AGREEMENT

AGREEMENT

BY AND BETWEEN THE PARTIES: Avalon Gold Corporation, a Nevada Corporation with offices at Suite 806 – 1288 Alberni St. , Vancouver, British Columbia, Canada, V6E 4N5, being represented by Xxxxxx Xxxxxx, President, hereinafter “Avalon”.

AND

Xxx Xxxxxxx, who has an office located at Suite 12 - 0000 Xxxxx Xxxx Xx., Xxxxxxx Xxxx, Xxxx, 00000.

RECITALS:

Avalon Gold Corporation is a Public Company, which is fully trading on the Nasdaq OTC Bulletin Board in the United States of America Public Markets (Symbol : AVGC) and is desirous of acquiring an asset to work with and increase in value for the benefit of its shareholders. Xxx Xxxxxxx is the owner of a mineral asset in the form of certain State of Nevada Mining Claims (claims) known as Lode Mining Claims LSA1, LSA2, LSA3, LSA4, LSA5, LSA6, LSA7, (140Acres) located in Lander County, Nevada, in sections 14 and 00, Xxxxxxxx 00X, Xxxxx 43E, in the Mt. Diablo meridian.

Xxx Xxxxxxx will transfer a ninety-percent (90%) ownership in the claims, retaining a non-assessable, carried ten-percent (10%), and Avalon agrees to acquire and take full responsibility for the claims for the purpose of increasing the claims value.

UNDER THE TERMS AND CONDITIONS AS FOLLOWS:

	(1)	Avalon, upon signing this agreement, will pay the sum of $1,000.00 USD to Xxx Xxxxxxx and will issue 1,000,000 Avalon shares to Xxx Xxxxxxx and/or his nominees; which stock will be classified as being under rule 144 of the Securities and Exchange Commission for a period of one year, with trading restrictions under rule 144 for another year.
	(2)	Avalon will, in addition to the treasury stock being transferred to Xxx Xxxxxxx and/or his nominees upon signing this agreement, agree to a further payment of $5,000.00 USD in cash or stock equivalent of Avalon shares to Xxx Xxxxxxx, ninety (90) days from the date of this agreement.
	(3)	Avalon will subsequently agree to further payments of $2,000.00 USD in cash or stock equivalent of Avalon shares to Xxx Xxxxxxx, payable on the 31st of every month for ten (10) months.
	(4)	Xxx Xxxxxxx will have the option to choose either cash or stock in all payments due to him and/or his nominees.

	(5)	The ten-percent (10%) retained interest of Xxx Xxxxxxx in the claims is non- assessable, meaning that Avalon cannot make a funds call to Xxx Xxxxxxx and /or his nominees for any reason whatsoever and cannot for any reason reduce the ten-percent (10%) retained interest. In the event of Avalon selling their interest in the claims, Xxx Xxxxxxx would continue to have a ten-percent (10%) non- assessable interest ownership under the same terms and conditions of this agreement, unless Xxx Xxxxxxx agrees to sell his interest to the purchaser of Avalon’s interest. In any event Avalon has a first right of refusal to purchase the retained interest of Xxx Xxxxxxx , should Xxx Xxxxxxx decide to sell his interest. In addition, and in the event that Avalon for any reason decides to sell their interest in the claims within thirteen (13) months from the date of signing this agreement, it will be entirely Avalon’s decision.
	(6)	Xxx Xxxxxxx will prepare and submit all required paperwork for yearly mining claim Assessment Work, State of Nevada fees for each claim, State of Nevada Mining Permits, State of Nevada exploration permits, State of Nevada Reclamation programs, and yearly reportable mining tax forms, etc., and any other paperwork that may be required by the Local, State or Federal governments. Avalon will pay the actual fees as required by a check made out to the proper government office to be submitted with the paperwork prepared by Xxx Xxxxxxx. Fees for the years 2003/2004 become due September 1 and the necessary amounts will be provided to Avalon by Xxx Xxxxxxx
	(7)	The State of Nevada requires that work must be performed on the claims each year before the 1st of September and recorded at the mining office. Avalon will be responsible to insure that this assessment work is accomplished. Xxx Xxxxxxx will assist Avalon, but the ultimate responsibility will be with Avalon. Mining Claim assessment work basically consists of performing a minimum of $100.00 worth of work per claim, per year before 1st day of September. Assessment work can be Labor, Equipment time, sampling, basically anything that improves the claims. Xxx Xxxxxxx must notify Avalon of requirements on a timely basis.
	(8)	In the event that Avalon does not perform the required assessment work on the claims by or before August 1st of any year, Xxx Xxxxxxx reserves the right to perform that work under Nevada State Law. Further, if Avalon does not pay the required fees by the State of Nevada on or before October 20th of any year, Xxx Xxxxxxx reserves the right to pay the fees under Nevada State Law.
	(9)	Avalon agrees to conduct itself concerning the claims in a manner so as to not cause the claims to suffer any undue legal or other undesirable problems.
	(10)	Avalon agrees to expand the claims boundaries and to make any new claims a part of this agreement, as might be necessary, to protect the rights of Xxx Xxxxxxx and the Avalon shareholders.

	(11)	The parties both Avalon and Xxx Xxxxxxx agree that time is of the essence in all particulars of this agreement.
	(12)	The parties both Avalon and Xxx Xxxxxxx agree that this agreement can be expanded by mutual consent upon the terms and conditions herein.
	(13)	The parties agree that this agreement constitutes the entirety of the agreement between the parties and any other agreements either verbal or written are of no consequence concerning this agreement other than some particular consultants / finders fees which apply and are understood by the principal parties.

Signed and Agreed to this 26th day of January 2004 by the parties,

/s/ Xxxxxx Xxxxxx		/s/ Xxx Xxxxxx
Avalon Gold Corporation		Xxx Xxxxxxx

By its: President