Common use of Grant and Exercise of Option Clause in Contracts

Grant and Exercise of Option. 3.1 The Optionor hereby grants to the Optionee the sole and exclusive right and option (the “Option”) to acquire an undivided seventy percent (70%) interest in and to the Property free and clear of all charges, encumbrances and claims. 3.2 The Optionee will be deemed to have exercised its option as follows: (a) acquire an initial fifty-one percent (51%) interest upon incurring Exploration Expenditures of US $1,500,000 on or before the third anniversary date of this Agreement, such expenditures to be incurred and paid by Spartan; and (b) acquire an additional nineteen percent (19%) interest upon incurring additional Exploration Expenditures of US $1,000,000 and by also completing and delivering to Optionor an Industry-standard Mining Feasibility Study (not necessarily "bankable") on or before the fifth anniversary date of this Agreement, such expenditures and Mining Feasibility Study to be incurred and paid by Sphere. 3.2 In order to maintain the Option, the Optionee and Sphere will also be required to: (a) Optionee shall pay US $110,000 to the Optionor as follows: (i) US $25,000 on the execution of this Agreement (the receipt of which is hereby acknowledged by the Optionor); (ii) US $35,000 within ninety (90) days of execution of this Agreement; (iii) US $25,000 on or before the second anniversary date of this Agreement; and (iv) US $25,000 on or before the third anniversary date of this Agreement. (b) Sphere shall allot and issue to the Optionor, as fully paid and non-assessable, the Shares as follows: (i) 300,000 common shares of Sphere Resources, Inc. within 60 days of the execution of this Agreement; and (ii) 400,000 common shares of Sphere Resources, Inc. within 60 days of Optionor acquiring a 51% interest in the Property. 3.3 It is understood and agreed by and between Spartan and Sphere that Spartan shall be responsible for and pay US $1,500,000 of initial Exploration Expenditures and Sphere shall be responsible for and pay the additional US $ 1,000,000 Exploration Expenditures and the Mining Feasibility Study as set forth above. Title to the seventy percent (70%) interest in the Property conveyed hereunder shall vest in Optionee (Spartan). Upon exercise of the Option and acquisition of the 70% interest in the Property, Spartan and Sphere shall enter into a joint venture agreement whereby each party is an equal partner with a thirty-five percent (35%) interest in the Property going forward. Such joint venture agreement shall provide for a four person technical committee, with equal representation from each party to the agreement. The technical committee shall meet at least twice per year and will be responsible for setting annual exploration and development program goals and expenditures. If one party to the joint venture agreement fails to meet part or all of its annual expenditure obligation as determined by the technical committee, the other party shall have the right to pay all or part of the shortfall in order to meet the program goals and thereby earn an additional proportionate share of the joint venture profits. 3.4 Exploration Expenditures shall be deemed to have been incurred by the Optionee when the Optionee has expended funds or has received goods or services from third parties for which the Optionee has an obligation to make payment, whether or not payment has been made. Where Exploration Expenditures are charged to the Optionee by an affiliate of the Optionee for services rendered by such affiliate, such Exploration Expenditures shall not exceed the fair market value of the services rendered. 3.5 Exploration Expenditures incurred by the Optionee exceeding the amount of Exploration Expenditures required to be incurred within any period shall be carried forward to the succeeding period and qualify as Exploration Expenditures. If the Exploration Expenditures incurred are less than the amount of the Exploration Expenditures required to be incurred in any period, the Optionee may at its option pay the deficiency to the Optionor within sixty (60) days after the end of such period in order to maintain the Option. Any such payment of cash in lieu shall be deemed to be Exploration Expenditures incurred on the Property on or before the relevant date for the purposes of this Part 3. 3.6 If the Optionee reasonably believes that it has incurred Exploration Expenditures required to be incurred by the Optionee in any period in order to maintain the Option, but it is subsequently determined upon examination or audit by either party that such Exploration Expenditures were not incurred within such period, the Optionee shall not lose any of its rights hereunder and the Option shall not terminate, provided that the Optionee pays the Optionor such deficiency in Exploration Expenditures within thirty (30) days following such determination (if determined by the Optionee) or within thirty (30) days following notice to the Optionee of such deficiency (if determined by the Optionor), and the payment of such deficiency in Exploration Expenditures shall be deemed to be Exploration Expenditures incurred by the Optionee for purposes of this Agreement. 3.7 If and when the Option has been exercised an undivided seventy percent (70%) right, title and interest in and to the Property shall vest in the Optionee free and clear of all charges, encumbrances and claims. 4.1 The Optionor shall, forthwith after the exercise of the Option by the Optionee, deliver to the Optionee a duly executed assignment and transfer of the appropriate interest in the Property which shall have been acquired by the Optionee upon exercise of the Option.

Grant and Exercise of Option. 3.1 4.1 The Optionor hereby grants to the Optionee the sole and exclusive right and option (the “"Option”") to acquire an undivided seventy percent (70%) interest in and up to the Property free and clear of all charges, encumbrances and claims. 3.2 The Optionee will be deemed to have exercised its option as follows: (a) acquire an initial a fifty-one percent (51%) interest upon incurring Exploration Expenditures of US $1,500,000 on or before in the third anniversary date of this AgreementProperty, such expenditures 51% interest, subject to the Underlying Royalty, to be incurred free and paid by Spartan; and (b) acquire an additional nineteen percent (19%) interest upon incurring additional Exploration Expenditures clear of US $1,000,000 all liens, charges, encumbrances, security interests and by also completing and delivering to Optionor an Industry-standard Mining Feasibility Study (not necessarily "bankable") on adverse claims arising from or before the fifth anniversary date of this Agreement, such expenditures and Mining Feasibility Study to be incurred and paid by Sphere. 3.2 In order to maintain the Option, the Optionee and Sphere will also be required to: (a) Optionee shall pay US $110,000 to the Optionor as follows: (i) US $25,000 on the execution of this Agreement (the receipt of which is hereby acknowledged by the Optionor); (ii) US $35,000 within ninety (90) days of execution of this Agreement; (iii) US $25,000 on or before the second anniversary date of this Agreement; and (iv) US $25,000 on or before the third anniversary date of this Agreement. (b) Sphere shall allot and issue to through the Optionor, as fully paid and non-assessable, subject to the Shares as follows: (i) 300,000 common shares of Sphere Resources, Inc. within 60 days of the execution of this Agreement; and (ii) 400,000 common shares of Sphere Resources, Inc. within 60 days of Optionor acquiring a 51% interest in laws applicable to the Property. 3.3 It is understood 4.2 The Optionee has approximately four and agreed by and between Spartan and Sphere that Spartan shall be responsible for and pay US $1,500,000 of initial Exploration Expenditures and Sphere shall be responsible for and pay the additional US $ 1,000,000 Exploration Expenditures and the Mining Feasibility Study as set forth above. Title one-half (4.5) years to the seventy earn a fifty-one percent (7051%) interest in the Property conveyed hereunder shall vest in Optionee (Spartanthe "Earn-In"). Upon exercise The Optionee must incur fifty percent (50%) or more of its Expenditures and fifty percent (50%) or more of its Option Payments before any earn-in is realized. Once the 50% in Work Commitments and the 50% in Option and acquisition of Payments has been reached, the 70% interest in the Property, Spartan and Sphere shall enter into Optionee will have a joint venture agreement whereby each party is an equal partner with a thirtytwenty-five and one-half percent (3525.5%) interest in the Property going forward. Such joint venture agreement shall provide for a four person technical committee, with equal representation from each party and the Optionee's interest will increase proportionate to its Work Commitments and Option Payments to the agreement. The technical committee shall meet maximum of a fifty-one percent (51%) interest in the Property at least twice per year which point both the Optionee' interest and the Optionor's interest will be responsible for setting annual exploration converted to working interests. 4.3 The Optionee must incur or caused to be incurred expenditures of not less than an aggregate of US$10,000,000 (the "Work Commitments") with minimum expenditures as follows: (a) US$1,800,000 by November 30, 2008; (b) US$2,200,000 by November 30, 2009; (c) US$2,800,000 by November 30, 2010; and development program goals and expenditures(d) US$3,200,000 by November 30, 2011. If one party the Optionee does not meet the minimum expenditures by the due date set out in this §4.3, the Optionor will deliver written notice to the joint venture agreement fails to meet part or all Optionee and the Optionee will have 30 calendar days from the date of its annual expenditure obligation as determined by the technical committee, the other party shall have the right to pay all or part receipt of the shortfall in order such notice to meet the program goals overdue minimum payments, including making a cash payment directly to the Optionor for the difference between the actual and thereby earn an additional proportionate share the required expenditures or by prepaying its Work Commitments and paying its Option Payments. If the Optionee defaults under this §4.3, the Earn-In right is suspended until written consent of the joint venture profitsOptionor is obtained waiving the default. 3.4 Exploration Expenditures 4.4 The Option must make or cause to be made, payments to the Optionor of not less than an aggregate of €3,000,000 (the "Option Payments") over four years as follows: (a) €30,000 by May 22, 2007; which Option Payment has now been made; (b) €270,000 on the Closing Date; (c) €600,000 by November 30, 2008; (d) €900,000 by November 30, 2009; and (e) €1,200,000 by November 30, 2010. The €30,000 payment to be paid by May 22, 2007 as set out in §4.4(a) is non-refundable once paid. 4.5 Following the Earn-In by the Optionee, the Optionor and the Optionee will form a Joint Venture for the purpose of carrying out further development work and production on the Property and will in good faith use their reasonable commercial efforts to negotiate and execute a Joint Venture Agreement, substantially in the form of Schedule C hereto; within 90 calendar days of the completion of the Earn-In by the Optionee; and said agreement shall include, but not be limited to, the following provisions representing the parties' current intentions herein: (a) the initial participating interests of the parties in the Joint Venture will be twenty-five and one-half percent (25.5%) as to the Optionee and seventy-four and one-half percent (74.5%) as to the Optionor; (b) the Optionee shall be deemed to the initial manager of the Joint Venture and the Optionee shall remain the manager until its resignation. Property claims shall be registered in the name of the manager on behalf of the Joint Venture; (c) the operations of the Joint Venture will be overseen by a management committee (the "Management Committee") comprised of five members of whom two (2) members will be selected by the Optionor, two (2) members will be selected by the Optionee and the fifth member will be the Vice-President, Exploration of the Optionee who will also act as Chair of the Management Committee. The parties acknowledge that Xxxxxxx Xxxxx is currently the Vice President, Exploration of the Optionee; (d) once the Work Commitments totalling US$10,000,000 have been incurred by the Optionee when under this Agreement, the participating interests of the parties in the Joint Venture will be subject to dilution for non-contribution to costs in proportion to their interests, on a straight line basis. For example, if after the Optionee has expended funds or has received goods or services from third parties for earned its fifty-one percent (51%) interest by fulfilling the Work Commitments and Option Payments, the Property is explored with a further US$5,000,000 and the Optionor does not pay its proportionate share of US$2,450,000, the Optionor's forty-nine percent (49%) working interest will be reduced to 49% x (US$10,000,000 / (US$10,000,000 + US$5,000,000) = 32.7%; (e) the working interest of the Optionor can fall to no less than ten percent (10%) at which point it will be converted into a carried interest and the Optionee has an obligation will have the right to make payment, whether or not payment has been made. Where Exploration Expenditures are charged purchase the Optionor's 10% carried interest by paying US$10,000,000 to the Optionee by Optionor; (f) notwithstanding any other provisions contained in this Agreement, the Optionor will retain a Net Smelter Return Royalty of two percent (2%) should any area within the Property be developed into an affiliate operating mine; said Net Smelter Return Royalty to be calculated in accordance with the provisions of the Optionee for services proposed Schedule D; (g) each party will have 15 calendar days following adoption of work programs to elect to participate therein and invoices rendered by such affiliate, such Exploration Expenditures shall not exceed the fair market value to participating parties in respect of the services rendered. 3.5 Exploration Expenditures incurred by the Optionee exceeding the amount of Exploration Expenditures required to be incurred within any period work program shall be carried forward payable within 20 calendar days; (h) each party will grant to the succeeding period and qualify as Exploration Expenditures. If the Exploration Expenditures incurred are less than the amount other a 21 calendar day right of the Exploration Expenditures required first refusal with respect to be incurred in any period, the Optionee may at its option pay the deficiency to the Optionor within sixty (60) days after the end proposed sale of such period in order to maintain the Option. Any such payment of cash in lieu shall be deemed to be Exploration Expenditures incurred on the Property on or before the relevant date for the purposes of this Part 3. 3.6 If the Optionee reasonably believes that it has incurred Exploration Expenditures required to be incurred by the Optionee in any period in order to maintain the Option, but it is subsequently determined upon examination or audit by either party that such Exploration Expenditures were not incurred within such period, the Optionee shall not lose any of its rights hereunder and the Option shall not terminate, provided that the Optionee pays the Optionor such deficiency in Exploration Expenditures within thirty (30) days following such determination (if determined by the Optionee) or within thirty (30) days following notice to the Optionee of such deficiency (if determined by the Optionor), and the payment of such deficiency in Exploration Expenditures shall be deemed to be Exploration Expenditures incurred by the Optionee for purposes of this Agreement. 3.7 If and when the Option has been exercised an undivided seventy percent (70%) right, title and interest in and to the Property shall vest in the Optionee free and clear of all charges, encumbrances and claims. 4.1 The Optionor shall, forthwith after the exercise of the Option by the Optionee, deliver to the Optionee a duly executed assignment and transfer of the appropriate party's working interest in the Property which shall have been acquired by Joint Venture to a third party. If a sale is completed the Optionee upon exercise third party must agree to be bound to the terms of the OptionJoint Venture Agreement; and (i) in the event of a dispute in reaching a binding Joint Venture Agreement the parties shall refer any such dispute to binding arbitration to have a binding agreement imposed on themselves.

Grant and Exercise of Option. 3.1 2.1 The Optionor hereby grants to the Optionee the sole and exclusive right and option (the “Option”) to acquire an a 60% undivided seventy percent (70%) interest in and to the Property free and clear of all charges, encumbrances and claims. 3.2 The Optionee will be deemed claims on the following terms and subject to have exercised its option as followsthe following conditions: (a) acquire an initial fifty-one percent (51%) interest upon incurring Exploration Expenditures of US $1,500,000 on or before The Option shall be exercised by the third anniversary date of this Agreement, such expenditures to be incurred and paid by Spartan; and (b) acquire an additional nineteen percent (19%) interest upon incurring additional Exploration Expenditures of US $1,000,000 and by also completing and delivering to Optionor an Industry-standard Mining Feasibility Study (not necessarily "bankable") on or before the fifth anniversary date of this Agreement, such expenditures and Mining Feasibility Study to be incurred and paid by Sphere. 3.2 In order to maintain the Option, the Optionee and Sphere will also be required to: (a) Optionee shall pay US $110,000 to the Optionor as followsOptionee: (i) US paying the Optionor $25,000 500 CDN on the execution of this Agreement (Agreement, the receipt of which is hereby acknowledged by the Optionor); (ii) US paying the Optionor $35,000 within ninety 15,000 CDN as follows: (90A) days $2,000 CDN on or before the date that is three months after the Effective Date; (B) an additional $3,000 CDN on or before the date that is six months after the Effective Date; and (C) an additional $10,000 CDN on or before the first anniversary of execution of this Agreement;the Effective Date. (iii) US incurring Exploration Expenditures of $25,000 160,000 CDN on the Property as follows; (A) $10,000 CDN on or before the date that is six months after the Effective Date; and (B) a further $150,000 CDN on or before the second anniversary date of this Agreement; andthe Effective Date. (iv) US $25,000 on or before Issuing shares of the third anniversary date of this Agreement. Optionee’s common stock (bthe “Shares”) Sphere shall allot and issue to the Optionor, as fully paid and non-assessable, the Shares Optionor as follows: (iA) 300,000 common shares of Sphere Resources, Inc. within 60 days of 2,000 Shares on or before the execution of this Agreementdate that is three months after the Effective Date; (B) an additional 3,000 Shares on or before the date that is six months after the Effective Date; and (iiC) 400,000 common shares an additional 10,000 Shares on or before the first anniversary of Sphere Resourcesthe Effective Date. (collectively referred to as the “Option Shares”) (b) In the event that the Optionee spends, Inc. within 60 days in any of the above periods, less than the specified sum, it may pay to the Optionor acquiring a 51% interest the difference between the amount it actually spent and the specified sum before the expiry of that period in full satisfaction of the PropertyExploration Expenditures to be incurred. In the event that the Optionee spends, in any period, more than the specified sum, the excess shall be carried forward and applied to the Exploration Expenditures to be incurred in succeeding periods. 3.3 It is understood and agreed by and between Spartan and Sphere that Spartan shall be responsible for and pay US $1,500,000 of initial Exploration Expenditures and Sphere shall be responsible for and pay the additional US $ 1,000,000 Exploration Expenditures and the Mining Feasibility Study as set forth above. Title to the seventy percent (70%c) interest in the Property conveyed hereunder shall vest in Optionee (Spartan). Upon exercise of the Option and acquisition of the 70% interest in the Property, Spartan and Sphere shall enter into a joint venture agreement whereby each party is an equal partner with a thirty-five percent (35%) interest in the Property going forward. Such joint venture agreement shall provide for a four person technical committee, with equal representation from each party to the agreement. The technical committee shall meet at least twice per year and will be responsible for setting annual exploration and development program goals and expenditures. If one party to the joint venture agreement fails to meet part or all of its annual expenditure obligation as determined by the technical committee, the other party shall have the right to pay all or part of the shortfall in order to meet the program goals and thereby earn an additional proportionate share of the joint venture profits. 3.4 Exploration Expenditures shall be deemed to have been incurred by the Optionee when the Optionee has expended funds or has received goods or services from third parties for which the Optionee has an obligation to make payment, whether or not payment has been made. Where Exploration Expenditures are charged to the Optionee by an affiliate of the Optionee for services rendered by such affiliate, such Exploration Expenditures shall not exceed the fair market value of the services rendered. 3.5 Exploration Expenditures incurred by the Optionee exceeding the amount of Exploration Expenditures required to be incurred within any period shall be carried forward to the succeeding period and qualify as Exploration Expenditures. If the Exploration Expenditures incurred are less than the amount of the Exploration Expenditures required to be incurred in any period, the Optionee may at its option pay the deficiency to the Optionor within sixty (60) days after the end of such period in order to maintain the Option. Any such payment of cash in lieu shall be deemed to be Exploration Expenditures incurred on the Property on or before the relevant date for the purposes of this Part 3. 3.6 If the Optionee reasonably believes that it has incurred Exploration Expenditures required to be incurred by the Optionee in any period in order to maintain the Option, but it is subsequently determined upon examination or audit by either party that such Exploration Expenditures were not incurred within such period, the Optionee shall not lose any of its rights hereunder and the Option shall not terminate, provided that the Optionee pays the Optionor such deficiency in Exploration Expenditures within thirty (30) days following such determination (if determined by the Optionee) or within thirty (30) days following notice to the Optionee of such deficiency (if determined by the Optionor), and the payment of such deficiency in Exploration Expenditures shall be deemed to be Exploration Expenditures incurred by the Optionee for purposes of this Agreement. 3.7 If and when the Option has been exercised an a 60% undivided seventy percent (70%) right, title and interest in and to the Property shall vest in the Optionee free and clear of all charges, encumbrances and claims. 4.1 The Optionor shall, forthwith after the exercise of the Option by the Optionee, deliver to the Optionee a duly executed assignment and transfer of the appropriate interest in the Property which shall have been acquired by the Optionee upon exercise of the Option.

Grant and Exercise of Option. 3.1 The Optionor Tham hereby grants to the Optionee MEL the sole and exclusive right and axx option (the “Option”) to acquire an up to a 100% undivided seventy percent (70%) interest in and to the Property free and clear of all charges, encumbrances and claims. 3.2 The Optionee will be deemed claims on the following terms and subject to have exercised its option as followsthe following conditions: (a) acquire an initial fifty-one percent (51%) interest The Option shall be exercised by MEL upon incurring Exploration Expenditures of US $1,500,000 on or before the third anniversary date of this Agreement, such expenditures to be incurred and paid by Spartan; and (b) acquire an additional nineteen percent (19%) interest upon incurring additional Exploration Expenditures of US $1,000,000 and by also completing and delivering to Optionor an Industry-standard Mining Feasibility Study (not necessarily "bankable") on or before the fifth anniversary date of this Agreement, such expenditures and Mining Feasibility Study to be incurred and paid by Sphere. 3.2 In order to maintain the Option, the Optionee and Sphere will also be required to: (a) Optionee shall pay US $110,000 to the Optionor as followsfollowing conditions: (i) US incurring Exploration Expenditures totaling up to $25,000 300,000 on the execution of this Agreement (the receipt of which is hereby acknowledged by the Optionor);Property as follows: (ii1) US $35,000 within ninety (90) days of execution of this Agreement; (iii) US $25,000 10,000 on or before the second anniversary date of this AgreementFebruary 28, 2004; 2) an additional $35,000 on or before February 28, 2005; 3) an additional $75,000 on or before December 31, 2005; and (iv4) US an additional $25,000 180,000 on or before the third anniversary date of this AgreementDecember 31, 2006. (b) Sphere In the event that MEL spends, in any of the above pxxxods, less than the specified sum, MEL must pay to Tham the differencx between the amount of actual expenditures and the required specified sum within 30 says after the respective required time period in full satisfaction of the Exploration Expenditures to be incurred. In the event that MEL spends, in any period, moxx than the specified sum, the excess shall allot be carried forward and issue applied to the Optionor, as fully paid and non-assessable, the Shares as follows:Exploration Expenditures to be incurred in succeeding periods. (id) 300,000 common shares of Sphere Resources, Inc. within 60 days of the execution of this Agreement; and (ii) 400,000 common shares of Sphere Resources, Inc. within 60 days of Optionor acquiring a 51% interest in the Property. 3.3 It is understood and agreed by and between Spartan and Sphere that Spartan shall be responsible for and pay US $1,500,000 of initial Exploration Expenditures and Sphere shall be responsible for and pay the additional US $ 1,000,000 Exploration Expenditures and the Mining Feasibility Study as set forth above. Title to the seventy percent (70%) interest in the Property conveyed hereunder shall vest in Optionee (Spartan). Upon exercise of the Option and acquisition of the 70in full by December 31, 2006, a 100% interest in the Property, Spartan and Sphere shall enter into a joint venture agreement whereby each party is an equal partner with a thirty-five percent (35%) interest in the Property going forward. Such joint venture agreement shall provide for a four person technical committee, with equal representation from each party to the agreement. The technical committee shall meet at least twice per year and will be responsible for setting annual exploration and development program goals and expenditures. If one party to the joint venture agreement fails to meet part or all of its annual expenditure obligation as determined by the technical committee, the other party shall have the right to pay all or part of the shortfall in order to meet the program goals and thereby earn an additional proportionate share of the joint venture profits. 3.4 Exploration Expenditures shall be deemed to have been incurred by the Optionee when the Optionee has expended funds or has received goods or services from third parties for which the Optionee has an obligation to make payment, whether or not payment has been made. Where Exploration Expenditures are charged to the Optionee by an affiliate of the Optionee for services rendered by such affiliate, such Exploration Expenditures shall not exceed the fair market value of the services rendered. 3.5 Exploration Expenditures incurred by the Optionee exceeding the amount of Exploration Expenditures required to be incurred within any period shall be carried forward to the succeeding period and qualify as Exploration Expenditures. If the Exploration Expenditures incurred are less than the amount of the Exploration Expenditures required to be incurred in any period, the Optionee may at its option pay the deficiency to the Optionor within sixty (60) days after the end of such period in order to maintain the Option. Any such payment of cash in lieu shall be deemed to be Exploration Expenditures incurred on the Property on or before the relevant date for the purposes of this Part 3. 3.6 If the Optionee reasonably believes that it has incurred Exploration Expenditures required to be incurred by the Optionee in any period in order to maintain the Option, but it is subsequently determined upon examination or audit by either party that such Exploration Expenditures were not incurred within such period, the Optionee shall not lose any of its rights hereunder and the Option shall not terminate, provided that the Optionee pays the Optionor such deficiency in Exploration Expenditures within thirty (30) days following such determination (if determined by the Optionee) or within thirty (30) days following notice to the Optionee of such deficiency (if determined by the Optionor), and the payment of such deficiency in Exploration Expenditures shall be deemed to be Exploration Expenditures incurred by the Optionee for purposes of this Agreement. 3.7 If and when the Option has been exercised an undivided seventy percent (70%) right, title and interest in and to the Property shall vest in the Optionee to MEL free and clear of all chargescharxxx, encumbrances and claims. 4.1 The Optionor shall, forthwith after subject only the exercise payment of a 1.5% Net Smelter Return Royalty ("NSR") to Tham realized from production on the Property. Net Smelter returns shall be the gross proceeds received by MEL, the manager and operator (the "Xanager") of the Option Property, in any year from the sale of ore (being any material containing minerals of commercial economic value including any concentrates or other products derived there from) from the mining operation on the Property, less successively: (i) custom smelting costs, treatment charges and penalties including, but not being limited to, metal losses, penalties for impurities and charges for refining, selling and handling by the Optioneesmelter, deliver to the Optionee a duly executed assignment refinery or other purchaser; and (ii) costs of handling, transporting and transfer of the appropriate interest in insuring ores, minerals and other materials or concentrates from the Property which shall have been acquired by or from a concentrator, whether situated on or off the Optionee Property, to a smelter, refinery or other place of treatment; and (iii) ad valorum taxes and taxes based upon exercise of the Optionproduction, but not income taxes.

Grant and Exercise of Option. 3.1 The Optionor Tham hereby grants to the Optionee MEL the sole and exclusive right and axx option (the “Option”) to acquire an up to a 100% undivided seventy percent (70%) interest in and to the Property free and clear of all charges, encumbrances and claims. 3.2 The Optionee will be deemed claims on the following terms and subject to have exercised its option as followsthe following conditions: (a) acquire an initial fifty-one percent (51%) interest The Option shall be exercised by MEL upon incurring Exploration Expenditures of US $1,500,000 on or before the third anniversary date of this Agreement, such expenditures to be incurred and paid by Spartan; and (b) acquire an additional nineteen percent (19%) interest upon incurring additional Exploration Expenditures of US $1,000,000 and by also completing and delivering to Optionor an Industry-standard Mining Feasibility Study (not necessarily "bankable") on or before the fifth anniversary date of this Agreement, such expenditures and Mining Feasibility Study to be incurred and paid by Sphere. 3.2 In order to maintain the Option, the Optionee and Sphere will also be required to: (a) Optionee shall pay US $110,000 to the Optionor as followsfollowing conditions: (i) US exploration expenditures not less than $25,000 on 35,000 resulting in two geological reports per respective Mongolian mineral licenses previous to the execution of this Agreement (Agreement, the receipt and the receiving of the reports of which is hereby acknowledged by the Optionor)Tham; (ii) US incurring Exploration Expenditures totaling up to $35,000 within ninety (90185,000 on the Property as follows: 1) days of execution of this Agreement$10,000 on or before December 31, 2003; (iii2) US a further $25,000 on or before the second anniversary date of this AgreementDecember 31, 2004; 3) a further $50,000 on or before December 31, 2005; and (iv4) US a further $25,000 100,000 on or before the third anniversary date of this AgreementDecember 31, 2006. (b) Sphere In the event that MEL spends, in any of the above pxxxods, less than the specified sum, MEL must pay to Tham the differencx between the amount of actual expenditures and the required specified sum within 30 says after the respective required time period in full satisfaction of the Exploration Expenditures to be incurred. In the event that MEL spends, in any period, moxx than the specified sum, the excess shall allot be carried forward and issue applied to the Optionor, as fully paid and non-assessable, the Shares as follows:Exploration Expenditures to be incurred in succeeding periods. (ic) 300,000 common shares of Sphere Resources, Inc. within 60 days of the execution of this Agreement; and (ii) 400,000 common shares of Sphere Resources, Inc. within 60 days of Optionor acquiring a 51% interest in the Property. 3.3 It is understood and agreed by and between Spartan and Sphere that Spartan shall be responsible for and pay US $1,500,000 of initial Exploration Expenditures and Sphere shall be responsible for and pay the additional US $ 1,000,000 Exploration Expenditures and the Mining Feasibility Study as set forth above. Title to the seventy percent (70%) interest in the Property conveyed hereunder shall vest in Optionee (Spartan). Upon exercise of the Option and acquisition of the 70in full, a 100% interest in the Property, Spartan and Sphere shall enter into a joint venture agreement whereby each party is an equal partner with a thirty-five percent (35%) interest in the Property going forward. Such joint venture agreement shall provide for a four person technical committee, with equal representation from each party to the agreement. The technical committee shall meet at least twice per year and will be responsible for setting annual exploration and development program goals and expenditures. If one party to the joint venture agreement fails to meet part or all of its annual expenditure obligation as determined by the technical committee, the other party shall have the right to pay all or part of the shortfall in order to meet the program goals and thereby earn an additional proportionate share of the joint venture profits. 3.4 Exploration Expenditures shall be deemed to have been incurred by the Optionee when the Optionee has expended funds or has received goods or services from third parties for which the Optionee has an obligation to make payment, whether or not payment has been made. Where Exploration Expenditures are charged to the Optionee by an affiliate of the Optionee for services rendered by such affiliate, such Exploration Expenditures shall not exceed the fair market value of the services rendered. 3.5 Exploration Expenditures incurred by the Optionee exceeding the amount of Exploration Expenditures required to be incurred within any period shall be carried forward to the succeeding period and qualify as Exploration Expenditures. If the Exploration Expenditures incurred are less than the amount of the Exploration Expenditures required to be incurred in any period, the Optionee may at its option pay the deficiency to the Optionor within sixty (60) days after the end of such period in order to maintain the Option. Any such payment of cash in lieu shall be deemed to be Exploration Expenditures incurred on the Property on or before the relevant date for the purposes of this Part 3. 3.6 If the Optionee reasonably believes that it has incurred Exploration Expenditures required to be incurred by the Optionee in any period in order to maintain the Option, but it is subsequently determined upon examination or audit by either party that such Exploration Expenditures were not incurred within such period, the Optionee shall not lose any of its rights hereunder and the Option shall not terminate, provided that the Optionee pays the Optionor such deficiency in Exploration Expenditures within thirty (30) days following such determination (if determined by the Optionee) or within thirty (30) days following notice to the Optionee of such deficiency (if determined by the Optionor), and the payment of such deficiency in Exploration Expenditures shall be deemed to be Exploration Expenditures incurred by the Optionee for purposes of this Agreement. 3.7 If and when the Option has been exercised an undivided seventy percent (70%) right, title and interest in and to the Property shall vest in the Optionee to MEL free and clear of all chargescharxxx, encumbrances and claims. 4.1 The Optionor shall, forthwith after subject only the exercise payment of a 1.5% Net Smelter Return Royalty ("NSR") to Tham realized from production on the Property. Net Smelter returns shall be the gross proceeds received by MEL, the manager and operator (xxe "Manager") of the Option Property, in any year from the sale of ore (being any material containing minerals of commercial economic value including any concentrates or other products derived there from) from the mining operation on the Property, less successively: (i) custom smelting costs, treatment charges and penalties including, but not being limited to, metal losses, penalties for impurities and charges for refining, selling and handling by the Optioneesmelter, deliver to the Optionee a duly executed assignment refinery or other purchaser; and (ii) costs of handling, transporting and transfer of the appropriate interest in insuring ores, minerals and other materials or concentrates from the Property which shall have been acquired by or from a concentrator, whether situated on or off the Optionee Property, to a smelter, refinery or other place of treatment; and (iii) ad valorum taxes and taxes based upon exercise of the Optionproduction, but not income taxes.

Grant and Exercise of Option. 3.1 2. 1 The Optionor hereby grants to the Optionee the sole and exclusive right and option (the “Option”) to acquire an a 70% undivided seventy percent (70%) interest in and to the Property free and clear of all charges, encumbrances and claims. 3.2 The Optionee will be deemed claims on the following terms and subject to have exercised its option as followsthe following conditions: (a) acquire an initial fifty-one percent (51%) interest upon incurring Exploration Expenditures of US $1,500,000 on or before The Option shall be exercised by the third anniversary date of this Agreement, such expenditures to be incurred and paid by Spartan; and (b) acquire an additional nineteen percent (19%) interest upon incurring additional Exploration Expenditures of US $1,000,000 and by also completing and delivering to Optionor an Industry-standard Mining Feasibility Study (not necessarily "bankable") on or before the fifth anniversary date of this Agreement, such expenditures and Mining Feasibility Study to be incurred and paid by Sphere. 3.2 In order to maintain the Option, the Optionee and Sphere will also be required to: (a) Optionee shall pay US $110,000 to the Optionor as followsOptionee: (i) paying the Optionor $1,000 US $25,000 on the execution of this Agreement (Agreement, the receipt of which is hereby acknowledged by the Optionor); (ii) incurring Exploration Expenditures of $75,250 US $35,000 within ninety (90) days of execution of this Agreementon the Property as follows; (iiiA) $24,000 US $25,000 on or before the second anniversary date of this AgreementNovember 30, 2002; and (ivB) further $20,000 US $25,000 on or before the third anniversary date of this AgreementNovember 30, 2003; and (C) a further $31,250 US on or before November 30, 2004. (b) Sphere shall allot and issue In the event that the Optionee spends, in any of the above periods, less than the specified sum, it may pay to the OptionorOptionor the difference between the amount it actually spent and the specified sum before the expiry of that period in full satisfaction of the Exploration Expenditures to be incurred. In the event that the Optionee spends, as fully paid and non-assessablein any period, more than the specified sum, the Shares as follows:excess shall be carried forward and applied to the Exploration Expenditures to be incurred in succeeding periods. (ic) 300,000 common shares of Sphere Resources, Inc. within 60 days of the execution of this Agreement; and (ii) 400,000 common shares of Sphere Resources, Inc. within 60 days of Optionor acquiring a 51% interest in the Property. 3.3 It is understood and agreed by and between Spartan and Sphere that Spartan shall be responsible for and pay US $1,500,000 of initial Exploration Expenditures and Sphere shall be responsible for and pay the additional US $ 1,000,000 Exploration Expenditures and the Mining Feasibility Study as set forth above. Title to the seventy percent (70%) interest in the Property conveyed hereunder shall vest in Optionee (Spartan). Upon exercise of the Option and acquisition of the Option, a 70% interest in the Property, Spartan and Sphere shall enter into a joint venture agreement whereby each party is an equal partner with a thirty-five percent (35%) interest in the Property going forward. Such joint venture agreement shall provide for a four person technical committee, with equal representation from each party to the agreement. The technical committee shall meet at least twice per year and will be responsible for setting annual exploration and development program goals and expenditures. If one party to the joint venture agreement fails to meet part or all of its annual expenditure obligation as determined by the technical committee, the other party shall have the right to pay all or part of the shortfall in order to meet the program goals and thereby earn an additional proportionate share of the joint venture profits. 3.4 Exploration Expenditures shall be deemed to have been incurred by the Optionee when the Optionee has expended funds or has received goods or services from third parties for which the Optionee has an obligation to make payment, whether or not payment has been made. Where Exploration Expenditures are charged to the Optionee by an affiliate of the Optionee for services rendered by such affiliate, such Exploration Expenditures shall not exceed the fair market value of the services rendered. 3.5 Exploration Expenditures incurred by the Optionee exceeding the amount of Exploration Expenditures required to be incurred within any period shall be carried forward to the succeeding period and qualify as Exploration Expenditures. If the Exploration Expenditures incurred are less than the amount of the Exploration Expenditures required to be incurred in any period, the Optionee may at its option pay the deficiency to the Optionor within sixty (60) days after the end of such period in order to maintain the Option. Any such payment of cash in lieu shall be deemed to be Exploration Expenditures incurred on the Property on or before the relevant date for the purposes of this Part 3. 3.6 If the Optionee reasonably believes that it has incurred Exploration Expenditures required to be incurred by the Optionee in any period in order to maintain the Option, but it is subsequently determined upon examination or audit by either party that such Exploration Expenditures were not incurred within such period, the Optionee shall not lose any of its rights hereunder and the Option shall not terminate, provided that the Optionee pays the Optionor such deficiency in Exploration Expenditures within thirty (30) days following such determination (if determined by the Optionee) or within thirty (30) days following notice to the Optionee of such deficiency (if determined by the Optionor), and the payment of such deficiency in Exploration Expenditures shall be deemed to be Exploration Expenditures incurred by the Optionee for purposes of this Agreement. 3.7 If and when the Option has been exercised an undivided seventy percent (70%) right, title and interest in and to the Property shall vest in the Optionee free and clear of all charges, encumbrances and claims., subject only to the following payments required pursuant to the R.T. Heard & Associates Agreement: 4.1 The Optionor shall(i) payment of $50,000 CDN per year, forthwith after the exercise with $25,000 CDN payable on May 27 and November 27 of each year, as provided by Section 2 of the Option R.T. Heard & Associates Agreement (the "R.T. Heard & Associates Royalty"); (ii) payment of a 4% Gross Overriding Royalty, as provided by the Optionee, deliver to the Optionee a duly executed assignment and transfer Section 4 of the appropriate interest in R.T. Heard & Associates Agreement (the Property which shall have been acquired "R.T. Heard & Associates XXXX"); (iii) payment of a 2% Net Smelter Return Royalty, as provided by the Optionee upon exercise Section 4 of the OptionR.T. Heard & Associates Agreement (the "R.T. Heard & Associates NSR").