NEWMONT MINING CORPORATION

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FRONTEER GOLD INC.

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PILOT GOLD INC.

ARRANGEMENT AGREEMENT

DATED FEBRUARY 3, 2011

ARRANGEMENT AGREEMENT

THIS ARRANGEMENT AGREEMENT dated February 3, 2011,

BETWEEN:

NEWMONT MINING CORPORATION, a corporation existing under the laws of the State of Delaware (“Acquiror”)

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FRONTEER GOLD INC., a corporation existing under the laws of the Province of Ontario (“Target”)

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PILOT GOLD INC., a corporation existing under the laws of Canada (“Spinco”)

WHEREAS:

A.                Acquiror wishes to indirectly acquire all of the issued and outstanding common shares of Target;

B.                 Acquiror, Target and Spinco wish to propose an arrangement involving, among other things, a reorganization of the capital of Target, the distribution to Target Shareholders of 80.1% of the outstanding Spinco Shares and the indirect acquisition by Acquiror of all of the issued and outstanding common shares of Target in exchange for cash;

C.                 The Parties intend to carry out the transactions contemplated herein by way of an arrangement under the provisions of the Business Corporations Act (Ontario);

D.                Acquiror has entered into lock up agreements with the directors and officers of Target and John Tognetti, pursuant to which, among other things, such shareholders have agreed to vote in favour of the Arrangement Resolution all of the common shares of Target held by them, on the terms and subject to the conditions set forth in such agreements; and

E.                 The Parties have entered into this Agreement to provide for the matters referred to in the foregoing recitals and for other matters relating to such arrangement.

THIS AGREEMENT WITNESSES THAT in consideration of the covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto covenant and agree as follows:

in each case, whether such action actually occurs or is deemed to occur for Tax purposes and only to the extent that such Tax is payable after Target and any of its subsidiaries have claimed the maximum amount of all credits, deductions, and other amounts available to it (including any loss carryforwards) for its respective taxation year that includes the transfer of Spinco Assets or Target Exploration Properties to Spinco or the disposition of Spinco Shares, as the case may be;

“Indemnified Party” has the meaning ascribed thereto in Section 8.1;

“Indemnified Tax Claim” has the meaning ascribed thereto in Section 8.2(b)(i);

“Intellectual Property” means any licenses for or other rights to use, any inventions, patent applications, patents, trade-marks (both registered and unregistered), trade names, copyrights, trade secrets and other proprietary information of Target as set out in the Target Disclosure Letter;

“Interim Order” means the interim order of the Court made in connection with the Arrangement and providing for, among other things, the calling and holding of the Target Meeting, as the same may be amended, supplemented or varied by the Court with the Acquiror and Target, each acting reasonably;

“Joint Venture Companies” means, collectively, the West Pequop Companies;

“Key Regulatory Approvals” means those sanctions, rulings, consents, orders, exemptions, permits and other approvals (including the lapse, without objection, of a prescribed time under a statute or regulation that states that a transaction may be implemented if a prescribed time lapses following the giving of notice without an objection being made) of Governmental Entities set out in Schedule C hereto;

“Key Third Party Consents” means those consents, approvals and notices required from any third party to proceed with the transactions contemplated by this Agreement and the Plan of Arrangement, set out in Schedule D hereto;

“Law” or “Laws” means all laws (including common law), by-laws, statutes, rules, regulations, principles of law and equity, orders, rulings, ordinances, judgements, injunctions, determinations, awards, decrees or other requirements, whether domestic or foreign, and the terms and conditions of any grant of approval, permission, authority or license of any Governmental Entity, and the term “applicable” with respect to such Laws and in a context that refers to one or more Parties, means such Laws as are applicable to such Party or its business, undertaking, assets, property or securities and emanate from a Person having jurisdiction over the Party or Parties or its or their business, undertaking, assets, property or securities;

“Liens” means any hypothecs, mortgages, pledges, assignments, liens, charges, security interests, encumbrances and adverse rights or claims, other third Person interest or encumbrance of any kind, whether contingent or absolute, and any agreement, option, right or privilege (whether by Law, contract or otherwise) capable of becoming any of the foregoing;

“Lock-Up Agreements” means each of the lock-up agreements dated the date hereof between Acquiror and each of the Locked-Up Shareholders substantially in the form of Schedule E;

“Locked-Up Shareholders” means each of the officers and directors of Target, together with their spouse, immediate family members or any company under their control that holds Target Shares, and John Tognetti;

“Long Canyon Property” means the approximately 49 square kilometres of unpatented mining claims and private mineral lands commonly known as the “Long Canyon property”, located in Elko County, Nevada as depicted on Schedule I;

“Material Adverse Effect” means, in respect of any Person, any change, effect, event, circumstance, fact or occurrence that individually or in the aggregate with other such changes, effects, events, circumstances, facts or occurrences, is or would reasonably be expected to be, material and adverse to the business, condition (financial or otherwise), properties, assets (tangible or intangible), liabilities (including any contingent liabilities), operations or results of operations of that Person and its subsidiaries, taken as a whole, except any change, effect, event, circumstance, fact or occurrence resulting from or relating to: (i) the announcement of the execution of this Agreement or the transactions contemplated hereby; (ii) general political, economic or financial conditions, including in Canada or the United States (provided that such conditions do not have a materially disproportionate effect on Target relative to comparable exploration and/or mining companies); (iii) the state of securities or commodity markets in general (provided that it does not have a materially disproportionate effect on that Person relative to comparable exploration and/or mining companies); (iv) changes affecting the mining industry generally (provided that such changes do not have a materially disproportionate effect on that Person relative to comparable exploration and/or mining companies); (v) any change in the price of gold; (vi) the commencement or continuation of any war, armed hostilities or acts of terrorism (provided that it does not have a materially disproportionate effect on that Person relative to comparable exploration and/or mining companies); (vii) any decrease in the trading price or any decline in the trading volume of that Person’s co mmon shares (it being understood that the causes underlying such change in trading price or trading volume (other than those in items (i) to (vi) above) may be taken into account in determining whether a Material Adverse Effect has occurred);

“Material Contracts” means any Contract: (i) which, if terminated or modified or if it ceased to be in effect, would reasonably be expected to have a Material Adverse Effect on Target; (ii) under which Target or any of its subsidiaries has directly or indirectly guaranteed any liabilities or obligations of a third party (other than ordinary course endorsements for collection) in excess of $3,000,000 in the aggregate; (iii) relating to indebtedness for borrowed money, whether incurred, assumed, guaranteed or secured by any asset, with an outstanding principal amount in excess of $3,000,000; ( iv) providing for the establishment, organization or formation of any joint ventures; (v) under which Target or any of its subsidiaries is obligated to make or expects to receive payments in excess of $1,500,000 over the remaining term of the Contract, excluding Target’s head office lease at 1055 West Hastings in Vancouver, British Columbia which shall be deemed not to be a Material Contract; (vi) that limits or restricts Target or any of its subsidiaries from engaging in any line of business or any geographic area in any material respect or (vii) that is otherwise material to Target and its subsidiaries, considered as a whole;

            such Acquisition Proposal and, if the Target Board ultimately determines it to be a Superior Proposal, to observe and satisfy Acquiror’s Response Period, all as contemplated in Article 7 and Article 9 hereof (and to postpone the Target Meeting to a day not more than five Business Days following the expiry of the Acquiror’s Response Period, if requested by Acquiror to do so); and provided further that, in exercising the right to postpone or adjourn set out in this Section 2.2(a), Target shall not be permitted to change the record date for the Target Meeting.

(b)               Target will use commercially reasonable efforts to solicit proxies in favour of the approval of the Arrangement Resolution, including, if so requested by Acquiror and at the Acquiror’s cost, by using proxy solicitation services designated by Acquiror. Target shall instruct Target’s transfer agent and any such proxy solicitation agents to report to Acquiror and its designated Representatives concurrently with their reports to Target, and to advise Acquiror as Acquiror may reasonably request, and on a daily basis on each of the last ten (10) Business Days prior to the Target Meeting, as to the aggregate tally of the proxies received by Target in respect of the Arrangement Resolution.

(c)                Target will promptly advise Acquiror of any written notice of dissent or purported exercise by any Target Shareholder of Dissent Rights received by Target in relation to the Arrangement Resolution and any withdrawal of Dissent Rights received by Target and, subject to applicable Law, any written communications sent by or on behalf of Target to any Target Shareholder exercising or purporting to exercise Dissent Rights in relation to the Arrangement Resolution.

(d)< font lang=en-ca style="font-weight: normal; " face="times new roman">               Within five (5) days of execution of this Agreement and as soon as practical after the record date for the Target Meeting, Target will prepare or cause to be prepared by its transfer agent and provided to Acquiror a list of the holders of Target Shares and Target Options, and will deliver to Acquiror thereafter on demand supplemental lists setting out any changes thereto, all such deliveries to be in electronic format if available from Target’s transfer agent.

2.3         &nb sp;                            Target Circular

(a)                Target shall prepare the Target Circular in compliance with the Interim Order and applicable Laws and file the Target Circular on a timely basis, and in any event on or before March 4, 2011, in all jurisdictions where the same is required to be filed and mail the same as required by the Interim Order and in accordance with all applicable Laws, in all jurisdictions where the same is required. Without limiting the generality of the foregoing, Target shall, in consultation with Acquiror, use all commercially reasonable efforts to abridge the timing contemplated by National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer, as provided in section 2.20 thereof.

(b)               Target shall ensure that the Target Circular complies in all material respects with the Interim Order and applicable Laws, and, without limiting the generality of t he foregoing, that the Target Circular does not contain any untrue statement of a

            material fact or omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made (other than in each case with respect to any information relating to and provided by Acquiror and its affiliates) and shall provide Target Shareholders with information in sufficient detail to permit them to form a reasoned judgement concerning the matters to be placed before them at the Target Meeting. Subject to Sections 7.1 to 7.3, the Target Circular will include the unanimous recommendation of the Target Board that Target Shareholders vote in favour of the Arrangement Resolution, and a statement that each director of Target intends to vote all of such director’s Ta rget Shares (including any Target Shares issued upon the exercise of any Target Options) in favour of the Arrangement Resolution, subject to the other terms of this Agreement and the Lock-up Agreements.

(c)                Acquiror will furnish to Target all such information regarding Acquiror and its affiliates as may be reasonably required by Target in the preparation of the Target Circular and other documents related thereto. Acquiror shall ensure that no such information will include any untrue statement of a material fact or omit to state a material fact required to be stated in the Target Circular in order to make any information so furnished or any information concerning Acquiror and its affiliates not misleading in light of the circumstances in which it is disclosed. Acquiror shall also provide Target with any disclosure reasonably requested by Target to permit reliance upon the exemption from registration provided under Section 3(a)(10) of the U.S. Securities Act with respect to the distribution of Spinco Shares by Target pursuant to the Arrangement in exchange for Target Shares pursuant to the transactions described herein, and Target shall include such disclosure in the form provided by the Acquiror in the Target Circular.

(d)               Acquiror and its legal counsel shall be given a reasonable opportunity to review and comment on the Target Circular, prior to the Target Circular being printed and mailed to Target Shareholders and filed with the Securities Authorities, and reasonable consideration shall be given to any comments made by Acquiror and its counsel, provided that all information relating to Acquiror included in the Target Circular shall be in form and content satisfactory to Acquiror. Target shall provide Acquiror with a final copy of the Target Circular prior to mailing to the Target Shareholders.

(e)                Target and Acquiror shall each promptly notify each other if at any time before the Effective Date, it becomes aware (in the case of Target only with respect to Target and Spinco and in the case of Acquiror only with respect to Acquiror) that the Target Circular contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made, or that otherwise requires an amendment or supplement to the Target Circular, and the Parties shall co-operate in the preparation of any amendment or supplement to the Target Circular, as required or appropriate, and Target shall p romptly mail or otherwise publicly disseminate any amendment or supplement to the Target Circular to Target Shareholders and, if required by the Court or

applicable Laws, file the same with the Securities Authorities and as otherwise required.

2.4                                      Final Order

If (i) the Interim Order is obtained, and (ii) the Arrangement Resolution is passed at the Target Meeting by Target Shareholders as provided for in the Interim Order and as required by applicable Law, subject to the terms of this Agreement, Target shall as soon as reasonably practicable thereafter and in any event within two Business Days thereafter take all steps necessary or desirable to submit the Arrangement to the Court and diligently pursue an application for the Final Order pursuant to section 182 of the OBCA.

2.5                                      Court Proceedings

Subject to the terms of this Agreement, Acquiror will cooperate with and assist Target in seeking the Interim Order and the Final Order, including by providing Target on a timely basis any information required to be supplied by Acquiror in connection therewith. Target will provide legal counsel to Acquiror with reasonable opportunity to review and comment upon drafts of all material to be filed with the Court in connection with the Arrangement, and will give reasonable consideration to all such comments. Target will also provide legal counsel to Acquiror on a timely basis with copies of any notice of appearance or notice of intent to oppose and any evidence served on Target or its legal counsel in respect of the application for the Interim Order or the Final Order or any appeal therefrom. Subject to applicable Law, Target will not file any material with the Court in connection with the Arrange ment or serve any such material, and will not agree to modify or amend materials so filed or served, except as contemplated hereby or with Acquiror’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed; provided that nothing herein shall require Acquiror to agree or consent to any increase in the Consideration or other modification or amendment to such filed or served materials that expands or increases Acquiror’s obligations set forth in this Agreement.

2.6                                      Articles of Arrangement and Effective Date

The Articles of Arrangement shall, unless otherwise agreed to in writing by Acquiror and Target, be filed by Target not later than the fifth Business Day after the satisfaction or, where not prohibited by applicable Law, the waiver of the conditions set forth in Article 6 by the applicable Party for whose benefit such conditions exist (excluding conditions that, by their terms, cannot be satisfied until the Effective Date, but subject to the satisfaction or, where not prohibited by applicable Law, the waiver of those conditions as of the Effective Time by the applicable Party for whose benefit such conditions exist). Upon the Arrangement Resolution having been approved and adopted by the Target Shareholders at the Target Meeting, in accordance with the Interim Order and Target obtaining the Final Order and filing the Articles of Arrangement, the Arrangement shall be effective at the Effective Time on the Effective Date and will have all of the effects provided by applicable Law.

2.7                                      Payment of Consideration

Acquiror will, following receipt of the Final Order and prior to the Effective Time deliver or cause to be delivered to the Depositary in escrow pending the Effective Time, sufficient cash to pay the aggregate Consideration to be paid to Former Target Shareholders (other than dissenting Target Shareholders) under the Arrangement, together with sufficient cash advanced to the Depositary in respect of a Canadian dollar denominated, demand, interest bearing loan to be made on or prior to the Effective Time from Acquiror Sub to Target in the amount by which (a) Target’s cash payment obligations (including source deductions) in connection with the Cash-Out Consideration (as defined in the Plan of Arrangement) to be paid to Target Optionholders under the Plan of Arrangement, plus the amount of the Subco Note (as defined in Schedule B to the Target Disclosure Letter) exceeds (b) the estimated ca sh in Target on the Effective Date after deducting transaction costs and reasonable working capital requirements.

2.8                                      Preparation of Filings

Acquiror and Target shall co-operate in the preparation of any application for the Key Regulatory Approvals and any other orders, registrations, consents, filings, rulings, exemptions, no-action letters and approvals and the preparation of any documents reasonably deemed by either of them to be necessary to discharge its respective obligations or otherwise advisable under applicable Laws in connection with this Agreement or the Plan of Arrangement.

2.9                                      Announcement and Shareholder Communications

Acquiror and Target shall issue a joint press release with respect to this Agreement and the Arrangement promptly following the execution of this Agreement, the text of such announcement to be in a form approved by each of Acquiror and Target in advance, acting reasonably and without delay. Each Party shall consult with the other Party prior to issuing any other press releases or otherwise making public written statements with respect to the Arrangement or this Agreement and shall provide the other Party with a reasonable opportunity to review and comment on all such press releases or public written statements prior to the release thereof. Acquiror and Target agree to co-operate in the preparation of presentations, if any, to Target Shareholders regarding the Plan of Arrangement; provided, however, that the foregoing shall be subject to each Party’s overriding obligation to make any discl osure or filing required under applicable Laws or stock exchange rules, and the Party making such disclosure shall use all commercially reasonable efforts to give prior oral or written notice to the other Party and reasonable opportunity to review or comment on the disclosure or filing, and if such prior notice is not possible, to give such notice immediately following the making of such disclosure or filing.

2.10                                  Withholding Taxes

Acquiror, Acquiror Sub, Target, Spinco and the Depositary shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable to any Person hereunder or under the Plan of Arrangement and from all dividends or other distributions or other payments otherwise payable to any former securityholders of Target such amounts as Acquiror, Acquiror Sub, Target, Spinco or the Depositary may be permitted or required to deduct and withhold therefrom under any provision of applicable Laws in respect of Taxes. To the extent that such amounts are so deducted, withheld and remitted, such amounts s hall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

Article 3
REPRESENTATIONS AND WARRANTIES OF TARGET

3.1                                      Representations and Warranties

Target hereby represents and warrants to and in favour of Acquiror as follows, except to the extent that such representations and warranties are qualified by the Target Disclosure Letter (which shall make reference to the applicable section, subsection, paragraph or subparagraph below in respect of which such qualification is being made), and acknowledges that Acquiror is relying upon such representations and warranties in connection with the entering into of this Agreement. Acquiror acknowledges and agrees that it is the operator of the Sandman Joint Venture and, accordingly, none of the representations and warranties made in this Section 3.1 shall apply to the Sandman Joint Venture except as specifically provided for.

(a)                Fairness Opinion and Directors’ Approvals. As of the date hereof:

(i)                 RBC Capital Markets has delivered an oral opinion to the Target Board to the effect that as of the date of such opinion, subject to the assumptions and limitations set out therein, the consideration to be received under the Arrangement is fair from a financial point of view to the Target Shareholders; and

(ii)               the Target Board, after consultation with its financial and legal advisors, has determined that the Arrangement is in the best interests of Target and is fair to the Target Shareholders and accordingly has resolved un animously to recommend to the Target Shareholders that they vote in favour of the Arrangement Resolution. The Target Board has unanimously approved the Arrangement pursuant to the Plan of Arrangement and the execution and performance of this Agreement.

(b)               Organization and Qualification. Target and each of its Material Subsidiaries and, to the knowledge of Target, each of the Joint Venture Companies is a corporation duly incorporated, amalgamated, continued or created and vali dly existing under the applicable Laws of its jurisdiction of incorporation, continuance or creation and has all necessary corporate or legal power and capacity to own its property and assets as now owned and to carry on its business as it is now being conducted. A true and complete copy of the constating documents of Target, each of its Material Subsidiaries and, to the extent in the possession of Target, the Joint Venture Companies has been provided directly to Acquiror. Target and each of its Material Subsidiaries and, to the knowledge of Target, each of the Joint Venture Companies, is duly registered, licensed or otherwise authorized and qualified to do business and each is in good standing in each jurisdiction in which the character of its properties, owned, leased, licensed or otherwise held, or the nature of its activities, makes such qualification necessary, except where the failure to be so registered or in good standing or to have such permits would not have a Material Adverse Effect on Target.

(c)                Authority Relative to this Agreement. Target has all necessary corporate power, authority and capacity to enter into this Agreement and all other agreements and instruments to be executed by Target as contemplated by this Agreement, and to perform its obligations hereunder and under such agreements and instruments. The execution and delivery of this Agreement by Target and the performance by Target of its obligations under this Agreement have been duly authorized by the T arget Board and except for obtaining Target Shareholder Approval, the Interim Order and the Final Order in the manner contemplated herein, and providing the Director under the OBCA with articles of arrangement in prescribed form and any records, information or other documents required by him in connection with the Arrangement, no other corporate proceedings on its part are necessary to authorize this Agreement or the Arrangement, other than, with respect to the Circular and other matters relating thereto, the approval of the Target Board. This Agreement has been duly executed and delivered by Target, and constitutes a legal, valid and binding obligation of Target, enforceable against Target in accordance with its terms, subject to the qualification that such enforceability may be limited by bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting rights of creditors and that equitable remedies, including specific performance, are discretionary and may not be ordere d.

(d)               No Violation. Neither the authorization, execution and delivery of this Agreement by Target nor the completion of the transactions contemplated by this Agreement or the Arrangement, nor the performance of its obligations thereunder, nor compliance by Target with any of the provisions hereof will:

(i)                 result in a violation or breach of, constitute a default (or an event which, with notice or lapse of time or both, would become a default), require any consent or approval to be obtained or notice to be given under, or give rise to any third party right of termination, cancellation, suspension, acceleration, penalty or payment obligation or right to purchase or sale under, any provision of:

(A)             its or any Material Subsidiary’s or the Joint Venture Companies’ articles, charters or by-laws or other comparable organizational documents;

(B)              any material Permit or Material Contract to which Target, any of its Material Subsidiaries or any of the Joint Venture Companies is a party or to which any of them, or any of their respective properties or assets, may be subject or by which Target or any of its Material Subsidiaries or any of the Joint Venture Companies is bound; or

(C)              except for the Key Regulatory Approvals, any Laws, regulation, order, judgment or decree applicable to Target, its Material Subsidiaries, or the Joint Venture Companies, or any of their respective properties or assets

provided that the representations and warranties given in paragraphs (B) and (C) above in respect of the Joint Venture Companies are given to the knowledge of Target; or

(ii)               give rise to any rights of first refusal or trigger any change in control provisions, rights of first offer or first refusal or any similar provisions or any restrictions or limitation under any note, bond, mortgage, indenture, Material Contract or material Permit to which Target, any of its Material Subsidiaries or any of the Joint Venture Companies is a party or in respect of any Target Exploration Property that is material to Spinco;

(iii)             give rise to any termination or acceleration of indebtedness, or cause any third party indebtedness to come due before its stated maturity or cause any available credit to cease to be available;

(iv)             result in the imposition of any Lien upon any of the property or assets of Target, or a Materia l Subsidiary of Target, or to the knowledge of Target, any of the Joint Venture Companies, or restrict, hinder, impair or limit the ability of Target or a Material Subsidiary of Target or, to the knowledge of Target, any of the Joint Venture Companies to conduct the business of Target or a Material Subsidiary of Target or any of the Joint Venture Companies as and where it is now being conducted which would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Target; or

(v)               except as provided for in Section 5.6, result in any mater ial payment (including retention, severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any director, officer or employee of Target or any of its Material Subsidiaries, or increase any benefit payable to such director, officer or employee by Target or any of its Material Subsidiaries, or result in the acceleration of the time of payment or vesting of any such benefits.

The Key Third Party Consents listed in Schedule D are the only consents, approvals and notices required from any third party under any Material Contracts of Target or any of its Material Subsidiaries or, to the knowledge of Target, the Joint Venture Companies in order for Target and its subsidiaries to proceed with the execution and delivery of this Agreement and the completion of the transactions contemplated by this Agreement (including the transfer of the Target Exploration Properties and Spinco Assets to Spinco and the assumption by Spinco of the Spinco Liabilities) and the Arrangement pursuant to the Plan of Arrangement.

(e)                Capitalization. The authorized share capital of Target consists of an unlimited number of Target Shares. As of the close of business on February 2, 2011, there are issued and outstanding 151,106,620 Target Shares. As of the close of business on February 2, 2011, an aggregate of up to 12,685,383 Target Shares are issuable upon the exercise of Target Options. Except for the Target Options and the Plan

            of Arrangement, there are no options, warrants, conversion privileges or other rights, agreements, arrangements or commitments (pre-emptive, contingent or otherwise) of any character whatsoever requiring or which may require the issuance, sale or transfer by Target of any securities of Target (including Target Shares), or any securities or obligations convertible into, or exchangeable or exercisable for, or otherwise evidencing a right or obligation to acquire, any securities of Target (including Target Shares) or subsidiaries of Target. Since the close of business on February 2, 2011, no Target Shares have been issued other than pursuant to the terms of Target Options outstanding at that time, and no Target Options have been issued. All outstanding Target Shares have been d uly authorized and validly issued, are fully paid and non-assessable, and all Target Shares issuable upon the exercise of Target Options in accordance with their respective terms have been duly authorized and, upon issuance, will be validly issued as fully paid and non-assessable, and are not and will not be subject to, or issued in violation of, any pre-emptive rights. All securities of Target (including the Target Shares and the Target Options) have been issued in compliance with all applicable Laws and Securities Laws. Other than the Target Options, there are no securities of Target or of any of its subsidiaries outstanding which have the right to vote generally (or are convertible into or exchangeable for securities having the right to vote generally) with the Target Shareholders on any matter and, further, no Target Option is exercisable for more than one Target Share. There are no outstanding contractual or other obligations of Target or any subsidiary to repurchase, redeem or otherwise acquire any of its securities or with respect to the voting or disposition of any outstanding securities of any of its subsidiaries. There are no outstanding bonds, debentures or other evidences of indebtedness of Target or any of its subsidiaries having the right to vote with the holders of the outstanding Target Shares on any matters.

(f)                Ownership of Subsidiaries. Section 3.1(f) of the Target Disclosure Letter includes complete and accurate lists of all subsidiaries owned, dire ctly or indirectly, by Target, each of which is wholly-owned except as otherwise noted on Section 3.1(f) of the Target Disclosure Letter. Except as disclosed in Section 3.1(f) of the Target Disclosure Letter, Target does not own any securities of any joint venture entity other than the Joint Venture Companies within the area of the Target Mining Properties. All of the issued and outstanding shares of capital stock and other ownership interests in the subsidiaries of Target and, to the knowledge of Target, Joint Venture Companies are duly authorized, validly issued, fully paid and, where the concept exists, non-assessable, and all such shares and other ownership interests held directly or indirectly by Target are legally and beneficially owned free and clear of all Liens, and there are no outstanding options, warrants, rights, entitlemen ts, understandings or commitments (contingent or otherwise) regarding the right to purchase or acquire, or securities convertible into or exchangeable for, any such shares of capital stock or other ownership interests in or material assets or properties of any of the subsidiaries of Target or, to the knowledge of Target, the Joint Venture Companies. There are no contracts, commitments, agreements, understandings, arrangements or restrictions which require any subsidiaries of Target or, to the knowledge of Target, the Joint

            Venture Companies to issue, sell or deliver any shares in its share capital or other ownership interests, or any securities or obligations convertible into or exchangeable for, any shares of its share capital or other ownership interests. 

(g)               Reporting Status and Securities Laws Matters. Target is a “reporting issuer” and not on the list of reporting issuers in default under applicable Canadian provincial Securities Laws in each of the Provinces of Canada.  Target and its subsidiaries and, to the knowledge of Target, each of the Joint Venture Companies, have been and are now in compliance, in all material respects, with all applicable Securities Laws and there are no current, pending or threatened proceedings before any Securities Authority or other Governmental Entity relating to any alleged non-compliance with any Securities Laws.  The Target Shares are listed on, and Target is in compliance with the rules and policies of, the TSX and the NYSE Amex. Target is not subject to regulation by any other stock exchange. No delisting, suspension of trading in or cease trading order with respect to any securities of Target and, except as disclosed in the Target Disclosure Letter, to the knowledge of Target, no inquiry or inves tigation (formal or informal) of any Securities Authority (including, for purposes of this paragraph, any similar authority in the United States), the TSX or the NYSE Amex is in effect or ongoing or, to the knowledge of Target, expected to be implemented or undertaken.

(h)               Public Filings. Target has filed all documents required to be filed by it in accordance with applicable Securities Laws with the Securities Authorities, the TSX or the NYSE Amex. All such documents and infor mation comprising the Target Public Disclosure Record, as of their respective dates (or, if amended, as of the date of such amendment), (1) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, and (2) complied in all material respects with the requirements of applicable Securities Laws, and any amendments to the Target Public Disclosure Record required to be made have been filed on a timely basis with the Securities Authorities, the TSX or the NYSE Amex. Target has not filed any confidential material change report with any Securities Authorities, the TSX or the NYSE Amex that at the date of this Agreement remains confidential.

(i)                 Target Financial Statements. Target’s audited financial statements as at and for the fiscal years ended December 31, 2009 and 2008 (including the notes thereto) and related management’s discussion and analysis (“MD&A”) and Target’s consolidated financial statements as at and for the nine months ended September 30, 2010 (collectively, the “Target Financial Statements”) were prepared in accordance with GAAP consistently applied (except (A) as otherwise indicated in such financial statements and the notes thereto or, in the case of audited statements, in the related report of Target’s independent auditors, or (B) in the case of unaudited interim statements, are subject to normal period-end adjustments and may omit notes which are not required by applicable Laws in the unaudited statements) and present fairly in all material respects the consolidated financial condition, results of operations, changes in financial position of Target and its subsidiaries as of the dates thereof and for the periods indicated therein

            (subject, in the case of any unaudited interim financial statements, to normal period-end adjustments) and reflect reserves required by GAAP in respect of all material contingent liabilities, if any, of Target and its subsidiaries on a consolidated basis. Target’s audited financial statements for the fiscal year ended December 31, 2010 will be filed as required pursuant to National Instrument 51-101 “Continuous Disclosure Obligations” on or before March 31, 2011. There has been no material change in Target’s accounting policies, except as described in the notes to the Target Financial Statements, since September 30, 2010.

(j)                 Internal Controls and Financial Reporting. Target has (i) designed disclosure controls and procedures to provide reasonable assurance that material information relating to Target, including its subsidiaries, is made known to the Chief Executive Officer and Chief Financial Officer of Target on a timely basis, particularly during the periods in which the annual or interim filings are being prepared; (ii) designed internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP; (iii) has evaluated the effectiveness of Target’s disclosure controls and procedures and has disclosed in its MD&A its conclusions about the effectiveness of its disclosure controls and procedures; and (iv) has evaluated the effectiveness of Target’s internal control over financial reporting and has disclosed in its MD&A its conclusions about the effectiveness of internal control over financial reporting and, if applicable, the necessary disclosure relating to any material weaknesses. Target has not failed to disclose any information regarding any event, circumstance or action taken or failed to be taken within the knowledge of Target as at the date of this Agreement which could reasonably be expected to have a Material Adverse Effect on Target. To the knowledge of Target, prior to the date of this Agreement:

(i)                 there are no significant deficiencies in the design or operation of, or material weaknesses in, the internal controls over financial reporting of Target that could reasonably be expected to adversely affect Target’s ability to record, process, summarize and report financial information; and

(ii)               there is and has been no fraud, whether or not material, involving management or any other employees who have a significant role in the internal control over financial reporting of Target. Since January 1, 2008, Target has received no: (x) complaints from any source regarding accounting, internal accounting controls or auditing matters; or (y) expressions of concern from employees of Target or any Target subsidiary regarding questionable accounting or auditing matters.

(k)               Books and Records. The financial books, records and accounts of Target and the Material Subsidiaries and, to the knowledge of Target, the Joint Venture Companies: (i) have been maintained in accordance with applicable Laws and GAAP on a basis consistent with prior years; (ii) are stated in reasonable detail and accurately and fairly reflect the material transactions, acquisitions and

            dispositions of the assets of Target and its Material Subsidiaries; and (iii) accurately and fairly reflect the basis for Target Financial Statements.

(l)                 Minute Books. Except as disclosed in the Target Disclosure Letter, the corpo rate minute books of each of Target and the Material Subsidiaries (excluding the corporate minute books of AuEx Ventures Inc. and its subsidiaries relating to the period prior to November 2, 2010) and, to the knowledge of Target, the corporate minute books of AuEx Ventures Inc. and its subsidiaries relating to the period prior to November 2, 2010 and the Joint Venture Companies contain minutes of all meetings and resolutions of their respective boards of directors and committees of such boards of directors or managers, as applicable, other than those portions of minutes of meetings reflecting discussions of the Arrangement, and shareholders or members, as applicable, held according to applicable Laws and are complete and accurate in all material respects.

(m)             No Undisclosed Liabilities. Except as disclosed in the Target Disclosure Letter, Target and its subsidiaries and, to the knowledge of Target, the Joint Venture Companies have no outstanding indebtedness, liability or obligation (including liabilities or obligations to fund any operations or work or exploration program, to give any guarantees or for Taxes), whether accrued, absolute, contingent or otherwise, and are not party to or bound by any suretyship, guarantee, indemnification or assumption agreement, or endorsement of, or any other similar commitment with respect to the obligations, liabilities or indebtedness of any Person, other than those specifically disclosed in the Target Public Disclosure Record filed prior to the date of t his Agreement, specifically identified in the Target Financial Statements, or incurred in the ordinary course of business since the date of the most recent financial statements of Target Financial Statements.

(n)               No Material Change. Since September 30, 2010, except as contemplated by this Agreement (including the internal reorganization implemented prior to and following the date of this Agreement to transfer all of the Target Exploration Properties and Spinco Assets to Spinco and relating to the assumption by Spinco of the Spinco Liabilities) or as disclosed in Section 3.1(n) of the Target Disclosure Letter:

(i)                 each of Target and each subsidiary of Target and, to the knowledge of Target, the Joint Venture Companies has conducted its business only in the ordinary and regular course of business;

(ii)               there has not occurred any event that constituted or with the passage of time would constitute a Material Adverse Effect in respect of Target and its subsidiaries taken as a whole;

(iii)             the business and property of Target and its subsidiaries and, to the knowledge of Target, each of the Joint Venture Companies conform in all material respects to the description thereof contain ed in the Target Public Disclosure Record and there has not been any acquisition or sale by Target

            or any of its subsidiaries or, to the knowledge of Target, the Joint Venture Companies of any material property or assets;

(iv)             other than in the ordinary and regular course of business consistent with past practice, there has not been any incurrence, assumption or guarantee by Target or any of its subsidiaries or, to the knowledge of Target, the J oint Venture Companies of any debt for borrowed money, any creation or assumption by Target or any of its subsidiaries or, to the knowledge of Target, any of the Joint Venture Companies of any Lien or any making by Target or any of its subsidiaries or, to the knowledge of Target, any of the Joint Venture Companies of any loan, advance or capital contribution to or investment in any other Person;

(v)               there has been no dividend or distribution of any kind declared, paid or made by Target on any Target Shares;

(vi)             Target has not effected or passed any resolution to approve a split, consolidation or reclassification of any of the outstanding Target Shares; and

(vii)           there has not been any material increase in or modification of the compensa tion payable to or to become payable by Target or any of its subsidiaries to any of their respective directors, officers, employees or consultants or any grant to any such director, officer, employee or consultant of any increase in severance or termination pay or any increase or modification of any bonus, pension, insurance or benefit arrangement (including the granting of Target Options pursuant to the Target Stock Option Plans) made to, for or with any of such directors, officers, employees or consultants.

(o)               Litigation. Except as disclosed in Section 3.1(o) of the Target Disclosure Letter, there is no claim, action, suit, grievance, complaint, proceeding or investigation that has been commenced or, to the knowledge of Target, is threatened affecting Target, its Material Subsidiaries or, to the knowledge of Target, the Joint Venture Companies or affecting any of their respective property or assets at law or in equity before or by any Governmental Entity, including matters arising under Environmental Laws, which, individually or in the aggregate, if determined adversely to Target, its Material Subsidiaries or the Joint Venture Companies, as the case may be, has or could reasonably be expected to result in liability to Target or such Material Subsidiary or the Joint Venture Companies in excess of $500,000. Neither Target, any of its Material Subsidiaries nor, to the knowledge of Target, the Joint Venture Companies nor their respective assets or properties is subject to any outs tanding judgment, order, writ, injunction or decree.

(p)               Taxes. Except as disclosed in Section 3.1(p) of the Target Disclosure Letter:

(i)            & nbsp;    Target and each of its Material Subsidiaries has filed or caused or will cause to be filed on a timely basis all Returns required to be filed by

            applicable Law on or before the Effective Date. All such Returns are correct and complete in all material respects and have not been amended. Target and each of its Material Subsidiaries has timely paid all material Taxes that are due and payable by Target or its Material Subsidiaries, including all instalments on account of taxes for the current year that are due and payable by Target or its Material Subsidiaries whether or not assessed (or reassessed) by the appropriate Governmental Entity, and has, as applicable, timely remitted such Taxes to the appropriate Governmental Entity under applicable Law. Reserves and provisions for Taxes accrued but not yet due and payable on or before the Effective Date as reflected in the Target Financial Statements are adequate as of the date of the Target Financial Statements and are in accordance with GAAP. Except for Permitted Encumbrances, there are no liens for Taxes upon any of the assets or properties of Target or any of its Material Subsidiaries.

(ii)               There is no material dispute or claim, including any audit, investigation or examination by any Governmental Entity, actual, pending or, to the knowledge of Target, threatened, concerning any Tax liability of Target or any of its Material Subsidiaries, no written notice of such an audit, investigation, examination, material dispute or claim has been received by Target or any of its Material Subsidiaries.

(iii)             Neither Target nor any of its Material Subsidiaries has requested, or entered into any agreement or other arrangement, or executed any waiver providing for, any extension of time within which:

(A)             to file any Return (which has not since been filed) in respect of any Taxes for which any of Target or its Material Subsidiaries is or may be liable;

(B)              to file any elections, designations or similar filings relating to Taxes (which have not since been filed) for which any of Target or its Material Subsidiaries is or may be liable;

(C)              any of Target or its Material Subsidiaries is required to pay or remit any Taxes or amounts on account of Taxes (which have not since been paid or remitted); or

(D)             any Governmental Entity may assess or collect Taxes for which any of Target or its Material Subsidiaries is liable.

(iv)             For U.S. federal income tax purposes, neither Target nor any of its Material Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Effective Date as a result of any:

(A)             change in method of accounting for a taxable period ending on or prior to the Effective Date;

            section 1.6011-4(b)(2) or in any other “reportable transaction” within the meaning of U.S. Treasury Regulation section 1.6011-4(b)(1).

(xii)           During the last three years, neither Target nor any of its Material Subsidiaries has been a party to any transaction (other than a transaction described in section 355(e)(2)(C) of the U.S. Tax Cod e) treated by the parties thereto as one to which section 355 of the U.S. Tax Code (or any similar provision of state, local, or foreign Law) applied.

(xiii)         There are no Tax credits, grants or similar amounts that are or will be subject to “clawback” or recapture as a result of the transactions contemplated by this Agreement or an act (or failure to act) by Target or any of its Material Subsidiaries to satisfy any requirement on which the credit, grant or similar amount is or was conditioned.

(xiv)         None of the assets of Target or its Material Subsidiaries is “tax-exempt use property” within the meaning of section 168(h) of the U.S. Tax Code and none of the property of Target or any of its Material Subsidiaries is properly treated as owned by persons other than Target or its Material Subsidiaries for tax purposes.

(xv)           As a direct or indirect result of the transactions contemplated by this Agreement and the Plan of Arrangement, no payment or other benefit, and no acceleration of the vesting of any options, payments or other benefits, either (i) will be an “excess parachute payment” to a “disqualified individual” as those terms are defined in section 280G of the U.S. Tax Code and the U.S. Treasury Regulations thereunder, or (ii) will be (or under section 280G of the U.S. Tax Code and the U.S. Treasury Regulations thereunder be presumed to be) a “parachute payment” to a “disqualified individual” as those terms are defined in such provisions of the U.S. Tax Code and regulations, without regard to whether such payment or acceleration is reasonable compensation for personal services performed or to be performed in the future.

(xvi)         Neither Target nor any of its Material Subsidiaries has made or is obligated to make any payment that would not be deductible pursuant to section 162(m) of the U.S. Tax Code.

(xvii)       Each arrangement or plan relating to any employee or service provider of Target or any of its Material Subsidiaries that is subjec t to section 409A of the U.S. Tax Code has been operated in good faith compliance, in all material respects, with section 409A of the U.S. Tax Code.

(xviii)     For all taxable periods (and portions thereof) (i) none of the Material Subsidiaries has a “dual consolidated loss” within the meaning of section 1503(d)(2) of the U.S. Tax Code and applicable U.S. Treasury Regulations that is subject to disallowance pursuant to section 1503(d) of the U.S. Tax Code, (ii) each of the Material Subsidiaries has been and

            continues to be in compliance with all applicable U.S. Treasury Regulations that are required to be satisfied in order to prevent any “dual consolidated loss” from being disallowed pursuant to section 1503(d) of the U.S. Tax Code and applicable U.S. Treasury Regulations, and (iii) there has been no event or other occurrence that would require the recapture of any “dual consolidated loss” pursuant to section 1503(d) of the U.S. Tax Code and applicable U.S. Treasury Regulations. Neither Target nor any of its subsidiaries has made any election under Section 897(i) of the U.S. Tax Code to be treated as a domestic corporation.

(xix)         None of Target or any of its subsidiaries has taken a reporting position on a Return, which reporting position (i) if not sustained would be reasonably likely to give rise to a penalty for substantial understatement of U.S. federal Income Tax under section 6662 of the U.S. Tax Code (or any similar provision of state, provincial, local or foreign Tax Law), and (ii) has not adequately been disclosed on such Return in accordance with section 6662(d)(2)(B) of the U.S. Tax Code (or any similar provision of state, provincial, local or foreign Tax law).

(xx)           For the purposes of the Tax Act, the paid-up capital for the Target Shares is at least equal to $80 million.

(q)               Title to Joint Venture Companies. Target holds, directly or indirectly, a 49% interest in WP LLC, which interest is held free and clear of all Liens.  WP LLC, together with its wholly-owned subsidiary, Pequop Exploration LLC, collectively own 100% of the mining claims and acres of private mineral lands commonly known as the “West Pequop Property”, which interests are, in each case, held free and clear of all Liens other than Permitted Encumbrances.

(r)                 Property. Other than in respect of the Sandman Joint Venture for which no representation or warranty is made (with the exceptio n of (i), (iii), (viii), (ix), (x) and (xiii) below for which such representations and warranties include representations and warranties with respect to the Sandman Joint Venture and Sandman Property) or as disclosed in Section 3.1(r) of the Target Disclosure Letter:

(i)                 Target, its Material Subsidiaries and the Joint Venture Companies are the legal and/or beneficial owners of all right, title and interest in the Target Mining Properties, free and clear of any title defects, pursuant to valid, subsisting and enforceable title documents or other recognized and enforceable agreements or instruments, and none of Target, its Material Subsidiaries or, to the knowledge of Target, the Joint Venture Companies is in default of any of the material provisions of such documents, agreements and instruments nor has any such default been alleged.

(ii)               The Target Mining Properties are the only mining concessions, unpatented claims, leases, licenses, permits or other rights that are required to conduct

            the activities of Target, its Material Subsidiaries or the Joint Venture Companies as currently conducted on the properties subject thereto.

(iii)             The interests of Target, its Material Subsidiaries and the Joint Venture Companies in the Target Mining Properties are held free and clear of all Liens other than Permitted Encumbrances. Section 3.1(r) o f the Target Disclosure Letter sets out an up to date, true description in all material respects of the interests of Target, its Material Subsidiaries and the Joint Venture Companies in each of the Target Mining Properties.  True and complete copies of any agreement or document pursuant to which Target, any of its Material Subsidiaries or, to the knowledge of Target, the Joint Venture Companies holds its interest in such Target Mining Properties have been provided to Acquiror.

(iv)             Applying customary standards in the mining industry, each of the Target Mining Properties has been properly recorded, and, to the knowledge of Target, located, in compliance with applicable Laws and comprises a valid and subsisting mineral claim, provided that the foregoing representation as it relates to the Joint Venture Companies is qualified by the knowledge of Target;

(v)               Each Target Mining Property is in good standing with the applicable Governmental Entities, except to the extent that not being in good standing would not, individually or in the aggregate, be materially adverse to such Target Mining Property, provided that the foregoing representation as it rela tes to the Joint Venture Companies is qualified by the knowledge of Target;

(vi)             Any and all Taxes and other payments required to be paid by the date hereof in respect of the Target Mining Properties and all rental payments required to be paid by the date hereof in respect of the Target Mining Properties have been paid;

(vii)           Any and all filings required to be filed by the date hereof in respect of the Target Mining Properties have been filed, provided that the foregoing representation and warranty as it relates to the Joint Venture Companies is qualified by the knowledge of Target;

(viii)         Target, its Material Subsidiaries or the Joint Venture Companies have the exclusive right to deal with (A) the Target Mining Properties that are wholly-owned, and (B) their interests in the Target Mining Properties that are not wholly-owned;

(ix)             There are no back-in rights, earn-in rights, rights of first refusal, royalty rights or similar provisions in respect of the Target Mining Properties, subject to the Sandman Joint Venture where the foregoing representation is restricted to Target’s interest in the Sandman Property;

            indicated and inferred mineral resources of Target disclosed in the Target Public Disclosure Record have been prepared and disclosed in accordance with prudent mining practices and in accordance with the requirements prescribed by National Instrument 43-101 – Standards of Disclosure for Mineral Projects and the companion policy thereto. Target has no information that would lead it to believe that the mineral resources as disclosed in the Target Public Disclosure Record are inaccurate in any material respect or that there are any outstanding unresolved comments of any Securities Authority in respect of the technical disclosure made in the Target Public Disclosure Record. To the knowledge of Target, there has been no material reduction in the aggregate amount of estimated mineral resources of Target and its Material Subsidiaries, from the amounts disclosed publicly by Target in the MD&A for the nine month period ended September 30, 2010.

(u)               Material Contracts. With respect to the Material Contracts of Target:

(i)                 Section 3.1(u) of the Target Disclosure Letter includes a complete and accurate list of all Material Contracts to which Target or any of its Material Subsidiaries is a party and that are currently in force and Target has made available to Acquiror for inspection true and complete copies of all such Material Contracts.

(ii)               Except as disclosed in Section 3.1(u) of the Target Disclosure Letter, all of the Material Contracts of Target and each of its Material Subsidiaries are in full force and effect, and Target or its Material Subsidiaries are entitled to all rights and benefits thereunder in accordance with the terms thereof. Target and each of its Material Subsidiaries have not waived any rights under a Material Contract and no material default or breach exists in respect thereof on the part of Target or any of its Material Subsidiaries or, to the knowledge of Target, on the part of any other party thereto, and no event has occurred which, after the giving of notice or the lapse of time or both, would constitute such a default or breach or trigger a right of termination of any of such Material Contracts.

(iii)             All of the Material Contracts of Target and each of its Material Subsidiaries are valid and binding obligations of Target or its Material Subsidiaries as the case may be, enforceable in accordance with their respective terms, except as may be limited by bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights generally and subject to the qualification that equitable remedies may only be granted in the discretion of a court of competent jurisdiction.

(iv)           &nb sp; As at the date hereof, neither Target nor any of its Material Subsidiaries has received written notice that any party to a Material Contract of Target or any of its Material Subsidiaries intends to cancel, terminate or otherwise modify or not renew such Material Contract, and to the knowledge of Target, no such action has been threatened.

            Material Subsidiaries or, to the knowledge of Target, of the Joint Venture Companies that has or could reasonably be expected to have the effect of prohibiting, restricting, or impairing any business practice of any of them, any acquisition or disposition of property by any of them, or the conduct of the business by any of them as currently conducted, which could reasonably be expected to have a Material Adverse Effect on Target.

(ee)            Brokers. Except as disclosed by Target to Acquiror, no broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Target, and the aggregate amount of such fees that may become payable in respect of all such arrangements is set out in Section 3.1(ee) to the Target Disclosure Letter.

(ff)             ; Insurance. As of the date hereof, Target and each of its Material Subsidiaries have such policies of insurance as are listed in Section 3.1(ff) of the Target Disclosure Letter. All insurance maintained by Target or its Material Subsidiaries is in full force and effect and in good standing and is in amounts and in respect of such risks as are normal and usual for companies of similar size operating in the mining industry.

(gg)           United States Investment Company Act. Target is not registered, and is not required to be registered, as an “investment company” under the United States Investment Company Act of 1940, as amended, or the rules and regulations promulgated thereunder.

(hh)           Data Provided. To the knowledge of Target, the Confidential Information (as defined in the Confidentiality Agreement) provided by or on behalf of Target to Acquiror and its Representatives is true and accurate in all material respects.

(ii)               Certain Business Practices. To the knowledge of Target, none of Target, any of its subsidiaries or any director, officer, agent or employee of Target or any of its subsidiaries (in their capacities as such) has:

(i)                 used or agreed to use funds for contributions, gifts, entertainment or other purposes relating to political activity in violation of Law including the CFPOA or the FCPA; or

(ii)               made or agreed to make any payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns in violation of Law, including the CFPOA or the FCPA.

(jj)               Investment Canada Act. Target is not, and does not undertake, a “Canadian business” within the meaning of the Investment Canada Act (Canada).

(kk)           United States Antitrust Matters.

(i)                 Excluding (i) assets that are exempt under U.S. 16 C.F.R. § 802.2(c) and/or § 802.50(a), and (ii) minority equity interests in other companies:

            consent, waiver or approval to any of the Joint Venture Companies in respect of such actions, (v) amend the terms of any of its securities nor provide any consent, waiver or approval in respect of such amendments to the terms of any securities of the Joint Venture Companies; (vi) adopt a plan of liquidation or resolution providing for the liquidation or dissolution of Target or any of its Material Subsidiaries nor provide any consent, waiver or approval to any of the Joint Venture Companies in respect of such actions; (vii) amend its accounting policies or adopt new accounting policies, in each case except as required in accordance with GAAP; or (ix) enter into any agreement with respect to any of the foregoing;

(c)                (i) sell, pledge, hypothecate, lease, license, sell and lease back, mortgage, dispose of or encumber or otherwise transfer, in whole or in part, any of its interest in the Sandman Joint Venture, any of the Joint Venture Companies or the Target Mining Properties; (ii) acquire (by merger, amalgamation, consolidation or acquisition of shares or assets or otherwise), directly or indirectly, any assets, securities, properties, interests, business, corporation, par tnership or other business organization or division thereof, or make any investment either by the purchase of securities, contribution of capital, property transfer, or purchase of any other property or assets of any other Person other than pursuant to a Contract in existence on the date hereof, a Spinco Permitted Contract or a Cash Call Payment; (iii) incur, create, assume or otherwise become liable for, any indebtedness for borrowed money or any other liability or obligation or issue any debt securities or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other Person, or make any loans, capital contributions, investments or advances other than pursuant to a Contract in existence on the date hereof or a Spinco Permitted Contract; (iv) waive, release, grant or transfer any rights of material value; or (v) authorize or propose any of the foregoing or enter into any agreement to do any of the foregoing;

(d)               except in the ordinary course of business or as otherwise disclosed in Section 5.1(d) of the Target Disclosure Letter (i) sell, pledge, hypothecate, lease, license, sell and lease back, mortgage, dispose of or encumber or otherwise transfer any assets, securities, properties, interests or businesses of Target or any of its subsidiaries; (ii) pay, discharge or satisfy any material liabilities or obligations other than pursuant to a Cash Call Payment; or (iii) authorize or propose any of the foregoing or enter into any agreement to do any of the foregoing;

(e)                other than as is necessary to comply with applicable Laws or as expressly provided in Section 5.3 or Section 5.6 of this Agreement: (i) grant to any officer, employee, consultant or director of Target or any of its subsidiaries an increase in compensation in any form, or grant any general salary increase; (ii) make any loan to any officer, employee, consultant or director of Target or any of its subsidiaries; (iii) take any action with respect to the grant of any severance, change of control, bonus or termination pay to, or enter into any employment agreement, deferred compensation or other similar agreement (or amend any such existing agreement) with, or hire (other than pursuant to a Spinco Permitted Contract), or terminate employment (except for just cause) of, any officer, employee, consultant or director of Target or any of its subsidiaries; (iv) increase

            any benefits payable under any existing severance or termination pay policies or employment agreements, or adopt or materially amend any bonus, profit sharing, option, pension, retirement, deferred compensation, insurance, incentive compensation, compensation or other similar plan, agreement, trust, fund or arrangement for the benefit of directors, officers, employees, consultants or former directors, officers, employees or consultants of Target or any of its subsidiaries; (v) increase bonus levels or other benefits payable to any director, executive officer, consultant or employee of Target or any of its subsidiaries; (vi) provide for accelerated vesting, removal of restrictions or an exercise of any stock based or stock related awards (including stock options, stock apprec iation rights, deferred share units, performance units and restricted share awards) upon a change of control occurring on or prior to the Effective Time; or (vii) establish, adopt or amend (except as required by applicable Law) any collective bargaining agreement or similar agreement; 

(f)                settle, pay, discharge, satisfy, compromise, waive, assign or release (i) any material action, claim or proceeding brought against Target and/or any of its subsidiaries; or (ii) any action, claim or proceeding brought by any present, former or purported holder of its securitie s in connection with the transactions contemplated by this Agreement or the Plan of Arrangement;

(g)               enter into any agreement or arrangement that limits or otherwise restricts in any material respect Target or any of its Material Subsidiaries or any successor thereto, or that would, after the Effective Time, limit or restrict in any material respect Target or any of its affiliates from competing in any manner;

(h)               waive, release or assign any material rights, claims or benefits of Target, any of its subsidiaries or the Joint Venture Companies;

(i)                 (i) enter into any agreement that if entered into prior to the date hereof would be a Material Contract; (ii) modify or amend in any material respect, transfer or terminate any Material Contract, or waive, release or assign any material rights or claims thereto or thereunder; or (iii) enter into or modify any Contract or series of Contracts resulting in a new Contract or series of related new Contracts or enter into any modifications to an existing Contract or series of related existing Contracts outside of the ordinary course of business provided that Spinco will be entitled to enter into any contract, agreement, commitment or understanding that is a Spinco Permitted Contract;

(j)                 change any method of Tax acc ounting, make or change any material Tax election (other than as disclosed in Section 5.1(j) of the Target Disclosure Letter), file any amended Tax return, settle or compromise any Tax liability, agree to an extension or waiver of the limitation period with respect to the assessment, reassessment or determination of Taxes, enter into any closing agreement with respect to any Tax or surrender any right to claim a Tax refund;

(k)               take any action or fail to take any action which action or failure to act would result in the material loss, expiration or surrender of, or the loss of any material

            benefit under, or reasonably be expected to cause any Governmental Entity to institute proceedings for the suspension, revocation or limitation of rights under, any material Permits necessary to conduct its businesses as now conducted or as proposed to be conducted, or fail to prosecute with commercially reasonable due diligence any pending applications to any Governmental Entities for material Permits;

(l)                 take any action or fail to take any action that is intended to, or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the ability of Target to consummate the Arrangement or the other transactions contemplated by this Agreement;

(m)             take any action or enter into any transaction that would preclude the Canadian tax “bump” rules from applying upon an amalgamation or winding-up of Target or any of Target’s Canadian subsidiaries (or t heir successors by amalgamation), in calculating the tax cost of capital property distributed to Acquiror under paragraphs 88(1)(c) and (d) of the Tax Act;

(n)               take any action that would prevent Acquiror from making an election pursuant to Section 338(g) of the U.S. Tax Code and, if applicable, similar elections under any applicable state or local laws, with respect to Target and any Non-U.S. Subsidiary; or

(o)               agree, resolve or commit to do any of the foregoing.

Target shall use commercially reasonable efforts to cause the current insurance (or re-insurance) policies maintained by Target or any of its subsidiaries, including directors’ and officers’ insurance, not to be cancelled or terminated or any of the coverage thereunder to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten by insurance or re-insurance companies of nationally recognized standing having comparable deductibles and providing coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums are in full force and effect; provided that, subject to Section 7.5, none of Target or any of its subsidiaries shall obtain or renew any insurance (or re-insurance) policy for a term exceeding 12 months.

Target shall promptly notify Acquiror in writing of any circumstance or development that, to the knowledge of Target, is or could reasonably be expected to constitute a Material Adverse Effect.

            typically applied for by an acquiror and, in doing so, keep Target reasonably informed as to the status of the proceedings related to obtaining the Key Regulatory Approvals, including providing Target with copies of all related applications and notifications in draft form (except that where such material is confidential, contains information relating to the valuation of the transactions herein, or is subject to privilege or immunity, it will in each case be provided (subject to applicable Laws) to Target’s outside counsel on an “external counsel” basis), in order for Target to provide its reasonable comments thereon; and

(b)               subject to the terms and conditions of this Agreement and of the Plan of Arrangement and applicable Laws and in compliance with Section 2.7, pay the aggregate Consideration to be paid pursuant to the Arrangement at the time provided herein.

5.5                                      < b>Mutual Covenants

Each of the Parties covenants and agrees that, except as contemplated in this Agreement, during the period from the date of this Agreement until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms:

(a)                it shall, and shall cause its subsidiaries to, use commercially reasonable efforts to satisfy (or cause the satisfaction of) the conditions precedent to its obligations hereunder as set forth in Article 6 to the extent the same is within its control and to take, or cause to be taken, all other actions and to do, or cause to be done, all other things necessary, proper or advisable under all applicable Laws to complete the Plan of Arrangement, including using commercially reasonable efforts to: (i) obtain all Key Regulatory Approvals required to be obtained by it; (ii) effect o r make promptly all necessary registrations, filings and submissions of information requested by Governmental Entities required to be effected by it in connection with the Plan of Arrangement; (iii) oppose, lift or rescind any injunction or restraining order against it or other order or action against it seeking to stop, or otherwise adversely affecting its ability to make and complete, the Plan of Arrangement; and (iv) co-operate with the other Party in connection with the performance by it and its subsidiaries of their obligations hereunder; in addition, subject to the terms and conditions of this Agreement, none of the Parties shall knowingly take or cause to be taken any action which would reasonably be expected to prevent or materially delay the consummation of the transactions contemplated hereby;

(b)               it shall not take any action, refrain from taking any commercially reasonable action, or permit any action to be taken or not taken, which is inconsistent with this Agreement or which would reasonably be expected to, individually or in the aggregate, materially delay or materially impede the making or completion of the Plan of Arrangement except as permitted by this Agreement;

(c)                Target shall effect such reorganization of its business, operations, subsidiaries and assets or such other transactions as Acquiror may reasonably request (each, a “Pre-Acquisition Reorganization”) prior to or following the Effective Time, and

           the Plan of Arrangement, if required, shall be modified accordingly; provided, however, that Target need not effect a Pre-Acquisition Reorganization which in the opinion of Target, acting reasonably: (i) would require Target to obtain the prior approval of the shareholders of Target in respect of such Pre-Acquisition Reorganization other than at the Target Meeting; or (ii) would impede or delay the consummation of the Arrangement by more than 20 Business Days. Without limiting the foregoing and other than as set forth in clause (ii) above, Target shall use commercially reasonable efforts to obtain all necessary consents, approvals or waivers from any Persons to effect each Pre-Acquisition Reorganization, and Target shall cooperate with Acquiror in structuring, planning and impleme nting any such Pre-Acquisition Reorganization. Target shall also cooperate with Acquiror to the extent reasonable in the preparation and filing of any request for an advance income tax ruling or private letter ruling. Acquiror shall provide written notice to Target of any proposed Pre-Acquisition Reorganization at least 10 Business Days prior to the Effective Date. In addition:

(i)                 Acquiror shall indemnify and save harmless Target and its subsidiaries’ respective officers, directors, employees, agents, advisors and representatives from and against any and all liabilities, losses, damages, claims, costs, expenses, interest awards, judgments and penalties suffered or incurred by any of them in connection with or as a result of any Pre-Acquisition Reorganization or as a result of the reversal (where such reversal is determined by Target to be necessary, acting reasonably) of all or any of the Pre-Acquisition Reorganization steps in the event the Arrangement does not proceed (including actual out-of-pocket costs and expenses for filing fees and external counsel);

(ii)               unless the Parties otherwise agree, any Pre-Acquisition R eorganization to be effected prior to the Effective Time shall not become effective unless Acquiror shall have confirmed in writing the satisfaction or waiver of all conditions in its favour in Section 6.1 and Section 6.2 and shall have confirmed in writing that it is prepared to promptly without condition (other than the satisfaction of the condition contemplated by Section 6.2(a) as it relates to the Pre-Acquisition Reorganization) proceed to effect the Arrangement;

(iii)             any Pre-Acquisition Reorganization shall not require Target or any subsidiary to contravene any applicable Laws, their respective organizational documents or any Contract;

(iv)             Target and its subsidiaries shall not be obligated to take any action that has a material likelihood of resulting in any material adverse Tax or other consequences to any securityholder of Target or to Spinco or any subsidiary of Spinco; and

(v)               such cooperation does not require the directors, officers or employees of Target to take any action in any capacity other than as a director, officer or employee, as applicable.

            severance payment to each such employee in an amount that is equal to the greater of (A) one month’s salary for each year of service (pro rated to actual length of service), and (B) such employee’s entitlements under applicable Law (as determined by Fronteer’s counsel, acting reasonably and in consultation with Acquiror’s external counsel) or contract; and

(iii)             if the Effective Date occurs other than at the end of a regular pay period of the Target, Target shall pay to each employee referred to in Section 5.6(b)(i) all salary, bonus, vacation pay or other payments payable to them in the ordinary course of business in a manner consistent with past practice and, if applicable, their respective employment agreements, service contracts, and in accordance with applicable Laws or otherwise that have accrued in respect of that pay period and which remain unpaid on the day prior to the Effective Date.

(c)                The Parties acknowledge and agree that, notwithstanding anything to the contrary in this Agreement, prior to the Effective Time, Acquiror shall be entitled to make an offer of employment to any employees of Target and its subsidiaries (including any employee that would, if such employee accepted Spinco’s offer of employment contemplated in Section 5.6(d), be a Spinco Employee) on such terms as Acquiror, in its sole discretion, determines are appropriate.

(d)               Spinco covenants and agrees that it shall make offers of employment to each of the Spinco Employees (oth er than the Designated Employees) on substantially the same or improved terms as currently enjoyed by such employees having regard to, among other things, title, responsibility, salary, benefits, bonus, vacation entitlement and location of employment.

If the Effective Date occurs, Section 5.6(d) shall survive the termination of this Agreement and be enforceable by the beneficiaries thereof.

5.7                                      Adjustment to Consideration regarding Distributions

If on or after the date hereof, Target declares, sets aside or pays any dividend or other distribution to the Target Shareholders of record as of a time prior to the Effective Time (except for the distribution of Spinco Shares pursuant to the Plan of Arrangement), the Board of Directors of Acquiror and the Target Board shall make such adjustments to the Consideration as they determine acting in good faith to be necessary to restore the original intention of the Parties in the circumstances. For greater certainty, if Target takes any of the actions referred to above, the aggregate consideration to be paid by Acquiror shall be decreased by an equivalent amount. Notwithstanding the foregoing, nothing in this Section 5.7 shall restrict the ability of Acquiror to terminate this Agreement pursuant to Section 9.2(c)(ii) in the event the condition precedent to the obligations of Acquiror set out in Section 6.2(b) shall not have been met.

5.8                                      Spinco Ownership

(a)                Acquiror covenants in fa vour of Spinco that, from and after the Effective Time until the second anniversary of the Effective Date, it and its affiliates will not,

            without the express advance written approval of the board of directors of Spinco, acquire or propose to acquire or otherwise obtain or propose to obtain a right to acquire or to control any securities of Spinco that would result in Acquiror and its affiliates having a Pro Rata Interest in excess of 19.9%; provided that this Section 5.8(a) shall cease to apply in the event that Spinco (a) publicly announces its intention to agree to a merger, amalgamation, arrangement or direct or indirect sale of all or substantially all of the assets of Spinco and its subsidiaries, taken as a whole, or any similar transaction, with or to a person other than Acquiror, its affiliates or any person acting jointly or in concert with Acquiror or its affiliates in respect of such transaction (a & #147;Third Party”) which, if consummated in accordance with its terms, would result in Persons who immediately prior to the consummation of such transaction were shareholders of Spinco holding less than 50% of the voting securities of the resulting or transferee corporation or entity, or (b) enters into an agreement with a Third party pursuant to which Spinco agrees to support and recommend a take-over bid by such Third Party (or an affiliate or agent of such Third Party).

(b)               If immediately following the Effective Time the Acquiror and its affiliates hold or are entitled to receive Spinco Shares and Spinco Convertible Securities that would result in Acquiror and its affiliates having a Pro Rata Interest in excess of 19.9%, it will, or will cause its affiliate to:

(i)                 within 90 days of the date the Spinco Shares begin trading on the TSX or TSX Venture Exchange, as applicable (the “Required Sale Date”), sell in an orderly fashion such number of Spinco Shares and/or Spinco Convertible Securities (the “Excess Securities”) as would, after giving effect to the sale of such Excess Securities, reduce Acquiror’s and its affiliates’ Pro Rata Interest to an amount that is not in excess of 19.9%, provided that prior to making any block sale trades, Acquiror shall provide notice to Spinco that it or its affiliate intends to make a block sale trade at a specified price and if within five (5) Business Days of receiving such notice, Spinco identifies a buyer that is willing to purchase all but not less than all of such block of Excess Securities at a price that is at least equal to such specified price, Acquiror shall, or shall cause its affiliate to, sell such Excess Securities to the buyer identified by Spinco within such five Business Day period or such later time frame as Acquiror and such buyer may agree; and

(ii)               if Acquiror and its affiliates have not sold the Excess Securities by the Required Sale Date, Acquiror shall be required to sell, or shall be required to cause its affiliate to sell such Excess Securities into the market or otherwise at the direction of Spinco at the lesser of the fair market value determined by the directors of Spinco under section 4(c) of the Pl an of Arrangement and the current trading price of the Spinco Shares on the TSX or TSX Venture Exchange, as applicable.

If the Effective Time occurs, this Section 5.8 shall survive the termination of this Agreement.

5.9                                      Right to Participate

(a)                If at any time after the Effective Time and prior to the second anniversary of the Effective Time, Spinco proposes to issue or sell Spinco Shares or Spinco Convertible Securities (“Additional Spinco Securities”) other than (i) under any stock option plan of Spinco, (ii) on the exercise, exchange or conversion of Spinco Convertible Securities, or (iii) for property other than money, Acquiror shall have the right to subscribe for and purchase (directly or through an affiliate) Additional Spinco Securities, at the price at which such Additional Spinco Securities are offered for sale to other purchasers, up to the lesser of 19.9% of the Additional Spinco Securities and its Pro Rata Interest, in each case, prior to giving effect to the issuance or sale of such Additional Spinco Securities (the “Maximum Additional Securities”).

(b)               If Spinco intends to authorize and/or issue Spinco Shares or Spinco Convertible Securities that give rise to Acquiror’s rights pursuant to Section 5.9(a), Spinco shall provide notice to Acquiror (the “Rights Notice”) no less than five (5) Business Days before the date on whi ch Spinco intends to issue Spinco Shares or Spinco Convertible Securities giving rise to Acquiror’s rights pursuant to Section 5.9(a).

(c)                The Rights Notice shall provide the same information to Acquiror regarding the particulars of the issuance or sale of the Additional Securities as is provided to other Persons proposing to participate in the subscription for Additional Spinco Securities. Acquiror shall give notice (an “Acceptance Notice”) to Spinco no later than 4:00 p.m. (Mountain time) on the fifth Business Day following the receipt of any Rights Notice setting out the number of Additional Securities, if any, up to the Maximum Additional Securities which Acquiror intends to subscribe for and purchase.  Following receipt of an Acceptance Notice, Acquiror shall be entitled to participate in the subscription for Additional Securities in the same manner as other Persons subscribing for Additional Securities and shall be entitled to subscribe for the number of Additional Securities specified in the Acceptance Notice under such subscription.

(d)               Spinco hereby agrees that neither it nor any of its subsidiaries will adopt a shareholder rights plan or similar plan or take any other action that is inconsistent with Acquiror’s rights under this Section 5.9 to maintain a 19.9% interest in Spinco until the second anniversary of the Effective Time. 

If the Effective Date occurs, this Section 5.9 shall survive the termination of this Agreement.

5.10                                  Target Guarantee

Target hereby unconditionally and irrevocably guarantees the due and punctual performance by Spinco of each and every covenant and obligation of Spinco arising under this Agreement and the Arrangement for the benefit of Acquiror and to be performed prior to the Effective Time. Target hereby agrees that Acquiror shall not have to proceed first against Spinco before exercising its rights under or in respect of this guarantee against Target.

Article 6
CONDITIONS

6.1                                      Mutual Conditions Precedent

The obligations of the Parties to complete the transactions contemplated by this Agreement are subject to the fulfillment, on or before the Effective Time, of each of the following conditions precedent, each of which may only be waived with the mutual consent of Acquiror and Target:

(a)                the Arrangement Resolution shall have been approved and adopted by the Target Shareholders at the Target Meeting in accordance with the Interim Order;

(b)               the Interim Order and the Final Order shall each have been obtained on terms consistent with this Agreement, and shall not have been set aside or modified in a manner unacceptable to Target and Acquiror, acting reasonably, on appeal or otherwise;

(c)                there shall not exist any prohibition at Law, including a cease trade order, injunction or other prohibition or order at Law or under applicable legislation, and there shall not have been any action taken under any Law or by any Governmental Entity or other regulatory authority, that makes it illegal or ot herwise directly or indirectly restrains, enjoins, prevents or prohibits the consummation of the Arrangement;

(d)               Spinco Shares to be issued to the holders of Target Shares pursuant to the Arrangement shall be exempt from the registration requirements of the U.S. Securities Act pursuant to Section 3(a)(10) thereof;

(e)                the Key Regulatory Approvals shall have been obtained;

(f)                this Agreement shall not have been terminated pursuant to Article 10; and

(g)               the distribution of the Spinco Shares pursuant to the Arrangement shall be exempt from the prospectus and registration requirements of applicable Securities Laws either by virtue of exemptive relief from the securities regulatory authorities of each of the provinces of Canada or by virtue of applicable exemptions under Securities Laws and shall not be subject to resale restrictions under applicable Securities Laws (other than as applicable to control Persons or pursuant to section 2.6 of National Instrument 45-102).

               (i) Spinco shall be validly existing under the laws of Canada and all of the issued and outstanding shares of capital stock and other ownership interests in Spinco shall be legally and beneficially owned, directly or indirectly, by Target free and clear of all Liens, (ii) Target shall, directly or indirectly, hold a number of whole Spinco Shares such that, after giving effect to the distribution of Spinco Shares contemplated in Section 3(a)(iii) and 3(a)(iv)(B) of the Plan of Arrangement (assuming that no Target Shares are exchanged pursuant to Section 3(a)(i) of the Plan of Arrangement), Target would hold 19.9% of the outstanding Spinco

            Shares, and (iii) Spinco and its subsidiaries shall have the Spinco Cash Amount in cash on a consolidated basis. 

6.2                                      Additional Conditions Precedent to the Obligations of Acquiror

The obligations of Acquiror to complete the transactions contemplated by this Agreement are subject to the fulfillment of each of the following conditions precedent on or before the Effective Date or such other time as specified below (each of which is for the exclusive benefit of Acquiror and may be waived by Acquiror in whole or in part at any time):

(a)                all covenants of Target under this Agreement to be performed on or before the Effective Time which have not been waived by Acquiror shall have been duly performed by Target in all material respects, and Acquiror shall have received a certificate of Target addressed to Acquiror and dated the Effective Date, signed on behalf of Target by a senior executive officer of Target (on Target’s behalf and without personal liability), confirming the same as at the Effective Time;

(b)               all representations and warranties of Target (i) set forth in Section 3.1(e) shall be true and correct in all respects as of the Effective Time as though made at and as of the Effective Time (except for those representations and warranties in Section 3.1(e) made as of a specified date, the accuracy of which shall be determined as of that specified date), and (ii) otherwise set forth in this Agreement shall be true and correct in all respects as of the Effective Time as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except, in the case of clause (ii), where any failure or failures of any such representations and warranties to be so true and correct in all respects would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Target; and Acquiror shall have received a certificate of Target addressed to Acquiror and dated the Effective Date, signed on behalf of Tar get by a senior executive officer of Target (on Target’s behalf and without personal liability), confirming the same as at the Effective Time;

(c)                since the date of this Agreement, there shall not have occurred, or have been disclosed to the public (if previously undisclosed to the public) any Material Adverse Effect in respect of Target, and Target shall have provided to Acquiror a certificate of a senior executive officer of Target certifying the same as at the Effective Time;

(d)               holders of no more than 10% of the Target Shares shall have exercised Dissent Rights (and not withdrawn such exercise) and Acquiror shall have received a certificate of a senior executive officer of Target confirming the same as at the Effective Time; and

(e)                the Key Third Party Consents shall have been obtained.

            be terminated any solicitation, encouragement, discussion or negotiation with any Persons (other than Acquiror and its Representatives) conducted heretofore by Target, its subsidiaries or its or their Representatives with respect to any potential Acquisition Proposal and, in connection therewith, Target will discontinue access to any of its confidential information (and not establish or allow access to any of its confidential information, or any data room, virtual or otherwise) and shall as soon as possible request, to the extent that it is entitled to do so (and exercise all rights it has to require) the return or destruction of all confidential information (including all material including or incorporating or otherwise reflecting any material confidential information) rega rding Target and its subsidiaries previously provided to any such Person or any other Person. Target agrees that, except as permitted by Section 7.1(c), neither it nor any of its subsidiaries shall terminate, waive, amend or modify any provision of any existing confidentiality agreement relating to a potential Acquisition Proposal or any standstill agreement to which it or any of its subsidiaries is a party (it being acknowledged and agreed that the automatic termination of any standstill provisions of any such agreement as the result of the entering into and announcement of this Agreement by Target, pursuant to the express terms of any such agreement, shall not be a violation of this Section 7.1(c)) and Target undertakes to enforce all standstill, non-disclosure, non-disturbance, non-solicitation and similar covenants that it or any of its subsidiaries have entered into prior to the date hereof; provided, however, that the foregoing shall not prevent the Target Board from considering an Acquisitio n Proposal that is reasonably likely to be a Superior Proposal and accepting a Superior Proposal that might be made by any such third party if the remaining provisions of this Agreement have been complied with.

(c)                Notwithstanding Sections 7.1(a) and 7.1(b) and any other provision of this Agreement or of any other agreement between Acquiror and Target, if at any time following the date of this Agreement and prior to obtaining the Target Shareholder Approval of the Arrangement Resolution at the Target Meeting, Target receives a written Acquisition Proposal (that w as not solicited after the date hereof in contravention of Section 7.1(a) and provided that Target is in compliance with Sections 7.1(b) and 7.1(a)), the Target Board may (directly or through its advisors or Representatives):

(i)                 if it believes, acting in good faith, that the Acquisition Proposal could reasonably be a Superior Proposal, contact the Person(s) making such Acquisition Proposal and its advisors solely for the purpose of clarifying such Acquisition Proposal and any material terms thereof and the conditions thereto and likelihood of consum mation so as to determine whether such proposal is, or is reasonably likely to be, a Superior Proposal; and

(ii)               if, in the opinion of the Target Board, acting in good faith and after receiving advice from its outside financial advisors and outside legal counsel, the Acquisition Proposal constitutes or, if consummated in accordance with its terms (disregarding, for the purposes of any such determination, any term of such Acquisition Proposal that provides for a

            due diligence investigation), would be a Superior Proposal, then, and only in such case, Target may:

(A)             furnish information with respect to Target and its subsidiaries to the Person making such Acquisition Proposal for a period of not more than 21 days; and/or

(B)              participate in discussions or negotiations with, the Person making such Acquisition Proposal; and/or

(C)              waive any standstill provision or agreement that would otherwise prohibit such person from making an Acquisition Proposal,

provided that Target shall not, and shall not allow its Representatives to, disclose any non-public information with respect to Target to such Person (i) if such non-public information has not been previously provided to, or is not concurrently provided to, Acquiror; (ii) without entering into a confidentiality and standstill agreement (if one has not already been entered into) which is customary in such situations and which is no less favourable to Target and no more favourable to the counterparty than the confidentiality and standstill provisions contained in the Confidentiality Agreement; and (iii) without providing a copy of such confidentiality agreement to Acquiror.

7.2                                      Notification of Acquisition Proposals

(a)                Tar get shall promptly notify Acquiror, at first orally and then in writing within 24 hours of receipt of any proposal, inquiry, offer or request received by Target or its Representatives after the date hereof (i) relating to an Acquisition Proposal or potential Acquisition Proposal or inquiry that could reasonably lead to or be expected to lead to an Acquisition Proposal; (ii) for discussions or negotiations in respect of an Acquisition Proposal or potential Acquisition Proposal; or (iii) for non-public information relating to Target or its subsidiaries, access to properties, books and records or a list of the Target Shareholders. Such notice shall indicate the identity of the Person making such proposal, inquiry or request, include a copy of the Acquisition Proposal and include a copy of any other documentation received by Target or its Representatives and such other details of the Acquisition Proposal known to Target as Acquiror may reasonably request. Target shall keep Acquiror promptly and fully informed of the status, including any change to the material terms, of such proposal, inquiry, offer or request and shall respond promptly to all reasonable inquiries by Acquiror with respect thereto and shall provide copies of any written documents or correspondence provided to Target relating to such Acquisition Proposal.

(b)               Subject to Section 7.3(a), at any time following the date of this Agreement and prior to obtaining Target Shareholder Approval, if Target receives an Acquisition Proposal which the Target Board concludes in good faith constitutes a Superior Proposal, the T arget Board may, subject to compliance with the procedures set

            forth in Section 9.2 and Section 9.4, terminate this Agreement to enter into a definitive agreement with respect to such Superior Proposal.

7.3                                      Responding to Acquisition Proposal and Superior Proposals

(a)                Notwithstanding Section 7.1 and subject to compliance with Target’s obligations in Section 7.1 and Section 7.2, Target may enter into a definitive agreement (a “Proposed Agreement”) with any third party providing for an Acquisition Proposal, if such Acquisition Proposal is a Superior Proposal; provided that Target may do so only after Target has provided Acquiror with written notice that the Target Boar d has determined that it has received a Superior Proposal (a “Superior Proposal Notice”), which identifies the party making the Superior Proposal, specifies the cash amount that the Target Board has ascribed to any non-cash consideration being offered in the Superior Proposal, and provides Acquiror with a copy of any Proposed Agreement, in each case not less than five Business Days (the “Response Period”) prior to the proposed execution of such Proposed Agreement by Target. For purposes of this Agreement, the Response Period shall expire at 5:00 p.m. (Mountain time) on the fifth Business Day following the day on which the Superior Proposal Notice and Proposed Agreement was provided to Acquiror.

(b)               During the Response Period, Target acknowledges and agrees that Acquiror shall have the right, but not the obligation, to offer to amend the terms of the Agreement and the Plan of Arrangement (including increasing or modifying the consideration to be received by the Former Target Shareholders) in order to provide for terms at least equivalent to those provided fo r in the Superior Proposal. If Acquiror does so, then the Target Board shall review any such proposal by Acquiror to determine (acting in good faith and in accordance with its fiduciary duties) whether the Acquisition Proposal to which Acquiror is responding would continue to be a Superior Proposal when assessed against the amended Agreement and Plan of Arrangement as proposed by Acquiror. If the Target Board determines that the Acquisition Proposal would thereby cease to be a Superior Proposal, it will cause Target to enter into an amendment to this Agreement and the Plan of Arrangement reflecting the offer by Acquiror to amend the terms of the Agreement and Plan of Arrangement and will further agree not to enter into the applicable Proposed Agreement and not to withdraw, modify or change any recommendation regarding the Plan of Arrangement save and except to reaffirm its recommendation of the amended Plan of Arrangement.

(c)                If (i) Acquiror does not offer to amend the terms of the Agreement and Plan of Arrangement within the Response Period or (ii) the Target Board determines acting in good faith and in the proper discharge of its fiduciary duties (after consultation with its financial advisor and after receiving advice from its outside legal counsel) that the Acquisition Proposal would nonetheless remain a Superior Proposal with respect to Acquiror’s proposal to amend the Agreement and Plan of Arrangement, and therefore rejects Acquiror’s offer to amend the Plan of Arrangement and this Agreement, Target shall be entitled to terminate this Agreement pursuant to Section 9.2(d)(i) following the expiry of the Response

            Period and enter into the Proposed Agreement upon payment to Acquiror of the amount payable pursuant to Section 9.4.

(d)               Target acknowledges and agrees that each successive modification of any Acquisition Proposal shall constitute a new Acquisition Proposal for purposes of the requirement of Section 7.3 to initiate an additio nal five Business Day Response Period.

(e)                Nothing in this Agreement shall prevent the Target Board from responding through a directors’ circular or otherwise as required by applicable Laws to an Acquisition Proposal that it determines is not a Superior Proposal. Acquiror and its advisors shall be given a reasonable opportunity to review and comment on the content of any directors’ circular prior to its printing and Target shall consider for inclusion all reasonable comments made by Acquiror and its advisors.

7.4                                      Access to Information; Confidentiality

From the date hereof until the earlier of the Effective Time and the termination of this Agreement, subject to compliance with applicable Law and the terms of any existing Contracts, Target shall, and shall cause its subsidiaries and their respective officers, directors, employees, independent auditors, accounting advisers and agents to, afford to Acquiror and its Representatives (upon reasonable advance notice and, at the option of Target, with a Target representative present), such reasonable access during regular business hours as Acquiror may reasonably require at all reasonable times, without disruption to the conduct of Target business, including for the purpose of facilitating integration business planning, to their officers, employees, agents, properties, books, records and Contracts of Target and its subsidiaries, and shall furnish Acquiror with all data and information (other than da ta and information relating solely to the Target Exploration Properties except as may be required to confirm (a) the proper designation of any assets and/or liabilities of Target and its subsidiaries as Spinco Assets and/or Spinco Liabilities, as applicable, and (b) that the Spinco Assets and Spinco Liabilities have been duly transferred to Spinco prior to the Effective Time) as Acquiror may reasonably request. Acquiror and Target acknowledge and agree that information furnished pursuant to this Section 7.4 shall be subject to the terms and conditions of the Confidentiality Agreement.

7.5                                      Insurance and Indemnification

(a)                Target shal l be entitled to purchase run off directors’ and officers’ liability insurance for a period of up to six years from the Effective Date with the prior written consent of Acquiror, not to be unreasonably withheld, provided that the aggregate cost therefor does not exceed 200% of the annual premiums currently in effect. Acquiror shall cause Target to ensure that the articles and/or by-laws of Target and its subsidiaries (or their respective successors) shall contain the provisions with respect to indemnification set forth in Target’s or the applicable subsidiary’s current articles and/or by-laws, which provisions shall not, except to the extent required by applicable Laws, be amended, repealed or otherwise modified for a period of six years from the Effective Date in any manner that would adversely affect any rights of indemnification of individuals who,

            immediately prior to the Effective Date, were directors or officers of Target or any of its subsidiaries.

(b)               Acquiror agrees that it shall directly honour all rights to indemnification or exculpation now existing in favour of present and former officers and directors of Target and its subsidiaries to the extent that they are disclosed in S ection 7.5(b) of the Target Disclosure Letter, and acknowledges that such rights, to the extent that they are disclosed in Section 7.5(b) of the Target Disclosure Letter, shall survive the completion of the Plan of Arrangement and shall continue in full force and effect for a period of not less than six years from the Effective Date.

(c)                The provisions of this Section 7.5 are intended for the benefit of, and shall be enforceable by, each insured or indemnified Person, his or her heirs and his or her legal representatives and, for such purpose, Target he reby confirms that it is acting as agent and trustee on their behalf. Furthermore, this Section 7.5 shall survive the termination of this Agreement as a result of the occurrence of the Effective Date for a period of six years.

Article 8
ADDITIONAL Spinco Covenants

8.1                                      Spinco Indemnity

From the Effective Time, Spinco hereby agrees to indemnify and save harmless Acquiror, Acquiror Sub, Target and its subsidiaries (each an “Indemnified Party”) from all losses suffered or incurred by an Indemnified Party as a result of or arising directly or indirectly out of or in connection with an Indemnified Liability; provided that Spinco shall have no liability hereunder in respect of any Claims unless an Indemnified Party shall have delivered an Indemnity Notice in respect of such Claim within six (6) years following the Effective Date, provided that Spinco shall have liability hereunder in respect of any Claims for Taxes provided that an Indemnified Party shall have delivered an Indemnity Notice in respect of such Claim prior to t he date that is sixty (60) days following the expiration of the relevant statutes of limitation (including all periods of extension). If the Effective Date occurs, this Section 8.1 shall survive the termination of this Agreement.

8.2                                      Indemnified Claims

(a)                If any claim, proceedi ng, liability (including a liability for Tax) or other matter resulting from the occurrence of any of the events contemplated by Section 8.1 above (a “Claim”) is made against an Indemnified Party by a third party for which the Indemnified Party may be entitled to indemnification, the Indemnified Party shall give notice (an “Indemnity Notice”) to Spinco specifying the particulars of such Claim within 20 days after it receives notification of the Claim. Spinco shall have the right to participate in any negotiations or proceedings with respect to any such Claim. An Indemnified Party shall not settle or compromise any such Claim without the prior written consent of Spinco, unless Spinco has not, within 20 Business Days after the giving of the Indemnity Notice, given notice to the Indemnified Party that it wishes to dispute such Claim. If Spinco does give such a

            notice, it shall have the right to assume the defence of such Claim and to defend such Claim in the name of the Indemnified Party. An Indemnified Party shall provide to Spinco all files, books, records and other information in their possession or control which may be relevant to the defence of such Claim. If Spinco fails after giving such notice, diligently and reasonably to defend such Claim throughout the period such Claim exists, its right to defend the Claim shall terminate and the Indemnified Party may assume the defence of such Claim. In such event, the Indemnified Party may assume the defence of such Claim. In such event, the Indemnified Party may compromise or settle such Claim without the consent of Spinco. If the Effective Date occurs, this Section 8.2 shall surviv e the termination of this Agreement.

(b)               Notwithstanding Section 8.2(a):

(i)                 if a Claim described in Section 8.2(a) include s or would reasonably be expected to include both a Claim for Taxes that are Indemnified Liabilities (an “Indemnified Tax Claim”) and a Claim for Taxes that are not Indemnified Liabilities (an “Unindemnified Tax Claim”), the Indemnified Party shall use reasonable commercial efforts to separate the defence of the Indemnified Tax Claim from the defence of the Unindemnified Tax Claim, and in the case of such separation Spinco shall have the rights provided in Section 8.2(a) in respect of the Indemnified Tax Claim only;

(ii)               if the Indemnified Party is not able to separate the defence of the Indemnified Tax Claim from the defence of the Unindemnified Tax Claim:

(A)             the Indemnified Party shall have the right to assume the defence of both such Claims, including the right to settle either or both of such Claims;

(B)              the Indemnified Party shall act in good faith with a view to the merits in connection with the defence of the Indemnified Tax Claim; and

(C)              the Indemnified Party shall afford Spinco the opportunity to participate in the defence of the Indemnified Tax Claim, provide Spinco with notice and access to documentation and information as is reasonable in the circumstances, otherwise keep Spinco updated and informed, and consult with Spinco with respect to the defence of the Indemnified Tax Claim;

(iii)             the Indemnified Party shall provide Spinco with notice of the resolution of any Indemnified Tax Claim within 20 days of such resolution;

(iv)             without limiting in a ny respect the Indemnified Party’s right to settle any such Indemnified Claim in its absolute discretion, in the event that Spinco

            objects to a resolution of an Indemnified Tax Claim by delivering notice to the Indemnified Party within 20 days of receiving the notice set out in (iii), a neutral nationally recognized accountant (the “Tax Arbitrator”) that is mutually reasonably satisfactory to the parties shall determine the amount, if any, by which:

(A)             the amount of Tax for which the Indemnified Tax Claim was resolved; exceeds

(B)              the amount of Tax for which the Indemnified Tax Claim could reasonably have been expected to be resolved if it had been the only matter in dispute;

(v)               if the Tax Arbitrator determines that the amount specified in 8.2(b)(iv)(A) does not exceed the amount specified in 8.2(b)(iv)(B), Spinco shall be liable for:

(A)             pursuant to Section 8.1, the Indemnified Tax Claim based on the amount specified in Section 8.2(b)(iv)(A); and

(B)              all costs and expenditures in respect of the arbitration, including the Indemnified Party’s reasonable costs;

(vi)             if the Tax Arbitrator determines that the amount specified in Section 8.2(b)(iv)(A) exceeds the amount specified in Section 8.2(b)(iv)(B)

(A)             pursuant to section 8.1, Spinco shall be liable for the Indemnified Tax Claim based on the amount specified in Section 8.2(b)(iv)(B); and

(B)              the Indemnified Party shall be liable for Spinco’s reasonable costs in respect of the arbitration.

(c)                For greater certainty, notwithstanding any other provision of this Agreement to the contrary, Acquiror shall be entitled to control in all respects any Tax proceedings relating to any consolidated, combined or unitary group that includes Acquiror or any of its subsidiaries, and the above provisions of this Section 8.2 shall not apply to any such Tax proceedings.

8.3                                      Target Mining Properties

(a)                Until the fifth anniversary of the Effective Date, none of Spinco or its subsidiaries will, without Acquiror’s prior written consent, stake, lease or otherwise purchase or acquire or become entitled to acquire, directly or indirectly, alone or in concert with any other person, any interest whatsoever in any real property, land rights, surface rights, water rights or any mineral concessions, leases, claims or other form of mineral rights whatsoever, any part of which lies within the boundary of, or within five (5) miles of the perimeter of, any of the Target Mining Properties comprising the Long Canyon Property, the Sandman Property and the

            Northumberland Property, and if Spinco or any of its subsidiaries acquires any such interest, directly or indirectly, alone or in concert with any other person, in contravention of the foregoing, such Spinco party will notify Acquiror immediately and Spinco (or its subsidiary if applicable) will hold such interest in trust for Acquiror and promptly convey such interest to Acquiror at no cost.

(b)               Until the first anniversary of the Effective Date, none of Spinco or its subsidiaries will, without Acquiror’s prior written consent, stake, lease or otherwise purchase or acquire or become entitled to acquire, directly or indirectly, alone or in concert with any other person, any interest whatsoever in any real property, land rights, surface rights, water rights or any mineral concessions, leases, claims or other form of mineral rights whatsoever, any part of which lies within the boundary of, or within two (2) miles of the perimeter of, any of the Target Mining Properties (other than the Long Canyon Property, the Sandman Property or the Northumberland Property), and if Spinco or any of its subsidiaries acquires any such interest, directly or indirectly, alone or in concert with any other person, in contravention of the foregoing, such Spinco party will notify Acquiror immediately and Spinco (or its subsidiary if applicable) will hold such interest in trust for Acquiror and promptly convey such interest to Acquiror at no cost.

(c)                Spinco covenants and agrees that it shall, and shall cause its subsidiaries to, treat all exploration information, data, reports and studies including all geological, geophysical and geochemical information and data (including all drill, sample and assay results and all maps) and all technical reports, feasibility studies and other similar reports and studies concerning the Target Mining Properties in the same way Spinco treats its own confidential information and shall use all commercially reasonable efforts to keep all such information confidential and shall not make or keep copies of such information or disclose any such information to anyone other than Acquiror or Acquiror’s Representatives without Acquiror’s prior written consent unless in the opinion of outside legal counsel it is required to do so by Law, except that the foregoing shall not apply to information that:

(i)                 at the time of its disclosure is generally available in the public domain; or

(ii)               enters the public domain and becomes generally available at any time after disclosure other than through a breach of the terms hereof by (A) Spinco, (B) any of its subsidiaries or (C) any of Spinco’s legal or financial advisors or consultants; or

(iii)             consists of general geological, geophysical, geochemical, metallurgical or operational concepts, models or principles.

If the Effective Date occurs, this Section 8.3 shall survive the termination of this Agreement.

8.4                                      Non-Solicitation of Employees

For a period of two years following the Effective Date:

           Acquiror from consummating the Arrangement and such applicable Law, injunction or court order shall have become final and non-appealable; or

(iii)             the Arrangement Resolution shall have failed to obtain the Target Shareholder Approval at the Target Meeting (including any adjournment or postponement thereof) in accordance with the Interim Order;

(c)                by Acquiror, if:

(i)                 prior to obtaining the Target Shareholder Approval, the Target Board withdraws, amends or modifie s, in a manner adverse to Acquiror, or fails to reaffirm its recommendation of the Arrangement within five Business Days (and in any case prior to the Target Meeting) after having been requested in writing by Acquiror to do so, including for greater certainty in the circumstances described in Section 7.1(a)(v) (a “Change in Recommendation”);

(ii)               any of the conditions set forth in Section&n bsp;6.1 or Section 6.2 has not been satisfied or waived by the Outside Date or such condition is incapable of being satisfied by the Outside Date provided that Acquiror is not then in breach of this Agreement so as to cause any of the conditions set forth in Section 6.1, Section 6.2 or Section 6.3 not to be satisfied;

(iii)             subject to Section 6.5, Target breaches any representation or warranty of Target set forth in this Agreement which breach would, individually or in the aggregate, be reasonably expected to cause the condition in Section 6.2(b) not to be satisfied or Targ et breaches any covenant (with the exception of the covenants contained in Sections 7.1, 7.2 and 7.3) or material obligation made in this Agreement, in each case, in any material respect; provided that Acquiror is not then in breach of this Agreement so as to cause any of the conditions set forth in Section 6.1 or Section 6.3 not to be satisfied;

(iv)             Target is in breach or in default of any of its obligations or covenants set forth in Sections 7.1, 7.2 and 7.3;

(v)               the Target Meeting has not occurred on or before May 6, 2011; provided that the right to terminate this Agreement pursuant to this Section 9.2(c)(v) shall not be available to Acquiror if the failure by Acquiror to fulfil any obligation hereunder is the cause of, or results in, the failure of the Target Meeting to occur on or before such date;

(vi)          &nb sp;  Target provides Acquiror with a Superior Proposal Notice; or

(vii)           if there shall occur after the date hereof any change, effect, event, circumstance or fact that constitutes a Material Adverse Effect in respect of Target and its subsidiaries, taken as a whole; or

IN WITNESS WHEREOF Acquiror, Target and Spinco have caused this Agreement to be executed as of the date first written above.

PLAN OF ARRANGEMENT
UNDER SECTION 182 OF THE
BUSINESS CORPORATIONS ACT (ONTARIO)

1.                  INTERPRETATION

(a)                Definitions: In this Plan of Arrangement, unless the context otherwise requires, the following words and terms shall have the meaning hereinafter set out:

                                                   (i)              “Acquiror” means Newmont Mining Corporation, a corporation existing under the laws of the State of Delaware;

                                                 (ii)              “Acquiror Sub” means an unlimited liability company formed pursuant to the laws of British Columbia as an indirect, wholly-owned sub sidiary of Acquiror;

                                               (iii)               “affiliate” has the meaning given to such term in the Arrangement Agreement;

                                              (iv)               “Arrangement” means the arrangement under the provisions of section 182 of the OBCA on the terms and subject to the conditions set out in this P lan of Arrangement, as may be amended, varied or supplemented from time to time in accordance with section 10.1 of the Arrangement Agreement and the provisions hereof;

                                                (v)              “Arrangement Agreement” means the Arrangement Agreement dated February 3, 2011 to which this Plan of Arrangement is attached as Schedule A, as the same may be amended, varied or supplemented from time to time;

                                               (vi)               “Arrangement Resolution” means the special resolution of Target Shareholders approving the Arrangement;

                                             (vii)               “Business Day” means any day, other than a Saturday, Sunday or a statutory or civic holiday in Denver, Colorado, or Vancouver, British Columbia;

                                           (viii)               “Cash-Out Consideration” in respect of a Target Option means the aggregate of (i) one Spinco Share and (ii) the amount by which $14.00 exceeds the aggregate of the s trike price of the Target Option and any amounts required to be withheld from such payment under the Tax Act or other applicable statute; provided that if $14.00 is less than such aggregate amount, the Target Optionholder shall have paid the amount of such difference to Target prior to the Effective Time in order for such Target Option to be a Cashed-Out Option, and provided further that in respect of a Target Option that is exercisable for a fraction of a Target Share, references to $14.00 above, and the number of Spinco Shares, shall each be adjusted in proportion to the fraction of a Target Share into which such Target Option is exercisable; and provided further that if the aggregate number of Spinco Shares to which a Target Optionholder would otherwise be entitled would include a fractional Spinco Share, then the number of Spinco Shares that such Target Optionholder is entitled to receive will be rounded down to the next whole number and the Target Optionholder will not be entitled to any compensation in respect of such fractional Spinco Share;

                                               (ix)             “Cashed-Out Option” means a Target Option which a Target Optionholder has elected in writing to surrender for payment of the Cash-Out Consideration;

                                                (x)              “Court” means the Ontario Superior Court of Justice;

                                              (xi)              “Class A Shares” means the Class A voting shares of Target which are to be created in accordance with this Plan of Arrangement and which shall be voti ng, redeemable and retractable at $14.00 per share and, if any Target Shares are transferred to Acquiror Sub pursuant to Section 3(a)(i) or Section 3(a)(iii) hereof, shall have a liquidation preference equal to $14.00 per share;

                                            (xii)              “Depositary” means any trust company, bank or financial institution agreed to in writing between Acquiror and Target for the purpose of, among other things, receiving Letters of Transmittal and distributing certificates representing Spinco Shares in connection with the Arrangement;

                                           (xiii)              “Dissenting Target Shareholder” means a registered Target Shareholder who has duly exercised a Dissent Right;

                                           (xiv)              “Dissent Rights” shall have the meaning set out in Section 5(a) hereof;

                                            (xv)             “Dissent Shares” means the Target Shares held by a Dissenting Shareholder and in respect of which the Dissenting Shareholder has validly exercised Dissent Rights;

                                           (xvi)             “Effective Date” means the date following the date upon which all of the conditions to completion of the Arrangement as set out in Sections 6.1, 6.2 and 6.3 of the Arrangeme nt Agreement have been satisfied or waived in accordance with the Arrangement Agreement, all documents agreed to be delivered thereunder have been delivered to the satisfaction of the recipient, acting reasonably, and the filings required under Section 182 of the OBCA have been filed with the registrar of companies;

                                          (xvii)              “Effective Time” means 12:01 a.m. (Vancouver time) on the Effective Date or such other time on the Effective Date as may be specified in writing by Acquiror Sub;

                                        (xviii)             “Exercised Option” means a Target Option which a Target Optionholder has elected in writing prior to the Effective Date to exercise in accordance with the terms of the Plan and in respect of whi ch the Target Optionholder has prior to the Effective Date paid to Target the aggregate of the strike price of such Target Option and the amount of all withholdings required to be made in connection with the exercise thereof, under the Tax Act or other applicable statute ;

                                         (xix)               “Final Order” means the final order of the Court pursuant to Section 182 of the OBCA, after a hearing upon the fairness of the terms and conditions of the Arrangement, approving the Arrangement, as such order may be amended by the Court at any time prior to the Effective Date or, if appealed, then unless such appeal is withdrawn or denied, as affirmed or as amended on appeal;

                                            (xx)               “Former Target Shareholder” means a Person who is a registered holder of Target Shares as shown on the share register of Target Shares immediately prior to the E ffective Time;

                                           (xxi)              “Governmental Entity” has the meaning given to such term in the Arrangement Agreement;

                                         (xxii)             “Interim Order” means the interim order of the Court providing for, among other things, the calling and holding of the Target Meeting, as such order may be amended, supplement or varie d by the Court;

                                       (xxiii)              “Letter of Transmittal” means the letter of transmittal(s) to be delivered by Target to the Target Shareholders providing for the delivery of the Target Shares to the Depositary;

                                       (xxiv)              “Lien” means any hypothec, mortgage, pledge, assignment, lien, charge, security interest, encumbrance or adverse right or claim, other third Person interest or encumbrance of any kind, wheth er contingent or absolute, and any agreement, option, right or privilege (whether by law, contract or otherwise) capable of becoming any of the foregoing;

                                         (xxv)              “OBCA” means the Business Corporations Act (Ontario) and the regulations made thereunder, as now in effect and as they may be promulgated or amended from time to time;

                                       (xxvi)               “paid-up capital” has the meaning ascribed to such term for purposes of the Tax Act;

                                     (xxvii)              “Person” means an individual, general partnership, limited partnership, corporation, company, limited liability company, unincorporated association, unincorporated syndicate, unincorporated organizatio n, trust, trustee, executor, administrator or other legal representative;

                                      (xxviii)             “Spinco” means Pilot Gold Inc., a corporation existing under the laws of Canada;

                                       (xxix)               “Spinco Share Consideration” means the undertaking of Acquiror Sub to deliver one Spinco Share (subject to adjustment for the consolidation provided for in Section 3(a)(v) hereof) in part p ayment of the purchase price of a Target Share within 3 business days of the Effective Date;

                                         (xxx)               “Spinco Shares” means the common shares of Spinco;

                                        (xxxi)               “Target” means Fronteer Gold Inc., a corporation existing under the laws of Ontario;

                                     (xxxii)               “Target Meeting” means the special meeting of Target Shareholders, including any adjournment or postponement thereof, to be held for the purpose of, among other things, obtaining approval by Target Sh areholders of the Arrangement Resolution;

                                    (xxxiii)               “Target Options” means the outstanding options to purchase Target Shares granted under or otherwise subject to the Target Stock Option Plans;

                                    (xxxiv)              “Target Optionholders” means the holders of Target Options;

                                      (xxxv)             “Target Shareholders” means the holders of Target Shares;

                                    (xxxvi)               “Target Shares” means common shares in the capital of Target, as currently constituted;

                                 (xxxvii)              “Target Stock Option Plans” means, collectively, (i) the Amended and Restated Stock Option Plan (2010) of Target dated March 25, 2010 and approved by the Target Shareholders on May 27, 2010, as amended, (ii) the acquisition stock option plan approved by the Target Board in August 2007 in connection with Target’s acquisition of NewWest Gold Corporation, and (iii) the stock option plan of Aurora Energy Resources Inc. assumed by Target in connection with Target’s acquisition of Aurora Energy Resources Inc.; and

                                (xxxviii)              “Tax Act” means the Income Tax Act (Canada) and the regulations thereunder, as amende d from time to time.

(b)               Interpretation Not Affected by Headings. The headings contained in this Plan of Arrangement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Plan of Arrangement. The terms “this Plan of Arrangement”, “hereof’, “herein”, “hereto”, “hereunder” and similar expressions refer to this Plan of Arrangement and not to any particular article, section, subsection, paragraph, subparagraph, clause or sub-clause hereof and include any agreement or instrument supplementary or ancillary hereto.

4.                  DELIVERY OF SPINCO SHARES AND CASH CONSIDERATION

(a)                Entitlement to Spinco Certificates and Cash Consideration.

                                                   (i)               At or prior to the Effective Date, Acquiror Sub shall deposit with the Depositary in accordance with the Arrangement Agreement, cash in an amount sufficient to pay the aggregate cash consideration to which the Former Target Shareholder are entitled to receive in accordance with Section 4 hereof.

                                                 (ii)               Until such time as a Former Target Shareholder deposits with the Depositary a duly completed Letter of Transmittal, documents, certificates and instruments contemplated by the Letter of Transmittal and such other documents and instruments as the Depository or Acquiror Sub reasonably requir es, the cash payment to which such Target Shareholder is entitled shall, subject to Section 4(a)(iii), in each case be delivered or paid to the Depositary to be held in trust for such Former Target Shareholder for delivery to the Former Target Shareholder, without interest and net of all applicable withholding and other taxes, if any, upon delivery of the Letter of Transmittal, documents, certificates and instruments contemplated by the Letter of Transmittal and such other documents and instruments as the Depository or Acquiror Sub reasonably requires.

                                               (iii)               Upon surrender to the Depositary for cancellation of a certificate which immediately prior to the Effective Time represented one or more Target Shares other than certificates representing Dissent Shares, if applicable, a completed Letter of Transmittal and such additional documents and instruments as the Depositary may reasonably require, the holder of such surrendered certificate or the deliverer of such Letter of Transmittal, as applicable, shall be entitled to receive in exchange therefor, and the Depositary shall deliver to such Former Target Shareholder following the Effective Time, certificates representing the Spinco Shares and a cheque for the cash consideration to which such Former Target Shareholder is entitled to receive in accordance with Section 3 hereof.

                                               (iv)               After the Effective Time and until surrender for cancellation as contemplated by Section 4(a)(iii) hereof, each certificate which immediately prior to the Effective Time represented one or more Target Shares shall be deemed at all times to represent only the right to receive in exchange therefor certificates representing the Spinco Shares and a cheque for any cash consideration to which the holder of such certificate is entitled to receive in accordance with Section 4(a)(iii) hereof.

(b)               Lost Certificates. In the event that any certificate which immediately prior to the Effective Time represented one or more Target Shares which were exchanged for Spinco Shares and any cash consideration in accordance with Section 4 hereof shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the holder claiming such certificate to be lost, stolen or destroyed, the Depositary shall deliver in exchange for such lost, stolen or destroyed certificate, certificates representing the Spinco Shares and the cheque for the cash consider ation which such Former Target Shareholder is entitled to receive in accordance with Section 4 hereof. When authorizing such delivery of certificates representing the Spinco Shares and the cheque for the cash consideration which such Former Target Shareholder is entitled to receive in exchange for such lost, stolen or destroyed certificate, the Former Target Shareholder

            to whom certificates representing such Spinco Shares and the cheque for the cash consideration are to be delivered shall, as a condition precedent to the delivery of such Spinco Shares and cash consideration, give a bond satisfactory to Acquiror Sub, Spinco and the Depositary in such amount as Acquiror Sub, Spinco and the Depositary may direct, or otherwise indemnify Acquiror Sub, Spinco and the Depositary in a manner satisfactory to Acquiror Sub, Spinco and the Depositary, against any claim that may be made against Acquiror Sub, Spinco or the Depositary with respect to the certificate alleged to have been lost, stolen or destroyed and shall otherwise take such actions as may be required by the by-laws of Target.

5.                  DISSENT RIGHTS

(a)                Each registered Target Shareholder may exercise rights of dissent (“Dissent Rights”) with respect to the Target Shares held by it pursuant to and in the manner set forth in the Interim Order. Dissenting Target Shareholders who:

                                                   (i)               are ultimately entitled to be paid by Acquiror Sub fair value for their Dissent Shares shall be deemed to have transferred such Dissent Shares (free and clear of any Liens) to Acquiror Sub in accordance with Section 3(a)(i); and

                                                 (ii)               are ultimately not entitled, for any reason, to be paid by Acquiror Sub fair value for their Target Shares in respect of which they dissent, shall be deemed to have participated in the Arrangement in respect of those Target Shares on the same basis as a non-dissenting Target Shareholder an d shall be entitled to receive only the Spinco Shares and cash consideration that such non-dissenting Target Shareholders are entitled to receive, on the basis set forth in Section 3(a)(iv)(B) and 3(a)(vi) and, for greater certainty, will be considered to have exchanged such Target Shares for Class A Shares and Spinco Shares pursuant to, and at the same time as Target Shares were exchanged pursuant to Section 3(a)(iv)(B) and to have subsequently transferred such Class A Shares in exchange for cash pursuant to, and at the same time as Target Shares were transferred by Former Target Shareholders to Acquiror Sub pursuant to, Section 3(a)(vi).

(b)               In no event shall Acquiror Sub, Target or Spinco or any other person be required to recognize a Dissenting Target Shareholder as a registered or beneficial owner of Target Shares or any interest therein (other than the rights set out in this Section 5) at or after the Effective Time, and at the Effective Time the names of such Dissenting Target Shareholders shall be deleted from the central securities register of Target as at the Effective Time.

(c)                For greater certainty, in addition to any other restrictions in the Interim Order, no person shall be entitled to exercise Dissent Rights with respect to Target Shares in respect of which a person has voted in favour of the Arrangement.

6.                  AMENDMENT

(a)                Acquiror, Target and Spinco reserve the right to amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to the Effective Date, provided that any amendment, modification or supplement must be contained in a written document which is filed with the Court and, if made following the Target Meeting, then: (i) approved by the Court, and (ii) if the Court directs, approved by the Target Shareholders and in any event communicated to them, and in either case in the manner required by the Court.

(b)               Any amendment, modification or supplement to this Plan of Arrangement, if agreed to by Target and Acquiror, may be made at any time prior to or at the Target Meeting, with or without any other prior notice or communication and, if so proposed and accepted by the Persons voting at the Target Meeting (other than as may be required under the Interim Order) shall become part of this Plan of Arrangement for all purposes.

(c)                Any amendment, modification or supplement to this Plan of Arrangement that is approved or directed by the Court following the Target Meeting will be effective only if it is consented to by Target and Acquiror and, if required by the Court, by the Target Shareholders.

(d)               Any amendment, modification or supplement to this Plan of Arrangement may be made by Target and Acquiror without approval of the Target Shareholders provided that it concerns a matter which, in the reasonable opinion of Target and Acquiror is of an administrative or ministerial nature required to better give effect to the implementation of this Plan of Arrangement and is not materially adverse to the financial or economic interests of any of the Target Shareholders.

(e)                Notwithstanding the foregoing provisions of this Section 6, no amendment, modification or supplement of this Plan of Arrangement may be made prior to the Effective Time except in accordance with the terms of the Arrangement Agreement.