MINING VENTURE AGREEMENT -------------------------- (SUNNY SLOPE GOLD PROPERTY)

MINING VENTURE AGREEMENT
--------------------------

(SUNNY SLOPE GOLD PROPERTY)

BETWEEN

WESTERN GOLDFIELDS, INC.

AND

321GOLD, INC.

DATED: NOVEMBER 28, 2004

TABLE OF CONTENTS
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I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.1 "Accounting Procedure". . . . . . . . . . . . . . . . . . . . . . . 6
1.2 "Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3 "Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4 "Area of Interest . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.5 "Assets". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.6 "Budgets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.7 "Development" . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.8 "Exploration" . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.9 "Initial Contribution". . . . . . . . . . . . . . . . . . . . . . . 7
1.10 "Joint Account" . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.11 "Management Committee". . . . . . . . . . . . . . . . . . . . . . . 7
1.12 "Manager" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.13 "Mining". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.14 "Operations". . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.15 "Participant" and "Participants". . . . . . . . . . . . . . . . . . 7
1.16 "Participating Interest". . . . . . . . . . . . . . . . . . . . . . 7
1.17 "Prime Rate". . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.18 "Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.19 "Program" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.20 "Properties". . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.21 "Transfer". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.22 "Venture" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

II - REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS. . . . . . . . . . . . . . . 8
2.1 Capacity of Participants. . . . . . . . . . . . . . . . . . . . . . 8
2.2 Representations and Warranties. . . . . . . . . . . . . . . . . . . 8
2.3 Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Record Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 Joint Loss of Title . . . . . . . . . . . . . . . . . . . . . . . . 9

III - NAME, PURPOSES AND TERM . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Purposes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Limitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Effective Date and Term . . . . . . . . . . . . . . . . . . . . . . 9

IV - RELATIONSHIP OF THE PARTICIPANTS. . . . . . . . . . . . . . . . . . . . . . 10
4.1 No Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Federal Tax Elections and Allocations . . . . . . . . . . . . . . . 10
4.3 State Income Tax. . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

4.5 Other Business Opportunities. . . . . . . . . . . . . . . . . . . . 10
4.6 Waiver of Right to Partition. . . . . . . . . . . . . . . . . . . . 10
4.7 Transfer of Termination of Rights to Properties . . . . . . . . . . 11
4.8 Implied Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 11

V - CONTRIBUTIONS BY PARTICIPANTS. . . . . . . . . . . . . . . . .. . . . . . 11
5.1 Participants' Initial Contributions . . . . . . . . . . . . . . . . 11
5.2 Company's Failure to Make Initial Contribution. . . . . . . . . . . 11
5.3 Additional Cash Contributions . . . . . . . . . . . . . . . . . . . 11

VI - INTERESTS OF PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1 Initial Participating Interests . . . . . . . . . . . . . . . . . . 11
6.2 Changes in Participating Interests. . . . . . . . . . . . . . . . . 12
6.3 Voluntary Reduction in Participation; WGI's NSR . . . . . . . . . . 12
6.4 Default in Making Contribution. . . . . . . . . . . . . . . . . . . 12
6.5 Elimination of Minority Interest. . . . . . . . . . . . . . . . . . 13
6.6 Continuing Liabilities upon Adjustments of Participating Interests. 13
6.7 WGI's Right to Increase Its Participating Interests . . . . . . . . 13

VII - MANAGEMENT COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.1 Organization and Composition. . . . . . . . . . . . . . . . . . . . 14
7.2 Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.3 Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.4 Action Without Meeting. . . . . . . . . . . . . . . . . . . . . . . 14
7.5 Matters Requiring Approval. . . . . . . . . . . . . . . . . . . . . 14

VIII -MANAGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.2 Powers and Duties of Manager. . . . . . . . . . . . . . . . . . . . 14
8.3 Standard of Care. . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.4 Resignation; Deemed Offer to Resign . . . . . . . . . . . . . . . . 17
8.5 Payments to Manager . . . . . . . . . . . . . . . . . . . . . . . . 18
8.6 Transactions With Affiliates. . . . . . . . . . . . . . . . . . . . 18
8.7 Activities During Deadlock. . . . . . . . . . . . . . . . . . . . . 18

IX - PROGRAMS AND BUDGETS. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.1 Initial Program and Budget. . . . . . . . . . . . . . . . . . . . . 18
9.2 Operations Pursuant to Programs and Budgets . . . . . . . . . . . . 18
9.3 Presentation of Programs and Budgets. . . . . . . . . . . . . . . . 18
9.4 Review and Approval of Proposed Programs and Budgets. . . . . . . . 18
9.5 Election to Participate . . . . . . . . . . . . . . . . . . . . . . 19
9.6 Deadlock on Proposed Programs and Budgets . . . . . . . . . . . . . 19
9.7 Budget Overruns; Programs Changes . . . . . . . . . . . . . . . . . 19
9.8 Emergency or Unexpected Expenditures. . . . . . . . . . . . . . . . 19

X - ACCOUNTS AND SETTLEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 19

10.1 Monthly Statement . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.2 Cash Calls. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.3 Failure to Meet Cash Calls. . . . . . . . . . . . . . . . . . . . . 20
10.4 Audits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

XI - DISPOSITION OF PRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 20
11.1 Taking in Kind. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
11.2 Failure of Participant to Take in Kind. . . . . . . . . . . . . . . 20

XII - WITHDRAWAL AND TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . 20
12.1 Termination by Expiration or Agreement. . . . . . . . . . . . . . . 20
12.2 Termination by Deadlock . . . . . . . . . . . . . . . . . . . . . . 20
12.3 Withdrawal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
12.4 Continuing Obligations. . . . . . . . . . . . . . . . . . . . . . . 21
12.5 Disposition of Assets on Termination. . . . . . . . . . . . . . . . 21
12.6 Non-Compete Covenants . . . . . . . . . . . . . . . . . . . . . . . 21
12.7 Right to Data After Termination . . . . . . . . . . . . . . . . . . 21
12.8 Continuing Authority. . . . . . . . . . . . . . . . . . . . . . . . 22

XIII -ACQUISITIONS WITHIN AREA OFINTEREST. . . . . . . . . . . . . . . . . . . . 22
13.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
13.2 Notice to Non-acquiring Participant . . . . . . . . . . . . . . . . 22
13.3 Option Exercised. . . . . . . . . . . . . . . . . . . . . . . . . . 22
13.4 Option Not Exercised. . . . . . . . . . . . . . . . . . . . . . . . 22

XIV - ABANDONMENT AND SURRENDER OF PROERTIES. . . . . . . . . . . . . . . . . . . 23
14.1 Surrender or Abandonment of Property. . . . . . . . . . . . . . . . 23
14.2 Reacquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

XV - TRANSFER OF INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.2 Limitations on Free Transferability . . . . . . . . . . . . . . . . 23
15.3 Preemptive Right. . . . . . . . . . . . . . . . . . . . . . . . . . 24
15.4 Exceptions to Preemptive Right. . . . . . . . . . . . . . . . . . . 25

XVI - DISPUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
16.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

XVII -CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
17.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
17.2 Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
17.3 Duration of Confidentiality . . . . . . . . . . . . . . . . . . . . 26

XVIII GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
18.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

18.2 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
18.3 Modification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
18.4 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
18.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
18.6 Rule Against Perpetuities . . . . . . . . . . . . . . . . . . . . . 27
18.7 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 27
18.8 Survival of Terms and Conditions. . . . . . . . . . . . . . . . . . 27
18.9 Entire Agreement; Successors and Assigns. . . . . . . . . . . . . . 27
18.10 Memorandum... . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

EXHIBITS
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EXHIBIT A - 29
PART 1. Properties and Title Exceptions
PART 2 Area of Interest
EXHIBIT B ACCOUNTING PROCEDURE 30
EXHIBIT C TAX MATTERS 36
EXHIBIT D INSURANCE 42
EXHIBIT E INITIAL PROGRAM AND BUDGET 43

MINING VENTURE AGREEMENT
------------------------

(Sunny Slope Gold Property)

THIS AGREEMENT made as of the 28th day of November, 2004 between Western
Goldfields, Inc., an Idaho corporation, ("WGI") and 321Gold, Inc., a Florida
Corporation , ("Company").

RECITALS
--------

A. WGI owns certain Properties in Mineral County, State of Nevada which
Properties are described in Exhibit A and defined in Section 1.20.

B. Company wishes to participate with WGI in the exploration, evaluation,
development and mining of mineral resources within the Properties or any other
properties acquired pursuant to the terms of this Agreement, and WGI is willing
to grant such right to Company.

NOW, THEREFORE, consideration of the covenants and agreements contained
herein, WGI and Company agree as follows:

ARTICLE I
---------

DEFINITIONS
-----------

1.1 "Accounting Procedure" means the procedures set forth in Exhibit B.

1.2 "Affiliate" means any person, partnership, joint venture, corporation
or other form of enterprise which directly or indirectly controls, is controlled
by, or is under common control with, a Participant. For purposes of the
preceding sentence, "control" means possession, directly or indirectly, of the
power to direct or cause direction of management and policies through ownership
of voting securities, contract, voting trust or otherwise.

1.3 "Agreement" means this Venture Agreement, including all amendments and
modifications thereof, and all schedules and exhibits, which are incorporated
herein by this reference.

1.4 "Area of Interest" means the area described in Part 2 of Exhibit A.

1.5 "Assets" means the Properties, Products and all other real and personal
property, tangible and intangible, held for the benefit of the Participants
hereunder.

1.6 "Budget" means a detailed estimate of all costs to be incurred by the
Participants with respect to a Program and a schedule of cash advances to be
made by the Participants.

1.7 "Development" means all preparation for the removal and recovery of
Products, including the construction or installation a mill or any other
improvements to be used for the mining, or other beneficiation of Products.

1.8 "Exploration" means all activities directed toward ascertaining the
existence, location, quantity, quality or commercial value of deposits of
Products.

1.9 "Initial Contribution" means that contribution each Participant has
made or agrees to make pursuant to Section 5.1.

1.10 "Joint Account" means the account maintained in accordance with the
Accounting Procedure showing the charges and credits accruing to the
Participants.

1.11 "Management Committee" means the committee established under Article
VII.

1.12 "Manager" means the person or entity appointed under Article VIII to
manage Operations, or any successor Manager.

1.13 "Mining" means the mining, extracting, producing, handling, milling or
other processing of Products.

1.14 "Operations" means the activities carried out under this Agreement.

1.15 "Participant" and "Participants" mean the persons or entities that
from time to time have Participating Interests.

1.16 "Participating Interest" means the percentage interest representing
the operating ownership interest of a Participant in Assets, and all other
rights and obligations arising under this Agreement, as such interest may from
time to time be adjusted hereunder. Participating Interests shall be calculated
to three decimal places and rounded to two (e.g., 1.519% rounded to 1.52%).
----
Decimals of .005 or more shall be rounded up to .01, than .005 shall be rounded
down. The initial Participating Interests of the Participants are set forth
Section 6.1.

1.17 "Prime Rate" means the interest rate quoted as "Prime" by the Bank of
America, N.A., at its head office, as said rate may change from day to day
(which quoted rate may not be the lowest rate at which the Bank loans funds).

1.18 "Products" means all ores, minerals and mineral resources produced
from the Properties under this Agreement.

1.19 "Program" means a description in reasonable detail of Operations to be
conducted and objectives to be accomplished by the Manager for a year or any
longer period.

1.20 "Properties" means those interests in real property described in Part
1 of Exhibit A and all other interests in real property within the Area of
Interest which are acquired and held subject to this Agreement.

1.21 "Transfer" means sell, grant, assign, encumber, pledge or otherwise
commit or dispose of.

1.22 "Venture" means the business arrangement of the Participants under
this Agreement.

ARTICLE II
----------

REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS
-----------------------------------------------

2.1 Capacity of Participants. Each of the Participants represents and
--------------------------
warrants as follows:

(a) that it is a corporation duly incorporated and in good standing in
its state of incorporation and that it is qualified to do business and is
in good standing in those states where necessary in order to carry out the
purposes of this Agreement;

(b) that it has the capacity to enter into and perform this Agreement
and all transactions contemplated herein and that all corporate and other
actions required to authorize it to enter into and perform this Agreement
have been properly taken;

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

2.2 Representations and Warranties. WGI makes the following representations
-------------------------------
and warranties effective the date hereof:

(a) With respect to unpatented mining claims located by WGI that are
included within the Properties, except as provided in Part 1 of Exhibit A
and subject to the paramount title of the United States: (i) the unpatented
mining claims were properly laid out and monumented; (ii) all required
location and validation work was properly performed; (iii) location notices
and certificates were properly recorded and filed with appropriate
governmental agencies; (iv) all assessment work and fees required to hold
the unpatented mining claims has been performed or paid in a manner
consistent with that of the Manager pursuant to Section 8.2(k) of this
Agreement through the assessment: year ending September 1, 2004; (v) all
affidavits of assessment work and other filings required to maintain the
claims in good standing have been properly and timely recorded or filed
with appropriate governmental agencies; (vi) the claims are free and clear
of defects, liens and encumbrances arising by, through or under WGI; and
(vii) WGI has no knowledge of conflicting claims. Nothing in this Section
2.2(a), however, shall be deemed to be a representation or a warranty that
any of the unpatented mining claims contains a discovery of minerals.

(b) With respect to the Properties, there are no pending or threatened
actions, suits, claims or proceedings.

The representations and warranties set forth above shall survive the
execution and delivery of any documents of Transfer provided under this
Agreement.

2.3 Disclosures. Each of the Participants represents and warrants that it
-----------
is unaware of any material facts or circumstances which have not been disclosed
in this Agreement, which should be disclosed to the other Participant in order
to prevent the representations in this Article II from being materially
misleading.

2.4 Record Title. Title to the Assets shall be held in the name of WGI
-------------
until Company completes its Initial Contribution and its final Participating
Interest is determined.

2.5 Joint Loss of Title. Any failure or loss of title to the Assets, and
----------------------
all costs of defending title, shall be charged to the Joint Account, except that
all costs and losses arising out of or resulting from breach of the
representations and warranties of WGI shall be charged to WGI.

ARTICLE III
-----------

NAME, PURPOSES AND TERM
-----------------------

3.1 General. WGI and Company hereby enter into this Agreement for the
-------
purposes hereinafter stated, and they agree that all of their rights and all of
the Operations on or in connection with the Properties or the Area of Interest
shall be subject to and governed by this Agreement.

3.2 Name. The name of this Venture shall be the Sunny Slope Gold Property
----
Venture. The Manager shall accomplish any registration required by applicable
assumed or fictitious name statutes and similar statutes.

3.3 Purposes. This Agreement is entered into for the following purposes and
--------
for no others, and shall serve as the exclusive means by which the Participants,
or either of them, accomplish such purposes:

(a) to conduct Exploration within the Area of Interest,

(b) to acquire additional Properties within the Area of Interest,

(d) to engage in Development and Mining Operations on the Properties,

(e) to engage in marketing Products, to the extent permitted by
Article XI, and

(f) to perform any other activity necessary, appropriate, or
incidental to any of the foregoing.

3.4 Limitation. Unless the Participants otherwise agree in writing, the
----------
Operations shall be limited to the purposes described in Section 3.3, and
nothing in this Agreement shall be construed to enlarge such purposes.

3.5 Effective Date and Term. The effective date of this Agreement shall be
------------------------
the date first recited above. The term of this Agreement shall be for 20 years
from the effective date and for so long thereafter as Products are produced from
the Properties, unless the Agreement is earlier terminated as herein provided.

ARTICLE IV
----------

RELATIONSHIP OF THE PARTICIPANTS
--------------------------------

4.1 No Partnership. Nothing contained in this Agreement shall be deemed to
---------------
constitute either Participant the partner of the other, nor, except as otherwise
herein expressly provided, to constitute either Participant the agent or legal
representative of the other, nor to create any fiduciary relationship between
them. It is not the intention of the Participants to create, nor shall this
Agreement be construed to create, any mining, commercial or other partnership.
Neither Participant shall have any authority to act for or to assume any
obligation or responsibility on behalf of the other Participant, except as
otherwise expressly provided herein. The rights, duties, obligations and
liabilities of the Participants shall be several and not joint or collective.
Each Participant: shall be responsible only for its obligations as herein set
out and shall be liable only for its share of the costs and expenses as provided
herein, it being the express purpose and intention of the Participants that
their ownership of Assets and the rights acquired hereunder shall be as tenants
in common. Each Participant shallindemnify, defend and hold harmless the
Participant, its directors, officers, managers, employees, agents and attorneys
from and against any and all losses, claims, damages and liabilities arising out
of any act or any assumption of liability by the indemnifying Participant, or
any of its directors, officers, managers, employees, agents and attorneys done
or undertaken, or apparently done or undertaken, on behalf of the other
Participant, except pursuant to the authority expressly granted herein or as
otherwise in writing between the Participants.

4.2 Federal Tax Elections and Allocations. Without changing the effect of
--------------------------------------
Section 4.1, the Participants agree that their relationship shall constitute a
tax partnership within the meaning of Section 761(a) of the United States
Internal Revenue Code of 1954, as amended. Tax elections and allocations shall
be made as set forth in Exhibit C.

4.3 State Income Tax. The Participants also agree that, to the extent
------------------
permissible under applicable law, their relationship shall be treated for state
income tax purposes in the same manner as it is for Federal income tax purposes.

4.4 Tax Returns. The Tax Matters Partner, as defined in Exhibit C, shall
------------
prepare and shall file, after approval of the Management Committee, any tax
returns or other tax forms required.

4.5 Other Business Opportunities. Except as expressly provided in this
------------------------------
Agreement, each Participant shall have the right independently to engage in and
receive full benefits from business activities, whether or not competitive with
the Operations, without consulting the other. The doctrines of "corporate
opportunity:" or "business opportunity" shall not be applied to any other
activity, venture, or operation of either Participant, and, except as otherwise
provided in Section 12.6, neither Participant shall have any obligation to the
other with respect to any opportunity to acquire any property outside the Area
of Interest at any time, or within the Area of Interest after termination of
this Agreement. Unless otherwise agreed in writing, no Participant: shall have
any obligation to mill, beneficiate or otherwise treat any Products or any other
Participant's share of Products in any facility owned or controlled by such
Participant.

4.6 Waiver of Right to Partition. The Participants hereby waive and release
----------------------------
all rights of partition, or of sale in lieu thereof, or other division of
Assets, including any such rights provided by statute.

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

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

ARTICLE V
---------

CONTRIBUTIONS BY PARTICIPANTS
-----------------------------

5.1 Participants' Initial Contributions. WGI, as its Initial Contribution,
-----------------------------------
hereby contributes the Properties to the purposes of this Agreement. The agreed
value of WGI's Initial Contribution is $1,000,000. Company, as its Initial
Contribution, shall contribute the first $1,000,000 hereunder, which sum shall
be used to fund Programs and Budgets approved pursuant to Article IX. Company's
Initial Contribution shall be expended on approved programs by the end of
calendar year 2006.

5.2 Company's Failure to Make Initial Contribution. Company's failure to
------------------------------------------------
make its Initial Contribution in accordance with the provisions of this
Agreement shall be deemed to be a decision by Company not to exercise its option
to earn a Participating Interest and a withdrawal of Company from this Agreement
and the termination of its Participating Interest hereunder. Upon such event,
Company shall have no further right, title or interest in the Assets, and
Company shall thereupon execute a written disclaimer of interest in the assets.
If Company fail to do so, WGI may execute the disclaimer as Company's attorney
in fact. Company's withdrawal shall be effective upon such failure, but such
withdrawal shall not relieve Company of its obligation to WGI to fund Operations
up to the amount of Company's agreed contribution to an adopted Program and
Budget, nor shall such withdrawal relieve Company of its responsibility to fund
and satisfy its share of liabilities to third persons (whether such accrues
before or after such withdrawal) arising out of Operations conducted prior to
Company's withdrawal. Company shall fund and satisfy 100% of such liabilities
until it has contributed the full amount of its Initial Contribution, and
thereafter it shall fund and satisfy such liabilities in proportion to its
initial Participating Interest set forth in Section 6.1. Except as provided in
the preceding two sentences, Company's withdrawal shall relieve Company from any
other obligation to make contributions hereunder.

5.3 Additional Cash Contributions. At such time as Company has contributed
-----------------------------
the full amount of its Initial Contribution, the Participants, subject to any
election permitted by Section 6.3, shall be obligated to contribute funds to
adopted Programs in proportion to their respective Participating Interests.

ARTICLE VI
----------

INTERESTS OF PARTICIPANTS
-------------------------

6.1 Initial Participating Interests. The Participants shall have the
---------------------------------
following initial Participating Interests:

WGI - 49%

Company - 51%

6.2 Changes in Participating Interests. A Participant's Participating
-------------------------------------
Interest shall be changed as follows:

(a) Company's Participating Interest shall be increased to 70%
provided it has made its Initial Contribution and produced at least 500
ounces of gold from the Property on or before three years from the date
hereof, and provided further that WGI has not been called upon to make a
cash contribution.

(b) As provided in Section 5.2 or 6.5; or

(c) Upon an election by, a Participant pursuant to Section 6.3 to
contribute less to an adopted Program and Budget than the percentage
reflected by, its Participating Interest; or

(d) In the event of default by a Participant in making its agreed-upon
contribution to an adopted Program and Budget, followed by an election by
the other Participant to invoke Section 6.4(b); or

(e) Transfer by a Participant of less than all its Participating
Interest in accordance with Article XV; or

(f) Acquisition of less than all of the Participating Interest of the
other Participant, however arising.

6.3 Voluntary Reduction in Participation; WGI's NSR. WGI has the right and
-----------------------------------------------
option at any time to convert its Participating Interest to a 4% of 100% Net
Smelter Returns (NSR) interest by written notice to Company. After such election
WGI shall have no obligation to make any further expenditures hereunder.

Except with respect to a Participant's obligation to make its Initial
Contribution, as to which no election is permitted, a Participant may elect, as
provided in Section 9.5, to limit its contributions to an adopted Program and
Budget as follows:

(a) To some lesser amount than its respective Participating Interest;
or

(b) Not at all.

If a Participant elects to contribute to an adopted Program and Budget some
lesser amount than its respective Participating, Interest, or not at all, the
Participating Interest of that Participant shall be recalculated at the time of
election by dividing: (i) the sum of (a) the agreed value of the Participant's
Initial Contribution under Section 5.1, (b) the total of all of the
Participant's contributions under Section 5.3, and (c) the amount, if any, the
Participant elects to contribute to the adopted Program and Budget; by (ii) the
sum of (a), (b) and (c) above for all Participants; and then multiplying the
result by one hundred. The Participating Interest of the other Participant
shall thereupon become the difference between 100% and the recalculated
Participating Interest.

6.4 Default in Making Contributions.
--------------------------------

(a) If a Participant defaults in making a contribution or cash call
required by an approved Program and Budget, the non-defaulting Participant
may advance the defaulted contribution on behalf of the defaulting
Participant and treat the same, together with any, accrued interest, as a
demand loan bearing interest from the date of the advance at the rate
provided in Section 10.3. The failure to repay said loan

upon demand shall be a default. Each Participant hereby grants to the other
a lien upon its interest in the Properties and a security interest in its
rights under this Agreement and in its Participating Interest in other
Assets, and the proceeds therefrom, to secure any loan made hereunder,
including interest thereon, reasonable attorneys fees and all other
reasonable costs and expenses incurred in recovering the loan with interest
and in enforcing such lien or security interest, or both. A non-defaulting
Participant may elect the applicable remedy under this Section 6.4(a) or
under 6.4(b), or, to the extent a Participant has a lien or security
interest under applicable law, it shall be entitled to its rights and
remedies at law and in equity. All such remedies shall be cumulative. The
election of one or more remedies shall not waive the election of any other
remedies. Each Participant hereby irrevocably appoints the other its
attorney-in-fact to execute, file and record all instruments necessary to
perfect or effectuate the provisions hereof.

(b) The Participants acknowledge that if a Participant defaults in
making a contribution, or a cash call, or in repaying a loan, as required
hereunder, it will be difficult to measure the damages resulting from such
default. In the event of such default, as reasonable liquidated damages,
the non-defaulting Participant may, with respect to any such default not
cured within 30 days after notice to the defaulting Participant of such
default, elect in writing to have the defaulting Participant's
Participating Interest permanently reduced as provided in Section 6.3.

6.5 Elimination of Minority Interest. Upon the reduction of its
-----------------------------------
Participating Interest to less than 10%, a Participant shall be deemed to have
withdrawn from this Agreement and shall relinquish its entire Participating
Interest. Such relinquished Participating Interest shall be deemed to have
accrued automatically to the other Participant. If WGI's Participating Interest
is reduced to 10%, such Participating Interest shall automatically be converted
to the NSR provided in Section 6.3.

6.6 Continuing Liabilities Upon Adjustments of Participating Interests. Any
------------------------------------------------------------------
reduction of a Participant's Participating Interest under this Article VI shall
not relieve such Participant of its share of any liability, whether it accrues
before or after such reduction, arising out of Operations conducted prior to
such reduction. For purposes of this Article VI, such Participant's share of
such liability shall be equal to its Participating Interest at the time such
liability was incurred. The increased Participating Interest accruing to a
Participant as a result of the reduction of the other Participant's
Participating Interest shall be free of royalties, liens or other encumbrances
arising by, through or under such other Participant, other than those provided
herein or those to which both Participants have given their written consent. An
adjustment to a Participating Interest need not be evidenced during the term of
this Agreement by the execution and recording of appropriate instruments, but
each Participant's Participating Interest shall be shown in the books of the
Manager. However, either Participant, at any time upon the request of the other
Participant, shall execute and acknowledge instruments necessary to evidence
such adjustment in form sufficient for recording in the jurisdiction where the
Properties are located.

6.7 WGI's Right to Increase Its Participating Interests. WGI retains the
-----------------------------------------------------
right to increase its Participating Interest to 70% and reduce Company's
Participating Interest to 30% for a period of time as outlined in this
paragraph. This right shall be exercised by written notice to Company on or
before the first anniversary of Company vesting at 70%. Within 60 days after
such notice, WGI shall pay Company 2.5 times the amount of Company's actual
expenditures on Exploration and Development Expenditures on the Property. If
such right is exercised, WGI, and not Company, shall thereafter have the right
to break deadlocks on Management Committee decisions.

ARTICLE VII
-----------

MANAGEMENT COMMITTEE
--------------------

7.1 Organization and Composition. The Participants hereby establish a
------------------------------
Management Committee to determine overall policies, objectives, procedures,
methods and actions under this Agreement. The Management Committee shall consist
of two members, one appointed by WGI and one member appointed by Company. Each
Participant may appoint one or more alternates to act in the absence of a
regular member. Any alternate so acting shall be deemed a member. Appointments
shall be made or changed by notice to the other Participant.

7.2 Decisions. Each Participant, acting through its appointed member shall
---------
have one vote on the Management Committee. The Participant with the largest
Participating Interest shall break any deadlock. Unless otherwise provided in
this Agreement, the vote of the Participant with a Participating Interest over
50% shall determine the decisions of the Management Committee.

7.3 Meetings. The Management Committee shall hold regular meetings at least
--------
annually in Reno, Nevada, or at other mutually agreed places. The Manager shall
give 30 days' notice to the Participants of such regular meetings. Additionally,
either Participant may call a special meeting upon 15 day's notice to the
Manager and the other Participant. In case of emergency, reasonable notice of a
special meeting shall suffice. There shall be a quorum if at least one member
representing each Participant is present. Each notice of a meeting shall include
an itemized agenda prepared by the Manager in the case of a regular meeting, or
by the Participant calling the meeting in the case of a special meeting, but any
matters may be considered with the consent of all Participants. The Manager
shall prepare minutes of all meetings and shall distribute copies of such
minutes to the Participants within 30 days after the meeting. The minutes, when
signed by all Participants, shall be the official record of the decisions made
by the Management Committee and shall be binding on the Manager and the
Participants. If personnel employed in Operations are required to attend a
Management Committee meeting, reasonable costs incurred in connection with such
attendance shall be a Venture cost. All other costs shall be paid by the
Participants individually.

7.4 Action Without Meeting. In lieu of meetings, the Management Committee
------------------------
may hold telephone conferences, so long as all decisions are within twenty-four
(24) hours confirmed in writing by the Participants.

7.5 Matters Requiring Approval. Except as otherwise delegated to the
----------------------------
Manager in Section 8.2, the Management Committee shall have exclusive authority
to determine all management matters related to this Agreement.

ARTICLE VIII
------------

MANAGER
-------

8.1 Appointment. The Participants hereby appoint WGI as the Manager with
-----------
overall management responsibility for Operations. WGI hereby agrees to serve
until it resigns as provided in Section 8.4.

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

(a) The Manager shall manage, direct and control Operations.

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

(c) The Manager shall: (i) purchase or otherwise acquire all material,
supplies, equipment, water, utility and transportation services required
for Operations, such purchases and acquisitions to be made on the best
terms available, taking into account all of the circumstances; (ii) obtain
such customary warranties and guarantees as are available in connection
with such purchases and acquisitions; and (iii) keep the Assets free and
clear of all liens and encumbrances, except for those existing at the time
of, or created concurrent with, the acquisition of such Assets, or
mechanic's or materialmen's liens which shall be released or discharged in
a diligent manner, or liens and encumbrances specifically approved by the
Management Committee.

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

(e) The Manager shall: (i) make or arrange for all payments required
by leases, licenses, permits, contracts and other agreements related to the
Assets; (ii) pay all taxes, assessments and like charges on Operations and
Assets except taxes determined or measured by a Participant's sales revenue
or net income. If authorized by the Management Committee, the Manager shall
have the right to contest in the courts or otherwise, the validity or
amount of any taxes, assessments or charges if the Manager deems them to be
unlawful, unjust, unequal or excessive, or to undertake such other steps or
proceedings as the Manager may deem reasonably necessary to secure a
cancellation, reduction, readjustment or equalization thereof before the
Manager shall be required to pay them, but in no event shall the Manager
permit or allow title to the Assets to be lost as the result of the
nonpayment of any taxes, assessments or like charges; and (iii) shall do
all other acts reasonably necessary to maintain the Assets.

(f) The Manager shall: (i) apply for all necessary permits, licenses
and approvals; (ii) comply with applicable federal, state and local laws
and regulations; (iii) notify promptly the Management Committee of any
allegations of substantial violation thereof; and (iv) prepare and file all
reports or notices required for Operations. The Manager shall not be in
breach of this provision if a violation has occurred in spite of the
Manager's good faith efforts to comply, and the Manager has timely cured or
disposed of such violation through performance, or payment of fines and
penalties.

(g) The Manager shall prosecute and defend, but shall not initiate
without consent of the Management Committee, all litigation or
administrative proceedings arising out of Operations. The non-managing
Participant shall have the right to participate, at its own expense, in
such litigation or administrative proceedings. The non-managing Participant
shall approve in advance any settlement involving payments, commitments or
obligations in excess of $10,000 in cash or value.

(h) The Manager shall provide insurance for the benefit of the
Participants as provided in Exhibit D.

(i) The Manager may dispose of Assets, whether by abandonment,
surrender or Transfer in the ordinary course of business, except that
Properties may be abandoned or surrendered only as provided in Article XIV.
However, without prior authorization from the Management Committee, the
Manager shall not: (i) dispose of Assets in any one transaction having a
value in excess of $10,000; (ii) enter into any sales contracts or
commitments for Product, except as permitted in Section 11.2; (iii) begin a
liquidation of the Venture; or (iv) dispose of all or a substantial part of
the Assets necessary to achieve the purposes of the Venture.

(j) The Manager shall have the right to carry out its responsibilities
hereunder through agents, Affiliates or independent contractors.

(k) The Manager shall perform or cause to be performed during the term
of this Agreement all assessment and other work required by law in order to
maintain the unpatented claims included within the Properties. The Manager
shall have the right to perform the assessment work required hereunder
pursuant to a common plan of exploration and continued actual occupancy of
such claims and sites shall not be required. The Manager shall not be
liable on account of any determination by any court or governmental agency
that the work performed by Manager does not constitute the required annual
assessment work or occupancy for the purposes of preserving or maintaining
ownership of the claims, provided that the work is in accordance with the
adopted Program and Budget. The Manager shall timely record with the
appropriate county and file with the appropriate United States agency,
affidavits in proper form attesting to the performance of assessment work
or notices of intent to hold in proper form, and allocating therein, to or
for the benefit of each claim, at least the minimum amount required by law
to maintain such claim or site.

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

(m) The Manager shall keep and maintain all required accounting and
financial records pursuant to the Accounting Procedure and in accordance
with customary cost accounting practices in the mining industry.

(n) The Manager shall keep the Management Committee advised of all
Operations by submitting in writing to the Management Committee: (i)
quarterly progress reports which include statements of expenditures and
comparisons of such expenditures to the adopted Budget; (ii) periodic
summaries of data acquired; (iii) copies of reports concerning Operations;
(iv) a detailed final report within 30 days after completion of each
Program and Budget, which shall include comparisons between actual and
budgeted expenditures and comparisons between the objectives and results of
Programs; and (v) such other reports as the Management Committee may
reasonably, request. At all reasonable times the Manager shall provide the
Management Committee or the representative of any Participant, upon the

request of any member of the Management Committee, access to, and the right
to inspect and copy all maps, drill logs, core tests, reports, surveys,
assays, analyses, production reports, operations, technical, accounting and
financial records, and other information acquired in operations. In
addition, the Manager shall allow the non-managing Participant, at the
latter's sole risk and expense, and subject to reasonable safety
regulations, to inspect the Assets and Operations at all reasonable times,
so long as the inspecting Participant does not unreasonably interfere with
Operations.

(o) The Manager shall undertake all other activities reasonably
necessary to fulfill the foregoing.

The Manager shall not be in default of any duty under this Section 8.2 if its
failure to perform results from the failure of the non-managing Participant to
perform acts or to contribute amounts required of it by this Agreement.

8.3 Standard of Care. The Manager shall conduct all Operations in a good,
-----------------
workmanlike and efficient manner, in accordance with sound mining and other
applicable industry standards and practices, and in accordance with the terms
and provisions of leases, licenses, permits, contracts and other agreements
pertaining to Assets. The Manager shall not be liable to the nonmanaging
Participant for any act or omission resulting in damage or loss except to the
extent caused by or attributable to the Manager's willful misconduct or gross
negligence.

8.4 Resignation; Deemed Offer to Resign. The Manager may resign upon three
-----------------------------------
months' prior notice to the other Participant, in which case the other
Participant may elect to become the new Manager by notice to the resigning
Participant within 30 days after the notice of resignation. If any of the
following shall occur, the Manager shall be deemed to have offered to resign,
which offer shall be accepted by the other Participant, if at all, within 90
days following such deemed offer:

(a) After the Company has made its Initial Contribution, the
Participating Interest of the Manager becomes less than 50%; or

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

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

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

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

8.5 Payments To Manager. The Manager shall be compensated for its services
---------------------
and reimbursed for its costs hereunder in accordance with the Accounting
Procedure.

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

8.7 Activities During Deadlock. If the Management Committee for any reason
---------------------------
fails to adopt a Program and Budget, subject to the contrary direction of the
Management Committee and to the receipt of necessary funds, the Manager shall
continue Operations at levels comparable with the last adopted Program and
Budget. For purposes of determining the required contributions of the
Participants and their respective Participating Interests, the last adopted
Program and Budget shall be deemed extended.

ARTICLE IX
----------

PROGRAMS AND BUDGETS
--------------------

9.1 Initial Program and Budget. The initial Program and Budget, which has
---------------------------
been adopted by the Participants, is attached as Exhibit E.

9.2 Operations Pursuant to Programs and Budgets. Except as provided in
------------------------------------------------
Section 9.8 and Article XIII, Operations shall be conducted, expenses shall be
incurred, and Assets shall be acquired only pursuant to approved Programs and
Budgets.

9.3 Presentation of Programs and Budgets. Proposed Programs and Budgets
----------------------------------------
shall be prepared by the Manager for a period of one year or any longer period.
Each adopted Program and Budget, regardless of length, shall be reviewed at
least once a year at the annual meeting of the Management Committee. During the
period encompassed by any Program and Budget, and at least 3 months prior to its
expiration, a proposed Program and Budget for the succeeding period shall be
prepared by the Manager and submitted to the Participants. Each such proposed
Program and Budget shall be in a form and degree of detail substantially similar
to Exhibit F.

9.4 Review and Approval of Proposed Programs and Budgets. Within 30 days
-------------------------------------------------------
after submission of a proposed Program and Budget, each Participant shall submit
to the Management Committee:

(a) Notice that the Participant approves the proposed Program and
Budget; or

(b) Proposed modifications of the proposed Program and Budget; or

If a Participant fails to give any of the foregoing responses within the
allotted time, the failure shall be deemed to be an approval by the Participant
of the Manager's proposed Program and Budget. If a Participant makes a

timely submission to the Management Committee pursuant to Section 9.4(b) or (c),
then the Management Committee shall seek to develop a Program and Budget
acceptable to the Participants.

9.5 Election to Participate. By notice to the Management Committee within
-------------------------
20 days after the final vote adopting a Program and Budget, a Participant may
elect to contribute to such Program and Budget in some lesser amount than its
respective Participant Interest, or not at all, in which cases its Participating
Interest shall be recalculated as provided in Article VI. If a Participant fails
to so notify the Management Committee, the Participant shall be deemed to have
elected to contribute to such Program and Budget in proportion to its respective
Participating Interest as of the beginning of the period covered by the Program
and Budget.

9.6 Deadlock on Proposed Programs and Budgets. If the Participants, acting
------------------------------------------
through the Management Committee, fail to approve a Program and Budget by the
beginning of the period to which the proposed Program and Budget applies, the
provisions of Sections 8.7 and 12.2 shall apply.

9.7 Budget Overruns; Program Changes. The Manager shall immediately notify
---------------------------------
the Management Committee of any material departure from an adopted Program and
Budget. If the Manager exceeds an adopted Budget by more than 10%, then the
excess over 10%, unless directly caused by an emergency or unexpected
expenditure made pursuant to Section 9.8 or unless otherwise authorized by the
Management Committee, shall be for the sole account of the Manager and such
excess shall not be included in the calculations of the Participating Interests.
Budget overruns of 10% or less shall be borne by the Participants in proportion
to their respective Participating Interests as of the time the overrun occurs.

9.8 Emergency or Unexpected Expenditures. In case of emergency, the Manager
------------------------------------
may take any reasonable action it deems necessary to protect life, limb or
property, to protect the Assets or to comply with law or government regulation.
The Manager may also make reasonable expenditures for unexpected events which
are beyond its reasonable control and which do not result from a breach by it of
its standard of care. The Manager shall promptly notify the Participants of the
emergency or unexpected expenditure, and the Manager shall be reimbursed for all
resulting costs by the Participants in proportion to their respective
Participating Interests at the time the emergency or unexpected expenditures are
incurred.

ARTICLE X
---------

ACCOUNTS AND SETTLEMENTS
------------------------

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

10.2 Cash Calls. On the basis of the adopted Program and Budget, the
-----------
Manager shall submit to each Participant prior to the last day of each month, a
billing for estimated cash requirements for the next month. Within 10 days after
receipt of each billing, each Participant shall advance to the Manager its
proportionate share of the estimated amount. Time is of the essence of payment
of such xxxxxxxx. The Manager shall at all times maintain a cash balance
approximately equal to the rate of disbursement for up to 90 days. All funds in
excess of immediate cash requirements shall be invested in interest-bearing
accounts with Bank of America, N.A., for the benefit of the Joint Account.

10.3 Failure to Meet Cash Calls. A Participant that fails to meet cash
------------------------------
calls in the amount and at the times specified in Section 10.2 shall be in
default, and the amounts of the defaulted cash call shall bear interest from the
date due at an annual rate equal to 5 percentage points over the Prime Rate, but
in no event shall said rate of interest exceed the maximum permitted by law. The
non-defaulting Participant shall have those rights, remedies and elections
specified in Section 6.4.

10.4 Audits. Upon request made by any Participant within 24 months
------
following the end of any calendar year (or, if the Management Committee has
adopted an accounting period other than the calendar year, within 24 months
after the end of such period), the Manager shall order an audit of the
accounting and financial year (or other accounting period). All written
exceptions to and claims upon the Manager for discrepancies disclosed by such
audit shall be made not more than 3 months after receipt of the audit report.
Failure to make any such exception or claim within the 3 month period shall mean
the audit is correct and binding upon the Participants. The audits shall be
conducted by a firm of certified public accountants selected by the Manager,
unless otherwise agreed by the Management Committee.

ARTICLE XI
----------

DISPOSITION OF PRODUCTION
-------------------------

11.1 Taking In Kind. Each Participant shall take in kind or separately
----------------
dispose of its share of all Products in accordance with its Participating
Interest. Any extra expenditure incurred in the taking in kind or separate
disposition by any Participant of its proportionate share of Products shall be
borne by such Participant. Nothing in this Agreement shall be construed as
providing, directly or indirectly, for any joint or cooperative marketing or
selling of Products or permitting the processing of Products of any parties
other than the Participants at any processing facilities constructed by the
Participants pursuant to this Agreement. The Manager shall give the Participants
notice at least 10 days in advance of the delivery date upon which their
respective shares of Products will be available.

11.2 Failure of Participant to Take In Kind. If a Participant fails to take
--------------------------------------
in kind, the Manager shall have right, but not the obligation, for a period of
time consistent with the minimum needs of the industry, but not to exceed one
year, to purchase the Participant's share for its own account or to sell such
share as agent for the Participant at not less than the prevailing market price
in the area. Subject to the terms of any such contracts of sale then
outstanding, during any period that the Manager is purchasing or selling a
Participant's share of production, the Participant may elect by notice to the
Manager to take in kind. The Manager shall be entitled to deduct from proceeds
of any sale by it for the account of a Participant reasonable expenses incurred
in such a sale.

ARTICLE XII
-----------

WITHDRAWAL AND TERMINATION
--------------------------

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

12.2 Termination by Deadlock. If the Management Committee fails or refuses
-----------------------
to adopt a Program and Budget for three months after the expiration of the
latest adopted Program and Budget, either Participant may elect to terminate
this Agreement by giving notice of termination to the other Participant.

12.3 Withdrawal. A Participant may, elect to withdraw as a Participant from
----------
this Agreement by giving notice to the other Participant of the effective date
of withdrawal, which shall be the later of the end of the then current Program
and Budget or at least 30 days after the date of the notice. Upon such
withdrawal, this Agreement shall terminate, and the withdrawing Participant
shall be deemed to have transferred to the remaining Participant, without cost
and free and clear of royalties, liens or other encumbrances arising by, through
or under such withdrawing Participant, except those exceptions to title
described in Part 1 of Exhibit A and those to which both Participants have given
their written consent after the date of this Agreement, all of its Participating
Interest in the Assets and in this Agreement. Any withdrawal under this Section
12.3 shall not relieve the withdrawing Participant of its share of liabilities
to third persons (whether such accrues before or after such withdrawal) arising
out of Operations conducted prior to such withdrawal. For purposes of this
Section 12.3, the withdrawing Participant's share of such liabilities shall be
equal to its Participating Interest at the time such liability was incurred.

12.4 Continuing Obligations. On termination of this Agreement under Section
----------------------
12.1 or 12.2, the Participants shall remain liable for continuing obligations
hereunder until final settlement of all accounts and for any liability, whether
it accrues before or after termination, if it arises out of Operations during
the term of the Agreement.

12.5 Disposition of Assets on Termination. Promptly after termination under
------------------------------------
Section 12.1 or 12.2, the Manager shall take all action necessary to wind up the
activities of the Venture, and all costs and expenses incurred in connection
with the termination of the Venture shall be expenses chargeable to the Venture.
In accordance with Exhibit C, any Participant that has a negative Capital
Account balance when the Venture is terminated for any reason shall contribute
to the Assets of the Venture an amount sufficient to raise such balance to zero.
The Assets shall first be paid, applied, or distributed in satisfaction of all
liabilities of the Venture to third parties and then to satisfy any debts,
obligations, or liabilities owed to the Participants. Before distributing any
funds or Assets to Participants, the Manager shall have the right to segregate
amounts which, in the Manager's reasonable judgment, are necessary to discharge
continuing obligations or to purchase for the account of Participants, bonds or
other securities for the performance of such obligations. The foregoing shall
not be construed to include the repayment of any Participant's capital
contributions or Capital Account balance. Thereafter, the properties shall be
distributed to WGI, all other assets shall be sold, and all cash shall be
distributed to the Participants, first in the ratio and to the extent of their
respective Capital Accounts and then in proportion to their respective
Participating Interests, subject to any dilution, reduction, or termination of
such Participating Interests as may have occurred pursuant to the terms of this
Agreement. No Participant shall receive a distribution of any interest in
Products or proceeds from the sale thereof if such Participant's Participating
Interest therein has been terminated pursuant to this Agreement.

12.6 Non-Compete Covenants. A Participant that withdraws pursuant to
----------------------
Section 12.3, or is deemed to have withdrawn pursuant to Section 5.2 or 6.5,
shall not directly or indirectly acquire any interest in property within the
Area of Interest for 12 months after the effective date of withdrawal. If a
withdrawing Participant, or the Affiliate of a withdrawing Participant, breaches
this Section 12.6, such Participant or Affiliate shall be obligated to offer to
convey to the non-withdrawing Participant, without cost, any such property or
interest so acquired. Such offer shall be made in writing and can be accepted by
the non-withdrawing Participant at any time within 45 days after it is received
by such non-withdrawing Participant.

12.7 Right to Data After Termination. After termination of this Agreement
---------------------------------
pursuant to Section 12.1 or 12.2, each Participant shall be entitled to copies
of all information acquired hereunder before the effective date

of termination not previously furnished to it, but a terminating or withdrawing
Participant shall not be entitled to any such copies after any other termination
or any withdrawal.

12.8 Continuing-Authority. On termination of this Agreement under Section
--------------------
12.1 or 12.2 or the deemed withdrawal of a Participant pursuant to Section 5.2,
6.4(b) or 6.5 or the withdrawal of a Participant pursuant to Section 12.3, the
Manager shall have the power and authority, subject to control of the Management
Committee, if any, to do all things on behalf of the Participants which are
reasonably necessary or convenient to: (a) wind up Operations and (b) complete
any transaction and satisfy any obligation, unfinished or unsatisfied, at the
time of such termination or withdrawal, if the transaction or obligation arises
out of Operations prior to such termination or withdrawal. The Manager shall
have the power and authority to grant or receive extensions of time or change
the method of payment of an already existing liability or obligation, prosecute
and defend actions on behalf of the Participants and the Venture, mortgage
Assets, and take any other reasonable action in any matter with respect to which
the former Participants continue to have, or appear or are alleged to have, a
common interest or a common liability.

ARTICLE XIII
------------

ACQUISITIONS WITHIN AREA OF INTEREST
------------------------------------

13.1 General. Any interest or right to acquire any interest in real
-------
property within the Area of Interest acquired during the term of this Agreement
by or on behalf of a Participant or any Affiliate shall be subject to the terms
and provisions of this Agreement.

13.2 Notice to Nonacquiring Participant. Within 30 days after the
-------------------------------------
acquisition of any interest or the right to acquire any interest in real
property wholly or partially within the Area of Interest (except real property
acquired by the Manager pursuant to a Program), the acquiring Participant shall
notify the other Participant of such acquisition. The acquiring Participant's
notice shall describe in detail the acquisition, the lands and minerals covered
thereby, the cost thereof, and the reasons why the acquiring Participant
believes that the acquisition of the interest is in the best interests of the
Participants under this Agreement. In addition to such notice, the acquiring
Participant shall make any and all information concerning the acquired interest
available for inspection by the other Participant.

13.3 Option Exercised. If, within 30 days after receiving the acquiring
-----------------
Participant's notice, the other Participant notifies the acquiring Participant
of its election to accept a proportionate interest in the acquired interest
equal to its Participating Interest, the acquiring Participant shall convey to
the other Participant, by special warranty deed, such a proportionate undivided
interest therein. The acquired interest shall become a part of the Properties
for all purposes of this Agreement immediately upon notice of such other
Participant's election to accept the proportionate interest therein. Such other
Participant shall promptly pay to the acquiring Participant its proportionate
share of the latter's actual out-of-pocket acquisition costs.

13.4 Option Not Exercised. If the other Participant does not give such
----------------------
notice within the 30 day period set forth in Section 13.3, it shall have no
interest in the acquired interest, and the acquired interest shall not be a part
of the Properties or be subject to this Agreement.

ARTICLE XIV
-----------

ABANDONMENT AND SURRENDER OF PROPERTIES
---------------------------------------

14.1 Surrender or Abandonment of Property. The Management Committee may
---------------------------------------
authorize the Manager to surrender or abandon part or all of the Properties. If
the Management Committee authorizes any such surrender or abandonment over the
objection of a Participant, the Participant that desires to abandon or surrender
shall assign to the objecting Participant, by special warranty deed and without
cost to the surrendering Participant, all of the surrendering Participant's
interest in the property to be abandoned or surrendered, and abandoned or
surrendered property shall cease to be part of the Properties.

14.2 Reacquisition. If any Properties are abandoned or surrendered under
-------------
the provisions of this Article XIV, then, unless this Agreement is earlier
terminated, neither Participant nor any Affiliate thereof shall acquire any
interest in such Properties or a right to acquire such Properties for a period
of one year following the date of such abandonment or surrender. If a
Participant reacquires any Properties in violation of this Section 14.2, the
other Participant may elect by notice to the reacquiring Participant within 45
days after it has actual notice of such reacquisition, to have such properties
made subject to the terms of this Agreement. In the event such an election is
made, the reacquired properties shall thereafter be treated as Properties, and
the costs of reacquisition shall be borne solely by the reacquiring Participant
and shall not be included for purposes of calculating the Participants'
respective Participating Interests.

ARTICLE XV
----------

TRANSFER OF INTEREST
--------------------

15.1 General. A Participant shall have the right to Transfer to any third
-------
party all or any part of its interest in or to this Agreement, its Participating
Interest, or the Assets solely as provided in this Article XV.

15.2 Limitations on Free Transferability. The Transfer right of a
--------------------------------------
Participant in Section 15.1 shall be subject to the following terms and
conditions:

(a) No transferee of all or any part of the interest of a Participant
in this Agreement, any Participating Interest, or the Assets shall have the
rights of Participant unless and until the transferring Participant has
provided to the other Participant notice of the Transfer, and except as
provided in Sections 15.2(g) and 15.2(h), the transferee, as of this
effective date of the Transfer, has committed in writing to be bound by
this Agreement to the same extent as the transferring Participant;

(b) No Participant, without the consent of the other Participant,
shall make a Transfer which shall cause termination of the tax partnership
established by the provisions of Section 4.2;

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

(d) As provided in Exhibit C, Article IV the transferring Participant
and the transferee shall bear all tax consequences of the Transfer;

(e) In the event of a Transfer of less than all of a Participating
Interest, the transferring Participant and its transferee shall act and be
treated as one Participant;

(f) No Participant shall Transfer any interest in this Agreement or
the Assets except by Transfer of part or all of its Participating Interest;

(g) If the Transfer is the grant, of a security interest by mortgage,
deed of trust, pledge, lien or other encumbrance of any interest in this
Agreement, any Participating Interest or the Assets to secure a loan or
other indebtedness of a Participant in a bona fide transaction, such
security interest shall be subordinate to the terms of this Agreement and
the rights and interests of the other Participant hereunder. Upon any
foreclosure or other enforcement of rights in the security interest the
acquiring third party shall be deemed to have assumed the position of the
encumbering Participant with respect to this Agreement and the other
Participant, and it shall comply with and be bound by the terms and
conditions of this Agreement;

(h) If a sale or other commitment or disposition of Products or
proceeds from the sale of Products by a Participant upon distribution to it
pursuant to Article XI creates in a third party a security interest in
Products or proceeds therefrom prior to such distribution, such sales,
commitment or disposition shall be subject to the terms and conditions of
this Agreement; and

(i) If, contrary to Section 15.2(b), a Transfer is made which causes
termination of the tax partnership established by Section 4.2, the
transferring Participant shall indemnify, defend and hold harmless the
other Participant from and against any and all loss, cost, expense or
damage arising from such termination;

(j) Only United States currency shall be used for Transfers for
consideration.

15.3 Preemptive Right. Except as otherwise provided in Section 15.4, if a
-----------------
Participant desires to Transfer all or any part of its interest in this
Agreement, any Participating Interest, or the Assets, the other Participant
shall have a preemptive right to acquire such interests as provided in this
Section 15.3.

(a) A Participant intending to Transfer all or any part of its
interest in this Agreement, any Participating Interest, or the Assets shall
promptly notify the other Participant of its intentions. The notice shall
state the price and all other pertinent terms and conditions of the
intended Transfer, and shall be accompanied by a copy of the offer or
contract for sale. The other Participant shall have 30 days from the date
such notice is delivered to notify the transferring Participant whether it
elects to acquire the offered interest at the same price and on the same
terms and conditions as set forth in the notice. If it does so elect, the
Transfer shall be consummated promptly after such notice of such election
is delivered to the transferring Participant.

(b) If the other Participant fails to so elect within the period
provided for in Section 15.3(a), the transferring Participant shall have 30
days following the expiration of such period to consummate the Transfer to
a third party at a price and on terms no less favorable than those offered
by the transferring Participant to the other Participant in the notice
required in Section 15.3(a).

(c) If the transferring Participant fails to consummate the Transfer
to a third party within the period set forth in Section 15.3(b), the
preemptive right of the other Participant in such offered interest shall be
deemed to be revived. Any subsequent proposal to Transfer such interest
shall be conducted in accordance with all of the procedures set forth in
this Section 15.3.

15.4 Exceptions to Preemptive Right. Section 15.3 shall not apply to the
--------------------------------
following:

(a) Transfer by a Participant of all or any part of its interest in
this Agreement, any Participating Interest, or the Assets to an Affiliate;

(b) Incorporation of a Participant, or corporate merger,
consolidation, amalgamation or reorganization of a Participant by which the
surviving entity shall possess substantially all of the stock, or all of
the property rights and interests, and be subject to substantially all of
the liabilities and obligations of that Participant;

(c) The grant by a Participant of a security in any interest in this
Agreement, any Participating Interest, or the Assets by mortgage, deed of
trust, pledge, lien or other encumbrance; or

(d) A sale or other commitment or disposition of Products or proceeds
from sale of Products by a Participant upon distribution to it pursuant to
Article XI.

ARTICLE XVI
-----------

DISPUTES
--------

16.1 General. The courts of the State of Nevada shall have exclusive
-------
jurisdiction to settle disputes between the Participants.

ARTICLE XVII
------------

CONFIDENTIALITY
---------------

17.1 General. The financial terms of this Agreement and all information
-------
obtained in connection with the performance of this Agreement shall be the
exclusive property of the Participants and, except as provided in Section 17.2,
shall not be disclosed to any third party or the public without the prior
written consent of the other Participant, which consent shall not be
unreasonably withheld.

17.2 Exceptions. The consent required by Section 17.1 shall not apply to a
----------
disclosure:

(a) To an Affiliate, consultant, contractor or subcontractor that has
a bona fide need to be informed;

(b) To any third party to whom the disclosing Participant contemplates
a Transfer of all or any part of its interest in or to this Agreement, its
Participating Interest, or the Assets; or

(c) To at governmental agency or to the public which the disclosing
Participant believes in good faith is required by pertinent law or
regulation or the rules of any stock exchange;

In any case to which this Section 17.2 is applicable, the disclosing Participant
shall give notice to the other Participant concurrently with the making of such
disclosure. As to any disclosure pursuant to Section 17.2(a) or (b), only such
confidential information as such third party shall have a legitimate business
need to know shall be

disclosed and such third party shall first agree in writing to protect the
confidential information from further disclosure to the same extent as the
Participants are obligated under this Article XVII.

17.3 Duration of Confidentiality. The provisions of this Article XVII shall
---------------------------
apply during the term of this Agreement and for one year following termination
of this Agreement pursuant to Section 12.1 or 12.2, and shall continue to apply
to any Participant who withdraws, who is deemed to have withdrawn, or who
Transfers its Participating Interest, for two years following the date of such
occurrence.

ARTICLE XVIII
-------------

GENERAL PROVISIONS
------------------

18.1 Notices. All notices, payments and other required communications
-------
("Notices") to the Participants shall be writing, and shall be addressed
respectively as follows:

WGI: Western Goldfields, Inc.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxx, XX 00000
Attn: Vice President Exploration

Company: 321Gold, Inc.
0000 Xxxxx Xxxxxxx Xxxxx, Xxxxx X-000
Xxxxx, XX 00000
Attn: President

All Notices shall be given (i) by personal delivery to the Participant, or (ii)
by electronic communication, with a confirmation sent by registered or certified
mail return receipt requested, or (iii) by registered or certified mail return
receipt requested. All Notices shall be effective and shall be deemed delivered
(i) if by personal delivery on the date of delivery if delivered during normal
business hours, and, if not delivered during normal business hours, on the next
business day following delivery, (ii) if by electronic communication on the next
business day following receipt of the electronic communication, and (iii) if
solely by mail on the next business day after actual receipt. A Participant may
change its address by, Notice to the other Participant.

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

18.3 Modification. No modification of this Agreement shall be valid unless
-------------
made in writing and duly executed by the Participants.

18.4 Force Majeure. Except for the obligation to make payments when due
---------------
hereunder, the obligations of a Participant shall be suspended to the extent and
for the period that performance is prevented by any cause, whether foreseeable
or unforeseeable, beyond its reasonable control, including, without limitation,
labor disputes (however arising and whether employee demands are reasonable or
within the power of the

participant to grant); acts of God; laws, regulations, orders, proclamations,
instructions or requests governmental entity; judgments or orders of any court;
inability to obtain on reasonably acceptable terms any public or private
license, permit or other authorization; curtailment or suspension of activities
to remedy or avoid an actual or alleged, present or prospective violation of
federal, state or local environmental standards; acts of war or conditions
arising out of or attributable to war, whether declared or undeclared; riot,
civil strife, insurrection or rebellion; fire, explosion, earthquake, storm,
flood, sink holes, drought or other adverse weather condition; delay or failure
by suppliers or transporters of materials, parts, supplies, services or
equipment or by contractors' or subcontractors' shortage of, or inability to
obtain, labor, transportation, materials, machinery, equipment, supplies,
utilities or services; accidents; breakdown of equipment, machinery or
facilities; or any other cause whether similar or dissimilar to the foregoing.
The affected Participant shall promptly give notice to the other Participant of
the suspension of performance, stating therein the nature of the suspension, the
reasons therefor, and the expected duration thereof. The affected Participant
shall resume performance as soon as reasonably possible. During the period of
suspension the obligations of the Participants to advance funds pursuant to
Section 10.2 shall be reduced to levels consistent with Operations.

18.5 Governing Law. This Agreement shall be governed by and interpreted in
--------------
accordance with the laws of the State of Nevada, except for its rules pertaining
to conflicts of laws.

18.6 Rule Against Perpetuities. Any right or option to acquire any interest
-------------------------
in real or personal property under this Agreement must be exercised, if at all,
so as to vest such interest in the acquirer within 21 years after the effective
date of this Agreement.

18.7 Further Assurances. Each of the Participants agrees to take from time
-------------------
to time such actions and execute such additional instruments as may be
reasonably necessary or convenient to implement and carry out the intent and
purpose of this Agreement.

18.8 Survival of Terms and Conditions. The following Sections shall survive
--------------------------------
the termination of this Agreement to the full extent necessary for their
enforcement and the protection of the Participant in whose favor they run:
Sections 2.2, 4.5, 6.4, 6.6, 10.3, 12.3, 12.4, 12.5, 12.6, 12.7 and 12.8.

18.9 Entire Agreement; Successors and Assigns. This Agreement contains the
-----------------------------------------
entire understanding of the Participants and supersedes all prior agreements and
understandings between the Participants relating to the subject matter hereof.
This Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the Participants. In the event of any
conflict between this Agreement and any Exhibit attached hereto, the terms of
this Agreement shall be controlling. 321Gold, Inc. LLC acquired all right, title
and interest of 321 Gold and Xxxxxx X. Xxxxxxxxx in the Letter of Intent dated
April 26, 2004, which letter is hereby terminated and of no further force and
effect.

18.10 Memorandum. At the request of either Participant, a Memorandum or
----------
short form of this Agreement, as appropriate, which shall not disclose financial
information contained herein, shall be prepared and recorded by Manager. This
Agreement shall not be recorded.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

XXXXXXX XXXXXXXXXX, INC.

By /s/ Xxxxxx X. Xxxxxxxxxx
---------------------------------
Vice President Exploration

321GOLD, INC.

By /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
President

EXHIBIT A

Sunny Slope Gold Property List of Claims

Mineral County, Nevada

PROPERTIES AND TITLE EXCEPTIONS

The sixteen (16) Sunny Slope lode claims are located in T11N, R28E sections 28,
and 29, and 33, Mineral County, Nevada.

BLM COUNTY COUNTY
1. CLAIM ID CLAIM NAME BOOK PAGE DOCUMENT NO.
-------------------------------------------------

NMC 822445. SS-1 187 505 124407
XXX 000000 SS-2 187 506 124408
XXX 000000. SS-3 187 507 124409
XXX 000000. SS-4 187 508 124410
NMC 845095. SS 16 127991
XXX 000000. SS 15 127992
NMC 845097 SS 14 127993
NMC 845098. SS 13 127994
XXX 000000. SS 12 127995
XXX 000000. SS 11 127996
NMC 845101 SS 10 127997
NMC 845102 SS 9 127998
NMC 845103 SS 8 127999
XXX 000000. SS 7 128000
XXX 000000. SS 6 128001
XXX 000000. SS 5 128002

There are no title exceptions.

2. THE PROPERTY AND AREA OF INTEREST
There shall be an "Area of Interest" for the Mining Joint Venture
Agreement, that includes all lands within approximately one (1) mile
beyond the boundary of the Claims, which is more particularly
described by legal description as follows: T10N, R28E sections 0X0/0,
0X0/0; X00X, X00X sections 20S1/2, 21S1/2, 22SW1/4, 27NW1/4, S1/2, and
sections 28, 29, 32, 33, and 34.

EXHIBIT B
---------

ACCOUNTING PROCEDURE
--------------------

The financial and accounting procedures to be followed by the Manager and
the Participants under the Agreement are set forth below. References in this
Accounting Procedure to Sections and Articles are to those located in this
Accounting Procedure unless it is expressly stated that they are references to
the Venture Agreement.

ARTICLE I
---------

GENERAL PROVISIONS
------------------

1.1 General Accounting Records. The Manager shall maintain detailed and
----------------------------
comprehensive cost accounting records in accordance with this Accounting
Procedure, including general ledgers, supporting and subsidiary, journals,
invoices, checks and other customary documentation, sufficient to provide a
record of revenues and expenditures and periodic statements of financial
position and the results of operations for managerial, tax, regulatory or other
financial reporting purposes. Such records shall be retained for the duration of
the period allowed the Participants for audit or the period necessary to comply
with tax or other regulatory requirements. The records shall reflect all
obligations, advances and credits of the Participants.

1.2 Bank Accounts. The Manager shall maintain one or more separate bank
--------------
accounts for the payment of all expenses and the deposit of all cash receipts
for the Venture.

1.3 Statements and Xxxxxxxx. The Manager shall prepare statements and xxxx
------------------------
the Participants as provided in Article X of the Agreement. Payment of any such
xxxxxxxx by any Participant, including the Manager, shall not prejudice such
Participant's right to protest or question the correctness thereof for a period
not to exceed twenty-four (24) months following the calendar year during which
such xxxxxxxx were received by the Participant. All written exceptions to and
claims upon the Manager for incorrect charges, xxxxxxxx or statements shall be
made upon the Manager within such twenty-four (24) month period. The time period
permitted for adjustments hereunder shall not apply to adjustments resulting
from periodic inventories as provided in Article V.

ARTICLE II
----------

CHARGES TO JOINT ACCOUNT
------------------------

Subject to the limitations hereinafter set forth, the following:

2.1 Rentals, Royalties and Other Payments. All property acquisition and
----------------------------------------
holding costs, including filing fees, license fees, costs of permits and
assessment work, delay rentals, production royalties, including any required
advances, and all other payments made by the Manager which are necessary to
acquire or maintain title to the Assets.

2.2 Labor and Employee Benefits.
------------------------------

(a) Salaries and wages of the Manager's employees directly engaged in
Operations, including salaries or wages of employees who are temporarily
assigned to and directly employed by same.

(b) The Manager's cost of holiday, vacation, sickness and disability
benefits, and other customary allowances applicable to the salaries and wages
chargeable under Sections 2.2(a) and 2.12. Such costs may be charged on a "when
and as paid basis" or by "percentage assessment" on the amount of salaries and
wages. If percentage assessment is used, the rate shall be applied to wages or
salaries excluding overtime and bonuses. Such rate shall be based on the
Manager's cost experience and it shall be periodically adjusted at least
annually to ensure that the total of such charges does not exceed the actual
cost thereof to the Manager.

(c) The Manager's actual cost of established plans for employees'
group life insurance, hospitalization, pension, retirement, stock purchase,
thrift, bonus (except production or incentive bonus plans under a union contract
based on actual rates of production, cost savings and other production factors,
and similar non-union bonus plans customary in the industry or necessary to
attract competent employees, which bonus payments shall be considered salaries
and wages under Sections 2.2(a) or 2.12; rather than employees' benefit plans)
and other benefit plans of a like nature applicable to salaries and wages
chargeable under Sections 2.2(a) or 2.12, provided that the plans are limited to
the extent feasible to those customary in the industry.

(d) Cost of assessments imposed by, governmental authority which is
applicable to salaries and wages chargeable under Sections 2.2(a) and 2.12,
including all penalties except those resulting from the willful misconduct or
gross negligence of the Manager.

2.3 Materials, Equipment and Supplies. The cost of materials, equipment and
---------------------------------
supplies (herein called "Material") purchased from unaffiliated third parties or
furnished by the Manager or any Participant as provided in Article III. The
Manager shall purchase or furnish only so much Material as may be required for
immediate use in efficient and economical Operations. The Manager shall also
maintain inventory levels of Material at reasonable levels to avoid unnecessary
accumulation of surplus stock.

2.4 Equipment and Facilities Furnished by Manager. The cost of machinery,
----------------------------------------------
equipment and facilities owned by the Manager and used in Operations or used to
provide support or utility services to Operations charged at rates commensurate
with the actual costs of ownership and operation of such machinery, equipment
and facilities. Such rates shall include costs of maintenance, repairs, other
operating expenses, insurance, taxes, depreciation and interest at a rate not to
exceed ten percent (10%) per annum. Such rates shall not exceed the average
commercial rates currently prevailing in the vicinity of the Operations.

2.5 Transportation. Reasonable transportation costs incurred in connection
-------------
with the transportation of employees and material necessary for the Operations.

2.6 Contract Services and Utilities. The cost of contract services and
----------------------------------
utilities procured from outside sources, other than services described in
Sections 2.9 and 2.13. If contract services are performed by the Manager or an
Affiliate thereof, the cost charged to the Joint Account shall not be greater
than that for which comparable services and utilities are available in the open
market within the vicinity of the Operations. The cost of professional
consultant services procured from outside sources in excess of $10,000 shall not
be charged to the Joint Account unless approved by the Management Committee.

2.7 Insurance Premiums. Net premiums paid for insurance required to be
-------------------
carried for Operations for the protection of the Participants. When the
Operations are conducted in an area where the Manager may self-insure for
Workmen's Compensation and/or Employer's Liability under state law, the Manager
may elect to include such

risks in its self-insurance program and shall charge its costs of self-insuring
such risks to the Joint Account provided that such charges shall not exceed
published manual rates.

2.8 Damages and Losses. All costs in excess of insurance proceeds necessary
------------------
to repair or replace damage or losses to any Assets resulting from any cause
other than the willful misconduct or gross negligence of the Manager. The
Manager shall furnish the Management Committee with written notice of damages or
losses as soon as practicable after a report thereof has been received by the
Manager.

2.9 Legal and Regulatory Expense. Except as otherwise provided in Section
-----------------------------
2.13, all legal and regulatory costs and expenses incurred in or resulting from
the Operations or necessary to protect or recover the Assets of the Venture. All
attorney's fees and other legal costs to handle, investigate and settle
litigation or claims, including the cost of legal services provided by the
Manager's legal staff, and amounts paid in settlement of such litigation or
claims in excess of $10,000 shall not be charged to the Joint Account unless
approved by the Management Committee.

2.10 Audit. Cost of annual audits under Section 10.4 of the Venture
-----
Agreement if approved by all of the Participants.

2.11 Taxes. All taxes (except income taxes) of every kind and nature
-----
assessed or levied upon or in connection with the Assets, the production of
Products or Operations, which have been paid by the Manager for the benefit of
the Participants. Each Participant is separately responsible for income taxes
which are attributable to its respective Participating Interest.

2.12 District and Camp Expense (Field Supervision and Camp Expenses). A pro
---------------------------------------------------------------
rata portion of (i) the salaries and expenses of the Manager's superintendent
and other employees serving Operations whose time is not allocated directly to
such Operations, and (ii) the costs of maintaining and operating an office
(herein called "the Manager's Project Office") and any necessary sub office and
(iii) all necessary camps, including housing facilities for employees, used for
Operations. The expense of those facilities, less any revenue there from, shall
include depreciation or a fair monthly rental in lieu of depreciation of the
investment. The total of such charges for all properties served by the Manager's
employees and facilities shall be apportioned to the Joint Account on the basis
of a ratio, the numerator of which is the direct labor costs of the Operations
and the denominator of which is the total direct labor costs incurred
for all activities served by the Manager.

2.13 Administrative Charge.
----------------------

(a) Each month, the Manager shall charge the Joint Account a sum
for each phase of Operations as provided below, which shall be a liquidated
amount to reimburse the Manager for its home office overhead and general and
administrative expenses to conduct each phase of the Operations, and which shall
be in lieu of any management fee:

(1) Exploration Phase - three percent (3%) Allowable Costs.
-----------------

(2) Development Phase - three percent (3%) Allowable Costs.
-----------------

(3) Mining Phase - three percent (3%) Allowable Costs.
-------------

(b) The term "Allowable Costs" as used in this Section 2.13 for a
particular phase of Operations shall mean all charges to the Joint Account:
excluding (i) the administrative charge referred to herein; (ii) depreciation,
depletion or amortization of tangible or intangible assets; (iii) amounts
charged in accordance with Sections 2.1 and 2.9. The Manager shall attribute
such Allowable Costs to a particular phase of Operations by applying the
following guidelines:

(1) The exploration phase shall cover those activities
conducted to ascertain the existence, location, extent or quantity of any
deposit of ore or mineral. Such phase shall cease when a commercially
recoverable reserve is determined to exist.

(2) The development phase shall cover those activities
conducted to access a commercially feasible ore body or to-extend
production of-an existing ore body, and to construct or install related
fixed assets.

(3) The major construction phase shall include all
activities involved in the construction of a mill, smelter or other ore
processing facilities.

(4) The mining phase shall include all other otherwise
covered above, including activities conducted after mining operations have
ceased.

(c) The monthly administration charge determined for each phase
of Operations shall be equitably apportioned among all of the monthly period on
the basis of a ratio, the numerator of which is the direct labor costs charged
to a particular property and the denominator of which is the total direct labor
costs incurred for all properties served by the Manager.

(d) The following is a representative list of items comprising
the Manager's principal business office expenses that are expressly covered by
the administrative charge provided in this Section 2.13:

(1) Administrative supervision, which includes services
rendered by managers, department supervisors, officers and directors of the
Manager for Operations, except to the extent that such services represent a
direct charge to the Joint Account, as provided for in Section 2.2;

(2) Accounting, data processing, personnel administration,
billing and record keeping in accordance with governmental regulations and
the provisions of the Venture Agreement, and preparation of reports;

(3) The services of tax counsel and tax administration
employees for all tax matters, including any protests, except any outside
professional fees which the Management Committee may approve as a direct
charge to the Joint Account;

(4) Routine legal services rendered by outside sources and
the Manager's legal staff not otherwise charged to the Joint Account under
Section 2.9; and

(5) Rentals and other charges for office and records storage
space, telephone service, office equipment and supplies.

(e) The Management Committee shall annually review the
administration charges and shall amend the methodology or rates used to
determine such charges if they are found to be insufficient or excessive.

2.14 Other Expenditures. Any reasonable direct expenditure, other than
------------------
expenditures which are covered by the foregoing provisions, incurred by the
Manager for the necessary and proper conduct of Operations.

ARTICLE III
-----------

BASIS OF CHARGES TO JOINT ACCOUNT
---------------------------------

3.1 Purchases. Material purchased and services procured from third parties
---------
shall be charged to the Joint Account by the Manager at invoiced cost, including
applicable transfer taxes, less all discounts taken. If any Material is
determined to be defective or is returned to a vendor for any other reason, the
Manager shall credit the Joint Account when an adjustment is received from the
vendor.

3.2 Material Furnished by or Transferred to the Manager or a Participant.
---------------------------------------------------------------------
Any Material furnished by the Manager or Participant from its stocks or
transferred to the Manager or Participant shall be priced on the following
basis:

(a) New Material: New Material transferred from the Manager or
-------------
Participant shall be priced F.O.B. the nearest reputable supply store or railway
receiving point, where like Material is available, at the current replacement
cost of the same kind of Material, exclusive of any available cash discounts, at
the time of the transfer (herein called, "New Price").

(b) Used Material.
--------------

(1) Used Material in sound and serviceable condition and suitable
for reuse without reconditioning shall be priced as follows:

(a) Used Material transferred by the Manager or a
Participant shall be priced at seventy-five percent (75%) of the New Price;

(b) Used Material transferred to the Manager or Participant
shall be priced (i) at seventy-five percent (75%) of the New Price if such
Material was originally charged to the Joint Account as new Material, or
(ii) at sixty-five percent (65%) of the New Price if such Material was
originally charged to the Joint Account as good used Material at
seventy-five percent (75%) of the New Price.

(2) Other used Material which, after reconditioning will be
further serviceable for original function as good secondhand Material, or
which is serviceable for original function but not substantially suitable
for reconditioning shall be priced at 50 percent (50%) of New Price. The
cost of any reconditioning shall be borne by the transferee.

(3) All other Material, including junk, shall be priced at a
value commensurate with its use or at prevailing prices. Material no longer
suitable for its original purpose but usable for some other purpose shall
be priced on a basis comparable with items normally used for such other
purposes.

(c) Obsolete Material. Any Material which is serviceable and
-----------------
usable for its original function, but its condition is not equivalent to that
which would justify a price as provided above shall be priced by the Management
Committee. Such price shall be set at a level which will result in a charge to
the Joint Account equal to the value of the service to be rendered by such
Material.

3.3 Premium Prices. Whenever Material is not readily obtainable at
---------------
published or listed prices because of national emergencies, strikes or other
unusual circumstances over which Manager has no control, the Manager may charge
the Joint for the required Material on the basis of the Manager's direct cost
and expenses incurred in procuring such Material and making it suitable for use.
The Manager shall give written notice of the proposed charge to the Participants
prior to the time when such charge is to be billed, whereupon any Participant
shall have the right, by notifying the Manager within ten days of the delivery
of the notice from the Manager, to furnish at the usual receiving point all or
part of its share of Material suitable for use and acceptable to the Manager.

3.4 Warranty of Material Furnished by the Manager or Participants. Neither
-------------------------------------------------------------
the Manager nor any Participant warrants the Material furnished beyond any
dealer's or manufacturer's warranty and no credits shall be made to the Joint
Account for defective Material until adjustments are received by the Manager
from the dealer, manufacturer or their respective agents.

ARTICLE IV
----------

DISPOSAL OF MATERIAL
--------------------

4.1 Disposition Generally. The Manager shall have no obligation to purchase
---------------------
a Participant's interest in Material. The Management Committee shall determine
the disposition of major items of surplus Material, provided the Manager shall
have the right to dispose of normal accumulations of junk and scrap Material
either by sale or by transfer to the Participants as provided in Section 4.2.

4.2 Distribution to Participants. Any Material to be distributed to the
------------------------------
Participants shall be made in proportion to their respective Participating
Interests, and corresponding credits shall be made to the Joint Account on the
basis provided in Section 3.2.

4.3 Sales. Sales of Material to third parties shall be credited to the
-----
Joint Account at the net amount received. Any damages or claims by the Purchaser
shall be charged back to the Joint Account if and when paid.

ARTICLE V
---------

INVENTORIES
-----------

5.1 Periodic Inventories, Notice and Representations. At reasonable
----------------------------------------------------
intervals, inventories shall be taken by the Manager, which shall include all
such Material as is ordinarily considered controllable by operators of mining
properties and the expense of conducting such periodic inventories shall be
charged to the Joint Account. The Manager shall give written notice to the
Participants of its intent to take any inventory at least 30 days before such
inventory is scheduled to take place. A Participant shall be deemed to have
accepted the results of any inventory taken by the Manager if the Participant
fails to be represented at such inventory.

5.2 Reconciliation and Adjustment of Inventories. Reconciliation of
------------------------------------------------
inventory with charges to the Joint Account shall be made, and a list of
overages and shortages shall be furnished to the Management:

Committee within 6 months after the inventory is taken. Inventory adjustments
shall be made by the Manager to the Joint Account for overages and shortages,
but the Manager shall be held accountable to the Venture only for shortages due
to lack of reasonable diligence.

EXHIBIT C
---------

TAX MATTERS
-----------

Article I
---------

Tax Matters Partner
-------------------

1.1 Designation of Tax Matters Partner. The Manager is hereby designated
----------------------------------
tax matters partner (hereinafter "TMP") as defined in Section 6231(a)(7} of the
Code. In the event of any change in Manager, the Participant serving as manager
at the end of a taxable year shall continue as TMP with respect to all matters
concerning such year. The TMP and other Participants shall use their best
efforts to comply with the responsibilities outlined in this section and in
Sections 6222 through 6232 of the Code (including any Treasury regulations
promulgated hereunder) and in doing so shall incur no liability to any other
party.

1.2 Notice. The Participants shall furnish the TMP with such information
------
(including information specified in Section 6230(e) of the Code) as it may
reasonably request to permit it to provide the Internal Revenue Service with
sufficient information to allow proper notice to the Participants in accordance
with Section 6223 of the Code. The TMP shall keep each Participant informed of
all administrative and judicial proceedings for the adjustment at the
partnership level of partnership items in accordance with Section 6223(g) of the
Code.

1.3 Inconsistent Treatment of Partnership Item. If an administrative
----------------------------------------------
proceeding contemplated under Section 6223 of the Code has begun, and the TMP so
requests, the Participants shall notify the TMP of their treatment of any
partnership item on their federal income tax return in a manner which is
inconsistent with the treatment of that item on the partnership return.

1.4 Extensions of Limitation Periods. The TMP shall not enter into any
-----------------------------------
extension of the period of limitations as provided under Section 6229 of the
Code without first giving reasonable advance notice to all other Participants of
such intended action.

1.5 Requests for Administrative Adjustments. No Participant shall file,
------------------------------------------
pursuant to Section 6227 of the Code, a request for an administrative adjustment
of partnership items for any partnership taxable year without first notifying
all other Participants. If all other Participants agree with the requested
adjustment, the TMP shall file the request for administrative adjustment on
behalf of the partnership. If unanimous consent is not obtained within 30 days,
or within the period required to timely file the request for administrative
adjustment, if shorter, any Participant, including the TMP, may file a request
for administrative adjustment on its own behalf.

1.6 Judicial Proceedings. Any Participant intending to file a petition
---------------------
under Section 6226, 6228 or other sections of the Code with respect to any
partnership item, or other tax matters involving the partnership, shall notify
the other Participants of such intention and the nature of the contemplated
proceeding. If the TMP is the Participant intending to file such petition, such
notice shall be given within a reasonable time to allow the other Participants
to participate in the choosing of the forum in which such petition will be
filed. If the

Participants do not agree on the appropriate forum, then the appropriate forum
shall be decided by majority vote. Each Participant shall have a vote in
accordance with its Participating Interest in the partnership. If a majority
cannot agree, the TMP shall choose the forum. If any Participant intends to
seek review of any court decision rendered as a result of a proceeding
instituted under the preceding part of this Section 1.6, such Participant shall
notify the other Participants of such intended action.

1.7 Settlements. The TMP shall not bind any Participant to at settlement
-----------
agreement without first obtaining the written concurrence of any, such
Participant. Any other Participant who enters into a settlement agreement with
respect to any partnership items, as defined by Section 6231(a)(3) of the Code,
shall notify the other Participants of such settlement agreement and its terms
within 90 days from the date of settlement.

1.8 Fees and Expenses. The TMP shall not engage legal counsel, certified
-------------------
public accountants, or others without the prior written consent of a majority of
the Participants. Any Participant may, engage legal counsel, certified public
accountants, or others on its own behalf and at its sole cost and expense. Any
reasonable item of expense, including but not limited to fees and expenses for
legal counsel, certified public accountants, and others which the TMP incurs in
connection with any audit, assessment, litigation, or other proceeding regarding
any partnership item, shall constitute proper charges to the Joint Account and
shall be borne by the Participants as any other item which constitutes a direct
charge to the Joint Account pursuant to the Agreement. Notwithstanding anything
in the Agreement to the contrary, the Joint Account allocation shall be borne by
the Participants based upon a daily weighted average of each Participant's
Participating Interest, in the partnership for the tax year in question.

1.9 Survival. The provisions of this Article I, including but not limited
--------
to the obligation to pay fees and expenses contained in Section 1.8, shall
survive the termination of the partnership or the termination of any
Participant's interest in the partnership and shall remain binding on the
Participants for a period of time necessary to resolve with the Internal Revenue
Service or the Department of the Treasury any and all matters regarding the
federal income taxation of the partnership for the applicable tax year(s).

Article II
----------

Tax Elections and Allocations
-----------------------------

2.1 Tax Partnership Election. It is understood and agreed that the
--------------------------
Participants intend to create a partnership for United States federal and state
income tax purposes, and, unless otherwise agreed to hereafter by all
Participants, no Participant shall make an election to be, or have the
arrangement evidenced hereby, excluded from the application of any provisions of
Subchapter K of the Internal Revenue Code of 1954, as amended (the "Code"), or
any equivalent state income tax provision. It is understood and agreed that the
Participants intend to create a partnership for federal and state and income tax
purposes only.

The Manager shall file with the appropriate office of the Internal Revenue
Service, a partnership income tax return covering the Operations. The
Participants recognize that this Agreement may be subject to state income tax
statutes. The Manager shall file with the appropriate office of the state
agencies any required partnership state income tax returns.

Each Participant agrees to furnish to the Manager such information which it
may have relating to Operations as shall be required for proper preparation of
such returns. The Manager shall furnish to the other

Participants for their review a copy of each proposed income tax return at least
two weeks prior to the date the return is filed.

2.2 Tax Elections. The Participants elect, for purposes of all partnership
-------------
income tax returns:

(a) To use the accrual method of accounting,

(b) To adopt the calendar year as the annual accounting period,

(c) To deduct currently all exploration and development expenses to
the extent possible under Sections 616, 617, and 291 of the Code, and

(d) Unless the Participants unanimously agree otherwise, to compute
the allowance for depreciation in respect of all eligible recovery property
under this Agreement subject to depreciation in accordance with the
Accelerated Cost Recovery System. Allowances for depreciation will be
computed using the maximum accelerated tax depreciation table and the
shortest life permissible, and

(e) To treat advance royalties as deductions from gross income for the
year paid or accrued to the extent permitted by law. The Manager agrees to
consult with the other Participants prior to making any other elections
required by this Agreement.

2.3 Allocations to Participants. Allocations for tax purposes shall be in
---------------------------
accordance with the following:

(a) Exploration and development costs shall be allocated as deductions
among the Participants in accordance with their respective contributions to
such costs.

(b) Depreciation expenses shall be allocated as a deduction among the
Participants in accordance with their respective contributions to the
adjusted basis of the Asset which gives rise to the depreciation expense.

(c) The qualified investment for investment tax credit purposes with
respect to any Asset shall be allocated among the Participants in
accordance with their respective contributions to the qualified investment
(as defined in the Code) in such Asset.

(d) Production and operating costs shall be allocated as deductions
among the Participants in accordance with their respective contributions to
such costs.

(e) Cost depletion shall be allocated to the Participants in
accordance with their respective contributions to the adjusted basis for
depletion purposes of each depletable Asset (as defined in Section 614 of
the Code), and statutory depletion in excess of cost depletion shall be
allocated to each Participant in ratio to the respective depletion
allowance which would be allowable if each Participant were to be allowed
depletion on the sales value of its share of Products sold, taking into
account its share of costs and expenses otherwise allocated hereunder,
provided that the amount of statutory depletion shall not exceed the
respective Participant's gross income from the Properties as defined in
Code Section 613(c) times the statutory depletion rate in Code Section
613(b).

(f) All costs and expenses which are not described in (a) through (e)
above, shall be allocated among the Participants in accordance with their
respective contributions to such costs and expenses.

(g) The provision for taking production in kind, as provided elsewhere
in this Agreement, is recognized as each Participant's right to determine
the market for a proportionate share of the sales. All items of income,
deductions, and credits arising from such marketing of production shall be
recognized by the partnership and shall be allocated respectively to the
Participant who designated such market.

(h) Except as provided in (1) and (2) immediately below, items of
income, gain and/or loss reported by the partnership on federal and state
partnership returns shall be allocated to the Participants realizing or
bearing such items as provided in this Agreement:

(1) Gain and/or loss arising from each sale, abandonment, or
other disposition of Assets shall be allocated to each Participant in
such a manner as will reflect the gain and/or loss that would have
been includable in such Participant's respective income tax return if
the Participants hereto (a) had elected to be excluded from Subchapter
K of the Code and/or any similar provisions of applicable state laws,
and (b) had made the same elections that were made by the partnership
pursuant to Section 1.2 above. The computation of gain and/or loss
shall take into account each Participant's share of the proceeds
derived from each sale or other disposition, selling expenses and the
Participant's respective contributions to the unadjusted cost basis of
such Asset, less any allowed or allowable depreciation, amortization
or other deductions which have been allocated to each Participant.

(2) If the application of the preceding paragraph (1) results in
the allocation of gains and/or losses in excess of the "ceiling
limitation" imposes by Treasury Regulation Section 1.704-1(c)(i), the
Participants agree that the entire gains and/or losses shall be
determined at the partnership level. If such a determination results
in a partnership gain, such gain shall be allocated to the Participant
or Participants who otherwise would have been allocated a gain under
the provisions of such Paragraph. If such at determination results in
a partnership loss, such loss shall be allocated to the Participant or
Participants who otherwise would have been allocated a loss under such
Paragraph.

(i) Any recapture of depreciation, exploration under Section 617, and
any other item of deduction or credit shall be allocated among the
Participants in accordance with their sharing of the depreciation,
exploration, or other item of deduction or credit which is recaptured.

Article III
-----------

Capital Accounts
----------------

3.1 Charges and Credits. A separate capital account shall be established
---------------------
and maintained for each Participant and shall be, from time to time, credited
with:

(a) the tax basis of the Participant's interest in the Asset
contributed to the partnership;

(b) all amounts contributed by the Participant to pay the costs and
expenditures arising pursuant to this Agreement;

(a) all losses, expenses, and deductions allocated to that
Participant under Section 2.3 above. However, statutory (percentage)
depletion deductions shall not be charged to a Participant's capital
account to the extent that such statutory depletion deductions exceed
the Participant's adjusted tax basis in each of the depletable Assets;

(b) cash received by that Participant with respect to partnership
Assets or by distribution from the partnership; and

3.2 Liquidation. If, upon a liquidation of the partnership pursuant to the
-----------
terms of this Agreement, the capital account balance of each and every
Participant (stated as a percentage of the capital account balances of all
Participants), is not equal to each and every Participant's ownership interest,
all the Participants hereby agree and obligate themselves as follows:

(a) Any Participant with a negative capital account balance, that is,
a balance less than zero, shall contribute an amount of cash to the partnership
sufficient to achieve a zero balance capital account.

(b) Following the contribution pursuant to paragraph (a) above, if the
capital account balance of each Participant (stated as a percentage of the
capital account balances of all Participants) is not in the same ratio as each
such Participant's Participating Interest, then unless the participants mutually
agree that this paragraph will not apply, the partnership capital accounts shall
be adjusted to reflect how any gain or loss would have been allocated (pursuant
to Section 2.3(h), above) if such Assets had been sold at fair market value at
the time of liquidation. The Participants shall agree upon the fair market value
of the Assets of the partnership, provided, however, in the event that the
Participants fail to agree, a nationally recognized independent engineering firm
acceptable to all Participants shall determine the fair market value of such
Assets.

(c) Following the preliquidation adjustments pursuant to paragraph (b)
above (or if the Participants mutually agree, pursuant to paragraph (a) above),
if the capital account balances of each Participant (stated as a percentage of
the capital account balances of all Participants) is not equal to each
Participant's Participating Interest, then each Participant whose capital
account balance is less than its Participating Interest shall, upon ten (10)
days notice by the Manager, contribute a sufficient amount of cash to the
partnership to cause such Participant's capital account balance and
Participating Interest to be in parity.

(d) Notwithstanding anything contained in this Agreement, expressed or
implied to the contrary, it is expressly agreed and understood that, after
making the adjustments and/or contributions provided for in this Article, all
remaining partnership Assets shall be distributed to the Participants in
accordance with their capital accounts.

Article IV
----------

Sale or Assignment
------------------

4.1 Agreement Not to Terminate. The Participants agree that if any one of
---------------------------
them makes a sale or assignment of its Participating Interest under this
Agreement, such sale or assignment will be structured so as not to cause a
termination under Section 708(b) (1)(B) of the Code. If a Section 708 (b) (1)(B)
termination is caused, the terminating Participant will indemnify the
nonterminating Participant and save it harmless for any increase in taxes,
interest, and penalties or decrease in credits to the nonterminating Participant
caused by the termination of the partnership. The indemnification, if any, shall
be computed in a cash flow basis taking into consideration the liability for tax
on any indemnification proceeds received by the nonterminating Participants.

Article V
---------

Correspondence
--------------

5.1 Correspondence. All correspondence relating to the preparation and
--------------
filing of the partnership's income tax return(s) shall be forwarded to:

WGI: Western Goldfields, Inc.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxx, XX 00000
Attn: Vice President Exploration

Company: 321Gold, Inc.
0000 Xxxxx Xxxxxxx Xxxxx, Xxxxx X-000
Xxxxx, XX 00000
Attn: President

EXHIBIT D
---------

INSURANCE
---------

The Manager shall, at all times while conducting Operations, comply fully
with the applicable worker's compensation laws and purchase, and provide
standard form insurance policies for (i) comprehensive public liability and
property damage with combined limits as agreed by the Participants for bodily
injury and property damage; (ii) automobile insurance as agreed by the
Participants; and (iii) adequate and reasonable insurance against risk of fire
and other risks ordinarily insured against in similar operations. The coverage
amounts of all insurance shall be approved by the Participants. Each
Participant shall self-insure or purchase for its own account such additional
insurance as it deems necessary.

EXHIBIT E
---------

SUNNY SLOPE PROJECT
MINERAL COUNTY, NEVADA
BY X. XXXXXXXXXX 11-27-04

EXPLORATION AND DEVELOPMENT BUDGET AND SCHEDULE
SEPTEMBER 2004 THRU DECEMBER 2005.

EXPLORATION PLANS AND SCHEDULE - The exploration program for the Sunny Slope
Project has been divided into two phases which will be conducted over
approximately one year and four month period beginning in September 2004 and
ending December 2005. The primary goal of this phased program is to explore and
develop an economic gold-silver deposit with a minimum of 500 ounces of
production. Phase I Exploration Program is designed to conduct surface and
underground exploration activities in the main Sunny Slope working area, as well
as for exploring for additional new mineralization within the area of interest.
This Phase I program activities is designed to be followed up with a limited
Phase II Drill Program drill program to test the lateral and down-dip extension
of the main Sunny Slope vein system. Phase II Drill program will either be
followed up by additional development drilling and/or work would begin with the
development of a small underground mine.

PHASE I - EXPLORATION PROGRAM BUDGET - This phase of exploration activities
-----------------------------------------
would consist of general surface and underground exploration activities
including geologic mapping, rock chip and soil sampling, geophysical surveys and
drill permitting. The breakdown for this first phase of the exploration
evaluation will occur as follows:

MAPPING AND SAMPLING ACTIVITIES - 4TH QUARTER 2004 AND 1ST QUARTER 2005

- Data compilation of all current geological and geochemical data (1 week) $ 2,500
- Area reconnaissance of the entire property to explore for new mineralization
and to determine if additional claims are warranted (incl. sampling
expenses-5 days $ 3,500
- Staking/recording of additional lode claims (est. possible 30 claims) $ 8,000
- Surface mapping and sampling by one geologist in the main Sunny Slope mine
area (incl. rock chip and soil sampling expenses). (2 weeks) $ 15,000
- Underground mapping and sampling by two geologists. (incl. sampling exp.
-1 week) $ 10,000
Petrographic studies (25 samples) $ 1,000
- Geophysical Surveys
- Ground magnetic survey $ 15,000
- Gravity survey. $ 15,000
- Other potential geophysical surveys $ 20,000
- Permitting/Bonding (est. 3-months for permit period) $ 10,000
--------

TOTAL $100,000

EXPLORATION DRILLING ACTIVITIES - 2ND QUARTER 2005

- Road building, drill sump construction and reclamation $ 20,000
- Drilling: 5,000 ft (8 RC holes at an ave. of 500 ft. ea. and one deep hole
@1,000 ft. Drill cost per ft. @ $15/ft. (Incl. supplies and misc. exp $ 75,000
- Assaying of drill footage: 5,000 ft. each 5' foot interval (1,000 samples
@ $20/ea) $ 20,000
- Drill supervision: 1-months @ $500/day (incl. all exp.) $ 10,000
- Metallurgical studies and other misc. work $ 20,000

TOTAL $125,000

TOTAL BUDGET FOR THE PHASE I EXPLORATION PROGRAM -TOTAL - $225,000

PHASE II - DEVELOPMENT PROGRAM OF A SMALL UNDERGROUND MINE - 3RD AND 4TH
------------------------------------------------------------------------
QUARTERS 2005
-------------

This phase of exploration activities would be contingent upon encouraging drill
results obtained in Phase I. This phase would include additional permitting,
reverse circulation drilling, selective core drilling, metallurgical testing,
geotechnical investigations, ore calculations and purchasing of small mining
equipment to establish a small mining operation. The breakdown for this Phase II
Development Program to be established after Phase I activities.

TOTAL BUDGET FOR THE PHASE II DEVELOPMENT EXPLORATION PROGRAM TOTAL $775,000

TOTAL BUDGET FOR THE PHASE I AND II EXPLORATION AND DEVELOPMENT PROGRAM TOTA $1,000,000

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MINING VENTURE AGREEMENT -------------------------- (SUNNY SLOPE GOLD PROPERTY)

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