversion of either Participant’s Participating Interest under Section 6.2 shall not relieve such Participant of its share of any liability, including, without limitation, Continuing Obligations, Environmental Liabilities and Environmental Compliance, whether arising, before or after such reduction or conversion, out of acts or omissions occurring or conditions existing prior to the Effective Date or out of Operations conducted during the term of this Agreement but prior to such reduction or conversion, regardless of when any funds may be expended to satisfy such liability. For purposes of this Section, such Participant’s share of such liability shall be equal to its Participating Interest at the time the act or omission giving rise to the liability occurred after first taking into account any reduction, readjustment and restoration of Participating Interests under Sections 6.3, 9.5, 9.6 and 10.5 (or, as to such liability arising out of acts or omissions occurring or conditions existing prior to the Effective Date, equal to such Participant’s initial Participating Interest). Should the cumulative cost of satisfying Continuing Obligations be in excess of cumulative amounts accrued or otherwise charged to the Environmental Compliance Fund as described in Exhibit B, each of the Participants shall be liable for its proportionate share (i.e., Participating Interest at the time of the act or omission giving rise to such liability occurred) after first taking into account any reduction, readjustment and restoration of Participating Interests under Sections 6.3, 9.5, 9.6 and 10.5, of the cost of satisfying such Continuing Obligations, notwithstanding that either Participant has previously withdrawn from the Business or that its Participating Interest has been reduced or converted to a Production Royalty pursuant to Subsection 6.3(a).

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

     6.6 Grant of Lien and Security Interest.

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

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

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

ARTICLE VII
MANAGEMENT COMMITTEE

     7.1 Organization and Composition. The Participants hereby establish a Management Committee to determine overall policies, objectives, procedures, methods and actions under this Agreement. The Management Committee shall consist of an equal number of member(s) appointed by Canyon and Horizon. Each Participant may appoint one or more alternates to act in the absence of a regular member. A Participant shall have at least one member until such time as its Participating Interest is converted to a Production Royalty pursuant to Section 6.3. Appointments by a Participant shall be made or changed by notice to the other members.

     7.2 Decisions. After Horizon has completed the funding of its Initial Contribution, each Participant, acting through its appointed member(s) in attendance at the meeting, shall have the votes on the Management Committee in proportion to its Participating Interest. Except for
super-majority voting matters identified herein or as otherwise provided in this Agreement, the vote of the Participant with a Participating

Interest greater than fifty percent (50%) shall determine the decisions of the Management Committee. Unanimous consent of the Participants shall be required for the following matters designated as super-majority voting matters: (i) the sale or other disposition of Assets in accordance with Section 8.2(i) and Article XIV; (ii) the initiation of litigation against third parties in accordance with Section 8.2(g); (iii) liquidation or wind-up of the Business except in accordance with Article XII; (iv) changes to the Administrative Charge provided for in Exhibit B in accordance with Section 8.5; (v) disbursements from the Business Account or other distributions to the Manager except disbursements due the Manager Participant from its share of Products, other distributions made to all Participants, or otherwise as authorized by this Agreement; and (vi) disbursements from the Environmental Compliance Fund for any purpose other than ongoing Environmental Compliance conducted during Operations, mine closure, post-Operations Environmental Compliance or Continuing Obligations.

     7.3 Meetings.

          (a) Beginning as of the Effective Date, the Management Committee shall hold regular meetings at least quarterly in Golden, Colorado, or at other agreed places. The Manager shall give fourteen (14) days notice to the Participants of such meetings. Additionally, either Participant may call a special meeting upon seven (7) days notice to the other Participant. In case of an emergency, reasonable notice of a special meeting shall suffice. There shall be a quorum if at least one member representing each Participant is present; provided, however, that if a Participant fails to attend two consecutive properly called meetings, then a quorum shall exist at the second meeting if the other Participant is represented by at least one appointed member, and a vote of such Participant shall be considered the vote required for the purposes of the conduct of all business properly noticed even if such vote would otherwise require unanimity.

          (b) If business cannot be conducted at a regular or special meeting due to the lack of a quorum, either Participant may call the next meeting upon thirty (30) days notice to the other Participant.

          (c) Each notice of a meeting shall include an itemized agenda prepared by the Manager in the case of a regular meeting or by the Participant calling the meeting in the case of a special meeting, but either Participant may add matters to the agenda at least three (3) days before the meeting or with the consent of the other Participant. The Manager shall prepare and distribute minutes of all meetings to the other Participant within fifteen (15) days after the meeting. Either Participant may electronically record the proceedings of a meeting with the consent of the other Participant. The other Participant shall sign and return or object to the minutes prepared by the Manager within thirty (30) days after receipt, and failure to do either shall be deemed acceptance of the minutes as prepared by the Manager. The minutes, when signed or deemed accepted by both Participants, shall be the official record of the decisions made by the Management

Committee. Decisions made at a Management Committee meeting shall be implemented in accordance with adopted Programs and Budgets. If a Participant timely objects to minutes proposed by the Manager, the members of the Management Committee shall seek, for a period not to exceed thirty (30) days from receipt by the Manager of notice of the objections, to agree upon minutes acceptable to both Participants. If the Management Committee does not reach agreement on the minutes of the meeting within such thirty (30) day period, the minutes of the meeting as prepared by the Manager together with the other Participant’s proposed changes shall collectively constitute the record of the meeting. If personnel employed in Operations are required to attend a Management Committee meeting, reasonable costs incurred in connection with such attendance shall be charged to the Business Account. All other costs shall be paid by the Participants individually.

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

     7.5 Matters Requiring Approval. Except as provided in Subsection 5.1(e) and as otherwise delegated to the Manager in Section 8.2, the Management Committee, acting in accordance with Section 7.2, shall have exclusive authority to determine all matters related to overall policies, objectives, procedures, methods and actions under this Agreement.

ARTICLE VIII
MANAGER

     8.1 Appointment. The Participants hereby appoint Horizon as the initial Manager with overall management responsibility for Operations. Horizon hereby agrees to serve until it resigns or has been deemed to resign as provided in Section 8.4. The Participants agree that notwithstanding Horizon’s appointment as Manager, for up to one (1) year from the Effective Date, Canyon shall continue to maintain all mining claims and lease rights and take all other actions to maintain the Properties until Horizon expressly assumes this responsibility. Horizon shall promptly reimburse expenses directly incurred by Canyon to maintain the Properties following receipt of invoice and reasonable supporting documentation.

     8.2 Powers and Duties of Manager. Subject to the terms and provisions of this Agreement, the Manager shall have the following powers and duties, which shall be discharged in accordance with adopted Programs and Budgets.

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

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

          (c) The Manager shall use reasonable efforts to: (i) purchase or otherwise acquire all material, supplies, equipment, water, utility and transportation services required for Operations, such purchases and acquisitions to be made to the extent reasonably possible on the best terms available, taking into account all of the circumstances; (ii) obtain such customary warranties and guarantees as are available in connection with such purchases and acquisitions; and (iii) keep the Assets free and clear of all Encumbrances, except any such Encumbrances listed in Paragraph 1.1 of Exhibit A and those existing at the time of, or created concurrent with, the acquisition of such Assets, or mechanic’s or materialmen’s liens (which shall be contested, released or discharged in a diligent matter) or Encumbrances specifically approved by the Management Committee. The Manager shall use its best efforts to obtain bids from multiple third party suppliers for individual, or related aggregate, purchases or purchase commitments that exceed Fifty Thousand Dollars ($50,000).

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

          (e) Except as to be performed by Canyon under Section 8.1, the Manager shall: (i) make or arrange for all payments required by leases, licenses, permits, contracts and other agreements with third parties related to the Assets; (ii) pay all taxes, assessments and like charges on Operations and Assets except taxes determined or measured by a Participant’s sales revenue or net income, and shall otherwise promptly pay and discharge expenses incurred in Operations; provided, however, that the Manager shall have the right to contest (in the courts or otherwise) the validity or amount of any taxes, assessments or charges or take other reasonable steps or proceedings to seek a reduction or readjustment prior to payment but in no event shall the Manager permit or allow title to the Assets to be lost as the result of the nonpayment of any taxes, assessments or like charges; and (iii) do all other acts reasonably necessary to maintain the Assets.

          (f) The Manager shall: (i) apply for all necessary permits, licenses and approvals; (ii) comply with all Laws; (iii) notify promptly the Management Committee of any actual or alleged substantial violations thereof; and (iv) maintain records and prepare and file all reports or notices required for or as a result of Operations. The Manager shall not be in breach of this provision if a violation has occurred in spite of the Manager’s good faith efforts to comply consistent with its standard of care under Section 8.3. In the event of any such violation, the Manager shall timely cure or dispose of such

violation on behalf of both Participants through performance, payment of fines and penalties, or both, and the cost thereof shall be charged to the Business Account.

          (g) The Manager shall prosecute and defend, but shall not initiate without unanimous consent of the Participants in accordance with Section 7.2, all litigation against third parties or administrative proceedings arising out of Operations. The non-managing Participant shall have the right to participate, at its own expense, in such litigation or administrative proceedings. The non-managing Participant shall approve in advance any settlement involving payments, commitments or obligations in excess of Fifty Thousand Dollars ($50,000) in cash or value.

          (h) The Manager shall provide insurance for the benefit of the Participants as follows or as may otherwise be determined from time to time by the Management Committee. The Manager shall, at all times while conducting Operations, comply fully with the applicable worker’s compensation laws and purchase, or provide protection for the Participants comparable to that provided under standard form insurance policies for the following risk categories: (i) comprehensive general liability and property damage with combined limits of not less than Two Million Dollars ($2,000,000) for bodily injury and property damage; (ii) automobile insurance with combined limits of not less than One Million Dollars ($1,000,000); and (iii) adequate and reasonable insurance against risk of fire and other risks ordinarily insured against in similar operations. Insurance coverage and limits shall be subject to annual review and approval by the Management Committee. Each Participant shall self-insure or purchase for its own account such additional insurance as it deems necessary.

          (i) Except as expressly authorized in Article XII, unanimous consent of both Participants in accordance with Section 7.2 is required before the Manager may: (i) abandon or surrender Properties as provided in Article XIV; (ii) dispose of Assets in any one transaction (or in any series of related transactions) having a value in excess of Fifty Thousand Dollars ($50,000); (iii) begin a liquidation or initiate wind up of the Business; or (iv) dispose of Assets necessary to achieve the purposes of the Business.

          (j) The Manager shall have the right to carry out its responsibilities hereunder through agents, Affiliates or independent contractors subject to Section 8.6 and prior disclosure to the Management Committee of the scope of responsibilities to be carried out by agents, Affiliates or independent contractors.

          (k) Except as to be performed by Canyon under Section 8.1, the Manager shall perform or cause to be performed all assessment and other work, and shall pay all Governmental Fees required by Law in order to maintain the unpatented mining claims, mill sites and tunnel sites included within the Properties. The Manager shall have the right to perform the assessment work required hereunder pursuant to a common plan of exploration and continued actual occupancy of such claims and sites shall not be

required. The Manager shall not be liable on account of any determination by any court or governmental agency that the work performed by the Manager does not constitute the required annual assessment work or occupancy for the purposes of preserving or maintaining ownership of the claims, provided that the work done is pursuant to an adopted Program and Budget and is performed in accordance with the Manager’s standard of care under Section 8.3. The Manager shall timely record with the appropriate county and file with the appropriate United States agency any required affidavits, notices of intent to hold and other documents in proper form attesting to the payment of Governmental Fees, the performance of assessment work or intent to hold the claims and sites, in each case in sufficient detail to reflect compliance with the requirements applicable to each claim and site. The Manager shall not be liable on account of any determination by any court or governmental agency that any such document submitted by the Manager does not comply with applicable requirements, provided that such document is prepared and recorded or filed in accordance with the Manager’s standard of care under Section 8.3.

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

          (m) The Manager shall keep and maintain all required accounting and financial records pursuant to the procedures described in Exhibit B and in accordance with generally accepted accounting principles used by companies based in the United States (“US GAAP”) as further described in Exhibit B, and shall ensure appropriate separation of accounts unless otherwise agreed by the Participants.

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

the Equity Account balances of the Participants, the Manager shall reasonably estimate the fair market value of all Products distributed to the Participants, and such estimated value shall be used regardless of the actual amount received by each Participant upon disposition of such Products.

          (o) Subject to Section 8.3, the Manager shall keep the Management Committee advised of all Operations by submitting in writing to the members of the Management Committee: (i) monthly progress reports that include statements of expenditures and comparisons of such expenditures to the adopted Budget; (ii) periodic summaries of data acquired; (iii) copies of reports concerning Operations; (iv) a detailed final report within sixty (60) days after completion of each Program and Budget, which shall include comparisons between actual and budgeted expenditures and comparisons between the objectives and results of Programs; and (v) such other reports as any member of the Management Committee may reasonably request. Subject to Article XVIII, at all reasonable times and upon reasonable advance notice the Manager shall provide the Management Committee, or other authorized representative of a Participant access to, and the right to inspect and, at such Participant’s cost and expense, copies of the Existing Data and all maps, drill logs and other drilling data, core, pulps, reports, surveys, assays, analyses, production reports, operations, technical, accounting and financial records, and other Business Information, in the possession of the Manager, subject to Article XVIII. In addition, the Manager shall allow authorized representatives of the non-managing Participant, at the latter’s sole risk, cost and expense, and subject to reasonable safety regulations, to inspect the Assets and Operations at all reasonable times and upon reasonable advance notice, so long as the representative does not unreasonably interfere with Operations.

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

          (q) The Manager shall undertake Continuing Obligations when and as economic and appropriate, whether before or after termination of the Business. As part of each Program and Budget submittal, the Manager shall specify the measures to be taken for performance of Continuing Obligations and the cost of such measures and shall describe the Manager’s efforts to discharge Continuing Obligations. Authorized representatives of each Participant upon reasonable advance notice shall have the right from time to time to enter the Properties to inspect work directed toward satisfaction of Continuing Obligations and audit books, records, and accounts related thereto.

          (r) The Environmental Compliance Fund shall be maintained by the Manager as a separate, interest bearing cash management account, which may include, but is not limited to, money market investments and/or in longer term investments if approved by the Management Committee. Such funds shall be used solely for Environmental Compliance and Continuing Obligations, including the committing of such funds, interests in property, insurance or bond policies, or other security to meet financial assurance obligations for the reclamation or restoration of the Properties, and for other Environmental Compliance requirements.

          (s) If Participating Interests are adjusted in accordance with this Agreement the Manager shall propose from time to time one or more methods for fair pro rata allocation of costs for Continuing Obligations.

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

     8.3 Standard of Care. The Manager shall discharge its duties under Section 8.2 and conduct all Operations in a good, workmanlike and efficient manner, in accordance with sound mining and other applicable industry standards and practices, and in accordance with Laws and with the terms and provisions of leases, licenses, permits, contracts and other agreements pertaining to the Assets. Without limiting the generality of the foregoing, all statements, reports or compilations of factual, financial or other data, and summaries of such data presented by Manager to the Management Committee shall be prepared to at least the level of detail, care and attention as those statements, reports or compilations prepared by the Manager Participant for its own use. The Manager shall not be liable to the other Participant for any act or omission resulting in damage or loss except to the extent caused by or attributable to the Manager’s willful misconduct or gross negligence. The Manager shall not be in default of any of its duties under Section 8.2 if its inability or failure to perform results from the failure of the other Participant to perform acts or to contribute amounts required of it by this Agreement.

     8.4 Resignation; Deemed Offer to Resign. The Manager may resign upon not less than six (6) months’ prior notice to the other Participant, in which case the other Participant may elect to become the new Manager by notice to the resigning Participant within sixty (60) days after receipt of the notice of resignation. The Manager shall be deemed to have resigned upon the occurrence of the event described in each of the following Subsections, with the other Participant to appoint itself or a third party as the successor Manager at a subsequently called meeting of the Management Committee, at which the Manager shall not be entitled to vote.

          (a) The aggregate Participating Interest of the other Participant and its Affiliates becomes greater than fifty percent (50%);

          (b) Except for conditions of Force Majeure, the Manager fails to perform a material obligation imposed upon it under this Agreement and such failure continues for a period of sixty (60) days after notice from the other Participant demanding performance;

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

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

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

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

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

     8.5 Payments To Manager. The Manager shall be compensated for its services and reimbursed for its costs hereunder in accordance with Exhibit B. Unanimous consent of both Participants is required to increase the Administrative Charge, described in Paragraph 2.13 of Exhibit B, due Manager under this Agreement. Except as specifically set out in this Agreement including Exhibit B or agreed to by unanimous consent of both Participants, the Manager may not collect additional costs, expenses, fees, charges, or other disbursements from the Business Account.

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

     8.7 Activities During Deadlock. If the Management Committee for any reason fails to adopt a proposed Program or Budget, the Manager shall continue Operations at levels sufficient to maintain the then current Operations and Properties. Additionally, if Mining has already been established, the Manager shall continue Mining Operations at a level comparable with the last adopted Mining Program and Budget exclusive of capital items. All of the foregoing shall be subject to the contrary direction of the Management Committee and the receipt of necessary funds.

ARTICLE IX
PROGRAMS AND BUDGETS

     9.1 Initial Program and Budget. The Initial Program and Budget to which both Participants have agreed is hereby adopted and is attached as Exhibit F.

     9.2 Operations Pursuant to Programs and Budgets. Except as otherwise provided in Subsection 5.1(e), Section 9.13, and Article XIII, Operations shall be conducted, expenses shall be incurred, and Assets shall be acquired only pursuant to adopted Programs and Budgets. Every Program and Budget adopted pursuant to this Agreement shall provide for cash accrual of reasonably anticipated Environmental Compliance expenses for all Operations contemplated under the Program and Budget in accordance with Paragraph 2.14 of Exhibit B.

     9.3 Presentation of Programs and Budgets. Proposed Programs and Budgets shall be prepared by the Manager to encompass a period of one (1) year or any other period and broken out by quarterly periods as approved by the Management Committee, and shall be submitted to the Management Committee for review and consideration. All proposed Programs and Budgets may include Exploration, Pre-Feasibility Studies, Feasibility Study, Development, Mining and Expansion or Modification Operations components, or any combination thereof, and shall be reviewed and adopted upon a vote of the Management Committee in accordance with Sections 7.2 and 9.4. Each Program and Budget adopted by the Management Committee, shall be reviewed quarterly at a meeting of the Management Committee. At least three (3) months prior to the expiration of the then current annual Program and Budget, a proposed Program and Budget for the succeeding period shall be submitted to the Management Committee for review and consideration.

     9.4 Review and Adoption of Proposed Programs and Budgets. A Participant shall be deemed to have approved and voted to adopt a proposed Plan and Budget unless it submits in writing to the Management Committee, within thirty (30) days after receipt, its rejection of or proposed modification(s) to any or all of the components of the proposed Plan and Budget. If a Participant timely submits its rejection or proposed

modification(s) to the Management Committee then the Manager working with the other Participant shall seek for a period of time not to exceed twenty (20) days to develop a complete Program and Budget acceptable to both Participants. The Manager shall then call a Management Committee meeting in accordance with Section 7.3 for purposes of reviewing and voting upon the proposed Program and Budget.

     9.5 Election to Participate.

          (a) By notice to the Management Committee within twenty (20) days after the final vote adopting a Program and Budget, and notwithstanding its vote concerning adoption of a Program and Budget, a Participant may elect to participate in the approved Program and Budget: (i) in proportion to its respective Participating Interest, (ii) in some lesser amount than its respective Participating Interest, (iii) not at all; or (iv) if a Reduced Participant, some greater amount than its Recalculated Participating Interest subject to Subsection 9.5(d). In case of an election under Subsection 9.5(a)(ii) or (iii), its Participating Interest shall be recalculated as provided in Subsection 9.5(b) below, with dilution effective as of the first day of the Program Period for the adopted Program and Budget. If a Participant fails to so notify the Management Committee of the extent to which it elects to participate, the Participant shall be deemed to have elected to contribute to such Program and Budget in proportion to its respective Participating Interest as of the beginning of the Program Period.

          (b) If a Participant elects to contribute to an adopted Program and Budget some lesser amount than in proportion to its respective Participating Interest, or not at all, and the other Participant elects to fund all or any portion of the deficiency, the Participating Interest of the Reduced Participant shall be provisionally recalculated by dividing: (A) the sum of (1) the amount credited to the Reduced Participant’s Equity Account with respect to its Initial Contribution under Section 5.1, (2) the total of all of the Reduced Participant’s contributions under Section 5.3, and (3) the amount, if any, the Reduced Participant elects to contribute to the adopted Program and Budget; by (B) the sum of (1), (2) and (3) above for both Participants; and then multiplying the result by one hundred. The Participating Interest of the other Participant shall be increased by the amount of the reduction in the Participating Interest of the Reduced Participant, and if the other Participant elects not to fund the entire deficiency, the Manager shall adjust the Program and Budget to reflect the funds available.

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

          (d) Until such time as a Reduced Participant’s Recalculated Participating Interest drops to less than fifteen percent (15%) and is converted to a Production Royalty in accordance with Section 6.3, a Reduced Participant may elect to restore its diluted Participating Interest by participating in an approved Program and Budget in an amount greater than in proportion to its Recalculated Participating Interest. At such time as the Reduced Participant has (i) funded its share of the current Program and Budget at least in proportion to its current Recalculated Participating Interest, as well as (ii) contributed funds to the Business Account equal to one hundred fifty percent (150%) or more of the amount the Reduced Participant should have contributed to any prior Program and Budget in order to maintain its Participating Interest in effect on the first day of the Program Period for such Program and Budget, the Reduced Participant’s Participating Interest shall be recalculated in accordance with Subsection 9.5(b) and shall be effective in accordance with Subsection 9.6(d).

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

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

          (b) If the Manager expended or incurred obligations that were more or less than the adopted Budget, the Participating Interests shall be recalculated pursuant to Subsection 9.5(b) by substituting each Participant’s actual contribution to the adopted Budget for that Participant’s estimated contribution at the time of the Reduced Participant’s election under Subsection 9.5(a). Such recalculation shall take into account any payments or contributions made by a Reduced Participant pursuant to Subsection 9.5(d).

          (c) If the Manager expended or incurred obligations of less than eighty percent (80%) of the adopted Budget, within twenty (20) days of receiving the Manager’s report on expenditures, the Reduced Participant may reimburse the other Participant for the difference between any amount contributed by the Reduced Participant to such adopted Program and Budget and the Reduced Participant’s proportionate share (at the Reduced Participant’s former Participating Interest) of the actual amount expended or incurred for the Program, plus interest on the difference accruing at the rate described in Section 10.3 plus three (3) percentage points. Failure of the Reduced Participant to timely reimburse shall result in dilution occurring in accordance with this Article IX and shall bar the Reduced Participant from its rights under this Subsection 9.6(c) concerning the relevant adopted Program and Budget.

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

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

     9.7 Pre-Feasibility Study Program and Budgets.

          (a) At such time as either Participant is of the good faith and reasonable opinion that economically viable Mining Operations may be possible on the Properties, the Participant may propose by written notice to the other Participant that a Pre-Feasibility Study Program and Budget component be prepared. Such proposal shall reference the data upon which the proposing Participant bases its opinion, and shall call a meeting of the Management Committee pursuant to Section 7.3. If such proposal is adopted by the Management Committee, the Manager shall cause to have prepared a Pre- Feasibility Study Program and Budget component as approved by the Management Committee and shall submit the same to the Management Committee within thirty (30) days following adoption of the proposal.

          (b) Pre-Feasibility Studies may be conducted by the Manager, Feasibility Contractors, or both, or may be conducted by the Manager and audited by Feasibility Contractors, as the Management Committee determines. A Pre-Feasibility Study Program shall include the work approved in the proposal adopted by the Management Committee, which may include some or all of the following:

               (i) analyses of various alternatives for mining, processing and treating of Products;

               (ii) analyses of alternative rates of mining, processing and treating of Products;

               (iii) analyses of alternative sites for placement of facilities (i.e., water supply facilities, transport facilities, reagent storage, offices, shops, warehouses, stock yards, explosives storage, handling facilities, housing, public facilities);

               (iv) analyses of alternatives for waste treatment and handling (including a description of each alternative of the method of tailings disposal and the location of the proposed disposal site);

               (v) estimates of recoverable proven and probable reserves of Products and of related substances, in terms of technical and economic constraints (extraction and treatment of Products), including the effect of grade, losses, and impurities, and the estimated mineral composition and content thereof, and review of mining rates commensurate with such reserves;

               (vi) analyses of environmental impacts of the various alternatives, including an analysis of the permitting, environmental liability and other Environmental Law implications of each alternative, and costs of Environmental Compliance for each alternative;

               (vii) tests to determine the efficiency of alternative extraction, recovery and processing techniques, including an estimate of water, power, and reagent consumption requirements;

               (viii) hydrologic studies related to any required use of water or dewatering; and

               (ix) other studies and analyses approved by the Management Committee.

          (c) If data results reasonably support a conclusion that further work would be unwarranted for a particular alternative, the Manager shall have no obligation to continue expenditures on other Pre-Feasibility Studies related solely to such alternative.

     9.8 Completion of Pre-Feasibility Studies and Selection of Approved Alternatives. As soon as reasonably practical following completion of all Pre-Feasibility Studies required to evaluate fully the alternatives studied, the Manager shall prepare a report summarizing all Pre-Feasibility Studies and shall submit the same to the Management Committee. Such report shall incorporate the following:

          (a) the results of the analyses of the alternatives and other matters evaluated by the Pre-Feasibility Programs;

          (b) reasonable estimates of capital costs for the Development and start-up of the facilities required by the Development and Mining alternatives evaluated (based on flowsheets, piping and instrumentation diagrams, and other major engineering diagrams), which cost estimates shall include reasonable estimates of:

               (i) capitalized pre-stripping expenditures, if an open pit or surface mine is proposed;

               (ii) expenditures required to purchase, construct and install all machinery, equipment and other facilities and infrastructure (including contingencies) required to bring a mine into commercial production, including an analysis of costs of equipment or supply contracts in lieu of Development costs for each Development and Mining alternative evaluated;

               (iii) expenditures required to perform all other related work required to commence commercial production of Products and, if applicable, process Products (including reasonable estimates of working capital requirements); and

               (iv) all other direct and indirect costs and general and administrative expenses that may be required for a proper evaluation of the Development and Mining alternatives and annual production levels evaluated. The capital cost estimates shall include a schedule of the timing of the estimated capital requirements for each alternative;

          (c) a reasonable estimate of the monthly expenditures required for the first year of Operations after completion of the capital program described in Subsection 9.8(b) for each Development alternative evaluated, and for subsequent quarters of Operations, including estimates of annual production, processing, administrative, operating and maintenance expenditures, taxes (other than income taxes), working capital requirements, royalty and purchase obligations, equipment leasing or supply contract expenditures, work commitments, Environmental Compliance costs, post- Operations Environmental Compliance and Continuing Obligations funding requirements and all other anticipated costs of such Operations. This analysis shall also include an estimate of the number of workers required to conduct such Operations for each alternative;

          (d) a review of the nature, extent and rated capacity of the mine, machinery, equipment and other facilities preliminarily estimated to be required for the purpose of producing and marketing Products under each Development and Mining alternative analyzed;

          (e) an analysis (and sensitivity analyses reasonably requested by either Participant), based on various target rates of return and price assumptions requested

by either Participant, of whether it is technically, environmentally, and economically feasible to place a prospective ore body or deposit within the Properties into commercial production for each of the Development and Mining alternatives analyzed (including a discounted cash flow rate of return investment analysis for each alternative and net present value estimate using various discount rates requested by either Participant); and

          (f) such other information as the Management Committee deems appropriate.

Within sixty (60) days after delivery of the Pre-Feasibility Study summary to the Participants, a Management Committee meeting shall be convened for the purposes of reviewing the Pre-Feasibility Study summary and selecting one or more Approved Alternatives, if any.

     9.9 Programs and Budgets for Feasibility Study. Within ninety (90) days following the selection of an Approved Alternative, the Manager shall submit to the Management Committee a Program and a Budget component, which shall include necessary Operations, for the preparation of a Feasibility Study. A Feasibility Study shall be prepared by Feasibility Contractors.

     9.10 Development Programs and Budgets; Project Financing.

          (a) Unless otherwise determined by the Management Committee, the Manager shall not submit to the Management Committee a Program and Budget component including Development of the mine described in a completed Feasibility Study until ninety (90) days following the receipt by Manager of a favorable Feasibility Study. The Program and Budget, which includes Development of the mine described in the completed Feasibility Study, shall be based on the estimated cost of Development described in the Feasibility Study for the Approved Alternative, unless otherwise directed by the Management Committee.

          (b) Promptly following adoption of the Program and Budget, which includes Development as described in a completed Feasibility Study the Manager shall submit to the Management Committee a report on material bids received for Development work (“Bid Report”). If bids described in the Bid Report result in the aggregate cost of Development work exceeding one hundred twenty percent (120%) of the Development cost estimates that formed the basis of the Development component of the adopted Program and Budget, the Program and Budget, which includes relevant Development, shall be deemed to have been resubmitted to the Management Committee based on the aggregate costs as described in the Bid Report on the date of receipt of the Bid Report and shall be reviewed and adopted in accordance with Sections 7.2 and 9.4.

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

     9.11 Expansion or Modification Programs and Budgets. Any Program and Budget proposed by the Manager involving Expansion or Modification shall be based on a Feasibility Study prepared by the Manager, Feasibility Contractors, or both, or prepared by the Manager and audited by Feasibility Contractors, as the Management Committee determines. The Program and Budget, which include Expansion or Modification, shall be submitted for review and approval by the Management Committee within ninety (90) days following receipt by the Manager of such Feasibility Study.

     9.12 Budget Overruns; Program Changes. For Programs and Budgets adopted after completion of Horizon’s Initial Contribution, the Manager shall immediately notify the Management Committee of any material departure from an adopted Program and Budget. If the Manager exceeds an adopted Budget by more than twenty percent (20%) in the aggregate, then the excess over ten percent (10%), except to the extent caused by a Force Majeure condition, emergency or unexpected expenditure made pursuant to Section 9.13 or unless otherwise authorized or ratified by the Management Committee, shall be for the sole account of the Manager and such excess shall not be included in the calculations of the Participating Interests nor deemed a contribution under this Agreement. Budget overruns of twenty percent (20%) or less in the aggregate shall be borne by the Participants in proportion to their respective Participating Interests.

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

ARTICLE X
ACCOUNTS AND SETTLEMENTS

     10.1 Monthly Statements. The Manager shall promptly submit to the Management Committee monthly statements of account reflecting in reasonable detail the charges and credits to the Business Account during the preceding month in accordance with Section 8.3.

     10.2 Cash Calls. Following Horizon’s Initial Contribution under Subsection 5.1(b) and any Additional Contribution(s) it elects under Section 5.3, on the basis of each adopted Program and Budget, the Manager shall submit prior to the last day of each month a billing for estimated cash requirements for the next month. Within ten (10) days after receipt of each billing, or a billing made pursuant to Section 9.13 or 12.4, each Participant shall advance its proportionate share of such cash requirements. The Manager shall record all funds received in the Business Account. All funds received from a Participant in excess of the Participant’s pro rata cash requirement or other funding commitment under this Agreement, or in excess of actual Program expenditures shall be credited towards the Participant’s future pro rata cash requirement or other funding commitment. The Manager shall at all times maintain a cash balance approximately equal to the rate of disbursement for up to ninety (90) days. All funds in excess of immediate cash requirements shall be invested by the Manager for the benefit of the Business in cash management accounts and investments selected at the discretion of the Manager, which accounts may include, but are not limited to, money market investments and money market funds.

     10.3 Failure to Meet Cash Calls. A Participant that fails to meet cash calls in the amount and at the times specified in Section 10.2 shall be in default, and the amounts of the defaulted cash call shall bear interest from the date due at an annual rate equal to two (2) percentage points over the Prime Rate, but in no event shall the rate of interest exceed the maximum permitted by Law. Such interest shall accrue to the benefit of and be payable to the non-defaulting Participant, but shall not be deemed as amounts contributed by the non-defaulting Participant in the event dilution occurs in accordance with Article VI. In addition to any other rights and remedies available to it by Law, the non-defaulting Participant shall have those other rights, remedies, and elections specified in Sections 10.4 and 10.5.

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

individual Cover Payment shall apply to the aggregated Cover Payments. The failure to repay such loan upon demand shall be a default.

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

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

          (b) The non-defaulting Participant may elect to have the defaulting Participant’s Participating Interest diluted or eliminated. The Reduced Participant’s Participating Interest shall be recalculated by dividing: (X) the sum of (1) the value of the Reduced Participant’s Initial Contribution under Section 5.1, (2) the total of all of the Reduced Participant’s contributions under Section 5.3, and (3) the amount, if any, the Reduced Participant contributed to the adopted Program and Budget with respect to which the default occurred; by (Y) the sum of (1), (2) and (3) above for both Participants; and then multiplying the result by one hundred. Dilution under this Subsection 10.5(b) shall be effective as of the date of the original default, and Section 9.6 shall not apply. The amount of any Cover Payment under Section 10.4 and interest thereon, or any interest accrued in accordance with Section 10.3, shall be deemed to be amounts contributed by the non-defaulting Participant, and not as amounts contributed by the defaulting Participant.

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

     10.6 Audits.

          (a) After completion of Horizon’s Initial Contribution, within six (6) months after the end of each calendar year, at the request of a Participant, an audit shall be completed by certified public accountants who are independent of the Manager and reasonably acceptable to both Participants. The audit shall be conducted in accordance with generally accepted auditing standards and shall cover all books and records maintained by the Manager pursuant to this Agreement, all Assets and Encumbrances, and all transactions and Operations conducted during such calendar year, including production and inventory records and all costs for which the Manager sought reimbursement under this Agreement, together with all other matters customarily included in such audits. All written exceptions to and claims upon the Manager for discrepancies disclosed by such audit shall be made not more than three (3) months after receipt of the audit report, unless either Participant elects to conduct an independent audit pursuant to Subsection 10.6(b) which is ongoing at the end of such three (3) month period, in which case such exceptions and claims may be made within the period provided in Subsection 10.6(b). Failure to make any such exception or claim within such period shall mean the audit is deemed to be correct and binding upon the Participants. The cost of all audits under this Subsection shall be charged to the Business Account.

          (b) Notwithstanding the annual audit conducted by certified public accountants selected by the Manager, each Participant shall have the right to have an independent audit of all Business books, records and accounts, including all charges to the Business Account. This audit shall review all issues raised by the requesting Participant, with all costs borne by the requesting Participant. The requesting Participant shall give the other Participant thirty (30) days prior notice of such audit. Any audit conducted on behalf of either Participant shall be made during the Manager’s normal business hours and shall not interfere with Operations. Neither Participant shall have the right to audit records and accounts of the Business relating to transactions or Operations more than twenty-four (24) months after the calendar year during which such transactions, or transactions related to such Operations, were charged to the Business Account. All written exceptions to and claims upon the Manager for discrepancies disclosed by such audit shall be made not more than three (3) months after completion and delivery of such audit, or they shall be deemed waived.

ARTICLE XI
DISPOSITION OF PRODUCTION

     11.1 Taking In Kind. Each Participant shall take in kind or separately dispose of its share of all Products in proportion to its Participating Interest. Any extra expenditure incurred in the taking in kind or separate disposition by either Participant of its proportionate share of Products shall be borne by such Participant. Nothing in this Agreement shall be construed as providing, directly or indirectly, for any joint or cooperative marketing or selling of Products or permitting the processing of Products owned by any third party at any processing facilities constructed by the Participants pursuant to this Agreement. The Manager shall give notice in advance of the anticipated delivery date upon which Products will be available. Each Participant agrees to report promptly to the Manager the prices it receives for its share of Products to enable the Manager to pay taxes, royalties and other payments due third parties on a weighted average basis.

     11.2 Delegation of Authority to Sell Products Taken In Kind. Unless Participant expressly notifies the Manager that the Participant will sell its share of Products, a Participant will be deemed to have authorized the Manager to sell Participant’s share of Products taken in kind for Producer’s account and the Manager shall have the right, but not the obligation, for a period of time consistent with the minimum needs of the industry, but not to exceed one (1) year from the notice date described in Section 11.1, to purchase the Participant’s share for its own account or to sell such share as agent for the Participant at not less than the prevailing market price in the area. Subject to the terms of any such contracts of sale then outstanding, during any period that the Manager is purchasing or selling a Participant’s share of production, the Participant may elect by notice to the Manager to terminate its delegation of authority and sell all or part of its share of Products taken in kind. The Manager shall be entitled to deduct from proceeds of any sale by it for the account of a Participant reasonable expenses incurred in such a sale.

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

ARTICLE XII
WITHDRAWAL AND TERMINATION

     12.1 Termination by Expiration or Agreement. This Agreement shall terminate as expressly provided in Section 2.5, unless earlier terminated by written agreement.

     12.2 Termination by Deadlock. If the Management Committee fails to adopt a Program and Budget within twelve (12) months after the expiration of the latest adopted Program and Budget, either Participant may elect to terminate the Business by giving sixty (60) days notice of termination to the other Participant.

     12.3 Withdrawal. Horizon shall be deemed to have withdrawn from the Business if it fails to complete its Initial Contributions as required by Subsection 5.1(b). Either Participant may withdraw from the Business by giving notice to the other Participant of the effective date of withdrawal, which shall be the later of the end of the then current Program Period or thirty (30) days after the date of the notice. Upon such withdrawal, the Business shall terminate, and the withdrawing Participant shall be deemed to have transferred to the remaining Participant all of its Participating Interest, including all of its interest in the Assets, without cost and free and clear of all Encumbrances arising by, through or under such withdrawing Participant, except those described in Paragraph 1.1 of Exhibit A and those to which both Participants have agreed. The withdrawing Participant shall execute and deliver all instruments as may be necessary in the reasonable judgment of the other Participant to effect the transfer of its interests in the Assets to the other Participant. If within a sixty (60) day period both Participants elect to withdraw, then the Business shall instead be deemed to have been terminated by the consent of the Participants pursuant to Section 12.1.

     12.4 Continuing Obligations and Environmental Liabilities. On termination of the Business under Sections 12.1, 12.2 or 12.3, each Participant shall remain liable for its respective share of liabilities to third persons (whether such arises before or after such withdrawal), including Environmental Liabilities and Continuing Obligations. The withdrawing Participant’s share of such liabilities shall be equal to its Participating Interest at the time such liability was incurred, after first taking into account any reduction, readjustment, and restoration of Participating Interests under Sections 6.3, 9.5, 9.6 and 10.5 (or, as to liabilities arising prior to the Effective Date, its initial Participating Interest).

     12.5 Disposition of Assets on Termination. Promptly after termination under Sections 12.1 or 12.2, the Manager shall take all action necessary to wind up the activities of the Business, in accordance with Exhibit C. All costs and expenses incurred in connection with the termination of the Business shall be expenses chargeable to the Business Account.

     12.6 Non-Compete Covenants. Neither a Participant that withdraws pursuant to Section 12.3, or is deemed to have withdrawn pursuant to Sections 5.2, 6.3 or 10.5, nor any Affiliate of such a Participant, shall directly or indirectly acquire any interest or right to explore or mine, or both, on any property any part of which is within the Area of Interest for twelve (12) months after the effective date of withdrawal. If a withdrawing Participant, or the Affiliate of a withdrawing Participant, breaches this Section 12.6, such Participant shall be obligated to offer to convey to the non-withdrawing Participant, without cost, any such property or interest so acquired (or ensure its Affiliate offers to convey the property or interest to the non-withdrawing Participant, if the acquiring party is the withdrawing Participant’s Affiliate). Such offer shall be made in writing and can be accepted by the non-withdrawing Participant at any time within ten (10) days after the offer is received by such non-withdrawing Participant. Failure of a Participant’s Affiliate to comply with this Section 12.6 shall be a breach by such Participant of this Agreement.

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

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

ARTICLE XIII
ACQUISITIONS WITHIN AREA OF INTEREST

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

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

     13.3 Option Exercised. Within forty-five (45) days after receiving the Acquiring Participant’s notice, the other Participant may notify the Acquiring Participant of its election to accept a proportionate interest in the acquired interest equal to its Participating Interest. Promptly upon such notice, the Acquiring Participant shall convey or cause its Affiliate to convey to the Participants, in proportion to their respective Participating Interests, by special warranty deed with title held as described in Section 3.4, all of the Acquiring Participant’s (or its Affiliate’s) interest in such acquired interest, free and clear of all Encumbrances arising by, through or under the Acquiring Participant (or its Affiliate) other than those to which both Participants have agreed. The acquired interests shall become a part of the Properties for all purposes of this Agreement immediately upon such notice. The other Participant shall promptly pay to the Acquiring Participant its proportionate share of the latter’s actual out-of-pocket acquisition costs.

     13.4 Option Not Exercised. If the other Participant does not give such notice within the forty-five (45) day period set forth in Section 13.3, it shall have no interest in the acquired interests, and the acquired interests shall not be a part of the Assets or continue to be subject to this Agreement.

ARTICLE XIV
ABANDONMENT AND SURRENDER OF PROPERTIES

     In accordance with Sections 7.2 and 8.2(i), unanimous consent of both Participants is required to authorize the Manager to surrender or abandon part or all of the Properties. If the Management Committee does not authorize such surrender or abandonment, the Participant that desires to surrender or abandon shall assign to the objecting Participant, by special warranty deed and without cost to the objecting Participant, all of the abandoning Participant’s interest in the Properties sought to be abandoned or surrendered, free and clear of all Encumbrances created by, through, or under the abandoning Participant other than those to which both Participants have agreed. Upon the assignment, such properties shall cease to be part of the Properties. The Participant that desires to abandon or surrender shall remain liable for its share (determined by its Participating Interest as of the date of such abandonment, after first taking into account any reduction, readjustment, and restoration of Participating Interests under Sections 6.3, 9.5, 9.6 and 10.5) of any liability with respect to such Properties, including, without limitation Continuing Obligations, Environmental Liabilities and Environmental Compliance, whether accruing before or after such abandonment, arising out of activities prior to the Effective Date and out of Operations conducted prior to the date of such abandonment, regardless of when any funds may be expended to satisfy such liability.

ARTICLE XV
SUPPLEMENTAL BUSINESS AGREEMENT

     15.1 Supplemental Business Agreement. At any time during the term of this Agreement, the Management Committee may determine by unanimous vote of both Participants after Horizon’s Initial Contribution obligations have been fully satisfied that it is appropriate to segregate the Area of Interest into areas subject to separate Programs and Budgets for purposes of conducting further Exploration, Pre-Feasibility or Feasibility Studies, Development, or Mining. At such time, the Management Committee shall designate which portion of the Properties will comprise an area of interest under a separate business arrangement (“Supplemental Business”), and the Participants shall enter into a new agreement (“Supplemental Business Agreement”) for the purpose of further exploring, analyzing, developing, and mining such portion of the Properties. The Supplemental Business Agreement shall be in substantially the same form as this Agreement, with the Participants agreeing to new Capital and Equity Accounts. Upon its

execution, the Supplemental Business Agreement shall govern the Properties covered by the Supplemental Business Agreement.

     15.2 Subdivided Area of Interest. Following the completion and delivery of any Pre-Feasibility Study or Feasibility Study, if one Participant desires to proceed with further Studies or Development and the other Participant does not, the Participants agree to take the actions necessary to subdivide or otherwise carve-out the Area of Interest and Business and enter into a Supplemental Business Agreement that will govern the new Supplemental Business in accordance with Section 15.1. Upon the effective date of the Supplemental Business Agreement, the Participants’ initial Participating Interests in the Supplemental Business shall be equal to their then current respective Participating Interests under this Agreement. However, the Participants’ respective Participating Interests shall be recalculated as a Participant contributes a lesser amount than in proportion to its respective Participating Interest consistent with the dilution and Account recalculation mechanisms described in Subsections 9.5(b) and (c). Until such time as a Reduced Participant’s Recalculated Participating Interest drops to less than fifteen percent (15%) and is converted to a Production Royalty in accordance with Section 6.3, a Reduced Participant may take actions to restore its diluted Participating Interest, but only in accordance with Subsection 9.5(d).

ARTICLE XVI
TRANSFER OF INTEREST; PREEMPTIVE RIGHT

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

     16.2 Limitations on Free Transferability. Any Transfer by either Participant under Section 16.1 shall be subject to the following limitations:

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

          (b) No transferee of all or any part of a Participant’s Participating Interest shall have the rights of a Participant unless and until the transferring Participant has provided to the other Participant notice of the Transfer, and, except as provided in Subsections 16.2(g) and 16.2(h), the transferee, as of the effective date of the Transfer, has committed in writing to assume and be bound by this Agreement to the same extent as the transferring Participant;

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

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

          (e) [Intentionally Omitted]

          (f) In the event of a Transfer of less than all of a Participating Interest, the transferring Participant and its transferee shall act and be treated as one Participant by notifying the non-transferring Participant of their designated Agent to act on their behalf with respect to all matters pertaining to this Agreement and the Business. The transferring Participant and its transferee may change the Agent (but such replacement must be one of them) by giving notice to the other Participant. Such notices must conform to Subsection 16.2(f)(ii).

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

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

               (ii) the Chargee’s remedies under the Encumbrance shall be limited to the sale of the whole (but only of the whole) of the encumbering Participant’s Participating Interest to the other Participant, or, failing such a sale, at a public auction to be held at least ten (10) days after prior notice to the other Participant, such sale to be subject to the purchaser entering into a written agreement with the other Participant whereby such purchaser assumes all obligations of the encumbering Participant under the terms of this Agreement. The price of any preemptive sale to the other Participant shall be

the remaining principal amount of the loan plus accrued interest and related expenses, and such preemptive sale shall occur within sixty (60) days of the Chargee’s notice to the other Participant of its intent to sell the encumbering Participant’s Participating Interest. Failure of a sale to the other Participant to close by the end of such period, unless failure is caused by the encumbering Participant or by the Chargee, shall permit the Chargee to sell the encumbering Participant’s Participating Interest at a public sale; and

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

          (h) If a sale or other commitment or disposition of Products or proceeds from the sale of Products by either Participant upon distribution to it pursuant to Article XI creates in a third party a security interest by Encumbrance in Products or proceeds therefrom prior to such distribution, such sales, commitment or disposition shall be subject to the terms and conditions of this Agreement including, without limitation, Section 6.7.

     16.3 Preemptive Right. Any Transfer by either Participant under Section 16.1 and any Transfer by an Affiliate of Control of either Participant shall be subject to a preemptive right of the other Participant as described below.

          (a) If either Participant intends to Transfer all or any part of its Participating Interest, or an Affiliate of either Participant intends to Transfer Control of such Participant (“Transferring Entity”), such Participant shall promptly notify the other Participant of such intent. The notice shall state the price and all other pertinent terms and conditions of the intended Transfer, and shall be accompanied by a copy of the offer or the contract for sale. If the consideration for the intended transfer is, in whole or in part, other than monetary, the notice shall describe such consideration and its monetary equivalent (based upon the fair market value of the non-monetary consideration and stated in terms of cash or currency).

          (b) The other Participant shall have ninety (90) days from the date such notice is received to notify the Transferring Entity whether it elects to acquire the offered interest at the same price (or its monetary equivalent in cash or currency) and on the same terms and conditions as set forth in the notice. If it does so elect, the acquisition by the other Participant shall be consummated promptly after notice of such election is delivered.

          (c) If the other Participant fails to so elect within the period provided for above, the Transferring Entity shall have one hundred eighty (180) days following the expiration of such period to consummate the Transfer to the third party at a price and on terms no less favorable to the Transferring Entity than those offered. If the Transferring

Entity fails to consummate the Transfer to a third party within the period set forth above, the preemptive right of the other Participant in such offered interest shall be deemed to be revived. Any subsequent proposal to Transfer such interest shall be conducted in accordance with all of the procedures set forth in this Subsection.

          (d) These procedures shall not apply to the following:

               (i) Transfer by either Participant of all or any part of its Participating Interest to an Affiliate; pursuant to an incorporation, or corporate consolidation or reorganization of a Participant by which the surviving entity shall possess substantially all of the stock or all of the property rights and interests, and be subject to substantially all of the liabilities and obligations of that Participant; or corporate merger or amalgamation by which the surviving entity or amalgamated company shall possess all of the stock or all of the property rights and interests, and be subject to substantially all of the liabilities and obligations of that Participant.

               (ii) Subject to Subsection 16.2(g) of the Agreement, the grant by either Participant of a security interest in its Participating Interest by Encumbrance.

               (iii) the creation by any Affiliate of either Participant of an Encumbrance affecting its Control of such Participant.

               (iv) a sale or other commitment or disposition of Products or proceeds from sale of Products by either Participant upon distribution to it pursuant to Article XI of the Agreement.

          (e) Failure of a Participant’s Affiliate to comply with this Article XVI shall be a breach by such Participant of this Agreement.

ARTICLE XVII
DISPUTES

     17.1 Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Colorado, without regard for any conflict of laws or choice of laws principles that would permit or require the application of the laws of any other jurisdiction.

     17.2 Venue. The Participants agree that the location for any arbitration proceeding shall be Golden, Colorado.

     17.3 Alternative Dispute Resolution. The Participants prefer to attempt to settle and resolve any controversy or claim relating to this Agreement informally

through good faith face to face negotiations between executive representatives of each Participant having the authority to settle. The Participants’ representatives agree to meet within sixty (60) days of a Participant’s written notice to the other of a dispute requiring resolution. If the Participants have not reached a mutually agreeable resolution to such dispute within thirty (30) days of the meeting, either Participant may seek resolution via binding arbitration pursuant to the American Arbitration Association rules of arbitration.

     17.4 Fees and Costs. All disputes arising under or in connection with this Agreement which cannot be resolved by agreement between the Participants shall be resolved in accordance with applicable Law. If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or substantially prevailing Participant shall be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled.

ARTICLE XVIII
CONFIDENTIALITY, OWNERSHIP, USE AND DISCLOSURE OF INFORMATION

     18.1 Business Information. All Business Information shall be owned jointly by the Participants as their Participating Interests are determined pursuant to this Agreement. Except as provided in Sections 18.3 and 18.4, or with the prior written consent of the other Participant, each Participant shall keep confidential and not disclose to any third party or the public any portion of the Business Information that constitutes Confidential Information.

     18.2 Participant Information. In performing its obligations under this Agreement, neither Participant shall be obligated to disclose any Participant Information. If a Participant elects to disclose Participant Information in performing its obligations under this Agreement, such Participant Information, together with all improvements, enhancements, refinements and incremental additions to such Participant Information that are developed, conceived, originated or obtained by either Participant in performing its obligations under this Agreement (“Enhancements”), shall be owned exclusively by the Participant that originally developed, conceived, originated or obtained such Participant Information. Each Participant may use and enjoy the benefits of such Participant Information and Enhancements in the conduct of the Business hereunder, but the Participant that did not originally develop, conceive, originate or obtain such Participant Information may not use such Participant Information and Enhancements for any other purpose. Except as provided in Section 18.4, or with the prior written consent of the other Participant, which consent may be withheld in such Participant’s sole discretion, each Participant shall keep confidential and not disclose to any third party or the public any

portion of Participant Information and Enhancements owned by the other Participant that constitutes Confidential Information.

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

          The Participant disclosing Confidential Information pursuant to this Section 18.3, shall disclose such Confidential Information to only those parties who have a bona fide need to have access to such Confidential Information for the purpose for which disclosure to such parties is permitted under this Section 18.3 and who have agreed in writing supplied to, and enforceable by, the other Participant to protect the Confidential Information from further disclosure, to use such Confidential Information solely for such purpose and to otherwise be bound by the provisions of this Article XVIII. Such writing shall not preclude parties described in Subsection 18.3(b) from discussing and completing a Transfer with the other Participant. The Participant disclosing Confidential Information shall be responsible and liable for any use or disclosure of the Confidential Information by such parties in violation of this Agreement and such other writing.

     18.4 Disclosure Required By Law. Notwithstanding anything contained in this Article XVIII, a Participant may disclose any Confidential Information if, in the opinion of the disclosing Participant’s legal counsel: (a) such disclosure is legally required to be made in a judicial, administrative or governmental proceeding pursuant to a valid subpoena or other applicable order; or (b) such disclosure is legally required to be made pursuant to the rules or regulations of a stock exchange or similar trading market applicable to the disclosing Participant.

          Prior to any disclosure of Confidential Information under this Section 18.4, the disclosing Participant shall give the other Participant at least ten (10) days prior written notice (unless less time is required by such rules, regulations or proceeding) and, in making such disclosure, the disclosing Participant shall disclose only that portion of Confidential Information required to be disclosed and shall take all reasonable steps to preserve the confidentiality thereof, including, without limitation, obtaining protective orders and supporting the other Participant in intervention in any such proceeding.

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

ARTICLE XIX
GENERAL PROVISIONS

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

		If to Canyon:						14142 Denver West Parkway
								Suite 250
								Golden, CO 80401
				Attention:				James K. B. Hesketh
				Telephone:				(303) 278-8464
				Facsimile:				(303) 279-3772
		With a Copy to:						Bruce C. Kirchhoff
								Carver Kirchhoff Schwarz
								McNab & Bailey, LLC
								Hudson’s Bay Centre
								1600 Stout Street, Suite 1700
								Denver, Colorado 80202
				Telephone:				(303) 531-6482
				Facsimile:				(303) 592-7680

		If to Horizon:						2221 East Street
								Suite 200
								Golden, CO 80401
				Attention:				William R. Wilson
				Telephone:				(303) 422-7803
				Facsimile:				(303) 940-9572
		With a Copy to:						Paul C. Jones
								2221 East Street, Suite 200
								Golden CO 80401
				Telephone:				(303) 277-1222
				Facsimile:				(303) 277-0006

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

     19.2 Gender. The singular shall include the plural, and the plural the singular wherever the context so requires, and the masculine, the feminine, and the neuter genders shall be mutually inclusive.

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

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

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

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

     19.7 Force Majeure. Except for the obligation to make payments when due hereunder, the obligations of a Participant shall be suspended to the extent and for the period that performance is prevented by any cause, whether foreseeable or unforeseeable, beyond its reasonable control, including, without limitation, labor disputes (however arising and whether or not employee demands are reasonable or within the power of the Participant to grant); acts of God; Laws, instructions or requests of any government or governmental entity; judgments or orders of any court; inability to obtain on reasonably acceptable terms any public or private license, permit or other authorization; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or prospective violation of Environmental Laws; action or inaction by any federal, state or local agency that delays or prevents the issuance or granting of any approval or authorization required to conduct Operations beyond the reasonable expectations of the Participant seeking the approval or authorization; acts of war or conditions arising out of or attributable to war, whether declared or undeclared; riot, civil strife, insurrection or rebellion; fire, explosion, earthquake, storm, flood, sink holes, drought or other adverse weather condition; delay or failure by suppliers or transporters of materials, parts, supplies, services or equipment or by contractors’ or subcontractors’ shortage of, or inability to obtain, labor, transportation, materials, machinery, equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or facilities; actions by native rights groups, environmental groups, or other similar special interest groups; or any other cause whether similar or dissimilar to the foregoing. The affected Participant shall promptly give notice to the other Participant of the suspension of performance, stating therein the nature of the suspension, the reasons therefore, and the expected duration thereof. The affected Participant shall resume performance as soon as reasonably possible. During the period of suspension the obligations of both Participants to advance funds pursuant to Section 10.2 shall be reduced to levels consistent with then current Operations.

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

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

     19.10 Entire Agreement; Successors and Assigns. This Agreement contains the entire understanding of the Participants and supersedes all prior agreements and understandings between the Participants relating to the subject matter hereof. This Agreement shall be binding upon and inure to the benefit of the respective successors and permitted assigns of the Participants.

     19.11 Memorandum. At the request of either Participant, a Memorandum or short form of this Agreement, or a Financing Statement(s) (to which copies of the Memorandum or short form of this Agreement shall be attached) shall be prepared by the Manager, executed and acknowledged by both Participants, and delivered to the Manager for recording and filing in those appropriate recording districts and Uniform Commercial Code filing offices as may be necessary to provide constructive notice of this Agreement and the rights and obligations of the Participants hereunder. The Manager shall record and file in the proper recording districts, county recording offices and Uniform Commercial Code filing offices, all such documents delivered to it by the Participants. Unless both Participants agree, this Agreement shall not be recorded.

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

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

Canyon

     By       /s/ James K. B. Hesketh                                                 

                     James K. B. Hesketh

     Its            President

Horizon

     By       /s/ Paul C. Jones                                                             

                     Paul C. Jones

     Its            Executive Vice President and Chief Operating Officer

EXHIBIT A
To
CONVERSE URANIUM PROJECT

EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT
By And Between
Canyon Resources Corporation
And
New Horizon Uranium Corporation

ASSETS AND AREA OF INTEREST

1.1

PROPERTIES AND TITLE EXCEPTIONS

List of Mining Claims and Leases

     CONVERSE PROJECT

		BLM
CLAIMS		WMC #				WIDTH				LENGTH				AREA				ACRES
Scott Ranch Area
BC-1		WMC 268577					50				1,450				72,500				1.66				1
BC-2		WMC 268578					50				1,450				72,500				1.66				2
BC-3		WMC 268579					600				1,450				870,000				19.97				3
BC-4		WMC 268580					600				1,450				870,000				19.97				4
BC-5		WMC 268581					600				1,450				870,000				19.97				5
BC-6		WMC 268582					600				1,450				870,000				19.97				6
BC-7		WMC 268583					600				1,450				870,000				19.97				7
BC-8		WMC 268584					600				1,450				870,000				19.97				8
BC-9		WMC 268585					600				1,450				870,000				19.97				9
BC-10		WMC 268586					600				1,450				870,000				19.97				10
BC-11		WMC 268587					600				1,450				870,000				19.97				11
BC-12		WMC 268588					600				1,450				870,000				19.97				12
BC-13		WMC 268589					600				1,450				870,000				19.97				13
BC-14		WMC 268590					600				1,450				870,000				19.97				14
BC-15		WMC 268591					600				1,450				870,000				19.97				15
BC-16		WMC 268592					600				1,450				870,000				19.97				16
BC-17		WMC 268593					600				1,450				870,000				19.97				17
BC-18		WMC 268594					600				1,450				870,000				19.97				18
BC-19		WMC 268595					600				1,450				870,000				19.97				19
BC-20		WMC 268596					600				1,450				870,000				19.97				20
BC-21		WMC 268597					600				1,360				816,000				18.73				21

EXHIBIT A
Page 1 of 9

		BLM
CLAIMS		WMC #				WIDTH				LENGTH				AREA				ACRES
BC-22		WMC 268598					600				1,360				816,000				18.73				22
BC-23		WMC 268599					600				1,360				816,000				18.73				23
BC-24		WMC 268600					600				1,360				816,000				18.73				24
BC-25		WMC 268601					600				1,360				816,000				18.73				25
BC-26		WMC 268602					600				1,360				816,000				18.73				26
BC-27		WMC 268603					600				1,360				816,000				18.73				27
BC-28		WMC 268604					600				1,360				816,000				18.73				28
BC-29		WMC 268605					600				1,360				816,000				18.73				29
BC-30		WMC 268606					600				1,360				816,000				18.73				30
BC-31		WMC 268607					600				1,360				816,000				18.73				31
BC-32		WMC 268608					600				1,360				816,000				18.73				32
BC-33		WMC 268609					380				1,360				516,800				11.86				33
BC-34		WMC 268610					600				1,360				816,000				18.73				34
BC-35		WMC 268611					600				1,430				858,000				19.70				35
BC-36		WMC 268612					600				1,430				858,000				19.70				36
BC-37		WMC 268613					600				1,430				858,000				19.70				37
BC-38		WMC 268614					600				1,430				858,000				19.70				38
BC-39		WMC 268615					600				1,430				858,000				19.70				39
BC-40		WMC 268616					600				1,430				858,000				19.70				40
BC-41		WMC 268617					600				1,430				858,000				19.70				41
BC-42		WMC 268618					600				1,430				858,000				19.70				42
BC-43		WMC 268619					600				1,430				858,000				19.70				43
BC-44		WMC 268620					600				1,430				858,000				19.70				44
BC-45		WMC 268621					600				1,430				858,000				19.70				45
BC-46		WMC 268622					600				1,430				858,000				19.70				46
BC-47		WMC 268623					600				1,430				858,000				19.70				47
BC-48		WMC 268624					600				1,430				858,000				19.70				48
BC-49		WMC 268625					600				1,360				816,000				18.73				49
BC-50		WMC 268626					600				1,360				816,000				18.73				50
BC-51		WMC 268627					600				1,360				816,000				18.73				51
BC-52		WMC 268628					600				1,360				816,000				18.73				52
BC-53		WMC 268629					600				1,360				816,000				18.73				53
BC-54		WMC 268630					600				1,360				816,000				18.73				54
BC-55		WMC 268631					600				1,360				816,000				18.73				55
BC-56		WMC 268632					600				1,360				816,000				18.73				56
BC-57		WMC 268633					520				1,360				707,200				16.24				57
BC-58		WMC 268634					600				1,360				816,000				18.73				58
BC-59		WMC 268635					520				1,360				707,200				16.24				59
BC-61		WMC 268636					600				1,500				900,000				20.66				60
BC-62		WMC 268637					600				1,500				900,000				20.66				61
BC-63		WMC 268638					600				1,500				900,000				20.66				62
BC-64		WMC 268639					600				1,500				900,000				20.66				63
BC-65		WMC 268640					600				1,500				900,000				20.66				64
BC-66		WMC 268641					600				1,500				900,000				20.66				65
BC-67		WMC 268642					600				1,500				900,000				20.66				66
BC-68		WMC 268643					600				1,500				900,000				20.66				67
BC-69		WMC 268644					600				1,500				900,000				20.66				68

EXHIBIT A
Page 2 of 9

		BLM
CLAIMS		WMC #				WIDTH				LENGTH				AREA				ACRES
BC-70		WMC 268645					600				1,500				900,000				20.66				69
BC-71		WMC 268646					600				1,320				792,000				18.18				70
BC-72		WMC 268647					600				1,320				792,000				18.18				71
BC-73		WMC 268648					600				1,320				792,000				18.18				72
BC-74		WMC 268649					600				1,320				792,000				18.18				73
BC-75		WMC 268650					390				1,320				514,800				11.82				74
BC-76		WMC 268651					150				1,500				225,000				5.17				75
BC-77		WMC 268652					600				1,500				900,000				20.66				76
BC-78		WMC 268653					600				1,500				900,000				20.66				77
BC-79		WMC 268654					600				1,500				900,000				20.66				78
BC-80		WMC 268655					600				1,500				900,000				20.66				79
BC-81		WMC 268656					600				1,500				900,000				20.66				80
BC-82		WMC 268657					600				1,500				900,000				20.66				81
BC-83		WMC 268658					600				1,500				900,000				20.66				82
BC-84		WMC 268659					600				1,500				900,000				20.66				83
BC-85		WMC 268660					600				1,500				900,000				20.66				84
BC-86		WMC 268661					600				1,500				900,000				20.66				85
BC-87		WMC 268662					160				1,500				240,000				5.51				86
BC-88		WMC 268663					160				1,500				240,000				5.51				87
BC-89		WMC 268664					600				1,500				900,000				20.66				88
BC-90		WMC 268665					600				1,500				900,000				20.66				89
BC-91		WMC 268666					83				1,200				99,600				2.29				90
BC-92		WMC 268667					83				1,350				112,050				2.57				91
															Acres				1655.18
S. Douglas Area
SD-9		WMC 268767					600				1,320				792,000				18.18				1
SD-10		WMC 268768					600				1,370				822,000				18.87				2
SD-11		WMC 268769					600				1,320				792,000				18.18				3
SD-12		WMC 268770					600				1,370				822,000				18.87				4
SD-13		WMC 268771					600				1,320				792,000				18.18				5
SD-14		WMC 268772					600				1,370				822,000				18.87				6
SD-15		WMC 268773					600				1,320				792,000				18.18				7
SD-16		WMC 268774					600				1,370				822,000				18.87				8
SD-17		WMC 268775					600				1,320				792,000				18.18				9
SD-18		WMC 268776					600				1,370				822,000				18.87				10
SD-19		WMC 268777					600				1,320				792,000				18.18				11
SD-20		WMC 268778					600				1,370				822,000				18.87				12
SD-21		WMC 268779					600				1,320				792,000				18.18				13
SD-22		WMC 268780					600				1,370				822,000				18.87				14
SD-23		WMC 268781					600				1,320				792,000				18.18				15
SD-24		WMC 268782					600				1,370				822,000				18.87				16
SD-25		WMC 268783					400				1,320				528,000				12.12				17
SD-26		WMC 268784					400				1,370				548,000				12.58				18
SD-27		WMC 268785					600				1,320				792,000				18.18				19
SD-28		WMC 268786					600				1,320				792,000				18.18				20
SD-29		WMC 268787					220				1,320				290,400				6.67				21
SD-30		WMC 268788					150				1,500				225,000				5.17				22

EXHIBIT A
Page 3 of 9

		BLM
CLAIMS		WMC #				WIDTH				LENGTH				AREA				ACRES
SD-31		WMC 268789					600				1,500				900,000				20.66				23
SD-32		WMC 268790					600				1,500				900,000				20.66				24
SD-33		WMC 268791					600				1,500				900,000				20.66				25
SD-34		WMC 268792					600				1,500				900,000				20.66				26
SD-35		WMC 268793					600				1,500				900,000				20.66				27
SD-36		WMC 268794					600				1,500				900,000				20.66				28
SD-37		WMC 268795					600				1,500				900,000				20.66				29
SD-38		WMC 268796					600				1,500				900,000				20.66				30
SD-39		WMC 268797					600				1,500				900,000				20.66				31
SD-40		WMC 268798					600				1,500				900,000				20.66				32
SD-41		WMC 268799					350				1,500				525,000				12.05				33
SD-42		WMC 268800					350				1,500				525,000				12.05				34
SD-45		WMC 268801					600				1,500				900,000				20.66				35
SD-46		WMC 268802					600				1,500				900,000				20.66				36
SD-47		WMC 268803					600				1,500				900,000				20.66				37
SD-48		WMC 268804					600				1,500				900,000				20.66				38
SD-49		WMC 268805					300				1,500				450,000				10.33				39
SD-57		WMC 268806					600				1,445				867,000				19.90				40
SD-59		WMC 268807					600				1,445				867,000				19.90				41
SD-60		WMC 268808					600				1,200				720,000				16.53				42
SD-62		WMC 268809					600				1,200				720,000				16.53				43
SD-100		WMC 268810					600				1,395				837,000				19.21				44
SD-101		WMC 268811					600				1,395				837,000				19.21				45
															Acres				804.30
Shawnee Area
SH-1		WMC 268668					600				1,400				840,000				19.28				1
SH-2		WMC 268669					600				1,400				840,000				19.28				2
SH-3		WMC 268670					600				1,400				840,000				19.28				3
SH-4		WMC 268671					600				1,400				840,000				19.28				4
SH-5		WMC 268672					600				1,400				840,000				19.28				5
SH-6		WMC 268673					600				1,400				840,000				19.28				6
SH-7		WMC 268674					460				1,400				644,000				14.78				7
SH-8		WMC 268675					600				1,400				840,000				19.28				8
SH-9		WMC 268676					600				1,400				840,000				19.28				9
SH-10		WMC 268677					600				1,400				840,000				19.28				10
SH-11		WMC 268678					600				1,400				840,000				19.28				11
SH-12		WMC 268679					600				1,400				840,000				19.28				12
SH-13		WMC 268680					600				1,400				840,000				19.28				13
SH-14		WMC 268681					600				1,400				840,000				19.28				14
SH-15		WMC 268682					600				1,400				840,000				19.28				15
SH-16		WMC 268683					600				1,400				840,000				19.28				16
SH-17		WMC 268684					600				1,400				840,000				19.28				17
SH-18		WMC 268685					600				1,400				840,000				19.28				18
SH-19		WMC 268686					600				1,400				840,000				19.28				19
SH-20		WMC 268687					460				1,400				644,000				14.78				20
SH-21		WMC 268688					460				1,400				644,000				14.78				21

EXHIBIT A
Page 4 of 9

		BLM
CLAIMS		WMC #				WIDTH				LENGTH				AREA				ACRES
SH-25		WMC 268689					600				1,500				900,000				20.66				22
SH-26		WMC 268690					600				1,500				900,000				20.66				23
SH-27		WMC 268691					600				1,500				900,000				20.66				24
SH-28		WMC 268692					600				1,500				900,000				20.66				25
SH-29		WMC 268693					440				1,500				660,000				15.15				26
SH-30		WMC 268694					600				1,500				900,000				20.66				27
SH-31		WMC 268695					600				1,500				900,000				20.66				28
SH-32		WMC 268696					270				1,500				405,000				9.30				29
SH-33		WMC 268697					600				1,500				900,000				20.66				30
SH-34		WMC 268698					600				1,500				900,000				20.66				31
SH-35		WMC 268699					300				1,500				450,000				10.33				32
															Acres				591.53
																			3,051.0
										TOTAL ACRES									1