EXPLORATIONCONTRACT WITH AN OPTION TO PURCHASE

 EXPLORATION CONTRACT WITH AN OPTION TO PURCHASE

In the city of San Salvador de Jujuy, Province of Jujuy, on 8th February 2010, between on the one part Mr. Antonio Augustin Giulianotti, N.I.D. (National Identity Document) No. 7.379.817, with domicile in Dr. Aparicio Street No. 667, District of Ciudad de Nieva, city of San Salvador de Jujuy, Province of Jujuy, who in this deed is acting in his own right and for and on behalf of JUAN PABLO GIULIANOTTI, Argentinean, N.I.D. Nº29707995; CLAUDIA KARINA GIULIANOTTI, Argentinean, N.I.D. Nº23946342 and MARÍA GABRIELA GIULIANOTTI, Argentinean, N.I.D. Nº22777383; ABRAHAM ALFREDO CABEZAS, N.I.D. Nº11256394 and ANA MARÍA IBAÑEZ, N.I.D. Nº ###-###-####, in accordance with special power of attorney of July 6th, 2007, which to date is still valid and has neither been revoked or limited, presented before Notary Public of this city Cesar Ricardo Frias (hereinafter the “TITLE HOLDER”), and on the other part Mr. FABIO MONTANARI, with Italian Passport No. E571059, with current domicile at Obispo Padilla 588, Borough of Nieva, city of San Salvador de Jujuy, Province of Jujuy, who in this deed is acting as an individual and in his capacity as person in charge of a Company or of a Joint Venture to be named in the future, (hereinafter the “INTERESTED PARTY”), the parties jointly and in common agreement declare;

PRELIMINARY INFORMATION

The TITLE HOLDER has registered in his name, before the Court of Mines of the Province of Jujuy, the mining property identified as file 020-G-1997 registered as Sur Eureka mine, with an area of 2926 hectares, located in the Department of Santa Catalina of this Province, (hereinafter the MINING PROPERTY).

As the INTERESTED PARTY wishes to obtain from the TITLE HOLDER the exclusive right to explore the MINING PROPERTY, with an option to purchase it, the INTERESTED PARTY and the TITLE HOLDER agree to execute a Contract, subject to the following articles:

ONE: DECLARATIONS AND GUARANTEES

1- The TITLE HOLDER declares and guarantees to the INTERESTED PARTY that:

a) He has the exclusive right to execute and carry out this Contract, which is binding and enforceable in accordance with its terms.

b) He has the proper and commercial right over all the MINING PROPERTY, which is free from any encumbrance, mortgage, attachment or lien.

c) There are no claims over the ownership of the MINING PROPERTY nor, to the best of his knowledge, any grounds to such claims.

d) There are no other agreements in force nor options relating to the exploration or the exploitation of the MINING PROPERTY.

e) To the best of his knowledge, information and belief, there are no legal actions either outstanding or to be initiated, no lawsuits, claims or disputes relating to the MINING PROPERTY or which could affect its possession

f) The MINING PROPERTY has not been explored or exploited with mechanical equipment that might have caused environmental changes or damage or with the potential to cause environment damage in the future, such as drainage of acid rocks.

1.2.1           The declarations and guarantees established in preceding clause 1.1 have been considered by the parties as conditions of the Contract and will remain in force for the whole period of this Contract and following the purchase of the MINING PROPERTY by the INTERESTED PARTY; consequently each party is obliged to indemnify and release the other from any loss, damage, cost or legal action which may result from the misrepresentation of any of the preceding declarations and guarantees.

TWO: TERM

The period of validity of this Contract will begin once it has been signed and it will remain in force for the time necessary for the fulfilment of the stipulations of articles NINE and TEN.

THREE: EVALUATION AND EXPLORATION

The TITLE HOLDER grants the INTERESTED PARTY the exclusive possession of the MINING PROPERTY for the term of this Contract, authorizing him to exercise all mining rights conferred on the TITLE HOLDER, which includes the exclusive right to assess the MINING PROPERTY and carry out exploratory operations therein, as well as any other work relating to this activity, according to the method, form and extent that the INTERESTED PARTY may determine at his own discretion.

FOUR:

4.1 In this deed the TITLE HOLDER delivers to the INTERESTED PARTY all the geological,   administrative and legal information in his possession on the MINING PROPERTY which is the subject of this Contract.

4.2	During the term of this Contract the INTERESTED PARTY, his dependents or representatives will have the right to conduct all exploratory activities on the MINING PROPERTY that the TITLE HOLDER has the right to conduct according to the Argentinean Mining Code.

 
 

4.3

The TITLE HOLDER authorizes the INTERESTED PARTY to conduct on the MINING PROPERTY topographical, geographical and geophysical surveys, drilling works, trench and well works or any other kind of mining work of an exploratory nature.  The INTERESTED PARTY will be able to extract, analyze and process samples, both geochemical and metallurgical, including those of an industrial size, send them to laboratories or research centres and deliver samples at necessary volumes to be tested by potential buyers.

4.4

The INTERESTED PARTY, his representatives, dependents, agents, his own workers or those belonging to contractors, will have the right to access the MINING PROPERTY without any limitation and to introduce into the property all machines, tools, equipment and supplies deemed necessary or appropriate.  At the termination of this Contract, for any reason, within one hundred and twenty (120) calendar days starting from the date of termination of this Contract, the INTERESTED PARTY may remove said machines, tools, equipment and supplies at his own expense.

4.5

The TITLE HOLDER or his representatives will have the right to access the MINING PROPERTY.  The INTERESTED PARTY will not be held responsible for any damage or loss that may be suffered by the TITLE HOLDER or his representatives on the occasion of their work and during visits to the MINING PROPERTY, with the exception of that caused by fault or negligence of the INTERESTED PARTY.

FIVE:

5.1	The INTERESTED PARTY will be held responsible for the contracting of personnel required for the fulfilment of his contractual obligation and in respect of said personnel, must strictly comply with current stipulations on matters of labour and pension legislation.

5.2	The INTERESTED PARTY is obliged to take out Liability Insurance in order to cover contingencies arising as a consequence of the activities that the INTERESTED PARTY carries out on the MINING PROPERTY.

5.3

The INTERESTED PARTY is obliged to keep the TITLE HOLDER free from liability for any damage or loss as a consequence of judgements or claims of a work-related, civil, commercial or criminal nature made by third parties as a consequence of the activity carried out by the INTERESTED PARTY in the execution of this Contract, as well as damage caused to third persons, their personnel and/or subcontractors and that caused to the environment.  In any of the events mentioned above, the INTERESTED PARTY will bear the legal defence costs of the TITLE HOLDER in the courts.

SIX:

In case the option agreement is not exercised, the INTERESTED PARTY is obliged to provide the TITLE HOLDER with all data relating to deposits or evidence of minerals discovered during the evaluation and exploration of the MINING PROPERTY.

The TITLE HOLDER undertakes not to make any kind of declaration, presentation of documentation or take any other action, measures or steps of any kind relating to THE MINING PROPERTY, before the Court of Mines of the Province of Jujuy nor before other subsidiary establishment, without the prior consent of the INTERESTED PARTY.  Non-compliance with this will bring about the rescission of this Contract, at the discretion of the INTERESTED PARTY, with the TITLE HOLDER being held responsible for damage and loss caused to the INTERESTED PARTY as a consequence thereof.

The TITLE HOLDER can conduct audits of the exploration tasks and other mining activities that the INTERESTED PARTY carries out on the MINING PROPERTY, using his own auditors or those appointed by the TITLE HOLDER.

The INTERESTED PARTY will take all the necessary steps so that, should the case arise, the declarations of discoveries which are made in the area covered by the MINING PROPERTY and any other mining right,  are registered before the Court of Mines of the Province of Jujuy  and these will be registered under the name of the TITLE HOLDER.

The declarations and other mining rights registered in the name of the TITLE HOLDER as a consequence of exploratory works carried out by the INTERESTED PARTY within the MINING PROPERTY will be automatically incorporated into the same and as a consequence will be subject to the Option to Purchase and the remaining provisions of this Contract.

Unless the Court of Mines of the Province of Jujuy requires the measurement, staking out and registration of the MINING PROPERTY, or if there is a legal obligation to do so, the legal figures in force on the date the contract is signed will be held by the TITLE HOLDER until the INTERESTED PARTY exercises the Option to Purchase.

The TITLE HOLDER will do everything necessary to maintain the validity of his right over the MINING PROPERTY.

SEVEN:

During the period of validity of this Contract, the TITLE HOLDER voluntarily refrains from carrying out acts of disposal of or encumbrance on the MINING PROPERTY, whatever they may be, including but not limited to: sales, transfers, mortgages, assignments, leases, contracting and hereditary leases.

In this deed the TITLE HOLDER signs a presentation to the Court of Mines of the Province of Jujuy requesting the registration of the restriction referred to in the paragraph above.  This restriction will be valid during the term of the Contract but can be lifted unilaterally by the TITLE HOLDER should the INTERESTED PARTY not exercise the Option to Purchase of this Contract at the terms established in article TEN.

In support of the said restriction, the TITLE HOLDER will proceed with the registration of this Contract before the Court of Mines of the Province of Jujuy, and failing this, will authorise the INTERESTED PARTY to formalize said registration. The costs of the stamp and fees received for services applicable according to the tax laws of the Province of Jujuy for the corresponding period up to the exercise of the Option to Purchase of the MINING PROPERTY, will be charged to the INTERESTED PARTY.

If the INTERESTED PARTY opts to purchase the MINING PROPERTY and its transfer could not be made due to the fault of the TITLE HOLDER before the date of expiry of the restriction, he must request that the Court of Mines of the Province of Jujuy register an extension of this period until the transfer is formalized and failing that, authorize the INTERESTED PARTY irrevocably to request such extension on his behalf.

EIGHT: RESCISSION

During the period this Contract is in force the INTERESTED PARTY may at any moment unilaterally give up the Option to Purchase and cancel this Contract, even after having exercised said Option to Purchase. This decision must be communicated to the TITLE HOLDER in a reliable manner and with no less than thirty (30) calendar days notice.  The Contract will terminate for both parties on the effective date of rescission specified in the notification.

This rescission will not grant the TITLEHOLDER the right to any claim whether as indemnity, loss or business interruption.

As from the effective date of rescission the INTERESTED PARTY will not be obliged to make the outstanding payments established in article TEN.

The TITLE HOLDER will be able to cancel this Contract if the INTERESTED PARTY does not comply with the payments established in article TEN, after thirty (30) days have passed since the TITLE HOLDER had requested such compliance in a reliable manner and in writing according to what is established in article NINETEEN.

NINE: OPTION TO PURCHASE

During the period of validity of this Contract, the INTERESTED PARTY will have the exclusive option to acquire the MINING PROPERTY, which will be understood to have been automatically executed once the INTERESTED PARTY completes the payments established in the article.

 

TEN:

Once the Option to Purchase is executed, the TITLE HOLDER must sign and deliver all documents, proceed with all registrations and entries and take all steps required to execute the assignment or transfer of the MINING PROPERTY to the INTERESTED PARTY, free from any obligation, charge or encumbrance.

Moreover, the TITLE HOLDER will have the right to the following payment plan:

During the life of the mine, the TITLE HOLDER will receive 1% of the NSR (Net Smelter Return). This can be purchased by the INTERESTED PARTY for $ 1,000,000.00 (One Million US Dollars) anytime after the start of production.

Plus

Payment of a “total sum” of $1,500,000 (One Million Five Hundred Thousand US Dollars), subtracting from this amount the payments of the option already made.

10.1.

The total price the INTERESTED PARTY will pay to the TITLE HOLDER for Right of Exploration and Option to Purchase on the MINING PROPERTY including all titles, properties and mining rights which make up the property, consists of the “total sum” to be paid as follows:

- On 8th February 2010, the sum of US$30,000 (Thirty thousand US Dollars)

- On 9th February 2010, the sum of US$70,000 (Seventy thousand US Dollars).

- On 20th March 2010, the sum of US$50,000. - (Fifty thousand US Dollars). -

- On 30th July 2010, the sum of US$1,350,000 (One million three hundred and fifty thousand US Dollars).

10.2.

Once the Option to Purchase is exercised in the way indicated in paragraph 10.1., then the assignment or transfer of ownership of each and every one of the properties and mining rights which make up the MINING PROPERTY must be signed before a Notary Public who will be appointed by the INTERESTED PARTY.  The said transfer must be made within thirty (30) working days counted as from the date the Option to Purchase was put into effect.  The costs of drawing up the deed, stamp and fees applicable to such assignment or transfer according to the tax regulations of the Province of Jujuy will be borne equally by the parties.

10.3.

If by 30th July 2010 the payment of the sum of US$ 1,350,000 (One million three hundred and fifty thousand US Dollars) is not made, the INTERESTED PARTY will have a priority on the right of option for the purchase of the MINING PROPERTY for three years.  If the TITLE HOLDER opts in that time to sell or contract with a third party, the INTERESTED PARTY will have the right, at the same conditions and with a period of ten calendar days after notification to the address reported in this contract, to purchase or contract at identical conditions.

ELEVEN: TERMINATION OF CONTRACT

11.2	If the INTERESTED PARTY or the TITLE HOLDER were to rescind the Contract, this would be terminated for both parties on the effective date of rescission as is indicated in the corresponding notification.

TWELVE:

When termination of the Contract takes place due to the reasons indicated in the previous paragraph, the INTERESTED PARTY must:

12

Give back possession of the MINING PROPERTY to the TITLE HOLDER.  The TITLE HOLDER will receive possession or ownership of the MINING PROPERTY, as the case may be, in the physical and legal condition it is in, with no right to claim indemnity for damages, losses, business interruption or reparation of any kind.

12.2	Sign, register and deliver to the TITLE HOLDER all documents required to verify the termination of the Contract before the Court of Mines of the Province of Jujuy or before interested third parties.

12.3

Leave the MINING PROPERTY within one hundred and twenty (120) calendar days from the effective date of termination of the Contract and remove from it, at his own expense, all machinery, tools, equipment, personal belongings and appliances brought in.  In order to comply with this obligation, the INTERESTED PARTY will be able to access the MINING PROPERTY during that period.

12.4

Deliver to the TITLE HOLDER within sixty (60) calendar days from the effective date of termination of the Contract, a copy of all maps, geological reports, tests results, drilling records and other technical data resulting from the exploration and evaluation tasks carried out by the INTERESTED PARTY.

THIRTEEN:

As from the effective date of termination of the Contract, it will lose all validity and effect for both parties, with the exception of the obligations established in the previous article and in article FOURTEEN of this Contract which will remain in force for an additional period of one (1) year.

FOURTEEN: CONFIDENTIALITY

All knowledge or information that the TITLE HOLDER acquires with regard to the results of the exploration conducted by the INTERESTED PARTY, methods applied, results of analysis, metallurgical tests, location of drilling, discoveries made, technology or inventions applied or as a consequence of any activity carried out by the INTERESTED PARTY by virtue of this Contract, will be kept secret by the TITLE HOLDER and deemed as confidential, unless the INTERESTED PARTY releases the TITLE HOLDER from this obligation in writing or the information is required from the TITLE HOLDER by state organisations, legally constituted for that purpose.  This applies for one (1) year after the termination of the Contract.

FIFTEEN: FORCE MAJEURE

None of the parties will be held responsible for failure to fulfil their obligations under this Contract when it is due to reasons beyond their control, including, but not limited to; work-related conflicts, whatever their origin, and irrespective of the validity of the claim or whether the parties are in a position to pay it, as long as the conflict is not a consequence of non-fulfilment of the legal or contractual obligations of the parties; events in nature; laws, provisions, decrees or resolutions of any state authority; judicial sentences or decisions that prevent or alter the fulfilment of the contractual obligations or prevent, any permits or licences from being obtained under reasonable conditions; lack of availability or insufficiency of equipment and material in the country to carry out the tasks prescribed in this Contract; suspension of activities to remedy or prevent the present or future transgression of federal, provincial or municipal laws or regulations relating to the environment; acts of war or situations caused by insurrection or rebellion; fire; explosions; earthquakes; volcanic eruptions; storms; flooding; droughts and other adverse climatic conditions.

The affected party shall notify the other without any delay of the act of force majeure and the suspension of his obligations, stating the reason for such suspension and its estimated duration. The affected party shall resume the fulfilment of his obligations as soon as reasonably possible.

SIXTEEN: AREA OF INFLUENCE

All property, right or mining interest acquired by either of the parties during the term of this Contract in the areas adjacent to the MINING PROPERTY will be incorporated into the same, and consequently will be subject to the terms and conditions established herein.

SEVENTEEN: GENERAL CLAUSES

The investments that the INTERESTED PARTY makes in fulfilment of this Contract must be notified to the TITLE HOLDER together with the relevant supporting documents at the address established in this Contract for the receipt of notifications.

EIGHTEEN:

The relationship between the parties will be governed by the provisions of this Contract and subsidiarily by the Argentinean Mining Code and applicable Argentinean legislation.

Any controversy in the application or interpretation of this Contract will be subject to the jurisdiction of the Ordinary Courts of the City of San Salvador de Jujuy, with any other jurisdiction or legislation being waived.

NINETEEN:

If either of the parties were to fail to fulfil any obligation established in this Contract, the party affected by such omission will notify the party in default in writing and in a reliable manner of the said omission and the latter will not lose the rights conferred by this Contract, unless within thirty (30) calendar days from receipt of such notification, he has not taken all reasonable measures to remedy his non-fulfilment.

If the party in default ceases to take the relevant measures to remedy his non-fulfilment within that period, the affected party will have the right to demand the remedy of such non-fulfilment through the courts or by any other means he deems appropriate, without prejudice to what is established in article EIGHT with regard to the rescission of the Contract.

TWENTY:

This contract will be to the advantage of and be binding upon the parties who sign it, as well as their respective heirs, executors, administrators, successors and beneficiaries.

TWENTY ONE:

Either party can freely assign all his rights and obligations arising from this Contract to third persons and can also enter into partnership with third persons for its fulfilment, by notifying the TITLE HOLDER in writing of the substantial conditions of such assignment or partnership.

The TITLE HOLDER can only assign his corresponding rights and obligations with the written consent of the INTERESTED PARTY and this consent cannot be refused without reasonable cause.

TWENTY TWO:

The purpose of the headings or titles of this Contract is to facilitate reference to the articles it includes but they do not affect nor limit the interpretation of the Contract.

TWENTY THREE: NOTIFICATIONS

Any notification relating to this Contract must be made in writing and can be delivered by hand or sent by prepaid registered mail, certified mail or by facsimile, addressed accordingly to:

The INTERESTED PARTY: FABIO MONTANARI, Calle Independencia 219, city of San Salvador de Jujuy, Province of Jujuy, Telephone ###-###-####, or ###-###-####, Fax +39 070 ###-###-####, E-mail ***@***

The TITLE HOLDER, Mr. Antonio Augustin Giulianotti, Dr. Aparicio Street No. 667, District of Ciudad de Nieva, city of San Salvador de Jujuy, Province of Jujuy, Phone +54 (0) 388 ###-###-#### or ###-###-#### E-mail ***@***

Any notification sent by facsimile will be considered to be delivered and received on the working day after the date of remittance of the facsimile.

Either party can notify the other in writing and in a reliable manner at any time of a change of their address and as from the effective date of delivery of such notification, the new address specified therein will be considered as the address of that party for notification purposes.

As proof of acceptance, the parties sign four originals for the same purpose and to one effect, in the city of San Salvador de Jujuy, Province of Jujuy, Republic of Argentina on 8th February 2010.

Fabio Montanari                                                                                     Antonio Augustin Giulianotti

/s/ Fabio Montanari                                                                                                /s/ Antonio Augustin Giulianotti

Book 152, folio 57, record 113

SS de Jujuy, 08/02/2010.-

Pages; 00697597 to 00697598

NOTARIAL RECORD

NOTARY’S STAMP                                                                                                     NATIONAL STAMP

Law 4884/96

CERTIFICATION OF SIGNATURES

A 00697597

S. S. de Jujuy, 8th February 2010

The person who has signed and placed his stamp at the foot of this document, Notary Public CESAR RICARDO FRIAS, National Notary Public, Holder of Registration No.36 with domicile in the city of San Salvador de Jujuy.

DOES HEREBY CERTIFY; FIRST: THAT the signature(s) that appear(s) in this Public Deed attached to this sheet (EXPLORATION CONTRACT WITH OPTION TO PURCHASE)

is/are placed in this deed, in his presence, by the person(s) whose name(s) and identity document(s) are mentioned as follows:

FABIO MONTANARI, with Passport of the European Union, Republic of Italy, No. E 571059 and ANTONIO AUGUSTIN GIULIANOTTI, N.I.D. Nº 7379817; who verify their identity in accordance with Article No. 1002, paragraph c, of the Civil Code, amended by Law No. 26240; I certify

SECOND: That said person(s) is/are acting in their own right.

THIRD: That the corresponding requirement(s) and signature(s) have been recorded simultaneously in the Book of Requirements No. 152 on sheet 57 Entry 113, with stamp(s) No. 00481779-00481780 being attached to said instrument and to such book.