Option Agreement (Frances Property) dated July 14, 2009 between Yaterra and Geoffrey Goodall

"Exploration and Development" means any and all activities comprising or undertaken in connection with the exploration and development of the Property, the construction of a mine and mining facilities on or in proximity to the Property and placing the Property into commercial production;

"Exploration Expenditures” means all reasonable and necessary monies expended on or in connection with Exploration and Development as determined in accordance with generally accepted accounting principles including, without limiting the generality of the foregoing:

the cost of entering upon, surveying, prospecting and drilling on the Property;

the cost of any geophysical, geochemical and geological reports or surveys relating to the Property;

all filing and other fees and charges necessary or advisable to keep the Property in good standing with any regulatory authorities having jurisdiction;

all rentals, royalties, taxes (exclusive of all income taxes and mining taxes based on income and which are or may be assessed against any of the parties hereto) and any assessments whatsoever, whether the same constitute charges on the Property or arise as a result of the operation thereon;

the cost, including rent and finance charges, of all buildings, machinery, tools, appliances and equipment and related capital items that may be erected, installed and used from time to time in connection with Exploration and Development;

the cost of construction and maintenance of camps required for Exploration and Development;

the cost of transporting persons, supplies, machinery and equipment in connection with Exploration and Development;

all wages and salaries of persons engaged in Exploration and Development and any assessments or levies made under the authority of any regulatory body having jurisdiction with respect to such persons or supplying food, lodging and other reasonable needs for such persons;

all costs of consulting and other engineering services including report preparation;

the cost of compliance with all statutes, orders and regulations respecting environmental reclamation, restoration and other like work required as a result of conducting Exploration and Development; and

all costs of searching for, digging, working, sampling, transporting, mining and procuring diamonds, other minerals, ores, and metals from and out of the Property;

“Mineral Claim” means the mineral claim described in Schedule A to this Agreement, including: (i) any replacement or successor claims; and (ii) all mining leases and other mining interests derived from any such claims;

"Option" means the option to acquire a 60% undivided interest in and to the Property as provided in this Agreement;

"Option Period" means the period from the date of this Agreement to and including the date of exercise or termination of the Option;

"Property" means the Mineral Claim and the Property Rights; and

"Property Rights" means all licenses, permits, easements, rights-of-way, certificates and other approvals obtained by either of the parties either before or after the date of this Agreement in connection with the Mineral Claim and necessary for the exploration of the Mineral Claim.

The Option shall be exercised by the Optionee:

paying the Optionor $500 CDN on the execution of this Agreement, the receipt of which is hereby acknowledged by the Optionor;

paying the Optionor $15,000 CDN as follows:

$2,000 CDN on or before the date that is three months after the Effective Date;

an additional $3,000 CDN on or before the date that is six months after the Effective Date; and

an additional $10,000 CDN on or before the first anniversary of the Effective Date.

incurring Exploration Expenditures of $160,000 CDN on the Property as follows;

$10,000 CDN on or before the date that is six months after the Effective Date; and

a further $150,000 CDN on or before the second anniversary of the Effective Date.

Issuing shares of the Optionee’s common stock (the “Shares”) to the Optionor as follows:

2,000 Shares on or before the date that is three months after the Effective Date;

an additional 3,000 Shares on or before the date that is six months after the Effective Date; and

an additional 10,000 Shares on or before the first anniversary of the Effective Date.

(collectively referred to as the “Option Shares”)

In the event that the Optionee spends, in any of the above periods, less than the specified sum, it may pay to the Optionor the difference between the amount it actually spent and the specified sum before the expiry of that period in full satisfaction of the Exploration Expenditures to be incurred. In the event that the Optionee spends, in any period, more than the specified sum, the excess shall be carried forward and applied to the Exploration Expenditures to be incurred in succeeding periods.

Upon exercise of the Option, a 60% undivided right, title and interest in and to the Property shall vest in the Optionee free and clear of all charges, encumbrances and claims.

the Optionee shall keep the Property clear of all liens, encumbrances and other charges;

the Optionee shall carry on all operations on the Property in a good and workmanlike manner and in compliance with all applicable governmental regulations and restrictions including but not limited to the posting of any reclamation bonds as may be required by any governmental regulations or regulatory authorities;

the Optionee shall pay or cause to be paid any rates, taxes, duties, royalties, workers’ compensation or other assessments or fees levied with respect to its operations thereon;

the Optionee shall pay the yearly claim maintenance payments necessary to maintain the claims in good standing;

the Optionee shall maintain books of account in respect of its expenditures and operations on the Property and, upon reasonable notice, shall make such books available for inspection by representatives of the Optionor;

the Optionee shall allow any duly authorised agent or representative of the Optionor to inspect the Property at reasonable times and intervals and upon reasonable notice given to the Optionee;

the Optionee shall allow the Optionor access at reasonable times to all maps, reports, sample results and other technical data prepared or obtained by the Optionee in connection with its operations on the Property; and

the Optionee shall indemnify and save the Optionor harmless of and from any and all costs, claims, loss and damages whatsoever incidental to or arising out of any work or operations carried out by or on behalf of the Optionee on the Property, including any liability of an environmental nature.

the Property is in good standing with all regulatory authorities having jurisdictions and all required claim maintenance payments have been made;

the Optionor is, and at all times during the term of this Agreement will be, the recorded holder and beneficial owner of all of the Property free and clear of all liens, charges and claims of others and no taxes or rentals are or will be due in respect of any of the mineral claims;

the Mineral Claim has been duly and validly located and recorded pursuant to the laws of the jurisdiction in which the Property is situate;

the Property is free and clear of any encumbrances, liens or charges and neither the Optionor nor, to the best of the Optionor’s knowledge, any of his predecessors in interest or title, have done anything whereby the Property may be encumbered;

the Optionor has the right to enter into this Agreement and to deal with the Property in accordance with the terms of this Agreement, there are no disputes over the title to the Property, and no other party has any interest in the Property or the production therefrom or any right to acquire any such interest;

there is no litigation, proceeding or investigation pending or threatened against the Assignor or, to the best of the knowledge of the Assignor after due inquiry, the Vendors, the Option Agreement or the Property, nor does the Assignor know, or have any grounds to know after due inquiry, of any basis for any litigation, proceeding or investigation which would affect the Option Agreement or the Property;

the Option Shares will be “restricted securities” within the meaning of the Securities Act of 1933 (the “Securities Act”) and will be issued to the Optionor in accordance with Regulation S of the Securities Act. Any certificates representing the Option Shares will be endorsed with the following legend in accordance with Regulation S of the Securities Act:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE SECURITIES ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

the Optionor is not a “U.S. Person” as defined by Regulation S of the Securities Act and is not acquiring the Option Shares for the account or benefit of a U.S. Person;

the Optionor is acquiring the Option Shares for investment purposes, only, with no present intention of dividing its interest with others or reselling or otherwise disposing of any or all of the Option Shares; and

the Optionor was not in the United States at the time the offer to acquire the Option Shares was received.

it has full corporate power and authority to enter into this Agreement and the entering into of this Agreement does not conflict with any applicable laws or with its charter documents or any contract or other commitment to which it is party; and

the execution of this Agreement and the performance of its terms have been duly authorised by all necessary corporate actions including the resolution of its board of directors.

a covenant to perform all the obligations of the Optionee to be performed under this Agreement in respect of the interest to be acquired by it from the Optionee to the same extent as if this Agreement had been originally executed by such purchaser, grantee or transferee; and

a provision subjecting any further sale, transfer or other disposition of such interest in the Property and this Agreement or any portion thereof to the restrictions contained in this paragraph (a).

The Optionor shall first offer (the "Offer") such interest in writing to the Optionee upon terms no less favourable than those offered by the Proposed Purchaser or intended to be offered by the Optionor, as the case may be.

The Offer shall specify the price, terms and conditions of such sale, the name of the Proposed Purchaser and shall, in the case of an intended offer by the Optionor, disclose the person or persons to whom the Optionor intends to offer its interest and, if the offer received by the Optionor from the Proposed Purchaser provides for any consideration payable to the Optionor otherwise than in cash, the Offer shall include the Optionor's good faith estimate of the cash equivalent of the non-cash consideration.

If within a period of 60 days of the receipt of the Offer the Optionee notifies the Optionor in writing that it will accept the Offer, the Optionor shall be bound to sell such interest to

the Optionee on the terms and conditions of the Offer. If the Offer so accepted by the Optionee contains the Optionor's good faith estimate of the cash equivalent of the non cash consideration as aforesaid, and if the Optionee disagrees with the Optionor's best estimate, the Optionee shall so notify the Optionor at the time of acceptance and the Optionee shall, in such notice, specify what it considers, in good faith, the fair cash equivalent to be and the resulting total purchase price. If the Optionee so notifies the Optionor, the acceptance by the Optionee shall be effective and binding upon the Optionor and the Optionee, and the cash equivalent of any such non-cash consideration shall be determined by binding arbitration and shall be payable by the Optionee, subject to prepayment as hereinafter provided, within 60 days following its determination by arbitration. The Optionee shall in such case pay to the Optionor, against receipt of an absolute transfer of clear and unencumbered title to the interest of the Optionor being sold, the total purchase price which is specified in its notice to the Optionor and such amount shall be credited to the amount determined following arbitration of the cash equivalent of any non-cash consideration.

If the Optionee fails to notify the Optionor before the expiration of the time limited therefor that it will purchase the interest offered, the Optionor may sell and transfer such interest to the Proposed Purchaser at the price and on the terms and conditions specified in the Offer for a period of 60 days, but the terms of this paragraph shall again apply to such interest if the sale to the Proposed Purchaser is not completed within such 60 days.

Any sale hereunder shall be conditional upon the Proposed Purchaser delivering a written undertaking to the Optionee, in form and substance satisfactory to its counsel, to be bound by the terms and conditions of this Agreement.

upon the failure of the Optionee to make a payment, incur Exploration Expenditures or issue the Option Shares required by and within the time limits prescribed by Section 2.1;

in the event that the Optionee, not being at the time in default under any provision of this Agreement, gives 30 day’s written notice to the Optionor of the termination of this Agreement;

in the event that the Optionee shall fail to comply with any of its obligations hereunder, other than the obligations contained in Section 2.1, and within 30 days of receipt by the Optionee of written notice from the Optionor of such default, the Optionee has not:

cured such default, or commenced proceedings to cure such default and prosecuted same to completion without undue delay; or

given the Optionor notice that it denies that such default has occurred.

In the event that the Optionee gives notice that it denies that a default has occurred, the Optionee shall not be deemed in default until the matter shall have been determined finally through such means of dispute resolution as such matter has been subjected to by

transfer any interest in title to the Property, if any, in good standing to the Optionor free and clear of all liens, charges, and encumbrances;

turn over to the Optionor copies of all maps, reports, sample results, contracts and other data and documentation in the possession of the Optionee or, to the extent within the Optionee’s control, in the possession of its agents, employees or independent contractors, in connection with its operations on the Property; and

ensure that the Property is in a safe condition and complies with all environmental and safety standards imposed by any duly authorised regulatory authority.