UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 4, 2017

KLONDEX MINES LTD.
(Exact name of registrant as specified in its charter)

British Columbia 001-37563 98-1153397
(State or other jurisdiction of    
incorporation or organization) (Commission File Number) (IRS Employer Identification No.)

6110 Plumas Street, Suite A
Reno, Nevada 89519
(Address of Principal Executive Offices)

(775) 284-5757
(Registrant's telephone number, including area code)

N/A
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( See General Instructions A.2 below):

[   ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[   ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
[   ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
[   ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b -2 of this chapter).

Emerging growth company [X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

[   ]


Explanatory Note

On May 4, 2017, Klondex Mines Ltd. (the “Company”) filed a Current Report on Form 8-K (the “Original Form 8-K”) that included certain exhibits for which confidential treatment was requested from the Securities and Exchange Commission (the “SEC”). The purpose of this amendment on Form 8-K (this “Amendment”) is to refile Exhibit 2.2, Exhibit 10.1, Exhibit 10.2, Exhibit 10.4, and Exhibit 10.5, in each case, to include certain information that was previously redacted. Exhibits 2.2, 10.1, 10.2, 10.4, and 10.5 attached hereto, supersede, respectively, Exhibits 2.2, 10.1, 10.2, 10.4, and 10.5 filed with the Original Form 8-K. No amendments are being made to Exhibit 2.1 and Exhibit 10.3 filed with the Original Form 8-K.

This Amendment should be read in conjunction with the Original Form 8-K and the Company’s other filings with the SEC.

Item 9.01 Financial Statements and Exhibits.

(d) List of Exhibits

Exhibit Description
2.1#† Membership Interest Purchase Agreement dated July 25, 2016*
2.2# Asset Purchase Agreement dated December 16, 2015*
10.1# Secured Revolving Facility Agreement Dated March 23, 2016
10.2 Amendment No. 1 to the Facility Agreement
10.3† Amendment No. 2 to the Facility Agreement
10.4# Amendment No. 3 to the Facility Agreement
10.5# Gold Purchase Agreement dated February 11, 2014

* Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the SEC, certain schedules to each of the Membership Interest Purchase Agreement and the Asset Purchase Agreement have been omitted. The registrant hereby agrees to furnish supplementally to the SEC, upon its request, any or all omitted schedules.

# Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been filed separately with the SEC.

†Previously filed with the registrant’s Current Report on Form 8-K filed with the SEC on May 4, 2017


SIGNATURE

            Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

  KLONDEX MINES LTD.
   
Date: July 27, 2017 By: /s/ Barry Dahl
  Name: Barry Dahl
  Title: Chief Financial Officer


EXHIBIT INDEX

Exhibit Description
2.1#† Membership Interest Purchase Agreement dated July 25, 2016*
2.2# Asset Purchase Agreement dated December 16, 2015*
10.1# Secured Revolving Facility Agreement Dated March 23, 2016
10.2 Amendment No. 1 to the Facility Agreement
10.3† Amendment No. 2 to the Facility Agreement
10.4# Amendment No. 3 to the Facility Agreement
10.5# Gold Purchase Agreement dated February 11, 2014

* Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the SEC, certain schedules to each of the Membership Interest Purchase Agreement and the Asset Purchase Agreement have been omitted. The registrant hereby agrees to furnish supplementally to the SEC, upon its request, any or all omitted schedules.

# Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been filed separately with the SEC.

†Previously filed with the registrant’s Current Report on Form 8-K filed with the SEC on May 4, 2017



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[REDACTED FOR PROPRIETARY REASONS]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

EXECUTION COPY

 

 

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

dated July 25, 2016

 

among

 

WATERTON PRECIOUS METALS FUND II CAYMAN, LP

 

and

 

WATERTON NEVADA SPLITTER, LLC

 

and

 

KLONDEX HOLDINGS (USA) INC.

 

and

 

KLONDEX MINES LTD.


TABLE OF CONTENTS

    Page
     
ARTICLE 1 CERTAIN DEFINITIONS   1
ARTICLE 2 BASIC TRANSACTIONS   7
                   2.1 Transactions to be Effected at Closing 7
                   2.2 Consideration 7
                   2.3 Allocation of Consideration 8
                   2.4 FIRPTA Certificate 8
                   2.5 Alternative Debt Financing 9
ARTICLE 3 RELATED MATTERS   9
                   3.1 Exclusion of Certain Assets 9
                   3.2 Assumed Debt 9
                   3.3 Receivables 9
                   3.4 Transfer Taxes 9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER   10
                   4.1 Organization of Seller and Seller Parent 10
                   4.2 Organization of the Company and Rock Creek 10
                   4.3 Authority 10
                   4.4 Capitalization; Subsidiaries 10
                   4.5 No Conflict; Required Consents 11
                   4.6 Governmental Permits 11
                   4.7 Litigation 11
                   4.8 Compliance with Legal Requirements 11
                   4.9 Books and Records 12
                   4.10 Liabilities 12
                   4.11 Tax Returns and Payments 12
                   4.12 Material Contracts 13
                   4.13 Assets and Properties 14
                   4.14 Surety Arrangements 15
                   4.15 Environmental Matters 15
                   4.16 Employee Matters 15
                   4.17 Intellectual Property 16
                   4.18 Insurance 16
                   4.19 Affiliate Contracts 16
                   4.20 Accounts Receivable 16
                   4.21 Bank Accounts and Attorneys 16
                   4.22 Benefit Plans 16
                   4.23 Money Laundering 17
                   4.24 Corrupt Practices 17
                   4.25 Investment Representations 17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES 18
                   5.1 Organization and Qualification; Tax Status 18
                   5.2 Authority 18

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                   5.3 No Conflict; Required Consents 19
                   5.4 Sufficiency of Funds 19
                   5.5 Buyer Parent Common Shares 19
                   5.6 Warrants and Warrant Shares 19
                   5.7 No Order 20
                   5.8 Investment Representations; Independent Investigation 20
ARTICLE 6 COVENANTS   20
                   6.1 Certain Affirmative Covenants of Seller 20
                   6.2 Confidentiality 23
                   6.3 Reasonable Efforts; Notices and Consents 24
                   6.4 HSR Act Filings 25
                   6.5 Tax Matters 26
                   6.6 Retention of Records 28
                   6.7 Surety Arrangements 29
                   6.8 Efforts to Obtain Financing 29
                   6.9 Assistance with Financial Statements and Technical Report 29
                   6.10 CFIUS Filing 30
ARTICLE 7 CONDITIONS PRECEDENT   31
                   7.1 Conditions to Buyer’s Obligations 31
                   7.2 Conditions to Seller’s Obligations 32
                   7.3 Frustration of Closing Conditions 33
                   7.4 Effect of Certain Waivers of Closing Conditions 33
ARTICLE 8 CLOSING   33
                   8.1 Closing 33
                   8.2 Seller’s Obligations 34
                   8.3 Buyer’s Obligations 35
ARTICLE 9 TERMINATION   36
                   9.1 Termination 36
                   9.2 Effect of Termination 37
ARTICLE 10 INDEMNIFICATION   37
                   10.1 Indemnification by Seller 37
                   10.2 Indemnification by Buyer 38
                   10.3 Procedure for Indemnified Third Party Claim 38
                   10.4 Determination of Indemnification Amounts; Time For Making Claims 39
                   10.5 Survival 40
                   10.6 Sole Remedy 40
                   10.7 Other Indemnification 40
ARTICLE 11 MISCELLANEOUS PROVISIONS   40
                   11.1 Expenses 40
                   11.2 Brokerage 40
                   11.3 Waivers 41
                   11.4 Notices 41
                   11.5 Entire Agreement; Amendments 42
                   11.6 Further Assurances 42

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                   11.7 Binding Effect; Benefits 42
                   11.8 Interpretation 43
                   11.9 Counterparts 43
                   11.10 Facsimile or .pdf Signature 43
                   11.11 Governing Law; Submission to Jurisdiction 43
                   11.12 Waiver of Jury Trial 44
                   11.13 Severability 44
                   11.14 Third Parties; Joint Ventures 44
                   11.15 Time of Essence 44
                   11.16 Construction 44
                   11.17 Attorneys’ Fees 45
                   11.18 Seller Parent Guarantee 45

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SCHEDULES

Schedule A Esmeralda Royalty Properties
Schedule B Hollister Royalty Properties
Schedule C Form of Warrant Certificate
Schedule D Form of Right of First Offer
Schedule 1.1 Affiliate Debt
Schedule 3.1 Excluded Assets
Schedule 4.4(b) No Conflict; Required Consents
Schedule 4.6 Governmental Permits
Schedule 4.7 Litigation
Schedule 0 Compliance with Legal Requirements
Schedule 0 Trial Balance
Schedule 4.10 Liabilities
Schedule 4.11 Tax Returns and Payments
Schedule 4.12(a) Material Contracts
Schedule 4.13(a) Properties
Schedule 4.13(b) Property Leases
Schedule 4.13(b) Royalties
Schedule 4.13(c) Water Rights
Schedule 4.13(d) Moveable Assets
Schedule 4.13(f) Easements
Schedule 4.13(g) Third Party Rights
Schedule 4.14 Surety Arrangements
Schedule 0 Environmental Matters
Schedule 4.16 Employee Matters
Schedule 0 Insurance
Schedule 0 Affiliate Contracts
Schedule 4.21 Bank Accounts and Attorneys
Schedule 4.22 Benefit Plans
Schedule 5.3 Required Buyer Consents
Schedule 6.3 Required Buyer Consents
Schedule 7.1(g) Required Consents

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TABLE OF DEFINED TERMS

TERM SECTION
Agreement Preamble
Affiliate Article 1
Affiliate Debt Article 1
Allocations Section 2.3
Alternative Cash Payment Section 2.5
Benefits Plans Section 4.22
Business Article 1
Business Day Article 1
Buyer Preamble
Buyer Indemnitees Section 10.1
Buyer Parent Preamble
Buyer Parties Preamble
Buyer Tax Returns Section 6.5(b)
Cash Purchase Price Section 2.2(a)
CFIUS Section 6.10(a)
CFIUS Approval Article 1
CFIUS Information Section 6.10(a)
Claim Fee Payments Section 6.1(a)(iii)
Closing Section 8.1
Closing Date Article 1
Code Article 1
Common Shares Section 2.2(e)
Company Recitals
Confidentiality Agreement Section 6.2(d)
Contract Article 1
Development Costs Article 1
DOJ Section 6.4(a)
EMG Article 1
Encumbrance Article 1
Environmental Law Article 1
Esmeralda Leasehold Interests Section 4.13(a)
Esmeralda Mine Recitals
Esmeralda Fee Properties Section 4.13(a)
Esmeralda Royalty Article 1
Esmeralda Unpatented Claims Section 4.13(a)
Excepted Seller Representations Section 10.4(a)
Fee Properties Section 4.13(a)
Financing Section 6.8
FTC Section 6.4(a)
GAAP Article 1
GBG Entities Article 1
GBG Royalty Article 1
GBG Royalty Agreement Article 1
Governmental Authority Article 1

v



TERM SECTION
Governmental Order Article 1
Governmental Permits Article 1
Hollister Fee Properties Section 4.13(a)
Hollister Leasehold Interests Section 4.13(a)
Hollister Mine Recitals
Hollister Royalty Article 1
Hollister Unpatented Claims Section 4.13(a)
HSR Act Section 4.4(b)
Indemnitee Section 10.3
Indemnitor Section 10.3
Intellectual Property Rights Article 1
Interest Section 2.1
Judgment Article 1
knowledge Article 1
Leasehold Interests Section 4.13(a)
Legal Requirements Article 1
Litigation Article 1
LOI Article 1
Losses Article 1
Material Adverse Effect Article 1
Material Contracts Section 4.12
Moveable Assets Section 4.13(d)
Note Section 2.2(a)
Note Amount Section 2.2(a)
NYSE MKT Article 1
Parties Preamble
Party Preamble
Person Article 1
Power Line Costs Article 1
Pre-Closing Tax Period Article 1
Properties Section 4.13(a)
Property Leases Section 4.13(b)
Purchased Assets Article 1
Reclamation Article 1
Registered Intellectual Property Article 1
Regulated Substances Article 1
Release Article 1
Releasing Affiliates 4.10
Remedial Action Article 1
Rock Creek Recitals
Rock Creek Fee Properties Section 4.13(a)
ROFO Agreement Section 8.2(j)
Royalty Obligation Article 1
Section 721 Article 1
Securities Act Section 4.25

vi



TERM SECTION
Security Documents Section 2.2(c)
Seller Preamble
Seller Indemnitees Section 10.2
Seller Parent Recitals
Seller Surety Arrangements Section 4.14
Seller Tax Returns Section 6.1(a)
Straddle Period Article 1
Surety Arrangements Article 1
Tax Returns Article 1
Taxes Article 1
Threshold Amount Section 10.4(a)
Trial Balance Section 0
Trial Balance Liabilities Article 1
TSX Article 1
Unpatented Claims Section 4.13(a)
Valuation Firm Section 2.3
waiving party Section 7.4
Warrant Shares Article 1
Warrants Article 1
Water Rights Section 4.13(c)

vii


MEMBERSHIP INTEREST PURCHASE AGREEMENT

This Membership Interest Purchase Agreement (this “ Agreement ”) is made and entered into as of July 25, 2016, by and among Waterton Precious Metals Fund II Cayman, LP, a Cayman Islands exempted limited partnership (“ Seller Parent ”), Waterton Nevada Splitter, LLC, a Nevada limited liability company (“ Seller ”), Klondex Holdings (USA) Inc., a Nevada corporation (“ Buyer ”), and Klondex Mines Ltd., a British Columbia corporation (“ Buyer Parent ”). Buyer and Buyer Parent sometimes are referred to in this Agreement collectively as the “ Buyer Parties ” and each individually as a “ Buyer Party ”. Seller Parent, Seller and the Buyer Parties sometimes are referred to in this Agreement collectively as the “ Parties ” and each individually as a “ Party ”.

Recitals

A.

Seller Parent, directly and indirectly through one or more subsidiaries, owns all of the issued and outstanding membership interests of Seller.

   
B.

Seller is the sole member of Carlin Resources, LLC, a Nevada limited liability company (the “ Company ”).

   
C.

The Company is the sole member of Rock Creek Conservancy, LLC, a Nevada limited liability company (“ Rock Creek ”).

   
D.

The Company and Rock Creek own and operate the Hollister mine in Elko County, Nevada, United States of America (the “ Hollister Mine ”), the Esmeralda mine and ore milling facility in Mineral County, Nevada, United States of America (the “ Esmeralda Mine ”) and other properties in Nevada, United States of America.

   
E.

Buyer Parent, through one or more subsidiaries, indirectly owns all of the issued and outstanding capital stock of Buyer.

   
F.

Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, Seller’s entire membership interest in the Company, on the terms and conditions of this Agreement.

Agreements

In consideration of the mutual covenants in this Agreement, the Parties agree as follows:

ARTICLE 1
CERTAIN DEFINITIONS

As used in this Agreement, the following terms, whether in singular or plural forms, shall have the following meanings:

Affiliate ” means with respect to any Person, any other Person controlling, controlled by or under common control with such Person, with “control” for such purpose meaning the possession, directly or indirectly, of the power to direct or cause the direction of the management


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and policies of a Person, whether through the ownership of voting securities or voting interests, by contract or otherwise.

Affiliate Debt ” means the indebtedness of the Company to its Affiliates as of the date of this Agreement, as set forth on Schedule 1.1.

Business ” means the ownership of the Hollister Mine and the Esmeralda Mine.

Business Day ” means any day other than Saturday, Sunday or a day on which banking institutions in Toronto, Ontario or Reno, Nevada are required or authorized to be closed.

CFIUS Approval ” means (i) Buyer and Seller shall have received a written notification from CFIUS that it has determined that (A) the acquisition of the Company by the Buyer is not a covered transaction under Section 721; or (B) it has concluded its review (and any applicable investigation) under Section 721 and has determined that there are no unresolved national security concerns with respect to the acquisition of the Company by the Buyer, (ii) the parties shall have received a decision by the President of the United States not to suspend, restrict or prohibit the transactions contemplated by this Agreement, or (iii) the President of the United States, having received a report from CFIUS, has not taken any action within 15 days after having received such report.

Closing Date ” means the date on which Closing occurs.

Code ” means the U.S. Internal Revenue Code of 1986, as amended.

Contract ” means any written contract, mortgage, deed of trust, bond, indenture, lease, license, note, franchise, certificate, option, warrant, right or other instrument, document, obligation or agreement, and any oral obligation, right or agreement.

Development Costs ” means all outstanding payables and other liabilities of the Company or Rock Creek to Seller, Seller Parent, EMG, Waterton Global Resource Management, Inc. or their respective Affiliates, including but not limited to those relating to legal, labour, powerline design, project supervision, environmental, permitting and commissioning costs, that are attributable to development activities, including but not limited to costs relating to transmission lines on or adjacent to the properties of the Company or Rock Creek, prior to Closing.

EMG ” means Elko Mining Group LLC, a Nevada limited liability company.

Encumbrance ” means any security interest, lien, mortgage, indenture, pledge, charge, right of first refusal, easement, lease or sub-lease, right of way, encroachment, deed of trust, restriction on transferability or other similar restriction, option or other encumbrance, whether imposed by agreement, law or otherwise, whether of record or otherwise, together with any agreement to grant any of the foregoing rights or interests.

Environmental Law ” means any Legal Requirement aimed at or in any way relating to pollution, protection or conservation of public health, safety or welfare or the environment, including those relating to emissions, discharges, Releases or threatened Releases of Regulated Substances into the environment (including ambient air, surface water, ground water or land), or


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otherwise relating to the manufacture, processing, distribution, use, reuse, recycling, treatment, storage, disposal, transport or handling of Regulated Substances, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.) the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), the Emergency Planning and Community Right to Know Act (42 U.S.C. § 11001 et seq.), and the Safe Drinking Water Act (42 U.S.C. § 300 et seq.), and all counterpart or other similar Nevada laws, as each has been or may be amended, and the regulations promulgated pursuant thereto.

Environmental Liabilities ” means all liabilities and obligations (i) for the Reclamation of any of the Properties or with respect to any Remedial Action in connection with any of the Properties or the Business, and (ii) associated with noncompliance with Environmental Laws (including fines, penalties, damages and remedies) with respect to any of the Properties or the Business, in each case regardless of when the operations or activities which gave rise to such liabilities or obligations occurred or arose.

Esmeralda Royalty ” means the 3% Net Smelter Returns Royalty on all mined minerals extracted from the properties forming the Esmeralda Mine described in Schedule A, payable to Seller.

GAAP ” means United States generally accepted accounting principles.

GBG Entities ” means, collectively, Rodeo Creek Gold Inc., Antler Peak Gold Inc., Hollister Venture Corp., and Touchstone Resources Company.

GBG Royalty ” means the 15% net profits royalty payable pursuant to the GBG Royalty Agreement.

GBG Royalty Agreement ” means the net profits royalty agreement dated May 20, 2013 between the Company and each of the GBG Entities, as assigned by the GBG Entities to Credit Suisse AG, and as further amended by an amending agreement dated June 17, 2016 between the Company and Credit Suisse AG.

Governmental Authority ” means the United States of America or any other country or sovereign entity, any state, commonwealth, territory or possession thereof, and any political subdivision or quasi-governmental authority of any of the same, including courts, tribunals, departments, commissions, boards, bureaus, agencies, counties, municipalities, provinces, parishes, other instrumentalities and bodies exercising any administrative, executive, judicial, legislative, police, regulatory, expropriation or taxing authority, domestic or foreign, or self-regulatory organization or stock exchange having jurisdiction in the relevant circumstances.

Governmental Order ” means any final order, writ, judgment, injunction, decree, stipulation or award entered by or with any Governmental Authority.


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Governmental Permits ” means franchises, approvals, authorizations, permits, licenses, easements, registrations, qualifications, leases, variances and similar rights obtained from any Governmental Authority.

Hollister Royalty ” means the 1% Net Smelter Returns Royalty on all mined minerals extracted from the properties forming the Hollister Mine described in Schedule B (underground, open pit or otherwise), payable to such Person or Persons as are designated by Seller after the Company has recovered 500,000 ounces of gold from such properties.

Intellectual Property Rights ” means all intellectual property rights, including Registered Intellectual Property, trademarks, trade names, brand names, service marks, domain names, logos, slogans, trade styles, trade dress and other indicia or origin, copyrights, copyrightable works, trade secrets, know-how, processes, methods, designs, plans, specifications, data, inventions and discoveries (whether or not patentable and reduced to practice), improvements, confidential or proprietary information, customer data, and all rights with respect to any of the foregoing.

Judgment ” means any judgment, writ, order, injunction, award, or decree of any court, arbitrator, judge, justice or magistrate, including any bankruptcy court or judge or other Governmental Order.

knowledge ” of (i) Seller, with respect to any matter, means the actual knowledge of any officer of Seller, the Company or Rock Creek of such matter, after making due and diligent inquiry of the individuals with direct supervisory responsibility for such matter as reasonably necessary to inform themselves as to the relevant matters, and (ii) Buyer, with respect to any matter, means the actual knowledge of any officer of Buyer of such matter, after making due and diligent inquiry of the individuals with direct supervisory responsibility for such matter as reasonably necessary to inform themselves as to the relevant matters.

Legal Requirements ” means any applicable statute, ordinance, code or other law, rule, regulation or order, enacted, adopted or promulgated by any Governmental Authority, including Judgments.

Litigation ” means any claim, action, suit, proceeding, arbitration, hearing or other activity or procedure that could result in a Judgment.

LOI ” means the non-binding letter of intent dated June 24, 2016 between Buyer Parent and Seller in respect of the proposed acquisition of the Interest.

Losses ” means any claims, losses, liabilities, damages, Encumbrances, penalties, costs and expenses, including interest which may be imposed in connection therewith, and reasonable fees and disbursements of counsel.

Material Adverse Effect ” means any event, change, circumstance, occurrence, development, effect or state of facts that (i) is or would reasonably be expected to be materially adverse to the business (as currently conducted), assets, liabilities, condition (financial or otherwise) or results of operations of the Company, taken as a whole, or (ii) prevents or materially delays, any of the transactions contemplated by this Agreement or would reasonably be expected to do so;


- 5 -

provided, however, that “Material Adverse Effect” shall not include any event, change, circumstance, occurrence, development, effect or state of facts, directly or indirectly, arising out of or attributable to: (A) any events, changes, circumstances, occurrences, developments, effects or states of fact in the United States or foreign economies or securities or financial markets in general, except to the extent any such events, occurrences, developments, facts, conditions or changes have affected the Company and other similarly situated industry participants operating in the mining industry and have had a disproportionately adverse effect on the Company or the business (as currently conducted) or assets of the Company, taken as a whole, as compared to other similarly situated industry participants operating in the mining industry; (B) any events, changes, circumstances, occurrences, developments, effects or states of fact that affect the gold mining industry generally, including the market prices of precious metals, except to the extent any such events, occurrences, developments, facts, conditions or changes have affected the Company and other similarly situated industry participants operating in the mining industry and have had a disproportionately adverse effect on the Company or the business (as currently conducted) or assets of the Company, taken as a whole, as compared to other similarly situated industry participants operating in the mining industry; (C) any events, changes, circumstances, occurrences, effects or states of fact resulting from an action required or permitted by this Agreement; (D) any matter of which either Buyer Party is aware on the date of this Agreement; (E) the effect of any changes in applicable Legal Requirements or accounting rules, including GAAP; (F) any events, changes, circumstances, occurrences, effects or states of fact resulting from the announcement of this Agreement or the transactions contemplated hereby; or (G) conditions caused by acts of terrorism or war (whether or not declared) or any natural or man-made disaster or other acts of God, except to the extent any such conditions have affected the Company and other similarly situated industry participants operating in the mining industry and have had a disproportionately adverse effect on the Company or the business (as currently conducted) or assets of the Company, taken as a whole, as compared to other similarly situated industry participants operating in the mining industry.

NYSE MKT ” means the NYSE MKT LLC.

Person ” means any natural person, Governmental Authority, corporation, general or limited partnership, joint venture, limited liability company, trust, association or unincorporated entity of any kind.

Power Line Costs ” means all costs that are attributable to the construction of the power line at the Hollister Mine, including legal, labour, powerline design, project supervision, permitting and commissioning costs, whether incurred prior to or after Closing.

Pre-Closing Tax Period ” means a Tax period ending on or before the Closing Date.

Purchased Assets ” means the assets and properties of the Company and Rock Creek, including without limitation, the Hollister Mine and the Esmeralda Mine, but excluding the assets described in Schedule 3.1.

Reclamation ” means the reclamation, restoration or closure of any facility or land utilized in any exploration, mining or processing operation required by any Legal Requirement or any Governmental Permits.


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Registered Intellectual Property ” means all patents and patent applications, registered trademarks and trademark applications, and service marks and registered copyrights and copyright applications.

Regulated Substances ” means any pollutants, contaminants, chemicals, industrial, toxic, hazardous or noxious substances or wastes which are regulated by any Governmental Authority or Legal Requirements, including but not limited to: (i) any petroleum or petroleum compound (refined or crude), flammable substance, explosive, radioactive material or any other material or pollutant which pose a hazard or potential hazard to real property or Persons; (ii) asbestos or any asbestos-containing material of any kind or character; (iii) polychlorinated biphenyls, as regulated by the Toxic Substances Control Act , 15 U.S.C. § 2601 et seq.; (iv) any materials or substances designated as “hazardous substances” pursuant to the Clean Water Act , 33 U.S.C. § 1251 et seq.; (v) “economic poison,” as defined in the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 135 et seq.; (vi) “chemical substance,” “new chemical substance” or “hazardous chemical substance or mixture” pursuant to the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; (vii) “hazardous substances” pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act , 42 U.S.C. § 9601 et seq.; and (viii) “hazardous waste” pursuant to the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.

Release ” means any release, spill, emission, leaking, pumping, poring, injection, deposit, dumping, emptying, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, or into or out of any property.

Remedial Action ” means all actions including any capital expenditures undertaken to (i) clean up, remove, treat or in any other way address any Regulated Substances; (ii) prevent the Release or threat of Release, or minimize the further Release of any Regulated Substances so it does not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (iii) perform pre-remedial studies and investigations or post-remedial monitoring and care; or (iv) to correct a condition of noncompliance with Environmental Laws.

Royalty Obligation ” means all obligations of the Company under the GBG Royalty, including, for greater certainty, the Disposition Royalty Payment (as defined in the GBG Royalty Agreement).

Section 721 ” means Section 721 of the Defense Production Act of 1950 , as amended.

Straddle Period ” means a Tax period beginning on or before the Closing Date and ending after the Closing Date.

Surety Arrangements ” means bonds, letters of credit, guarantees and other instruments or arrangements securing or guarantying performance of obligations.

Tax Returns ” means all Tax returns, amended Tax returns, statements, reports, declarations and other forms and documents filed or required to be filed with any tax authority with respect to any Tax period.


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Taxes ” means all levies, charges and assessments of any kind or nature imposed by any Governmental Authority, including but not limited to all income, alternative minimum, sales, use, ad valorem, value added, franchise, severance, net or gross proceeds, withholding, payroll, social security, unemployment, employment, excise, or property taxes, together with any interest thereon and any penalties, additions to tax, or additional amounts applicable thereto.

Trial Balance Liabilities ” means, collectively, the liabilities, other than asset retirement obligations, of the Company or Rock Creek, as the case may be, disclosed on the trial balance delivered by Seller to Buyer at Closing pursuant to Section 8.2(j) .

TSX ” means the Toronto Stock Exchange.

Warrant Shares ” means the common shares in the capital of Buyer Parent issuable upon exercise of the Warrants.

Warrants ” means common share purchase warrants to be granted to Seller or its designee by Buyer Parent pursuant to Section 2.2(d), with each such warrant being exercisable for one Warrant Share.

ARTICLE 2
BASIC TRANSACTIONS

2.1         Transactions to be Effected at Closing

Subject to the terms and conditions of this Agreement, at 9:00 a.m. (Reno time) on the Closing Date, Seller shall sell and convey to Buyer, and Buyer shall purchase for the consideration described below, free and clear of all Encumbrances, Seller’s entire membership interest in the Company (the “ Interest ”):

2.2         Consideration

As consideration for the Interest, at Closing, Buyer or Buyer Parent, as applicable, shall take the following actions:

  (a)

Buyer shall pay Seller, by wire transfer of immediately available funds to an account of Seller designated by Seller, a sum equal to $63,000,000 (the “ Cash Purchase Price ”);

     
  (b)

subject to Section 2.5, Buyer shall execute and deliver to Seller a secured promissory note (the “ Note ”) in the aggregate principal amount of $17,000,000 (the “ Note Amount ”), which Note shall (i) have a four year term, (ii) accrue interest at a rate of 6% per annum, (iii) be repaid in three equal installments on the second, third and fourth anniversaries of the Closing Date, and (iv) otherwise be in form and substance mutually acceptable to Buyer and Seller;

     
  (c)

Buyer and the Company shall execute and deliver security documents in form and substance mutually acceptable to Buyer and Seller (the “ Security Documents ”),



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by which the Company shall grant a security interest over the Properties forming the Hollister Mine in order to secure Buyer’s obligations under the Note;

     
  (d)

Buyer shall direct Buyer Parent to, and Buyer Parent shall, issue to Seller or its designee 5,000,000 Warrants, which Warrants shall be represented by a certificate substantially in the form of the warrant certificate set forth in Schedule D hereto and shall (i) have a 15 year term from the date the Warrants are first exercisable, (ii) have an exercise price equal to a 20% premium on the pricing of the Financing, (iii) include a forced conversion provision that requires the holder to convert the Warrants if Buyer Parent’s common shares trade at a 100% premium to the exercise price of the Warrants for 60 consecutive trading days on the stock exchange or other market on which the trading in the Common Shares primarily occurs at such time, and (iv) be exercisable at any time after the date that is six months after the Closing Date and prior to their expiry time; and

     
  (e)

Buyer shall direct Buyer Parent to, and Buyer Parent shall, issue to Seller or its designee 2,600,000 common shares in the capital of Buyer Parent (the “ Common Shares ”), the sale of which will be restricted for a period of 23 consecutive calendar months from the Closing Date.

2.3        Allocation of Consideration

Promptly following Closing Buyer shall engage Duff & Phelps Corp. or such other valuation firm determined by Buyer and reasonably acceptable to Seller (in either case, the “ Valuation Firm ”) to determine the allocations of consideration for the Purchased Assets, including any other amounts treated as consideration therefor for applicable financial accounting purposes, on a class-by-class basis among the tangible, intangible and real property assets comprising the Purchased Assets (the “ Allocations ”). The Valuation Firm shall be asked to prepare the Allocations in accordance with the applicable financial accounting requirements and the requirements of Section 1060 of the Code and the Treasury Regulations promulgated thereunder, and to include a fair market valuation of the Warrants and Common Shares. Buyer shall provide to Seller a draft of such Allocations prepared by the Valuation Firm within ninety (90) days after the Closing Date. Buyer will consider in good faith and, at the request of Seller, will forward to the Valuation Firm, any comments received from Seller in relation to such draft Allocations provided such comments are received within thirty (30) days following the delivery of the draft Allocations to Seller. Buyer shall then ask the Valuation Firm to prepare the final Allocations and, when available, Buyer shall promptly provide the final Allocations to Seller. Buyer and Seller shall report for all federal income tax and financial statement purposes in accordance with the Allocations; provided, however, that that nothing contained herein shall prevent any party from settling, or require any party to litigate before any court, any challenge, proposed deficiency or adjustment by any taxing authority based upon or arising out of the Allocations.

2.4         FIRPTA Certificate

On or prior to the Closing Date, Seller shall deliver to Buyer a certificate, in a form reasonably satisfactory to Buyer and its counsel, certifying that Seller is not a foreign person in accordance with Treasury Regulations under Section 1445 of the Code. If Seller has not provided the


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certification described above to Buyer on or prior to the Closing Date, Buyer shall be permitted to withhold portions of the Cash Purchase Price and other consideration payable under Section 2.2, and pay over such withheld amounts to the Internal Revenue Service in accordance with the requirements of Section 1445 of the Code and administrative guidance thereunder.

2.5         Alternative Debt Financing

If Buyer and Seller cannot come to a mutual agreement regarding the form of the Note or if Buyer is unable to obtain any third party consents required by the Buyer Parties in connection with the entering into of the Note or the incurrence of any indebtedness hereunder, Buyer shall be permitted at its discretion to obtain alternative financing of the Note Amount, in which case: (i) at Closing Buyer shall deliver to Seller a cash payment (the “ Alternative Cash Payment ”) in the amount of the Note Amount; and (ii) effective as of the receipt by Seller of the Alternative Cash Payment, Buyer shall have no further obligations to deliver the Note under Section 2.2(a) and Section 8.3(b) .

ARTICLE 3
RELATED MATTERS

3.1         Exclusion of Certain Assets

Prior to Closing, Seller shall cause the Company to convey to Seller or other Affiliates of Seller, all rights, titles and interests of the Company in or to the assets described on attached Schedule 3.1.

3.2        Assumed Debt

Effective as of immediately prior to Closing, Seller shall assume, or cause Affiliates of Seller other than the Company and Rock Creek, to assume all of the Affiliate Debt, the Trial Balance Liabilities and the Royalty Obligation. At Closing, Seller shall deliver to the Company and Rock Creek releases of all obligations with respect to the Affiliate Debt, the Trial Balance Liabilities and the Royalty Obligation in form reasonably acceptable to Buyer.

3.3         Receivables

Prior to Closing, Seller shall cause all receivables and other amounts owing to the Company or Rock Creek from any Affiliates of the Company or Rock Creek or any of their respective related parties to be transferred to Seller or an Affiliate of Seller other than the Company and Rock Creek.

3.4        Transfer Taxes

Buyer and Seller shall each bear one half of all sales, use, transfer, recording and similar fees and Taxes (for certainty, excluding Income Taxes) payable in connection with the transfer of the Interest pursuant to this Agreement, and shall timely file all Tax Returns required to be filed in connection with such Taxes. For certainty, all such Taxes incurred by Seller, the Company and Rock Creek or any other Affiliate of Seller resulting from the transactions described in Sections 3.1 and 0 shall be borne exclusively by Seller.


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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to the Buyer Parties as follows:

4.1         Organization of Seller and Seller Parent

Seller is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Nevada, and has all requisite power and authority to hold its assets, conduct its activities as currently conducted and to execute, deliver and perform its obligations under this Agreement. Seller Parent is an exempted limited partnership duly organized, validly existing, and in good standing under the laws of the Cayman Islands, and has all requisite power and authority to hold its assets, conduct its activities as currently conducted and to execute, deliver and perform its obligations under this Agreement.

4.2        Organization of the Company and Rock Creek

The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Nevada, and has all requisite power and authority to hold its assets and conduct its activities as currently conducted. Rock Creek is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Nevada, and has all requisite power and authority to hold its assets and conduct its activities as currently conducted.

4.3        Authority

The execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby by Seller and Seller Parent have been duly and validly authorized by all necessary action on the part of Seller and Seller Parent. This Agreement has been duly and validly executed and delivered by each of Seller and Seller Parent, and is the valid and binding obligation of each of Seller and Seller Parent, enforceable against each of Seller and Seller Parent in accordance with its terms.

4.4         Capitalization; Subsidiaries

  (a)

All of the outstanding membership interests in the Company (comprising the Interest) are held beneficially and of record by Seller. Except for the Interest, there are not outstanding any membership interests in the Company, or any options, warrants, Encumbrances, right of first refusal, pre-emptive right, subscription right or other rights of any Person (other than Buyer pursuant to this Agreement) to acquire, or any instruments that are convertible into, any membership interests in or other equity interests of the Company.

     
  (b)

The Company does not have any direct or indirect subsidiaries other than Rock Creek. All of the outstanding membership interests in Rock Creek are held beneficially and of record by the Company. Except for the membership interests in Rock Creek held by the Company, there are not outstanding any membership interests in Rock Creek or any options, warrants, Encumbrances, right of first



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refusal, pre-emptive right, subscription right or other rights of any Person to acquire, or any instruments that are convertible into, any membership interests in or other equity interests of Rock Creek.

4.5         No Conflict; Required Consents

Except (i) as described on Schedule 4.4(b), (ii) for compliance with and filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), and (iii) if Buyer and Seller submit a joint filing with CFIUS, the CFIUS Approval, the execution, delivery and performance by Seller and Seller Parent of this Agreement do not and will not: (A) conflict with or violate any provision of the charter or bylaws or other organizational or constituent documents of Seller Parent, Seller, the Company or Rock Creek; (B) except as would not reasonably be expected to result in a Material Adverse Effect, violate any provision of any Legal Requirements; (C) except as would not reasonably be expected to result in a Material Adverse Effect, result in a breach of or constitute a default or an event creating rights of acceleration, termination, modification or cancellation or a loss of rights under (with or without the giving of notice or lapse of time or both) any Contract to which Seller, the Company or Rock Creek is a party or by which Seller, the Company or Rock Creek is bound or affected or any Governmental Permit held by the Company or Rock Creek or by which the Company or Rock Creek is bound; (D) result in the creation or imposition of any Encumbrance against or upon the Interest, the membership interests in Rock Creek or the assets or properties of the Company or Rock Creek; or (E) require any consent, approval or authorization of any Governmental Authority or other Person, except any such consents, approvals or authorizations the failure of which to be obtained would not reasonably be expected to result in a Material Adverse Effect.

4.6         Governmental Permits

Schedule 4.6 includes a description of all material Governmental Permits held by the Company. Rock Creek does not hold any material Governmental Permits. The Company is currently in compliance with the Governmental Permits set forth on Schedule 4.6 and with the Legal Requirements applicable to such Governmental Permits in all material respects.

4.7         Litigation

Except as described on Schedule 4.7, as of the date of this Agreement (i) there is no material Litigation pending or, to Seller’s knowledge, threatened in writing against the Company or Rock Creek or affecting the Company, Rock Creek, the Interest, the Business as currently conducted or the assets of Rock Creek or the Company, and (ii) there are no material outstanding unsatisfied Judgments against the Company or Rock Creek or affecting the Company, Rock Creek, the Interest, the Business as currently conducted or the assets of Rock Creek or the Company.

4.8        Compliance with Legal Requirements

Except as described on Schedule 0, the ownership, leasing and use of the assets and properties of the Company and Rock Creek as they are currently owned, leased and used do not violate in any material respect any Legal Requirements.


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4.9        Books and Records

Attached as Schedule 0 is a detailed trial balance setting forth the assets and liabilities of the Company and Rock Creek as of the date of this Agreement (the “ Trial Balance ”). The Trial Balance has been prepared in accordance with the books and records of the Company and Rock Creek and presents fairly, in all material respects, the assets and liabilities of the Company and Rock Creek (except for the liabilities described on Schedule 4.10) as of the date of this Agreement. The limited liability company records and minute books of the Company and Rock Creek are accurate and complete in all material respects.

4.10        Liabilities

Except as described in the Trial Balance or on Schedule 4.10, as of the date of this Agreement neither the Company nor Rock Creek has any liabilities that are required to be reflected as liabilities on a balance sheet prepared in accordance with GAAP, except non-delinquent obligations for trade payables, accrued but unpaid employment Tax liabilities incurred in the ordinary course of business and other obligations incurred in the ordinary course of business, in each case, having an aggregate value of not more than $50,000. Other than Seller Parent, Borealis Holdings LLC, Seller, EMG and Waterton Global Resource Management, Inc. (the “ Releasing Affiliates ”), no Affiliate of any Releasing Affiliate has any claims, demands, damages, debts, liabilities, obligations, costs, expenses, actions and causes of action relating to the Company or Rock Creek, the assets or properties of the Company or Rock Creek, the Hollister Mine, the Esmeralda Mine or the business or operations of the Company or Rock Creek, the Hollister Mine or the Esmeralda Mine.

4.11      Tax Returns and Payments

Except as described on Schedule 4.11:

  (a)

All material Taxes required to be paid by the Company and Rock Creek have been timely paid or caused to be paid through the date hereof and as of the Closing;

     
  (b)

Each of the Company and Rock Creek has filed or caused to be filed in a timely manner (within any applicable extension periods) all Tax Returns required to be filed by it with the appropriate Governmental Authority in all jurisdictions in which such Tax Returns are required to be filed, and such Tax Returns were complete and correct in all material respects as of the time of filing;

     
  (c)

All material Taxes required to be paid with respect to the Purchased Assets have been timely paid or caused to be paid through the date hereof and as of the Closing;

     
  (d)

The Seller has filed or caused to be filed in a timely manner (within any applicable extension periods) all Tax Returns required to be filed by it with respect to the Purchased Assets with the appropriate Governmental Authority in all jurisdictions in which such Tax Returns are required to be filed, and such Tax Returns were complete and correct in all material respects as of the time of filing;



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  (e)

There are no ongoing Tax audits and no waivers of statutes of limitations have been given or requested with respect to the Company, Rock Creek or Seller with respect to any of the Purchased Assets;

     
  (f)

The assets and properties of the Company and Rock Creek are not subject to any Tax liens, other than liens for Taxes not yet due and payable or being contested in good faith through appropriate proceedings and for which adequate reserves are maintained in the appropriate financial statements;

     
  (g)

No unresolved deficiencies or additions to Taxes have been proposed, asserted or assessed in writing against the Company, Rock Creek or any of the Purchased Assets by any Governmental Authority;

     
  (h)

No claim has been made in writing within the last three years by any Governmental Authority in a jurisdiction in which the Company, Rock Creek and Seller do not file Tax Returns that the Company, Rock Creek or Seller is or may be subject to taxation by that jurisdiction;

     
  (i)

All material amounts of Taxes required to be withheld or collected by Company or Rock Creek in connection with amounts paid or owing to any employee, independent contractor, creditor or stockholder have been withheld and collected and, to the extent required by law, timely paid to the appropriate Governmental Authority;

     
  (j)

Each of the Company and Rock Creek is classified as a disregarded entity for federal and Nevada income Tax purposes and will continue to be classified as a disregarded entity for federal income Tax purposes through the Closing; and

     
  (k)

Seller is a U.S. domestic partnership for federal income Tax purposes and will continue to be classified as a U.S. domestic partnership through the Closing and until the Note is satisfied in full.


4.12

Material Contracts

     
(a)

Except for Contracts described on Schedule 4.12(a) (collectively, including the Property Leases to which the Company is a party, the “ Material Contracts ”), the Company is not a party to any of the following: (i) leases or subleases of real property or material personal property (whether as lessor or lessee); (ii) material Contracts with consultants or independent contractors; or (iii) Contracts other than those described in any other clause of this paragraph that are material to the Company, the Business or to the ownership, operation, closure, remediation or Reclamation of the properties of the Company. Rock Creek is not a party to any of the following: (i) leases or subleases of real property or personal property (whether as lessor or lessee); (ii) Contracts with consultants or independent contractors; or (iii) Contracts other than those described in any other clause of this paragraph that are material to Rock Creek, the Business or to the ownership, operation, closure, remediation or Reclamation of the properties of Rock Creek.



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  (b)

Seller has made available to Buyer true and correct copies of each of the Material Contracts, including all amendments or modifications thereof. Each of the Material Contracts is valid, in full force and effect, and, to the knowledge of Seller, enforceable in accordance with its terms against the parties thereto other than the Company or Rock Creek. There has not occurred any material default (without regard to lapse of time, the giving of notice, the election of any Person other than the Company or Rock Creek, or any combination thereof) by the Company or Rock Creek nor, to the knowledge of Seller, has there occurred any material default (without regard to lapse of time, the giving of notice, the election of the Company or Rock Creek, or any combination thereof) by any Person other than the Company or Rock Creek under any of the Material Contracts.

4.13        Assets and Properties

To Seller’s knowledge:

  (a)

Schedule 4.13(a) includes a description of all real property and mining claims held by the Company or Rock Creek, including all (i) patented mining claims and other fee interests in real property held by the Company and forming part of the Hollister Mine (collectively, the “ Hollister Fee Properties ”), patented mining claims and other fee interests in real property held by the Company and forming part of the Esmeralda Mine (collectively, the “ Esmeralda Fee Properties ”) and fee interests in real property held by Rock Creek (collectively, the “ Rock Creek Fee Properties ” and, together with the Hollister Fee Properties and the Esmeralda Fee Properties, collectively, the “ Fee Properties ”), (ii) unpatented mining claims held by the Company and forming part of the Hollister Mine (collectively, the “ Hollister Unpatented Claims ”) and unpatented mining claims held by the Company and forming part of the Esmeralda Mine (collectively, the “ Esmeralda Unpatented Claims ” and together with the Hollister Unpatented Claims, collectively, the “ Unpatented Claims ”) and (iii) leasehold interests in real property, including fee interests and patented and unpatented mining claims, held by the Company and forming part of the Hollister Mine (collectively, the “ Hollister Leasehold Interests ”) and leasehold interests in real property, including fee interests and patented and unpatented mining claims, held by the Company and forming part of the Esmeralda Mine (collectively, the “ Esmeralda Leasehold Interests ” and together with the Hollister Leasehold Interests, collectively, the “ Leasehold Interests ”). The Fee Properties, the Unpatented Claims and the Leasehold Interests are referred to collectively in this Agreement as the “ Properties ”. Rock Creek does not hold any patented mining claims, unpatented mining claims or leasehold interests in real property.

     
  (b)

The Leasehold Interests are leased pursuant to the leases (including any amendments or modifications thereof) described on Schedule 4.13(b) (the “ Property Leases ”).



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  (c)

Schedule 4.13(b) includes a description of all royalties, overriding royalties, net profit interests and payments on or out of production to which any of the Properties is subject.

     
  (d)

Schedule 4.13(c) includes a description of all material water rights held by the Company (collectively, the “ Water Rights ”). Rock Creek does not hold any material Water Rights.

     
  (e)

Schedule 4.13(d) identifies, as of the date hereof, each asset, piece of equipment, vehicle and other tangible property and property, other than interests in real property, owned or leased by the Company that, to Seller’s knowledge, has a fair market value of at least $25,000 (the “ Moveable Assets ”). Rock Creek does not own any material assets or properties, other than interests in real property.

     
  (f)

All easements and rights of way that are material to the Company’s and Rock Creek’s conduct of operations as currently conducted are identified at Schedule 4.13(f) and are valid and in full force and effect.

     
  (g)

Except as disclosed in Schedule 4.13(g), there are no material farm-in or earn-in rights, back-in rights, rights of first refusal, rights of first offer, option rights, or area of interest rights affecting the Properties or the assets of the Company or Rock Creek.

4.14      Surety Arrangements

Schedule 4.14 describes all Surety Arrangements maintained by the Company, Seller or any Affiliate of Seller with respect to the operation, closure, Reclamation or remediation of all owned, leased or operated properties of the Company or Rock Creek, including the Hollister Mine and the Esmeralda Mine (collectively, “ Seller Surety Arrangements ”). The Governmental Authorities have not called on the Seller Surety Arrangements. Rock Creek does not maintain any Surety Arrangements.

4.15        Environmental Matters

Except as described on Schedule 0, to Seller’s knowledge (i) the operations of the Company and Rock Creek as currently conducted are in material compliance with all applicable Environmental Laws; and (ii) there have been no Releases of reportable quantities of Regulated Substances on, from or under any property currently or formerly owned, operated or leased by the Company, occurring in material violation of Environmental Laws during the Company’s ownership of such property.

4.16        Employee Matters

Schedule 4.16 includes the names and positions of all employees of the Company were employed as of December 31, 2015, as well as employees who subsequently were hired and were employed as of June 30, 2016. Neither the Company nor Rock Creek is a party to, or bound by, any collective bargaining agreements. Except as set forth in Schedule 4.16, Rock Creek and the Company are in material compliance with all applicable laws, ordinances and regulations


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relating to employment and employment practices, including but not limited to those relating to the calculation and payment of wages, equal employment opportunity, affirmative action and other hiring practices, occupational safety and health, workers’ compensation, unemployment, the payment of taxes, the National Labor Relations Act , and the Worker Adjustment and Retraining Notification Act .

4.17      Intellectual Property

Neither the Company nor Rock Creek holds any material Intellectual Property Rights.

4.18      Insurance

The insurance policies maintained for the benefit of the Company are set forth on Schedule 0. Rock Creek does not have any insurance policies maintained for its benefit.

4.19        Affiliate Contracts

Except as described on Schedule 0, neither the Company nor Rock Creek is a party to any Contract with Seller or any other Affiliate of Seller.

4.20        Accounts Receivable

All accounts receivable, book debts and other debts due or accruing to the Company or Rock Creek are bona fide and good and, subject to an allowance for doubtful accounts that have been reflected on the books of the Company or Rock Creek in accordance with GAAP on a basis consistent with prior periods, collectible without set-off or counterclaim.

4.21        Bank Accounts and Attorneys

Schedule 4.21 sets forth a complete and accurate list showing the name of each bank, trust company or similar institution in which the Company or Rock Creek has accounts or safety deposit boxes, the number or designation of each such account and safety deposit box and the names of all Persons authorized to draw thereon or to have access thereto and showing the name of each Person holding a general or special power of attorney from the Company or Rock Creek and a summary of the terms thereof.

4.22        Benefit Plans

Schedule 4.22 contains a list (which list identifies the plan sponsor) of (i) each benefit plan which is maintained, sponsored or contributed to, or required to be maintained or contributed to, by Seller or any other Person that, together with the Company, Rock Creek and Seller, is or was treated as a single employer under Section 414(b), (c), (m) or (o) of the Code, for the benefit of any current or former employee, officer, director, retiree, independent contractor or consultant of the Company or Rock Creek, or any spouse or dependent of such individual; and (ii) any other benefit plan with respect to which the Company or Rock Creek would reasonably be expected to have any liability (all the foregoing, herein referred to as the “ Benefit Plans ”). Each Benefit Plan is administered in all material respects in accordance with its terms and in compliance in all


- 17 -

material respects with the applicable provisions of ERISA and the Code and other applicable laws.

4.23        Money Laundering

The operations of the Company and Rock Creek are conducted in compliance in all material respects with financial record-keeping and reporting requirements of applicable Legal Requirements relating to money laundering.

4.24      Corrupt Practices

None of the Seller or any of its Affiliates (other than the Company or Rock Creek), officers, directors or employees or, to the knowledge of the Seller, the Company or Rock Creek or any of their respective managers, officers or employees, has made any payment, directly or indirectly, on behalf of or to the benefit of the Seller, the Company or Rock Creek, in violation of any applicable Legal Requirements prohibiting the payment of undisclosed commissions or bonuses or the making of bribe or incentive payments or other arrangements of a similar nature, including the Corruption of Foreign Public Officials Act (Canada) and the Foreign Corrupt Practices Act (U.S.).

4.25      Investment Representations

The Warrants and Common Shares being acquired by Seller are for investment only and not with a view of any distribution thereof. Seller understands that neither the Warrants, the Warrant Shares or the Common Shares have been registered under the Securities Act of 1933, as amended (the “ Securities Act ”), or the securities laws of any state and must be held indefinitely unless subsequently registered under the Securities Act and any applicable state securities laws or unless an exemption from registration becomes or is available. Seller is an “accredited investor” as defined in Rule 501(a) of Regulation D, as amended, under the Securities Act and has not acquired Common Shares or Warrants as a result of any general solicitation or general advertising. Seller will not distribute any Warrants, Warrant Shares or Common Shares or any portion thereof in violation of the Securities Act or the applicable securities laws of any state. Seller (i) is familiar with Buyer Parent and its assets and operations, (ii) has been given the opportunity to ask questions of representatives of Buyer Parent and to obtain such information about Buyer Parent and its assets and operations as Seller has reasonably requested and (iii) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment in the Warrants (and underlying securities) and the Common Shares. In formulating a decision to enter into this Agreement, Seller has relied solely upon an independent investigation of Buyer Parent and upon consultations with Seller’s legal and financial advisors with respect to this Agreement and the nature of this investment. It is understood that certificates evidencing the Warrants and Common Shares may bear the following or any similar legends:

            “THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE


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REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.”

            “UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [DATE THAT IS 4 MONTHS AND A DAY AFTER ISSUANCE OF THE SECURITY].”.

EXCEPT AS EXPRESSLY STATED IN THIS ARTICLE 4, SELLER MAKES NO OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT. THE ASSETS AND PROPERTIES OF THE COMPANY AND ROCK CREEK ARE BEING INDIRECTLY ACQUIRED BY BUYER ON AN “AS IS, WHERE IS” BASIS, SUBJECT ONLY TO THE REPRESENTATIONS AND WARRANTIES EXPRESSLY STATED IN THIS ARTICLE 4.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES

The Buyer Parties represent and warrant to Seller as follows:

5.1         Organization and Qualification; Tax Status

Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the state of Nevada and has all requisite power and authority to carry out its obligations under this Agreement. Buyer Parent is a corporation duly organized, validly existing, and in good standing under the laws of the province of British Columbia and has all requisite power and authority to carry out its obligations under this Agreement. Buyer Parent is a foreign corporation for U.S. federal income tax purposes and is not subject to an election under Section 897(i) of the Code.

5.2         Authority

Each Buyer Party has all requisite power and authority to execute, deliver, and perform this Agreement and consummate the transactions contemplated by this Agreement. The execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated by this Agreement on the part of each Buyer Party, including the issuance of the Common Shares, the Warrants and the Warrant Shares upon the exercise of the Warrants, have been duly and validly authorized by all necessary action on the part of such Buyer Party. This Agreement has been duly and validly executed and delivered by each Buyer Party, and is the valid and binding obligation of such Buyer Party, enforceable against such Buyer Party in accordance with its terms.


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5.3         No Conflict; Required Consents

Except for (i) compliance with and filings under the HSR Act, (ii) the approval of the TSX and the NYSE MKT in connection with the issuance of the Common Shares and the Warrants and the listing of the Common Shares and Warrant Shares, (iii) if Buyer and Seller submit a joint filing with CFIUS, the CFIUS Approval, and (iv) as set out in Schedule 5.3, the execution, delivery and performance by the Buyer Parties of this Agreement do not and will not: (A) conflict with or violate any provision of the charter or bylaws of Buyer or Buyer Parent; (B) violate any provision of any Legal Requirements; (C) result in a material breach of or constitute a material default under any Contract to which Buyer or Buyer Parent is a party or by which Buyer or Buyer Parent is bound or affected; or (D) require any consent, approval or authorization of any Governmental Authority or other Person.

5.4         Sufficiency of Funds

Upon consummation of the Financing and the direct or indirect contribution by Buyer Parent of the proceeds thereof to Buyer, Buyer will have adequate funds on hand to pay the Cash Purchase Price at Closing and to consummate the transactions contemplated by this Agreement.

5.5         Buyer Parent Common Shares

All Common Shares issued pursuant to this Agreement will, when issued, (i) be duly authorized and validly issued as fully paid and non-assessable securities in the capital of Buyer Parent, free of any Encumbrance, right of first refusal, pre-emptive right, subscription right or other similar right with respect thereto, other than under any applicable Legal Requirements; and (ii) be freely tradeable after the expiry of applicable hold periods and compliance with resale restrictions and conditions under the applicable Legal Requirements.

5.6         Warrants and Warrant Shares

All Warrants issued pursuant to this Agreement will, when issued, (i) have been duly created and authorized and validly issued as fully paid securities in the capital of Buyer Parent, free of any Encumbrance, right of first refusal, pre-emptive right, subscription right or other similar right with respect thereto, other than under any applicable Legal Requirements; and (ii) freely tradeable after the expiry of applicable hold periods and compliance with resale restrictions and conditions under the applicable Legal Requirements. All Warrant Shares issuable upon the exercise of the Warrants, (i) have been duly authorized and when issued upon the exercise of the Warrants will be validly issued as fully paid and non-assessable securities in the capital of Buyer Parent, free of any Encumbrance, right of first refusal, pre-emptive right, subscription right or other similar right with respect thereto, other than under any applicable Legal Requirements; and (ii) be freely tradeable after the expiry of applicable hold periods and compliance with resale restrictions and conditions under the applicable Legal Requirements. The certificate representing the Warrants will be in proper form under the laws of British Columbia and comply in all material respects with the requirements of the TSX and the NYSE MKT and will not conflict with the constating documents of Buyer Parent or the laws of British Columbia.


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5.7         No Order

No order, action or proceeding having the effect of ceasing or suspending the distribution or trading of the Common Shares, the Warrants or the Warrant Shares or ceasing or suspending the trading of any other securities of Buyer Parent, or prohibiting the distribution of the Common Shares, the Warrants or the Warrant Shares has been issued or made by any Governmental Authority and no proceedings have been initiated or are pending or, to the knowledge of either Buyer Party, are threatened by any Governmental Authority in relation thereto.

5.8         Investment Representations; Independent Investigation

The Interest being acquired by Buyer is for investment only and not with a view of any distribution thereof. Buyer understands that the Interest has not been registered under the Securities Act, or the securities laws of any state and must be held indefinitely unless subsequently registered under the Securities Act and any applicable state securities laws or unless an exemption from registration becomes or is available. Buyer will not distribute the Interest or any portion thereof in violation of the Securities Act or the applicable securities laws of any state. Buyer (i) is familiar with the Company and Rock Creek and their assets and operations, (ii) has been given the opportunity to ask questions of representatives of Seller, the Company and Rock Creek and to obtain (and has received to Buyer’s satisfaction) such information about the Company and Rock Creek and their assets and operations as Buyer has reasonably requested and (iii) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment in the Interest. In formulating a decision to enter into this Agreement, (x) each Buyer Party has relied solely upon an independent investigation of the Company and Rock Creek and upon consultations with such Buyer Party’s legal and financial advisors with respect to this Agreement and the nature of this investment and (y) no reliance was placed by either Buyer Party upon any representations or warranties other than those of Seller stated in Article 4 of this Agreement.

ARTICLE 6
COVENANTS

6.1

Certain Affirmative Covenants of Seller

       
(a)

Except as Buyer otherwise may consent in writing (which consent Buyer shall not unreasonably withhold, condition or delay), or as otherwise contemplated by this Agreement, between the date of this Agreement and Closing, Seller shall cause each of the Company and Rock Creek to:

       
(i)

operate in the usual, regular and ordinary course and in a manner consistent with past practices and the “care and maintenance” status of the Hollister Mine and the Esmeralda Mine and, to the extent consistent with such operation, use commercially reasonable efforts to: (i) preserve its current business organization; (ii) keep available the services of employees whose performance and conduct meets the Company’s and Rock Creek’s normal requirements; and (iii) preserve beneficial business



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relationships with all suppliers, and others having business dealings with the Company and Rock Creek;

  (ii)

maintain its assets and properties in their condition as of the date of this Agreement, ordinary wear and tear excepted;

     
  (iii)

pay all fees required to maintain the claims comprising the Properties in good standing and which are due on or before August 31, 2016 by no later than August 10, 2016 (the “ Claim Fee Payments ”); and

     
  (iv)

(A) provide to Buyer, and its counsel, accountants and other representatives, during normal business hours and after reasonable advance notice, reasonable access to the Company’s and Rock Creek’s assets, properties, books and records; and (B) furnish or make available to Buyer and such representatives all such additional documents, financial information and other information in the possession of the Company and Rock Creek and relating to the Company and Rock Creek and their operations as Buyer may from time to time reasonably request; provided, however, that Buyer shall exercise such right of access in such a manner as not to interfere unnecessarily with the operations of the Company or Rock Creek.


  (b)

Without limiting the generality of the foregoing, Seller shall not, without the prior written consent of Buyer (which consent Buyer shall not unreasonably withhold, condition or delay), or as otherwise contemplated by this Agreement:

       
  (i)

sell, dispose, mortgage, pledge, grant a security interest in, grant a license to or otherwise encumber any of the Properties or the Moveable Assets, except in the ordinary course of business consistent with past practice, such as sales of inventory and obsolete equipment in the ordinary course and in amounts which, individually and in the aggregate, are not material to the financial condition or the business or operations of the Company or Rock Creek;

       
  (ii)

enter into any lease or other Contract relating to the business or operations of the Company or Rock Creek that is not in the ordinary course of business and that would, if existing on the date hereof, constitute a Material Contract hereunder;

       
  (iii)

terminate or cancel (other than the termination, expiration or cancellation of a Material Contract in accordance with its terms), modify or amend in any material respect or take or fail to take any action which would entitle any party to any Material Contract to terminate or cancel (other than the termination, expiration or cancellation of a Material Contract in accordance with its terms), modify or amend any Material Contract;

       
  (iv)

amend or otherwise alter (or propose any amendment or alteration to) the governing documents of either of the Company or Rock Creek;



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  (v)

permit either of the Company or Rock Creek to create, issue, sell, deliver, pledge or otherwise encumber any securities or interest in the capital of either of the Company or Rock Creek or any securities or instruments convertible or exercisable for any such securities or interest, or declare or pay any dividend or make any other distribution of any of the assets of the Company or Rock Creek to their securityholders;

     
  (vi)

permit either of the Company or Rock Creek to become a party to any merger, consolidation, share exchange, business combination, recapitalization, or similar transaction;


  (vii)

permit either of the Company or Rock Creek to incur any indebtedness for borrowed money or guarantee any indebtedness of another Person or make any loans, advances, or capital contributions to, or investments in, any other Person, in each case other than in the ordinary course of business; or

       
  (viii)

permit either of the Company or Rock Creek to settle any Litigation to which it is a party other than settlements with respect to, or payments of, penalties under citations issued by the Mine Safety and Health Administration of the U.S. Department of Labor or which would not result in any material liability to the Company or Rock Creek.

       
  (c)

None of Seller or any of its Affiliates or their respective representatives shall solicit, encourage, or enter into any letter of intent, contract or other agreement with any Person (other than Buyer) concerning any offers to purchase, directly or indirectly, membership interests or all or substantially all of the assets of either of the Company or Rock Creek including any joint venture or royalty transaction or similar arrangement (other than the Hollister Royalty and the Esmeralda Royalty), and none of Seller or any of its Affiliates or their respective representatives will initiate or participate in any discussions or negotiations with any Person (other than Buyer) with respect to any such transactions or similar transactions, during the period commencing on the date hereof and ending on the termination of this Agreement.

       
  (d)

Buyer and Seller agree that subject to applicable Legal Requirements, between the date of this Agreement and Closing, each shall provide the other prompt notice in writing of:

       
  (i)

any notice or communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated hereby;

       
  (ii)

any material notice or communication from any Governmental Authority that proposes to, or which would reasonably be expected to, impede or delay the consummation of the transactions contemplated hereby;



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  (iii)

any material Litigation commenced or threatened against it which would reasonably be expected to impede or delay the consummation of the transactions contemplated hereby; and

     
  (iv)

any failure by it to comply with or satisfy in all material respects any covenant, condition or agreement to be complied with or satisfied under this Agreement;

provided that the giving of any such notice shall not in any way change or modify the representations and warranties of Buyer or Seller, or any covenants or conditions in favor of the Buyer or Seller, contained in this Agreement or otherwise affect the remedies available to the Buyer and Seller under this Agreement.

6.2

Confidentiality

     
(a)

Prior to Closing, any non-public information that the Buyer Parties may obtain from Seller in connection with this Agreement with respect to Seller shall be deemed confidential, and neither Buyer Party shall disclose any such information to any third party or use such information for any commercial purpose; provided, however, that (i) the Buyer Parties may use and disclose any such information once it has been publicly disclosed (other than by either Buyer Party in breach of its obligations under this Section) or which rightfully has come into the possession of the Buyer Parties (other than from Seller); (ii) the Buyer Parties may disclose such information to their respective officers, directors, agents, employees, advisors and lenders as necessary in connection with the transactions contemplated in this Agreement; and (iii) to the extent that either Buyer Party may become compelled by Legal Requirements to disclose any of such information, it may disclose such information if it shall have used all reasonable efforts, and shall have afforded Seller the opportunity, to obtain an appropriate protective order, or other satisfactory assurance of confidential treatment, for the information compelled to be disclosed.

     
(b)

Any non-public information that Seller shall obtain from the Buyer Parties in connection with this Agreement with respect to either Buyer Party shall be deemed confidential, and Seller shall not disclose such information to any third party or use such information for any commercial purpose; provided, however, that (i) Seller may use and disclose any such information once it has been publicly disclosed (other than by Seller in breach of its obligations under this Section) or which rightfully has come into the possession of Seller (other than from the Buyer Parties); (ii) Seller may disclose such information to its officers, directors, agents, employees, representatives, advisors and lenders as necessary in connection with the transactions contemplated in this Agreement; and (iii) to the extent that Seller may become compelled by Legal Requirements to disclose any of such information, Seller may disclose such information if it shall have used all reasonable efforts, and shall have afforded the Buyer Parties the opportunity, to



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obtain an appropriate protective order, or other satisfactory assurance of confidential treatment, for the information compelled to be disclosed.

  (c)

Except as required by applicable Legal Requirements, no Party shall make any press release or public announcement or statement without the prior written consent and approval of the other Parties. The Parties shall consult with and cooperate with the other with respect to the content and timing of all press releases and other public announcements or statements, and any oral or written statements to Seller’s employees concerning this Agreement and the transactions contemplated hereby.

     
  (d)

This Section does not supersede the confidentiality agreement dated March 31, 2016 between Seller and Buyer (the “ Confidentiality Agreement ”), which remains in full force and effect.


6.3

Reasonable Efforts; Notices and Consents

     
(a)

On the terms and subject to the conditions of this Agreement, each Party shall use its reasonable efforts to cause the Closing to occur, including taking all reasonable actions necessary to (i) comply promptly with all Legal Requirements that may be imposed on it or any of its Affiliates with respect to the Closing and (ii) in the case of the Buyer Parties, promptly after the execution of this Agreement file with the TSX and the NYSE MKT an application for, and diligently pursue and obtain the approval of the TSX and the NYSE MKT for the listing of the Common Shares and the Warrant Shares. All costs and expenses relating to obtaining the approval of the TSX and the NYSE MKT for the listing of the Common Shares and the Warrant Shares shall be borne by the Buyer Parties.

     
(b)

Subject to Section 6.3(c), Seller and Buyer each shall exercise commercially reasonable efforts to obtain all consents and approvals of Governmental Authorities and other Persons required for consummation of the transactions contemplated by this Agreement.

     
(c)

Each Buyer Party shall use its best efforts to obtain prior to Closing all consents and approvals described on Schedule 6.3(c).

     
(d)

Seller and the Company shall promptly provide all notices to Governmental Authorities and other Persons required for consummation of the transactions contemplated by this Agreement in compliance with any applicable timing requirements.

     
(e)

Without limiting the generality of paragraph (a) of this Section 6.3, Buyer Parent shall execute and file with the applicable Governmental Authorities, the TSX and the NYSE MKT all forms, notices and certificates required to be filed by Buyer Parent pursuant to applicable Legal Requirements, including the rules and policies of the TSX and the NYSE MKT, in the time required under applicable Legal Requirements and the rules and policies of the TSX and the NYSE MKT.



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  (f)

Without limiting the generality of paragraph (b) of this Section 6.3, prior to and following Closing, Seller and Buyer each shall, and shall each cause its respective Affiliates to, exercise commercially reasonable efforts to promptly obtain all consents and approvals required in connection with the consummation of the transactions contemplated by this Agreement under the Governmental Permits identified on Schedule 4.6.

     
  (g)

Prior to Closing, if Buyer wishes to submit an inquiry (whether operational in nature, pertaining to permitting or otherwise) to a Governmental Authority with respect to the commencement following Closing of underground operations at the Hollister Mine, Buyer shall submit such inquiry to Seller and EMG (with attention to Debbie Lassiter or such other representative of EMG as Seller may designate from time to time). Promptly following receipt of any such inquiry from Buyer, Seller shall cause EMG and its Nevada permitting team to use their commercially reasonable efforts to further submit such inquiry to the applicable Governmental Authority and to provide Buyer with any response from such Governmental Authority in connection therewith. For the avoidance of doubt, prior to Closing, no Buyer Party shall, and each Buyer Party shall cause its Affiliates and its and their respective representatives not to, directly or indirectly (except pursuant to this Section 6.3(g)) contact any Governmental Authority with respect to any such inquiry or otherwise in connection with the Hollister Mine, the Esmeralda Mine, the Company, Rock Creek, the Business or the properties, permits or other assets of or relating to the Company, Rock Creek or the Business.


6.4

HSR Act Filings

     
(a)

Without limiting the generality of Section 6.3, Seller and Buyer shall, promptly after the execution and delivery of this Agreement, but in no event later than ten days after the date of this Agreement, complete and file, or cause to be completed and filed, with the Federal Trade Commission (the “ FTC ”) and the Antitrust Division of the United States Department of Justice (“ DOJ ”) any notification and report required to be filed under the HSR Act, with respect to the transactions contemplated under this Agreement, and each such filing shall request early termination of the waiting period imposed by the HSR Act. Each of Buyer and Seller shall coordinate with the other with respect to its filings, shall cooperate to prevent inconsistencies between their respective filings and shall furnish to each other such necessary information and reasonable assistance as the other may reasonably request in connection with its preparation of necessary filings or submissions under the HSR Act. All fees related to any filings under the HSR Act shall be paid in equal shares by Buyer and Seller. The Parties shall use commercially reasonable efforts to respond as promptly as practicable to any requests received from the FTC or the DOJ for additional information or documentation and respond as promptly as practicable to inquiries and requests received from other Governmental Authorities with respect to antitrust matters.

     
(b)

Each of the Parties shall promptly notify the other Parties of any communication it or any of its Affiliates receives from any Governmental Authority relating to



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any filing made pursuant to Section 6.4(a) . No Party shall agree to participate in any meeting with any Governmental Authority in respect of any filings, investigation or other inquiry under the HSR Act unless it consults with the other Party in advance and, to the extent permitted by such Governmental Authority, gives the other Party the opportunity to attend and participate at such meeting. The Parties will coordinate and cooperate fully with each other in exchanging such information and providing such assistance as the other Parties may reasonably request in connection with the foregoing. The Parties shall provide each other with copies of all correspondence, filings or communications between them or any of their representatives, on the one hand, and any Governmental Authority or members of its staff, on the other hand, with respect to any filings made pursuant to Section 6.4(a); provided, however, that a Party may withhold documents to the extent that they contain competitively sensitive information or information relating to valuation of the Purchased Assets.

6.5         Tax Matters

  (a)

Seller shall prepare and cause to be filed all Tax Returns of the Company and Rock Creek for Pre-Closing Tax Periods (“ Seller Tax Returns ”) in accordance with past practices of the Company and Rock Creek in preparing their Tax Returns, except where such past practice is not consistent with applicable Legal Requirements. At the request of Seller, Buyer shall execute or cause the Company and Rock Creek to execute any Tax Return prepared in accordance with this Section 6.5(a). Seller shall be responsible for paying any Taxes that are due with a Seller Tax Return.

   

 

  (b)

Buyer shall prepare or cause to be prepared and timely filed or cause to be filed all Tax Returns of the Company and Rock Creek for Straddle Periods (“ Buyer Tax Returns ”). Buyer Tax Returns shall be prepared in accordance with past practices of the Company and Rock Creek in preparing their Tax Returns, except where such past practice is not consistent with applicable Legal Requirements. Seller shall reimburse Buyer for an amount equal to the portion of unpaid Taxes that are due with a Buyer Tax Return to the extent that such Taxes are allocable to a Pre-Closing Tax Period or the portion of a Straddle Period ending on and including the Closing Date (determined in accordance with Section REF _Ref456011616 \w \h \* MERGEFORMAT 6.5(c)), within ten days of Buyer’s providing Tax Returns and work papers establishing such liability.


  (c)

Except as provided in Section 0, for purposes of this Agreement, Taxes allocable to the portion of a Straddle Period ending on the Closing Date shall (i) in the case of any property and similar Taxes, be deemed to be the amount of such Tax for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days in the Taxable period prior to and ending on the Closing Date and the denominator of which is the number of days in the entire Straddle Period, and (ii) in the case of all other Taxes, be deemed equal to the amount which would be payable if the relevant Straddle Period ended on the Closing Date, provided that all permitted allowances, credits, exemptions and deductions that are normally



- 27 -

computed on the basis of an entire year period (such as depreciation and amortization deductions) shall accrue on a daily basis and shall be allocated between the pre-Closing portion of the Straddle Period and the post-Closing portion of the Straddle Period in proportion to the number of days in each such period.

  (d)

Buyer shall provide Seller, and Seller shall provide Buyer, with copies of any Tax Returns to be filed by Buyer or Seller, as applicable, pursuant to Section 6.5(a) or 6.5(b) at least thirty (30) days prior to the due date thereof (giving effect to any extensions thereto) (or, in the case of any Tax Return due less than thirty (30) days after the Closing Date, at least ten (10) days prior to the due date thereof). Seller or Buyer, as applicable, shall have the right to review such Tax Returns prior to the filing of such Tax Returns. If Seller or Buyer, as applicable, disputes any amounts shown to be due on such Tax Returns, Seller and Buyer shall consult and resolve in good faith any issues arising as a result of the review of such Tax Returns. If the Parties are unable to resolve any dispute prior to the due date of the Tax Return, such dispute shall be resolved by the Accounting Firm, which shall resolve any issue in dispute as promptly as practicable. The fees, costs and expenses of the Accounting Firm shall be shared equally by Seller and Buyer, unless either Seller or Buyer prevails on all material issues, in which case such fees, costs and expenses shall be paid by the non-prevailing party. The determination by the Accounting Firm shall be final, conclusive and binding on the parties.

     
  (e)

Seller and Buyer shall cooperate, as and to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns pursuant to this Section 6.5 and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention (in accordance with such Party’s practices for such records) and (upon the other Party’s request) the provision of records and information which are reasonably relevant to such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Buyer agrees (i) to retain all books and records with respect to all material Tax matters pertinent to the Company and Rock Creek relating to any Tax period beginning before the Closing Date until thirty (30) days after the expiration of the statute of limitations (and any extensions thereof) of the respective Tax periods, and to abide by all record retention agreements entered into with any Governmental Authority, and (ii) to give Seller reasonable written notice prior to transferring, destroying or discarding any such books and records and, if Seller so requests, Buyer shall allow Seller to take possession of such books and records. Seller and Buyer agree, upon request, to use their reasonable best efforts to obtain any certificate or other document from any Governmental Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby). To the extent permitted by applicable law, Seller and Buyer shall cause any Tax period to end on the Closing Date.



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  (f)

Any refunds of Taxes for Pre-Closing Tax Periods or attributable to the pre- Closing portion of any Straddle Period shall be paid to Seller within ten (10) Business Days after receipt. At the request of Seller, and with the agreement of Buyer, which shall not be unreasonably withheld, conditioned or delayed, Buyer shall file requests for refunds of Taxes for a Pre-Closing Tax Periods or for a Straddle Period.

     
  (g)

Seller shall pay and indemnify Buyer, Company and Rock Creek for the following Taxes (and all other related losses, costs and damages), but without duplication of any liabilities that are taken into account under Section 10.1 and without duplication of any such Taxes that the Seller has previously paid on an estimated basis or otherwise: (a) all Taxes of Seller, Company and Rock Creek and all Taxes with respect to the Purchased Assets for (1) any Pre-Closing Tax Periods or (2) the portion of any Straddle Period ending on the Closing Date; and (b) all Taxes resulting from a breach of a representation in Section 4.11 or a breach of a covenant of Seller contained in this Section 6.5; provided that Seller shall have no liability for Taxes of the Company or Rock Creek resulting from activities of the Company or Rock Creek outside the ordinary course of business that occur after the Closing on the Closing Date.

     
  (h)

Seller shall cause any tax sharing or similar arrangement with respect to Taxes involving the Purchased Assets, Company or Rock Creek to be terminated effective as of the Closing Date, to the extent that any such agreement or arrangement relates to Company or Rock Creek, and after the Closing Date, Company and Rock Creek shall have no obligation under any such agreement or arrangement for any past, present or future period.

     
  (i)

Notwithstanding anything in this Agreement to the contrary, in case of any conflict between this Section 6.5 and Article 10 with respect to any claim for Taxes, this Section 6.5 shall govern with respect to such claim for Taxes; provided that the provisions of Section 10.7 shall be applicable in accordance with the terms thereof to the extent not inconsistent with this Section 6.5.

     
  (j)

Buyer and Seller agree to treat the transactions contemplated by this Agreement as a taxable purchase of the Purchased Assets for U.S. federal income Tax purposes.

6.6      Retention of Records

Buyer shall (i) retain all books and records relating to matters that are the subject of indemnification by Buyer pursuant to Section 10.2, for a period of at least five years following creation of such books and records, and (ii) give to Seller reasonable written notice prior to transferring, destroying or discarding any such books and records and, if Seller so requests, allow Seller to take possession of such books and records.


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6.7        Surety Arrangements

Buyer shall arrange for and provide substitute Surety Arrangements for each of the Seller Surety Arrangements in form and amount acceptable to each of the Governmental Authorities that hold or are benefitted by the Seller Surety Arrangements, to be tendered as soon as practicable after the Closing Date and in any event within 120 days of the Closing Date. Buyer shall use its commercially reasonable efforts to obtain the final release and return to Seller of the Seller Surety Arrangements within 60 days of the Closing Date.

6.8      Efforts to Obtain Financing

The Buyer Parties shall use their commercially reasonable efforts to obtain, as soon as reasonably practicable after the date hereof, at least $65,000,000 of gross equity financing on terms commercially acceptable to the Buyer Parties to enable the Buyer Parties to pay the Cash Purchase Price at Closing and to consummate the transactions contemplated under this Agreement (the “ Financing ”). Without limiting the generality of the foregoing, the Buyer Parties shall (i) commence arrangement of the Financing concurrently with the Parties’ execution and delivery of this Agreement and diligently pursue the arrangement of the Financing thereafter, (ii) cause any conditions to the Financing to be fulfilled in accordance with their terms as soon as reasonably practicable and (iii) expeditiously seek to obtain any replacement equity financing on terms commercially acceptable to the Buyer Parties if it becomes reasonably likely that the Buyer Parties will be unable for any reason to timely consummate all or any portion of the Financing initially arranged by them or on their behalf. Upon consummation of the Financing, Buyer Parent shall contribute to Buyer sufficient funds from the proceeds thereof to enable Buyer to pay the Cash Purchase Price at Closing and to consummate the transactions contemplated under this Agreement. Seller shall (and shall cause the Company and the respective Affiliates and representatives of Seller and the Company to) reasonably cooperate with Buyer Parent with respect to Buyer Parent’s arranging of the Financing, as Buyer Parent may reasonably request, at the cost and expense of the Buyer Parties.

6.9

Assistance with Financial Statements and Technical Report

     
(a)

Prior to Closing and as soon as reasonably practicable after the date hereof, Seller shall cause to be prepared all unaudited financial statements of the Company and Rock Creek as may be reasonably required by Buyer and Buyer Parent in accordance with applicable securities laws in connection with the transactions contemplated by this Agreement. In addition, Seller shall cause to be prepared for delivery to Buyer and Buyer Parent as soon as reasonably practicable after the date hereof, and in any event within 60 days following the Closing Date, all audited financial statements of the Company and Rock Creek as may be reasonably required by Buyer and Buyer Parent in accordance with applicable securities laws in connection with the transactions contemplated by this Agreement.

     
(b)

Prior to Closing and as soon as reasonably practicable after the date hereof, and in any event within 60 days following the Closing Date, Seller shall cause to be prepared by an independent third party technical consultant a current independent



- 30 -

technical report for the Hollister Mine prepared in accordance with the requirements of National Instrument 43-101 of the Canadian Securities Administrators, which technical report shall be addressed and delivered to Buyer Parent. The Buyer Parties acknowledge and agree that none of Seller, Seller Parent or any of their respective Affiliates (i) is or will be the owner of or shall have responsibility for the content of such technical report or any disclosure therein, (ii) make any representation or warranty with respect to such technical report or any data, information, statement, representation or conclusion contained therein, or (iii) shall have any liability or obligation related to such technical report or any disclosure therein.

  (c)

This Section 6.9 shall survive the Closing for a period of 90 days, except for the last sentence of Section 6.9(b), which shall continue in full force and effect without limitation of time.


6.10

CFIUS Filing

     
(a)

Should Buyer and Seller mutually determine within 15 days of the date of this Agreement that it is necessary or advisable, Buyer and Seller will use all commercially reasonable efforts to, as promptly as practicable after such determination, make a joint filing with the Committee on Foreign Investment in the United States (“ CFIUS ”) under Section 721 with respect to the transactions contemplated by this Agreement and supply each other with all information necessary to complete the preparation and submission of such joint filing as required by 31 C.F.R. § 800.402 (“ CFIUS Information ”).

     
(b)

The parties will promptly provide CFIUS with any additional or supplemental information requested by CFIUS or its member agencies during the review (and, if applicable, investigation) process; provided that no party shall be required to provide information that is not CFIUS Information. The parties, in cooperation with each other, will take all commercially reasonable steps advisable, necessary or desirable to finally and successfully complete the CFIUS review (and, as applicable, investigation) process as promptly as practicable. In furtherance of the foregoing, the Buyer and the Seller agree that if CFIUS offers the parties an opportunity to withdraw and resubmit their joint notice regarding the transactions contemplated hereby, and the parties opt to request withdrawal and resubmission in response to such offer by CFIUS, then the parties will agree to join the request for withdrawal and resubmission and promptly resubmit the joint notice regarding the transactions contemplated hereby.



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ARTICLE 7
CONDITIONS PRECEDENT

7.1         Conditions to Buyer’s Obligations

The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the following conditions, which, to the extent permitted by applicable Legal Requirements, may be waived by Buyer:

  (a)

Seller shall have, in all material respects, performed and complied with all covenants and obligations of this Agreement to be complied with and performed by it at or before Closing.

     
  (b)

The representations and warranties of Seller set forth in this Agreement that are qualified by materiality or Material Adverse Effect qualifications shall be true and correct in all respects and all other representations and warranties of Seller set forth in this Agreement shall be true and correct in all material respects except where any failures or breaches of representations and warranties would not, either individually or in the aggregate, have a Material Adverse Effect, in each case, as of the Closing Date as if made on and as of such date except to the extent that such representations and warranties speak as of an earlier date, in which event such representations and warranties shall be accordingly true and correct as of such earlier date.

     
  (c)

Seller shall have delivered to Buyer a certificate, dated as of the date of Closing, executed by the manager of Seller, certifying that the conditions stated in paragraphs 7.1(a) and 7.1(b) have been satisfied.

     
  (d)

Any waiting period (and any extension thereof) under the HSR Act applicable to the transactions contemplated by this Agreement shall have expired or been terminated, or clearance shall otherwise have been granted by the relevant Governmental Authorities.

     
  (e)

If Buyer and Seller submit a joint filing with CFIUS, CFIUS Approval shall have been obtained.

     
  (f)

The Financing (for greater certainty, providing for gross proceeds of at least $65,000,000) shall have been arranged by or on behalf of the Buyer Parties; provided, however, that the obligations of Buyer to consummate the transactions contemplated by this Agreement shall not be subject to the condition stated in this Section 7.1(f) if the Buyer Parties have not performed in all respects all covenants and obligations of the Buyer Parties in Section 6.8.

     
  (g)

All authorizations, approvals and consents described on Schedule 7.1(g) shall have been obtained.



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  (h)

There shall be no receivables or other amounts owing to the Company or Rock Creek from any Affiliates of the Company or Rock Creek or any of their respective related parties.

     
  (i)

Since the date of this Agreement, there shall not have occurred and be continuing any Material Adverse Effect.

     
  (j)

There shall be no Legal Requirement, and no Judgment shall have been entered and not vacated by any Governmental Authority of competent jurisdiction in any Litigation or arising therefrom, that enjoins, restrains, makes illegal or prohibits consummation of the transactions contemplated by this Agreement.

     
  (k)

That certain Management Services Agreement dated March 31, 2014 between EMG and the Company shall have been terminated.

     
  (l)

The Note, if required, and each Security Document and the Warrant to be delivered by the parties thereto at Closing shall each be in form and substance satisfactory to Buyer.

7.2        Conditions to Seller’s Obligations

The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the following conditions, which, to the extent permitted by applicable Legal Requirements, may be waived by Seller:

  (a)

Each Buyer Party shall have, in all respects, performed and complied with its covenants and obligations under Section 6.3(c) and shall have, in all material respects, performed and complied with all other covenants and obligations of this Agreement to be complied with and performed by it at or before Closing.

     
  (b)

The representations and warranties of the Buyer Parties set forth in this Agreement that are qualified by materiality shall be true and correct in all respects and all other representations and warranties of the Buyer Parties set forth in this Agreement shall be true and correct in all material respects except where any failures or breaches of representations and warranties would not, either individually or in the aggregate, be reasonably expected to have a material adverse effect on the ability of either Buyer Party to perform its obligations under this Agreement or consummate the transactions contemplated by this Agreement, in each case as of the Closing Date as if made on and as of such date except to the extent that such representations and warranties speak as of an earlier date, in which event such representations and warranties shall be accordingly true and correct as of such earlier date.

     
  (c)

Buyer shall have delivered to Seller a certificate dated as of the date of Closing, executed by an executive officer of each of Buyer and Buyer Parent, certifying that the conditions stated in paragraphs 7.2(a) and 7.2(b) have been satisfied.



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  (d)

Any waiting period (and any extension thereof) under the HSR Act applicable to the transactions contemplated by this Agreement shall have expired or been terminated, or clearance shall otherwise have been granted by the relevant Governmental Authorities.

     
  (e)

If Buyer and Seller submit a joint filing with CFIUS, CFIUS Approval shall have been obtained.

     
  (f)

There shall be no Legal Requirement, and no Judgment shall have been entered and not vacated by any Governmental Authority of competent jurisdiction in any Litigation or arising therefrom, that enjoins, restrains, makes illegal or prohibits consummation of the transactions contemplated by this Agreement.

     
  (g)

The listing of the Common Shares and the Warrant Shares shall have been conditionally approved by the TSX and the NYSE MKT, subject only to the filing by Buyer Parent of customary documents with the TSX and the NYSE MKT.

     
  (h)

The Note, if required, and each Security Document and the Warrant to be delivered by the parties thereto at Closing shall each be in form and substance satisfactory to Seller.

7.3         Frustration of Closing Conditions

Neither Buyer nor Seller may rely on the failure of any condition set forth in this Article 7 to be satisfied if such failure was caused by such Party’s failure to act in good faith or to use its reasonable efforts to cause the Closing to occur, as required by Section 6.3.

7.4         Effect of Certain Waivers of Closing Conditions

If (i) prior to the Closing any Party (the “ waiving party ”) has knowledge of any breach by any other Party of any representation, warranty or covenant contained in this Agreement and (ii) the waiving party proceeds with Closing, the waiving party shall be deemed to have waived such breach and the waiving party and its successors, assigns and Affiliates shall not be entitled to be indemnified pursuant to Article 10, to sue for damages or to assert any other right or remedy for any losses arising from any matters relating to such condition or breach, notwithstanding anything to the contrary contained herein or in any certificate delivered pursuant hereto.

ARTICLE 8
CLOSING

8.1         Closing

The consummation and closing of the transactions contemplated by this Agreement (“ Closing ”) shall take place within three Business Days following the date on which the conditions stated in Sections 7.1 and 7.2 have been satisfied, at such time and place as the Parties mutually agree.


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8.2         Seller’s Obligations

At Closing, Seller shall deliver or cause to be delivered to Buyer the following:

  (a)

Interest Assignment. An instrument of transfer in respect of the Interest in form mutually acceptable to Buyer and Seller, executed by Seller.

     
  (b)

Constituent Documents. Copies of the articles of organization and operating agreement of the Company and Rock Creek, certified as being true and correct by the manager of Seller, together with a copy of the minute books of each of the Company and Rock Creek.

     
  (c)

Manager Resignation. A resignation of the Company as the manager of Rock Creek and a resignation of EMG as the manager of the Company.

     
  (d)

Officer Resignations. Resignations by the then current officers of the Company and Rock Creek, as applicable, in form and substance mutually acceptable to Buyer and Seller and executed by the respective officers of the Company and Rock Creek.

     
  (e)

Officer Releases. General releases of the Company and Rock Creek by the then current officers of the Company and Rock Creek, as applicable, releasing and discharging the Company or Rock Creek, as applicable, from any claims, actions, liabilities, damages, costs and expenses related to such persons acting in their capacity as officers of the Company or Rock Creek, as applicable, whether known or unknown or whether asserted or unasserted, except in connection with any fraud or with respect to limitations of liability, rights to indemnification or insurance coverage provided in the constituent documents of the Company or Rock Creek or pursuant to director and officer insurance policies, in form and substance mutually acceptable to Buyer and Seller and executed by the respective officers of the Company and Rock Creek.

     
  (f)

Company and Rock Creek Releases. General releases of the Company and Rock Creek by Seller Parent, Borealis Holdings LLC, Seller, EMG and Waterton Global Resource Management, Inc., releasing and discharging the Company and Rock Creek from and against all claims, demands, damages, debts, liabilities, obligations, costs, expenses, actions and causes of action to the extent arising prior to Closing out of the Company or Rock Creek, the assets or properties of the Company or Rock Creek, the Hollister Mine, the Esmeralda Mine or the business or operations of the Company or Rock Creek, the Hollister Mine or the Esmeralda Mine, in form and substance mutually acceptable to Buyer and Seller and executed by the respective officers of the Seller Parent, Borealis Holdings LLC, Seller, EMG and Waterton Global Resource Management, Inc.

     
  (g)

Security Documents. Counterparts of the Security Documents, executed by Seller.



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  (h)

Assumption Agreements. The assumption agreements between Seller and each of the Company and Rock Creek relating to the assumption of Affiliate Debt, the Trial Balance Liabilities and the Royalty Obligation by Seller pursuant to Section 0, in form and substance mutually acceptable to Buyer and Seller and executed by the Company and Rock Creek, as applicable, and Seller or an Affiliate of Seller other than the Company or Rock Creek.

     
  (i)

Releases. A release of obligations related to Affiliate Debt, the Trial Balance Liabilities, the Development Costs and the Royalty Obligation in accordance with Section 0, in form and substance mutually acceptable to Buyer and Seller and executed by Seller or an Affiliate of Seller other than the Company or Rock Creek.

     
  (j)

Right of First Offer. A right of first offer agreement, substantially in the form of Schedule D (the “ ROFO Agreement ”), in favor of Buyer or its designee in respect of the properties listed therein, executed by Clover Nevada LLC.

     
  (k)

Closing Date Trial Balance. A detailed trial balance setting forth the assets and liabilities of the Company and Rock Creek as of the Closing Date (after giving effect to the assumption of Affiliate Debt and the Royalty Obligation by Seller pursuant to Section 0, such that the Affiliate Debt and the Royalty Obligation will be excluded from such trial balance) in the form of the Trial Balance attached as Schedule 0.

     
  (l)

Form W-9. An IRS Form W-9 completed and signed by Seller.

     
  (m)

Other. Such other documents and instruments as shall be necessary to effect the intent of this Agreement and consummate the transactions contemplated hereby.

8.3         Buyer’s Obligations

At Closing, Buyer shall deliver or cause to be delivered to Seller the following:

  (a)

Cash Purchase Price. The Cash Purchase Price, in accordance with 2.2(a).

     
  (b)

Note. The Note, executed by Buyer, or, subject to Section 2.5, the Alternative Cash Payment by wire transfer of immediately available funds to an account of Seller designated by Seller.

     
  (c)

Security Documents. Counterparts of the Security Documents, executed by Buyer and the Company.

     
  (d)

Warrants. A certificate representing the Warrants, duly registered in the name of Seller or its designee, together with evidence reasonably satisfactory to Seller that it, or its designee, has been entered upon the books of Buyer Parent as the holder of the Warrants.



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  (e)

Common Shares. A certificate or confirmation of instant deposit of the Common Shares, duly registered or reflected, as applicable, in the name of Seller or its designee, together with evidence reasonably satisfactory to the Seller that it, or its designee, has been entered upon the books of Buyer Parent as the holder of the Common Shares.

     
  (f)

Listing Approval. Evidence of the conditional approval by the TSX and the NYSE MKT for the listing of the Common Shares and the Warrant Shares, in form and substance satisfactory to Seller.

     
  (g)

Company and Rock Creek Releases. General releases of Seller Parent, Borealis Holdings LLC, Seller, EMG and their Affiliates by the Company and Rock Creek, releasing and discharging Seller Parent, Borealis Holdings LLC, Seller, EMG and their Affiliates from and against all claims, demands, damages, debts, liabilities, obligations, costs, expenses, actions and causes of action to the extent arising prior to Closing out of the Company or Rock Creek, the assets or properties of the Company or Rock Creek, the Hollister Mine, the Esmeralda Mine or the business or operations of the Company or Rock Creek, Hollister Mine or the Esmeralda Mine, in form and substance mutually acceptable to Buyer and Seller and executed by the respective officers of the Company and Rock Creek.

     
  (h)

Claim Fee Payment Reimbursement. A cash payment, by wire transfer of immediately available funds to an account of Seller designated by Seller, in an amount equal to the aggregate amount paid by Seller or the Company, between the date hereof and the Closing, in respect of the Claim Fee Payments.

     
  (i)

Right of First Offer. A counterpart of the ROFO Agreement, executed by Buyer or its designee.

     
  (j)

Other. Such other documents and instruments as shall be necessary to effect the intent of this Agreement and consummate the transactions contemplated hereby.

ARTICLE 9
TERMINATION

9.1

Termination

       
(a)

This Agreement may be terminated and the transactions contemplated hereby may be abandoned:

       
(i)

at any time, by the mutual written agreement of Buyer and Seller;

       
(ii)

by Buyer if any of the conditions set forth in Section 7.1 shall have become incapable of fulfillment, and shall not have been waived by Buyer;



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  (iii)

by Seller if any of the conditions set forth in Section 7.2 shall have become incapable of fulfillment, and shall not have been waived by Seller; or

     
  (iv)

by either Buyer or Seller, if Closing shall not have occurred on or before October 1, 2016;

provided, however, that a Party may not terminate this Agreement pursuant clause (ii), (iii) or (iv) if it is then in breach of any of its representations, warranties, covenants or agreements contained in this Agreement.

  (b)

In the event of termination by Seller or Buyer pursuant to this Section 9.1, written notice thereof shall forthwith be given to the other and this Agreement shall be terminated, without further action by any Party. If this Agreement is terminated as provided herein:

       
  (i)

the Buyer Parties shall return all documents and other material received from Seller or the Company relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to Seller or the Company; and

       
  (ii)

all confidential information received by the Buyer Parties with respect to the Company shall be treated in accordance with the Confidentiality Agreement, which shall remain in full force and effect notwithstanding the termination of this Agreement.

9.2         Effect of Termination

If this Agreement shall be terminated pursuant to Section 9.1, all obligations of the Parties hereunder shall terminate, except for the obligations set forth in Section 9.1, this Section 9.2 and Article 11. Termination of this Agreement pursuant to Section 9.1 shall not limit or impair any remedies that any Party may have with respect to a breach or default by any other Party of its covenants, agreements or obligations under this Agreement.

ARTICLE 10
INDEMNIFICATION

10.1      Indemnification by Seller

From and after Closing, Seller shall indemnify and hold harmless each Buyer Party and its Affiliates and their respective officers, directors, managers, employees, agents and representatives, and any Person claiming by or through any of them, as the case may be (the “ Buyer Indemnitees ”), from and against any and all Losses arising out of or resulting from:

  (a)

any representations and warranties of Seller in this Agreement not being true and correct when made or when required by this Agreement to be true and correct;



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  (b)

any failure by Seller to perform any of its covenants, agreements or obligations in this Agreement;

     
  (c)

any payment obligations of the Company or Rock Creek relating to Development Costs;

     
  (d)

any obligations of the Company or Rock Creek in connection with the Royalty Obligation;

     
  (e)

any Affiliate Debt or Trial Balance Liabilities; and

     
  (f)

any Power Line Costs.

10.2        Indemnification by Buyer

From and after Closing, the Buyer Parties jointly and severally shall indemnify and hold harmless Seller and its Affiliates and their respective officers, directors, managers, employees, agents and representatives, and any Person claiming by or through any of them, as the case may be (the “ Seller Indemnitees ”), from and against any and all Losses arising out of or resulting from:

  (a)

any representations and warranties of either Buyer Party in this Agreement not being true and correct when made or when required by this Agreement to be true and correct;

     
  (b)

any failure by either Buyer Party to perform any of its covenants, agreements or obligations in this Agreement;

     
  (c)

any Environmental Liabilities (except to the extent of Losses for which the Buyer Indemnitees are entitled to indemnification under Section 10.1(a)); and

     
  (d)

any liabilities or obligations arising out of or relating to the Seller Surety Arrangements in connection with the operation or ownership of, or activities conducted at, the Hollister Mine or the Esmeralda Mine following Closing.

10.3        Procedure for Indemnified Third Party Claim

Promptly after receipt by a Buyer Indemnitee or a Seller Indemnitee entitled to indemnification hereunder (the “ Indemnitee ”) of written notice of the assertion or the commencement of any Litigation with respect to any matter referred to in Sections 10.1 or 10.2, the Indemnitee shall give written notice thereof to Seller if the Indemnitee is a Buyer Indemnitee, or Buyer, if the Indemnitee is a Seller Indemnitee (in either case, the “ Indemnitor ”), and thereafter shall keep the Indemnitor reasonably informed with respect thereto; provided, however, that failure of the Indemnitee to give the Indemnitor notice as provided herein shall not relieve the Indemnitor of its obligations hereunder except to the extent that the Indemnitor is prejudiced thereby. If any third party commences any Litigation against any Indemnitee, the Indemnitor shall be entitled to participate in such Litigation and, at its option, assume the defense thereof with counsel reasonably satisfactory to the Indemnitee, at the Indemnitor’s sole expense; provided, however,


- 39 -

that the Indemnitor shall not have the right to assume the defense of any Litigation if (i) the Indemnitee shall have one or more legal or equitable defenses available to it which are different from or in addition to those available to the Indemnitor, and, in the reasonable opinion of the Indemnitee, counsel for the Indemnitor could not adequately represent the interests of the Indemnitee because such interests could be in conflict with those of the Indemnitor, (ii) such Litigation is reasonably likely to have a material adverse effect on any other matter beyond the scope or limits of the indemnification obligation of the Indemnitor, or (iii) the Indemnitor shall not have assumed the defense of the Litigation in a timely fashion (but in any event within thirty days of notice of such Litigation). If the Indemnitor shall assume the defense of any Litigation, the Indemnitee shall be entitled to participate in any Litigation at its expense, and the Indemnitor shall not settle such Litigation unless the settlement shall include as an unconditional term thereof the giving by the claimant or the plaintiff of a full and unconditional release of the Indemnitee, from all liability with respect to the matters that are subject to such Litigation, or otherwise shall have been approved reasonably by the Indemnitee.

10.4

Determination of Indemnification Amounts; Time For Making Claims

     
(a)

The Buyer Indemnitees shall not be entitled to indemnification under Section 10.1(a) in respect of any Losses unless and until (and then shall be entitled to such indemnification only to the extent that) the aggregate amount of all such Losses exceeds the amount of [redacted for proprietary reasons] (the “ Threshold Amount ”), upon which the Buyer Indemnitees shall be entitled to indemnification only for such Losses in excess of the Threshold Amount; provided, however, that the Threshold Amount shall not apply to any rights to indemnification under Section 10.1(a) with respect to the representations or warranties in Sections 0, 0, 0, 4.4(a) and 4.11 (the “ Excepted Seller Representations ”). In no event shall the aggregate liability of Seller under Section 10.1(a) for all matters other than breaches of the Excepted Seller Representations exceed [redacted for proprietary reasons] , and in no event shall the aggregate liability of Seller under Section 10.1(a) exceed the Cash Purchase Price. For the avoidance of doubt, the liability of Seller under Sections 10.1(a), 10.1(b), 10.1(c), 10.1(d) and 10.1(f) shall not be subject to the Threshold Amount or to any of the limitations stated in the immediately preceding sentence.

     
(b)

The amount of any Loss for which indemnification is provided under this Article 10 shall be net of any amounts recovered or recoverable by the indemnified parties under insurance policies with respect to such Loss.

     
(c)

Under no circumstances shall any Party be liable to indemnify any person under Section 10.1 or 10.2 for any punitive damages, consequential damages or remote damages or any lost profits.

     
(d)

No Person shall be entitled to indemnification under Section 10.1(a) or Section 10.2(a) unless it shall have given the Party or Parties from which indemnity is sought written notice of the Losses for which it seeks indemnification (which notice may be, in the case of third party claims, notice under Section 10.3) within the applicable period of survival stated in Section 10.5. Each such notice shall



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include a reasonably detailed description of the circumstances surrounding the Losses in respect of which indemnification is claimed.

  (e)

Indemnification payments under this Article 10 shall constitute adjustments to the consideration for the Interest.

10.5        Survival

The representations and warranties in Sections 0, 0, 0, 4.4(a), 5.1 and 5.2 shall survive Closing solely for purposes of this Article 10 and shall terminate on the third anniversary of the Closing Date. The representations and warranties in Section 4.11 shall survive Closing solely for purposes of this Article 10 and shall terminate on the thirtieth day following expiration of the applicable statutory period of limitations applicable to claims by any Governmental Authority with respect to any matter that constitutes a breach of such representations and warranties. Each other representation and warranty in this Agreement shall survive Closing solely for purposes of this Article 10 and shall terminate on the date that is 270 days following the Closing Date.

10.6      Sole Remedy

The provisions of this Article 10 are the sole and exclusive monetary remedies of the Parties with respect to this Agreement and the transactions contemplated by this Agreement following Closing, and each Party waives any and all other monetary rights and remedies in respect of this Agreement and such transactions.

10.7        Other Indemnification

The provisions of Section 10.3 shall be applicable to any claim for indemnification made under any other provision of this Agreement, and all references in Section 10.3 to Sections 10.1 and 10.2 shall be deemed to be references to such other provisions of this Agreement.

ARTICLE 11
MISCELLANEOUS PROVISIONS

11.1      Expenses

Except as otherwise provided in Section 11.17 or elsewhere in this Agreement, each of the Parties shall pay its own expenses and the fees and expenses of its counsel, accountants, and other experts in connection with this Agreement.

11.2      Brokerage

Seller shall indemnify and hold each Buyer Party harmless from and against any and all Losses arising from any employment by it of, or services rendered to it by, any finder, broker, agency or other intermediary, in connection with the transactions contemplated hereby, or any allegation of any such employment or services. The Buyer Parties jointly and severally shall indemnify and hold Seller harmless from and against any and all Losses arising from any employment by either Buyer Party of, or services rendered to either Buyer Party by, any finder, broker, agency or other


- 41 -

intermediary, in connection with the transactions contemplated hereby, or any allegation of any such employment or services.

11.3        Waivers

No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. The waiver by any Party of any condition or of a breach of another provision of this Agreement shall not operate or be construed as a waiver of any other condition or subsequent breach. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

11.4      Notices

All notices, requests, demands, applications and other communications which are required to be or may be given under this Agreement shall be in writing and shall be deemed to have been duly given if sent by electronic mail or facsimile transmission or delivered by recognized overnight courier or mailed, certified first class mail, postage prepaid, return receipt requested, to the Parties at the following addresses:

To Seller or Seller Parent:

c/o Waterton Global Resource Management, Inc.
Commerce Court West
199 Bay Street, Suite 5050
Toronto, Ontario M5L 1E2

Attention: Kamal Toor, General Counsel
Facsimile: 416.504.3200
Email:            ktoor@watertonglobal.com

With copies (which shall not constitute notice) to:

Davis Graham & Stubbs LLP
1550 17th Street, Suite 500
Denver, CO 80202

Attention:   Joel O. Benson
Facsimile:    303.893.1379
Email:            joel.benson@dgslaw.com

To the Buyer Parties:

c/o Klondex Mines Ltd.
1055 West Hastings Street, Suite 2200
Vancouver, BC V6E 2E9


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Attention:   Paul Huet
Facsimile:    775.284.5756
Email:             phuet@klondexmines.com

With copies (which shall not constitute notice) to:

Bennett Jones LLP
3400 One First Canadian Place
P.O. Box 130
Toronto, ON M5X 1A4

Attention:   Abbas Ali Khan
Facsimile:    416.863.1716
Email:            alikhana@bennettjones.com

or to such other address as any Party shall have furnished to the other Parties by notice given in accordance with this Section. Such notice shall be effective when received.

11.5        Entire Agreement; Amendments

This Agreement and the Confidentiality Agreement embody the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto, including for greater certainty, the LOI. This Agreement may not be modified orally, but only by an agreement in writing signed by the Party or Parties against whom any waiver, change, amendment, modification or discharge may be sought to be enforced.

11.6        Further Assurances

From time to time after the Closing Date, each Party shall, at the request of any other Party, execute and deliver such additional conveyances, transfers and other assurances as may be reasonably required to effectively undertake the transactions contemplated by this Agreement and to carry out the intent of this Agreement. Without limiting the generality of the foregoing, to the extent that any properties, permits or other assets disclosed in the applicable Schedules hereto are not held by the Company at Closing, upon the written request of Buyer, Seller and its Affiliates shall use their best efforts to transfer, or to cause the transfer of, such property, permit or other asset to the Company or take other appropriate steps to allow the Company to enjoy the benefit of such arrangement or asset.

11.7        Binding Effect; Benefits

This Agreement shall inure to the benefit of and will be binding upon the Parties and their respective successors and permitted assigns. The Parties agree that the Buyer may assign all or any part of its rights under this Agreement to a wholly-owned direct or indirect subsidiary of the Buyer Parent, provided that Buyer shall not be released of its obligations under this Agreement without the prior written consent of Seller. Subject to the foregoing, neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any Party without the prior written consent of the other Parties.


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11.8        Interpretation

The section and other headings in this Agreement are for reference purposes only and will not affect the meaning of interpretation of this Agreement. Reference to Schedules and Exhibits shall, unless otherwise indicated, refer to the Schedules and Exhibits attached to this Agreement, which shall be incorporated in and constitute a part of this Agreement by such reference. The word “including” and words of similar import when used in this Agreement will mean “including, without limitation,” unless otherwise specified. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to the Agreement as a whole and not to any particular provision in this Agreement. The term “or” is not exclusive. All references to “dollars” or “$” in this Agreement refer to United States dollars, which is the currency used for all purposes in this Agreement.

11.9        Counterparts

This Agreement may be executed in any number of counterparts, each of which, when executed, shall be deemed to be an original and all of which together will be deemed to be one and the same instrument.

11.10      Facsimile or .pdf Signature

This Agreement may be executed by facsimile or .pdf signature and a facsimile or .pdf signature shall constitute an original for all purposes.

11.11

Governing Law; Submission to Jurisdiction

     
(a)

This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of Nevada, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Nevada.

     
(b)

Each of the Parties irrevocably agrees that any Litigation arising out of or relating to this Agreement brought by any Party or its successors or permitted assigns against the other Party or Parties shall be brought and determined in any State or federal court located in Reno, Nevada, and each of the Parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such Litigation arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the Parties hereto agrees not to commence any Litigation relating thereto except in the courts described above in Reno, Nevada, other than Litigation in any court of competent jurisdiction to enforce any Judgment rendered by any such court in Reno, Nevada as described herein. Each of the Parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Litigation arising out of or relating to this Agreement or the transactions contemplated hereby, (i) any claim that it is not personally subject to the jurisdiction of the courts in Reno, Nevada as described herein for any reason, (ii)



- 44 -

that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) that (A) the Litigation in any such court is brought in an inconvenient forum, (B) the venue of such Litigation is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

11.12     Waiver of Jury Trial

EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

11.13     Severability

Any term or provision of this Agreement which is invalid or unenforceable shall be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining rights of the Person intended to be benefited by such provision or any other provisions of this Agreement.

11.14     Third Parties; Joint Ventures

This Agreement constitutes an agreement solely among the Parties, and, except as otherwise provided herein, is not intended to and will not confer any rights, remedies, obligations or liabilities, legal or equitable, including any right of employment, on any Person (including but not limited to any employee or former employee of the Company) other than the Parties and their respective successors or permitted assigns, or otherwise constitute any Person a third party beneficiary under or by reason of this Agreement. Nothing in this Agreement, expressed or implied, is intended to or shall constitute the Parties partners, whether as a mining partnership or otherwise, or as participants in a joint venture.

11.15     Time of Essence

Time is of the essence with regard to all dates and time periods set forth or referred to in this Agreement.

11.16     Construction

This Agreement has been negotiated by the Parties and their respective legal counsel, and legal or equitable principles that might require the construction of this Agreement or any provision of this Agreement against the Party drafting this Agreement shall not apply in any interpretation of this Agreement.

11.17     Attorneys’ Fees

If any Litigation between Seller and any Buyer Party with respect to this Agreement or the transaction contemplated hereby shall be resolved or adjudicated by a Judgment of any court, the


- 45 -

Party substantially prevailing under such Judgment shall be entitled, as part of such Judgment, to recover from the other Party its reasonable attorneys’ fees and costs and expenses of litigation.

11.18     Seller Parent Guarantee

Seller Parent hereby absolutely, unconditionally and irrevocably guarantees, as a direct obligation, in favor of Buyer the full and timely performance, observance and payment by Seller of each and every covenant, agreement, undertaking, representation, warranty, indemnity, liability and obligation of Seller contained in this Agreement. Seller Parent agrees that Buyer shall not have to proceed first against Seller before exercising its rights under or in respect of this guarantee against Seller Parent.

[The remainder of this page is intentionally left blank.]


The Parties have executed this Agreement as of the date first written above.

    WATERTON NEVADA SPLITTER, LLC
     
  Per: (signed) “Isser Elishis”
    Name: Isser Elishis
    Title: Manager


 

    KLONDEX HOLDINGS (USA) INC.
     
  Per: (signed) “Paul Huet”
    Name: Paul Huet
    Title: President


 

    KLONDEX MINES LTD.
     
  Per: (signed) “Blair Schultz”
     Name: Blair Schultz
    Title: Director

 

Solely for purposes of Section 11.18:

WATERTON PRECIOUS METALS FUND II CAYMAN, LP
     
  Per: (signed) “Richard Wells”
    Name: Richard Wells
    Title: Authorized Signatory


SCHEDULE A

ESMERALDA ROYALTY PROPERTY

[Omitted]


SCHEDULE B

HOLLISTER ROYALTY PROPERTY

[Omitted]


SCHEDULE C

FORM OF WARRANT

See attached.


THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE ON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) OR ANY STATE SECURITIES LAWS. THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE 1933 ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE LAWS, AND THE HOLDER HAS, PRIOR TO SUCH TRANSACTION UNDER (C) OR (D), FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE CORPORATION.

THIS WARRANT AND THE SECURITIES DELIVERABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF A U.S. PERSON OR PERSON IN THE UNITED STATES UNLESS THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE 1933 ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [INSERT DATE THAT IS FOUR MONTHS AND A DAY FOLLOWING ISSUANCE OF WARRANT].

WARRANTS TO PURCHASE
COMMON SHARES OF KLONDEX MINES LTD.

Warrant Certificate Number: Number of Warrants:
   
2016 – [ ] 5,000,000

THIS IS TO CERTIFY THAT for value received Waterton Nevada Splitter, LLC, a Nevada limited liability company (the “Warrantholder”), has the right to purchase in respect of each whole warrant (individually a “Warrant” and collectively the “Warrants”) represented by this certificate or by a replacement certificate (in either case this “Warrant Certificate”), at any time during the period beginning [•], 2017 [INSERT DATE THAT IS SIX MONTHS FOLLOWING ISSUANCE OF WARRANT] and continuing through and up to the earlier of (i) 5:00 p.m. (Toronto time) on [•], 2032 [INSERT DATE THAT IS 15 YEARS AND SIX MONTHS FOLLOWING ISSUANCE OF WARRANT], and (ii) 5:00 p.m. (Toronto time) on the date that

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1


is 60 days following the delivery to the Warrantholder of written notice that the closing price of the Common Shares (as defined below) on the stock exchange or other market on which the trading in the Common Shares primarily occurs equals or exceeds a 100% premium to the Exercise Price (as defined below) for a period of 60 consecutive trading days (the earlier of (i) or (ii) being the “Expiry Time”) one fully paid and non-assessable common share (individually a “Common Share” and collectively the “Common Shares” and which terms shall include any shares or other securities which may be issued in addition thereto or in substitution or replacement therefor as provided herein) of Klondex Mines Ltd. (the “Corporation”), a corporation incorporated under the Business Corporations Act (British Columbia), as constituted on the date hereof at a purchase price (the purchase price in effect from time to time being called the “Exercise Price”) of Cdn$[•] per Common Share [INSERT PRICE EQUAL TO 20% PREMIUM ON PRICING OF FINANCING, BUT IN NO INSTANCE LESS THAN THE BOOK OR MARKET PRICE ON DATE OF FINANCING], subject to adjustment as provided herein. If, for purposes of subsection (ii) above, the closing price in the primary trading market is reported in a currency other than Canadian dollars, such closing price shall be converted into Canadian dollars at the noon rate reported by the Bank of Canada.

The Corporation agrees that the Common Shares purchased pursuant to the exercise of the Warrants shall be and be deemed to be issued to the Warrantholder as of the close of business on the date on which this Warrant Certificate shall have been surrendered and payment made for such Common Shares as aforesaid.

Nothing contained herein shall confer any right upon the Warrantholder to subscribe for or purchase any Common Shares at any time after the Expiry Time and from and after the Expiry Time the Warrants and all rights under this Warrant Certificate shall be void and of no value. The above provisions are subject to the following:

1.

Exercise : In the event that the Warrantholder desires to exercise the right to purchase Common Shares conferred hereby, the Warrantholder shall (a) complete to the extent possible in the manner indicated and execute a subscription form in the form attached as Schedule “A” to this Warrant Certificate, (b) surrender this Warrant Certificate to the Corporation in accordance with section 9 of this Warrant Certificate, and (c) pay the amount payable upon the exercise of such Warrants in respect of the Common Shares subscribed for by certified cheque, bank draft or money order in lawful money of Canada payable to the Corporation or by transmitting same day funds in lawful money of Canada by wire to such account as the Corporation shall direct the Warrantholder. Upon such surrender and receipt of payment as aforesaid, the Warrantholder shall be deemed for all purposes to be the holder of record of the number of Common Shares to be so issued and the Warrantholder shall be entitled to delivery of a certificate or certificates representing such Common Shares and the Corporation shall cause such certificate or certificates to be delivered to the Warrantholder at the address specified in the subscription form within three business days after such surrender and payment as aforesaid. No fractional Common Shares will be issuable upon any exercise of the Warrants. If a fractional share interest arises upon any exercise of the Warrants, the Corporation shall eliminate such fractional share interest by paying the Warrantholder an amount computed by multiplying the fractional interest by the then fair market value of a full Common Share.

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2



2.

Partial Exercise : The Warrantholder may from time to time subscribe for and purchase any lesser number of Common Shares than the number of Common Shares represented by this Warrant Certificate. In the event that the Warrantholder subscribes for and purchases any such lesser number of Common Shares prior to the Expiry Time, the Corporation shall issue a replacement certificate in the same form as this Warrant Certificate (with appropriate changes) representing the unexercised balance of the Warrants.

   
3.

Not a Shareholder : The holding of the Warrants shall not constitute the Warrantholder a shareholder of the Corporation nor entitle the Warrantholder to any right or interest in respect thereof except as expressly provided in this Warrant Certificate.

   
4.

Covenants, Representations and Warranties : The Corporation hereby represents and warrants that (a) it is authorized to create and issue the Warrants; (b) this Warrant Certificate is a valid and enforceable obligation of the Corporation, enforceable against it in accordance with the provisions of this Warrant Certificate; and (c) all necessary Toronto Stock Exchange and NYSE MKT LLC (“NYSE MKT”) approvals have been obtained. The Corporation hereby covenants and agrees that (i) it will cause the Common Shares from time to time subscribed for and purchased in the manner provided in this Warrant Certificate and the certificate or certificates representing such Common Shares to be issued; (ii) at all times prior to the Expiry Time, it will reserve and there will remain unissued a sufficient number of Common Shares to satisfy the right of purchase provided for in this Warrant Certificate; (iii) all Common Shares issued upon exercise of the right to purchase provided for herein shall, upon payment of the Exercise Price therefor, be issued as fully paid and non-assessable shares, and be free from any and all taxes, liens and charges relating thereto; (iv) it shall make all requisite filings under all applicable securities laws and the respective regulations made thereunder including those necessary to remain a reporting issuer not in default of any requirement of such acts and regulations; and (v) it shall preserve and maintain its corporate existence and all licenses and permits that are material to the proper conduct of its business. The Corporation hereby further covenants and agrees that all Common Shares issuable upon exercise of this Warrant shall be approved for listing (subject to issue or notice of issue) on the Toronto Stock Exchange, the NYSE MKT and on such other stock exchanges or over- the-counter markets on which the Common Shares are listed from time to time.

   
5.

Anti-Dilution Protection :


(a)

Definitions : For the purposes of this section 5, unless there is something in the subject matter or context inconsistent therewith, the words and terms defined below shall have the respective meanings specified therefor in this subsection 5(a):

     
(i)

“Adjustment Period” means the period commencing on the date of issue of the Warrants and ending at the Expiry Time;

     
(ii)

“Current Market Price” of the Common Shares at any date means the price per share equal to the weighted average price at which the Common Shares have traded on the Toronto Stock Exchange or, if the Common Shares are not then

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3



listed on the Toronto Stock Exchange, the NYSE MKT or, if the Common Shares are not then listed on the NYSE MKT, on such other Canadian or U.S. stock exchange as may be selected by the directors of the Corporation for such purpose or, if the Common Shares are not then listed on any Canadian or U.S. stock exchange, in the over-the- counter market, during the period of any 20 consecutive trading days ending not more than five business days and not less than three business days before such date; provided that the weighted average price shall be determined by dividing the aggregate sale price of all Common Shares sold on the said exchange or market, as the case may be, during such 20 consecutive trading days by the total number of Common Shares so sold; and provided further that if the Common Shares are not then listed on any Canadian or U.S. stock exchange or traded in the over-the- counter market, then the Current Market Price shall be determined by a firm of independent chartered accountants selected by the directors of the Corporation;

       
(iii)

“director” or “director of the Corporation” means a director of the Corporation at the relevant time and, unless otherwise specified herein, a reference to action “by the directors” means action by the directors of the Corporation as a board or, whenever empowered, action by any committee of the directors of the Corporation;

       
(iv)

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind; and

       
(v)

“trading day” with respect to a stock exchange or over-the-counter market means a day on which such stock exchange or market is open for business.

       
(b)

Adjustments : The Exercise Price and the number of Common Shares issuable to the Warrantholder pursuant to this Warrant Certificate shall be subject to adjustment from time to time in the events and in the manner provided as follows:

       
(i)

If at any time during the Adjustment Period the Corporation shall:

       
A.

fix a record date for the issue of, or issue, Common Shares or securities exchangeable for or convertible into Common Shares to the holders of all or substantially all of the outstanding Common Shares by way of a stock dividend;

       
B.

fix a record date for the distribution to, or make a distribution to, the holders of all or substantially all of the outstanding Common Shares payable in Common Shares or securities exchangeable or exercisable for or convertible into Common Shares;

       
C.

subdivide the outstanding Common Shares into a greater number of Common Shares; or

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4



  D.

consolidate the outstanding Common Shares into a lesser number of Common Shares,

(any of such events in subclauses 5(b)(i)A, 5(b)(i)B, 5(b)(i)C and 5(b)(i)D above being herein called a “Common Share Reorganization”), the Exercise Price shall be adjusted on the earlier of the record date on which holders of Common Shares are determined for the purposes of the Common Share Reorganization and the effective date of the Common Share Reorganization to the amount determined by multiplying the Exercise Price in effect immediately prior to such record date or effective date, as the case may be, by a fraction:

  I.

the numerator of which shall be the number of Common Shares outstanding on such record date or effective date, as the case may be, before giving effect to such Common Share Reorganization; and

     
  II.

the denominator of which shall be the number of Common Shares which will be outstanding immediately after giving effect to such Common Share Reorganization (including in the case of a distribution of securities exchangeable or exercisable for or convertible into Common Shares the number of Common Shares that would have been outstanding had such securities been exchanged or exercised for or converted into Common Shares on such date).

To the extent that any adjustment in the Exercise Price occurs pursuant to this clause 5(b)(i) as a result of the fixing by the Corporation of a record date for the distribution of securities exchangeable or exercisable for or convertible into Common Shares, the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange, exercise or conversion right to the Exercise Price which would then be in effect based upon the number of Common Shares actually issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right. Any Warrantholder who has not exercised his right to subscribe for and purchase Common Shares on or prior to the record date of such stock dividend or distribution or the effective date of such subdivision or consolidation, as the case may be, upon the exercise of such right thereafter shall be entitled to receive and shall accept in lieu of the number of Common Shares then subscribed for and purchased by such Warrantholder, at the Exercise Price determined in accordance with this clause 5(b)(i) the aggregate number of Common Shares that such Warrantholder would have been entitled to receive as a result of such Common Share Reorganization, if, on such record date or effective date, as the case may be, such Warrantholder had been the holder of record of the number of Common Shares so subscribed for and purchased.

  (ii)

if at any time during the Adjustment Period the Corporation shall fix a record date for the issue or distribution to the holders of all or substantially all of the

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5


outstanding Common Shares of rights, options or warrants pursuant to which such holders are entitled, during a period expiring not more than 45 days after the record date for such issue (such period being the “Rights Period”), to subscribe for or purchase Common Shares or securities exchangeable or exercisable for or convertible into Common Shares at a price per share to the holder (or in the case of securities exchangeable or exercisable for or convertible into Common Shares, at an exchange, exercise or conversion price per share) at the date of issue of such securities of less than 95% of the Current Market Price of the Common Shares on such record date (any of such events being called a “Rights Offering”), the Exercise Price shall be adjusted effective immediately after the record date for such Rights Offering to the amount determined by multiplying the Exercise Price in effect on such record date by a fraction:

  A.

the numerator of which shall be the aggregate of

         
  I.

the number of Common Shares outstanding on the record date for the Rights Offering, plus

         
  II.

the quotient determined by dividing

         
  (1)

either (a) the product of the number of Common Shares offered during the Rights Period pursuant to the Rights Offering and the price at which such Common Shares are offered, or, (b) the product of the exchange, exercise or conversion price of the securities so offered and the number of Common Shares for or into which the securities offered pursuant to the Rights Offering may be exchanged, exercised or converted, as the case may be, by

         
  (2)

the Current Market Price of the Common Shares as of the record date for the Rights Offering; and

         
  B.

the denominator of which shall be the aggregate of the number of Common Shares outstanding on such record date plus the number of Common Shares offered pursuant to the Rights Offering (including in the case of the issue or distribution of securities exchangeable or exercisable for or convertible into Common Shares the number of Common Shares for or into which such securities may be exchanged, exercised or converted).

If by the terms of the rights, options, or warrants referred to in this clause (ii), there is more than one purchase, exchange, exercise or conversion price per Common Share, the aggregate price of the total number of additional Common Shares offered for subscription or purchase, or the aggregate exchange, exercise or conversion price of the exchangeable, exercisable or convertible securities so offered, shall be calculated for purposes of the adjustment on the basis of the lowest purchase, exchange, exercise or conversion price per Common Share, as the case may be. Any Common Shares owned by or held for the account of the

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6



 

Corporation shall be deemed not to be outstanding for the purpose of any such calculation. To the extent that any adjustment in the Exercise Price occurs pursuant to this clause (ii) as a result of the fixing by the Corporation of a record date for the issue or distribution of rights, options or warrants referred to in this clause (ii), the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange, exercise or conversion right to the Exercise Price which would then be in effect based upon the number of Common Shares actually issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right.

       
  (iii)

If at any time during the Adjustment Period the Corporation shall fix a record date for the issue or distribution to the holders of all or substantially all of the outstanding Common Shares of:

       
  A.

shares of the Corporation of any class other than Common Shares;

       
  B.

rights, options or warrants to acquire Common Shares or securities exchangeable or exercisable for or convertible into Common Shares (other than rights, options or warrants pursuant to which holders of Common Shares are entitled, during a period expiring not more than 45 days after the record date for such issue, to subscribe for or purchase Common Shares or securities exchangeable or exercisable for or convertible into Common Shares at a price per share (or in the case of securities exchangeable or exercisable for or convertible into Common Shares at an exchange, exercise or conversion price per share) on the record date for the issue of such securities to the holder of at least 95% of the Current Market Price of the Common Shares on such record date);

       
  C.

evidences of indebtedness of the Corporation; or

       
  D.

any property or assets of the Corporation;

       
 

and if such issue or distribution does not constitute a Common Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a “Special Distribution”), the Exercise Price shall be adjusted effective immediately after the record date for the Special Distribution to the amount determined by multiplying the Exercise Price in effect on the record date for the Special Distribution by a fraction:


  I.

the numerator of which shall be the difference between

       
  (1)

the product of the number of Common Shares outstanding on such record date and the Current Market Price of the Common Shares on such record date, and

       
  (2)

the aggregate fair market value, as determined by the directors of the Corporation, to the holders of Common Shares of the shares, rights, options, warrants, evidences of

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7


indebtedness or property or assets to be issued or distributed in the Special Distribution, and

  II.

the denominator of which shall be the product obtained by multiplying the number of Common Shares outstanding on such record date by the Current Market Price of the Common Shares on such record date.

Any Common Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of such calculation. To the extent that any adjustment in the Exercise Price occurs pursuant to this clause 5(b)(iii) as a result of the fixing by the Corporation of a record date for the issue or distribution of rights, options or warrants to acquire Common Shares or securities exchangeable or exercisable for or convertible into Common Shares referred to in this clause 5(b)(iii), the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange, exercise or conversion right to the amount which would then be in effect based upon the number of Common Shares issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right.

  (iv)

If at any time during the Adjustment Period there shall occur:

       
A.

a reclassification or redesignation of the Common Shares, a change of the Common Shares into other shares or securities or any other capital reorganization involving the Common Shares other than a Common Share Reorganization;

       
B.

a consolidation, amalgamation, arrangement or merger of the Corporation with or into another body corporate which results in a reclassification or redesignation of the Common Shares or a change of the Common Shares into other shares or securities;

       
C.

the transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or entity;

       

(any of such events being called a “Capital Reorganization”), after the effective date of the Capital Reorganization the Warrantholder shall be entitled to receive, and shall accept, for the same aggregate consideration, upon exercise of the Warrants, in lieu of the number of Common Shares to which the Warrantholder was theretofor entitled upon the exercise of the Warrants, the kind and aggregate number of shares and other securities or property resulting from the Capital Reorganization which the Warrantholder would have been entitled to receive as a result of the Capital Reorganization if, on the effective date thereof, the Warrantholder had been the registered holder of the number of Common Shares which the Warrantholder was theretofore entitled to purchase or receive upon the exercise of the Warrants. If necessary, as a result of any such Capital Reorganization, appropriate adjustments shall be made in the application of the

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8



 

provisions of this Warrant Certificate with respect to the rights and interests thereafter of the Warrantholder to the end that the provisions shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares or other securities or property thereafter deliverable upon the exercise of the Warrants. Any such adjustment must be made by and set forth in an amendment to this Warrant approved by the directors of the Corporation.

       
(v)

If at any time during the Adjustment Period any adjustment or readjustment in the Exercise Price shall occur pursuant to the provisions of clause 5(b)(i) of this Warrant Certificate, then the number of Common Shares purchasable upon the subsequent exercise of the Warrants shall be simultaneously adjusted or readjusted, as the case may be, by multiplying the number of Common Shares purchasable upon the exercise of the Warrants immediately prior to such adjustment or readjustment by a fraction of which the numerator shall be the Exercise Price in effect immediately prior to such adjustment or readjustment and the denominator shall be Exercise Price resulting from such adjustment or readjustment.

       
  (c)

Rules : The following rules and procedures shall be applicable to adjustments made pursuant to subsection 5(b) of this Warrant Certificate:

       
(i)

Subject to the following clauses of this subsection 5(c), any adjustment made pursuant to subsection 5(b) hereof shall be made successively whenever an event referred to therein shall occur.

       
(ii)

No adjustment in the Exercise Price shall be required unless such adjustment would result in a change of at least one per cent in the then Exercise Price and no adjustment shall be made in the number of Common Shares purchasable upon the exercise of the Warrants unless it would result in a change of at least one one- hundredth of a Common Share; provided, however, that any adjustments which except for the provision of this clause 5(c)(ii) would otherwise have been required to be made shall be carried forward and taken into account in any subsequent adjustment. Notwithstanding any other provision of subsection 5(b) hereof, no adjustment of the Exercise Price shall be made which would result in an increase in the Exercise Price or a decrease in the number of Common Shares issuable upon the exercise of the Warrants (except in respect of the Common Share Reorganization described in subclause 5(b)(i)D hereof or a Capital Reorganization described in subclause 5(b)(iv)A hereof).

       
(iii)

No adjustment in the Exercise Price or in the number or kind of securities purchasable upon the exercise of the Warrants shall be made in respect of any event described in section 5 hereof (except for Common Share Reorganizations described in subclauses 5(b)(i)C or 5(b)(i)D hereof) if the Warrantholder is entitled to participate in such event on the same terms mutatis mutandis as if the Warrantholder had exercised the Warrants prior to or on the record date or effective date, as the case may be, of such event.

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    (iv)

No adjustment in the Exercise Price or in the number of Common Shares purchasable upon the exercise of the Warrants shall be made pursuant to subsection 5(b) hereof in respect of the issue from time to time of Common Shares pursuant to this Warrant Certificate or pursuant to any stock option, stock purchase or stock bonus plan in effect from time to time for directors, officers or employees of the Corporation and/or any subsidiary of the Corporation and any such issue, and any grant of options in connection therewith, shall be deemed not to be a Common Share Reorganization, a Rights Offering nor any other event described in subsection 5(b) hereof.

         
    (v)

If at any time during the Adjustment Period the Corporation shall take any action affecting the Common Shares, other than an action or event described in subsection 5(b) hereof, which in the opinion of the directors of the Corporation would have a material effect upon the rights of Warrantholders, either or both the Exercise Price and the number of Common Shares purchasable upon exercise of the Warrants shall be adjusted in such manner and at such time by action by the directors of the Corporation, in their sole discretion, as may be equitable in the circumstances; provided, however, that any such adjustment shall be subject to the approval of the Toronto Stock Exchange and the NYSE MKT (if the Common Shares are then listed on such stock exchanges) and any other required regulatory approvals. Failure of the taking of action by the directors of the Corporation so as to provide for an adjustment prior to the effective date of any action by the Corporation affecting the Common Shares shall be deemed to be conclusive evidence that the directors of the Corporation have determined that it is equitable to make no adjustment in the circumstances.

         
    (vi)

If the Corporation shall set a record date to determine holders of Common Shares for the purpose of entitling such holders to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter and before the distribution to such holders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, then no adjustment in the Exercise Price or the number of Common Shares purchasable upon the exercise of the Warrants shall be required by reason of the setting of such record date.

         
    (vii)

In any case in which this Warrant Certificate shall require that an adjustment shall become effective immediately after a record date for an event referred to in subsection 5(b) hereof, the Corporation may defer, until the occurrence of such event:

         
    A.

issuing to the Warrantholder, to the extent that the Warrants are exercised after such record date and before the occurrence of such event, the additional Common Shares or other securities issuable upon such exercise by reason of the adjustment required by such event; and

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10



  B.

delivering to the Warrantholder any distribution declared with respect to such additional Common Shares or other securities after such record date and before such event;

provided, however, that the Corporation shall deliver to the Warrantholder an appropriate instrument evidencing the right of the Warrantholder upon the occurrence of the event requiring the adjustment, to an adjustment in the Exercise Price or the number of Common Shares purchasable upon the exercise of the Warrants and to such distribution declared with respect to any such additional Common Shares issuable upon the exercise of the Warrants.

In the absence of a resolution of the directors of the Corporation fixing a record date for a Rights Offering, the Corporation shall be deemed to have fixed as the record date therefor the date of the issue of the rights, options or warrants issued pursuant to the Rights Offering.

    (viii)

If a dispute shall at any time arise with respect to adjustments of the Exercise Price or the number of Common Shares purchasable upon the exercise of the Warrants, such disputes shall be conclusively determined by the auditors of the Corporation or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by the directors of the Corporation and any such determination shall be conclusive evidence of the correctness of any adjustment made pursuant to subsection 5(b) hereof and shall be binding upon the Corporation and the Warrantholder.

       
    (ix)

As a condition precedent to the taking of any action which would require an adjustment pursuant to subsection 5(b) hereof, including the Exercise Price and the number or class of Common Shares or other securities which are to be received upon the exercise thereof, the Corporation shall take any action which may, in the opinion of counsel to the Corporation, be necessary in order that the Corporation may validly and legally issue as fully paid and non-assessable shares all of the Common Shares or other securities which the Warrantholder is entitled to receive in accordance with the provisions of this Warrant Certificate.


  (d)

Fundamental Transaction : If, at any time while this Warrant is outstanding, (i) the Corporation, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Corporation with or into another Person, (ii) the corporation, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Shares, (iv) the Corporation, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Shares or any compulsory share exchange pursuant to which the Common Shares are effectively converted into or exchanged for other securities, cash or property,

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or (v) the Corporation, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Common Shares (not including any shares of Common Shares held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Warrantholder shall have the right to receive, for each Common Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction the number of common shares of the successor or acquiring corporation or of the Corporation, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of Common Shares for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Common Share in such Fundamental Transaction, and the Corporation shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Warrantholder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Change of Control Transaction (as defined below), the Corporation or any Successor Entity (as defined below) shall, at the Warrantholder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Change of Control Transaction, purchase this Warrant from the Warrantholder by paying to the Warrantholder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Change of Control Transaction. The Black Scholes Value shall be determined by such accounting firm agreed upon by the Corporation and the Warrantholder. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds within five Business Days of the Warrantholder’s election (or, if later, on the effective date of the Fundamental Transaction). The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Corporation under this Warrant pursuant to written agreements in form and substance reasonably satisfactory to the Warrantholder and approved by the Warrantholder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Warrantholder, deliver to the Warrantholder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of common shares of such Successor Entity (or its parent entity) equivalent to the Common Shares acquirable and receivable upon exercise of this Warrant prior to such Fundamental Transaction, and with

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12



an exercise price which applies the exercise price hereunder to such common shares (adjusted in accordance with Section 5 to the extent applicable but taking into account the relative value of the Common Shares pursuant to such Fundamental Transaction and the value of such common shares, such number of common shares and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Warrantholder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Corporation” shall refer instead to the Successor Entity), and may exercise every right and power of the Corporation and shall assume all of the obligations of the Corporation under this Warrant with the same effect as if such Successor Entity had been named as the Corporation herein. “Change of Control Transaction” means (i) the direct or indirect sale, lease, exchange or other transfer of all or substantially all of the assets of the Corporation to any Person or entity or group of Persons or entities, in each case other than an affiliate of the Corporation (as that term is defined in the Securities Act (Ontario)), but not including the entering into of an option, joint venture or other arrangement whereby the Corporation transfers, or has the right to transfer, an interest in its mineral properties yet maintains control, majority ownership or an operating interest in the mineral properties, resulting entity or new arrangement; (ii) the amalgamation, merger or arrangement of the Corporation with or into another entity (other than an affiliate of the Corporation, as that term is defined in the Securities Act (Ontario)) where the shareholders of the Corporation immediately prior to the transaction will hold less than 50% of the voting securities of the resulting entity upon completion of the transaction; or (iii) any Person or combination of Persons (in each case other than an affiliate of the Corporation, as that term is defined in the Securities Act (Ontario)) acting jointly or in concert, acquiring or becoming the beneficial owner of, directly or indirectly, of more than 50% of the voting securities of the Corporation whether through the acquisition of previously issued and outstanding voting securities of the Corporation or of voting securities of the Corporation that have not previously been issued or any combination thereof or any other transaction with similar effect.

     
  (e)

Notice : At least 21 days prior to the earlier of the record date or effective date of any event which requires or might require an adjustment in any of the rights of the Warrantholder under this Warrant Certificate, including the Exercise Price or the number of Common Shares which may be purchased under this Warrant Certificate, the Corporation shall deliver to the Warrantholder a certificate of the Corporation specifying the particulars of such event and, if determinable, the required adjustment and the calculation of such adjustment. In case any adjustment for which a notice in this subsection 5(d) has been given is not then determinable, the Corporation shall promptly after such adjustment is determinable deliver to the Warrantholder a certificate providing the calculation of such adjustment. The Corporation hereby covenants and agrees that the register of transfers and share transfer books for the Common Shares will be open, and that the Corporation will not take any action which might deprive the Warrantholder of the opportunity of exercising the rights of subscription contained in this Warrant Certificate, during such 21 day period.

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6.

Further Assurances : The Corporation hereby covenants and agrees that it will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, all and every such other act, deed and assurance as the Warrantholder shall reasonably require for the better accomplishing and effectuating of the intentions and provisions of this Warrant Certificate.

   
7.

Time of Essence : Time shall be of the essence of this Warrant Certificate.

   
8.

Governing Laws : This Warrant Certificate shall be subject to, governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. The Corporation and the Warrantholder irrevocably attorn and submit to the execlusive jurisdiction of the courts of the Province of Ontario with respect to any dispute related to or arising out of this Warrant Certificate.

   
9.

Notices : All notices or other communications to be given under this Warrant Certificate shall be delivered by hand or by telecopier or other form of electronic transmission (such as email or .pdf) and, if delivered by hand, shall be deemed to have been given on the delivery date and, if sent by telecopier or other form of electronic transmission, on the date of transmission if sent before 5:00 p.m., Toronto time, on a business day or, if sent after 5:00 p.m., Toronto time, or such day is not a business day, on the first business day following the date of transmission.

Notices to the Corporation shall be addressed to:

Klondex Mines Ltd.
1055 West Hastings Street, Suite 2200
Vancouver, British Columbia V6E 2E9

Attention: Chief Financial Officer
Facsimile:   (604) 891-5100

Notices to the Warrantholder shall be addressed to the address of the Warrantholder last shown on the register of Warrantholders maintained by the Corporation.

The Corporation or the Warrantholder may change its address for service by notice in writing to the other of them specifying its new address for service under this Warrant Certificate.

10.      Legends on Common Shares :

  (a)

Any certificate representing Common Shares issued upon the exercise of the Warrants prior to the date which is four months and one day after the date hereof will bear the following legends:

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY

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BEFORE [INSERT DATE THAT IS 4 MONTHS AND A DAY AFTER ISSUANCE OF THE WARRANTS].”

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON TSX.”

provided that at any time subsequent to the date which is four months and one day after the date hereof any certificate representing such Common Shares may be exchanged for a certificate or certificates bearing no such legends. The Corporation hereby covenants and agrees that it will deliver or cause to be delivered a certificate or certificates representing such Common Shares bearing no such legends within three business days after receipt of the legended certificate or certificates.

     
  (b)

Any certificate representing Common Shares issued on the exercise of Warrants represented by this Warrant Certificate (i) to persons who do not certify to the Corporation that they are not a U.S. person and are not exercising the Warrants in the United States or for the account or on behalf of a U.S. Person or person in the United States, or (ii) at a time the Corporation is not a foreign private issuer, will, unless the offer and sale of such Common Shares is registered under the U.S. Securities Act and the securities laws of all applicable states of the United States, will bear the following legend:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) OR ANY STATE SECURITIES LAWS. THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE 1933 ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE LAWS, AND THE HOLDER HAS, PRIOR TO SUCH TRANSACTION UNDER (C) OR (D), FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE CORPORATION.

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THE PRESENCE OF THIS LEGEND MAY IMPAIR THE ABILITY OF THE HOLDER HEREOF TO EFFECT “GOOD DELIVERY” OF THE SECURITIES REPRESENTED HEREBY ON A CANADIAN STOCK EXCHANGE. A CERTIFICATE WITHOUT A LEGEND MAY BE OBTAINED FROM THE REGISTRAR AND TRANSFER AGENT OF THE CORPORATION IN CONNECTION WITH A SALE OF THE SECURITIES REPRESENTED HEREBY AT A TIME WHEN THE CORPORATION IS A “FOREIGN ISSUER” AS DEFINED IN REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT, UPON DELIVERY OF THIS CERTIFICATE, AN EXECUTED DECLARATION AND, IF REQUESTED BY THE CORPORATION OR THE TRANSFER AGENT, AN OPINION OF COUNSEL, EACH IN FORM REASONABLY SATISFACTORY TO THE TRANSFER AGENT AND THE CORPORATION, TO THE EFFECT THAT SUCH SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT.”

provided, that if at any time the holder proposes to resell any of the Common Shares bearing the foregoing legend outside the United States pursuant to Regulation S promulgated under the U.S. Securities Act, the legend set forth above may be removed in connection with such resale by providing to the Corporation and its transfer agent the certificate for such securities and a completed declaration in the form attached hereto as Schedule “B” or such other evidence of exemption as the Corporation or its transfer agent may reasonably prescribe from time to time, including, but not limited to, an opinion of counsel or other evidence of exemption, in either case reasonably satisfactory to the Corporation and its transfer agent, to the effect that the sale of the securities is being made in compliance with Regulation S.

11.

Lost Certificate : If this Warrant Certificate or any replacement hereof becomes stolen, lost, mutilated or destroyed, the Corporation shall, on such terms as it may reasonably impose (which shall, in the case of a mutilated Warrant Certificate, include the surrender thereof, and it being understood that, in the case of a lost, stolen or destroyed Warrant Certificate, an affidavit of loss shall be sufficient evidence thereof) issue and deliver a new certificate, in form identical hereto but with appropriate changes, representing any unexercised portion of the subscription rights represented hereby to replace the certificate so stolen, lost, mutilated or destroyed.

   
12.

Transfer : The Warrants are transferable and the term “Warrantholder” shall mean and include any successor, transferee or assignee of the current or any future Warrantholder. The Warrants may be transferred by the Warrantholder completing and delivering to the Corporation the transfer form attached hereto as Schedule “C”.

   
13.

Successors and Assigns : This Warrant Certificate shall enure to the benefit of the Warrantholder and the successors and assignees thereof and shall be binding upon the Corporation and the successors thereof.

[Signature Page Follows]

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16


IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed by an authorized officer as of the _______ day of ______________, 201__.

  KLONDEX MINES LTD.
     
     
  By:  
    Authorized Officer

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Schedule A

TO: KLONDEX MINES LTD.

SUBSCRIPTION FORM

The undersigned hereby subscribes for common shares (“Common Shares”) of Klondex Mines Ltd. (the “Corporation”) (or such other number of Common Shares or other securities to which such subscription entitles the undersigned in lieu thereof or in addition thereto pursuant to the provisions of the warrant certificate (the “Warrant Certificate”) dated [•], 2016 issued by the Corporation) at the purchase price of Cdn$[•] per Common Share (or at such other purchase price as may be in effect under the provisions of the Warrant Certificate) and on and subject to the other terms and conditions specified in the Warrant Certificate and hereunder and encloses herewith a certified cheque, bank draft or money order in lawful money of Canada payable to the Corporation or has transmitted same day funds by wire to such account as the Corporation directed the undersigned in payment of the subscription price.

In connection with the exercise of the Warrant Certificate, the undersigned hereby represents and warrants as follows: (Please check the ONE box applicable):

[   ] 1.

The undersigned (i) at the time of exercise is not a U.S. person, (ii) at the time of exercise is not within the United States, (iii) is not exercising any of the Warrants represented by this Warrant certificate for the account or benefit of any U.S. person or person within the United States, and (iv) did not execute or deliver this Subscription Form in the United States.

   
[   ] 2.

The undersigned (i) purchased the Warrants directly from the Corporation, (ii) is exercising the Warrants solely for its own account or for the account of the original beneficial purchaser, if any, and (iii) each of it and any beneficial purchaser was on the date the Warrants were purchased from the Corporation, and is on the date of exercise of the Warrants, an “accredited investor” (as defined in Rule 501(a) of Regulation D under the 1933 Act).

   
[   ] 3.

The undersigned has delivered to the Corporation a written opinion of U.S. counsel reasonably satisfactory to the Corporation to the effect that the Common Shares to be delivered upon exercise hereof are exempt from registration under the 1933 Act and the securities laws of all applicable states of the United States.

“1933 Act” means the United States Securities Act of 1933, as amended. “U.S. person” and “United States” are as defined by Regulation S under the 1933 Act.

Certificates representing Common Shares will not be registered or delivered to an address in the United States unless Box 2 or Box 3 above is checked and the requirements in connection therewith have been satisfied.

Certificates representing Common Shares issued upon exercise of Warrants pursuant to Box 2 or Box 3 above will bear a U.S. restrictive legend. If the Corporation is not a foreign private issuer

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at the time of exercise, certificates representing Common Shares issued upon exercise of Warrants pursuant to Box 1 above will bear a U.S. restrictive legend.

If any Common Shares represented by this Warrant certificate are not being exercised, a new Warrant Certificate will be issued and delivered with the Common Share certificate(s).

The undersigned hereby directs that the Common Shares subscribed for be registered and delivered as follows:

Name in Full Address Number of Common Shares

DATED this _______ day of ________, 20__.

     
     
  By:   

Instructions:

1.

If the Subscription Form indicates that Common Shares are to be issued to a person or persons other than the registered holder of the Warrant Certificate, the signature of the Warrantholder on the Subscription Form must be guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange, and the Warrantholder must pay any applicable transfer taxes or fees.

   
2.

If the Subscription Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a judiciary or representative capacity, the Warrant Certificate must be accompanied by evidence of authority to sign satisfactory to the Corporation.

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Schedule B
FORM OF DECLARATION FOR REMOVAL OF LEGEND

TO: Computershare Investor Services Inc., as registrar and transfer agent for the Common Shares of Klondex Mines Ltd.

The undersigned (a) acknowledges that the sale of the securities of Klondex Mines Ltd. (the “Corporation”) to which this declaration relates is being made in compliance with Rule 904 of Regulation S promulgated under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and (b) certifies that (1) the undersigned is not an “affiliate” of the Corporation as that term is defined in Rule 405 of Regulation C promulgated under the U.S. Securities Act (except in respect of any officer or director who is an “affiliate” solely by virtue of holding such position), (2) the offer of such securities was not made to a person in the United States and either (A) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States, or (B) the transaction was executed in, on or through the facilities of the Toronto Stock Exchange or any other Designated Offshore Securities Market as defined in Rule 902 under Regulation S promulgated under of the U.S. Securities Act (“Regulation S”) and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, (3) neither the seller nor any affiliate of the seller nor any person acting on any of its behalf has engaged or will engage in any “directed selling efforts” in the United States in connection with the offer and sale of such securities, (4) the sale is bona fide and not for the purpose of “washing off” the resale restrictions imposed because the securities are “restricted securities” (as such term is defined in Rule 144(a)(3) under the U.S. Securities Act), (5) the securities sold in reliance on Rule 904 of Regulation S will not be replaced with fungible unrestricted securities, (6) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions of the U.S. Securities Act, and (7) at the time of the exercise of the warrants the Corporation was a foreign private issuer. Unless otherwise specified, terms set forth above have the meanings given to them by Regulation S.

Dated:                                                                                            
    Name of Seller
     
  By:  
    Name:
    Title:

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Schedule C

FORM OF TRANSFER

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ______________________________________________________________________________ (include name and address of the transferee) Warrants exercisable for common shares of Klondex Mines Ltd. (the “Corporation”) registered in the name of the undersigned on the register of the Corporation maintained therefor, and hereby irrevocably appoints _______________ the attorney of the undersigned to transfer the said securities on the books maintained by the Corporation with full power of substitution.

DATED this        day of                          , 20   .

Signature of Transferor guaranteed by:

Name of Bank or Trust Company:   Signature of Transferor
     
     
     
     
    Address of Transferor

Instructions:

1.

The name of the Transferor must correspond with the name written upon the face of this Warrant Certificate in every particular without any changes whatsoever.

   
2.

The signature of the Transferor on the Transfer Form must be guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange, and the Warrantholder must pay any applicable transfer taxes or fees.

   
3.

If the Transfer Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a judiciary or representative capacity, the Warrant Certificate must be accompanied by evidence of authority to sign satisfactory to the Corporation.

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SCHEDULE D
RIGHT OF FIRST OFFER

See attached.

 

 


 

Schedule D – Right of First Offer
1


RIGHT OF FIRST OFFER AGREEMENT

             THIS RIGHT OF FIRST OFFER AGREEMENT (the “ Agreement ”) is executed this _______ day of ________, 2016 between Clover Nevada LLC, a Nevada limited liability company (“ Grantor ”), and [Klondex Holdings (USA) Inc. or its designee], a [Nevada Corporation] (“ Grantee ” and together with Grantor, the “ parties ”).

            For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each party, the parties covenant and agree as follows:

1.

Right of First Offer . Grantor hereby grants and sells to Grantee a one-time right of first offer (the “ Right of First Offer ”) for the purchase of the real property more particularly described on Exhibit A hereto (the “ Subject Properties ”) on and subject to the terms hereof. Subject to Section 6, if at any time Grantor proposes to effect any sale, transfer, assignment or other disposition (a “ Disposition ”) of its right, title and interest in and to all or any part of the Subject Properties (the “ Subject Property Interest ”) to any third party, Grantor shall deliver to Grantee a written notice (the “ Disposition Notice ”) of the proposed Disposition. If Grantee delivers notice to Grantor within ten (10) days of receipt of the Disposition Notice of Grantee’s intent to engage in negotiations regarding the Disposition, then for the thirty (30) days following delivery of the Disposition Notice, Grantor and Grantee shall discuss and attempt to negotiate and agree upon the terms upon which Grantee would be willing to purchase the Subject Property Interest under this Agreement. Upon the first to occur of (i) Grantee’s failure to deliver notice to Grantor of Grantee’s intent to engage in such discussions within the time period prescribed in the preceding sentence; (ii) Grantee’s delivery of notice to Grantor of Grantee’s intent not to engage in such discussions; and (iii) the failure of Grantor and Grantee to reach agreement on the terms upon which Grantee would purchase the Subject Property Interest by the end of such thirty (30) day period, Grantor may proceed with the proposed Disposition with any third party at any time and upon any such terms as Grantor may determine in its sole discretion, and Grantee shall be deemed to have irrevocably elected not to purchase the Subject Property Interest that is the subject of such Disposition Notice. In the event that Grantor and Grantee reach agreement on the terms upon which Grantee would purchase the Subject Property Interest that is the subject of the Disposition Notice within such thirty (30) day period, then, on such business day as Grantor and Grantee shall mutually agree (which shall be not less than thirty (30) days nor more than sixty (60) days after the end of such thirty (30) day period) Grantee shall purchase the Subject Property Interest that is the subject of the Disposition Notice upon the terms mutually agreed by Grantor and Grantee. In the event that any Disposition Notice relates to only a portion, and not the entirety, of the Subject Properties, Grantee’s Right of First Offer as to the remaining Subject Property Interests that were not the subject of such Disposition Notice (the “ Remaining Subject Properties ”) shall survive such Disposition Notice as to such Remaining Subject Properties.

   
2.

Definitions .

   

affiliated entity ” means any entity owned by, controlled by, under common control with or sharing principals or directors in common with Grantor, and with respect to any

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2



successor in interest of Grantor, said phrase shall mean any entity owned by, controlled by, under common control with or sharing principals or directors in common with Grantor, with said successor in interest or with any predecessor in title to said successor in interest. “Controlled by” and “common control with” shall include all types of control, whether by the ownership of voting securities or otherwise.

   

Grantor Reorganization ” means any merger, consolidation or other entity reorganization involving Grantor or its direct or indirect parent company which is not a bona fide sale of the Subject Properties for its fair market value and which transfer was not made for purposes of evading its obligation to offer the Subject Property Interests to Grantee in accordance with the terms of this Agreement.

   
3.

Representations of Grantor . Grantor is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Nevada, and has all requisite power and authority to hold its assets, conduct its activities as currently conducted and to execute, deliver and perform its obligations under this Agreement. The execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby by Grantor have been duly and validly authorized by all necessary action on the part of Grantor. This Agreement has been duly and validly executed and delivered by Grantor, and is the valid and binding obligation of Grantor, enforceable against Grantor in accordance with its terms. Grantor has good record title to the Subject Properties.

   
4.

Representations of Grantee . Grantee is a [corporation] duly organized, validly existing, and in good standing under the laws of the [State of Nevada], and has all requisite power and authority to hold its assets, conduct its activities as currently conducted and to execute, deliver and perform its obligations under this Agreement. The execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby by Grantee have been duly and validly authorized by all necessary action on the part of Grantee. This Agreement has been duly and validly executed and delivered by Grantee, and is the valid and binding obligation of Grantee, enforceable against Grantee in accordance with its terms.

   
5.

Grantor’s Rights Not Restricted . Notwithstanding anything to the contrary contained in this Agreement, Grantor shall have the right during the term of this Agreement to mortgage or otherwise encumber the Subject Properties and to grant leases for all or parts of the Subject Properties, as Grantor sees fit.

   
6.

Transfers to Affiliates . If at any time Grantor proposes to effect any Disposition of the Subject Property Interest to any third party that is an affiliated entity of Grantor or carry out a transaction or series of transactions that is or are part of a Grantor Reorganization, Grantor shall not be required to provide a Disposition Notice to Grantee in respect of such Disposition or Grantor Reorganization; provided, however, that any acquiree, transferee, assignee or surviving entity of the Grantor Reorganization that acquires the Subject Property Interest shall have acknowledged in writing to the Grantee that it is bound by this Agreement.

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7.

Assignment by Grantee . Grantor and Grantee agree that Grantee may assign all or any part of its rights under this Agreement to, and its obligations under this Agreement may be assumed by, an affiliated entity of Grantee. Subject to the foregoing, neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by either Grantor and Grantee without the prior written consent of the other party hereto. This Agreement does not affect title to any real property and does not run with title to any real property. In no event may this Agreement or any memorandum, summary or any instrument making reference to any provision hereunder be recorded in the real estate records in any location or jurisdiction. If such an instrument is recorded it (and all rights granted to Grantee herein) shall be deemed immediately and finally terminated and void, and Grantor shall have the unilateral right to release it of record.

   
8.

Governing Law . This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of Nevada, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Nevada.

   
9.

Counterparts; Facsimile or .pdf Signature . This Agreement may be executed in any number of counterparts, each of which, when executed, shall be deemed to be an original and all of which together will be deemed to be one and the same instrument. This Agreement may be executed by facsimile or .pdf signature and a facsimile or .pdf signature shall constitute an original for all purposes.

   
10.

Entire Agreement . This Agreement supersedes all prior agreements between the parties with regard to the subject matter hereof, and there are no other understandings or agreements between them. This Agreement can only be modified by a written instrument signed by both Grantor and Grantee.

[Signature Page Follows.]

 

 

 

 

 

Schedule D – Right of First Offer
4


IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first above written.

  CLOVER NEVADA LLC
   
   
  By: _______________________________________________
           Name:
           Title:
   
   
  [KLONDEX HOLDINGS (USA) INC.]
   
   
  By: _______________________________________________
           Name:
           Title:

Schedule D – Right of First Offer
5


EXHIBIT A
SUBJECT PROPERTIES

[Omitted]

 

 

 

Schedule D – Right of First Offer
6



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

ASSET PURCHASE AGREEMENT

-AMONG-

KLONDEX CANADA LTD.

-AND-

KLONDEX MINES LTD.

-AND-

SHORELINE GOLD INC.

___________________________________
DECEMBER 16, 2015


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

TABLE OF CONTENTS

ARTICLE 1 INTERPRETATION 1
     1.1 Defined Terms 1
     1.2 Certain Rules of Interpretation 10
ARTICLE 2 PURCHASED ASSETS AND PURCHASE PRICE 11
     2.1 Purchase and Sale 11
     2.2 Purchase Price 11
     2.3 Allocation of Purchase Price 12
     2.4 Assignment of Rights to the Purchased Assets 12
ARTICLE 3 REPRESENTATIONS AND WARRANTIES 13
     3.1 Representations and Warranties of Shoreline 13
     3.2 Representations and Warranties of Klondex and Klondex Parent 13
ARTICLE 4 COVENANTS 13
     4.1 Conduct of Business of Shoreline 13
     4.2 Certain Covenants of Shoreline Relating to the Transaction 13
     4.3 Covenants of Klondex Relating to the Transaction 15
     4.4 Required Consents 16
     4.5 Access to Information and Access for Due Diligence 16
     4.6 Public Communications 16
     4.7 Tax Matters 17
     4.8 Employment Matters 17
     4.9 6004903 Manitoba Limited 19
ARTICLE 5 NON-SOLICITATION 19
     5.1 Non-Solicitation 19
ARTICLE 6 CONDITIONS 20
     6.1 Mutual Conditions Precedent 20
     6.2 Additional Conditions Precedent to the Obligations of Klondex 20
     6.3 Additional Conditions Precedent to the Obligations of Shoreline 21
ARTICLE 7 TERM AND TERMINATION 23
     7.1 Termination 23
     7.2 Effect of Termination 24
ARTICLE 8 CLOSING 24
     8.1 Date, Time and Place of Closing 24
ARTICLE 9 INDEMNITY 24

-i-


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

     9.1 Indemnity 24
     9.2 Procedure 24
     9.3 Third Party Claims 25
     9.4 Limitations 26
     9.5 Survival 26
     9.6 Remedies and Mitigation Obligation 26
     9.7 Payment of Indemnification 27
     9.8 Knowledge 27
     9.9 Non-Reliance 27
ARTICLE 10 GENERAL PROVISIONS 27
     10.1 Amendments 27
     10.2 Expenses 27
     10.3 Injunctive Relief and Remedies 28
     10.4 Further Assurances 28
     10.5 Notices 28
     10.6 Time of the Essence 29
     10.7 Third Party Beneficiaries 29
     10.8 Waiver 30
     10.9 Entire Agreement 30
     10.10 Successors and Assigns 30
     10.11 Severability 30
     10.12 Governing Law 30
     10.13 Rules of Construction 31
     10.14 Counterparts 31

SCHEDULES DESCRIPTION
   
Schedule "A" Assumed Contracts
Schedule "B" Equipment
Schedule "C" Excluded Assets
Schedule "D" Fixed Assets
Schedule "E" Intellectual Property
Schedule "F" Owned Real Property
Schedule "G" Properties
Schedule "H" Royalties
Schedule "I" Required Consent
Schedule "J" Representations and Warranties of Shoreline
Schedule "K" Representations and Warranties of Klondex and Klondex Parent
Schedule "L" Intentionally Deleted
Schedule "M" Other Interests
Schedule "N" Encumbrances
Schedule "O" Franco-Nevada Consents
Schedule "P" Form of Promissory Note

-ii-


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

-iii-


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

ASSET PURCHASE AGREEMENT

THIS AGREEMENT is made as of December 16, 2015,

AMONG:

KLONDEX CANADA LTD. , a corporation existing under the laws of British Columbia

(" Klondex ")

- and -

SHORELINE GOLD INC. , a corporation existing under the laws of Manitoba

(" Shoreline ")

- and -

KLONDEX MINES LTD. , a corporation existing under the laws of British Columbia

(" Klondex Parent ")

      WHEREAS Shoreline is the beneficial and registered owner of the Purchased Assets (as defined herein);

     AND WHEREAS Shoreline desires to sell, and Klondex desires to purchase, the Purchased Assets upon and subject to the terms and conditions set out in this Agreement;

     NOW THEREFORE , in consideration of the covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties agree as follows:

ARTICLE 1
INTERPRETATION

1.1

Defined Terms

As used in this Agreement, the following terms have the following meanings:

" Accepting Employee " means each of the Retained Employees of Shoreline who has accepted Klondex's offer of employment.

" affiliate " has the meaning specified in National Instrument 45-106 – Prospectus Exemptions.

" Agreement " means this asset purchase agreement, including the schedules attached hereto.

" Assumed Contracts " means the Contracts listed in Schedule "A".


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

" Authorization " means, with respect to any Person, any order, permit, approval, consent, waiver, licence, registration or similar authorization of any Governmental Entity having jurisdiction over the Person.

" Books and Records " means all information in any form relating directly or indirectly to the Purchased Assets, including, without limitation, books of account, personnel records, sales and purchase records, customer and supplier lists, lists of potential customers, referral sources, research and development reports and records, production reports and records, business reports, plans and projections, marketing and advertising materials, corporate seals, equipment logs, operating guides and manuals, business reports, plans and projections and all other documents, files, correspondence, e-mails, Authorizations, Environmental management systems (including data collected for the purpose of compliance with Environmental Laws and the preparation of reports to Governmental Entities) and other information (whether in written, printed, electronic or computer printout form, or stored on computer discs or other data and software storage and media devices).

" Business Day " means any day of the year, other than a Saturday, Sunday or any day on which major banks are closed for business in Winnipeg, Manitoba and/or Reno, Nevada.

" Cash Consideration " has the meaning ascribed thereto in Section 2.2(a) .

" Change of Control " means the occurrence of any transaction or event resulting in (i) any Person (or group of Persons acting jointly or in concert) purchasing or acquiring legal or beneficial ownership, either directly or indirectly, of voting shares of a Person which carry more than 50% of the votes for the election of directors of the Person, except where such Person or group of Persons are "related" (within the meaning of the Tax Act) to such Person prior to such purchase or acquisition, (ii) the amalgamation of a Person with another Person or Persons, except where such amalgamation is with a Person or group of Persons each of whom is "related" (within the meaning of the Tax Act) to such Person prior to such amalgamation, or (iii) a sale of all or substantially all of the assets of a Person to any Person (or group of Persons acting jointly or in concert).

" Claim " has the meaning ascribed thereto in Section 9.2(a) .

" Closing Date " means the date which is ten Business Days following the date on which the Required Consents are obtained, or such earlier or later date as the Parties may agree in writing, such date to occur not earlier than January 1, 2016 or later than the Outside Date, provided in all cases that such date shall not occur prior to the satisfaction or waiver of the conditions set out in Article 6.

" Closing Time " means 10:00 a.m. (Toronto time) or such other time as the Parties may agree in writing on the Closing Date.

" Contract " means any (written) agreement, commitment, engagement, contract, franchise, licence, lease, obligation, undertaking or joint venture relating to the Purchased Assets and to which Shoreline is a party or by which Shoreline is bound or affected.

" Cougar Property " means the group of mining claims and permits located near Bissett, Manitoba listed or described in Schedule "G".

" Data Room " means the material contained in the virtual data room (established by Shoreline) as at 10:00 p.m. on December 16, 2015.


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

" Denmark Lake-Kenbridge Property " means the group of mining claims and permits located in the Kenora Mining Division, Ontario listed or described in Schedule "G".

" Denton-Keefer (Golden) Property " means the group of mining claims and permits located in the Kenora Mining Division, Ontario listed or described in Schedule "G".

" Disclosure Letter " means the disclosure letter dated the date of this Agreement and delivered by Shoreline to Klondex with this Agreement.

" Encumbrance " means any encumbrance of any kind whatsoever on property including any privilege, mortgage, hypothec, lien, charge, pledge, security interest, adverse claim or any other option, right or claim of others of any kind whatever, whether contractual, statutory or otherwise, arising.

" Environment " means soil, land surface or subsurface strata, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins and wetlands), groundwater, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life, sewer system, and any other environmental medium or natural resource and the environment in the workplace.

" Environmental Laws " means all Laws and agreements with Governmental Entities and all other statutory requirements relating to the Environment, public health and safety, noise control, pollution, reclamation or the protection of the Environment or to the generation, production, installation, use, storage, treatment, disposal, handling, transportation, Release or threatened Release of Hazardous Substances, including civil responsibility for acts or omissions with respect to the Environment, and all Authorizations issued pursuant to such Laws, agreements or other statutory requirements.

" Equipment " means the equipment of Shoreline described in Schedule "B".

" Escrow Agent " means Computershare Trust Company of Canada or such other escrow agent as the Parties may agree.

" Escrow Agreement " means the escrow agreement between Shoreline, Klondex and the Escrow Agent in form and substance satisfactory to each of the Parties and the Escrow Agent.

" Exchange " means the Toronto Stock Exchange.

" Excluded Assets " means each asset of Shoreline that is not a Purchased Asset.

" Fixed Assets " means the fixed assets of Shoreline described in Schedule "D".

" Fourth Instalment " has the meaning ascribed thereto in Section 2.2(a)(iv) .

" Franco-Nevada Consents " means [****] .

[****]

[****]


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

" Governmental Entity " means (i) any international, multinational, national, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau, ministry, agency or instrumentality, domestic or foreign, (ii) any subdivision or authority of any of the above, (iii) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing or (iv) any stock exchange.

" Greenbelt Property " means the group of mining claims and permits located near Bissett, Manitoba listed or described in Schedule "G".

" Hazardous Substances " means any element, waste or other substance, whether natural or artificial and whether consisting of gas, liquid, solid or vapour that is prohibited, listed, defined, judicially interpreted, designated or classified as dangerous, hazardous, radioactive, explosive or toxic or a pollutant or a contaminant under or pursuant to any applicable Environmental Laws, and specifically including petroleum and all derivatives thereof or synthetic substitutes therefor and asbestos or asbestos-containing materials or any substance which is regulated under Environmental Laws.

" IFRS " means generally accepted accounting principles as set out in the CPA Canada Handbook – Accounting for an entity that prepares its financial statements in accordance with International Financial Reporting Standards, at the relevant time, applied on a consistent basis.

" Initial Cash Consideration " has the meaning ascribed thereto in Section 2.2(a)(i) .

" Intellectual Property " means intellectual property of any nature owned or used by Shoreline in relation to the Purchased Assets, including trademarks, proposed trademarks, certification marks, distinguishing guises, industrial designs, copyrights, formulae, processes, research data, technical expertise, know-how, trade secrets, inventions, patent rights, patent registration, patent continuations or patents, whether domestic or foreign and whether registered or unregistered, and all applications for registration in respect thereof, including, without limitation, the intellectual property described in Schedule "E".

" Jeep Property " means the group of mining claims and permits located near Bissett, Manitoba listed or described in Schedule "G".

" Klondex " means Klondex Canada Ltd., a corporation existing under the laws of British Columbia.

" Klondex Parent " means Klondex Mines Ltd., a corporation existing under the laws of British Columbia.

" Law " means, with respect to any Person, any and all applicable law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement, whether domestic or foreign, enacted, adopted, promulgated or applied by a Governmental Entity that is binding upon or applicable to such Person or its business, undertaking, property or securities, and to the extent that they have the force of law, policies, guidelines, notices and protocols of any Governmental Entity, as amended unless expressly specified otherwise.

" Loss " has the meaning ascribed thereto in Section 9.1.


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

" Manitoba Properties " means, collectively, (i) the Cougar Property; (ii) the Jeep Property; (iii) the Mike Power Property; (iv) the Poundmaker Property; (v) the Rice Lake Property; and (vi) the Greenbelt Property.

" Material Adverse Effect " means any fact or state of facts, circumstance, change, effect, occurrence or event which individually or in the aggregate is, or individually or in the aggregate could reasonably be expected to be material and adverse to the Purchased Assets (taken as a whole) except any fact or state of facts, circumstance, change, effect, occurrence or event resulting from or relating to:

  (a)

the announcement of this Agreement or any action taken by Shoreline that is required pursuant to this Agreement;

     
  (b)

changes in Laws, general economic, securities, financial, accounting, banking or currency exchange markets;

     
  (c)

changes in the worldwide gold mining industry in general or the price of gold, provided that such changes do not have a materially disproportionate effect on the Purchased Assets relative to comparable gold development or gold mining companies and/or gold development or gold mining projects;

     
  (d)

changes in political or civil conditions in Canada, provided that such changes do not have a materially disproportionate effect on the Purchased Assets relative to comparable gold development or gold mining companies and/or gold development or gold mining projects;

     
  (e)

any generally applicable changes in Laws or regulations (other than changes in applicable mining Laws or orders, judgements or decrees against Shoreline), changes in IFRS or other applicable accounting standards; or

     
  (f)

a natural disaster or the commencement, occurrence or continuation of any war, armed hostilities or act of terrorism, provided that such events do not have a materially disproportionate effect on the Purchased Assets, relative to comparable gold development or gold mining companies and/or gold development or gold mining projects.

" Mike Power Property " means the group of mining claims and permits located near Bissett, Manitoba listed or described in Schedule "G".

" Mine Closure Plan " means the closure plan dated September 1, 2001 submitted by San Gold Corporation (“ San Gold ”) to the Government of Manitoba relating to San Gold’s mine located in Bissett, Manitoba, as replaced by the new closure plan dated September 30, 2012 prepared by Parks Environmental Inc.

" Mineral Products " means the end products derived from operating a Property including metals, concentrates and whole ore.

" Mineral Rights " means the rights to prospect and explore for, to develop and to mine minerals on, in or under any lands.


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

" Misrepresentation " has the meaning ascribed thereto under Securities Laws.

" Notice of Claim " has the meaning ascribed thereto in Section 9.2(a) .

" officer " has the meaning ascribed thereto in the Securities Act.

" Ontario Properties " means, collectively, (i) the Denmark Lake-Kenbridge Property, (ii) the Denton-Keefer (Golden) Property, (iii) the Tully Property, (iv) the Turtlepond Lake Property, and (v) the Whitesides-Carscallen Property.

" Ordinary Course " means, with respect to an action taken by Shoreline, that such action is consistent with the practice of Shoreline at the Properties during the Shoreline Period taking into account that (i) the Rice Lake Property is and has during such period been on care and maintenance and (ii) no mining, exploration or development has been undertaken during such period in relation to the other Properties.

" Owned Real Property " means the lands and premises of Shoreline described in Schedule "F".

" Outside Date " means February 29, 2016.

" Parties " means Klondex and Shoreline and

" Party " means either of them.

" Permitted Encumbrance " means, in respect of the Purchased Assets:

  (a)

the reservations, limitations, provisos and conditions expressed in any original grant from a Governmental Entity and any statutory exceptions to title;

     
  (b)

agreements with any Governmental Entity and any public utilities or private suppliers of services that in each case do not materially detract from the value or materially interfere with the use of the real or immovable property subject thereto;

     
  (c)

any claim by any First Nation or other aboriginal people based on treaty rights, traditional territory or otherwise;

     
  (d)

those royalties set out in Schedule "H";

     
  (e)

the Encumbrances granted in favour of the Government of Manitoba pursuant to a general security agreement relating to (i) prior to the Closing Time, Shoreline's obligations under the Mine Closure Plan, or (ii) at or after the Closing Time, Klondex's obligations under the Mine Closure Plan; and

     
  (f)

all Encumbrances described in Schedule "N".

" Person " includes any individual, partnership, association, body corporate, organization, trust, estate, trustee, executor, administrator, legal representative, government (including Governmental Entity), syndicate or other entity, whether or not having legal status.

" Poundmaker Property " means the group of mining claims and permits located near Bissett, Manitoba listed or described in Schedule "G".


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

" Promissory Note " has the meaning ascribed thereto in Section 2.2(b) .

" Properties " means, collectively, the Manitoba Properties and the Ontario Properties, and

" Property " means any one of them.

" Property Rights " has the meaning ascribed thereto in subparagraph 11(a) of Schedule "J".

" Proposal " has the meaning ascribed thereto in Section 5.1.

" Purchase Price " has the meaning ascribed thereto in Section 2.2(a) .

" Purchased Assets " means all of Shoreline's rights, title and interest in and to:

  (a)

a 100% interest in the Properties other than the Tully Property;

     
  (b)

a 50% interest in the Tully Property;

     
  (c)

all geological, geophysical, geochemical and test data and all other information (including internal and external studies, analyses and other work products) in relation to the Properties acquired, proved, gained or developed heretofore in the possession or under the control of Shoreline;

     
  (d)

all improvements to the Properties, all fixtures, plant, machinery, equipment, supplies, infrastructure and any other properties or rights of any description whether real or personal, in relation to the Properties;

     
  (e)

all Mineral Products derived from the exploitation and mining of the Properties;

     
  (f)

all proceeds of insurance received by or payable to by Shoreline on account of loss of or damage to the Properties occurring during the period commencing on the date hereof and ending on the Closing Date;

     
  (g)

all rights, benefits and entitlements of Shoreline under the Assumed Contracts;

     
  (h)

all rights, benefits and entitlements of Shoreline under any Authorizations relating to the Properties (to the extent transferable);

     
  (i)

the leasehold interests of Shoreline in any surface lease or leases or any mining lease with respect to the Properties;

     
  (j)

the Owned Real Property and all tailings, dams and similar property and structures;

     
  (k)

the Equipment;

     
  (l)

the Fixed Assets;

     
  (m)

the Intellectual Property;



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (n)

the Books and Records;

     
  (o)

the 43,047,256 common shares of SGX Resources Inc.; and

     
  (p)

all of the shares in 6004903 that are owned by Shoreline provided that Klondex has notified Shoreline in writing not later than three Business Days prior to the Closing Date that it wishes to acquire such shares.

For the purposes of (a) to (o) above, " Properties " shall be deemed to refer to, collectively, (i) all of the Properties other than the Tully Property, and (ii) a 50% interest in the Tully Property.

" Release " has the meaning prescribed in any Environmental Law and includes any sudden, intermittent or gradual release, spill, leak, pumping, addition, pouring, emission, emptying, discharge, migration, injection, escape, leaching, disposal, dumping, deposit, spraying, burial, abandonment, incineration, seepage, placement or introduction of a Hazardous Substance, whether accidental or intentional, into the Environment or migration of a Hazardous Substance into or through the Environment or into or out of any lands or waters, including the movement of a Hazardous Substance through or in any part of the Environment.

" Representatives " has the meaning ascribed thereto in Section 6.1(a) .

" Required Consents " means those consents listed in Schedule "I".

" Rice Lake Property " means the group of mining claims and permits located in Bissett, Manitoba listed or described in Schedule "G".

" San Gold " has the meaning ascribed thereto in Section 4.7(a) .

" Second Instalment " has the meaning ascribed thereto in Section 2.2(a)(ii) .

" Securities Act " means The Securities Act (Manitoba).

" Securities Laws " means the Securities Act and all rules, regulations, published notices and instruments thereunder, and all comparable securities Laws in each of the provinces of Canada.

" Shoreline " means Shoreline Gold Inc., a corporation existing under the laws of Manitoba.

" Shoreline Period " means the period commencing on June 23, 2015 and ending on the date hereof.

" Shoreline Fundamental Reps " means the representations and warranties of Shoreline set forth in paragraphs 1 [Organization and Qualification] , 2 [Corporate Authorization], 3 [Execution and Binding Obligation] , 11(a)(i) and (ii) [ Real Property Matters ] and 12 [ No Option on Assets ] of Schedule J.

" Subsidiary " means, with respect to a Person, any body corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors thereof (whether or not shares of any other class shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such Person and shall include any body partnership, joint venture or other entity over which it exercises direction or control or which is in a like relation to subsidiary.


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST. corporate,

" Tax Act " means the Income Tax Act (Canada).

" Taxes " means (a) any and all taxes, duties, fees, excises, premiums, assessments, imposts, levies and other charges or assessments of any kind whatsoever imposed by any Governmental Entity, whether computed on a separate, consolidated, unitary, combined or other basis, including those levied on, or measured by, or described with respect to, income, gross receipts, profits, gains, windfalls, capital, capital stock, production, recapture, transfer, land transfer, license, gift, occupation, wealth, environment, net worth, indebtedness, surplus, sales, goods and services, harmonized sales, use, value-added, excise, special assessment, stamp, withholding, business, franchising, real or personal property, health, employee health, payroll, workers' compensation, employment or unemployment, severance, social services, social security, education, utility, surtaxes, customs, unclaimed property, import or export, and including all license and registration fees and all employment insurance, health insurance and government pension plan premiums or contributions; (b) all interest, penalties, fines, additions to tax or other additional amounts imposed by any Governmental Entity on or in respect of or in lieu of amounts of the type described in clause (i) above or this clause (ii); and (c) any liability for the payment of any amounts of the type described in clauses (i) or (ii) as a result of being a member of an affiliated, consolidated, combined or unitary group for any period.

" Third Instalment " has the meaning ascribed thereto in Section 2.2(a)(iii) .

" Third Party Claim " has the meaning ascribed thereto in Section 9.3.

" Threshold " has the meaning ascribed thereto in Section 9.4(a)(i) .

" Transaction " means, collectively, the transactions contemplated by this Agreement including the purchase of the Purchased Assets by Klondex and the sale of the Purchased Assets by Shoreline as contemplated herein but excluding any transaction relating to any Excluded Asset.

" Tully Property " means the group of mining claims and permits located near Timmins, Ontario listed or described in Schedule "G".

" Turtlepond Lake Property " means the group of mining claims and permits located in the Kenora Mining Division, Ontario listed or described in Schedule "G".

" Whitesides-Carscallen Property " means the group of mining claims and permits located in the Porcupine Mining Division, Ontario listed or described in Schedule "G".

" Wilful Breach " means a breach of this Agreement that is a consequence of an act undertaken by the breaching Party with the actual knowledge that the taking of such act would, or would be reasonably expected to, cause a breach of this Agreement.

" 6004903 " means 6004903 Manitoba Limited.


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

1.2 Certain Rules of Interpretation

In this Agreement, unless otherwise specified:

  (a)

Headings, etc. The provision of a Table of Contents, the division of this Agreement into Articles and Sections and the insertion of headings are for convenient reference only and do not affect the construction or interpretation of this Agreement.

     
  (b)

Currency. All references to dollars or to $ are references to United States dollars, unless specified otherwise.

     
  (c)

Gender and Number. Any reference to gender includes all genders. Words importing the singular number only include the plural and vice versa.

     
  (d)

Certain Phrases, etc. The words (i) "including", "includes" and "include" mean "including (or includes or include) without limitation," (ii) "the aggregate of", "the total of", "the sum of", or a phrase of similar meaning means "the aggregate (or total or sum), without duplication, of," and (iii) unless stated otherwise, "Article", "Section", and "Schedule" followed by a number or letter mean and refer to the specified Article or Section of or Schedule to this Agreement. The term "made available" means (i) copies of the subject materials were included in the Data Room or (ii) the subject material was listed in the Disclosure Letter and copies were provided to Klondex by Shoreline if requested.

     
  (e)

Capitalized Terms. Unless expressly indicated otherwise, all capitalized terms used in any Schedule or in the Disclosure Letter have the meanings ascribed to them in this Agreement.

     
  (f)

Knowledge. Where any representation or warranty is expressly qualified by reference to the knowledge of Shoreline, it is deemed to refer to the actual knowledge of [****] , the knowledge of each of whom and relationship to Shoreline have been disclosed in writing to Klondex.

     
  (g)

Accounting Terms. All accounting terms are to be interpreted in accordance with IFRS and all determinations of an accounting nature in respect of Shoreline required to be made shall be made in a manner consistent with IFRS.

     
  (h)

Statutes. Any reference to a statute refers to such statute and all rules, resolutions and regulations made under it, as it or they may have been or may from time to time be amended or re-enacted, unless stated otherwise.

     
  (i)

Computation of Time. A period of time is to be computed as beginning on the day following the event that began the period and ending at 4:30 p.m. on the last day of the period, if the last day of the period is a Business Day, or at 4:30 p.m. on the next Business Day if the last day of the period is not a Business Day.

     
  (j)

Time References. References to time are to local time, Bissett, Manitoba.



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (k)

Consent. If any provision requires approval or consent of a Party and such approval or consent is not delivered within the specified time limit, the Party whose consent or approval is required shall be conclusively deemed to have withheld its approval or consent.

     
  (l)

Schedules. The following schedules are attached to this Agreement and form an integral part of this Agreement for all purposes of it:


  SCHEDULES DESCRIPTION
     
  Schedule "A" Assumed Contracts
  Schedule "B" Equipment
  Schedule "C" Excluded Assets
  Schedule "D" Fixed Assets
  Schedule "E" Intellectual Property
  Schedule "F" Owned Real Property
  Schedule "G" Properties
  Schedule "H" Royalties
  Schedule "I" Required Consent
  Schedule "J" Representations and Warranties of Shoreline
  Schedule "K" Representations and Warranties of Klondex and Klondex Parent
  Schedule "L" Intentionally Deleted
  Schedule "M" Other Interests
  Schedule "N" Encumbrances
  Schedule "O" Franco-Nevada Consents
  Schedule "P" Form of Promissory Note

ARTICLE 2
PURCHASED ASSETS AND PURCHASE PRICE

2.1

Purchase and Sale

On and subject to the terms and conditions of this Agreement, including the representations, warranties and covenants contained herein, Shoreline agrees to sell, assign, transfer and convey unto Klondex and Klondex agrees to purchase from Shoreline the Purchased Assets free and clear of all Encumbrances, other than Permitted Encumbrances.

2.2

Purchase Price

     
(a)

The purchase price payable by Klondex to Shoreline for the Purchased Assets (the " Purchase Price ") shall be fully paid and satisfied by the payment by Klondex of an amount in cash equal to the aggregate of $32,000,000 (the " Cash Consideration "), which Cash Consideration shall be paid by Klondex as follows:



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (i)

a first instalment of the Purchase Price in the amount of $20,000,000 (the " Initial Cash Consideration ") shall be paid at the Closing Time by Klondex to Shoreline by wire transfer of immediately available funds;

     
  (ii)

a second instalment of the Purchase Price in the amount of $4,000,000 (the " Second Instalment ") shall be paid on the first anniversary of the Closing Date by Klondex to Shoreline by wire transfer of immediately available funds;

     
  (iii)

a third instalment of the Purchase Price in the amount of $4,000,000 (the " Third Instalment ") shall be paid on the second anniversary of the Closing Date by Klondex to Shoreline by wire transfer of immediately available funds; and

     
  (iv)

a fourth instalment of the Purchase Price in the amount of $4,000,000 (the " Fourth Instalment ") shall be paid on the third anniversary of the Closing Date by Klondex to Shoreline by wire transfer of immediately available funds.


  (b)

Klondex's obligation to pay the Second Instalment, Third Instalment and Fourth Instalment shall be evidenced by a promissory note to be agreed upon and executed by Klondex and Shoreline (the " Promissory Note "). The Promissory Note shall be substantially in the form set out in Schedule "P".


2.3

Allocation of Purchase Price

Klondex shall determine the allocations of the tangible (on a class-by-class basis), intangible and real property assets comprising the Purchased Assets and shall, within 90 days after the Closing Date, communicate in writing such values to Shoreline, accompanied with a draft purchase price allocation. Klondex will consider in good faith any comments received from Shoreline in relation to such draft purchase price allocation provided such comments are received within 30 days following the delivery of the allocation by Klondex to Shoreline. Klondex shall then confirm the final purchase price allocation, which may or may not include some or all of Shoreline's comments, and such final purchase price allocation shall be the purchase price allocation which the Parties shall use for all Tax purposes. In the event that not all of Shoreline's comments have incorporated in the final purchase price allocation, Shoreline shall only be required to use such purchase price allocation for any purpose if, in Shoreline's view (acting reasonably), such purchase price allocation does not have any adverse Tax consequences for Shoreline or any of its affiliates.

2.4

Assignment of Rights to the Purchased Assets

Upon receipt by Shoreline of the Initial Cash Consideration, all right, title and interest in and to the Purchased Assets shall, as between the Parties, be deemed to be transferred to, and held by, Klondex notwithstanding that Klondex shall make the payments required by Sections 2.2(a)(ii), (iii) and (iv) after the Closing Time or that further actions may be taken by the Parties to effectively transfer title to Klondex after the Closing Time.


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES

3.1

Representations and Warranties of Shoreline

Except as set forth in the Disclosure Letter (it being expressly understood and agreed that the disclosure of any fact or item in the Disclosure Letter shall also be deemed to be an exception to (or, as applicable, disclosure for the purposes of) all applicable representations and warranties of Shoreline), Shoreline represents and warrants to Klondex as set forth in Schedule "J" and acknowledges and agrees that Klondex is relying upon such representations and warranties in connection with the entering into of this Agreement.

3.2

Representations and Warranties of Klondex and Klondex Parent

Except as set forth in writing by Klondex or Klondex Parent to Shoreline on or prior to the date hereof, each of Klondex and Klondex Parent represents and warrants to Shoreline as set forth in Schedule "K" and acknowledges and agrees that Shoreline is relying upon such representations and warranties in connection with the entering into of this Agreement.

ARTICLE 4
COVENANTS

4.1

Conduct of Business of Shoreline

Shoreline covenants and agrees that, during the period from the date of this Agreement until the earlier of the Closing Date and the time that this Agreement is terminated in accordance with its terms, except with the express prior written consent of Klondex, as required or permitted by this Agreement, or as required by Law, Shoreline shall conduct its business in respect of the Purchased Assets in the Ordinary Course and Shoreline shall maintain and preserve the Purchased Assets substantially in the condition in which they are in as of the date of this Agreement and perform and comply with all of its material obligations under all Assumed Contracts. For greater certainty, Klondex acknowledges that this Section 4.1 shall not apply to the conduct of business by Shoreline in respect of its properties and assets other than the Purchased Assets.

4.2

Certain Covenants of Shoreline Relating to the Transaction

       
(a)

Shoreline shall perform all obligations required or desirable to be performed by Shoreline under this Agreement, co-operate with Klondex in connection therewith, and do all such other acts and things as may be necessary in order to consummate and make effective, as soon as reasonably practicable, the Transaction and, without limiting the generality of the foregoing, Shoreline shall:

       
(i)

use commercially reasonable efforts to satisfy all conditions precedent in this Agreement and comply promptly with all requirements imposed by Law on it with respect to this Agreement or the Transaction;

       
(ii)

use commercially reasonable efforts to obtain and maintain all third party or other consents (including from Governmental Entities), waivers, permits, exemptions, orders, approvals, agreements, amendments or confirmations that are (i) necessary in connection with the Transaction, (ii) required to be obtained under any Assumed Contracts, leases, permits, licenses or other Authorizations in respect of the Purchased Assets in connection with the Transaction or (iii) required in order to maintain any Assumed Contracts, leases, permits, licenses or other authorizations in respect of the Purchased Assets in full force and effect following completion of the Transaction, in each case, on terms that are reasonably satisfactory to Klondex, and without committing the Purchased Assets or Klondex to pay any consideration or incur any liability or obligation without the prior written consent of Klondex;



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (iii)

use commercially reasonable efforts to effect all necessary registrations, filings and submissions of information required by Governmental Entities relating to the Transaction and coordinating and cooperating with Klondex with respect thereto, including the discharge of any Encumbrance in favour of the government of Manitoba securing the obligations of Shoreline under the Mine Closure Plan in the event that such Encumbrance is not required by the government of Manitoba as a result of the Transaction;

       
  (iv)

use commercially reasonable efforts to oppose, lift or rescind any injunction, restraining or other order, decree or ruling seeking to restrain, enjoin or otherwise prohibit or adversely affect the consummation of the Transaction and defend, or cause to be defended, any proceedings to which it is a party or brought against it or its directors or officers challenging the Transaction or this Agreement; and

       
  (v)

not take any action, or refrain from taking any commercially reasonable action, or permitting any action to be taken or not taken, which is inconsistent with this Agreement or which would reasonably be expected to prevent, delay or otherwise impede the consummation of the Transaction.

       
  (b)

Shoreline shall promptly notify Klondex and (if it becomes aware, Klondex shall promptly notify Shoreline) in writing of:

       
  (i)

any Material Adverse Effect or any fact or state of facts, circumstance, change, effect, occurrence or event which could reasonably be expected to have a Material Adverse Effect;

       
  (ii)

any notice or other communications from any Person alleging that the consent (or waiver, permit, exemption, order, approval, agreement, amendment or confirmation) of such Person (or another Person) is or may be required in connection with this Agreement or the Transaction;

       
  (iii)

any notice or other communication from any Governmental Entity in connection with this Agreement or the Transaction (and contemporaneously provide a copy of any such written notice or communication to Klondex); or



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (iv)

any filing, actions, suits, claims, investigations or proceedings commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting Shoreline, the Purchased Assets or that relate to this Agreement or the Transaction.


4.3

Covenants of Klondex Relating to the Transaction

       
(a)

Klondex shall perform all obligations required or desirable to be performed by Klondex under this Agreement, co-operate with Shoreline in connection therewith, and do all such other acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the Transaction and, without limiting the generality of the foregoing, Klondex shall:

       
(i)

use commercially reasonable efforts to satisfy all conditions precedent in this Agreement and comply promptly with all requirements imposed by Law on it with respect to this Agreement or the Transaction; and

       
(ii)

use commercially reasonable efforts to obtain and maintain all third party or other consents (including from Governmental Entities), waivers, permits, exemptions, orders, approvals, agreements, amendments or confirmations that are (i) necessary in connection with the Transaction, (ii) required to be obtained under any Assumed Contracts, leases, permits, licenses or other Authorizations in respect of the Purchased Assets in connection with the Transaction or (iii) required in order to maintain any Assumed Contracts, leases, permits, licenses or other authorizations in respect of the Purchased Assets in full force and effect following completion of the Transaction;

       
(iii)

use commercially reasonable efforts to effect all necessary registrations, filings and submissions of information required by Governmental Entities (including the Exchange, if applicable) relating to the Transaction and cooperating with Shoreline with respect thereto;

       
(iv)

use commercially reasonable efforts to oppose, lift or rescind any injunction, restraining or other order, decree or ruling seeking to restrain, enjoin or otherwise prohibit or adversely affect the consummation of the Transaction and defend, or cause to be defended, any proceedings to which it is a party or brought against it or its directors or officers challenging the Transaction or this Agreement; and

       
(v)

not take any action, or refrain from taking any commercially reasonable action, or permitting any action to be taken or not taken, which is inconsistent with this Agreement or which would reasonably be expected to prevent, delay or otherwise impede the consummation of the Transaction.



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

4.4

Required Consents

     
(a)

Shoreline covenants and agrees in favour of Klondex to use its commercially reasonable efforts after the date hereof to promptly obtain at its sole cost and expense the Required Consents.

     
(b)

Klondex Parent shall, on or prior to the first anniversary of the Closing Date, advance not less than C$10,000,000 in cash to Klondex by way of equity or debt that is non-redeemable, non- retractable and non-repayable (and in relation to which no other amounts shall be paid) until all amounts under the Promissory Note have been paid in full.

     
(c)

Shoreline covenants and agrees to provide Klondex with all correspondence made by Shoreline or received by Shoreline with respect to the Required Consents.

     
(d)

To the extent applicable, on and after the Closing Date, until such time as the Required Consents have been obtained, to the extent permitted by Law, Shoreline shall hold the Assumed Contract which relates to the Required Consent in trust for the benefit of Klondex and the covenants and obligations thereunder shall be fully performed by Shoreline (and Shoreline shall not terminate or amend any such Assumed Contract or grant a waiver of any breach of such Assumed Contract or fail to enforce any breach of such Assumed Contract without the prior written consent of Klondex) and all benefits and obligations existing thereunder shall be for the account of Klondex and all costs (if any) in respect thereof shall also be for the account of Klondex.


4.5

Access to Information and Access for Due Diligence

From the date hereof, unless this Agreement is terminated in accordance with its terms, subject to Law, Shoreline shall, and shall cause its officers, directors, employees, auditors, advisors and agents to, in respect of the business, operations, assets, properties and related rights comprising and relating solely to the Purchased Assets and 6004903, afford Klondex and its officers, employees, agents and representatives such access as Klondex may reasonably request, without disrupting the business and operations of Shoreline, during regular business hours of Shoreline, including for the purpose of environmental site assessments, environmental compliance audits and health and safety audits, facilitating post-closing business planning and indemnification purposes, to their officers, employees, agents, properties, books, records and Contracts, and shall make available to Klondex all data and information as Klondex may reasonably request with respect thereto. Without limiting the foregoing, Shoreline shall, upon Klondex's reasonable request, facilitate discussions between Klondex and any third party from whom consent may be required in respect of the Transaction.

4.6

Public Communications

Shoreline and Klondex shall agree on the text of any press releases by which Shoreline and/or Klondex will announce (i) the execution of this Agreement and (ii) the completion of the Transaction. A Party must not issue any press release or make any other public statement or disclosure with respect to this Agreement or the Transaction without the consent of the other Party (which consent shall not be unreasonably withheld or delayed), and Shoreline must not make any filing with any Governmental Entity with respect to this Agreement or the Transaction without the consent of Klondex (which consent shall not be unreasonably withheld or delayed); provided that any Party that, in the opinion of its outside legal counsel, is required to make disclosure by Law shall use its commercially reasonable efforts to give the other Party prior oral or written notice and a reasonable opportunity to review or comment on the disclosure (other than with respect to confidential information contained in such disclosure). The Party making such disclosure shall give reasonable consideration to any comments made by the other Party or its counsel, and if such prior notice is not possible, shall give such notice immediately following the making of such disclosure.


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

4.7

Tax Matters

     
(a)

Shoreline represents and warrants that it acquired the Purchased Assets on June 23, 2015 pursuant to an agreement of purchase and sale dated June 10, 2015 from 5813906 Manitoba Ltd. (formerly San Gold Corporation) (" San Gold ") and that [****] .

     
(b)

The Parties agree and acknowledge that the acquisition of the Purchased Assets hereunder involves the acquisition by Klondex of all or substantially all of the assets of Shoreline, and Klondex and Shoreline covenant and agree to execute and file a joint election in the prescribed form contemplated under paragraph 66.7(7)(e) of the Tax Act, within the time limits prescribed by the Tax Act, in respect of the transfer of the Purchased Assets. The Parties acknowledge that the election under this section will only extend to the Purchased Assets to the extent applicable. Shoreline shall prepare and execute such election and provide a copy of the same for Klondex's review at least 15 Business Days prior to the filing deadline.

     
(c)

Each of Shoreline and Klondex represents that it is duly registered under subdivision (d) of Division V of Part IX of the Excise Tax Act (Canada) with respect to GST and will provide its registration number to the other party promptly upon request by such other party. Shoreline and Klondex acknowledge and agree that Shoreline is selling, and Klondex is acquiring, all or substantially all of the assets used in the business and each agrees to jointly prepare and execute an election pursuant to section 167 of the Excise Tax Act (Canada). Klondex shall file such election in prescribed form and within the time limits contained in the Excise Tax Act (Canada) with the appropriate Governmental Entity. Any GST and/or any other sales or similar tax incurred in connection with the transactions contemplated by this Agreement, including, for greater certainty, where an election pursuant to section 167 of the Excise Tax Act (Canada) is not or cannot be validly made in respect of the Purchased Assets, shall be borne by Klondex.

     
(d)

Klondex shall pay (and indemnify Shoreline for) any and all land transfer taxes, levies and other Taxes which may be payable in connection with the purchase and sale of the assets of 6004903 if Klondex acquires such assets as contemplated in section 4.9.

     
4.8

Employment Matters

     
(a)

Klondex shall make offers of employment, effective at the Closing Time, to each of [****] , which offers of employment shall be made no later than ten days prior to the Closing Date. [****] shall each have the option to accept or reject their respective offer of employment up to five days prior to the Closing Date.



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

As a condition of closing, prior the Closing Date, Shoreline shall have:

       
  (i)

Terminated, effective prior to the Closing Date, the employment of all its employees other than any employee who tenders his or her resignation effective prior to the Closing Date (each such resigning employee being a " Resigning Employee ") and all such terminated Shoreline employees are hereinafter referred to as " Terminated Employees ";

       
  (ii)

provided all notice or pay in lieu of notice to all Terminated Employees as is required under all applicable employment agreements with such Terminated Employees and as otherwise required by law; and

       
  (iii)

paid to all employees of Shoreline all accrued vacation pay, statutory holiday pay, wages, salaries, termination payments (subject to subsection 4.8(c) below), and all other benefits and entitlements accrued up to the Closing Date under the applicable employment agreement with each such employee and as otherwise required by law,

       
 

and Shoreline shall and does hereby indemnify and hold Klondex harmless for all liabilities, obligations and amounts arising from matters during the period commencing on June 23, 2015 and ending on the Closing Date, or in connection with the transactions herein set forth, that may be or become owing by Shoreline, to any or all employees of Shoreline including without limitation, all Resigning Employees, Terminated Employees, and subject to subsection 4.8(c) hereof, [****] .

       
  (c)

Notwithstanding whether or not [****] accepts employment with Klondex pursuant to the offers made in accordance with subsection 4.8(a), Shoreline shall terminate both of their employment contracts effective the Closing Date, however in the event that:

       
  (i)

[****] accepts his offer of employment with Klondex, Klondex hereby covenants and agrees with Shoreline that Klondex, in satisfaction of Shoreline's obligation under [****] existing employment contract with Shoreline, shall, on closing, pay directly to [****] the termination payment set out in such employment contract in the amount of [****] ; and

       
  (ii)

[****] accepts his offer of employment with Klondex, Klondex hereby covenants and agrees with Shoreline that Klondex, in satisfaction of Shoreline's obligation under [****] existing employment contract with Shoreline, shall on closing, pay directly to [****] the termination payment set out in such employment contract in the amount of [****] ;

       
 

in each case, with such payment being less all respective required deductions.

       
  (d)

In the event that [****] does not accept the offer of employment made by Klondex made pursuant to subsection 4.8(a) hereof, then Klondex shall have no responsibility whatsoever for such non-accepting party's termination payment or any other obligation of Shoreline under the applicable employment agreement with such party or as otherwise required by law.



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (e)

If [****] accepts the offer of employment by Klondex made pursuant to subsection 4.8(a) hereof, Klondex shall recognize such accepting party's length of service with Shoreline and San Gold.


4.9

6004903 Manitoba Limited

     
(a)

In the event that Klondex does not provide Shoreline with the notice contemplated in paragraph (p) of the definition of "Purchased Assets" and accordingly does not wish to acquire all of the shares in 6004903, Klondex shall notify Shoreline in writing, not later than three Business Days prior to the Closing Date, whether it wishes to acquire all the assets owned by 6004903 (the " asset purchase notice "). In the event that Klondex does not provide an asset purchase notice by such date, Klondex shall be deemed to not wish to acquire any such assets. In the event that Klondex does provide an asset purchase notice by such date, the Parties agree that Klondex and 6004903 shall enter into a short form transfer agreement (in form and substance satisfactory to the Parties) pursuant to which all such assets shall be purchased by Klondex from 6004903 to Klondex (for nominal consideration). Shoreline agrees that it shall cause 6004903 to enter into such short form transfer agreement. The Parties agree that none of the provisions of this Agreement shall apply to any such assets and, for the avoidance of doubt, "Purchased Assets" shall not include any such assets.

     
(b)

In the event that Klondex does provide Shoreline with the notice contemplated in paragraph (p) of the definition of "Purchased Assets" and accordingly does wish to acquire all of the shares in 6004903, Shoreline shall ensure that Klondex shall obtain free and clear title to all the shares in 6004903 and that 6004903 shall not have any actual or accrued liabilities.

ARTICLE 5
NON-SOLICITATION

5.1

Non-Solicitation

Commencing on the date hereof and until 5:00 p.m. (Pacific time) on the earlier of the Closing Date and the Outside Date, Shoreline shall not, directly or indirectly, and shall not permit any of its affiliates [****] , or any of the officers, directors, employees, representatives or agents of Shoreline, its affiliates [****] (collectively, " Representatives ") to (A) encourage, solicit, initiate discussions with or engage in negotiations with any Person (whether such negotiations are initiated by a Representative or otherwise), other than Klondex, relating in any way to the acquisition of all or any portion of the Purchased Assets (a " Competing Transaction "), (B) enter into any letter of intent, contract or other agreement with any person or entity, other than Klondex, providing for any Competing Transaction, or (C) encourage, solicit or initiate discussions with any Person, other than Klondex, relating in any way to a Competing Transaction, (ii) Shoreline shall, and shall cause the Representatives to, suspend all discussions with third parties regarding any Competing Transactions, and (iii) and Shoreline shall, and shall cause the Representatives to, promptly notify Klondex, within 24 hours of receipt of a proposal, inquiry or other written communication relating in any way to a Competing Transaction, of the material terms and conditions thereof, and the identity of the Person or Persons making such proposal, inquiry or other written communication. None of the foregoing shall apply to any Excluded Asset.


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

ARTICLE 6
CONDITIONS

6.1

Mutual Conditions Precedent

The Parties are not required to complete the Transaction unless each of the following conditions is satisfied on or as of the Closing Date, which conditions may only be waived, in whole or in part, by the mutual consent of each of the Parties:

  (a)

Illegality. No Law is in effect that makes the consummation of the Transaction illegal or otherwise prohibits or enjoins Shoreline or Klondex from consummating the Transaction; and

     
  (b)

Required Consents . The Required Consents shall have been obtained in form and substance satisfactory to the Parties, acting reasonably.


6.2

Additional Conditions Precedent to the Obligations of Klondex

Klondex is not required to complete the Transaction unless each of the following conditions is satisfied on or as of the Closing Date, which conditions are for the exclusive benefit of Klondex and may only be waived, in whole or in part, by Klondex in its sole discretion:

  (a)

Representations and Warranties. The representations and warranties of Shoreline set forth in this Agreement that are qualified by materiality or Material Adverse Effect qualifications shall be true and correct in all respects and all other representations and warranties of Shoreline set forth in this Agreement shall be true and correct in all material respects except where any failures or breaches of representations and warranties would not, either individually or in the aggregate, have a Material Adverse Effect, in each case, as of the Closing Date as if made on and as of such date except to the extent that such representations and warranties speak as of an earlier date, in which event such representations and warranties shall be accordingly true and correct as of such earlier date; and Shoreline shall have delivered a certificate confirming same to Klondex, executed by a senior officer of Shoreline (without personal liability), addressed to Klondex and dated the Closing Date;

     
  (b)

Performance of Covenants. Shoreline has fulfilled or complied in all material respects with each of the covenants and obligations of Shoreline contained in this Agreement and in the agreements attached as Schedules hereto to be fulfilled or complied with by it on or prior to the Closing Date and Shoreline has delivered a certificate confirming same to Klondex, executed by a senior officer of each of Shoreline (without personal liability), addressed to Klondex and dated the Closing Date;

     
  (c)

No Material Adverse Effect. There shall not have occurred a Material Adverse Effect;



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (d)

No Legal Action. There is no action or proceeding pending in Canada to prohibit or restrict the Transaction or prohibit or restrict the ownership or operation by Klondex of the Purchased Assets;

       
  (e)

Damage or Destruction. The Purchased Assets shall not have been damaged in any material respect or destroyed, in whole or in part, by fire, theft or any other hazard;

       
  (f)

Deliveries. Shoreline shall deliver or cause to be delivered to Klondex the following in form and substance satisfactory to Klondex, acting reasonably:

       
  (i)

the certificates referred to in Section 6.2(a) and Section 6.2(b);

       
  (ii)

certified copies of (i) the articles and by-laws of Shoreline; and (ii) the resolutions of the board of directors and (if required) the shareholders of Shoreline approving the entering into of this Agreement, the Transaction and the other transactions contemplated hereby;

       
  (iii)

a certificate of status, compliance, good standing or like certificate with respect to Shoreline issued by appropriate government officials of their respective jurisdictions of incorporation or formation.

       
  (iv)

all conveyances, transfers, assignments, consents and other documents as may be required to convey to Klondex the Purchased Assets with good and marketable title, free and clear of all Encumbrances, other than the Permitted Encumbrances;

       
  (v)

all documents as may be required to remove from title the registrations relating to Encumbrances listed at paragraphs 1(a)(ii) to (iii), 1(b)(vii) to (x) and 3(j);

       
  (vi)

the Promissory Note acknowledged by Shoreline (whether or not executed by Klondex); and

       
  (vii)

the Escrow Agreement executed and delivered by Shoreline.


6.3

Additional Conditions Precedent to the Obligations of Shoreline

Shoreline is not required to complete the Transaction unless each of the following conditions is satisfied on or as of the Closing Date, which conditions are for the exclusive benefit of Shoreline and may only be waived, in whole or in part, by Shoreline in its sole discretion:

  (a)

Representations and Warranties . The representations and warranties of Klondex set forth in this Agreement that are qualified by materiality or Material Adverse Effect qualifications shall be true and correct in all respects and all other representations and warranties of Klondex set forth in this Agreement shall be true and correct in all material respects except where any failures or breaches of representations and warranties would not, either individually or in the aggregate, have a Material Adverse Effect, in each case as of the Closing Date as if made on and as of such date except to the extent that such representations and warranties speak as of an earlier date, in which event such representations and warranties shall be accordingly true and correct as of such earlier date; and Klondex shall have delivered a certificate confirming same to Shoreline, executed by a senior officer of Klondex (without personal liability), addressed to Shoreline and dated the Closing Date;



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

Performance of Covenants . Klondex has fulfilled or complied in all respects with each of the covenants and obligations of Klondex contained in this Agreement and in the agreements attached as Schedules hereto to be fulfilled or complied with by it on or prior to the Closing Date and Klondex has delivered a certificate confirming same to Shoreline, executed by a senior officer of Klondex (without personal liability), addressed to Shoreline and dated the Closing Date;

       
  (c)

No Legal Action . There is no action or proceeding pending in Canada to prohibit or restrict the Transaction;

       
  (d)

Deliveries . Klondex shall deliver or cause to be delivered to Shoreline the following in form and substance satisfactory to Shoreline, acting reasonably:

       
  (i)

the certificates referred to in Section 6.3(a) and Section 6.3(b);

       
  (ii)

certified copies of (i) the notice of articles and the articles of Klondex; and (ii) the resolutions of the board of directors of Klondex approving the entering into of this Agreement, the Promissory Note (and all related documents and security), the Transaction and the other transactions contemplated hereby;

       
  (iii)

a certificate of status, compliance, good standing or like certificate with respect to each of Klondex and Klondex Parent issued by appropriate government officials of their respective jurisdictions of incorporation or formation;

       
  (iv)

the Promissory Note executed and delivered by Klondex, together with all debenture and other security documents relating to the Encumbrances to be granted by Klondex in favour of Shoreline as security for its obligations to Shoreline (and any and all registrations Shoreline may reasonably require to ensure that such Encumbrances are perfected and first ranking subject only to the Permitted Encumbrances and Permitted Klondex Encumbrances (as defined in the Promissory Note) provided that such Permitted Klondex Encumbrances are subordinated to the security over Klondex’s assets in favour of Shoreline on terms and conditions satisfactory to Shoreline);

       
  (v)

a legal opinion of counsel to Klondex in relation to the Promissory Note and the security related thereto in form and substance satisfactory to Shoreline, acting reasonably; and

       
  (vi)

the Escrow Agreement executed and delivered by each of Klondex and the Escrow Agent; and

       
  (e)

Franco-Nevada Consents . The Franco-Nevada Consents shall have been obtained.



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

ARTICLE 7
TERM AND TERMINATION

7.1

Termination

         
(a)

This Agreement may be terminated prior to the Closing Date:

         
(i)

by the mutual written agreement of the Parties;

         
(ii)

by either Shoreline or Klondex if:

         
(A)

the closing of the Transaction does not occur on or prior to the end of the day on the Outside Date, provided that a Party may not terminate this Agreement pursuant to this Section 7.1(a)(ii)(A) if the failure of the closing of the Transaction to so occur has been caused by, or is a result of, a breach by such Party of any of its representations or warranties or the failure of such Party to perform any of its covenants under this Agreement; or

         
(B)

after the date of this Agreement, any Law is enacted, made, enforced or amended, as applicable, that makes the consummation of the Transaction illegal or otherwise permanently prohibits or enjoins Shoreline or Klondex from consummating the Transaction, and such Law has, if applicable, become final and non-appealable, provided the Party seeking to terminate this Agreement pursuant to this Section 7.1(a)(ii)(B) has used its commercially reasonable efforts to appeal such Law (provided such Law is an order, injunction, judgment, decree or ruling) or otherwise have it lifted or rendered non-applicable in respect of the Transaction;

         
(iii)

by Shoreline if a breach of any representation or warranty or failure to perform any covenant on the part of Klondex under this Agreement occurs that would cause any condition in Section 6.3(a) or Section 6.3(b) not to be satisfied, and such breach or failure is incapable of being cured or is not cured by the Outside Date; provided that any Wilful Breach shall be deemed to be incurable; or

         
(iv)

by Klondex:

         
(A)

if a breach of any representation or warranty or failure to perform any covenant on the part of Shoreline under this Agreement occurs that would cause any condition in Section 6.2(a) or Section 6.2(b) not to be satisfied, and such breach or failure is incapable of being cured or is not cured by the Outside Date; provided that any Wilful Breach shall be deemed to be incurable; or

         
(B)

after the date of this Agreement, there has occurred a Material Adverse Effect.



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

The Party desiring to terminate this Agreement pursuant to Section 7.1(a) shall give notice of such termination to the other Party, specifying in reasonable detail the basis for such Party's exercise of its termination right.


7.2

Effect of Termination

If this Agreement is terminated pursuant to Section 7.1, this Agreement, subject to Section 10.2(a) and 10.3, shall become void and of no further force or effect without liability of any Party to any other Party to this Agreement except that no Party shall be relieved of any liability for any Wilful Breach by it of this Agreement.

ARTICLE 8
CLOSING

8.1

Date, Time and Place of Closing

The completion of the Transaction contemplated by this Agreement will take place at the offices of Bennett Jones LLP, Suite 3400, One First Canadian Place, Toronto, Ontario, at the Closing Time on the Closing Date or at such other place, on such other date and at such other time as may be agreed upon in writing between Shoreline and Klondex.

ARTICLE 9
INDEMNITY

9.1

Indemnity

Subject to the terms and conditions set forth herein, Shoreline shall indemnify Klondex from and against any and all loss, liability, damage, claim, cost and expense (including reasonable attorney’s fees and expenses) borne by Klondex (excluding, for the sake of clarity, indirect, punitive, consequential, special or similar damages including but not limited to loss of repute, loss of clientele, loss of profit and loss of opportunity) (a " Loss "), which arises out of or results from or otherwise relates to:

  (a)

any breach of any of the representations and warranties made by Shoreline to Klondex in this Agreement;

     
  (b)

any failure by Shoreline to perform any covenant or obligation of Shoreline contained herein; and

     
  (c)

any debts, claims, liabilities and other obligation related to the Purchased Assets that occurred or (to Shoreline's knowledge) were outstanding during the period commencing on June 23, 2015 and ending on the Closing Date.


9.2

Procedure

     
(a)

In order to be valid, any claim in respect of the indemnification of a Loss by Klondex against Shoreline (a " Claim ") shall be notified in writing to Shoreline within the time period referred to in Section 9.5 and shall specify the basis, act or event on which it is based (including the sections of this Agreement supporting its Claim), indicating the amount or an estimate of the amount claimed in respect of the Loss, if known, and be submitted together with documents which set forth, in reasonable detail, a description of the matter which could potentially give rise to indemnification hereunder (a " Notice of Claim "). Klondex shall deliver the Notice of Claim to Shoreline promptly after Klondex acquires knowledge of the event, fact or circumstance giving rise to the Claim. If Klondex does not so deliver the Notice of Claim in time for Shoreline to effectively contest the determination of any liability susceptible of being contested or to assert a right to recover an amount under applicable insurance coverage, then the liability of Shoreline shall be reduced by the amount that losses are incurred by Shoreline resulting from Klondex's failure to give such Notice of Claim on a timely basis.



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

Klondex shall ensure that Shoreline shall receive without unreasonable delay and be able to reasonably consult all reasonable information and documents held by Klondex, and/or their representatives, advisors, agents and/or affiliates in relation to a Notice of Claim or to the events, facts or circumstances having given rise to a Claim.

     
  (c)

If Shoreline disputes the Notice of Claim, the Parties shall attempt to resolve their dispute amicably.


9.3

Third Party Claims

In the case of any Claim by or in respect of any Person other than the Parties (a " Third Party Claim ") for which indemnification is sought, Shoreline shall have the right to: (a) conduct and control any proceedings or negotiations; (b) perform and control or direct the performance of activities required; (c) take all other steps to settle or defend any such Third Party Claim (provided, that Shoreline shall not settle any such Third Party Claim without the consent of Klondex (which consent shall not be unreasonably withheld) unless the settlement includes a complete release of Klondex with respect to the Third Party Claim); and (d) employ counsel to contest any such Third Party Claim. Notwithstanding an election by Shoreline to assume the defense of such Third Party Claim, Klondex shall have the right to employ separate counsel and to participate in the defense of such Third Party Claim, and Klondex shall bear the fees, costs and expenses of such separate counsel. Shoreline shall, within 30 days after delivery of the Notice of Claim to Shoreline, notify Klondex of Shoreline’s intention as to the conduct and control of the defense of such Third Party Claim. Until Klondex has received notice of Shoreline’s election whether to defend any Third Party Claim, Klondex shall take reasonable steps to defend (but may not settle) such Third Party Claim. If Shoreline shall decline to assume the defense of any such Third Party Claim, or Shoreline shall fail to notify Klondex within 30 days after delivery of the Notice of Claim of Shoreline’s election to defend such Third Party Claim, Klondex shall be entitled to defend against such Third Party Claim (provided, that Klondex shall not settle such Third Party Claim without the consent of Shoreline, which consent shall not be unreasonably withheld). Regardless of which Party assumes, or is entitled to conduct, pursuant to this Section 9.3, the defense of a Third Party Claim, the Parties agree (A) that neither Party shall settle any Third Party Claim without the consent of the other Party, which consent shall not be unreasonably withheld; (B) to take reasonable steps to defend any Third Party Claim; (C) to cooperate fully with one another in connection therewith; (D) to keep each other reasonably informed of the status of any Third Party Claim and any related legal proceeding; and (E) to take no action or make any admissions or statements not required by Law which would adversely affect the defense of any Third Party Claim.


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

9.4

Limitations


  (a)

Notwithstanding anything to the contrary in this Agreement, the liability of Shoreline to indemnify any Loss shall be limited in the following manner:

       
  (i)

Threshold . No claims for indemnification may be made by Klondex against Shoreline under this Article 9 until the aggregate amount of all Losses exceeds $500,000 (the " Threshold ") in which event Shoreline shall be responsible for all Losses including the amount of the Threshold and all amounts exceeding the Threshold.

       
  (ii)

Cap . Shoreline’s aggregate obligation to indemnify Klondex and hold it harmless under this Article 9 shall in no event exceed an amount equal to $8,000,000 .

       
  (b)

Any Loss shall be indemnified only once by Shoreline, whether incurred by Klondex, Klondex Parent and/or any of their affiliates.

       
  (c)

If any Loss is recovered by Klondex, Klondex Parent or any of their affiliates, in whole or in part, from any Person after the payment by Shoreline of any amount due under this Agreement, amounts so recovered shall be credited to Shoreline.


9.5

Survival

     
(a)

Each of the representations and warranties of Shoreline shall survive the closing of the Transaction and remain in full force and effect for a time-period expiring eighteen (18) months after the Closing Date provided however that the Shoreline Fundamental Reps shall survive without any limitation of time.

     
(b)

Each of the representations and warranties of Klondex shall survive the closing of the Transaction and remain in full force and effect for a time-period expiring eighteen (18) months after the Closing Date provided however that the representations and warranties set forth in paragraphs 1 [Organization and Qualification] , 2 [Corporate Authorization] and 3 [Execution and Binding Obligation] of Schedule "K" shall survive without any limitation of time.

     
9.6

Remedies and Mitigation Obligation

     
(a)

Subject to Section 10.3 of this Agreement, Klondex and Shoreline acknowledge and agree that the indemnification provisions of this Article 9 shall be the sole and exclusive remedies of Klondex and Klondex Parent for any breach by Shoreline of the representations and warranties in this Agreement and for any failure by Shoreline to perform and comply with any covenants and agreements in this Agreement.

     
(b)

Each of Klondex and Klondex Parent shall take and shall cause that all reasonable steps be taken to mitigate all Losses and potential Losses and to avoid and minimize the amount of all Losses and potential Losses.



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (c)

Each of Klondex and Klondex Parent shall claim under all available insurance policies and the amount of all Losses shall be reduced by an amount equal to all amounts available to Klondex or Klondex Parent under any insurance policy.


9.7

Payment of Indemnification

Payments to be made to Klondex under this Agreement (other than pursuant to Section 9.3) or pursuant to any set-off provision in the Promissory Note shall be deemed a reduction of the Purchase Price.

9.8

Knowledge

Shoreline shall not be liable under this Article 9 for any Losses resulting from or relating to any inaccuracy in or breach of any representation or warranty in this Agreement if Klondex or Klondex Parent had knowledge of such inaccuracy or breach before the closing of the Transaction. For purposes of this Article 9, a reference to the knowledge of Klondex or Klondex Parent means the actual knowledge of [****] .

9.9

Non-Reliance

Klondex and Klondex Parent acknowledge and agree that (i) Shoreline has not made and is not making any representations or warranties whatsoever regarding any of the Purchased Assets or the subject matter of this Agreement, express or implied, except as provided in Section 3 and (ii) they are not relying, and have not relied, on any representations or warranties whatsoever regarding any of the Purchased Assets or the subject matter of this Agreement, express or implied, except for the representations and warranties in Section 3.

ARTICLE 10
GENERAL PROVISIONS

10.1

Amendments

This Agreement may only be amended by mutual written agreement of the Parties.

10.2

Expenses

     
(a)

Subject to Section 10.2(b) or as otherwise expressly agreed between the Parties, all out- of-pocket third party transaction expenses incurred in connection with this Agreement and the Transaction, including all costs, expenses and fees of Shoreline and Klondex incurred prior to or after the Closing Date in connection with, or incidental to, the Transaction, shall be paid by the Party incurring such expenses, whether or not the Transaction is consummated.

     
(b)

Klondex shall pay all Taxes exigible under The Tax Administration and Miscellaneous Taxes Act (Manitoba) in connection with the Transaction contemplated hereby. In this regard, each of Klondex and Shoreline agrees to reasonably cooperate with the other and file any requisite documents within a reasonable period of time following the Closing Date.



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (c)

If Klondex determines that the Transaction constitutes a "sale in bulk" pursuant to The Tax Administration and Miscellaneous Taxes Act (Manitoba), Shoreline shall use its commercially reasonable efforts to obtain and supply a clearance certificate pursuant to Section 45(2) of The Tax Administration and Miscellaneous Taxes Act (Manitoba) to Klondex within thirty (30) days following the Closing Date.


10.3

Injunctive Relief and Remedies

The Parties agree that irreparable harm would occur for which money damages would not be an adequate remedy at Law in the event that any of the provisions of this Agreement were not performed by Shoreline or Klondex in accordance with their specific terms or were otherwise breached. It is accordingly agreed that each Party shall be entitled to injunctive and other equitable relief to prevent breaches or threatened breaches of this Agreement by the other Party, and to enforce compliance with the terms of this Agreement by the other Party without any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive or other equitable relief, this being in addition to any other remedy to which a Party may be entitled at Law or in equity.

10.4

Further Assurances

From time to time after the Closing Date, each Party shall, at the request of any other Party, execute and deliver such additional conveyances, transfers and other assurances as may be reasonably required to effectively undertake the transactions contemplated by this Agreement and to carry out the intent of this Agreement. Without limiting the generality of the foregoing, to the extent that any Purchased Asset is not transferred to Klondex, upon the written request of Klondex, Shoreline shall use its reasonable best efforts to transfer, or to cause the transfer of, such asset to Klondex or take other appropriate steps to allow Klondex to enjoy the benefit of such arrangement or asset.

10.5

Notices

Any notice, or other communication given regarding the matters contemplated by this Agreement must be in writing, sent by personal delivery, courier or facsimile (but not by electronic mail) and addressed:

  (a) to Klondex at:  
       
    Klondex Canada Ltd.
    c/o Klondex Mines Ltd.
    1055 West Hastings Street, Suite 2200
    Vancouver, BC V6E 2E9
       
    Attention: President and Chief Executive Officer
    Telephone: (775) 284-5757
    Facsimile: (775) 284-5756
       
    with a copy to:  
       
    Bennett Jones LLP
    3400 One First Canadian Place


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

    P.O. Box 130
    Toronto, ON M5X 1A4
       
    Attention: Abbas Ali Khan
    Telephone: (416) 777-5397
    Facsimile: (416) 863-1716
       
  (b) to Shoreline at:
       
    Shoreline Gold Inc.
    c/o B Asset Manager, LP
    1370 Avenue of the Americas, 32nd Floor
    New York, New York 10019
       
    Attention: Daniel Saks
    Facsimile number: (212) 260-5051   
       
    With a copy to:
       
    Baker & McKenzie LLP
    Brookfield Place
    Bay/Wellington Tower
    181 Bay Street, Suite 2100
    Toronto, ON M5J 2T3
       
    Attention: Ilia Danef
    Facsimile number: (416) 863-6275   

Any notice or other communication is deemed to be given and received (i) if sent by personal delivery or same day courier, on the date of delivery if it is a Business Day and the delivery was made prior to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day, (ii) if sent by overnight courier, on the next Business Day, or (iii) if sent by facsimile, on the Business Day following the date of confirmation of transmission by the originating facsimile. Sending a copy of a notice or other communication to a Party's legal counsel as contemplated above is for information purposes only and does not constitute delivery of the notice or other communication to that Party. The failure to send a copy of a notice or other communication to legal counsel does not invalidate delivery of that notice or other communication to a Party.

10.6

Time of the Essence

Time is of the essence in this Agreement.

10.7

Third Party Beneficiaries

The Parties intend that this Agreement will not benefit or create any right or cause of action in favour of any other Person, other than the Parties and that no Person, other than the Parties, shall be entitled to rely on the provisions of this Agreement in any action, suit, proceeding, hearing or other forum.


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

10.8

Waiver

No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the Party to be bound by the waiver. A Party's failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a Party from any other or further exercise of that right or the exercise of any other right.

10.9

Entire Agreement

This Agreement, together with the Promissory Note (and all documents related thereto) and the Escrow Agreement, constitutes the entire agreement between the Parties with respect to the transactions contemplated by this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, between the Parties in connection with the subject matter of this Agreement, the Promissory Note (and all documents related thereto) or the Escrow Agreement except as specifically set forth in this Agreement. The Parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement.

10.10

Successors and Assigns

     
(a)

This Agreement becomes effective only when executed by Shoreline, Klondex and Klondex Parent. After that time, it will be binding upon and enure to the benefit of Shoreline, Klondex and Klondex Parent and their respective successors and permitted assigns.

     
(b)

Neither this Agreement nor any of the rights or obligations under this Agreement are assignable or transferable by any Party without the prior written consent of the other Parties.

     
10.11

Severability

If any provision of this Agreement is determined to be illegal, invalid or unenforceable by any court of competent jurisdiction, that provision will be severed from this Agreement and the remaining provisions shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.

10.12

Governing Law

     
(a)

This Agreement will be governed by and interpreted and enforced in accordance with the Laws of the Province of Ontario and the federal Laws of Canada applicable therein.

     
(b)

Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of the Ontario courts situated in the City of Toronto and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum.



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

10.13

Rules of Construction

The Parties to this Agreement waive the application of any Law or rule of construction providing that ambiguities in any agreement or other document shall be construed against the Party drafting such agreement or other document.

10.14

Counterparts

This Agreement may be executed in any number of counterparts (including counterparts by facsimile) and all such counterparts taken together shall be deemed to constitute one and the same instrument. The Parties shall be entitled to rely upon delivery of an executed facsimile or similar executed electronic copy of this Agreement, and such facsimile or similar executed electronic copy shall be legally effective to create a valid and binding agreement between the Parties.

[Remainder of page intentionally left blank. Signature page follows.]


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.

  SHORELINE GOLD INC.
     
     
  By: (signed) "Daniel Saks"
    Name: Daniel Saks  
    Title: Authorized Signatory
     
  KLONDEX MINES LTD.
     
     
  By: (signed) "Paul Huet"
    Name: Paul Huet  
    Title: President & CEO
     
  KLONDEX CANADA LTD.
     
     
  By: (signed) "Paul Huet"
    Name: Paul Huet  
    Title: President


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "A"

ASSUMED CONTRACTS

[Omitted]

A-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "B"

EQUIPMENT

[Omitted]

B-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "C"

EXCLUDED ASSETS

[Omitted]

C-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "D"

FIXED ASSETS

[Omitted]

D-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "E"

INTELLECTUAL PROPERTY

[Omitted]

E-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "F"

OWNED REAL PROPERTY

[Omitted]

F-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "G"

PROPERTIES

[Omitted]

G-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "H"

ROYALTIES

[Omitted]

H-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "I"

REQUIRED CONSENTS

[Omitted]

I-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "J"

REPRESENTATIONS AND WARRANTIES OF SHORELINE

Except as set forth in the Disclosure Letter:

1.

Organization and Qualification . Shoreline is a corporation incorporated, validly existing and in good standing under the Laws of its jurisdiction of incorporation, organization or formation, as applicable, and has all requisite power and authority to own, lease and operate its assets and properties and conduct its business as now owned and conducted. Shoreline is qualified, licensed or registered to carry on business and is in good standing in each jurisdiction in which such qualification, licensing or registration is necessary except to the extent that any failure of Shoreline to be so qualified, licensed or registered or to be in good standing would not materially affect the Purchased Assets and has all Authorizations required to own, lease and operate the Purchased Assets and to conduct its business as now owned and conducted in respect of the Purchased Assets.

   
2.

Corporate Authorization . Shoreline has the requisite corporate power and authority to enter into and perform its obligations under this Agreement. The execution, delivery and performance by Shoreline of its obligations under this Agreement and the consummation of the Transaction and the other transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Shoreline and no other corporate proceedings on the part of Shoreline are necessary to authorize this Agreement or the consummation of the Transaction and the other transactions contemplated hereby.

   
3.

Execution and Binding Obligation . This Agreement has been duly executed and delivered by Shoreline, and constitutes a legal, valid and binding agreement of Shoreline, enforceable against it in accordance with its terms subject only to any limitation under bankruptcy, insolvency or other Laws affecting the enforcement of creditors' rights generally and the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction.

   
4.

Governmental Authorization . The execution, delivery and performance by Shoreline of its obligations under this Agreement and the consummation of the Transaction and the other transactions contemplated hereby do not require any Authorization or other action by or in respect of, or filing with, or notification to, any Governmental Entity by Shoreline other than those listed in the Required Consents.

   
5.

Non-Contravention . The execution, delivery and performance by Shoreline of its obligations under this Agreement and the consummation of the Transaction and the other transactions contemplated hereby do not and will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition):


  (a)

contravene, conflict with, or result in any violation or breach of Shoreline's articles or by- laws;

J-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

assuming compliance with the matters referred to in Paragraph (4) above, contravene, conflict with or result in a violation or breach of Law;

     
  (c)

allow any Person to exercise any rights, require any consent or other action by any Person, or constitute a default under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which Shoreline is entitled (including by triggering any rights of first refusal or first offer, change in control provision or other restriction or limitation) under any Contract (oral or written) or any Authorization to which Shoreline is a party or by which Shoreline is bound, relating to the Purchased Assets; or

     
  (d)

result in the creation or imposition of any Encumbrance upon any of the Purchased Assets.


6.

No Undisclosed Liabilities . There are no material liabilities or obligations of Shoreline of the nature required to be disclosed in a balance sheet prepared in accordance with IFRS which relate in any way to the Purchased Assets, other than liabilities or obligations incurred in connection with this Agreement or disclosed to Klondex in writing.

   
7.

Absence of Certain Changes or Events . Since June 23, 2015, other than the transactions contemplated in this Agreement, the business of Shoreline as it relates to the Purchased Assets has been conducted in the Ordinary Course and there has not been any event, circumstance or occurrence which has had or would be reasonably expected to have a Material Adverse Effect.

   
8.

Compliance with Laws . Shoreline is, and since June 23, 2015 has been, in compliance in all material respects with Law in connection with the ownership, use, maintenance and operation of the Purchased Assets. Shoreline is not under any investigation with respect to, has not been charged with or, to the knowledge of Shoreline, threatened to be charged with, nor has Shoreline received notice of, any violation or potential violation of any Law or disqualification by a Governmental Entity in connection with the ownership, use, maintenance and operation of the Purchased Assets if such violation, potential violation or disqualification would have or would be reasonably expected to have a Material Adverse Effect.

   
9.

Compliance with Non-Solicitation Provisions . Shoreline has complied with its non- solicitation obligations set out under the heading "Exclusivity" in the preliminary non-binding proposal dated October 30, 2015 between Klondex Parent and Shoreline in respect of the Transaction.

   
10.

Authorizations and Licenses .


  (a)

Shoreline owns, possesses or has obtained all Authorizations that are required by Law in connection with the ownership of the Purchased Assets, and the business or operations currently carried on in respect thereof. Each Authorization is valid and in full force and effect. No action, investigation or proceeding is pending in respect of or regarding any such Authorization and Shoreline has not received notice, whether written or oral, of revocation, non-renewal or material amendments of any such Authorization, or of the intention of any Government Entity to revoke, refuse to renew or materially amend any such Authorization.

J-2


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

11.

Real Property Matters .


  (a)

Other than Permitted Encumbrances, Shoreline (i) is the absolute legal and beneficial owner of the Purchased Assets, (ii) is or will be the registered owner of the Properties as at the Closing Date and (iii) holds either freehold title, leases, concessions, claims, options or participating interests or other conventional property or proprietary interests or rights, recognized in the jurisdiction in which each Property is located (collectively, " Property Rights "), in respect of the Mineral Rights located in each Property, under valid, subsisting and enforceable title documents or other recognized and enforceable agreements or instruments, sufficient to permit Shoreline to explore, develop or mine (as the case may be) mineral deposits relating thereto and, except for Permitted Encumbrances, Shoreline holds an interest in each Property free and clear of any Encumbrances.

     
  (b)

To Shoreline's knowledge, except as disclosed in Schedule "H" under the heading " Royalties ", there are no royalty or similar obligations in place with respect to the Properties.

     
  (c)

To Shoreline's knowledge, all rentals, royalties, overriding royalty interests, production payments, net profits, interest burdens, payments and obligations due and payable, or performable, as the case may be, with respect to, or on account of, the Properties, have been: (i) duly paid; (ii) duly performed; or (iii) provided for.

     
  (d)

To Shoreline’s knowledge, there are no back-in rights, earn-in rights, rights of first refusal or similar provisions or rights which would affect Shoreline's interest in the Properties or any of the Property Rights.

     
  (e)

To Shoreline's knowledge, all of the Property Rights have been properly located and recorded in material compliance with applicable Law and are comprised of valid and subsisting mineral claims in all material respects.

     
  (f)

To Shoreline’s knowledge, the Property Rights are in good standing under Law and, all work required to be performed and filed in respect thereof has been performed and filed, all Taxes, rentals, fees, expenditures and other payments in respect thereof have been paid or incurred and all filings in respect thereof have been made.

     
  (g)

To Shoreline’s knowledge, there is no material adverse claim, existing or threatened, against or challenge to the title to or ownership of any of the Property Rights, Mineral Rights, Authorizations including any asserted aboriginal title or other rights from First Nations, Métis, tribal or native authorities, communities or groups, and Government Entity.

J-3


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (h)

To Shoreline's knowledge, the Purchased Assets and Mineral Rights are not within any protected area, conservation area, rescued area, reserve, reservation, reserved area, resource management zone, traditional aboriginal lands, aboriginal treaty lands or special needs lands as designated by any Governmental Entity which would materially impair the operation and further development of the Purchased Assets.

     
  (i)

Shoreline does not have knowledge of any actual or threatened claim that would reasonably be expected to materially and adversely affect the right of Shoreline to transfer the Properties.

     
  (j)

Shoreline does not occupy any premises as tenant in respect of any of the Properties.

     
  (k)

No legal or governmental proceedings or inquiries are pending to which Shoreline is a party or to which either of the Properties is subject that would result in revocation or modification of any certificate, authority, permit or licence related to a Property and, to Shoreline's knowledge, no such legal or governmental proceedings or inquiries are pending or threatened.


12.

No Option on Assets . No Person has any agreement or option or any right or privilege capable of becoming an agreement or option for the purchase from Shoreline, or on or following the Closing Date, of any portion of the Purchased Assets.

   
13.

Care and Maintenance . The Rice Lake Property is, and has during the Shoreline Period, been on care and maintenance and no mining, exploration or development has been undertaken during such period in relation to the other Properties.

   
14.

Environmental Matters .

In relation to the Shoreline Period:

  (a)

neither Shoreline nor any of its Subsidiaries has been and is currently in violation of, in connection with the ownership, use, maintenance, operation, closure or remediation of the Purchased Assets, in any material respect, any Environmental Laws;

     
  (b)

without limiting the generality of Paragraph 14(a), Shoreline does not have any knowledge of, and has not received any notice of, any claim, judicial or administrative proceeding, pending or threatened against, or which would reasonably be expected to affect, either Shoreline or any of its property, assets or operations, relating to, or alleging any violation of, any Environmental Laws in connection with the ownership, use, maintenance, operation, closure or remediation of the Purchased Assets by Shoreline. To Shoreline's knowledge, there are no facts or conditions which would reasonably give rise to any such claim or judicial or administrative proceeding or otherwise. Shoreline has not received notice from a Governmental Entity that such Governmental Entity is investigating or auditing any of the Purchased Assets to determine whether any violation of any Environmental Laws has occurred or is occurring or whether any remedial action is needed in connection with a Release of any Hazardous Substances into the Environment, except for compliance inspections conducted in the normal course by any Governmental Entity;

J-4


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (c)

to Shoreline's knowledge, there are no orders, rulings, directives or Governmental Entity policies issued, pending or threatened against Shoreline in connection with the ownership, use, maintenance or operation of the Purchased Assets under or pursuant to any Environmental Laws requiring any work, repairs, construction or capital expenditures with respect to the Purchased Assets;

     
  (d)

to Shoreline’s knowledge, (i) there are no costs, damages or other liabilities arising from or related to the presence, emission, migration, disposal, Release or threatened Release of any Hazardous Substances (including any investigation, assessment, remediation, monitoring or other work) and (ii) no Purchased Assets have been used by Shoreline for the disposal of waste, Release or transportation of, any substance, material or waste in violation of any Environmental Laws or that would reasonably be expected to materially adversely affect the use or value of the Properties;

     
  (e)

to Shoreline's knowledge, there are no polychlorinated biphenyls, asbestos, asbestos- containing materials, urea formaldehyde, lead paint or other such Hazardous Substances at the Purchased Assets;

     
  (f)

to Shoreline's knowledge, there are no underground storage tanks, sumps, pits or other below grade containment devices at the Purchased Assets except in compliance with all Environmental Laws and in a manner that would not have a Material Adverse Effect; and

     
  (g)

to Shoreline's knowledge, there is no mine closure plan in effect in relation to the Properties other than the Mine Closure Plan.


15.

Aboriginal Matters .

Shoreline: (i) is not a party to any arrangement or understanding with First Nations, Métis, tribal or native authorities, communities or groups in relation to the environment or the development of communities in the vicinity of, or in connection with, the Purchased Assets; (ii) is not currently engaged or involved in any disputes, discussions or negotiations with First Nations, Métis, tribal or native authorities, communities or groups, or Governmental Entity; or (iii) has not received notice of any existing claim with respect to the Purchased Assets, either from First Nations, Métis, tribal or native authorities, communities or groups or any Governmental Entity, indicating that any part of the Purchased Assets infringes upon or has an adverse effect on aboriginal rights or interests.

16.

Restrictions on Conduct of Business . Shoreline is not a party to or bound by any non- competition agreement, any non-solicitation agreement, or any other agreement, obligation, judgment, injunction, order or decree which purports to limit in any material respect the manner or the localities in which all or any portion of the business or operations contemplated to be carried on in respect of the Purchased Assets may be conducted.

J-5


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

17.

Litigation . There are no claims, actions, suits, arbitrations, inquiries, investigations or proceedings pending, or, to the knowledge of Shoreline, threatened against or relating to Shoreline that would reasonably be expected to have a Material Adverse Effect by or before any Governmental Entity.

   
18.

Insurance . Shoreline in respect of the Purchased Assets is, and has been continuously since June 23, 2015, insured by reputable third party insurers with reasonable and prudent policies appropriate for the size and nature of the business of Shoreline and the Purchased Assets.

   
19.

Taxes . No failure, if any, of Shoreline to duly and timely pay all Taxes, including all instalments on account of Taxes for the current year, that are due and payable will result in an Encumbrance on the Purchased Assets.

   
20.

Anti-Corruption . Neither Shoreline, nor to the knowledge of Shoreline, any of its directors, executives, officers, representatives, agents or employees has: (i) used or is using any corporate funds for any illegal contributions, gifts, entertainment or other expenses relating to political activity that would be illegal; (ii) used or is using any corporate funds for any direct or indirect illegal payments to any foreign or domestic governmental officials or employees; (iii) has established or maintained, or is maintaining, any illegal fund of corporate monies or other properties; or (iv) made any bribe, illegal rebate, illegal payoff, influence payment, kickback or other illegal payment of any nature.

   
21.

Labour Unions . Shoreline has not made any agreements with any labour union or employee association, nor made commitments to, or conducted negotiations with, any labour union or employee association with respect to any such agreement. Shoreline does not have any knowledge of any current attempts to organize or establish any labour union or employee association in respect of the Purchased Assets.

   
22.

Sale Approval and Vesting Order . Shoreline has complied with the terms of and its obligations under the Sale Approval and Vesting Order, dated June 22, 2015 and issued by the Court of Queen's Bench of Manitoba (Bankruptcy and Insolvency) in respect of Shoreline's acquisition of the Purchased Assets from San Gold, other than non-compliance that (i) does not adversely affect Shoreline's right, title and interest in the Purchased Assets, (ii) would not reasonably be expected to adversely affect Klondex's right, title, and interest in the Purchased Assets following the closing of the Transaction and (iii) would not reasonably be expected to adversely affect any Authorizations that are required by Law in connection with the ownership of the Purchased Assets.

   
23.

San Gold Financial Offtake Agreements . Shoreline did not assume from San Gold any of the financial offtake agreements, dated March 7, 2014, between San Gold and each of [****] .

J-6


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "K"

REPRESENTATIONS AND WARRANTIES OF KLONDEX AND KLONDEX PARENT

1.

Organization and Qualification . Each of Klondex and Klondex Parent is a corporation incorporated, validly existing and in good standing under the Laws of British Columbia and has all requisite power and authority to own, lease and operate its assets and properties and conduct its business as now owned and conducted.

   
2.

Corporate Authorization . Each of Klondex and Klondex Parent has the requisite corporate power and authority to enter into and perform its obligations under this Agreement. The execution, delivery and performance by each of Klondex and Klondex Parent of its respective obligations under this Agreement and the consummation of the Transaction and the other transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Klondex and Klondex Parent and no other corporate proceedings on the part of Klondex or Klondex Parent are necessary to authorize this Agreement or the consummation of the Transaction and the other transactions contemplated hereby.

   
3.

Execution and Binding Obligation . This Agreement has been duly executed and delivered by each of Klondex and Klondex Parent, and constitutes a legal, valid and binding agreement of each of Klondex and Klondex Parent enforceable against each of them in accordance with its terms subject only to any limitation under bankruptcy, insolvency or other Laws affecting the enforcement of creditors' rights generally and the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction.

   
4.

Governmental Authorization . The execution, delivery and performance by each of Klondex and Klondex Parent of its respective obligations under this Agreement and the consummation of the Transaction and the other transactions contemplated hereby do not require any Authorization or other action by or in respect of, or filing with, or notification to, any Governmental Entity by Klondex or Klondex Parent other than: (i) filings with the Exchange; and (ii) any Authorizations which, if not obtained, or any other actions by or in respect of, or filings with, or notifications to, any Governmental Entity which, if not taken or made, would not, individually or in the aggregate, materially impede the ability of Klondex or Klondex Parent (as the case may be) to consummate the Transaction and the transactions contemplated hereby.

   
5.

Non-Contravention . The execution, delivery and performance by each of Klondex and Klondex Parent of its respective obligations under this Agreement and the consummation of the Transactions and the other transactions contemplated hereby do not and will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition):


  (a)

contravene, conflict with, or result in any violation or breach of Klondex's or Klondex Parent's organizational documents; or

     
  (b)

assuming compliance with the matters referred to in Paragraph (4) above, contravene, conflict with or result in a violation or breach of Law.

K-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

6.

Cash . On or prior to the first anniversary of the Closing Date, Klondex Parent shall have transferred a minimum of C$10,000,000 in cash to Klondex as equity or debt.

J-2


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "L"
PURCHASE PRICE ALLOCATION

[Omitted]

L-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "M"

OTHER INTERESTS

Nil.

M-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "N"

ENCUMBRANCES

[Omitted]

N-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "O"

FRANCO-NEVADA CONSENTS

[Omitted]

O-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE "P"

FORM OF PROMISSORY NOTE

(See attached)

P-1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SECURED PROMISSORY NOTE

TO: SHORELINE GOLD INC. PRINCIPAL AMOUNT:      US$12,000,000
DATE: January [º], 2016  

FOR VALUE RECEIVED, the undersigned, KLONDEX CANADA LTD. (the “ Debtor ”), hereby acknowledges its indebtedness and promises to pay to or to the order of SHORELINE GOLD INC. (the “ Holder ”) or as the Holder may direct, the principal sum of US$12,000,000 in lawful money of the United States of America as well as all accrued and unpaid interest on or before the applicable Maturity Dates in accordance with the terms of this Promissory Note. This Promissory Note is being issued in connection with the asset purchase agreement dated December 16, 2015 between, inter alia , the Debtor, the Holder and Klondex Mines Ltd. (" Klondex Parent" ) (the “ APA ”) to evidence the indebtedness of the Debtor to the Holder for the Second Instalment (as defined in the APA), Third Instalment (as defined in the APA) and Fourth Instalment (as defined in the APA). Capitalized terms used, but not defined, herein shall have the meanings given thereto in the APA.

1.

Payment. The principal sum of this Promissory Note shall be paid by the Debtor as follows:

     
(a)

US$4,000,000 shall be paid by wire transfer of immediately available funds on the first anniversary of the Closing Date (as defined in the APA) (such anniversary, the “ First Instalment Maturity Date ”) and shall be credited by the Holder against the Purchase Price (as defined in the APA);

     
(b)

US$4,000,000 shall be paid by wire transfer of immediately available funds on the second anniversary of the Closing Date (as defined in the APA) (such anniversary, the “ Second Instalment Maturity Date ”) and shall be credited by the Holder against the Purchase Price (as defined in the APA); and

     
(c)

US$4,000,000 shall be paid by wire transfer of immediately available funds on the third anniversary of the Closing Date (as defined in the APA) (such anniversary, the “ Third Instalment Maturity Date ” and together with the First Instalment Maturity Date and the Second Instalment Maturity Date, the “ Maturity Dates ”) and shall be credited by the Holder against the Purchase Price (as defined in the APA).

Notwithstanding the schedule of payments set out above, the principal sum of this Promissory Note and all other amounts outstanding under this Promissory Note shall be paid in full by the Debtor immediately upon the occurrence of an Event of Default.

2.

Interest. The outstanding principal amount hereof shall bear interest from the date hereof to and including the date of payment of the principal amount hereof in full at a rate of 4% per annum, calculated and payable monthly, in arrears on the first Business Day (as defined in the APA) of each month, both before and after judgment. Interest shall accrue daily and be calculated on the basis of the actual number of days elapsed in a year of 360 days. The covenant to pay interest shall not merge on the taking of a judgment or judgments with respect to any of the obligations herein stipulated. If any provision of this Promissory Note would oblige the Debtor to make any payment of interest or other amount payable to the Holder in an amount or calculated at a rate which would be prohibited by applicable law or would result in a receipt by the Holder of “ interest ” at a “ criminal rate ” (as such terms are construed under the Criminal Code (Canada)), then, notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, that would not be so prohibited by applicable law or so result in a receipt by the Holder of “ interest ” at a “ criminal rate ”, such adjustment to be effected, to the extent necessary (but only to the extent necessary) by the Holder returning such excess amount or rate to the Debtor.



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

3.

Costs and Expenses. The Debtor shall pay 50% of all costs and expenses of the Holder incurred in connection with all security documents and/or any other documents related hereto including all such registrations thereof (including the reasonable fees and expenses of its legal counsel). The Debtor shall indemnify the Holder for any amounts required to compensate the Holder for, any cost, expense, claim or loss suffered by, imposed on, or asserted against, the Holder as a result of, connected with or arising out of (i) the enforcement of this Promissory Note, (ii) a default (whether or not constituting an Event of Default) by the Debtor, and (iii) any proceedings brought by or against the Holder due to the Holder’s entering into or being a party to the Promissory Note.

     
4.

Security. All obligations under this Promissory Note shall be secured by security over all the Purchased Assets (including, without limitation, the Rice Lake Property) pursuant to a debenture to be entered into, executed and delivered by the Debtor in favour of the Holder in form and substance satisfactory to each of the Holder and the Debtor (the “ Debenture ”). The Debenture and/or notice thereof (as the Holder may require) will be filed in all registries and offices as the Holder may require. All the security pursuant to the Debenture shall at all times be first-ranking (subject only to the Permitted Encumbrances) and perfected on terms and conditions satisfactory to the Holder provided that the Holder shall permit the Permitted Klondex Encumbrances if such Permitted Klondex Encumbrances are subordinated to the security over the Purchased Assets in favour of the Holder on terms and conditions satisfactory to the Holder.

     

" Permitted Klondex Encumbrances " means:

     
(a)

the Encumbrances in favour of Franco-Nevada GLW Holdings Corp. (“ Franco-Nevada ”) pursuant to the gold purchase agreement dated February 11, 2014 between Franco-Nevada and Klondex Parent provided such Encumbrances are subordinated to the security over the Purchased Assets granted by Klondex in favour of Shoreline on terms and conditions satisfactory to Shoreline;

     
(b)

the Encumbrances in favour of [****] or other third party lender pursuant to a revolving credit facility and risk management facility for metal and currency hedging to be provided by [****] or other third party lender to Klondex Parent (and/or one of its subsidiaries), provided such Encumbrances are subordinated to the security over the Purchased Assets granted by Klondex in favour of Shoreline on terms and conditions satisfactory to Shoreline;

     
(c)

Encumbrances arising by operation of law for Taxes, assessments or governmental charges not yet due or being contested in good faith by appropriate proceedings diligently conducted and for which reserves satisfactory to Shoreline have been established; and



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (d)

such other Encumbrances as may be approved in writing by Shoreline from time to time.


5.

Affirmative Covenants. So long as any amount owing under this Promissory Note remains unpaid, the Debtor shall do the following:

     
(a)

Payments of Principal Sum and Interest. Pay the principal sum of this Promissory Note and all accrued interest and fees upon same becoming due and payable in accordance with the terms of this Promissory Note;

     
(b)

Delivery of Secured Property and Perfection. Do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, such further acts, deeds, mortgages, assignments, transfers and assurances as the Holder shall require for better assuring, charging, assigning and conferring unto the Holder the security interest created under the Debenture and/or for the purpose of fully accomplishing and effecting the intention of this Promissory Note;

     
(c)

Corporate Existence, Compliance with Laws, etc. Preserve and maintain its corporate existence. Comply in all material respects with the requirements of all applicable Laws (as defined in the APA). Obtain and maintain in full force all consents, authorizations, approvals, licenses, permits and third party approvals necessary for the conduct of its business as currently conducted and the entering into and performance of its obligations under this Promissory Note;

     
(d)

Maintenance of Insurance. (A) Maintain insurance at all times with responsible insurance carriers and in such amounts and covering such risks as are usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Debtor operates; (B) Promptly at the request of the Holder, deliver to the Holder evidence of such insurance coverage; and (C) Promptly at the request of the Holder, deliver to the Holder all certificates and reports prepared in connection with such insurance;

     
(e)

Maintenance of Collateral. (A) Maintain or cause to be maintained all the Purchased Assets (including, without limitation, the Rice Lake Property) in good condition in accordance with prudent industry standards; and (B) cause all necessary and proper steps to be taken diligently to protect and defend all the Purchased Assets (including, without limitation, the Rice Lake Property) and the proceeds thereof against any adverse claim or demand;

     
(f)

Notice. Give notice to the Holder as soon as it becomes aware of (i) the commencement of any action, litigation, proceeding, arbitration, investigation, grievance or dispute affecting the Debtor, its business or any of its affairs, or (ii) any Event of Default;

     
(g)

Further Assurances. Upon request of the Holder, execute and deliver, or cause to be executed and delivered, to the Holder such further instruments and agreements and do and cause to be done such further acts as may be necessary or proper in the opinion of the Holder, acting reasonably, to carry out more effectively the provisions and purposes of this Promissory Note and/or the Debenture; and



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (h)

Performance of Obligations. Duly and punctually perform and carry out all of the covenants and acts or things to be done by it as provided in this Promissory Note.


6.

Negative Covenants. Except with the prior written consent of the Holder (acting in its sole and absolute discretion), so long as any amount owing under this Promissory Note remains unpaid, the Debtor shall not:

     
(a)

Grant Security. Directly or indirectly create, incur, assume, grant, permit or suffer to exist any Encumbrance (as defined in the APA) whatsoever on any of the Purchased Assets (including, without limitation, the Rice Lake Property) other than (i) the Permitted Encumbrances and (ii) any Permitted Klondex Encumbrances provided that such Permitted Klondex Encumbrances are subordinated to the security over the Purchased Assets in favour of the Holder on terms and conditions satisfactory to the Holder;

     
(b)

Distributions . Declare, make or pay any Distribution. For purposes of this Promissory Note, “ Distribution ” includes (i) any dividend or other distribution on issued shares, or (ii) any purchase, redemption or retirement of any issued shares, preferred shares, warrants or any other option or right to acquire any shares;

     
(c)

Sale of Assets . Sell, lease, convey, transfer, assign or otherwise dispose of all or any Purchased Assets, except that it may sell its inventory in the ordinary course of business and otherwise dispose of obsolete or worn out assets for cash on arm's length terms and conditions, provided that the Debtor shall be entitled to temporarily transfer to, and maintain in, the State of Nevada mobile equipment of the Debtor currently located in the Province of Manitoba provided further that the security granted in favour of the Holder in such equipment for the obligations under this Note shall continue uninterrupted as perfected first-ranking security (subject only to the Permitted Encumbrances) in favour of the Holder on terms and conditions satisfactory to the Holder provided that the Permitted Klondex Encumbrances shall be permitted to apply to such mobile equipment only to the extent such Permitted Klondex Encumbrances are subordinated to the security over the Purchased Assets in favour of the Holder on terms and conditions satisfactory to the Holder;

     
(d)

Mergers, Etc. Enter into any reorganization, consolidation, amalgamation, arrangement, winding-up, merger or other similar transaction or convey, lease or dispose of all or substantially all of its assets;

     
(e)

Bankruptcy. (i) Make a general assignment for the benefit of creditors, (ii) institute any proceeding seeking (a) to adjudicate it a bankrupt or insolvent, or (b) to liquidate, wind up, reorganize, arrange, adjust, protect or relieve of it or its debts under any laws relating to bankruptcy, insolvency, reorganization or relief of debtors or (iii) take any corporate action to authorize any of the above actions;



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (f)

Financial Assistance. Make any loans, grant any credit or give any guarantee or other financial accommodation or assurance to or for the benefit of any Person (as defined in the APA); or

     
  (g)

Payment of Indebtedness. Directly or indirectly, purchase, redeem, defease or pay any principal, interest, fee, commission or other amount relating to any indebtedness other than (i) indebtedness owing by the Debtor to the Holder or (ii) indebtedness incurred solely for the acquisition of mobile equipment necessary for the development or operation of the Rice Lake Project (and, if secured, only secured by a security interest over the asset acquired with the proceeds of such indebtedness) and provided further that (A) the total aggregate amount thereof incurred during the period commencing on the date hereof and ending on the Third Instalment Maturity Date shall not exceed CAD$5,000,000 and (B) the only permitted payments shall be payments of regular interest and regular scheduled repayments of principal (each of which shall be on arm’s length terms).


7.

Events of Default. The occurrence of any of the following events shall constitute an “ Event of Default ” under this Promissory Note:

     
(a)

Non-Payment . The Debtor fails to make payment of any obligation (whether for principal, interest, costs, fees, expenses or any other amount due hereunder) when due and payable pursuant to the terms of this Promissory Note;

     
(b)

Breach of Covenants or Obligations . (i) The Debtor fails to perform, observe or comply with any covenant, condition or any other provision or obligation contained in Section 6 of this Promissory Note; or (ii) the Debtor fails to perform, observe or comply with any covenant, condition or any other provision or obligation contained in Section 5 of this Promissory Note and, in the case of paragraph (ii), such failure continues for a period of ten (10) Business Days (as defined in the APA);

     
(c)

No Priority. This Promissory Note ceases to be in full force and effect and/or if the Holder's security interest is no longer effective and/or the Holder no longer has a perfected priority lien against all the Purchased Assets as contemplated herein;

     
(d)

Judgments . Any judgment or order for the payment of money is rendered against (i) the Debtor in excess of CAD$500,000 in the aggregate or (ii) Klondex Parent in excess of US$10,000,000 in the aggregate;

     
(e)

Insolvency . The Debtor or Klondex Parent (i) makes a general assignment for the benefit of creditors, (ii) institutes or has instituted against it any proceeding seeking (a) to adjudicate it a bankrupt or insolvent, (b) liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any laws relating to bankruptcy, insolvency, reorganization or relief of debtors, or (c) the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any part of its properties and assets, or (iii) takes any action to authorize any of the above or similar actions;



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (f)

Dissolution . Any proceedings are commenced or any application is made for the bankruptcy, insolvency, reorganization, winding-up, liquidation or dissolution or any similar proceedings of the Debtor or Klondex Parent or any decree, order or approval for such bankruptcy, insolvency, reorganization, winding-up, liquidation or dissolution is issued or entered; and/or

     
  (g)

Change of Control . A Change of Control (as defined in the APA) of the Debtor and/or of Klondex Parent occurs.

     
  (h)

Cross Default . The Debtor fails to pay the principal of, or premium or interest on, any of its Debt which is outstanding in an aggregate principal amount exceeding (i) in the case of the Debtor, CAD$500,000 or (ii) in the case of Klondex Parent, US$10,000,000 (or the equivalent amount in any other currency) when such amount becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise); or any other event occurs or condition exists if its effect is to constitute a default (howsoever described) under any such Debt or would accelerate, or permit the acceleration of any such Debt; or any such Debt shall or may be declared to be due and payable prior to its stated maturity. For the purposes of this Section 7(h), " Debt" means (i) all indebtedness of the Debtor and/or Klondex Parent for borrowed money, including borrowings of commodities, bankers’ acceptances, letters of credit or letters of guarantee, (ii) all indebtedness of the Debtor and/or Klondex Parent for the deferred purchase price of property or services other than for goods and services purchased in the ordinary course of business and paid for in accordance with customary practice and not represented by a note, bond, debenture or other evidence of Debt provided such indebtedness is not outstanding for a period longer than 90 days, (iii) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by the Debtor and/or Klondex Parent (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (iv) all current liabilities of the Debtor and/or Klondex Parent represented by a note, bond, debenture or other evidence of Debt, (v) all obligations under leases which have been or should be recorded as capital leases in respect of which the Debtor and/or Klondex Parent is liable as lessee and (vi) all indebtedness of the Debtor and/or Klondex Parent to finance all or part of the cost of acquiring any asset.


8.

Application of Payments. All payments by the Debtor to the Holder shall be applied firstly to accrued and unpaid interest, if applicable, and secondly to the unpaid balance of the principal amount.

   
9.

Pre-Payment. The Debtor shall have the right to pay any or all amounts owing hereunder at any time without penalty, premium or similar payment.

   
10.

Set-Off. In the event that any outstanding amount is claimed by the Debtor as due and payable pursuant to the Holder's obligations to indemnify the Debtor under Article 9 of the APA in connection with any Loss (as defined in the APA) for which a Claim or Third Party Claim has been made by the Debtor in accordance with the terms of the APA (" Unsatisfied Indemnity Obligations "), and the Debtor wishes to set-off all or any portion of the amount owing by the Debtor to the Holder pursuant to this Promissory Note against all or any portion of the amount of Unsatisfied Indemnity Obligations, the Debtor shall:



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

 

(a) provide prior written notice to the Holder of such Unsatisfied Indemnity Obligation and its intention to set-off all or any portion of the amount owing by the Debtor to the Holder pursuant to this Promissory Note against all or any portion of the amount of Unsatisfied Indemnity Obligations, not less than 10 days prior to the date it intends to effect such set-off ; and

(b) without prejudice to any of its other (payment and/or other) obligations under this Promissory Note, deposit an amount equal to the lesser of (i) the amount then due under this Promissory Note and (ii) the amount of such Unsatisfied Indemnity Obligation with the Escrow Agent (as defined in the APA) in accordance with the provisions of the Escrow Agreement (as defined in the APA) (the “ Escrowed Amount ”).

Subject to the provisions of the Escrow Agreement, the Debtor and the Holder agree that the Escrowed Amount shall be disbursed as follows:

  (i)

in the event that the Debtor and the Holder reach an agreement in relation to any Unsatisfied Indemnity Obligation, the Escrowed Amount shall be disbursed in accordance with such agreement, and each of the Debtor and the Holder shall so instruct the Escrow Agent; and

     
  (ii)

in the event that no such agreement is reached between the Holder and the Debtor, the Escrowed Funds shall be disbursed in accordance with a final, non-appealable judgement rendered by a competent court or a final, non- appealable decision rendered by an arbitrator (as the case may be) in relation to the Claim, and each of the Debtor and the Holder shall so instruct the Escrow Agent.


The right of set-off described in this Section is the only and exclusive right of set-off, deduction, withholding or similar right and/or remedy that the Debtor shall have in relation to its obligations under this Promissory Note.

   
11.

Waiver. The Debtor hereby waives presentment for payment, notice of non-payment, protest and notice of protest and any other condition precedent to action against it for the payment of this Promissory Note. The failure of the Holder to exercise any of the Holder’s rights hereunder in any instance shall not constitute a waiver thereof in that or any other instance.

   
12.

Enurement and Assignment . This Promissory Note shall be binding upon and shall enure to the benefit of the parties hereto and their respective successors and permitted assigns. This Promissory Note may not be assigned or transferred by the Debtor without the prior written consent of the Holder (which may be unreasonably withheld) and any such assignee shall consent in writing to be bound by the terms and conditions of this Promissory Note. This Promissory Note may be assigned or transferred by the Holder to any Person (as defined in the APA) without the consent of or notice to the Debtor. The Debtor hereby agrees and acknowledges that the Holder may grant an Encumbrance (as defined in the APA) over all of its interest in this Promissory Note to any Person (as defined in the APA).



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

13.

Severability. In the event that any one or more of the provisions of this Promissory Note shall be held to be illegal, invalid or unenforceable in any respect, the same shall not in any respect affect the validity, legality or enforceability of the remainder of this Promissory Note.

   
14.

Governing Law. This Promissory Note shall be governed by and construed in accordance with the laws of the Province of Manitoba and the federal laws of Canada applicable therein. The Debtor hereby submits to the non-exclusive jurisdiction of the courts of Manitoba.

[ Signature page follows. ]


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

IN WITNESS WHEREOF the undersigned has executed this Promissory Note as of the date first above written.

  KLONDEX CANADA LTD.
     
  By:
    Name:
    Title:

The foregoing is hereby accepted and agreed to as of the date first above written.

  SHORELINE GOLD INC.
     
  By:
    Name:
    Title:



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Execution Version

Dated MARCH 23, 2016
   

UP TO US$25,000,000

SECURED REVOLVING FACILITY AGREEMENT

between

KLONDEX MINES LTD.
as Borrower

and

KLONDEX CANADA LTD., 0985472 B.C. LTD, KLONDEX HOLDINGS (USA)
INC., KLONDEX MIDAS HOLDINGS LIMITED, KLONDEX MIDAS
OPERATIONS INC. and KLONDEX GOLD & SILVER MINING COMPANY
as Guarantors

with

INVESTEC BANK PLC
as Lender and Hedge Counterparty

and

INVESTEC BANK PLC
acting as Security Agent



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Contents

Clause Page
INTERPRETATION 1
1 Definitions and Interpretation 1
THE FACILITY 21
2 The Facility 21
3 Purpose 22
4 Conditions of Utilization 23
UTILIZATION 24
5 Utilization 24
REPAYMENT, PREPAYMENT AND CANCELLATION 25
6 Repayment 25
7 Prepayment and Cancellation 25
COSTS OF UTILIZATION 28
8 Interest 28
9 Interest Periods 29
10 Changes to the Calculation of Interest 29
11 Fees 30
ADDITIONAL PAYMENT OBLIGATIONS 31
12 Tax Gross Up and Indemnities 31
13 Increased Costs 36
14 Other Indemnities 38
15 Mitigation by the Lender 39
16 Costs and Expenses 39
GUARANTEE 41
17 Guarantee and Indemnity 41


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT 44
18 Representations 45
19 Information Undertakings 51
20 Financial Covenants 56
21 General Undertakings 58
22 Events of Default 70
CHANGES TO PARTIES 76
23 Changes to the Lender 76
24 Restriction on Debt Purchase Transactions 80
25 Changes to the Obligors 80
ADMINISTRATION 81
26 Payment Mechanics 81
27 Set-Off 83
28 Notices 83
29 Calculations and Certificates 85
30 Partial Invalidity 85
31 Remedies and Waivers 85
32 Amendments and Waivers 86
33 Confidentiality 87
34 Interest Act of Canada 90
35 Usury 90
36 Future Financings 90
37 Counterparts 90
38 Contractual Recognition of Bail-In 91
GOVERNING LAW AND ENFORCEMENT 91
39 Governing Law 91
40 Enforcement 91


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

41   Waiver of immunity 92
Schedule 1   Conditions Precedent 93
Schedule 2   Requests 97
Part I   Utilization Request 97
Part II   Extension Request 98
Part III   Amendment Request 99
Schedule 3   Form of Transfer Certificate 100
Schedule 4  Form of Assignment Agreement 102
Schedule 5   Form of Amendment Confirmation 105
Schedule 6   Form of Compliance Certificate 107
Schedule 7   Timetables 108
Schedule 8   Disclosure Schedule 109
Schedule 21.40   208
Schedule 33.2(C)   209
SIGNATURES 210


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

THIS AGREEMENT is dated as of March 23, 2016 and made between:

(1)

KLONDEX MINES LTD , a company incorporated under the laws of the Province of British Columbia (the Borrower );

   
(2)

KLONDEX CANADA LTD , a company incorporated under the laws of the Province of British Columbia as guarantor ( Klondex Canada );

   
(3)

0985472 B.C. LTD , a company incorporated under the laws of the Province of British Columbia as guarantor ( 0985472 );

   
(4)

KLONDEX HOLDINGS (USA) INC. , a company incorporated under the laws of the State of Nevada as guarantor ( Klondex Holdings );

   
(5)

KLONDEX MIDAS HOLDINGS LIMITED , a company incorporated under the laws of the State of Nevada as guarantor ( Klondex Midas );

   
(6)

KLONDEX MIDAS OPERATIONS INC. , a company incorporated under the laws of the State of Nevada as guarantor ( Klondex Operations );

   
(7)

KLONDEX GOLD & SILVER MINING COMPANY , a company incorporated under the laws of the State of Nevada as guarantor ( Klondex Gold , together, the Guarantors );

   
(8)

INVESTEC BANK PLC , under the laws of England and Wales whose registered office is at 2 Gresham Street, London, EC2V 7QP and with registered number 00489604 (the Lender and Hedge Counterparty );

   
(9)

INVESTEC BANK PLC , as security agent for the Secured Parties (the Security Agent ).

IT IS AGREED as follows:

INTERPRETATION

1

Definitions and Interpretation


1.1

Definitions

In this Agreement:

Accounting Principles means, for any Obligor, IFRS and, for the purposes of any definition or calculation in clause 0 ( Financial covenants ), as applicable at the date of this Agreement.

Accounting Reference Date means 31 December.

Affiliate means, in relation to any person:

  (a)

a Subsidiary of that person;

     
  (b)

a Holding Company of that person; or

     
  (c)

any other Subsidiary of that Holding Company,

1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

(including head offices and branches of the above).

Amendment Confirmation means a confirmation substantially in the form set out in 0 Schedule ( Form of Amendment Confirmation ).

Amendment Request means a request substantially in the form set out in Part III of 0( Requests ).

Annual Budget means a cash flow budget prepared in accordance with Clause 19.4, showing the proposed budgeted sources and uses of funds by the Borrower over the following twelve (12) months. The Annual Budget shall take into account cash, available debt and forecast cash flows calculated using reasonable metal price and technical assumptions.

Applicable Law means any law, regulation, rule, executive order, decree, code of practice, circular, guidance note or injunction of, or made by, any Competent Authority that is binding and enforceable on or against an Obligor, the Properties or the subject matter of, or any party to, any Finance Document, as the case may be, including, for the avoidance of doubt, any Sanctions.

Assignment Agreement means an agreement substantially in the form set out in 0 ( Form of Assignment Agreement ).

Authorization means all Authorizations, permits, consent, approvals, resolutions, licences, leases, exemptions, filings, notarisations or registrations required in connection with:

  (a)

the conduct of the business of any member of the Group;

     
  (b)

the development, construction, operation and maintenance of the Properties, including land use and access rights;

     
  (c)

the entry into and performance by an Obligor of any Finance Document to which it is a party and the transactions contemplated thereby;

     
  (d)

the validity and enforceability against an Obligor of any Finance Document to which it is a party; and

     
  (e)

the admissibility in any Relevant Jurisdiction of any Finance Document to which an Obligor is party.

Availability Period means the period from and including Financial Close to and including the date falling one (1) Month before the Original Final Maturity Date.

Available Commitment means the Commitment minus:

  (a)

the amount of any outstanding Loans; and

     
  (b)

in relation to any proposed Utilization, the amount of any Loans that are due to be made on or before the proposed Utilization Date,

excluding the amount of repayment or prepayment with respect to any Loans due on or before the proposed Utilization Date.

Bail-In Action means the exercise of any Write-down and Conversion Powers.

2


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Bail-In Legislation means:

(a)      in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms , the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and

(b)      in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation.

Bank Tax means any Tax directly or indirectly measured by reference to or imposed as a result of the equity, assets, liabilities, leverage or other exposures to risk of the Lender or of any Affiliate of the Lender, the nature of the activities or transactions undertaken by the Lender or of any Affiliate of the Lender or other similar factors and includes any similar Tax levied or imposed in any other jurisdiction.

Base Case Model means the base case cash flow forecast model for the Borrower prepared by the Borrower, such model to detail the Borrower’s cash flow forecast for a minimum of three (3) years of operations and use reasonable assumptions in light of the circumstances or market conditions at the time of delivery.

Break Costs means the amount (if any) by which:

  (a)

the interest (other than the Margin) which the Lender should have received for the period from the date of receipt of all or any part of its participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

exceeds:

  (b)

the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

Business Day means a day (other than a Saturday or Sunday) on which banks are open for general business in the provinces of Ontario and British Columbia and in the United Kingdom.

Cash Available for Debt Service means, for a period for the Obligors and the Properties, all revenues less cash operating costs, capital, exploration and other agreed expenditures, and taxes payable for that period as represented in the then current Base Case Model.

Charged Property means all of the assets which from time to time are, or are expressed to be, the subject of the Transaction Security.

Code means the US Internal Revenue Code of 1986, as amended.

Commitment means US$25,000,000, or as amended in accordance with clause 0 ( Amendment to Commitment ) and to the extent not cancelled, reduced or transferred under this Agreement.

Commitment Limit has the meaning given to it in clause 2.3 (Reduction in Available Commitment) .

3


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Competent Authority means a government, supranational, local government, statutory or regulatory body or any subdivision thereof and any ministerial or governmental, quasi governmental, mining industry or other regulatory department, body, instrumentality, agency or official court or tribunal having jurisdiction over an Obligor, the Properties or the subject matter of, or any party to, any Finance Document.

Compliance Certificate means a certificate substantially in the form set out in 0 ( Form of Compliance Certificate ).

Condemnation means any legal or regulatory process that prevents use of the site, facilities and assets (or any material part of any of the foregoing) of any of the Properties on the grounds of health and safety for a continuous period of ninety (90) days or more.

Confidential Information means all information relating to any Obligor, the Group, the Finance Documents or the Facility of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to the Finance Documents or the Facility from either:

  (a)

any member of the Group or any of its advisers; or

     
  (b)

another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any member of the Group or any of its advisers,

in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:

  (i)

is or becomes public information other than as a direct or indirect result of any breach that Finance Party of clause 0 ( Confidentiality ); or

     
  (ii)

is identified in writing at the time of delivery as non-confidential by any member of the Group or any of its advisers; or

     
  (iii)

is known by that Finance Party before the date the information is disclosed to it accordance with paragraphs (a) or (b) above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with the Group and which, in either case, as far as that Finance Party aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.

Control means where one (1) person (either directly or indirectly and whether by share capital, voting power, contract or otherwise) has the power to appoint and/or remove the majority of the members of the governing body of another person or otherwise controls or has the power to control the affairs and policies of that other person and that other person is taken to be Controlled by the first person.

Counterparty Hedging Agreements means the risk management facilities as provided by the Hedge Counterparty, to be executed and utilised following Financial Close (in each case at the Borrower’s election) to manage any member of the Group’s short term sales and hedging of foreign currency exposure, gold and silver production (and such other commodities to be agreed upon between the Borrower and the Hedge Counterparty).

4


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Debt Purchase Transaction means, in relation to a person, a transaction where such person:

  (a)

purchases by way of assignment or transfer;

     
  (b)

enters into any sub-participation in respect of; or

     
  (c)

enters into any other agreement or arrangement having an economic effect substantially similar to a sub-participation in respect of,

any Commitment or amount outstanding under this Agreement.

Default means an Event of Default or any event or circumstance specified in clause 0 ( Events of Default ) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

Delegate means any delegate, agent, attorney or co-trustee appointed by the Security Agent.

Designated Person means a person or entity:

  (a)

listed in the annex to, or otherwise targeted by the provisions of U.S. Executive Order No. 13224 on Blocking Property and Prohibiting Transactions with Persons who Commit, Threaten to Commit, or Support Terrorism;

     
  (b)

named as a "Specially Designated National and Blocked Person" on the most current list published by the Office of Foreign Assets Control of the U.S. Department of the treasury (or any successor thereto) as its official website or any replacement website or other replacement official publication of such list; or

     
  (c)

to the best of the Obligors' knowledge, with which any Finance Party is prohibited from dealing or otherwise engaging in any transaction by any Sanctions.

Disclosure Schedule means the disclosure information set out in Schedule 8 ( Disclosure schedule ).

Disposal means a sale, lease, licence, transfer, loan or other disposal by a person of any asset, undertaking or business (whether by a voluntary or involuntary single transaction or series of transactions).

Disruption Event means either or both of:

  (a)

a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

     
  (b)

the occurrence of any other event which results in a disruption (of a technical or systems- related nature) to the treasury or payments operations of a Party preventing that, or any other Party:


  (i)

from performing its payment obligations under the Finance Documents; or

     
  (ii)

from communicating with other Parties in accordance with the terms of the Finance Documents,

5


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

Distribution means, in respect of a person:

  (a)

declaring, making or paying any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its share capital (or any class of its share capital);

     
  (b)

repaying or distributing any dividend or share premium reserve;

     
  (c)

redeeming, reducing, cancelling, repaying, purchasing or transferring any Financial Indebtedness owed to an Affiliate;

     
  (d)

paying or allowing any member of the Group to pay any management, advisory or other fee to or to the order of (i) any of its shareholders, (ii) any other member of the Group (unless such member is not an Obligor) or (iii) any of the shareholders of another member of the Group; or

     
  (e)

redeeming, repurchasing, defeasing, retiring or repaying any of its share capital or resolving to do so.

EEA Member Country means any member state of the European Union, Iceland, Liechtenstein and Norway.

Environment means humans, animals, plants and all other living organisms including the ecological systems of which they form part and the following media:

  (a)

air (including, without limitation, air within natural or man-made structures, whether above or below ground);

     
  (b)

water (including, without limitation, territorial, coastal and inland waters, water under or within land and water in drains and sewers); and

     
  (c)

land (including, without limitation, land under water).

Environmental Assessment means the Environmental Assessment level under the National Environmental Policy Act required to be completed for the Fire Creek Project, as determined by the Bureau of Land Management.

Environmental Claim means any claim, proceeding, formal notice or investigation by any person in respect of any Environmental Law.

Environmental Law means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directives, requests, licenses, authorizations and permits of, and agreements with (including consent decrees), any governmental agencies or authorities, in each case relating to or imposing liability or standards of conduct concerning public health, safety and Environmental protection matters, including those relating to hazardous, deleterious or toxic materials or substances or wastes, air emissions, and discharges to waste or public systems, in each case to the extent applicable to the Group.

6


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Environmental Permits means any permit and other Authorization and the filing of any notification, report or assessment required under any Environmental Law for the operation of the business of any member of the Group conducted on or from the properties owned or used by any member of the Group.

Equivalent means, in relation to an amount specified in a particular currency (the first amount ), the net amount of any other currency which the Lender determines can be purchased with the first amount in the Toronto foreign exchange market at or about 11:00 a.m. on the day on which the calculation falls to be made for spot delivery.

EU Bail-In Legislation Schedule means the document described as such and published by the Loan Market Association (or any successor person) from time to time.

Event of Default means any event or circumstance specified as such in clause 0 ( Events of Default ).

Event of Loss means any event that renders repair or restoration of the site or facilities or assets (or any material part of any of the foregoing) of any of the Properties impracticable or impossible unless adequately insured.

Excluded Assets means any Material Licences.

Exploration Business means any member of the Group (other than an Obligor) that is engaged solely in the identification, reconnaissance, investigation and exploration of potential or actual mineral resources by whatever means, including the submission of applications for appropriate licences to do so.

Extension Fee means the fee referred to in clause 6.2 ( Extension Option ).

Extension Request means a request substantially in the form set out in Part II of 0( Requests ).

Facility means the revolving loan facility made available under this Agreement as described in clause 0 ( The Facility ).

Facility Office means the office or offices through which the Lender will perform its obligations under this Agreement.

FATCA means:

  (a)

the Foreign Account Tax Compliance Act, being

     
  (b)

sections 1471 to 1474 of the Code or any associated regulations or other official guidance;

     
  (c)

any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction which (in each case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or

     
  (d)

any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.

FATCA Deduction means a deduction or withholding from a payment under a Finance Document required by FATCA.

7


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

FATCA Exempt Party means a Party that is entitled to receive payments free from any FATCA Deduction.

Fee Letter means:

  (d)

any letter or letters dated on or about the date of this Agreement between the Lender and the Borrower or the Security Agent and the Borrower setting out any of the fees referred to in clause 0 ( Fees ); and

     
  (e)

any agreement setting out fees payable to a Finance Party referred to in clause 0 ( Amendment to Commitment ) under any other Finance Document.

Finance Document means this Agreement, the Intercreditor Agreement, any Counterparty Hedging Agreement, each Transaction Security Document, and any other document designated as such by the Lender and the Borrower.

Finance Party means the Security Agent, the Hedge Counterparty or the Lender.

Financial Close means the date on which the Lender gives notice to the Borrower under clause 0 ( Initial conditions precedent ).

Financial Indebtedness means any indebtedness for or in respect of:

  (a)

moneys borrowed;

     
  (b)

any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;

     
  (c)

any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

     
  (d)

the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with Accounting Principles, be treated as a finance or capital lease;

     
  (e)

receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

     
  (f)

any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;

     
  (g)

any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account);

     
  (h)

any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and

     
  (i)

the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (h) above.

8


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Fire Creek Mine means the Fire Creek gold project in Nevada, United States.

Foreign Currency means any currency other than the lawful currency of Canada.

Good Industry Practice means international standards, practices, methods and procedures complying with Applicable Law and all Authorizations and with that degree of skill, diligence, judgment, prudence and foresight which would reasonably and ordinarily be expected under the same or similar circumstances from (as applicable) an internationally skilled and experienced owner, contractor, manufacturer, marketer, sales company or, as the case may be, operator engaged in designing, engineering, constructing, developing, commissioning, repairing, refurbishing, operating, maintaining, insuring and/or owning mining facilities in relation to the Properties.

Gold Purchase Agreement means the gold purchase agreement dated 11 February 2014 between the Borrower, as seller, and Franco-Nevada Corporation ( Franco-Nevada ), as buyer, including any permitted amendments, in accordance with the Intercreditor Agreement.

Government means the Government of Canada.

Group means each Obligor and each Subsidiary for the time being.

Group Structure Chart means the group structure chart provided to the Lender on the Closing Date.

Hedging Policy Limits means those limits established in the Klondex Mines Ltd. Accounting Policy Regarding Metal Sales, dated August 7, 2015, as prepared by [****] , specifying the amounts of metal that can be sold as follows:

  (a)

[****] % of metal in inventory after settlement with the refiner; and

     
  (b)

[****] % of metal delivered to the refiner but not settled, metal poured at mill or in transit to the refiner, metal in precipitate or estimated recovered metal in circuit. Metal is available to pledge after it is melted and poured at the refiner. Final settlement with the refiner is 10 days from the melt date.

     
  (c)

Percentages of estimated metal production for a one year rolling program:


  (i)

[****] % of 0-90 days;

     
  (ii)

[****] % of 91-180 days;

     
  (iii)

[****] % of 181-273 days; and

     
  (iv)

[****] % of 274-365 days.

Hedging Agreements means any master agreement, confirmation, schedule or other agreement entered into or to be entered into by any member of the Group and another party for the purpose of risk management in accordance with this Agreement (other than the Hedge Counterparty) or otherwise with the consent of the Lender.

Holding Company means, in relation to a person, any other person in respect of which it is a Subsidiary.

IFC Performance Standards means the IFC Performance Standards on Social and Economic Sustainability dated 1 January 2012 and as updated from time to time.

9


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

IFRS means International Financial Reporting Standards, as promulgated by the International Accounting Standards Committee, applied on a consistent basis both as to classification of items and amounts.

Insurance means any policy of insurance in respect of the Properties in which an Obligor may at any time have an interest, entered into in accordance with clause 0 ( Insurance ).

Insolvency Event in relation to an entity means that the entity:

  (a)

is dissolved (other than pursuant to a consolidation, amalgamation or merger);

     
  (b)

becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;

     
  (c)

makes a general assignment, arrangement or composition with or for the benefit of its creditors;

     
  (d)

institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official;

     
  (e)

has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition is instituted or presented by a person or entity not described in paragraph (d) above and:


  (i)

results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation; or

     
  (ii)

is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof;


  (f)

has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);

     
  (g)

seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets (other than, for so long as it is required by law or regulation not to be publicly disclosed, any such appointment which is to be made, or is made, by a person or entity described in paragraph (d) above);

     
  (h)

has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter;

10


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (i)

causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in paragraphs (a) to (i) above; or

     
  (j)

takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.

Intercreditor Agreement means the intercreditor agreement dated on or about Financial Close and made between the Lender and Franco-Nevada.

Interest Period means, in relation to a Loan, each period determined in accordance with clause 0 ( Interest Periods ) and, in relation to an Unpaid Sum, each period determined in accordance with clause 0 (Default interest).

Interpolated Screen Rate means, in relation to LIBOR for any Loan, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from interpolating on a linear basis between:

  (a)

the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of that Loan; and

     
  (b)

the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of that Loan,

each as of the Specified Time on the Quotation Day for the currency of that Loan.

Joint Venture means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity.

Legal Opinion means any legal opinion by counsel to the Borrower required to be delivered to the Lender and the Hedge Counterparty under paragraph 0 of 0( Conditions precedent ).

Legal Reservations means:

  (a)

the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;

     
  (b)

the time barring of claims under the Limitation Act;

     
  (c)

similar principles, rights and defences under the laws of any Relevant Jurisdiction; and

     
  (d)

any other matters that are set out as qualifications or reservations as to matters of law of general application in the Legal Opinions.

Lender’s Spot Rate of Exchange means the Lender’s spot rate of exchange for the purchase of the relevant currency with dollars in the Toronto foreign exchange market at or about 11:00 a.m. on a particular day.

LIBOR means, in relation to any Loan:

  (a)

the applicable Screen Rate;

     
  (b)

(if no Screen Rate is available for dollars for the Interest Period of that Loan) the Interpolated Screen Rate for that Loan; or

11


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (c)

if:


  (i)

no Screen Rate is available for dollars; or

     
  (ii)

no Screen Rate is available for dollars for the Interest Period of that Loan and it is not possible to calculate an Interpolated Screen Rate for that Loan,

the Reference Bank Rate,

as of, in the case of paragraphs (a) and (c) above, the Specified Time on the Quotation Day for dollars and for a period equal in length to the Interest Period of that Loan and if that rate is less than zero, LIBOR shall be deemed to be zero.

Limitation Act means the Limitations Act (Ontario), 2002 and any similar legislation in any Relevant Jurisdiction.

Loan means a loan made or to be made under the Facility or the principal amount outstanding for the time being of that loan.

Margin means three point five percent (3.5%) for the period up to the first full Test Date (as defined in clause 20.1 ( Financial definitions )) following Financial Close, inclusive of any applicable Risk Premium. Thereafter, the Margin shall be determined based on the Borrower Gearing Ratio (as defined in clause 20.1 ( Financial definitions )) for the Relevant Period (as defined in clause 20.1 ( Financial definitions )) in accordance with the table below:

Borrower Gearing Ratio Margin (% per annum)
< 0.50:1 2.75
≥ 0.50:1 < 1.00:1 2.95
≥ 1.00:1 < 1.50:1 3.15
≥ 1.50:1 < 2.00:1 3.35
≥ 2.00:1 < 2.50:1 3.60
≥ 2.50:1 4.00

Material Adverse Effect means any effect which, in the reasonable opinion of the Lender, is or is reasonably likely to be materially adverse to:

  (a)

the business, operations, property, condition (financial or otherwise) or creditworthiness of any Obligor or the Group (taken as a whole);

     
  (b)

the ability of an Obligor to perform any of its obligations under the Finance Documents; or

     
  (c)

the validity or enforceability of, or the effectiveness or ranking of any Security granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents.

Material Licences means any mining right issued by the relevant authority in connection with the Properties, the termination, revocation or loss of which could result in a Material Adverse Effect.

Midas Mine means the Midas gold mine in Nevada, United States.

12


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Midas Plant means the processing plant for the extraction of gold and silver located at the Midas Mine.

Month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:

  (a)

(subject to paragraph (c) below) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day; and

     
  (b)

if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and

     
  (c)

if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end.

The above rules will only apply to the last Month of any period.

New Lender has the meaning given to that term in clause 0 ( Changes to the Lender ).

Obligor means the Borrower, a Guarantor or any party (other than the Hedge Counterparty) to a Counterparty Hedging Agreement.

On Demand Funds has the meaning given to that term in clause 11.1 ( Commitment fee ).

On Notice Funds has the meaning given to that term in clause 11.1 ( Commitment fee ).

Original Final Maturity Date means the date falling twenty-four (24) Months after the date of this Agreement or, if extended pursuant to clause 0 ( Extension option ), the date which is twelve months after the then Original Final Maturity Date.

Original Financial Statements means the audited consolidated financial statements of the Borrower and its Subsidiaries for each of the financial year ended 31 December 2014 and the financial year ended 31 December 2013.

Original Jurisdiction means, in relation to an Obligor, the jurisdiction under whose laws that Obligor is incorporated as at the date of this Agreement.

Party means a party to this Agreement.

Permitted Acquisitions has the meaning given to it in clause 21.15 ( Acquisitions ).

Permitted Acquisition Debt means any pre-existing debt facilities secured solely against assets to be acquired under a Permitted Acquisition, including metal pre-purchase agreements, streaming or royalty financing agreements entered into to fund a Permitted Acquisition and which is secured solely against production from the acquired assets.

Permitted Disposal means a sale, lease, licence, transfer, loan or other disposal by a person of any asset, undertaking or business (whether by a voluntary or involuntary single transaction or series of transactions), which is on arm's length terms:

13


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (a)

of obsolete or redundant vehicles, inventory, plant and equipment for cash;

     
  (b)

of assets (other than shares, businesses, or real property) in aggregate of less than or equal to $ [****] in exchange for other assets comparable or superior as to type, value and quality;

     
  (c)

of assets in the ordinary course of trading of the disposing entity; or

     
  (d)

of assets acquired as part of a Permitted Acquisition for fair market value, where such assets are not required by the Borrower as part of its strategy for that Permitted Acquisition or the existing Properties.

Permitted Equipment Financing means:

  (a)

lending arrangements for the acquisition of vehicles, plant, equipment or computers, (or which are secured on any such vehicles, plant, equipment or computers (and any insurance policies in respect of the foregoing)); or

     
  (b)

finance or capital leases of vehicles, plant, equipment or computers,

provided that:

  (i)

the cost of financing the asset does not exceed fifteen percent (15%) per annum;

     
  (ii)

the aggregate Financial Indebtedness arising thereunder does not exceed US$ [****] (or its Equivalent);

     
  (iii)

the relevant Obligor provides a copy of the agreement documenting such lending arrangements to the Lender; and

     
  (iv)

in the case of (b) above only, any deposit or down payment that is required to be made under the terms of the finance or capital lease does not exceed forty percent (40%) of the capital cost of the asset.

Permitted Indebtedness has the meaning given to it in clause 0 ( Financial indebtedness ).

Permitted Security has the meaning given to it in clause 0 ( Negative pledge ).

Properties means the operation, maintenance and ownership of Midas Mine, Midas Plant, Fire Creek Mine, Rice Lake Mine and any Permitted Acquisitions.

Quotation Day means, in relation to any period for which an interest rate is to be determined, two (2) Business Days before the first day of that period unless market practice differs in the Relevant Interbank Market, in which case the Quotation Day will be determined by the Lender in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

Receiver means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property.

Reference Bank Rate means the arithmetic mean of the rates (rounded upwards to four (4) decimal places) as supplied to the Lender at its request by the Reference Banks as the rate at which the relevant Reference Bank could borrow funds in the London interbank market in dollars for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that period.

14


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Reference Banks means the principal London offices of Barclays Bank PLC and such other banks as may be selected by the Lender in consultation with the Borrower.

Related Fund in relation to a fund (the first fund ), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.

Relevant Interbank Market means the London interbank market.

Relevant Jurisdiction means, in relation to an Obligor:

  (a)

its Original Jurisdiction;

     
  (b)

any jurisdiction where any asset subject to or intended to be subject to the Transaction Security to be created by it is situated;

     
  (c)

any jurisdiction where it conducts its business; and

     
  (d)

the jurisdiction whose laws govern the perfection of any of the Transaction Security Document entered into by it.

Repeating Representations means each of the representations set out in clause 18.

Representative means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.

Resolution Authority means any body which has authority to exercise any Write-down and Conversion Powers.

Restricted Party means a person that is:

  (a)

listed on, or owned or controlled by a person listed on, or acting on behalf of a person listed on, any Sanctions List;

     
  (b)

located in, incorporated under the laws of, or owned or (directly or indirectly) controlled by, or acting on behalf of, a person located in or organized under the laws of a country or territory that is the target of country-wide or territory-wide Sanctions; or

     
  (c)

otherwise a target of Sanctions (“target of Sanctions” signifying a person with whom a US person or other national of a Sanctions Authority would be prohibited or restricted by law from engaging in trade, business or other activities).

Rice Lake Mine means the Rice Lake Mine and mill complex located near Bissett, Manitoba.

Risk Premium means from the first Test Date (as defined in clause 20.1 ( Financial definitions ) for which the Margin is calculated under the grid contained therein, an additional per annum premium shall be applied to the Margin as follows:

  (a)

0.25% prior to the final approval of the Environmental Assessment for the Fire Creek Mine; and

15


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

0.35% while the liabilities outstanding under the Gold Purchase Agreement exceed US$10,000,000, as reported using Accounting Principles and/or the Intercreditor Agreement remains in effect.

Rollover Loan means one or more Loans:

  (a)

made or to be made on the same day that a maturing Loan is due to be repaid;

     
  (b)

the aggregate amount of which is equal to or less than the amount of the maturing Loan; and

     
  (c)

made or to be made to the same Borrower for the purpose of refinancing a maturing Loan.

Sanctions means the economic sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by:

  (a)

the United States government;

     
  (b)

the United Nations;

     
  (c)

the European Union;

     
  (d)

the United Kingdom; or

     
  (e)

the respective governmental institutions and agencies of any of the foregoing, including, without limitation, the Office of Foreign Assets Control of the US Department of Treasury ( OFAC ), the United States Department of State, and Her Majesty’s Treasury ( HMT ),

(together, the Sanctions Authorities ).

Sanctions List means the “Specially Designated Nationals and Blocked Persons” list maintained by OFAC, the Consolidated List of Financial Sanctions Targets and the Investment Ban List maintained by HMT, or any similar list maintained by, or public announcement of Sanctions designation made by, any of the Sanctions Authorities.

Screen Rate means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate), or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page or service ceases to be available, the Lender may specify another page or service displaying the relevant rate after consultation with the Borrower.

Security means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

Separate Loan has the meaning given to it in clause 0 ( Repayment of Loans ).

Shoreline Asset Purchase Agreement means the Asset Purchase Agreement made as of December 16, 2015 among Klondex Canada, Shoreline Gold Inc. and the Borrower.

16


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Shoreline Promissory Note means the secured Promissory Note dated January 21, 2016 made by Klondex Canada in favor of 7097914 Manitoba Inc. in the principal amount of $12,000,000.

Specified Time means a time determined in accordance with 0( Timetables ).

Subsidiary means, in relation to a company, any other company:

  (a)

which is Controlled, directly or indirectly, by the first named company; or

     
  (b)

more than half the issued share capital of which is beneficially owned, directly or indirectly, by the first named company.

Tax means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

Transaction Security means the Security created or expressed to be created in favour of the Security Agent pursuant to the Transaction Security Documents.

Transaction Security Documents means any document required to be delivered under paragraph 0 of 0( Conditions Precedent ); and any other document entered into by any Obligor creating or expressed to create any Security over all or any part of its assets in respect of the obligations of any of the Obligors under any of the Finance Documents.

Transfer Certificate means a certificate substantially in the form set out in 0 ( Form of Transfer Certificate ) or any other form agreed between the Lender and the Borrower.

Transfer Date means, in relation to an assignment or a transfer, the proposed date specified in the relevant Assignment Agreement or Transfer Certificate.

Unpaid Sum means any sum due and payable but unpaid by an Obligor under the Finance Documents.

US means the United States of America.

US Tax Obligor means:

  (a)

the Borrower which is resident for tax purposes in the US; or

     
  (b)

an Obligor some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.

Utilization means a Utilization of the Facility.

Utilization Date means the date of a Utilization, being the date on which a Loan is to be made.

Utilization Request means a notice substantially in the form set out in 0( Utilization Request ).

VAT means general sales tax and provincial sales tax as applicable in British Columbia, or any other tax of similar nature, whether imposed in Canada or elsewhere.

World Bank Standards means:

17


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (a)

the environmental and social standards, requirements, policies and guidelines contained in the Pollution, Prevention and Abatement Handbook 1998 published by the World Bank and (to the extent applicable) all other environmental and social standards, requirements, policies and guidelines relating to mining projects published by the World Bank from time to time;

     
  (b)

the IFC Environmental Guidelines for Occupational Health and Safety in force from time to time;

     
  (c)

the IFC Performance Standards; and

     
  (d)

(to the extent applicable) all other environmental and social standards, requirements, policies and guidelines relating to mining projects published by the International Finance Corporation from time to time.

Write-down and Conversion Powers means:

  (a)

in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; and

     
  (b)

in relation to any other applicable Bail-In Legislation:


  (i)

any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and

     
  (ii)

any similar or analogous powers under that Bail-In Legislation.


1.2

Construction


  (a)

Unless a contrary indication appears, any reference in this Agreement to:


  (i)

the Security Agent , any Finance Party , the Lender , any Obligor , or any Party shall be construed so as to include its successors in title, permitted assigns and permitted transferees to, or of, its rights and/or obligations under the Finance Documents and, in the case of the Security Agent, any person for the time being appointed as Security Agent or Security Agents in accordance with the Finance Documents;

     
  (ii)

a document in agreed form is a document which is previously agreed in writing by or on behalf of the Borrower and the Lender or their respective legal advisors or, if not so agreed, is in the form specified by the Lender;

     
  (iii)

assets includes present and future properties, assets, intellectual property rights, real property, personal property, revenues, uncalled capital and rights of every description;

18


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (iv)

a Finance Document or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended, novated, supplemented, extended or restated, however fundamentally;

     
  (v)

guarantee means (other than in clause 0 ( Guarantee and Indemnity )) any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness;

     
  (vi)

indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

     
  (vii)

the term including shall be construed to mean including without limitation ;

     
  (viii)

an obligation means any duty, obligation or liability of any kind;

     
  (ix)

a person includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium, partnership or other entity (whether or not having separate legal personality);

     
  (x)

a regulation includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation;

     
  (xi)

a right means any right, privilege, power, immunity or other interest or remedy of any kind;

     
  (xii)

the winding up , dissolution , administration or bankruptcy of a person shall be construed as to include any equivalent or analogous procedures under the laws of any jurisdiction in which such person is incorporated or resident in any jurisdiction in which such person carries on business or in which any of its assets are located (including the seeking of a liquidation, winding up, appointment of bankruptcy trustee, reorganisation, dissolution, administration, arrangement, adjustment, protection or relief of debtors, insolvency and suspension of payments);

     
  (xiii)

a provision of law is a reference to that provision as amended or re-enacted;

     
  (xiv)

a time of day is a reference to Pacific Time; and

     
  (xv)

clauses and schedules are to be construed as references to clauses of and schedules to this Agreement.


  (b)

Section, clause and Schedule headings are for ease of reference only.

     
  (c)

Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.

     
  (d)

A Default (other than an Event of Default) is continuing if it has not been remedied or waived and an Event of Default is continuing if it has not been waived.

19


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

1.3

Currency symbols and definitions

$ , US$ , USD and dollars denote the lawful currency of the United States of America.

1.4

Third Party Rights


  (a)

Unless expressly provided to the contrary in a Finance Document a person who is not a Party has no right to enforce or to enjoy the benefit of any term of this Agreement.

     
  (b)

Notwithstanding any term of any Finance Document the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.


1.5

Calculations

In any calculation done for the purposes of a Finance Document, no amount shall be double-counted.

20


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

THE FACILITY

2

The Facility


2.1

The Facility

Subject to the terms of this Agreement, the Lender shall make available to the Borrower a dollar revolving loan facility in an aggregate amount equal to the Commitment.

2.2

Amendment to Commitment


  (a)

The Borrower may, on the one (1) year anniversary of Financial Close, request that the Commitment be amended by delivering an Amendment Request to the Lender specifying the amount in dollars of the proposed amendment in the Commitment.

     
  (b)

The Borrower may not deliver an Amendment Request unless:


  (i)

no Default is continuing or would result from the proposed increase in the Commitment; and

     
  (ii)

the Repeating Representations are true on the date of the Amendment Request.


  (c)

Any amendment to the Commitment made pursuant to paragraph (a) above will take effect on the last day of the current Interest Period for the Loan or Loans which are outstanding when the conditions set out in paragraph (d) below are satisfied.

     
  (d)

An amendment to the Commitment will only be effective on:


  (i)

the Lender’s credit committee consenting in writing to the proposed amendment; and

     
  (ii)

the execution by the Lender of an Amendment Confirmation.


  (e)

The Borrower shall promptly on demand pay the Lender and the Security Agent the amount of all costs and expenses (including legal fees and disbursements) reasonably incurred by either of them and, in the case of the Security Agent, by any Receiver or Delegate in connection with any increase in Commitment under this clause 2.2.

     
  (f)

The Borrower may pay to the Lender a fee in the amount and at the times agreed between the Borrower and the Lender in a Fee Letter.


2.3

Reduction in Commitment

If the Borrower Gearing Ratio (as defined in clause 0 ( Financial definitions )) is greater than 3.75:1 at any time when calculated prior to the Original Final Maturity Date, the Available Commitment shall be recalculated by the Lender and reduced to a level in compliance with the ratios described in clause 20.1 (Financial definitions) (the Commitment Limit ). If the amount of the outstanding under the Facility exceeds the Commitment Limit, the Borrower shall be required to remit a mandatory prepayment in accordance with clause 7.3 ( Mandatory prepayment – reduction in Commitment ).

2.4

Finance Parties' rights and obligations


  (a)

The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

21


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor shall be a separate and independent debt.

     
  (c)

A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.


2.5

Obligors' Agent


  (a)

Each Obligor (other than the Borrower) by its execution of this Agreement irrevocably appoints the Borrower (acting through one or more authorised signatories) to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises:


  (i)

the Borrower on its behalf to supply all information concerning itself contemplated by this Agreement to the Finance Parties and to give all notices and instructions, to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Obligor notwithstanding that they may affect the Obligor, without further reference to or the consent of that Obligor; and

     
  (ii)

each Finance Party to give any notice, demand or other communication to that Obligor pursuant to the Finance Documents to the Borrower,

and in each case the Obligor shall be bound as though the Obligor itself had given the notices and instructions or executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.

  (b)

Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made by the Obligors' Agent or given to the Obligors' Agent under any Finance Document on behalf of another Obligor or in connection with any Finance Document (whether or not known to any other Obligor and whether occurring before or after such other Obligor became an Obligor under any Finance Document) shall be binding for all purposes on that Obligor as if that Obligor had expressly made, given or concurred with it. In the event of any conflict between any notices or other communications of the Obligors' Agent and any other Obligor, those of the Obligors' Agent shall prevail.


3

Purpose


3.1

Purpose

The Borrower shall apply all amounts borrowed by it under the Facility towards:

  (a)

any fees and expenses which are payable by the Obligors under this Agreement;

     
  (b)

general corporate requirements of the Borrower;

22


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (c)

working capital requirements of the Borrower or its Subsidiaries; and

     
  (d)

capital investments and expenditures of the Borrower or its Subsidiaries.


3.2

Monitoring

No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

4

Conditions of Utilization


4.1

Initial conditions precedent

The Borrower may not deliver a Utilization Request unless the Lender has received all of the documents and other evidence listed in 0( Conditions precedent ) in form and substance satisfactory to the Lender. The Lender shall notify the Borrower promptly upon being so satisfied.

4.2

Further conditions precedent

The Lender will only be obliged to comply with clause 0 ( Lender’s obligation ) if on the date of the Utilization Request and on the proposed Utilization Date:

  (a)

in the case of a Rollover Loan, no Event of Default is continuing or would result from the proposed Loan and, in the case of any other Loan, no Default is continuing or would result from the proposed Loan; and

     
  (b)

the Repeating Representations to be made by each Obligor are true in all material respects.

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

UTILIZATION

5

Utilization


5.1

Delivery of a Utilization Request

The Borrower may utilise the Facility by delivery to the Lender of a duly completed Utilization Request not later than the Specified Time.

5.2

Completion of a Utilization Request


  (a)

Each Utilization Request is irrevocable and will not be regarded as having been duly completed unless:


  (i)

the proposed Utilization Date is a Business Day within the Availability Period;

     
  (ii)

the currency and amount of the Utilization comply with clause 0 ( Currency and amount ); and

     
  (iii)

the proposed Interest Period complies with clause 0 ( Interest Periods ).


  (b)

Only one (1) Loan may be requested in each Utilization Request.


5.3

Currency and amount


  (a)

The currency specified in a Utilization Request must be dollars.

     
  (b)

The amount of the proposed Loan must be an amount which is not more than the Available Commitment and which is a minimum of US$1,000,000 and an integral multiple of US$500,000 or, if less, the Commitment.


5.4

Lender’s obligations

If the conditions set out in this Agreement have been met, and subject to clause 0 ( Repayment of Loans ) the Lender shall make each Loan available by the Utilization Date through its Facility Office.

5.5

Cancellation of Commitment

The portion of the Commitment which, at that time, is unutilised shall be immediately cancelled at the end of the Availability Period.

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

REPAYMENT, PREPAYMENT AND CANCELLATION

6

Repayment


6.1

Repayment of Loans


  (a)

The Borrower shall repay each Loan on the last day of its Interest Period, and any outstanding Loans shall be repaid on the Original Final Maturity Date.


6.2

Extension option


  (a)

On an annual basis after the date hereof, the Borrower may request an extension of the then applicable Original Final Maturity Date by a further twelve months by delivering an Extension Request to the Lender not less than sixty (60) days before the then applicable Original Final Maturity Date, provided that the Borrower may not deliver an Extension Request unless:


  (i)

no Default is continuing or would result from the Extension Request; and

     
  (ii)

the Repeating Representations are true on the date of the Extension Request.


  (b)

An Extension Request shall be irrevocable.

     
  (c)

Concurrent with the Extension Request, the Borrower shall deliver an extension fee equal to US$ [****] on the date of the delivery of the Extension Request (the “ Extension Fee ”).

     
  (d)

If the Lender consents to the Extension Request, it shall notify the Borrower by no later than thirty (30) days prior to the then Original Final Maturity Date (the Consent Date ). The decision as to whether to consent to the Extension Request is at the sole discretion of the Lender who shall not be under any obligation whatsoever to agree to the Extension Request. If the Borrower does not receive notification from the Lender by the Consent Date or if the Lender does not receive the Extension Fee, that Lender shall be deemed not to have consented to the Extension Request.

     
  (e)

If the Lender consents to the Extension Request, provided that no Default is continuing and the Extension Fee has been received by the Lender, the Original Maturity Date shall be extended by a further twelve months on the later of the Consent Date and the date on which the Borrower pays the Extension Fee to the Lender.

     
  (f)

If the Lender does not consent to the Extension Request by the Consent Date, the Original Final Maturity Date shall remain the same as was previously in effect without any recognition of an extension, and the Lender shall return the Extension Fee to the Borrower.


7

Prepayment and Cancellation


7.1

Illegality

If, in any applicable jurisdiction, it becomes unlawful for the Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in any Loan or it becomes unlawful for any Affiliate of the Lender to do so:

  (a)

upon the Lender notifying the Borrower, the Available Commitment of that Lender will be immediately cancelled; and

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

the Borrower shall repay the Lender on the last day of the Interest Period for each Loan occurring after the Lender has notified the Borrower, and the Lender's Commitment shall be cancelled in the amount of the Loans repaid.


7.2

Mandatory prepayment - change of control


  (a)

If a Change of Control occurs:


  (i)

the Borrower shall promptly (and in any event no later than three (3) Business Days after the occurrence of the Change of Control) notify the Lender upon becoming aware of that event; and

     
  (ii)

unless the Lender gave its written consent prior to the occurrence of the Change of Control, the Commitment will be immediately cancelled and all outstanding Loans, together with accrued interest and all other amounts accrued under the Finance Documents, will become immediately due and payable.


  (b)

For the purposes of paragraph 0 above, Change of Control means any person or group of persons acting jointly or otherwise acting in concert (including by way of joint venture or other cooperation agreement with an Obligor) gaining direct or indirect control of the Borrower or any Obligor and, for the purposes of this definition:


  (i)

control of a person means:


  (A)

the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:


  (1)

cast, or control the casting of, more than fifty percent (50%) of the maximum number of votes that might be cast at a general meeting of that person; or

     
  (2)

appoint or remove all, or the majority, of the directors or other equivalent officers of that person; or

     
  (3)

give directions with respect to the operating and financial policies of that person with which the directors or other equivalent officers of that person are obliged to comply; or


  (B)

the holding of more than fifty percent (50%) of the issued and outstanding share capital of that person (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital); and


  (ii)

acting in concert means a group of persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition by any of them, either directly or indirectly, of shares in a person, to obtain or consolidate control of that person.


7.3

Mandatory prepayment – reduction in Commitment

If the amount of Loans outstanding under the Facility exceeds the Commitment Limit pursuant to a reduction under Clause 2.3 ( Reduction in Commitment ):

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (a)

any available cash of the Borrower above US$10,000,000 shall become immediately due and payable to the Lender to reduce the Loans to the Commitment Level; and

     
  (b)

following the payment described in paragraph (a) above, one hundred percent (100%) of Cash Available for Debt Service shall be payable to the Lender until the outstanding Loans do not exceed the Commitment Limit.


7.4

Automatic cancellation

The Available Commitment shall be automatically cancelled at the end of the Availability Period.

7.5

Restrictions


  (a)

Any notice of cancellation or prepayment given by any Party under this clause 0 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.

     
  (b)

Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty.

     
  (c)

Unless a contrary indication appears in this Agreement, any part of the Facility which is prepaid or repaid may be reborrowed in accordance with the terms of this Agreement.

     
  (d)

The Borrower shall not repay or prepay all or any part of the Loans or cancel all or any part of the Commitment except at the times and in the manner expressly provided for in this Agreement.

     
  (e)

Subject to clause 0 ( Amendment to Commitment ), no amount of the Commitment cancelled under this Agreement may be subsequently reinstated.

     
  (f)

If all or part of a Loan is repaid or prepaid and is not available for redrawing (other than by operation of clause 0 ( Further conditions precedent )), the amount which is repaid or prepaid will be deemed to be cancelled on the date of repayment or prepayment.

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

COSTS OF UTILIZATION

8

Interest


8.1

Calculation of interest

The rate of interest on each Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:

  (a)

Margin;

     
  (b)

LIBOR; and

     
  (c)

Risk Premium.


8.2

Payment of interest

The Borrower shall pay accrued interest on the Loan to which that Interest Period relates on the last day of each Interest Period (and, if the Interest Period is longer than six (6) Months, on the dates falling at six (6) monthly intervals after the first day of the Interest Period).

8.3

Default interest


  (a)

If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph 0 below, is two percent (2.0%) per annum higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan of the overdue amount for successive Interest Periods, each of a duration selected by the Lender (acting reasonably). Any interest accruing under this clause 0 shall be immediately payable by the Obligor on demand by the Lender.

     
  (b)

If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:


  (i)

the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and

     
  (ii)

the rate of interest applying to the overdue amount during that first Interest Period shall be two percent (2%) per annum higher than the rate which would have applied if the overdue amount had not become due.


  (c)

Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.


8.4

Notification of rates of interest

The Lender shall promptly notify the Borrower of the determination of a rate of interest under this Agreement.

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

9

Interest Periods


9.1

Selection of Interest Periods


  (a)

The Borrower may select an Interest Period for a Loan in the Utilization Request for that Loan.

     
  (b)

The Borrower may select an Interest Period of one (1), three (3), and six (6) or twelve (12) Months or any other period agreed between the Borrower and the Lender.

     
  (c)

An Interest Period for a Loan shall not extend beyond the Original Final Maturity Date.

     
  (d)

Each Interest Period for a Loan shall start on its Utilization Date.

     
  (e)

A Loan has one (1) Interest Period only.


9.2

Non-Business Days

If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

10

Changes to the Calculation of Interest


10.1

Absence of quotations

Subject to clause 0 ( Market disruption ), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

10.2

Market disruption


  (a)

If a Market Disruption Event occurs in relation to a Loan for any Interest Period, then the rate of interest on the Loan for the Interest Period shall be the percentage rate per annum which is the sum of:


  (i)

the Margin; and

     
  (ii)

the percentage rate per annum of the cost to the Lender of funding its participation in that Loan from whatever source it may reasonably select.


  (b)

If the percentage rate per annum notified by the Lender pursuant to clause 0 above is less than LIBOR, the cost to that Lender of funding its participation in that Loan for that Interest Period shall be deemed, for the purposes of clause 0 above, to be LIBOR.

     
  (c)

If a Market Disruption Event occurs the Lender shall, as soon as is practicable, notify the Borrower.

     
  (d)

In this Agreement Market Disruption Event means:


  (i)

at or about noon on the Quotation Day for the relevant Interest Period when LIBOR is to be determined by reference to the Reference Banks, and none or only one of the Reference Banks supplies a rate to the Lender to determine LIBOR for the relevant Interest Period; or

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (ii)

before close of business in Toronto on the Quotation Day for the relevant Interest Period, the cost to the Lender of obtaining matching deposits in the Relevant Interbank Market would be in excess of LIBOR.


10.3

Alternative basis of interest or funding

If a Market Disruption Event occurs and the Lender or the Borrower so requires, the Lender and the Borrower shall enter into negotiations (for a period of not more than thirty (30) days) with a view to agreeing a substitute basis for determining the rate of interest.

10.4

Break Costs


  (a)

The Borrower shall, within three (3) Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Loan or Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for that Loan or Unpaid Sum.

     
  (b)

The Lender shall, as soon as reasonably practicable to the Borrower, provide a certificate of an authorized signatory of the Lender confirming the amount of its Break Costs for any Interest Period in which they accrue.


11

Fees


11.1

Commitment fee


  (a)

The Borrower shall pay to the Lender a fee on undrawn amounts under the Facility computed at the rate equal to:


  (i)

[****] per annum on amounts subject to sixty (60) days’ notice for Utilizations ( On Notice Funds ); and

     
  (ii)

[****] per annum on all other amounts ( On Demand Funds ).


  (b)

Following Financial Close, the Borrower shall notify the Lender of the aggregate amount of undrawn funds to be held as On Notice Funds and On Demand Funds. Following receipt of such notice by the Lender, the Borrower may elect to re-allocate any undrawn funds as either On Notice Funds or On Demand Funds at any time during the Availability Period, provided that the Borrower provides sixty (60) days’ notice to the Lender prior to any change of allocation.

     
  (c)

The accrued commitment fee is payable on the last day of each fiscal quarter which ends during the Availability Period, on the last day of the Availability Period and, if cancelled in full, on the cancelled amount of the Lender's Commitment at the time the cancellation is effective.


11.2

Establishment fee

The Borrower shall pay to the Lender an establishment fee as more specifically outlined in the Fee Letter in the form attached as Schedule 11.2 and executed and delivered concurrently with this Agreement.

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

ADDITIONAL PAYMENT OBLIGATIONS

12

Tax Gross Up and Indemnities


12.1

Definitions


  (a)

In this Agreement:

Protected Party means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.

Tax Deduction means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.

Tax Payment means either the increase in a payment made by an Obligor to a Finance Party under clause 0 ( Tax gross-up ) or a payment under clause 0 ( Tax indemnity ).

Tax Refund means a refund of any Tax.

Tax Withholding means (i) a FATCA Withholding or (ii) withholding Taxes imposed on amounts payable to or for the account of a Finance Party under a Finance Document pursuant to a law in effect on the date on which (A) such Finance Party acquires such interest in the Finance Document or (B) such Finance Party changes its Facility Office, except in each case to the extent that, pursuant to Section 12 of this Agreement, amounts with respect to such Taxes were payable either to such Finance Party’s assignor immediately before such Finance Party became a party hereto or to such Finance Party immediately before it changed its Facility Office.

  (b)

Unless a contrary indication appears, in this clause 0 a reference to determines or determined means a determination made in the absolute discretion of the person making the determination.


12.2

Tax gross-up


  (a)

Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.

     
  (b)

The Borrower shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Lender accordingly. Similarly, the Lender shall notify the Borrower on becoming so aware in respect of a payment payable to that Lender.

     
  (c)

If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

     
  (d)

If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

     
  (e)

Within thirty (30) days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

31


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (f)

Notwithstanding anything else in this Agreement, provided no Event of Default shall have occurred and be continuing, the provisions of this Section 0 shall not apply in respect of any Tax Withholding that is required solely as a result of an assignment by the Lender pursuant to Section 0 of this Agreement.


12.3

Tax indemnity


  (a)

The Borrower shall (within ten days of demand by the Lender) indemnify each Protected Party for the full amount of Tax imposed on such Protected Party and any other loss, liability or cost which that Protected Party reasonably determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document, including, without limitation, any Tax imposed or asserted on, or attributable to, amounts payable under this clause 12.3(a), whether or not such Tax was correctly or legally imposed or asserted. Any Protected Party making a claim under this clause 0 shall provide the Borrower with documentary evidence that the loss, liability or cost will be or has been suffered.

     
  (b)

Paragraph 0 above shall not apply:


  (i)

with respect to any Tax assessed on a Finance Party:


  (A)

under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or

     
  (B)

under the law of the jurisdiction in which that Finance Party's Facility Office is located in respect of amounts received or receivable in that jurisdiction,

if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or

  (ii)

to the extent a loss, liability or cost:


  (A)

is compensated for by an increased payment under clause 0 ( Tax gross-up ); or

     
  (B)

relates to a FATCA Deduction required to be made by a Party; or


  (iii)

with respect to any Bank Tax assessed or imposed on a Finance Party to the extent a loss, liability or cost is attributable to the unreasonable delay or default of a Finance Party in accounting for an amount of Tax due where such Finance Party was aware that such delay or default would result in such loss, liability or cost, save to the extent that such delay or default is attributable to the Borrower’s failure to pay that Finance Party pursuant to its obligation under clause 0 ( Tax indemnity ).


12.4

Tax Refund

If an Obligor makes a Tax Payment and the relevant Finance Party determines, in its discretion, that:

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (a)

a Tax Refund is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was required; and

     
  (b)

that a Finance Party (or any Affiliate of that Finance Party) has obtained that Tax Refund,

the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it, together with its Affiliates (if relevant) (after making that payment) in the same after-Tax position as it (or they, as the case may be) would have been in had the Tax Payment not been required to be made by the Obligor. Notwithstanding any other provision of this Agreement:

  (a)

the relevant Finance Party shall not be required to take any steps to claim or utilise any Tax Refund which would result in that Finance Party incurring any costs (including costs of management time);

     
  (b)

the relevant Finance Party shall not be required to take any steps which it reasonably considers would adversely affect its interests; and

     
  (c)

the relevant Finance Party shall not be required to claim or utilise any Tax Refund in priority to any other Tax relief, credit, deduction or right of repayment or other Tax benefit which may be available to it.


12.5

Stamp taxes

The Borrower shall pay and, within ten days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document except for any such Tax payable in connection with the entry into of, or any transaction implemented by, a Transfer Certificate (other than where that Transfer Certificate is entered into following an Event of Default which is continuing or a request by an Obligor).

12.6

VAT


  (a)

All amounts expressed to be payable under a Finance Document by any Party to a Finance Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to paragraph (b) below, if VAT is or becomes chargeable on any supply made by any Finance Party to any Party under a Finance Document and such Finance Party is required to account to the relevant tax authority for the VAT, that Party must pay to such Finance Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to that Party). In the event that any VAT is paid by any Party to a Finance Party in respect of such supply and such VAT is found not to be chargeable in respect of such supply and, as a result, such Finance Party receives a credit or repayment from the relevant tax authority, the Finance Party shall promptly pay to the Party an amount equal to such credit or repayment (if any) (up to an amount equal to the VAT paid by that Party to the relevant Finance Party in relation to such supply) which it reasonably determines relates to the VAT chargeable on that supply.

     
  (b)

If VAT is or becomes chargeable on any supply made by any Finance Party (the Supplier ) to any other Finance Party (the Recipient ) under a Finance Document, and any Party other than the Recipient (the Relevant Party ) is required by the terms of any Finance Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):

33


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (c)

(where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this paragraph (i) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and

     
  (d)

(where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.

     
  (e)

Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.

     
  (f)

Any reference in this clause 12.6 to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the person who is treated as making the supply, or (as appropriate) receiving the supply, under any applicable grouping rules.

     
  (g)

In relation to any supply made by a Finance Party to any Party under a Finance Document, if reasonably requested by such Finance Party, that Party must promptly provide such Finance Party with details of that Party's VAT registration and such other information as is reasonably requested in connection with such Finance Party's VAT reporting requirements in relation to such supply.


12.7

FATCA Information


  (a)

Subject to clause 0 below, each Party shall, within ten (10) Business Days of a reasonable request by another Party in writing:


  (i)

confirm to that other Party whether it is:


  (A)

a FATCA Exempt Party; or

     
  (B)

not a FATCA Exempt Party;


  (ii)

supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA; and

     
  (iii)

supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party's compliance with any other law, regulation or exchange of information regime.

34


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

     
  (c)

Paragraph (a) above shall not oblige any Finance Party to do anything, and paragraph (a)(iii) above shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:


  (i)

any law or regulation;

     
  (ii)

any fiduciary duty; or

     
  (iii)

any duty of confidentiality.


  (d)

If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraph (a)(i) or (ii) above (including, for the avoidance of doubt, where paragraph (c) applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information

     
  (e)

If the Borrower is a US Tax Obligor, or where the Lender reasonably believes that its obligations under FATCA or any other applicable law or regulation require it, the Lender shall, within ten (10) Business Days of:


  (i)

where the Borrower is a US Tax Obligor and the relevant Lender is the Lender, the date of this Agreement; or

     
  (ii)

where an Obligor is a US Tax Obligor and the relevant Lender is a New Lender, on or prior to the relevant Transfer Date or the date on which an increase in Commitment takes effect pursuant to clause 2.2 ( Amendment to Commitment ),

Lender shall supply:

  (A)

an executed withholding certificate on Form W-8 or Form W-9 or any other relevant form; or

     
  (B)

any withholding statement and other documentation, Authorization or waiver to certify or establish the status of such Lender under FATCA or that other law or regulation.


  (f)

The Lender shall provide any withholding certificate, withholding statement, document, Authorization or waiver received pursuant to paragraph (a) above to the relevant Borrower.

     
  (g)

If any withholding certificate, withholding statement, document, Authorization or waiver provided to the Lender pursuant to paragraph (e) above is or becomes materially inaccurate or incomplete, that Borrower shall promptly update it and provide such updated withholding certificate, withholding statement, document, Authorization or waiver to the Lender, unless it is unlawful for the Lender to do so.

35


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

12.8

FATCA Deduction


  (a)

Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

     
  (b)

Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), and in any case at least three (3) Business Days prior to making a FATCA Deduction, notify the Party to whom it is making the payment and, on or prior to the day on which it notifies that Party, shall also notify the Borrower, the Lender and the other Finance Parties.


13

Increased Costs


13.1

Increased costs


  (a)

Subject to clause 0 ( Exceptions ) the Borrower shall, within three (3) Business Days of a demand by the Lender, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of:


  (i)

the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation;

     
  (ii)

compliance with any law or regulation made after the date of this Agreement; or

     
  (iii)

is a Basel III Increased Cost.


  (b)

In this Agreement:

Increased Costs means:

  (i)

a reduction in the rate of return from the Facility or on a Finance Party's (or its Affiliate's) overall capital;

     
  (ii)

an additional or increased cost; or

     
  (iii)

a reduction of any amount due and payable under any Finance Document,

which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document.

Basel II means the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 as updated prior to, and in the form existing on, the date of this Agreement, excluding any amendment thereto arising out of Basel III;

Basel III means:

  (iv)

the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;

36


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (v)

the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement - Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and

     
  (vi)

any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”;

Basel III Increased Cost means an Increased Cost which is attributable to the implementation or application of or compliance with any Basel III Regulation (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates); and

Basel III Regulation means any law or regulation implementing Basel III (including any regulations regarding such issued by the Office of the Superintendent of Financial Institutions of Canada).

13.2

Increased cost claims

A Finance Party intending to make a claim pursuant to clause 0 ( Increased costs ) shall notify the Borrower, and as soon as practicably after, provide a certificate of an authorized signatory of the Lender confirming the amount of its Increased Costs.

13.3

Exceptions


  (a)

Clause 0 ( Increased costs ) does not apply to the extent any Increased Cost is:


  (i)

attributable to a Tax Deduction required by law to be made by an Obligor;

     
  (ii)

attributable to a FATCA Deduction required to be made by a Party;

     
  (iii)

compensated for by clause 0 ( Tax indemnity ) (or would have been compensated for under clause 0 ( Tax indemnity ) but was not so compensated solely because any of the exclusions in paragraph 0 of clause 0 ( Tax indemnity ) applied); or

     
  (iv)

attributable to the implementation or application of or compliance with Basel II or any other law or regulation which implements Basel II (but excluding any proposed changes to Basel II for the purposes of implementing Basel III or any other law or regulation which implements Basel III (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates)) or any other regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates);

     
  (v)

attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.


  (b)

In this clause 0, a reference to a Tax Deduction has the same meaning given to the term in clause 0 ( Definitions ).

37


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

14

Other Indemnities


14.1

Currency indemnity


  (a)

If any sum due from an Obligor under the Finance Documents (a Sum ), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the First Currency ) in which that Sum is payable into another currency (the Second Currency ) for the purpose of:


  (i)

making or filing a claim or proof against that Obligor; or

     
  (ii)

obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

that Obligor shall as an independent obligation, within three (3) Business Days of demand, indemnify the Lender and the Secured Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (1) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (2) the rate or rates of exchange available to that person at the time of its receipt of that Sum.

  (b)

Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.


14.2

Other indemnities


  (a)

The Borrower shall, within three (3) Business Days of demand, indemnify the Lender and the Secured Party against any cost, loss or liability incurred by that Finance Party as a result of:


  (i)

the occurrence of any Event of Default;

     
  (ii)

a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of clause 30 ( Sharing among the Finance Parties );

     
  (iii)

funding, or making arrangements to fund a Loan requested by the Borrower in a Utilization Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone);

     
  (iv)

a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower; or

     
  (v)

any actual or alleged breach of any Environmental Law or any Environmental Permit in connection with the Properties or the Facility by any person other than a Finance Party (except where such actual or alleged breach by a Finance Party is due to the acts or omissions of an Obligor or any other third party).


  (b)

The Borrower shall, within three (3) Business Days of demand, indemnify each Finance Party, each Affiliate of a Finance Party and each officer or employee of a Finance Party or its Affiliate, against any cost, loss or liability incurred by that Finance Party or its Affiliate (or officer or employee of that Finance Party or Affiliate) in connection with or arising out of the use of proceeds under the Facility or Transaction Security being taken over the Charged Property (including but not limited to those incurred in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry concerning the use of proceeds under the Facility), unless such loss or liability is caused by the gross negligence or wilful misconduct of that Finance Party or its Affiliate (or employee or officer of that Finance Party or Affiliate). Any Affiliate or any officer or employee of a Finance Party or its Affiliate may rely on this Clause 0 subject to Clause 0 ( Third party rights ).

38


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

14.3

Indemnity to the Lender

The Borrower shall indemnify the Lender immediately on demand against:

  (a)

any cost, loss or liability incurred by the Lender as a result of:


  (i)

investigating any event which it reasonably believes is a Default;

     
  (ii)

acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or

     
  (iii)

instructing lawyers, accountants, tax advisors, surveyors or other professional advisers or experts as permitted under this Agreement and in accordance with the terms of clause 0 ( Costs and expenses ); and


  (b)

any cost, loss or liability incurred by the Lender, except where by reason of the Lender’s gross negligence or wilful misconduct, or in the case of any cost, loss or liability pursuant to clause 0 ( Disruption to Payment Systems etc .).


15

Mitigation by the Lender


15.1

Mitigation


  (a)

Each Finance Party shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of clause 0 ( Illegality ), clause 0 ( Tax gross-up and indemnities ) or clause 0 ( Increased costs ) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.

     
  (b)

Paragraph 0 above does not in any way limit the obligations of any Obligor under the Finance Documents.


15.2

Limitation of liability


  (a)

The Borrower shall promptly indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under clause 0 ( Mitigation ).

     
  (b)

A Finance Party is not obliged to take any steps under clause 0 ( Mitigation ) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.


16

Costs and Expenses


16.1

Transaction expenses

The Borrower shall promptly on demand pay each of the Finance Parties all reasonable costs incurred in the development, completion and maintenance of the Facility will be for the account of the Borrower including legal documentation, stamp duty, independent technical experts (if required) and reasonable out-of-pocket expenses incurred by the Lender. The Finance Documents will contain the normal cost, increased cost (gross up provisions), charges, expenses and indemnity provisions for Facility arrangements of this nature.

39


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

16.2

Amendment costs

If (a) an Obligor requests an amendment, waiver or consent, or (b) an amendment is required pursuant to clause 0 ( Change of currency ), the Borrower shall, within three (3) Business Days of demand, reimburse each of the Finance Parties for the amount of all costs and expenses (including legal fees) reasonably incurred by the Lender and the Security Agent (and, in the case of the Security Agent, by any Receiver or Delegate) in responding to, evaluating, negotiating or complying with that request or requirement.

16.3

Enforcement costs

The Borrower shall, within three (3) Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document and the Transaction Security and any proceedings instituted by or against the Security Agent as a consequence of taking or holding the Transaction Security or enforcing these rights.

40


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

GUARANTEE

17

Guarantee and Indemnity


17.1

Guarantee and indemnity

Each Guarantor irrevocably and unconditionally jointly and severally:

  (a)

guarantees to each Finance Party punctual performance by each other Obligor of all that Obligor's obligations under the Finance Documents;

     
  (b)

undertakes with each Finance Party that whenever another Obligor does not pay any amount when due under or in connection with any Finance Document, that Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and

     
  (c)

agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of an Obligor not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due. The amount payable by a Guarantor under this indemnity will not exceed the amount it would have had to pay under this clause 0 if the amount claimed had been recoverable on the basis of a guarantee.


17.2

Continuing guarantee

This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.

17.3

Reinstatement

If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made by a Finance Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of each Guarantor under this clause 0 will continue or be reinstated as if the discharge, release or arrangement had not occurred.

17.4

Waiver of defences

The obligations of each Guarantor under this clause 0 will not be affected by an act, omission, matter or thing which, but for this clause, would reduce, release or prejudice any of its obligations under this clause 0 (without limitation and whether or not known to it or any Finance Party) including:

  (a)

any time, waiver or consent granted to, or composition with, any Obligor or other person;

     
  (b)

the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;

     
  (c)

the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

41


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (d)

any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;

     
  (e)

any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security including without limitation any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;

     
  (f)

any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or

     
  (g)

any insolvency or similar proceedings.


17.5

Guarantor intent

Without prejudice to the generality of clause 0 ( Waiver of defences ), each Guarantor expressly confirms that it intends that this guarantee shall extend from time to time to any (however fundamental) variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made available under any of the Finance Documents for the purposes of or in connection with any of the following: business acquisitions of any nature; increasing working capital; enabling investor distributions to be made; carrying out restructurings; refinancing existing facilities; refinancing any other indebtedness; making facilities available to a new borrower; any other variation or extension of the purposes for which any such facility or amount might be made available from time to time; and any fees, costs and/or expenses associated with any of the foregoing.

17.6

Immediate recourse


  (a)

Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from that Guarantor under this clause 0. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.

     
  (b)

Each Guarantor acknowledges the right of the Lender pursuant to clause 0 ( Acceleration ) to accelerate the payment of any sum that may become due under any guarantee or indemnity contained in this clause 0.


17.7

Appropriations

Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:

  (a)

refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and

42


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of any Guarantor's liability under this clause 0.


17.8

Deferral of Guarantors' rights

Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Lender otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this clause 0:

  (a)

to be indemnified by an Obligor;

     
  (b)

to claim any contribution from any other guarantor of any Obligor's obligations under the Finance Documents;

     
  (c)

to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party;

     
  (d)

to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which any Guarantor has given a guarantee, undertaking or indemnity under clause 0 ( Guarantee and Indemnity );

     
  (e)

to exercise any right of set-off against any Obligor; and/or

     
  (f)

to claim or prove as a creditor of any Obligor in competition with any Finance Party.

If a Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Finance Parties by the Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Finance Parties and shall promptly pay or transfer the same to the Lender or as the Lender may direct for application in accordance with clause 0 ( Payment mechanics ).

17.9

Additional security

This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party.

17.10

Further assurance

Each Guarantor agrees that, upon demand of the Lender (acting reasonably), it shall promptly execute and deliver at its own expense any document (executed as a deed or under hand as the Lender may direct in writing) and do any act or thing in order to confirm or establish the validity and enforceability of the guarantee and indemnity intended to be created by it under this clause 0.

43


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

18

Representations

Each Obligor makes the representations and warranties set out in this clause 0 to each Finance Party on the date of this Agreement.

18.1

Status


  (a)

It is a corporation, duly incorporated and validly existing under the law of its Original Jurisdiction.

     
  (b)

Each of its Subsidiaries is a corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation.

     
  (c)

It and each of its Subsidiaries has the power to:


  (i)

own or hold under lease and operate the assets it purports to own or hold under lease; and

     
  (ii)

own its assets and carry on its business as it is being conducted and as currently proposed to be conducted.


18.2

Binding obligations

Subject to the Legal Reservations:

  (a)

the obligations expressed to be assumed by it in each Finance Document to which it is a party are legal, valid, binding and enforceable obligations; and

     
  (b)

(without limiting the generality of paragraph (a) above), each Transaction Security Document to which it is a party creates (or will create, on the effective date of such relevant Transaction Security Document) the security interests which that Transaction Security Document purports to create and those security interests are valid and effective.


18.3

Non-conflict with other obligations

The entry into and performance by it of, and the transactions contemplated by, the Finance Documents and the granting of the Transaction Security do not and will not conflict with:

  (a)

any Applicable Law;

     
  (b)

its or any of its Subsidiaries' charter documents; or

     
  (c)

any agreement or instrument binding upon it or any of its Subsidiaries or any of its or any of its Subsidiaries' assets or constitute a default or termination event (however described) under any such agreement or instrument to an extent or in a manner that has or could reasonably be expected to have a Material Adverse Effect.


18.4

Power and authority


  (a)

It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.

44


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

No limit on its powers will be exceeded as a result of the borrowing, grant of security or giving of guarantees or indemnities contemplated by the Finance Documents to which it is a party.


18.5

Validity and admissibility in evidence


  (a)

All Authorizations required or desirable:


  (i)

to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party; and

     
  (ii)

to make the Finance Documents to which it is a party admissible in evidence in its Relevant Jurisdictions,

have been obtained, effected, done, fulfilled or performed and are in full force and effect.

  (b)

All Authorizations necessary for the conduct of the business, trade and ordinary activities of members of the Group have been obtained or effected and are in full force and effect if failure to obtain or effect those Authorizations has or is reasonably likely to have a Material Adverse Effect.

     
  (c)

No action has been taken against it or any member of the Group by any Competent Authority in connection with the Authorizations.

     
  (d)

All the Material Licences have been obtained or effected and are in full force and effect.


18.6

Governing law and enforcement


  (a)

The choice of the law stated to be the governing law of each Finance Document will be recognised and enforced in its Relevant Jurisdictions.

     
  (b)

Any judgment obtained in relation to a Finance Document in the jurisdiction of the stated governing law of that Finance Document will be recognised and enforced in its Relevant Jurisdictions.

     
  (c)

Any arbitral award obtained in relation to a Finance Document in the seat of the arbitral tribunal as specified in that Finance Document will be recognised and enforced in its Relevant Jurisdictions.


18.7

Insolvency

No:

  (a)

corporate action, legal proceeding or other procedure or step described in clause 0 ( Insolvency proceedings ); or

     
  (b)

creditors' process described in clause 0 ( Creditors' process ),

has been taken or, to the knowledge of the Borrower, threatened in relation to a member of the Group and none of the circumstances described in clause 0 ( Insolvency ) applies to a member of the Group.

45


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

18.8

Deduction of Tax

It is not required to make any deduction for or on account of Tax from any payment it may make under any Finance Document.

18.9

No filing or stamp taxes

Under the law of its Relevant Jurisdictions it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents except the filings to be made and registration fees and stamp duty to be paid in relation to the execution of the relevant Finance Documents as set out below (which shall be made and paid promptly after the date of the relevant Finance Document):

  (a)

any registration or duties payable as described in the Legal Opinions;

     
  (b)

registration of the relevant Transaction Security Document in accordance with the Personal Property Security Act (British Columbia) and the Uniform Commercial Code in Nevada.


18.10

No default


  (a)

No Default is continuing or might reasonably be expected to result from the making of any Loan or the entry into, the performance of, or any transaction contemplated by, any Finance Document.

     
  (b)

No other event or circumstance is outstanding which constitutes (or, with the expiry of a grace period, the giving of notice, the making of any determination or any combination of any of the foregoing, would constitute) a default or termination event (however described) under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries') assets are subject which might have a Material Adverse Effect.


18.11

No misleading information


  (a)

Any factual information provided by or on behalf of any member of the Group to any Finance Party in connection with the Properties or the Finance Documents (or in budgets or forecasts provided under this Agreement):


  (i)

was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated and was not misleading in any respect; and

     
  (ii)

does not omit any information that results in the information provided being untrue or misleading in any material respect.


  (b)

Any opinions, forecasts and projections contained in any factual information referred to in clause 0, the Base Case Model and the assumptions on which they were based, have been prepared in good faith and, as at their date, on the basis of recent historical information and on assumptions believed by the Borrower to be fair and reasonable.

     
  (c)

Nothing has occurred since the date any information referred to in clause 0 was provided, and no information has been given or withheld, that renders that information untrue or misleading in any material respect (taking into account any updates to such information which fall within clause 0).

46


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

18.12

Financial statements


  (a)

The Original Financial Statements were prepared in accordance with Accounting Principles.

     
  (b)

The Original Financial Statements fairly represent its financial condition and operations (consolidated in the case of the Borrower) during the relevant financial year.

     
  (c)

The most recent financial statements of the Obligors delivered pursuant to clause 0 ( Financial statements ):


  (i)

have been prepared in accordance with Accounting Principles; and

     
  (ii)

fairly represent its financial condition and operations (consolidated in the case of the Borrower) during the relevant financial year.


  (d)

There has been no material adverse change in the business or financial condition of any Obligor since the date of its most recent financial statements delivered pursuant to clause 0 ( Financial statements ).


18.13

Pari passu ranking

Its payment obligations under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

18.14

No proceedings pending or threatened

No litigation, arbitration or administrative proceedings or investigations of or before any court, arbitral body or agency (including in respect of any labour dispute) or any other claims or disputes which, if adversely determined, would reasonably be expected to have a Material Adverse Effect have been started or (to the best of its knowledge and belief, having made due and careful enquiry) threatened in writing against it or any of its Subsidiaries.

18.15

No breach of laws


  (a)

It has not (and none of its Subsidiaries has) breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.

     
  (b)

It is in compliance with all Authorizations in all material respects.


18.16

Environmental compliance


  (a)

Each member of the Group is in compliance with clause 0 ( Environmental compliance ) and to the best of its knowledge and belief (having made due and careful internal enquiry) no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect.

     
  (b)

No Environmental Claim has been commenced or (to the best of its knowledge and belief (having made due and careful internal enquiry)) is threatened against any member of the Group where that claim has or is reasonably likely, if determined against that member ofthe Group, to have a Material Adverse Effect.

47


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

18.17

Taxation


  (a)

It is not (and none of its Subsidiaries is) materially overdue in the filing of any Tax returns.

     
  (b)

It is not (and none of its Subsidiaries is) overdue in the payment of any amount in respect of Tax (unless and only to the extent that (i) payment can be lawfully withheld, is being contested in good faith and adequate reserves are being maintained for the payment of such Taxes or (ii) the amount of such unpaid Taxes is not material, the non-payment results from an administrative oversight or error by a member of the Group and such payment is made promptly (and in any event within three (3) Business Days) after a member of the Group becoming aware of such non-payment).

     
  (c)

No claims or investigations are being, or are reasonably likely to be, made or conducted against it (or any of its Subsidiaries) with respect to Taxes such that a liability of, or claim against, any member of the Group of US$ [****] (or its Equivalent) or more is reasonably likely to arise.


18.18

Anti-corruption law

The Borrower, each Obligor and each of their Subsidiaries has conducted its businesses in compliance with applicable anti-corruption laws and has instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.

18.19

Sanctions


  (a)

Neither the Borrower nor any Obligor, nor any of their Subsidiaries or joint ventures, nor any of their respective directors, officers or employees, nor to the knowledge of any Obligor, any persons acting on any of their behalf:


  (i)

is a Restricted Party; or

     
  (ii)

has received notice of or is aware of any claim, action, suit, proceeding or investigation against it with respect to Sanctions by any Sanctions Authority.


18.20

Security and Financial Indebtedness


  (a)

No Security or Quasi-Security exists over all or any of the present or future assets of any member of the Group other than Permitted Security.

     
  (b)

No member of the Group has any Financial Indebtedness outstanding other than


18.21

Transaction Security


  (a)

Subject to the Legal Reservations, the Transaction Security ranks (or, on the effective date of such Transaction Security, will rank) at least pari passu with all other Security (excluding Permitted Security), including such secured obligations owed under the Gold Purchase Agreement.

     
  (b)

Any shares that are expressed to be subject to the Transaction Security are fully paid and are not subject to any option to purchase or similar rights. The charter documents of the companies whose shares are subject to the Transaction Security do not and could not restrict or inhibit any transfer of those shares on creation or on enforcement of the Transaction Security.

48


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

18.22

Legal and beneficial ownership


  (a)

Each member of the Group has good, valid and marketable title to, or valid leases or licences of, and all appropriate Authorizations to use, the assets necessary to carry on its business as presently conducted.

     
  (b)

Each member of the Group is the sole legal and beneficial owner of the respective assets over which it purports to grant Security free from any claims, third party rights or competing interests other than Permitted Security.

     
  (c)

No breach of any law or regulation is subsisting that would reasonably be likely to adversely affect the value of the assets that are expressed to be the subject of the Transaction Security.

     
  (d)

There is no covenant, easement, agreement, reservation, restriction, condition or other matter that materially and adversely affects the assets that are expressed to be the subject of the Transaction Security.


18.23

Intellectual Property

It has available to it now, or will at the time necessary for the business of the Properties have, all material Intellectual Property necessary for the Properties (if any) including in relation to all patents, trade marks, service marks, designs, utility models, copyrights, design rights, inventions, confidential information, know-how and rights of like nature.

18.24

Group Structure Chart

The Group Structure Chart is true, complete and accurate in all material respects and shows the following information:

  (a)

Each member of the Group, including current name and company registration number, its Original Jurisdiction, its jurisdiction of incorporation and/or its jurisdiction of establishment, a list of shareholders and indicating whether a company is not a company with limited liability; and

     
  (b)

all minority interests in any member of the Group and any person in which any member of the Group holds shares in its issued share capital or equivalent ownership interest of such person.


18.25

Accounting Reference Date

The Accounting Reference Date of the Borrower and each member of the Group is 31 December.

18.26

No amendment

Its articles and by-laws documents have not been amended since the date of certification of those provided pursuant to paragraph 0 of 0( Conditions precedent ), except for any amendments permitted pursuant to the Finance Documents.

49


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

18.27

Ownership of Obligors


  (a)

As at the date of this Agreement, the date of and after Financial Close:


  (i)

one hundred percent (100%) of the share capital of 0985472 is directly, legally and beneficially owned and controlled by the Borrower;

     
  (ii)

one hundred percent (100%) of the share capital of Klondex Canada Ltd. is directly, legally and beneficially owned by the Borrower;

     
  (iii)

one hundred percent (100%) of the share capital of Klondex Holdings is directly, legally and beneficially owned and controlled by 0985472;

     
  (iv)

one hundred percent (100%) of the share capital of Klondex Gold and Klondex Midas is directly, legally and beneficially owned and controlled by Klondex Holdings; and

     
  (v)

one hundred percent (100%) of the share capital of Klondex Operations is directly, legally and beneficially owned and controlled by Klondex Midas;

except to the extent that the ownership interest of the applicable shareholder in the share capital of an Obligor may change pursuant to any other transaction undertaken with the prior written consent of the Lender.

18.28

Insurances


  (a)

All Insurances that by the terms of this Agreement are required to be in place are in place and are in full force and effect.

     
  (b)

Nothing has been done, suffered or omitted to be done by an Obligor that would render any of such Insurances unenforceable, suspended, void or voidable, in whole or in a material part or which would entitle any insurer or reinsurer to reduce its liability thereunder.

     
  (c)

No member of the Group has received any notification from its insurers that their liability under the Insurances has been reduced or avoided.


18.29

Material Adverse Effect

No event or circumstance is continuing which has or is reasonably likely to have a Material Adverse Effect.

18.30

No adverse consequences


  (a)

It is not necessary under the laws of its Relevant Jurisdictions:


  (i)

in order to enable any Finance Party to enforce its rights under any Finance Document; or

     
  (ii)

by reason of the execution of any Finance Document or the performance by it of its obligations under any Finance Document,business in its Relevant Jurisdictions.

that any Finance Party should be licensed, qualified or otherwise entitled to carry on

50


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

No Finance Party is or will be deemed to be resident, domiciled or carrying on business in its Relevant Jurisdictions by reason only of the execution, performance and/or enforcement of any Finance Document.


18.31

No immunity

In any proceedings taken in its jurisdiction of incorporation in relation to the Finance Documents to which it is a party, it will not be entitled to claim for itself or any of its assets immunity from suit, execution, attachment or other legal process.

18.32

[Intentionally Deleted]


18.33

Repetition


  (a)

The Repeating Representations are deemed to be made by each Obligor on the date of each Utilization Request, the date of Financial Close, the first day of each Interest Period, the date of any Extension Request and the date of any Amendment Request.

     
  (b)

Each representation or warranty deemed to be made after the date of this Agreement shall be deemed to be made by reference to the facts and circumstances existing at the date the representation or warranty is deemed to be made.


19

Information Undertakings

The undertakings in this clause 0 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.

19.1

Financial statements

The Borrower shall supply to the Lender:

  (a)

as soon as available and in any event within ninety (90) days after the end of each fiscal year, the Borrower shall deliver to the Lender: (i) the audited consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and the related audited consolidated and consolidating statements of income, shareholders’ equity and cash flow for such fiscal year; (ii) a report with respect to such audited financial statements from the Borrower’s auditors, which report shall state that (A) such audited financial statements present fairly the consolidated financial position of the Borrower as at the dates indicated and the results of its operations and cash flow for the periods indicated in conformity with Accounting Principles applied on a basis consistent with prior years, and (B) that the examination by such accountants in connection with such audited financial statements has been made in accordance with generally accepted auditing standards;

     
  (b)

as soon as available and in any event within forty-five (45) days after the end of each fiscal quarter of each fiscal year, the Borrower shall deliver the unaudited condensed consolidated balance sheet of the Borrower, as adjusted in conformity with Accounting Principles, as at the end of such fiscal quarter and the related consolidated statements of income, shareholders’ equity and cash flow for such fiscal quarter and for the period from the beginning of such fiscal year to the end of such fiscal quarter; and

     
  (c)

as soon as available but in no event more than thirty (30) days after the end of each calendar month, the Borrower shall deliver a summary of such month’s operations and a summary of the fiscal year-to-date operations, in a form reasonably satisfactory to the Lender, including information in reasonable detail concerning (i) production during such period; (ii) the inventory at the end of such period; (iii) revenues generated during such period; (iv) operating costs during such period; (v) costs constituting capital expenditures; (vi) when prepared and available, the Borrower’s most recent quarterly cash planning forecast (including, without limitation, current cash balances) covering at least the next following fiscal quarter; and (vii) any material developments during such period in project operation or development, including material technical problems, discovery of any material defect in any physical facilities of the Borrower, material interruption to operation, updates on permitting and project timelines or material labor difficulties.

51


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

19.2

Compliance Certificate


  (a)

The Borrower shall supply to the Lender, with each set of financial statements or quarterly management accounts delivered pursuant to clause 0 ( Financial statements ), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with clause 0 ( Financial covenants ) as at the date as at which those financial statements were drawn up.

     
  (b)

Each Compliance Certificate shall be signed by the Chief Financial Officer or any director of the Borrower, for the purpose of certifying compliance with the other financial covenants in clause 0 ( Financial covenants ).


19.3

Requirements as to financial statements


  (a)

Each set of financial statements delivered by the Borrower pursuant to clause 0 ( Financial statements ) shall be certified by the Chief Financial Officer or any director of the relevant company as fairly representing its financial condition as at the date as at which those financial statements were drawn up.

     
  (b)

The Borrower shall procure that each set of financial statements delivered pursuant to clause 0 ( Financial statements ) is prepared in accordance with the Accounting Principles.


19.4

Annual Budget and Base Case Model


  (a)

The Borrower shall provide to the Lender the Annual Budget describing the budgeted sources and uses of funds by the Borrower over the following twelve (12) month operating period, which will be consistent with the Base Case Model. The Annual Budget shall be updated annually during the term of the Facility, and in the event of any material changes to the Annual Budget during the relevant year.

     
  (b)

The Borrower shall provide to the Lender the Base Case Model for the Properties outlining, at a minimum, the following three (3) years of operations. The Borrower shall provide an updated Base Case Model annually, and in the event of a material changes to the Base Case Model during the relevant year (including for the avoidance of doubt, in respect of any proposed acquisitions). Where any such material change will likely result in:


  (i)

a material reduction in forecast production up to the Original Final Maturity Date, on a consolidated basis;

     
  (ii)

a material increase in the average cost of production or capital expenditures required to maintain production from the Properties, on a consolidated basis in dollars;

52


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (iii)

a material change in current or conventional mining methods employed at the Midas Mine or Fire Creek Mine;

     
  (iv)

a material change in the processing circuit used at the Midas Plant for current mine production (for greater certainty, the use of alternative methods and processing for the development and extraction of new resources or deposits shall not constitute a material change in this clause 19.4(b));

     
  (v)

a forecast funding shortfall, after considering cash, forecast cash flows and available Commitments, over the forecast period greater than ten percent (10%) of the current market capitalization of the Borrower; or

     
  (vi)

any change which could have a Material Adverse Effect on the Transaction Security,

the Borrower shall be required to obtain the Lender’s consent within thirty (30) days of proposing any changes to the Base Case Model, such consent not to be unreasonably withheld or delayed.

19.5

Report undertakings

The Borrower undertakes in relation to each report, budget or certificate delivered by it pursuant to this clause 0 ( Information undertakings ) that, as at the date of delivery thereof:

  (a)

all the factual information set out therein will (or, to the extent that information has been provided by others, will to the best of its knowledge, after due enquiry) be true, complete and accurate in all material respects and will be compiled in good faith; and

     
  (b)

all projections, forecasts, estimates and opinions made by it therein are made in good faith, arrived at after due and careful consideration and enquiry and genuinely represent its views as at the date they are given or made.


19.6

Environmental matters


  (a)

Each Obligor shall, promptly upon becoming aware of the same, inform the Lender in writing of:


  (i)

any Environmental Claim against any member of the Group which is current, pending, or threatened in writing; and

     
  (ii)

any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any member of the Group.


  (b)

The Borrower shall promptly upon request provide such information as may be requested by the Lender, and give such access to the Properties and the assets of the Borrower, as is reasonably required by the Lender to assess the Properties in relation to the Environmental.


53


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

19.7

Reserves and resources


  (a)

The Borrower shall ensure that it maintains


  (i)

sufficient reported measured and indicated resources (in accordance with Ontario Securities Commission instrument NI 43-101) in a minimum amount (such amount, the Minimum Resources Undertaking ) equal to the forecast mined ounces from the operations through to the date falling one (1) year after the Original Final Maturity Date; provided however that at all times:

       
    (A)  reported measured resources will be no less than 450,000 ounces; and
       
    (B)  no more than 25% of the reported indicated resources may be used to meet the then applicable Minimum Resources Undertaking; and
       
  (ii)

sufficient reported measured, indicated and inferred resources incorporated within an economically sustainable mine plan to cover the following twelve (12) Months of production provided however that inferred resources shall equal no more than 20% of total resources within the mine plan, subject to the Lender being satisfied (acting reasonably) that the inferred resources are based on reasonable assumptions after taking into account actual relevant factors such as the Borrower’s operating performance and reconciliations.


  (b)

The Borrower shall provide a certificate calculating the measured, indicated and inferred resources to the Lender within forty-five (45) days after the end of each fiscal quarter of each fiscal year based on internal calculations and technical report in accordance with NI 43-101 report on an annual basis in order to demonstrate compliance with subparagraph (i) above, and in respect of subparagraph (ii) above, shall satisfy the same with the delivery of the mine plan upon which each Annual Budget is based.


19.8

Information: miscellaneous

The Borrower shall supply to the Lender:

  (a)

all documents dispatched by the Borrower or any Obligor to its shareholders (or any class of them) or its creditors generally;

     
  (b)

a copy of (i) all reports, notices, orders, edicts or other information submitted to, or received from the Government and any material notices in respect of the Environmental Impact Assessment Licence; and (ii) any material notices given or received by the Borrower or any other Obligor pursuant to any other Finance Document promptly upon submission or receipt thereof;

     
  (c)

promptly upon any Obligor becoming aware of them, the details of any litigation, arbitration or administrative proceedings (including in respect of any labour dispute) which are current, threatened or pending against any member of the Group which:


  (i)

relate to a claimed amount in excess of US$ [****] (in relation to any individual proceedings, claims or disputes, or in aggregate with any other proceedings, claims or disputes in relation to the same matter of contract) or, when aggregated with the other claims, disputes and/or proceedings, in excess of US$ [****] ; or

     
  (ii)

would, if adversely determined, have or be reasonably likely to have, a Material Adverse Effect,

unless and only to the extent to which such proceedings, disputes or claims have been disclosed in the Disclosure Schedule, provided that the Borrower shall promptly upon any Obligor becoming aware of the same, supply the Lender with details of any final determination, settlement or discharge of such disclosed proceedings, disputes or claims or any adverse change in relation to such disclosed proceedings, disputes or claims;

  (d)

promptly upon becoming aware of such, the details of any claims in relation to the Insurances in excess of US$ [****] ;

     
  (e)

promptly upon becoming aware of such, the details of any circumstances which are reasonably likely to lead to the revocation, cancellation or cessation of the mining rights of any Obligor;

     
  (f)

promptly, any event that reasonably could be expected to result in the revocation,withdrawal, cancellation, termination, suspension, forfeiture or variation of any Authorization, except where any such Authorization is no longer required for the Properties;

54


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (g)

promptly, details of any replacement, resignation or other expiry of appointment (or proposals for the same) of any senior management employees of the Obligors (including the chief executive officer and the chief operating officer;

     
  (h)

promptly, such information as the Security Agent may reasonably require about the Charged Property and compliance of the Obligors with the terms of any Transaction Security Documents; and

     
  (i)

promptly, such further information regarding the financial condition, business and operations of any member of the Group as any Finance Party may reasonably request.


19.9

Amendment of charter documents

Each Obligor shall inform and notify the Lender of any proposed amendment, variation or waiver of any of the terms or conditions or scope of its charter documents at least five (5) Business Days’ prior to the proposed amendment, variation or waiver taking effect.

19.10

Notification of default


  (a)

Each Obligor shall notify the Lender of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor).

     
  (b)

Promptly upon a request by the Lender, the Borrower shall supply to the Lender a certificate signed by the Chief Financial Officer, or other director or senior officer, on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).


19.11

[Intentionally deleted]


19.12

Know your customer checks

If:

  (a)

the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

     
  (b)

any change in the status of an Obligor (or the incorporation or addition of a new Obligor) after the date of this Agreement; or

     
  (c)

a proposed assignment or transfer by the Lender of any of its rights and obligations under this Agreement to a party that is not the Lender prior to such assignment or transfer,

obliges the Lender to comply with know your customer or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall, promptly upon the request of the Lender, supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Lender to carry out and be satisfied that the Obligor has complied with all necessary know your customer or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

55


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

20

Financial Covenants


20.1

Financial definitions

In this Agreement:

Borrower Adjusted EBITDA means, in respect of any Relevant Period, the aggregate EBITDA less an amount equal to the Sustaining Capital Expenditures, without, for greater certainty, double counting any such expenditure that is included within operating expenses for the Relevant Period.

Borrower Cash Balance means the aggregate amounts standing to the credit of the Borrower’s accounts, subject to the Transaction Security excluding cash securing (i) the performance of bids, tenders, leases, contracts (other than for the payment of money) or statutory obligations or (ii) obligations on surety or appeal or performance bonds, including those to support or secure reclamation in accordance with applicable law, as required by any governmental agency to support or secure reclamation in accordance with applicable laws or (iii) any margined trading exposures permitted under clause 0.

Borrower Current Assets means, with respect to the Borrower, on a consolidated basis, all current assets of the Borrower as of any date of determination calculated in accordance with Accounting Principles.

Borrower Current Liabilities means the aggregate (on a consolidated basis) of all liabilities (including trade creditors, accruals and provisions) of the Borrower expected to be settled within twelve months of the Test Date calculated in accordance with Accounting Principles.

Borrower Current Ratio means, in respect of any Relevant Period, the ratio of:

  (a)

Borrower Current Assets on the Test Date; to

     
  (b)

Borrower Current Liabilities on the Test Date.

Borrower Gearing Ratio means, in respect of any Relevant Period, the ratio of:

  (c)

Borrower Total Debt on the Test Date; to

     
  (d)

Borrower Adjusted EBITDA for that Relevant Period.

Borrower Tangible Net Worth means the aggregate value of all assets after deducting or eliminating from the calculation intangible assets and future income tax benefits less the aggregate of all liabilities.

Borrower Total Debt means the aggregate of the current liabilities and long term liabilities in respect of financing transactions as detailed in the Borrower’s consolidated financial statements, including the Gold Purchase Agreement, less the minimum Borrower Cash Balance of US$10,000,000.

Capital Expenditures means, with respect to any Person for any period, any expenditure in respect of any fixed or capital asset (excluding normal replacements and maintenance which are properly charged to current operations).

56


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

EBITDA shall be calculated on the basis of the Net Income for the period, adjusted to add back income tax, depreciation, amortization and finance charges (as detailed in the Statement of Income) and otherwise adjusted for other non-cash items (as detailed in the Borrower’s consolidated financial statements).

Quarter Date means each of 31 March, 30 June, 30 September and 31 December.

Relevant Period means each period of twelve (12) months ending on a Test Date.

Sustaining Capital Expenditures means [****] .

Test Date means every Quarter Date in each year.

20.2

Interpretation


  (a)

Except as provided to the contrary in this clause 0 ( Financial covenants ), an accounting term used in this clause 0 ( Financial covenants ) is to be construed in accordance with the Accounting Principles.

     
  (b)

Any amount in a currency other than dollars is to be taken into account at its dollar equivalent calculated on the basis of:


  (i)

the Lender’s Spot Rate of Exchange; or

     
  (ii)

if the amount is to be calculated on the last day of a financial period of the Borrower or a member of the Group, the relevant rates of exchange used by the Borrower or a member of the Group in, or in connection with, the financial statements covering it for that period.


  (c)

No item must be credited or deducted more than once in any calculation under this clause 0 ( Financial covenants ).


20.3

Financial condition

The Borrower shall ensure that:

  (a)

Borrower Tangible Net Worth : The Borrower Tangible Net Worth in respect of any Test Date is not less than US$100,000,000.

     
  (b)

Borrower Gearing Ratio : The Borrower Gearing Ratio in respect of any Relevant Period is not greater than 4.00:1.

     
  (c)

Borrower Cash Balance : The Borrower Cash Balance in respect of any Relevant Period is not less than US$10,000,000.

     
  (d)

Borrower Current Ratio : The Borrower Current Ratio in respect of any Relevant Period is not less than 1.10:1.


20.4

Financial testing

The financial covenants set out in clause 0 ( Financial condition ) shall be calculated in accordance with the Accounting Principles and tested by reference to each of the quarterly financial statements delivered pursuant to 0 ( Financial statements ).

57


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

20.5

Annual Budget undertaking

The Annual Budget shall be required to show that forecast operations and capital expenditures for the period is fully funded from available liquidity (including cash, forecast cash flows and available debt under the Facility).

21

General Undertakings

The undertakings in this clause 21 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.

21.1

Authorizations

The Borrower shall promptly:

  (a)

obtain, comply with and do all that is necessary to maintain all Authorizations in full force and effect; and

     
  (b)

upon request, supply certified copies to the Lender of,


  (i)

any Authorization required under any law or regulation of a Relevant Jurisdiction to:


  (A)

enable it to perform its obligations under the Finance Documents;

     
  (B)

ensure, subject to Legal Reservations, the legality, validity, enforceability or admissibility in evidence of any Finance Document; and

     
  (C)

carry on its business where failure to do so has or is reasonably likely to have a Material Adverse Effect; and


  (ii)

any Material Licence.


21.2

Default

The Borrower shall immediately notify the Finance Parties of any Default occurring under the Finance Documents.

21.3

Compliance with laws


  (a)

The Borrower shall (and shall ensure that each of its Subsidiaries will) comply in all material respects with all Applicable Laws.

     
  (b)

The Borrower shall (and shall ensure that each of its Subsidiaries will) comply in all respects with all Applicable Laws and all agreements which are binding and enforceable against it, in each case to the extent they relate to the provision and funding of pension schemes.

     
  (c)

The Borrower shall ensure that no:


  (i)

funds or assets of the Borrower or its Subsidiaries that are used to repay the Facility shall constitute property of, or shall be beneficially owned by, any Designated Person or be derived from any transaction that would violate any Sanctions;

58


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (ii)

proceeds of the Facility shall be used to fund any transaction that would violate any Sanctions; and

     
  (iii)

Designated Person shall have any direct or indirect interest in the Borrower or its Subsidiaries that would violate any Sanctions.


21.4

Defence of claims

The Borrower shall defend any action, claim or other proceeding made against or affecting the Borrower unless there is no effective defence to such action, claim or proceeding, or it is not commercially worthwhile for the Borrower to defend it, in which case the Borrower shall use all reasonable endeavours to minimise or mitigate the effect of such claim, action or proceeding upon it and its business (including settling or compromising such claim if commercially appropriate to do so).

21.5

Negative pledge

In this clause 0, Quasi-Security means an arrangement or transaction described in paragraph 0 below.

  (a)

Other than Permitted Security, the Borrower shall not create or permit to subsist any Security over any of its assets.

     
  (b)

The Borrower shall not:


  (i)

sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by the Borrower or any other member of the Group;

     
  (ii)

sell, transfer or otherwise dispose of any of its receivables on recourse terms;

     
  (iii)

other than pursuant to Permitted Indebtedness, enter into any arrangement under which money for the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or

     
  (iv)

enter into any other preferential arrangement having a similar effect,

     
 

in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.


  (c)

Paragraphs 0 and 0 above do not apply to any Security or (as the case may be) Quasi- Security, listed below:


  (i)

any lien arising by operation of law and in the ordinary course of trading on arm’s length terms (including retention of title arrangements) and securing amounts not more than sixty (60) days overdue and not as a result of a default or omission by any member of the Group, and a reserve or other appropriate provision, if any, as shall be required by IFRS shall have been made for such lien;

     
  (ii)

any Security or Quasi-Security over or affecting any asset acquired by the Borrower after the date of this Agreement if such asset is acquired as a result of a Permitted Acquisition under Permitted Acquisition Debt;

59


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (iii)

any Security or Quasi-Security arising under the Finance Documents;

     
  (iv)

(prior to Financial Close) any Security or Quasi-Security which secures Permitted Indebtedness arising under the Gold Purchase Agreement, on its terms as at the date of this Agreement;

     
  (v)

(prior to Financial Close) any Security or Quasi-Security which secures Permitted Indebtedness arising under the Shoreline Asset Purchase Agreement and Shoreline Promissory Note, on its terms as at the date of this Agreement;

     
  (vi)

any Security or Quasi-Security assumed by the Borrower or Klondex Canada in connection with the Shoreline Asset Purchase Agreement;

     
  (vii)

the Borrower deposits and pledges of cash or securities (only to the extent such deposits or pledges are incurred or otherwise arise in the ordinary course of business and secure obligations not past due) securing (i) the performance of bids, tenders, leases, contracts (other than for the payment of money) or statutory obligations or (ii) obligations on surety or appeal or performance bonds, including those to support or secure reclamation in accordance with Applicable Law, as required by any governmental agency to support or secure reclamation in accordance with Applicable Laws, and, in each case, only to the extent such deposits or pledges are incurred or otherwise arise in the ordinary course of business and secure obligations not past due;

     
  (viii)

pledges, deposits and liens in connection with workers’ compensation, employment insurance and other similar legislation and deposits securing liability to insurance carriers under insurance or self-insurance arrangements to the extent required by Applicable Law;

     
  (ix)

rights of set-off or bankers’ liens upon deposits of cash or broker’s liens upon securities in favour of financial institutions, banks or other depositary institutions to a maximum of $ [****] ;

     
  (x)

short term pledge certificates, cash collateral or cash margining posted under the Hedging Agreements contemplated by Section 0, not to exceed the limit set forth in Section Error! Reference source not found. ; and

     
  (xi)

any Security or Quasi-Security granted in respect of any equipment which secures Permitted Indebtedness arising under any Permitted Equipment Financing; and

     
  (xii)

any Security or Quasi-Security created or permitted to subsist with the prior written consent of the Lender,

provided that only clauses 0, 0, 0 and 2.15(c)(xii) shall apply to any Security or Quasi-Security over any Excluded Assets, (together, Permitted Security ).

21.6

Disposals


  (a)

The Borrower shall not effect a Disposal of any of its assets, undertaking or business.

     
  (b)

Paragraph 0 above does not apply to any Permitted Disposal or Disposal:


  (i)

of assets to another Obligor, provided that if the disposing company has given Transaction Security over those assets, the acquiring company must give equivalent Transaction Security over those assets; or

60


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (ii)

made with the prior written consent of the Lender.


21.7

Arm's length basis


  (a)

The Borrower shall not enter into any transaction with any person except on arm's length terms and for full market value (except with the prior written consent of the Lender).

     
  (b)

Paragraph (a) above does not apply to:


  (i)

any disposals permitted under clause 0 ( Disposals ) or guarantees permitted under clause 0 ( Financial indebtedness ), in each case arising under or made in accordance with an agreement which is in force on (and on its terms as at) the date of this Agreement; or

     
  (ii)

any loans, disposal or guarantees entered into or made between the Borrower and another Obligor from time to time.


21.8

Acquisition of Real Property


  (a)

As soon as reasonably practicable upon the acquisition of additional real property, including real property in relation to the Properties, (provided however with respect to acquisition of additional real property with a value of less than $ [****] only, no later than the end of the fiscal quarter following any such acquisition), the Borrower shall:


  (i)

notify the Lender; and

     
  (ii)

execute a supplement (or similar document) amending the appropriate deed of trust or debenture such that it thereafter includes the additional real property.


21.9

No guarantees or indemnities


  (a)

The Borrower shall not incur or allow to remain outstanding any guarantee in respect of any obligation of any person.

     
  (b)

Paragraph 0 does not apply to a guarantee which is:


  (i)

permitted under clause 0 ( Financial indebtedness ); or

     
  (ii)

granted with the prior written consent of the Lender.


21.10

Dividends and share redemption


  (a)

The Borrower shall not make any Distribution.

     
  (b)

Paragraph (a) above does not apply to:


  (i)

the making of a Distribution to another Obligor with respect to (x) Permitted Indebtedness, (y) management fees or consulting fees to reflect attributable management (or consulting) costs or salaries, or (z) intercompany cash and inventory management, each in the ordinary course of business and Accounting Principles; or

61


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (ii)

the making of a Distribution, provided that:


  (A)

payment is made when no Default is continuing or would occur immediately after the making of the payments;

     
  (B)

the covenants described in clause 20.3 ( Financial condition ) have been satisfied as of the most recent Test Date and on a pro-forma basis for the following twelve (12) Months.

     
  (C)

the most recent Annual Budget shows that the Borrower is fully funded from cash, forecast cash flows and available liquidity after making such distribution for the following twelve (12) Months.


21.11

Financial Indebtedness


  (a)

Neither the Borrower, nor any of the Obligors, shall:


  (i)

Incur, be a creditor in respect of or allow to remain outstanding any Financial Indebtedness; or

     
  (ii)

pay or discharge (including by way of set-off or combination of accounts), or grant any guarantee, indemnity, bond, letter of credit or similar assurance of performance or against financial loss in support of, any obligations (including indebtedness) owed to it or any other person.


  (b)

Paragraph 0 above does not apply to any Financial Indebtedness:


  (i)

arising under a Finance Document;

     
  (ii)

(prior to the first Utilization Date) arising under the Gold Purchase Agreement, on its terms as at the date of this Agreement;

     
  (iii)

(prior to the first Utilization Date) arising under the Shoreline Promissory Note, on its terms as at the date of this Agreement;

     
  (iv)

arising under any Permitted Equipment Financing;

     
  (v)

arising under intercompany loans to any Obligor;

     
  (vi)

arising under any unsecured debt,


(A)

excluding any marked-to-market trading exposures, not exceeding US$4,000,000 in aggregate;

(B)

consisting of marked-to-market trading exposures not exceeding the amounts specified in Section 21.38;


  (vii)

arising under any trade payables in the ordinary course of business or less than ninety (90) days outstanding;

     
  (viii)

deposits and pledges of cash or securities (only to the extent such deposits or pledges are incurred or otherwise arise in the ordinary course of business and secure obligations not past due) securing (i) the performance of bids, tenders, leases, contracts (other than for the payment of money) or statutory obligations or (ii) obligations on surety or appeal or performance bonds, including those to support or secure reclamation in accordance with applicable law, as required by any governmental agency to support or secure reclamation in accordance with applicable laws, and, in each case, only to the extent such deposits or pledges are incurred or otherwise arise in the ordinary course of business and secure obligations not past due;

62


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (ix)

unsecured indebtedness owed to any person providing property, casualty, liability, or other insurance to the Borrower or any Obligor, so long as the amount of such indebtedness is not in excess of $ [****] , and shall be incurred only to defer the cost of such insurance for the year in which such indebtedness is incurred and such indebtedness is outstanding only during such year;

     
  (x)

owed by the Borrower to another Obligor; or

     
  (xi)

incurred or allowed to remain outstanding with the prior written consent of the Lender

(together, Permitted Indebtedness ).

21.12

Merger

The Borrower shall not enter into any merger or consolidation, except where:

  (a)

The Borrower’s management survives and the Borrower’s board of directors retain control of the board following the merger or consolidation;

     
  (b)

The merger or consolidation counterparty is within the precious metals mining sector in approved jurisdictions (US, Canada, Mexico and other to be agreed in writing with the Lender) and complies with the Lender’s regulatory compliance requirements; and

     
  (c)

No breach of the Facility’s terms would result from the merger or consolidation, and the Lender’s position under the documentation or security is not adversely affected.


21.13

Change of business

The Borrower shall procure that no substantial change is made to the general nature of the business of the Borrower or the Group from that carried on at the date of this Agreement.

21.14

Joint Ventures


  (a)

The Borrower shall not (except with the prior written consent of the Lender):


  (i)

enter into, invest in or acquire (or agree to acquire) any shares, stocks, securities or other interest in any Joint Venture; or

     
  (ii)

transfer any assets or lend to or guarantee or give an indemnity for or give Security for the obligations of a Joint Venture or maintain the solvency of or provide working capital to any Joint Venture (or agree to do any of the foregoing).


  (b)

Paragraph (a) above does not apply to any Joint Venture specifically permitted by clause 21.15(b) below.

63


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

21.15

Acquisitions


  (a)

The Borrower shall not (except with the prior written consent of the Lender):


  (i)

invest in or acquire any share in, or any security issued by, any person (other than an Obligor), or any interest therein or in the capital of any person (other than an Obligor), or make any capital contribution to any person (other than an Obligor) (or make any preliminary or other payments towards or with a view to make such investment;

     
  (ii)

invest in or acquire any business or going concern, or the whole or substantially the whole of the assets or business of any person, or any assets that constitute a division or operating unit of the business of any person (or make any preliminary or other payments towards or with a view to make such investment); or

     
  (iii)

enter into any joint venture, consortium, partnership or similar arrangement with any person other than as permitted under clause 0 ( Joint ventures ).


  (b)

Paragraph (a) above does not apply to any acquisition of:


  (i)

assets or formations of Joint Ventures that are within the precious metals mining sector within approved jurisdictions (US, Canada, Mexico and other to be agreed upon in writing with the Lender, acting reasonably), provided that:


  (A)

the cash acquisition costs or the Borrower’s funding commitments can be funded from currently available funds (including treasury, available debt under this Facility and proceeds of related equity issue) or Permitted Acquisition Debt;

     
  (B)

any security over the acquired assets or Joint Ventures is on a limited recourse financing with no direct recourse post-acquisition to any Obligor for repayment;

     
  (C)

the Borrower is able to demonstrate pro-forma compliance with financial ratios described in clause 20.3 ( Financial condition ) following the acquisition as such covenant is recomputed as at the last day of the most recently ended Test Date under such Section as if such acquisition had occurred on the first day of such Test Date;

     
  (D)

if the acquisition materially increases the actual or contingent environmental, social and/or Tax liabilities of the Borrower, the Borrower shall show that such liabilities can be adequately funded or mitigated post-acquisition, to the extent that such liabilities are not otherwise reflected in the compliance with the financial ratios described in clause 20.3 ( Financial condition );

     
  (E)

if the acquisition requires any member of the Group to comply with either IFC Performance Standards or World Bank Standards, compliance with such standards; and

     
  (F)

such acquisition shall result in the Security Agent, for the benefit of the Finance Parties, being granted a security interest (second ranking to the extent secured under Permitted Acquisition Debt) in any equity interests or any assets so acquired,

64


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

(together, Permitted Acquisitions ).

21.16

Finance Documents


  (a)

The Borrower shall not amend, vary, novate, supplement, supersede, waive or terminate any term of a Finance Document or any other document delivered to the Lender pursuant to clause 0 ( Initial conditions precedent ) except in writing:


  (i)

in accordance with clause 0 ( Amendments and Waivers ) or as otherwise permitted pursuant to this Agreement;

     
  (ii)

to the extent that that amendment, variation, novation, supplement, superseding, waiver or termination is permitted by the Intercreditor Agreement; or

     
  (iii)

prior to or on Financial Close, with the prior written consent of the Lender.


  (b)

The Borrower shall promptly supply to the Lender a copy of any document relating to any of the matters referred to in paragraph (a) above.


21.17

Environmental compliance


  (a)

The Borrower shall:


  (i)

comply in all respects with all Environmental Law;

     
  (ii)

obtain, maintain and ensure compliance with all requisite Environmental Permits;

     
  (iii)

take all reasonable steps in anticipation of known or expected future changes or obligations under Environmental Law; and

     
  (iv)

implement procedures and management systems to adequately monitor compliance with and to mitigate liability under any Environmental Law.


21.18

Preservation of assets

The Borrower shall maintain and preserve all of its assets that are necessary or desirable for the conduct of its business, as conducted at the date of this Agreement, in good working order and condition, ordinary wear and tear excepted.

21.19

Access to the site

The Borrower shall permit the Lender and its authorised representatives reasonable access, upon request and reasonable notice, to inspect the construction, commissioning and operation of the Properties and related technical data books and records and shall cooperate with such persons to enable them to prepare their reports, provided that such rights of access shall be exercised in a way to minimise expense to the Borrower and, as far as is reasonably practicable, any disruption to the Properties.

21.20

Principal place of business

The Borrower shall have its registered office in British Columbia and principal place of business and executive office in Nevada, and shall maintain in such places, originals or copies of the principal books and records relating to its business.

65


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

21.21

Accounting systems

The Borrower shall ensure that adequate and appropriate accounting, management information and cost control and accounting systems for the Properties are installed and maintained and that books of accounts and other records give a true and fair view of the financial condition of the Borrower and the results of its operations in accordance with the Accounting Principles.

21.22

Accounting Reference Date

The Borrower shall not, change its Accounting Reference Date without the prior written consent of the Lender.

21.23

Auditors

The Borrower shall ensure at all times that its and the Group’s and the Borrower’s auditors are Pricewaterhouse Coopers LLP or such other firm approved in advance by the Lender (such approval not to be unreasonably withheld or delayed).

21.24

Construction, operation and maintenance

The Borrower shall carry out the Properties and conduct its business pursuant to this Agreement and Good Industry Practice, and in all material aspects in accordance with the Annual Budget and Base Case Model.

21.25

Amendment of charter documents

The Borrower shall not agree to any amendment to, variation or waiver of any of the terms or conditions or scope of its charter documents, unless the Lender has been given at least five (5) Business Days’ prior written notice of the proposed amendment, variation or waiver as required under clause 0 ( Amendment of charter documents ) and provided that where any such amendment, variation or waiver could have a Material Adverse Effect, no such amendment, variation or waiver may be effected without the prior written consent of the Lender, such consent not to be unreasonably withheld.

21.26

Anti-corruption law


  (a)

The Borrower shall (and shall ensure that no Subsidiary will) directly or indirectly use the proceeds of the Facility for any purpose which would breach the Canada Corruption of Foreign Public Officials Act, the United States Foreign Corrupt Practices Act of 1977 or other similar legislation in other jurisdictions.

     
  (b)

The Borrower shall (and shall ensure that its Subsidiaries will):


  (i)

conduct its businesses in compliance with applicable anti-corruption laws; and

     
  (ii)

maintain policies and procedures designed to promote and achieve compliance with such laws.


21.27

Sanctions

The Borrower shall not, and shall not permit or authorise any other person to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of any Loan or other transaction(s) contemplated by this Agreement to fund any trade, business or other activities:

66


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (a)

involving or for the benefit of any Restricted Party; or

     
  (b)

in any other manner that would reasonably be expected to result in the Borrower or the Lender being in breach of any Sanctions (if and to the extent applicable to either of them) or becoming a Restricted Party.


21.28

Taxation


  (a)

The Borrower shall (and shall ensure that each member of the Group will) pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:


  (i)

such payment is being contested in good faith; and


  (A)

adequate reserves are being maintained for those Taxes and the costs required to contest them which have been disclosed in its latest financial statements delivered to the Lender under clause 0 ( Financial statements ); and

     
  (B)

such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect; or


  (ii)

the amount of such unpaid Taxes is not material, the non-payment results from an administrative oversight or error by a member of the Group and such payment is made promptly (and in any event within three (3) Business Days) after a member of the Group becoming aware of such non-payment.


  (b)

No member of the Group may change its residence for Tax purposes.


21.29

Critical assets

Notwithstanding any other provision of this Agreement the Borrower shall not sell, lease, transfer or otherwise dispose of any Material Licence or of any other asset critical to the operation of the Properties without the prior written consent of the Lender. For greater certainty the obligations under this clause 21.29 shall include obtaining, maintaining or renewing, as applicable, any Material Licenses, approvals or consents necessary at the time for the carrying out of the Borrower’s business and operations.

21.30

Intellectual Property

The Borrower shall, to the extent that it has the right to the same, preserve and maintain the subsistence and validity of all material Intellectual Property necessary for the Properties including in relation to all patents, trade marks, service marks, designs, utility models, copyrights, design rights, inventions, confidential information, know-how and rights of like nature.

21.31

Insurance


  (a)

The Borrower shall effect and maintain or cause to be effected and maintained in full force and effect the following Insurances with reputable independent insurance companies or underwriters:

67


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (i)

property damage insurance covering all risks of physical loss, destruction, or damage to all insurable assets of the Properties;

     
  (ii)

insurance of all risks of direct physical loss or damage on a “warehouse to warehouse” basis arising from the transport or temporary storage of Product or equipment;

     
  (iii)

liability insurance on an occurrence basis against claims filed anywhere in the world and occurring anywhere in the world for an Obligor’s liability arising out of claims for personal injury (including bodily injury and death) and property damage;

     
  (iv)

employers’ liability insurance in accordance with statutory requirements;

     
  (v)

directors’ and officers’ liability insurance; and

     
  (vi)

all insurances required to be in effect by the laws of the countries of incorporation of each Obligor.


21.32

Pari passu ranking

The Borrower shall ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.

21.33

Access

The Borrower shall ensure that each member of the Group will, (not more than once in every calendar year unless the Lender reasonably suspects a Default is continuing or may occur) permit the Lender and/or the Security Agent and/or accountants or other professional advisers and contractors of the Lender or the Security Agent free access at all reasonable times and on reasonable notice at the risk and cost of the Borrower to (a) the premises, assets, books, accounts and records of each member of the Group and (b) meet and discuss matters with management of the Group.

21.34

Further assurance


  (a)

The Borrower shall (and shall procure that each other member of the Group will) promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Security Agent may reasonably specify (and in such form as the Security Agent may reasonably require in favour of the Security Agent or its nominee(s)):


  (i)

to perfect the Security created or intended to be created under or evidenced by the Transaction Security Documents or for the exercise of any rights, powers and remedies of the Security Agent or the Finance Parties provided by or pursuant to the Finance Documents or by law; and/or

     
  (ii)

to facilitate the realisation of the assets which are, or are intended to be, the subject of the Transaction Security.


  (b)

The Borrower shall (and shall procure that each other member of the Group will) take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Security Agent or the Finance Parties by or pursuant to the Finance Documents.

68


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

21.35

Preservation of Transaction Security

Other than as expressly permitted under the Finance Documents, the Borrower shall not do, or consent to the doing of, anything that reasonably could be expected to prejudice the validity of any of the security granted pursuant to the Transaction Security Documents.

21.36

Abandonment or suspension


  (a)

The Borrower shall not:


  (i)

abandon the conduct of the Properties or any material part thereof; or

     
  (ii)

suspend the operation of any of the Properties for a continuous period of more than thirty five (35) days.


  (b)

If an event of force majeure occurs that the Borrower anticipates (acting reasonably) may result in the abandonment of the conduct of any of the Properties or a suspension of construction or operation of any of the Properties for a continuous period in excess of the relevant periods specified in clause 0, the Borrower immediately shall notify and consult with the Lender.


21.37

Immunity

The Borrower shall not in any proceedings in Canada or in any other jurisdiction in relation to any Finance Document, claim or seek in any way to claim, for itself or any of its assets, immunity from execution, attachment or other similar legal process.

21.38

Hedging programme


  (a)

The Borrower shall undertake in good faith to offer risk management business to the Lender, subject to the Lender’s ability to execute such business effectively and promptly, and offer competitive commercial terms.

     
  (b)

The Borrower shall not carry out any hedging transactions other than:


  (i)

pursuant to a Counterparty Hedging Agreement, provided that at no time shall the aggregate of all outstanding Loans and marked-to-market trading exposures of the Obligors owed to the Finance Parties under this Agreement and the Counterparty Hedging Agreement exceed $30,000,000;

     
  (ii)

a Hedging Agreement on unsecured and unmargined terms, provided that:

     
 
      (A) the provision of short term pledge certificates in respect of metal in process or refinery shall be permitted;
         
      (B) the marked-to-market trading exposures of the Obligors owed to other counterparties under all Hedging Agreements shall not exceed US$4,000,000 in aggregate (excluding any cash collateral or cash margining);
         
      (C) the Obligors may provide cash collateral or cash margining with respect to Hedging Agreements up to a net limit of US$2,500,000 in aggregate;
         
      (D) any Hedging Agreements subject to any cash collateral or cash margining arrangements for
           
        (1) gold or silver shall have a settlement date not greater than 6 months from the date of execution; and
           
        (2) consumables shall not have a settlement date greater than 24 months from the date of execution;
         
      (E) in the event that the Borrower wishes to enter into a derivative transaction for gold or silver with a settlement date greater than 6 months from the date of execution, and the Hedge Counterparty is unable or unwilling to execute such derivative transaction, the Lender will (acting reasonably and in good faith) consider in granting a waiver of the restriction in (D) above provided it is within the limits in (B) and (C) above and taking into account all Hedging Agreements in place at that time; and
         
      (F) no gold or silver Hedging Agreements shall be entered into by the Obligors which would exceed any applicable Hedging Policy Limits in effect on the date hereof, and in respect of consumable cost hedging greater than 12 months, for not more than 80% of the forecast consumables volumes for the Properties during such period; or
     
  (iii)

with the prior written consent of the Lender.

   
21.39

Press announcements

The Borrower shall not, and shall procure that no member of the Group will, make any press announcement or other media communication (including by making any information available on any website) in relation to the Facility without the prior written consent of the Lender, save where an announcement is required by any applicable Canadian or US securities laws or the requirements of the TSX or NYSE (provided that, to the extent permitted to do so by such law, rules or regulation, the Borrower shall inform the Lender of the contents of such announcement or communication as soon as possible before such announcement or communication is made).

69


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

21.40

Klondex Canada

Klondex Canada shall deliver within 30 days of the Financial Close the Transaction Security Documents set out in Schedule 21.40, in form and substance satisfactory to the Finance Parties, acting reasonably.

22

Events of Default

Each of the events or circumstances set out in clause 0 is an Event of Default (save for clause 22.28 ( Acceleration )).

22.1

Non-payment

An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place and in the currency in which it is expressed to be payable.

22.2

Other obligations


  (a)

An Obligor does not comply with any provision of the Finance Documents (other than those referred to in clause 22.1 ( Non-payment )).

     
  (b)

No Event of Default under paragraph 0 above will occur if the failure to comply is capable of remedy and is remedied within ten (10) Business Days (or such other time as may be expressly provided in this Agreement) of the earlier of (A) the Lender giving notice to the Borrower and (B) the Borrower becoming aware of the failure to comply.

     
  (c)

For the purposes of paragraph (b) above, any failure to comply with clauses 19.1, 19.2, 19.3, 19.4, 19.8(e), and 19.10, clause 0 ( Financial covenants ), or any provision of any Transaction Security Document shall not be capable of remedy.


22.3

Misrepresentation

Any representation or statement made or deemed to be made by an Obligor in the Finance Documents or any other document delivered by or on behalf of any Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be made unless the underlying circumstances (if capable of remedy) are remedied within ten (10) Business Days of the statement being made or deemed repeated.

22.4

Cross default


  (a)

Any event of default as described in the Gold Purchase Agreement.

     
  (b)

Any Financial Indebtedness of any member of the Group is not paid when due nor within any originally applicable grace period.

     
  (c)

Any Financial Indebtedness of any member of the Group is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described).

     
  (d)

Any commitment for any Financial Indebtedness of any member of the Group is cancelled or suspended by a creditor of any member of the Group as a result of an event of default (however described).

70


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (e)

Any creditor of any member of the Group becomes entitled to declare any Financial Indebtedness of any member of the Group due and payable prior to its specified maturity as a result of an event of default (however described).

     
  (f)

No Event of Default will occur under this clause 22.4 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) to (e) above is less than US$ [****] (or its Equivalent).


22.5

Insolvency


  (a)

A member of the Group is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors (excluding any Finance Party in its capacity as such) with a view to rescheduling any of its indebtedness.

     
  (b)

The value of the assets of any member of the Group is less than its liabilities (taking into account contingent and prospective liabilities).

     
  (c)

A moratorium is declared in respect of any indebtedness of any member of the Group. If a moratorium ends, the ending of the moratorium will not remedy any Event of Default caused by that moratorium.


22.6

Insolvency proceedings


  (a)

Any corporate action, legal proceedings or other procedure or step is taken in relation to:


  (i)

the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any member of the Group or the Borrower other than a solvent liquidation or reorganisation of any member of the Group which is not an Obligor;

     
  (ii)

a composition, compromise, assignment or arrangement with any creditor of any member of the Group;

     
  (iii)

the appointment of a liquidator (other than in respect of a solvent liquidation of a member of the Group which is not an Obligor), receiver, administrative receiver, administrator, compulsory manager or other similar officer in respect of any member of the Group or the Borrower or any of its assets; or

     
  (iv)

enforcement of any Security over any assets of any member of the Group,

or any analogous procedure or step is taken in any jurisdiction.

  (b)

This clause 22.6 shall not apply to:


  (i)

any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within thirty (30) days of commencement; or

     
  (ii)

the solvent liquidation of any member of the Group that is not an Obligor so long as any payments or assets distributed as a result of such liquidation are distributed to other members of the Group.

71


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

22.7

Creditors' process

Any expropriation, attachment, sequestration, execution or other enforcement action or any analogous process in any jurisdiction affects any asset or assets of a member of the Group having an aggregate value of US$ [****] and is not discharged within thirty (30) days.

22.8

Failure to comply with court judgment or arbitral award


  (a)

Any member of the Group fails to comply with or pay by the required time any sum due from it under any final judgment or any final order made or given by a court or arbitral tribunal or other arbitral body, in each case of competent jurisdiction.

     
  (b)

No Event of Default under paragraph 0 above will occur if the aggregate liability under that judgment or order is less than US$ [****] (or its Equivalent) and is discharged within thirty (30) days.


22.9

Unlawfulness and invalidity


  (a)

It is or becomes unlawful for an Obligor to perform any of its obligations under the Finance Documents or any Transaction Security created or expressed to be created by the Transaction Security Documents ceases to be effective or any subordination created under the Intercreditor Agreement ceases to be effective.

     
  (b)

Any obligation or obligations of any Obligor under any Finance Documents are not (subject to the Legal Reservations) or cease to be legal, valid, binding or enforceable and the cessation individually or cumulatively materially and adversely affects the interests of the Lender under the Finance Documents.

     
  (c)

Any Finance Document ceases to be in full force and effect or any Transaction Security or any subordination created under the Intercreditor Agreement ceases to be legal, valid, binding, enforceable or effective or is alleged by a party to it (other than a Finance Party) to be ineffective.


22.10

Repudiation and rescission of agreements

An Obligor (or other relevant party) rescinds or purports to rescind or repudiates or purports to repudiate a Finance Document or any of the Transaction Security or evidences an intention to rescind or repudiate a Finance Document or any Transaction Security.

22.11

Intercreditor Agreement

Any party to the Intercreditor Agreement (other than a Finance Party or an Obligor) fails to comply with the provisions of, or does not perform its obligations under, the Intercreditor Agreement, provided if the non-compliance or circumstances are capable of remedy, it is not remedied within thirty (30) days of the Lender giving notice to that party.

22.12

Major damage

The whole or any part (the book value of which is twenty percent (20%) or more of the book value of the aggregate of the assets of the Borrower on a consolidated basis) of any asset of the Borrower is destroyed or otherwise damaged.

72


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

22.13

Cessation of business

Any member of the Group suspends or ceases to carry on (or threatens to suspend or cease to carry on) all or a material part of its business.

22.14

Abandonment

Abandonment, loss, damage or forfeiture of all or substantially all of the Properties or the mining rights, including the Material Licences.

22.15

Authorizations


  (a)

Any Authorization is suspended, cancelled, revoked, forfeited, surrendered or terminated (whether in whole or in part thereof) or otherwise is not, or ceases to be, in full force and effect, or any person is, or becomes entitled to revoke, cancel, suspend, surrender or terminate any Authorization (whether in whole or in part thereof), and which is likely to have a Material Adverse Effect.

     
  (b)

No Event of Default under clause 24.15(a) will occur if:


  (i)

the mining operations are continuing uninterrupted; and

     
  (ii)

the circumstances discussed in clause 24.15(a) are capable of remedy and are remedied within sixty (60) days of their occurrence.


22.16

Audit qualification

The auditors of any Obligor include:

  (a)

a going concern qualification in their audit opinion; or

     
  (b)

any other material qualification or any emphasis of matter statement,

in relation to any financial statements required to be delivered pursuant to clause 0 ( Financial statements ), which qualification or emphasis, or the matters in relation to which such qualification or emphasis is made, would have a Material Adverse Effect.

22.17

Litigation


  (a)

Other than as disclosed in the Disclosure Schedule, any litigation, arbitration, administrative, governmental, regulatory or other investigation, proceeding or dispute is commenced or threatened:


  (i)

in relation to the Finance Documents or the transactions contemplated in the Finance Documents; or

     
  (ii)

otherwise against any member of the Group or its assets (or against the directors of any member of the Group),

which (in each case) in the opinion of the Lender is reasonably likely to be adversely determined and, if adversely determined, will have or is reasonably likely to have a Material Adverse Effect.

73


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

Any litigation, arbitration or administrative proceeding of or before any court, arbitral body or agency, or any other claim or dispute, has been finally settled (by non-appealable judgment, decision or other determination) against, or settled by, any member of the Group that has a determination or settlement value which:


  (i)

is more than US$ [****] ; or

     
  (ii)

in the opinion of the Lender has or could reasonably be expected to increase the Borrower’s environmental, social and/or tax liabilities, and which in each case could have a Material Adverse Effect.


22.18

Expropriation

The authority or ability of any member of the Group to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation, compulsory acquisition, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to any member of the Group or any of its assets or the shares in that member of the Group (including without limitation the displacement of all or part of the management of any member of the Group).

22.19

Convertibility/Transferability

Any foreign exchange law is amended, enacted or introduced or is reasonably likely to be amended, enacted or introduced in any Relevant Jurisdiction that (in the opinion of the Lender):

  (a)

has or is reasonably likely to have the effect of prohibiting, or restricting or delaying in any material respect any payment that any Obligor is required to make pursuant to the terms of any of the Finance Documents; or

     
  (b)

is materially prejudicial to the interests of the Finance Parties under or in connection with any of the Finance Documents.


22.20

Material Licences

Any:

  (a)

Material Licence is terminated, cancelled, suspended or revoked (whether wholly or in part);

     
  (b)

restrictions or conditions are imposed on any Material Licence;

     
  (c)

Material Licence is modified or varied in a way that is adverse in any material respect to the interests of the relevant member or members of the Group; or

     
  (d)

Material Licence expires and is not renewed on substantially the same terms,

unless the mining operations are continuing uninterrupted and the circumstances leading to the relevant occurrences referred to in paragraphs (a) to (d) above are capable of remedy and are remedied within sixty (60) days of their occurrence.

74


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

22.21

[Intentionally Deleted]


22.22

[Intentionally Deleted]


22.23

Insurance


  (a)

Any Insurance:


  (i)

is not, or ceases to be, in full force and effect;

     
  (ii)

is unavailable at the time it is required to be effected; or

     
  (iii)

is avoided or reduced,

in a manner which would have a Material Adverse Effect.

  (b)

Any insurer is entitled to avoid or otherwise reduce its liability under the policy relating to any Insurance or other insurance required to be effected under any Finance Document, unless the Insurance is, prior to its cession, replaced by insurance on substantially similar or more favourable terms and in form and substance satisfactory to the Lender.


22.24

Material adverse change

Any event or circumstance occurs which the Lender reasonably believe has or is reasonably likely to have a Material Adverse Effect.

22.25

Acceleration

On and at any time after the occurrence of an Event of Default which is continuing the Lender may, by notice to the Borrower:

  (a)

cancel the Commitment whereupon they shall immediately be cancelled;

     
  (b)

declare that all or part of the Loans, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable;

     
  (c)

declare that all or part of the Loans be payable on demand, whereupon they shall immediately become payable on demand by the Lender; and/or

     
  (d)

exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or discretions under the Finance Documents.

75


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

CHANGES TO PARTIES

23

Changes to the Lender


23.1

Assignments and transfers by the Lender

Subject to this clause 0 and to clause 0 ( Restriction on Debt Purchase Transactions ), the Lender (the Existing Lender ) may, upon the written consent of the Borrower (such consent not to be unreasonably withheld or delayed):

  (a)

assign any of its rights; or

     
  (b)

transfer by novation any of its rights and obligations,

to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, debt securities or other similar debt instruments or facilities (the New Lender ); provided however that the consent of the Borrower shall not be required where the assignment is to an Affiliate of the Lender or after the occurrence and during the continuation of an Event of Default.

23.2

Conditions of assignment or transfer


  (a)

An assignment or transfer of part of the Lender's participation in Commitment or Loans must be in a minimum amount of US$ [****] .

     
  (b)

An assignment will only be effective on:


  (i)

receipt by the Existing Lender (whether in the Assignment Agreement or otherwise) of written confirmation from the New Lender (in form and substance satisfactory to the Lender) that the New Lender will assume the same obligations to the other Finance Parties and the other Secured Parties as it would have been under if it was the Lender;

     
  (ii)

the New Lender entering into the documentation required for it to accede as a party to the Intercreditor Agreement; and

     
  (iii)

performance by the Existing Lender of all necessary know your customer or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender.


  (c)

A transfer will only be effective if the New Lender enters into the documentation required for it to accede as a party to the Intercreditor Agreement and if the procedure set out in clause 0 ( Procedure for transfer ) is complied with.

     
  (d)

If:


  (i)

the Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and

     
  (ii)

as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under clause 0 ( Tax gross-up and indemnities ) or clause 0 ( Increased Costs ),

76


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.

23.3

Limitation of responsibility of the Existing Lender


  (a)

Unless expressly agreed to the contrary, the Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:


  (i)

the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents, the Transaction Security or any other documents;

     
  (ii)

the financial condition of any Obligor;

     
  (iii)

the performance and observance by any Obligor of its obligations under the Finance Documents or any other documents; or

     
  (iv)

the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,

and any representations or warranties implied by law are excluded.

  (b)

Each New Lender confirms to the Existing Lender, the other Finance Parties and the Secured Parties that it:


  (i)

has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender or any other Finance Party in connection with any Finance Document or the Transaction Security; and

     
  (ii)

will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.


  (c)

Nothing in any Finance Document obliges an Existing Lender to:


  (i)

accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this clause 23; or

     
  (ii)

support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Finance Documents or otherwise.


23.4

Procedure for transfer


  (a)

Subject to the conditions set out in clause 23.2 ( Conditions of assignment or transfer ) a transfer is effected in accordance with paragraph 0 below when the Existing Lender executes an otherwise duly completed Transfer Certificate by the New Lender. The Existing Lender shall, subject to paragraph 0 below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.

77


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

The Borrower and the other Finance Parties irrevocably authorise the Lender to execute any Transfer Certificate on their behalf, without any consultation with them.

     
  (c)

The Lender shall only be obliged to execute a Transfer Certificate delivered to it once it is satisfied that it has complied with all necessary know your customer or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender.

     
  (d)

Subject to clause 0 ( Pro rata interest settlement ), on the Transfer Date:


  (i)

to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents and in respect of the Transaction Security each of the Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and in respect of the Transaction Security and their respective rights against one another under the Finance Documents and in respect of the Transaction Security shall be cancelled (being the Discharged Rights and Obligations );

     
  (ii)

each of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;

     
  (iii)

the New Lender shall acquire the same rights and assume the same obligations in respect of the Transaction Security as they would have acquired and assumed had the New Lender been the Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Security Agent and the Existing Lender shall each be released from further obligations to each other under the Finance Documents; and

     
  (iv)

the New Lender shall become a Party as the Lender.


23.5

Procedure for assignment


  (a)

Subject to the conditions set out in clause 23.2 ( Conditions of assignment or transfer ) an assignment may be effected in accordance with paragraph 0 below when the Lender executes an otherwise duly completed Assignment Agreement delivered to it by the New Lender. The Lender shall, subject to paragraph 0 below, as soon as reasonably practicable after receipt by it of a duly completed Assignment Agreement appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Assignment Agreement.

     
  (b)

The Borrower and the other Finance Parties irrevocably authorise the Lender to execute any Assignment Agreement on their behalf, without any consultation with them

     
  (c)

The Lender shall only be obliged to execute an Assignment Agreement delivered to it by the New Lender once it is satisfied it has complied with all necessary know your customer or other similar checks under all applicable laws and regulations in relation to the assignment to such New Lender.

78


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (d)

Subject to clause 23.8 ( Pro rata interest settlement ), on the Transfer Date:


  (i)

the Existing Lender will assign absolutely to the New Lender its rights under the Finance Documents and in respect of the Transaction Security expressed to be the subject of the assignment in the Assignment Agreement;

     
  (ii)

the Existing Lender will be released from the obligations (the Relevant Obligations ) expressed to be the subject of the release in the Assignment Agreement (and any corresponding obligations by which it is bound in respect of the Transaction Security); and

     
  (iii)

the New Lender shall become a Party as the Lender and will be bound by obligations equivalent to the Relevant Obligations.


  (e)

The Lender may utilise procedures other than those set out in this clause 23.5 to assign their rights under the Finance Documents (but not, without the consent of the relevant Obligor or unless in accordance with clause 23.4 ( Procedure for transfer ), to obtain a release by that Obligor from the obligations owed to that Obligor by the Lender nor the assumption of equivalent obligations by a New Lender) provided that they comply with the conditions set out in clause 0 ( Conditions of assignment or transfer ).


23.6

Copy of Transfer Certificate, Assignment Agreement or Amendment Confirmation to Borrower

The Lender shall, as soon as reasonably practicable after it has executed a Transfer Certificate, an Assignment Agreement or an Amendment Confirmation, send to the Borrower a copy of that Transfer Certificate, Assignment Agreement or Amendment Confirmation.

23.7

Security over the Lender’s rights

In addition to the other rights provided the Lender under this clause 23, the Lender may without consulting with or obtaining consent from any Obligor, at any time charge, assign or otherwise create Security in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:

  (a)

any charge, assignment or other Security to secure obligations to a federal reserve or central bank; and

     
  (b)

in the case of the Lender which is a fund, any charge, assignment or other Security granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities,

except that no such charge, assignment or Security shall:

  (i)

release the Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security for the Lender as a party to any of the Finance Documents; or

     
  (ii)

require any payments to be made by an Obligor other than or in excess of, or grant to any person any more extensive rights than, those required to be made or granted to the relevant Lender under the Finance Documents.


79


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

23.8

Pro rata interest settlement


  (a)

Any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall continue to accrue in favour of the Existing Lender up to but excluding the Transfer Date ( Accrued Amounts ) and shall become due and payable to the Existing Lender (without further interest accruing on them) on the last day of the current Interest Period (or, if the Interest Period is longer than six (6) Months, on the next of the dates which falls at six (6) Monthly intervals after the first day of that Interest Period).

     
  (b)

The rights assigned or transferred by the Existing Lender will not include the right to the Accrued Amounts, so that, for the avoidance of doubt:


  (i)

when the Accrued Amounts become payable, those Accrued Amounts will be payable to the Existing Lender; and

     
  (ii)

the amount payable to the New Lender on that date will be the amount which would, but for the application of this clause 23.8, have been payable to it on that date, but after deduction of the Accrued Amounts.


  (c)

In this clause references to 23.8 Interest Period shall be construed to include a reference to any other period for accrual of fees.


24

Restriction on Debt Purchase Transactions

The Borrower shall not, and shall procure that and each other member of the Group shall not, enter into any Debt Purchase Transaction or beneficially own all or any part of the share capital of a company that is the Lender or a party to a Debt Purchase Transaction.

25

Changes to the Obligors


25.1

Assignments and transfer by Obligors

No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

80


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

ADMINISTRATION

26

Payment Mechanics


26.1

Distributions to an Obligor

The Lender may (with the consent of the Obligor or in accordance with clause 27 ( Set-off )) apply any amount received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.

26.2

Clawback


  (a)

Where a sum is to be paid to the Lender under the Finance Documents for another Party, the Lender is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

     
  (b)

If the Lender pays an amount to another Party and it proves to be the case that such Party had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Lender shall on demand refund the same to the Lender together with interest on that amount from the date of payment to the date of receipt by the Lender, calculated by the Lender to reflect its cost of funds.


26.3

Partial payments


  (a)

If the Lender receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents, the Lender shall apply that payment towards the obligations of that Obligor under the Finance Documents in the following order:


  (i)

first , in or towards payment pro rata of any unpaid fees, costs and expenses of the Lender or the Security Agent under the Finance Documents;

     
  (ii)

secondly , in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement;

     
  (iii)

thirdly , in or towards payment pro rata of any principal due but unpaid under this Agreement; and

     
  (iv)

fourthly , in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.


  (b)

The Lender may vary the order set out in paragraphs 00 to 0 above.


  (c)

Paragraphs 0 and 0 above will override any appropriation made by an Obligor.


26.4

No set-off by Obligors

All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

81


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

26.5

Business Days


  (a)

Any payment under the Finance Documents which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

     
  (b)

During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.


26.6

Currency of account


  (a)

Subject to paragraphs 0 and 0 below, dollars is the currency of account and payment for any sum due from an Obligor under any Finance Document.

     
  (b)

Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.

     
  (c)

Any amount expressed to be payable in a currency other than dollars shall be paid in that other currency.


26.7

Change of currency


  (a)

Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:


  (i)

any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Lender (after consultation with the Borrower); and

     
  (ii)

any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Lender (acting reasonably).


  (b)

If a change in any currency of a country occurs, this Agreement will, to the extent the Lender (acting reasonably and after consultation with the Borrower) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.


26.8

Disruption to Payment Systems etc.

If either the Lender determines (in its discretion) that a Disruption Event has occurred or the Lender is notified by the Borrower that a Disruption Event has occurred:

  (a)

the Lender may, and shall if requested to do so by the Borrower, consult with the Borrower with a view to agreeing with the Borrower such changes to the operation or administration of the Facility as the Lender may deem necessary in the circumstances;

     
  (b)

the Lender shall not be obliged to consult with the Borrower in relation to any changes mentioned in paragraph 0 if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes;

82


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (c)

the Lender may consult with the Finance Parties in relation to any changes mentioned in paragraph 0 but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;

     
  (d)

any such changes agreed upon by the Lender and the Borrower shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of clause 32 ( Amendments and Waivers );

     
  (e)

the Lender shall not be liable for any damages, costs or losses whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Lender) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this clause 26.8; and

     
  (f)

the Lender shall notify the Finance Parties of all changes agreed pursuant to paragraph 0 above.


27

Set-Off

A Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

28

Notices


28.1

Communications in writing

Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.

28.2

Addresses

The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:

  (a)

in the case of any Obligor, that identified with its name below;

     
  (b)

in the case of the Lender or the Security Agent, that identified with its name below,

or any substitute address or fax number or department or officer as the Party may notify to the Lender by not less than five (5) Business Days' notice.

28.3

Delivery


  (a)

Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:

83


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (i)

if by way of fax, when received in legible form; or

     
  (ii)

if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address;

     
 

and, if a particular department or officer is specified as part of its address details provided under clause 28.2 ( Addresses ), if addressed to that department or officer.


  (b)

Any communication or document to be made or delivered to the Lender or the Security Agent will be effective only when actually received by Lender or the Security Agent and then only if it is expressly marked for the attention of the department or officer identified with the Lender’s or the Security Agent’s signature below (or any substitute department or officer as the Lender or the Security Agent shall specify for this purpose).

     
  (c)

All notices from or to an Obligor shall be sent through the Lender.

     
  (d)

Any communication or document made or delivered to the Borrower in accordance with this clause will be deemed to have been made or delivered to each of the Obligors.

     
  (e)

Any communication or document which becomes effective, in accordance with paragraphs 0 to 0 above, after 5:00 p.m. in the place of receipt shall be deemed only to become effective on the following day (unless mutually agreed otherwise by all parties to the communication or document).


28.4

Notification of address and fax number

Promptly upon receipt of notification of an address or fax number or change of address or fax number pursuant to clause 28.2 ( Addresses ) or changing its own address or fax number, the Lender shall notify the other Parties.

28.5

Electronic communication


  (a)

Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means, to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication and if those two Parties:


  (i)

notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

     
  (ii)

notify each other of any change to their address or any other such information supplied by them by not less than five (5) Business Days' notice.


  (b)

Any electronic communication made between those two Parties will be effective only when actually received in readable form and in the case of any electronic communication made by a Party to the Lender or the Security Agent only if it is addressed in such a manner as the Lender or Security Agent shall specify for this purpose.

     
  (c)

Any electronic communication which becomes effective, in accordance with paragraph 0 above, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.

84


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

28.6

English language


  (a)

Any notice given under or in connection with any Finance Document must be in English.

     
  (b)

All other documents provided under or in connection with any Finance Document must be:


  (i)

in English; or

     
  (ii)

if not in English, and if so required by the Lender, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.


29

Calculations and Certificates


29.1

Accounts

In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.

29.2

Certificates and Determinations

Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

29.3

Day count convention

Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of three hundred sixty (360) days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.

30

Partial Invalidity

If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

31

Remedies and Waivers

No failure to exercise, nor any delay in exercising, on the part of any Finance Party or Secured Party, any right or remedy under a Finance Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any Finance Document. No election to affirm any Finance Document on the part of any Finance Party or Secured Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in each Finance Document are cumulative and not exclusive of any rights or remedies provided by law.

85


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

32

Amendments and Waivers


32.1

Intercreditor Agreement

This clause 32 is subject to the terms of the Intercreditor Agreement.

32.2

Required consents


  (a)

Subject to clause 32.3 ( Lender matters ) and clause 32.4 ( Other exceptions ), any term of the Finance Documents may be amended or waived only with the consent of Lender and the Obligors and any such amendment or waiver will be binding on all Parties.

     
  (b)

The Lender may effect, on behalf of any Finance Party, any amendment or waiver permitted by this clause 32.

     
  (c)

Notwithstanding clause (a) and (b) above, the Lender shall not amend, supplement or restate the terms of any Finance Document in such a way that such amendment, supplement or restatement would, materially affect the rights of the Hedge Counterparty without the prior written consent of the Hedge Counterparty.


32.3

Lender matters


  (a)

An amendment, waiver or (in the case of a Transaction Security Document) a consent of, or in relation to, any term of any Finance Document that has the effect of changing or which relates to:


  (i)

an extension to the date of payment of any amount under the Finance Documents;

     
  (ii)

a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable;

     
  (iii)

an increase in the Commitment (except pursuant to clause 0 ( Amendment to Commitment ), an extension of the Availability Period or any requirement that a cancellation reduces the Commitment of the Lender under the Facility;

     
  (iv)

a change to the Borrower or the Guarantors;

     
  (v)

any provision which expressly requires the consent of all the Lender;

     
  (vi)

clause 0 ( Finance Parties' rights and obligations ), clause 0 ( Extension option ), clause 0 ( Changes to the Lender ), this clause 32, the governing law of any Finance Document or clause 0 ( Jurisdiction of British Columbia courts );

     
  (vii)

the nature or scope of:


  (A)

the guarantee and indemnity granted under clause 0 ( Guarantee and Indemnity );

     
  (B)

the Charged Property; or

     
  (C)

the manner in which the proceeds of enforcement of the Transaction Security are distributed,

(except, in the case of paragraphs (B) and (C) above, insofar as it relates to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Finance Document);

86


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (viii)

the release of any guarantee and indemnity granted under clause 0 ( Guarantee and indemnity ) or of any Transaction Security (unless permitted under this Agreement or any other Finance Document or relating to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Finance Document); or

     
  (ix)

any amendment to the order of priority or subordination under the Intercreditor Agreement,

shall not be made or given without the prior consent of all the Lender.

32.4

Other exceptions

An amendment or waiver which relates to the rights or obligations of the Lender or the Security Agent (each in their capacity as such) may not be effected without the consent of the Lender or the Security Agent.

33

Confidentiality


33.1

Confidential Information

Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by clause 0 ( Disclosure of Confidential Information ), and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.

33.2

Disclosure of Confidential Information

Any Finance Party may disclose:

  (a)

to any of its Affiliates (including branches) and Related Funds and any representatives in any jurisdiction and any of its or their officers, directors, employees, professional advisers, insurers, insurance brokers, service providers, rating agencies, direct or indirect providers of credit protection, auditors, partners and Representatives such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph 0 is informed in writing of its confidential nature and that some or all of such Confidential Information may be price- sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;

     
  (b)

to any person:


  (i)

to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as Lender or Security Agent and, in each case, to any of that person's Affiliates, Related Funds, Representatives and professional advisers;

87


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (ii)

with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation, insurance or brokerage arrangement in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Obligors and to any of that person's Affiliates, Related Funds, Representatives and professional advisers;

     
  (iii)

appointed by any Finance Party or by a person to whom paragraph 00 or 0 above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf;

     
  (iv)

who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in paragraph 00 or 00 above;

     
  (v)

to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, quasi-governmental, administrative, supervisory, banking, taxation or other regulatory authority or similar body, court or tribunal, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;

     
  (vi)

to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes;

     
  (vii)

to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or may do so) pursuant to clause 0 ( Security over Lender’s rights );

     
  (viii)

who is a Party; or

     
  (ix)

with the consent of the Borrower;

in each case, such Confidential Information as that Finance Party shall consider appropriate if:

  (A)

in relation to paragraphs 00, 00 and 00 above, the person to whom the Confidential Information is to be given has entered into a confidentiality undertaking except that there shall be no requirement for a confidentiality undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;

     
  (B)

in relation to paragraph 00 above, the person to whom the Confidential Information is to be given has entered into a confidentiality undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;

     
  (C)

in relation to paragraphs 00, 00 and 00 above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information; and

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (c)

to any person appointed by that Finance Party or by a person to whom paragraph (b)(i) or (b)(ii) above applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph 0 if the service provider to whom the Confidential Information is to be given has entered into a confidentiality agreement substantially in a form attached hereto as Schedule 33.2(c);

     
  (d)

to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Obligors if the rating agency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information; and

     
  (e)

where such Finance Party is the Lender, at its own expense, its involvement in the Facility by way of internal and external pitch documents and the placement of “tombstone” or other advertisements in financial and other newspapers and journals (and such other methods of publication as the Lender may choose from time to time).


33.3

Entire agreement

This clause 33 ( Confidentiality ) constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.

33.4

Inside information

Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.

33.5

Notification of disclosure

Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Borrower:

  (a)

of the circumstances of any disclosure of Confidential Information made pursuant to paragraph 00 of clause 0 ( Disclosure of Confidential Information ) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and

     
  (b)

upon becoming aware that Confidential Information has been disclosed in breach of this clause 0 ( Confidentiality ).


33.6

Continuing obligations

The obligations in this clause 0 ( Confidentiality ) are continuing and, in particular, shall survive and remain binding on each Finance Party for a period of twelve (12) months from the earlier of:

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (a)

the date on which all amounts payable by the Obligors under or in connection with this Agreement have been paid in full and all Commitment have been cancelled or otherwise cease to be available; and

     
  (b)

the date on which such Finance Party otherwise ceases to be a Finance Party.


34

Interest Act of Canada

For the purposes of the Interest Act (Canada) and disclosure thereunder, whenever any interest or any fee to be paid hereunder or in connection herewith is to be calculated on the basis of a 360-day or 365-day year, the yearly rate of interest to which the rate used in such calculation is equivalent to the rate so used multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by 360 or 365, as applicable. The rates of interest under this Agreement are nominal rates, and not effective rates or yields. The principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement.

35

Usury

If any provision of this Agreement would oblige the Borrower to make any payment of interest or other amount payable to any Finance Party in an amount or calculated at a rate which would be prohibited by law or would result in a receipt by that Lender of “interest” at a “criminal rate” (as such terms are construed under the Criminal Code (Canada)), then, notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or so result in a receipt by the Lender of “interest” at a “criminal rate”, such adjustment to be effected, to the extent necessary (but only to the extent necessary), as follows:

  (a)

first, by reducing the amount or rate of interest; and

     
  (b)

thereafter, by reducing any fees, commissions, costs, expenses, premiums and other amounts required to be paid to such Finance Party which would constitute interest for purposes of section 347 of the Criminal Code (Canada),

in each case, if necessary, to be effected by repayment by such Finance Party to the Borrower of any amount already received by such Finance Party that would be reduced by this Section (it being agreed that such Finance Party may elect whether to effect such repayment and reduction by return of shares or by payment of the applicable amount in cash to the Borrower).

36

Future Financings

The Borrower agrees in good faith to provide the Lender with the right to offer future debt finance ( [****] ) and trading business on an equal basis with any other parties; further in the event that a club of syndicated transaction is proposed with another arranger that requires more than one lender, the Borrower will use reasonable commercial efforts to offer the Lender the opportunity to participate on an equal basis in the transaction. The Borrower will also undertake to consider using the Lender’s corporate advisory services should the opportunity arise. For greater certainty, this provision shall not restrict the Borrower from fulfilling prior agreements entered into with other financial institutions in relation to non-lending services.

37

Counterparts

Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

38

Contractual Recognition of Bail-In

Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the Parties, each Party acknowledges and accepts that any liability of any Party to any other Party under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

  (a)

any Bail-In Action in relation to any such liability, including (without limitation):


  (i)

a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;

     
  (ii)

a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and

     
  (iii)

a cancellation of any such liability; and


(b)

a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.

GOVERNING LAW AND ENFORCEMENT

39

Governing Law

This Agreement and any non-contractual obligations arising out of or in connection with it are governed by laws of the Province of British Columbia, and the federal laws of Canada as applicable herein.

40

Enforcement


40.1

Jurisdiction of British Columbia courts


  (a)

The courts of British Columbia have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a Dispute ).

     
  (b)

The Parties agree that the courts of British Columbia are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

     
  (c)

This clause 0 is for the benefit of the Finance Parties and the Secured Parties only. As a result, no Finance Party or Secured Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties and the Secured Parties may take concurrent proceedings in any number of jurisdictions.


40.2

Service of process


  (a)

Without prejudice to any other mode of service allowed under any relevant law, each Obligor, other than the Borrower, 0985472 and Klondex Canada (the Non-British Columbia Obligors ):

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (i)

irrevocably appoints the Borrower as its agent for service of process in relation to any proceedings before the British Columbia courts in connection with any Finance Document; and

     
  (ii)

agrees that failure by an agent for service of process to notify the relevant Non- British Obligor of the process will not invalidate the proceedings concerned.


  (b)

If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process, the Borrower (on behalf of all Non-British Obligors) must immediately (and in any event within five (5) Business Days of such event taking place) appoint another agent on terms acceptable to the Lender.


41

Waiver of immunity


41.1

Waiver of Immunity

Each Obligor irrevocably and unconditionally:

  (a)

agrees not to claim in any jurisdiction, for itself or in respect of its assets, immunity from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and waives such present or future immunity, whether claimed or not; and

     
  (b)

consents generally to the giving of any relief or the issue of any process in connection with any proceedings, including the making, enforcement or execution against any property of any nature (irrespective of its use or intended use) of any order or judgement which may be made or given in any proceedings.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

92


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Schedule 1
Conditions Precedent

1

Original Obligors


  (a)

A copy of the charter documents of each Obligor.

     
  (b)

A copy of a resolution of the board of directors of each Obligor:


  (i)

approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute the Finance Documents to which it is a party;

     
  (ii)

authorising a specified person or persons to execute the Finance Documents to which it is a party on its behalf; and

     
  (iii)

authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, any Utilization Request) to be signed and/or despatched by it under or in connection with the Finance Documents to which it is a party.


  (c)

A specimen of the signature of each person authorised by the resolution referred to in paragraph 0 above.

     
  (d)

A copy of a resolution signed by all the holders of the issued shares in the Borrower approving the terms of, and the transactions contemplated by, the Finance Documents to which that Obligor is a party.

     
  (e)

A certificate of each Obligor (signed by a director or by the Chief Financial Officer or Treasurer) confirming that borrowing or guaranteeing or securing, as appropriate, the Commitment would not cause any borrowing, guarantee, security or similar limit binding on it to be exceeded.

     
  (f)

A certificate of an authorised signatory of each Obligor certifying that each copy document relating to it specified in this Part I of 0is correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than the date of this Agreement.

     
  (g)

A certified copy of the register of members/shareholders of each Obligor (other than the Borrower).

     
  (h)

A certified copy of each Material Licence.

     
  (i)

Any applicable Fee Letters duly executed by all parties.


2

Finance Documents


  (a)

This Agreement duly executed by all original parties to it.

     
  (b)

The Intercreditor Agreement executed by the parties thereto (other than the Finance Parties) on or prior to the Utilisation Date.

     
  (c)

At least two (2) originals of each Transaction Security Document executed by the relevant Obligor, including the following

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (i)

The guarantees from each Guarantor in favour of the Lender;

     
  (ii)

The general security agreements and first lien security agreements granted to the Lender by the Borrower and each Guarantor;

     
  (iii)

The securities pledge agreements granted to the Lender by each of the Borrower, 0985472 B.C. Ltd., Klondex Holdings (USA) Inc. and Klondex Midas Holdings Limited; and

     
  (iv)

The perfection certificate provided by the Borrower to the Lender;

     
  (v)

The fee and leasehold deed of trust, assignment of leases and rents and security agreement dated February 10, 2014 from Klondex Gold & Silver Mining Company in relation to the Fire Creek Mine, as amended;

     
  (vi)

The deed of trust, assignment of leases and rents and security agreement dated February 10, 2014 from Klondex Gold & Silver Mining Company in relation to the Hot Springs Property, as amended;

     
  (vii)

The deed of trust, assignment of leases and rents and security agreement dated February 11, 2014, from Klondex Gold & Silver Mining Company in relation to the Maggie Creek Property, as amended;

     
  (viii)

The deed of trust, assignment of leases and rents and security agreement dated February 10, 2014, from Klondex Gold & Silver Mining Company in relation to the Reef Property, as amended;

     
  (ix)

The Fee and Leasehold Deed of Trust, Assignment of Leases and Rents and Security Agreement dated February 11, 2014, from Klondex Midas Operations Inc., in relation to the Midas Property, as amended;

     
  (x)

The environmental indemnity agreement issued by Klondex Gold & Silver Mining Company and Klondex Midas Operations Inc. in favour of the Lender;

     
  (xi)

The Ontario and Manitoba debentures made by Klondex Canada Ltd. in favour of the Lender; and

     
  (xii)

All instruments, financing statements, stock powers, documents, guarantees and agreements executed in relation to the above listed Transaction Security Documents by or on behalf of any Obligor for the Lender, Hedge Counterparty or Security Agent.


  (d)

A copy of all notices required to be sent under the Transaction Security Documents executed by the relevant Obligors and duly acknowledged by the addressee.

     
  (e)

A copy of all share certificates, transfers and stock transfer forms or equivalent duly executed by the relevant Obligor in blank in relation to the assets subject to or expressed to be subject to the Transaction Security and other documents of title to be provided under the Transaction Security Documents.

     
  (f)

The relevant Obligors have signed all other documents and taken all other actions requested by the Lender or the Security Agent to enable the Transaction Security to be perfected including all filings, stampings, registrations, notifications and other actions (or documents to effect such actions) in all relevant jurisdictions necessary or, in the opinion of legal advisors to the Lender, acting reasonably, advisable, in order to create in favour of the Security Agent valid perfected Security over all of the assets purported to be covered by the Transaction Security.

94


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (g)

Evidence that any applicable stamp, registration or other fees payable in connection with the registration and perfection of the creation of the Transaction Security, have been paid.

     
  (h)

Evidence showing that there is no other Security (other than the Transaction Security or Permitted Security) registered against the assets of the Obligors.


3

Finance Documents

A certified copy of each of the Finance Documents (other than the Finance Documents) executed by the parties to those documents.

4

Insurance


  (a)

A letter from the Borrower’s insurance brokers addressed to the Lender and the Security Agent listing the insurance policies of the Group and confirming that they are on risk and that the insurance for the Group at the date of this Agreement is at a level acceptable to the Lender and covering appropriate risks for the business carried out by the Group.

     
  (b)

Evidence of insurance cover in full force and effect that accords with the terms of this Agreement.


5

Legal opinions

The following legal opinions, each addressed to the Finance Parties.

  (a)

A legal opinion of Bennett Jones LLP, Dorsey & Whitney LLP and Erwin & Thompson LLP, legal advisers to the Borrower.


6

Other documents and evidence


  (a)

Certified true copies of the Shoreline Asset Purchase Agreement and Shoreline Promissory Note.

     
  (b)

The Base Case Model.

     
  (c)

A certified copy of the Original Financial Statements.

     
  (d)

Evidence of the Lender’s internal credit approval to provide the Facility.

     
  (e)

An updated list of the fixed assets of each Obligor.

     
  (f)

Evidence that the fees, costs and expenses then due from the Borrower pursuant to clause 0 ( Fees ) and clause 0 ( Costs and expenses ) have been paid or will be paid by the first Utilization Date.

     
  (g)

Satisfactory completion of all "know your customer" requirements of the Finance Parties.

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

     
  (h)

A copy of any other Authorization or other document, opinion or assurance which the Lender considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any Finance Document or for the validity and enforceability of any Finance Document.

96


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Schedule 2
Requests

Part I
Utilization Request

From: Klondex Mines Ltd

To:     [ Lender ]

Dated:

Dear Sirs

Klondex Mines Ltd – Up to US$25,000,000 Secured Revolving Facility dated [          ] 2016 (the Agreement)

1

We refer to the Agreement. This is a Utilization Request. Terms defined in the Agreement have the same meaning in this Utilization Request unless given a different meaning in this Utilization Request.

   
2

We wish to borrow a Loan on the following terms:


  Proposed Utilization Date: [     ] (or, if that is not a Business Day, the next Business Day)
     
  Currency of Loan: [     ]
     
  Amount: [     ] or, if less, the Available Commitment
     
  Interest Period: [          ]

3

We confirm that each condition specified in clause 0 ( Further conditions precedent ) is satisfied on the date of this Utilization Request.

   
4

[This Loan is to be made in [whole]/[part] for the purpose of refinancing [ identify maturing Loan. ] [The proceeds of this Loan should be credited to [ account ].]

   
5

This Utilization Request is irrevocable.

Yours faithfully

....................................................

authorised signatory for

Klondex Mines Ltd

97


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Part II
Extension Request

From: Klondex Mines Ltd

To:     [ Lender ]

Dated:

Dear Sirs

Klondex Mines Ltd – Up to US$25,000,000 Secured Revolving Facility dated [          ] 2016 (the Agreement)

1

We refer to the Agreement. This is an Extension Request. Terms defined in the Agreement have the same meaning in this Extension Request unless given a different meaning in this Extension Request.

   
2

We hereby request pursuant to clause 0 ( Extension option ) to extend the Original Final by a further 12 month period to ______________.

   
3

We confirm that no Default is continuing or would result from this Extension Request.

   
4

This Extension Request is irrevocable.

Yours faithfully

....................................................

authorised signatory for

Klondex Mines Ltd

98


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Part III
Amendment Request

From: Klondex Mines Ltd

To:     [ Lender ]

Dated:

Dear Sirs

Klondex Mines Ltd – Up to US$25,000,000 Secured Revolving Facility dated [          ] 2016 (the Agreement)

1

We refer to the Agreement. This is an Amendment Request. Terms defined in the Agreement have the same meaning in this Amendment Request unless given a different meaning in this Amendment Request.

   
2

We hereby request pursuant to clause 0 ( Amendment to Commitment ) that the Commitment be amended to US$[     ].

   
3

We confirm that no Default is continuing or would result from this Amendment Request.

   
4

This Amendment Request is irrevocable.

Yours faithfully

....................................................

authorised signatory for

Klondex Mines Ltd

99


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Schedule 3
Form of Transfer Certificate

To:     Investec Bank PLC

From: [ The New Lender ] (the New Lender)

Dated:

Klondex Mines Ltd – Up to US$25,000,000 Secured Revolving Facility dated [          ] 2016 (the Agreement)

1

We refer to the Facility Agreement and to the Intercreditor Agreement (as defined in the Facility Agreement). This agreement (the Agreement) shall take effect as a Transfer Certificate for the purpose of the Facility Agreement. Terms defined in the Facility Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.

   
2

We refer to clause 0 ( Procedure for transfer ):


  (a)

The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation, and in accordance with clause 0 ( Procedure for transfer ), all of the Existing Lender's rights and obligations under the Agreement and the other Finance Documents which relate to that portion of the Existing Lender's Commitment and participations in Loans under the Agreement as specified in the Schedule.

     
  (b)

The proposed Transfer Date is [          ].

     
  (c)

The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of clause 0 ( Addresses ) are set out in the Schedule.


3

The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph 0 of clause 0 ( Limitation of responsibility of Existing Lender ).

   
4

This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.

   
5

This Transfer Certificate and any non-contractual obligations arising out of or in connection with it are governed by laws of the Province of British Columbia, and the federal laws of Canada as applicable therein.

   
6

This Transfer Certificate has been entered into on the date stated at the beginning of this Transfer Certificate.

100


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THE SCHEDULE

Commitment/rights and obligations to be transferred

[insert relevant details]
[Facility Office address, fax number and attention details for notices and account details for payments,]

[Existing Lender] [New Lender]
   
By: By:

This Agreement is accepted as a Transfer Certificate for the purposes of the Facility Agreement by the Lender, the Security Agent, and the Transfer Date is confirmed as [          ].

By:

101


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Schedule 4
Form of Assignment Agreement

From: [the New Lender ] (the New Lender)

To:     [the Existing Lender ] (the Existing Lender)

Dated:

Klondex Mines Ltd – Up to US$25,000,000 Secured Revolving Facility dated [           ] 2016 (the Agreement)

1

We refer to the Facility Agreement and to the Intercreditor Agreement (as defined in the Facility Agreement). This is an Assignment Agreement. This agreement (the Agreement) shall take effect as an Assignment Agreement for the purpose of the Facility Agreement and as a Creditor/Creditor Representative Accession Undertaking for the purposes of the Intercreditor Agreement (and as defined in the Intercreditor Agreement). Terms defined in the Facility Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.

   
2

We refer to clause 0 ( Procedure for assignment ):


  (a)

The Existing Lender assigns absolutely to the New Lender all the rights of the Existing Lender under the Agreement and the other Finance Documents and in respect of the Transaction Security which relate to that portion of the Existing Lender's Commitment and participations in Loans under the Agreement as specified in the Schedule.

     
  (b)

The Existing Lender is released from all the obligations of the Existing Lender which correspond to that portion of the Existing Lender's Commitment and participations in Loans under the Agreement specified in the Schedule.

     
  (c)

The New Lender becomes a Party as the Lender and is bound by obligations equivalent to those from which the Existing Lender is released under paragraph (b) above.


3

The proposed Transfer Date is [     ].

   
4

On the Transfer Date the New Lender becomes Party to the Finance Documents as the Lender.

   
5

The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of clause 0 ( Addresses ) are set out in the Schedule.

   
6

The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph 0 of clause 0 ( Limitation of responsibility of Existing Lender ).

   
7

This Assignment Agreement acts as notice to the Lender (on behalf of each Finance Party) and, upon delivery in accordance with clause 0 ( Copy of Transfer Certificate, Assignment Agreement or Amendment Confirmation to Borrower ), to the Company (on behalf of each Obligor) of the assignment referred to in this Assignment Agreement.

   
8

This Assignment Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Assignment Agreement.

   
9

This Assignment Agreement and any non-contractual obligations arising out of or in connection with it are governed by laws of the Province of British Columbia, and the federal laws of Canada as applicable therein.

102


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

10

This Assignment Agreement has been entered into on the date stated at the beginning of this Assignment Agreement.

103


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

THE SCHEDULE

Rights to be assigned and obligations to be released and undertaken

[insert relevant details]

[Facility office address, fax number and attention details for notices and account details for payments]

[Existing Lender] [New Lender]
   
By: By:

This Agreement is accepted as an Assignment Agreement for the purposes of the Facility Agreement by the Lender, the Security Agent, and the Transfer Date is confirmed as [ ].

Signature of this Assignment Agreement by the Lender constitutes confirmation by the Lender of receipt of notice of the assignment referred to herein, which notice the Lender receives on behalf of each Finance Party.

104


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Schedule 5
Form of Amendment Confirmation

To:     [Lender] and [Security Agent]

From: [          ] as Borrower, for and on behalf of each Obligor

Dated:

Klondex Mines Ltd – Up to US$25,000,000 Secured Revolving Facility dated [          ] 2016 (the Agreement)

1

We refer to the Facility Agreement. This agreement (the Agreement) shall take effect as an Amendment Confirmation for the purpose of the Facility Agreement. Terms defined in the Facility Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.

   
2

We refer to [clause 0 ( Amendment to Commitment )] of the Facility Agreement.

   
3

The proposed date on which the amendment is to take effect (the Amendment Date) is [     ].

   
4

On the Amendment Date, the Commitment shall be amended to be US$[          ].

   
1

This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.

   
2

This Agreement and any non-contractual obligations arising out of or in connection with it are governed by the laws of the Province of British Columbia, and the federal laws of Canada as applicable therein.

   
3

This Agreement has been entered into on the date stated at the beginning of this Agreement.

105


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

THE SCHEDULE

Relevant Commitment/rights and obligations to be assumed by the Increase Lender

[ insert relevant details ]

[ Facility office address, fax number and attention details for notices and account details for payments ] [Increase Lender] By:

This Agreement is accepted as an Amendment Confirmation for the purposes of the Facility Agreement by the Lender, the Security Agent and the Amendment Date is confirmed as [     ].

Lender

By:

 

Security Agent

By:

106


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Schedule 6
Form of Compliance Certificate

To:     [     ] as Lender

From: [ Company ]

Dated:

Dear Sirs

Klondex Mines Ltd – Up to US$25,000,000 Secured Revolving Facility dated [          ] 2016 (the Agreement)

1

We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

   
2

We confirm that: [Insert details of covenants to be certified]

   
3

[We confirm that no Default is continuing.] 1 *


Signed: ………… …………

Director or Chief Financial Officer

of

[Borrower]

__________________________________________

1 * If this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it.

107


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Schedule 7
Timetables

Delivery of a duly 10.00am three
completed Utilization Business Days
Request (clause 0 before the
( Delivery of a Utilization proposed
Request )) Utilization Date
   
LIBOR is fixed Quotation Day as
  of 11:00 a.m. EST

108


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Schedule 8 - Disclosure Schedule

SCHEDULE A

Obligors

  1.

Klondex Mines Ltd.

     
  2.

0985472 B.C. Ltd.

     
  3.

Klondex Canada Ltd.

     
  4.

Klondex Holdings (USA) Inc.

     
  5.

Klondex Gold & Silver Mining Company

     
  6.

Klondex Midas Holdings Limited

     
  7.

Klondex Midas Operations Inc.

109


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SCHEDULE B

Commitments

Lender Commitment
Investec Bank Plc US$25,000,000

110


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SCHEDULE C

Charged Property

 

All right, title and interest of each of the Obligors in and to all present and after-acquired personal and real property and undertaking wheresoever situated.

     
 

Midas Mine Property and Fire Creek Property including: Reef Property, Hot Springs Property and Maggie Creek Property

     
 

Manitoba properties including:


  o Cougar Property
     
  o Jeep Property
     
  o Mike Power Property
     
  o Poundmaker Property
     
  o Rice Lake Property
     
  o Greenbelt Property

  Ontario properties including:

  o Denmark Lake-Kenbridge Property
     
  o Denton-Keefer (Golden) Property
     
  o Tully Property (50%)
     
  o Turtlepond Lake Property
     
  o Whitesides-Carscallen Property

111


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SCHEDULE D

Liens

  A.

FIRE CREEK PROPERTY

Fire Creek Property Royalties

Royalties affect ten fee parcels owned and / or leased by Klondex and forming part of the Fire Creek Property, as set forth below:

APN Description Lessor Royalty
Section 15 T30N R47E MDB&M    
007-140-04 SE1/4 NEI/4 Third Party Lessor 4% NSR
007-140-06 SE1/4 NE1/4 Third Party Lessor 4% NSR
007-140-10 NE1/4 SE1/4, E1/2 NW1/4 SE1/4 Third Party Lessor 2.5% NSR
007-140-07 N2NW4SW4 Third Party Lessor 3.0% NSR & 0.5%
wheelage royalty (1)
007-140-09 W2NW4SE4 Third Party Lessor 3.0% NSR & 0.5%
wheelage royalty (1)
Section 19 T30N R47E MDB&M    
007-160-04 SW4NE4 Third Party Lessor 3.0% NSR & 0.5%
wheelage royalty (1)
007-160-24 NE4NW4SE4 Third Party Lessor 3.0% NSR & 0.5%
wheelage royalty (1)
Section 19 T30N R47E MDB&M    
007-060-69 Parcel 1 of the Sharp Hospital Map recorded in the Office of the Lander County Recorder in Book 375, Official Records, Page 170 Third Party Lessor 3.0% NSR & 0.5%
wheelage royalty (1)
Section 23 T30N R47E MDB&M    
007-160-16 N1/2 SE1/4 NW1/4 n/a 5% NSR
007-160-25 W1/2 SW1/4 NW1/4 NE1/4 SW1/4 NW1/4 n/a 5% NSR

Notes:

(1) Wheelage royalty is calculated on mineralization mined from other properties which is transported underground through the leased property.

(2)Mineral production royalty of 5% of the net smelter returns reserved by Donnie Charles in the Grant, Bargain and Sale Deed dated March 26, 2007, recorded on March 29, 2007, Document 247101, Book 571, Page 2, which affects Parcels 007-160-16 and 007-160-25.

Fire Creek Property Agreement Obligations

Due Date Commitment/Obligatio n $ Obligation Payable/ Due to Notes

01/09/2005

3 Leased Parcels (1)

Third Party Lessors

1987 Leases extended for 10 years from 01/09/2005

19/08/2013

Property Taxes - 3 Leased Parcels

$ 146.78

Lander County Treasurer

Lessee to pay property taxes

112


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19/08/2013 Property Taxes 29 -
Klondex Owned Parcels
$ 1,032.33 Lander County Treasurer Real Property Taxes
Due 3rd Monday of
August annually
19/08/2013 Property Taxes 2 -
Klondex Owned Parcels
$ 84.08 Lander County Treasurer Real Property Taxes
Due 3rd Monday of
August annually
31/08/2013 BLM Claim Fees - 484 Claims $ 67,760.00 Bureau of Land Management 484 Klondex Owned
Claims x $140/Claim
01/09/2013 3 Leased Parcels -
Annual AMR Payment
$ 24,000.00 7 Third Party Lessors Annual AMR payment
due on lease anniversary
01/09/2013 Insurance Certificates 7 Third Party Lessors Insurance certificates
required under terms of leases
01/11/2013 Lander County NOI to
hold - 484 Claims
$ 5,086.00 Lander County Recorder 484 Klondex Owned
Claims x $10.50/claim + $4
01/09/2015 3 Leased Parcels -
Expire
7 Third Party Lessors Leases expire - Renew
  Total  $ 98,109.19    

Notes: (1) The lease agreement remains in full force and effect for so long as any mining operations (as defined in the lease agreement) are being conducted on the relevant property on a continuing basis.

In addition, pursuant to a mining lease agreement dated effective July 31, 2013, with respect to five leased fee parcels, Klondex is required to pay minimum rental payments of $50,000 per year for the first ten years of the lease and increasing by $10,000 for each subsequent ten year period (including any renewal period), subject to an additional increase under certain circumstances.

Fire Creek Property – Other

The reservation of all petroleum, oil, natural gas and products derived therefrom reserved by the Southern Pacific Land Company, a California corporation, in the deed recorded on October 2, 1951, in Book 64, Page 313, Deed Records, which affects Assessor Parcel Nos.:


  007-110-01
  007-110-13
  007-610-01
  007-640-06
  007-140-01
  007-140-03
  007-140-05
  007-140-12
  007-140-15
  007-140-19
  007-140-21
  007-140-22
  007-140-23
  007-140-25
  007-140-28
  007-160-06
  007-160-16
  007-160-17
  007-160-18
  007-160-19
  007-160-20
  007-160-21
  007-160-25

113


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  007-160-26
  007-160-27
  007-160-28

On February 12, 2016, Klondex Gold & Silver Mining Company acquired an additional parcel in Lander County. The description of the parcel is:

APN 007-110-10
Section 9, T30N R47E MDB&M
W1/2NW1/4SW1/4
20 acres
No royalty.

  B.

MIDAS PROPERTY

Midas Property Royalties

Agreement Recorded Royalty

Mining Lease dated August 1, 1990, by and between William and Rose Domenichelli, John Kenneth Domenichelli, William Melvin Domenichelli, Barbara Jean Rameriz and Ruth Ann Williams, as lessors, and Frazer Creek Exploration Company, Inc. a Nevada corporation, as lessee

Recorded in short form version as Document No. 297863 in Book 735 at Pages 508-514 of the Official Records of the Elko County Recorder’s Office, Elko County, Nevada

5% NSR

Grant Deed dated January 12, 1993, by and between Virginia Myers, and the Midas Joint Venture

Recorded as Document No. 333428 in Book 809, Page 904-905 of the Official Records of the Elko County Recorder’s Office, Elko County, Nevada

2 patented mining claims; Banner, Gift No. 1 (1% NSR to a $30,000 maximum royalty payment).

Grant Deed dated January 25, 1993, by and between Francis N. Murdock, John G. Murdock and the Midas Joint Venture

Recorded as Document No. 334437 in Book 811, Page 472-473 of the Official Records of the Elko County Recorder’s Office, Elko County, Nevada

1 unpatented lode mining claim known as the New Grant; (1% NSR to a $100,000 maximum royalty payment).

Grant Deed dated January 27, 1993, by and between Evelyn Albisu, Donato Albisu and the Midas Joint Venture

Recorded as Document No. 333895 in Book 810, Page 708-709 of the Official Records of the Elko County Recorder’s Office, Elko County, Nevada.

2 patented mining claims; Gold Crown and portion of Oversight Fraction (1% NSR to a $100,000 maximum royalty payment).

Grant Deed dated March 17, 1993, by and between Mr. and Mrs. Hjalmer Theodore Hanson and the Midas Joint Venture

Recorded as Document No. 336177 in Book 814, Page 923-924 of the Official Records of the Elko County Recorder’s Office, Elko County, Nevada.

1 patented mining claim; Ripsaw No. 2 (1% NSR to a $100,000 maximum royalty payment).

Mining Lease by and between

BLM Serial Numbers

During the 30 year term of agreement: (i)

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Agreement Recorded Royalty

Clark Powell and his Associates and Romarco Nevada, Inc., a Nevada corporation (predecessor-in-interest to Newmont Midas Operations Inc.), dated October 30, 1995

105502 to 105507, 105509 recorded in Book 1095, Pages 890-896.

advance minimum royalties totaling $135,000 in the aggregate payable between execution of lease and third anniversary; (ii) advance minimum royalty of $50,000 payable annually after fourth anniversary of lease.

Production royalty of 2.5% of NSR.

Lease of Estar, Redar and Laura Unpatented Lode Mining Claims and Sublease of Domenichelli Lease, dated July 1, 2000, by and between Frazer Creek Exploration Company, Inc., a Nevada corporation, and Franco-Nevada Mining Corporation, Inc., a Nevada corporation (predecessor-in- interest to Newmont Midas Operations Inc.)

Recorded as a memorandum as Document No. 467521 in Book 1, Pages 5290- 5317 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, on February 28, 2001. The Lease affects unpatented lode mining claims and agreements pertaining to lands situated in Sections 12 and 13, Township 39 North, Range 46 East, and in Sections 7, 18 and 19, Township 39 North, Range 47 East, MDM, Elko County, Nevada.

Advance minimum royalty totaling $150,000 payable between execution of lease and fourth anniversary and of $75,000 until the lease is terminated or expires, whichever first occurs.

NSR payable as a production royalty as follows:
(i) 4% if the average spot price of gold quoted on the London Bullion Market, Afternoon fix, for a particular payment period is $500 or less; or
(ii) 5% if the average spot price of gold quoted on the London Bullion Market, Afternoon fix, for a particular payment period is $700 or less; or
(iii) 6% if the average spot price of gold quoted on the London Bullion Market, Afternoon fix, for a particular payment period is greater than $700. When the Lessee has cumulatively paid the Lessor the sum of $1,000,000 in advance minimum royalties, production royalties or other form of pre-payment of same, the production royalty shall be reduced by 1% of NSR so that the above percentages will be 3%, 4% and 5%, respectively.

Agreement Transferring Property Interests and Terminating Mining Lease With Option to Joint Venture, Quitclaim Deed and Grant of Royalty, dated August 11, 2000, by and between Frazer Creek Exploration Company Incorporated, a Nevada corporation and Homestake Mining Company of California, a California corporation

Recorded as Document No. 462327 in Book 0 at Pages 23222-23233 of the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, and on September 18, 2000

Laura 6 and 20 unpatented lode mining claims are subject to a 2% NSR and portions of the REDAR 3, 4 and 5, and ESTAR 1, 7, 8, 11, 18 and 19 unpatented lode mining claims are subject to a 1% NSR

Mining Sublease and Option dated April 2, 2007, by and between Barrick Gold Exploration Inc. and Newmont USA Limited

Recorded as a memorandum as Document No. 571656 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, on April 20, 2007

1.5% NSR on properties identified in Part 1 of Exhibit A of the Mining Lease with Conditional Purchase Obligation Agreement dated April 2, 2007 (attached as Exhibit I to sublease), 3.0% NSR on properties identified in Part 2 of Exhibit A, subject to proportionate reduction in certain circumstances in accordance with terms of sublease.

Midas Property Payment Obligations

Project (s) Recipient / Payee / Claim Group Amount Due Type
MIDAS BARRICK GOLD $110,000 04/02/13 Annual Rental
MIDAS FRAZER CREEK EXPLORATION $75,000 07/01/13 Advance Royalty

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Project (s) Recipient / Payee / Claim Group Amount Due Type
FRAZER
CREEK
MIDAS DOMENICHELLI $10,000 08/01/13 Annual Rental
MIDAS MIDAS et. al. $203,699 08/31/13 Annual Claim Fees
MIDAS EXPL CAT 1-58 $8,758 08/31/13 Annual Claim Fees
MIDAS POO MDS 1-49 $7,399 08/31/13 Annual Claim Fees
MIDAS
FRAZER
CREEK
LAURA 6, 20, REDAR 1-5, ESTAR 1- 19 $3,926 08/31/13 Annual Claim Fees
MIDAS
LEE
KING MIDAS, KING MIDAS NO. 2, DIXIE, DIXIE NO. 1-3, H-2 $1,057 08/31/13 Annual Claim Fees
MIDAS POWELL, CLARK, ET AL $50,000 10/30/13 Advance Royalty
MIDAS UNGER FAMILY TRUST SURFACE USE $3,500 11/01/13 Right-of-Way fees
MIDAS BLM ROW N-61100 $795 01/01/17 Right-of-Way fees
MIDAS BLM ROW N-66023 $310 01/01/20 Right-of-Way fees

Midas Property – Other

The option granted to Frazer Creek Exploration Company, Inc. in Section 10.3 of the Lease of Estar, Redar and Laura Unpatented Mining Lode Mining Claims and Sublease of Domenichelli Lease, Elko County, Nevada dated July 1, 2000, to acquire the Amsterdam claims described in Exhibits D and E of the Lease.

The notations in the Historical Index of the Bureau of Land Management for the townships in which the Midas Mine properties are situated as described in Exhibit A to this Schedule F.12.

  C.

MANITOBA PROPERTIES


  1.

Manitoba Mines Branch Registrations:


  (a)

The following Manitoba Mines Branch registrations in relation to Mineral Lease ML63:


  (i)

Event # 183284 (Security Agreement between the Government of Manitoba and Rice Lake Gold Corporation registered under Document No. 16963);

     
  (ii)

Event # 300004 (Debenture under Document Number D300004 in the amount of $23,750,000.00)*; and

     
  (iii)

Event # 322648 (Debenture under Document Number D322648)*;


  (b)

The following Manitoba Mines Branch registrations in relation to the Manitoba mining claims, patents and interests described in Schedule "G":


  (i)

an agreement between W. Bruce Dunlop Limited and Hugh Wynne dated May 16, 1990 has been registered against Claim Nos. CB11704 and W46385 as D16168;

116


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (ii)

an agreement between Peter Dunlop and Hugh Wynne dated May 16, 1990 has been registered against Claim Nos. W48797 and W49484 as D16167;

     
  (iii)

an agreement affecting Claim Nos. 15922, W44242 and W44243 as Document No. 25;

     
  (iv)

an amending agreement to acquisition agreement between Ann Mark and Grande Truck Resources Inc. has been registered against Claim No. W47000 as D15307;

     
  (v)

an acquisition agreement between Ann Mark and Grande Truck Resources Inc. has been registered against Claim No. W47000 as D15306;

     
  (vi)

an option agreement between Dave Giannotti and Ann Mark to expire December 31, 1984 has been registered against Claim No. W47000 as D15305;

     
  (vii)

Event # 322648 Debenture in the amount of $7,000,000.00US by San Gold Corporation in favour of Beechwood Re registered under Document Number D322648*;

     
  (viii)

Event # 300005 Registration of Debenture under Document Number D300005 in the amount of $23,750,000.00 San Gold Corporation (the Mortgagor) has agreed to grant BAM Administrative Services LLC, in its capacity as collateral agent, a debenture granting a security interest in the assets of the Mortgagor described herein * ;

     
  (ix)

Event # 322657 Registration of Debenture under Document Number D322657 * ; and

     
  (x)

Event # D300065 Registration of Debenture under Document Number D300065 in the amount of $23,750,000.00 San Gold Corporation (the Mortgagor) has agreed to grant BAM Administrative Services LLC, in its capacity as collateral agent, a debenture granting a security interest in the assets of the Mortgagor described herein*.

Note: Asterisked items above were or will be discharged at or following closing of the acquisition of the Manitoba properties. Discharges to be confirmed.

  D.

ONTARIO PROPERTIES


  2.

Mines and Minerals Division of the Ministry of Northern Development and Mines (Ontario) registrations:

LIENS, ENCUMBRANCES AND OTHER REGISTRATIONS RECORDED AGAINST UNPATENTED CLAIMS:

PART ONE:

Date Description Instrument
Number
Claims Affected
2011-Jun-15

Commissioner grants application for exclusion of surface rights from the mining claim and orders that such surface rights are hereby surrendered to the Crown

M1160.00127 947885
2011-Jun-15

Commissioner orders that

M1160.00128 947885

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claim holder retain rights to access and work the mining rights, pursuant to the Mining Act

2012-Jan-20

Agreement: Opawica Explorations Inc. (177975) And Xstrata Canada Corporation (130679)

T1260.00016

3002972, 3002999, 3010654

PART TWO:

Date Description Instrument
Number
Claims Affected

1987-Oct-02

Memo Of Agreement: Frank Zoebelein (A49486) and Frank Galata (A33969) File Number: 683/87

T8706.02363,
T8706.02362

947837, 947838, 947839, 947840, 947841, 947842, 947843, 947844, 947845, 947846, 947847, 947848, 947849, 947850, 947851, 947852, 947853, 947854, 947858, 949904, 949905, 949906, 949907, 949908, 949909, 949910, 949911, 949912, 949913, 949914, 949915, 949921, 949922, 949923, 949924, 949925, 949928, 982288, 982289, 982290, 982291, 982292, 997233, 817604, 817605, 817608, 833192, 833195, 947863, 947864, 947865, 947866, 947867, 947869, 947870, 947871, 947872, 947873, 947874, 947875, 947876, 947877, 947878, 947879, 947880, 947881, 947882, 947885, 947886, 947887, 947888, 947889, 949074

1987-Oct-02

Dispute filed by Guy Thibault
File Number D19/87

M8706.00281

833192

1988-Dec-06

Commissioner Issues
Certificate of Interest

M8806.50042

1087474, 1087475, 1087476, 1087477, 996605, 996609

1989-Feb-07

Commissioner Issues
Certificate of Interest

M8906.00006

1087474, 1087475, 1087476, 1087477, 996605, 996609

1989-Mar-02

Commissioner Continues
Action of Certificate of Interest

M8906.00015

1087474, 1087475, 1087476, 1087477, 996605, 996609

1989-Mar-06

Pending Proceedings by
Commissioner

M9006.00005

947837, 947838, 947839, 947840, 947841, 947842, 947843, 947844, 947845, 947846, 947847, 947848, 947849, 947850, 947851, 947852, 947853, 947854, 947858, 949904, 949905, 949906, 949907, 949908, 949909, 949910, 949911, 949912, 949913, 949914, 949915, 949921, 949922, 949923, 949924, 949925, 949928, 982288, 982289, 982290, 982291, 982292, 997233, 817604, 817605, 817608, 833192, 833195, 947863, 947864, 947865, 947866, 947867, 947869, 947870, 947871,

118


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

947872, 947873, 947874, 947875, 947876, 947877, 947878, 947879, 947880, 947881, 947882, 947885, 947886, 947887, 947888, 947889, 949074

1989-Mar-06 Notice of Hearing Before
Mining and Lands Commissioner

O8906.00072

947837, 947838, 947839, 947840, 947841, 947842, 947843, 947844, 947845, 947846, 947847, 947848, 947849, 947850, 947851, 947852, 947853, 947854, 947858, 949904, 949905, 949906, 949907, 949908, 949909, 949910, 949911, 949912, 949913, 949914, 949915, 949921, 949922, 949923, 949924, 949925, 949928, 982288, 982289, 982290, 982291, 982292, 997233, 1087474, 1087475, 1087476, 1087477, 817604, 817605, 817608, 833192, 833195, 947863, 947864, 947865, 947866, 947867, 947869, 947870, 947871, 947872, 947873, 947874, 947875, 947876, 947877, 947878, 947879, 947880, 947881, 947882, 947885, 947886, 947887, 947888, 947889, 949074, 996605, 996609

1991-Feb-12 Notice of Hearing Before
Mining and Lands Commissioner

O9106.00063

947837, 947838, 947839, 947840, 947841, 947842, 947843, 947844, 947845, 947846, 947847, 947848, 947849, 947850, 947851, 947852, 947853, 947854, 947858, 949904, 949905, 949906, 949907, 949908, 949909, 949910, 949911, 949912, 949913, 949914, 949915, 949921, 949922, 949923, 949924, 949925, 949928, 982288, 982289, 982290, 982291, 982292, 997233, 1087474, 1087475, 1087476, 1087477, 817604, 817605, 817608, 833192, 833195, 947863, 947864, 947865, 947866, 947867, 947869, 947870, 947871, 947872, 947873, 947874, 947875, 947876, 947877, 947878, 947879, 947880, 947881, 947882, 947885, 947886, 947887, 947888, 947889, 949074, 996605, 996609

1991-Apr-09 Notice of Hearing Before
Mining and Lands Commissioner

O9160.00145

947837, 947838, 947839, 947840, 947841, 947842, 947843, 947844, 947845, 947846, 947847, 947848, 947849, 947850, 947851, 947852, 947853, 947854, 947858, 949904, 949905, 949906, 949907, 949908, 949909, 949910, 949911, 949912, 949913, 949914, 949915, 949921, 949922, 949923, 949924, 949925, 949928, 982288, 982289, 982290,

119


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

982291, 982292, 997233, 1087474, 1087475, 1087476, 1087477, 817604, 817605, 817608, 833192, 833195, 947863, 947864, 947865, 947866, 947867, 947869, 947870, 947871, 947872, 947873, 947874, 947875, 947876, 947877, 947878, 947879, 947880, 947881, 947882, 947885, 947886, 947887, 947888, 947889, 949074, 996605, 996609

1996-Jul-09

Commissioner Vests 100.00
% Interest of Keefer Lake Resources Inc. (151197) in
Galata Frank (134600)

O9660.00006

947837, 947838, 947839, 947840, 947841, 947842, 947843, 947844, 947845, 947846, 947847, 947848, 947849, 947850, 947851, 947852, 947853, 947854, 947858, 949904, 949905, 949906, 949907, 949908, 949909, 949910, 949911, 949912, 949913, 949914, 949915, 949921, 949922, 949923, 949924, 949925, 949928, 982288, 982289, 982290, 982291, 982292, 997233, 1087474, 1087475, 1087476, 1087477, 817604, 817605, 817608, 833192, 833195, 947863, 947864, 947865, 947866, 947867, 947869, 947870, 947871, 947872, 947873, 947874, 947875, 947876, 947877, 947878, 947879, 947880, 947881, 947882, 947885, 947886, 947887, 947888, 947889, 949074, 996605, 996609

1996-Jul-09

Commissioner Vacates
Certificate of Interest

M9660.00021

1087474, 1087475, 1087476, 1087477, 996605, 996609

1996-Jul-09

Pending Proceedings Removed

P9660.00014

947837, 947838, 947839, 947840, 947841, 947842, 947843, 947844, 947845, 947846, 947847, 947848, 947849, 947850, 947851, 947852, 947853, 947854, 947858, 949904, 949905, 949906, 949907, 949908, 949909, 949910, 949911, 949912, 949913, 949914, 949915, 949921, 949922, 949923, 949924, 949925, 949928, 982288, 982289, 982290, 982291, 982292, 997233, 817604, 817605, 817608, 833192, 833195, 947863, 947864, 947865, 947866, 947867, 947869, 947870, 947871, 947872, 947873, 947874, 947875, 947876, 947877, 947878, 947879, 947880, 947881, 947882, 947885, 947886, 947887, 947888, 947889, 949074

1998-Nov-18

Special Circumstances Apply

M9860.00072

947837, 947838, 947839, 947840, 947841, 947842, 947843, 947844, 947845, 947846, 947847, 947848, 947849, 947850, 947851, 947852,

120


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

947853, 947854, 947858, 949904, 949905, 949906, 949907, 949908, 949909, 949910, 949911, 949912, 949913, 949914, 949915, 949921, 949922, 949923, 949924, 949925, 949928, 982288, 982289, 982290, 982291, 982292, 997233, 1087474, 1087475, 1087476, 1087477, 817604, 817605, 817608, 833192, 833195, 947863, 947864, 947865, 947866, 947867, 947869, 947870, 947871, 947872, 947873, 947874, 947875, 947876, 947877, 947878, 947879, 947880, 947881, 947882, 947885, 947886, 947887, 947888, 947889, 949074, 996605, 996609

1999-Jan-22

Special Circumstances Removed

M9960.00001

947837, 947838, 947839, 947840, 947841, 947842, 947843, 947844, 947845, 947846, 947847, 947848, 947849, 947850, 947851, 947852, 947853, 947854, 947858, 949904, 949905, 949906, 949907, 949908, 949909, 949910, 949911, 949912, 949913, 949914, 949915, 949921, 949922, 949923, 949924, 949925, 949928, 982288, 982289, 982290, 982291, 982292, 997233, 1087474, 1087475, 1087476, 1087477, 817604, 817605, 817608, 833192, 833195, 947863, 947864, 947865, 947866, 947867, 947869, 947870, 947871, 947872, 947873, 947874, 947875, 947876, 947877, 947878, 947879, 947880, 947881, 947882, 947885, 947886, 947887, 947888, 947889, 949074, 996605, 996609

1999-Jan-22

Special Circumstances Apply

M9960.00002

947837, 947838, 947839, 947840, 947841, 947842, 947843, 947844, 947845, 947846, 947847, 947848, 947849, 947850, 947851, 947852, 947853, 947854, 947858, 949904, 949905, 949906, 949907, 949908, 949909, 949910, 949911, 949912, 949913, 949914, 949915, 949921, 949922, 949923, 949924, 949925, 949928, 982288, 982289, 982290, 982291, 982292, 997233, 1087474, 1087475, 1087476, 1087477, 817604, 817605, 817608, 833192, 833195, 947863, 947864, 947865, 947866, 947867, 947869, 947870, 947871, 947872, 947873, 947874, 947875, 947876, 947877, 947878, 947879, 947880, 947881, 947882, 947885, 947886, 947887, 947888, 947889, 949074, 996605, 996609

121


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

1999-Jan-22

Special Circumstances
Removed

M9960.00003

947837, 947838, 947839, 947840, 947841, 947842, 947843, 947844, 947845, 947846, 947847, 947848, 947849, 947850, 947851, 947852, 947853, 947854, 947858, 949904, 949905, 949906, 949907, 949908, 949909, 949910, 949911, 949912, 949913, 949914, 949915, 949921, 949922, 949923, 949924, 949925, 949928, 982288, 982289, 982290, 982291, 982292, 997233, 1087474, 1087475, 1087476, 1087477, 817604, 817605, 817608, 833192, 833195, 947863, 947864, 947865, 947866, 947867, 947869, 947870, 947871, 947872, 947873, 947874, 947875, 947876, 947877, 947878, 947879, 947880, 947881, 947882, 947885, 947886, 947887, 947888, 947889, 949074, 996605, 996609

2004-Feb-17

Commissioner's Order Removes
Memo of Agreement:
Zoebelein, Frank Joseph (211482) and Galata,
Frank (134600)

T0460.00069 T0460.00068

947837, 947838, 947839, 947840, 947841, 947842, 947843, 947844, 947845, 947846, 947847, 947848, 947849, 947850, 947851, 947852, 947853, 947854, 947858, 949904, 949905, 949906, 949907, 949908, 949909, 949910, 949911, 949912, 949913, 949914, 949915, 949921, 949922, 949923, 949924, 949925, 949928, 982288, 982289, 982290, 982291, 982292, 997233, 817604, 817605, 817608, 833192, 833195, 947863, 947864, 947865, 947866, 947867, 947869, 947870, 947871, 947872, 947873, 947874, 947875, 947876, 947877, 947878, 947879, 947880, 947881, 947882, 947885, 947886, 947887, 947888, 947889, 949074

2014-Sep-08

Exploration Plan No. PL13- 10155
effective from 2013- May-30 to 2015-May-30
For the following activities:
(Geophysical / Surveys, Line Cutting / LC)

J1460.00091

947837, 947842, 947845, 947848, 949908, 949912, 949913, 949924, 949925, 817604, 817605, 817608, 833195, 947864, 947865, 947866, 947867, 947871, 947872, 947876, 947879, 947880, 947882, 947885, 947888, 949074

2014-Oct-31

Exploration Permit No. PR13-10301
effective from 2013-Jun-03 to 2016-Jun-03
for the following activities:
(Drilling / PDrill)

J1460.00470

947837, 947842, 947845, 947848, 949908, 949909, 949912, 949913, 949924, 949925, 817604, 817605, 817608, 833195, 947864, 947865, 947866, 947867, 947871, 947872, 947876, 947879, 947880, 947882, 947885, 947888, 949074

2016-Feb-09

Debenture/Mortgage/Security
Interest: Klondex Canada

T1660.00046 T1610.00047

4208700, 4208701, 4208702, 4208703, 4208704, 4208705, 4208706, 4208707,

122


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Ltd. (412887) and 7097914
Manitoba Ltd. (412699)

4208708, 4208709, 4212129, 4212130, 4212131, 4212132, 4212133, 4213420, 4213421, 4213422, 4213423, 4213424, 4213425, 4214238, 4219064, 4219065, 4219066, 4219067, 4219068, 4228981, 1247471, 1247472, 3012581, 4219025, 4219026, 4219027, 4219028, 4219029, 4219030, 4219031, 4219032, 4219033, 4219034, 4219035, 4219036, 4219037, 4219038, 4219039, 4219040, 4219041, 4219042, 817604, 817605, 817608, 833192, 833195, 947837, 947838, 947839, 947840, 947841, 947842, 947843, 947844, 947845, 947846, 947847, 947848, 947849, 947850, 947851, 947852, 947853, 947854, 947858, 947863, 947864, 947865, 947866, 947867, 947869, 947870, 947871, 947872, 947873, 947874, 947875, 947876, 947877, 947878, 947879, 947880, 947881, 947882, 947885, 947886, 947887, 947888, 947889, 949074, 949904, 949905, 949906, 949907, 949908, 949909, 949910, 949911, 949912, 949913, 949914, 949915, 949921, 949922, 949923, 949924, 949925, 949928, 982288, 982289, 982290, 982291, 982292, 996605, 996609, 997233, 1087474, 1087475, 1087476, 1087477, 4241345, 4241346, 4241347, 3010236, 3010237, 3002972, 3002999, 3010654

2016-Feb-09

Debenture/Mortgage/Security Interest:
Klondex Canada Ltd. (412887) and
Franco- Nevada GLW Holdings Corp. (412661)

T1660.00061 T1610.00062

4208700, 4208701, 4208702, 4208703, 4208704, 4208705, 4208706, 4208707, 4208708, 4208709, 4212129, 4212130, 4212131, 4212132, 4212133, 4213420, 4213421, 4213422, 4213423, 4213424, 4213425, 4214238, 4219064, 4219065, 4219066, 4219067, 4219068, 4228981, 1247471, 1247472, 3012581, 4219025, 4219026, 4219027, 4219028, 4219029, 4219030, 4219031, 4219032, 4219033, 4219034, 4219035, 4219036, 4219037, 4219038, 4219039, 4219040, 4219041, 4219042, 817604, 817605, 817608, 833192, 833195, 947837, 947838, 947839, 947840, 947841, 947842, 947843, 947844, 947845, 947846, 947847, 947848, 947849, 947850, 947851, 947852, 947853, 947854, 947858, 947863, 947864, 947865, 947866, 947867, 947869, 947870, 947871, 947872, 947873, 947874, 947875, 947876, 947877, 947878, 947879, 947880, 947881, 947882, 947885, 947886, 947887, 947888, 947889, 949074, 949904, 949905, 949906, 949907, 949908, 949909,

123


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

     

949910, 949911, 949912, 949913, 949914, 949915, 949921, 949922, 949923, 949924, 949925, 949928, 982288, 982289, 982290, 982291, 982292, 996605, 996609, 997233, 1087474, 1087475, 1087476, 1087477, 4241345, 4241346, 4241347, 3010236, 3010237, 3002972, 3002999, 3010654

LIENS, ENCUMBRANCES AND OTHER REGISTRATIONS RECORDED AGAINST COCHRANE PATENTED CLAIMS

Date Description Instrument
Number
Properties Affected
2004-Nov-12 Notice of Letter Option Agreement between Dean Varley and Denton Resources Ltd., providing in part for a 1.5% net smelter royalty in the event that a feasibility study is reached CB2685 PINs 65473-0179, 0181, 0183, 0185, 0187, 0189
2016-Feb-05 $16,000,000 Charge issued in favour of 7097914 Manitoba Ltd. CB120498 PINs 65473-0179, 0181, 0183, 0185, 0187, 0189
2016-Feb-05 $50,000,000 Charge issued in favour of Franco-Nevada GLW Holdings Corp. CB120499 PINs 65473-0179, 0181, 0183, 0185, 0187, 0189

3.      All encumbrances registered at the Winnipeg Land Titles Office in relation to the real property described in Schedule "H" hereto are Encumbrances.

4.     All encumbrances registered or to be registered in favour of 7097914 Manitoba Ltd. including the debenture dated January 21, 2016 granted by Klondex Canada Ltd. in connection with the promissory note dated January 21, 2016 from Klondex Canada Ltd.

124


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE E

Indebtedness

The following is a list of all Indebtedness of each Obligor as of the date hereof:

Klondex Mines Ltd.

Delivery of 23,333 gold ounces under the gold purchase agreement dated February 11, 2014 between Franco-Nevada GLW Holdings Corp. and Klondex Mines Ltd.

0985472 B.C. Ltd.

Nil

Klondex Canada Ltd.

US$12,000,000 principal amount senior secured vendor take-back promissory note dated January 21, 2016 in favour of 7097914 Manitoba Ltd., which note is payable in three installments of US$4,000,000, with the first installment due February 4, 2017, the second installment due February 4, 2018, and the third installment due February 4, 2019. The note bears interest at 4% payable monthly. The obligations under this promissory note are secured by the Purchased Assets (as defined in the asset purchase agreement dated December 16, 2015 among, Klondex Canada Ltd., 7097914 Manitoba Ltd., and Klondex Mines Ltd.). The note is open to pre-payment without penalty.

Klondex Holdings (USA) Inc.

CDN$34,800,391 owing under the promissory note dated February 6, 2014 in favour of Klondex Mines Ltd., which note is repayable on demand and bears interest at 3.0% payable semi- annually.

 

US$68,447,959 owing under the promissory note dated February 11, 2014 in favour of Klondex Mines Ltd., which note is repayable on demand and bears interest at 3.0% payable semi- annually.

 

US$3,399,328 owing under the promissory note dated February 11, 2014 in favour of Klondex Mines Ltd., with a maturity of 5 years and bearing interest at 3.5% with 20% of the initial principal amount payable annually and open to pre-payment without penalty.

Klondex Gold & Silver Mining Company

Nil

Klondex Midas Holdings Limited

Nil

Klondex Midas Operations Inc.

Nil

125


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE F

Closing Deliveries

1.

Certificate of Good Standing for the Borrower, 0985472 B.C. Ltd., and Klondex Canada Ltd. dated on or about the Closing Date from the Registrar of Companies for British Columbia

2.



Certificate of Good Standing (Nevada) dated on or about the Closing Date for each of:
(a) Klondex Holdings (USA) Inc.,
(b) Klondex Midas Holdings Limited,
(c) Klondex Midas Operations Inc., and
(d) Klondex Gold and Silver Mining Company

3.

Officer’s Certificate of the Borrower including (i) certified copies of the Articles and Notice of Articles of the Borrower, (ii) certified copy of the resolutions of the board of directors of the Borrower approving matters relating to the Facility Agreement (including without limitation, the granting of all security in connection therewith) and (iii) incumbency certificate of Borrower

4.

Officer’s Certificate for each of the Guarantors including (i) certified copies of the Certificate of Incorporation and By-laws (or equivalent) of the Guarantors, (ii) certified copy of the resolutions of the board of directors of the Guarantors, approving matters relating to the Facility Agreement (including without limitation, the granting of all security in connection therewith) and (iii) incumbency certificate of the Guarantors

5.

Facility Agreement

6.

Guarantee by Klondex Canada Ltd. in favour of Security Agent

7.

Guarantee by 0985472 B.C. Ltd. in favour of Security Agent

8.

Guarantee by Klondex Gold and Silver Mining Company in favour of Security Agent

9.

Guarantee by Klondex Holdings (USA) Inc. in favour of Security Agent

10.

Guarantee by Klondex Midas Holdings Limited in favour of Security Agent

11.

Guarantee by Klondex Midas Operations Inc. in favour of Security Agent

12.

ISDA Schedule

13.

Intercreditor Agreement

14.

Ontario Opinion of Bennett Jones LLP addressed to Security Agent

15.

B.C. Opinion of Bennett Jones LLP as to certain corporate matters addressed to Security Agent

16.

Opinion of Dorsey & Whitney LLP addressed to Security Agent in respect of the Guarantors

17.

Opinion of Erwin & Thompson LLP addressed to Security Agent in respect of the Guarantors

18.

Title Opinion of Erwin & Thompson LLP addressed to Security Agent in respect of Nevada properties

19.

Perfection Certificate

126


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

20.

General Security Agreement (BC law) issued by the Borrower in favour of Security Agent

21.

General Security Agreement (BC law) issued by Klondex Canada Ltd. in favour of Security Agent

22.

General Security Agreement (BC law) issued by 0985472 B.C. Ltd. in favour of Security Agent

23.

Debenture (MB law) issued by Klondex Canada Ltd. in favour of Security Agent

24.

Debenture (ON law) issued by Klondex Canada Ltd. in favour of Security Agent

25.

First Lien US Security Agreement (US law) issued by Klondex Gold & Silver Mining Company in favour of Security Agent

26.

First Lien US Security Agreement (US law) issued by Klondex Holdings (USA) Inc. in favour of Security Agent

27.

First Lien US Security Agreement (US law) issued by Klondex Midas Holdings Limited in favour of Security Agent

28.

First Lien US Security Agreement (US law) issued by Klondex Midas Operations Inc. in favour of Security Agent

29.

Securities Pledge Agreement (BC law) executed and delivered by Borrower in favour of Security Agent

30.

Securities Pledge Agreement (BC law) executed and delivered by 0985472 B.C. Ltd. in favour of Security Agent

31.

Securities Pledge Agreement (US law) executed and delivered by Klondex Holdings (USA) Inc. in favour of Security Agent

32.

Securities Pledge Agreement (US law) executed and delivered by the Klondex Midas Holdings Limited in favour of Security Agent

33.

Delivery of Undated Blank Stock Transfer Powers

34.

PPSA Financing Statement registered against Borrower and in the Province of British Columbia

35.

PPSA Financing Statement registered against 0985472 B.C. Ltd. in the Province of British Columbia

36.

PPSA Financing Statement registered against Klondex Canada Ltd. in the Province of British Columbia, Manitoba and Ontario

37.

UCC Financing Statement registered against the U.S. Guarantors in the State of Nevada

38.

UCC Financing Statement registered against the Guarantors in the District of Columbia

39.

Blocked Account Agreement with each Canadian Guarantor and the Bank of Montreal (Post-Closing Deliverable)

40.

Deposit Account Control Agreement with each U.S. Guarantor and the Bank of America (Post-Closing Deliverable)

41.

Deed of Trust, Assignment of Leases and Rents and Security Agreement issued by U.S. Guarantors

127


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

42.

Environmental Indemnity Agreement issued by U.S. Guarantors

43.

Property and General Liability Insurance Certificates with Lender as Loss Payee and Additional Insured

44.

Title Insurance for the Charged Property

45.

Subordination Agreement with 7097914 Manitoba Ltd.

46.

Any additional closing deliverables as listed in the Closing Agenda attached hereto

128


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE G

Capitalization

Subsidiary Class of
securities
Number of
securities
Cert # Rights/warrants/etc?
0985472 B.C. Ltd. Common 1,304,209 1, 2, 3 N/A
Klondex Canada Ltd. Common 1,000,100 C-1, 1 N/A
Klondex Holdings (USA) Inc. Common 117,833 003, 004 N/A
Klondex Gold &
Silver Mining Company
Common 500,000 2 N/A
Klondex Midas Holdings Limited Common 1,095 4 N/A
Klondex Midas Operations Inc. Common 25,000 4 N/A

129


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE H

Title to Properties; Liens

DESCRIPTION OF MIDAS PROPERTY

Title to Properties

  1.

Fee Properties

The real property and property rights, situated in Elko County, Nevada, which is more particularly described as:

Township 38 North, Range 46 East, MDM, APN 004-250-0003
          approx. 40.9 acres owned by Newmont USA Limited
Section 2: NW4NW4

Township 39 North, Range 46 East, MDM, APN 004-260-03 
          Surface and mineral estate (approximately 840 acres)
Section 9: E2NE4
Section 10: W2NW4, SW4
Section 22: E2N W4, SE4
Section 27: NE4, NE4NW4
Section 28: W2NW4 
          Surface estate only (approximately 1.019 acres, commonly referred to as the Buckingham Lands)
Section 9: W2NE4, E2NW4
Section 15: E2W2, W2E2
Section 22: NE4
Section 28: W2SE4, E2SW4
Section 33: NE4
Section 34: SW4NW4, Lot 1

Midas Town Site Lots

Lot No. Block No. Assessor's Parcel No.
6-7 I (Gold Circle)
03-523-03-2
8 03-523-02-4
11-12 Q (Gold Circle) 03-526-01-9
1 S (Gold Circle)
03-521-05-1
2 03-521-04-4
1 W (Gold Circle)
03-513-03-3
3-16 03-513-01-7

130


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  2.

Patented Mining Claims


Patent Name M.S. No. Patent No. Assessor Parcel No.
Elko Prince Annex Fraction 4034 314565 0PM- 314-056
Elko Prince No. 1
Elko Prince No. 2
Elko Prince No. 4 Fraction
Todd Fraction
Hanks Fraction
Little Willie Fraction
Merle
June Bell
June Belle Fraction
 Water Witch No. 1 (E. Portion) 4192 567990
004-26C-004
 Water Witch No. 2 (E. Portion) 004-26C-008
Water Witch No. 3 0PM-567-099
Water Witch No. 4
Water Witch Fraction
Water Witch No. 1 (Parcel 1) 004-26C-001
Water Witch No. 1 (Parcel 2) 004-26C-002
Water Witch No. 1 (Parcel 3) 004-26C-003
Water Witch No. 2 (Parcel 4) 004-26C-005
Water Witch No. 2 (Parcel 5) 004-26C-006
Water Witch No. 2 (Parcel 6) 004-26C-007
Ripsaw No. 2 3991 298366 0PM-298-036
Gold Crown 3738 256016 0PM-256-001
Oversight Fraction (Portion)
Banner 0PM-560-016
Gift No. 1
Oversight Fraction (Portion) 0PM-060-016
Gift No. 2
Rabbit's Foot 0PM-256-006
Banner Fraction
Wedge 0PM-668-021
Old Judge No. 1 4327 668211
Sleeping Beauty 4666 1054830 0PM-373-058

Poor Man
Orphan Boy
Pan Handle
Pan Handle No. 2
Red Top
Orphan Boy No. 2
Little Dot
Sunset Fraction  4667 1037358
Hardscrabble No. 1 4356 827131 0PM-827-013
Hardscrabble No. 2
Hardscrabble Fraction

131


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  3.

Unpatented Mining Claims


Claim Name Book & Page or
Document No.
BLM Serial No.
ACME 41 89 27590
ACME NO. 1 41 279 27591
ACME NO. 2 42 165 27592
ACME NO. 3 42 166 27593
DOT LODE 43 483 27594
DOT LODE #2 135 551 27596
DOT LODE NO. 4 100 523 27597
MARTY 366 156 218384
DOT LODE #1 472 575 321676
MIDAS 110 838 347 687827
MIDAS NO. 13 838 332 687851
MIDAS 14 838 333 687852
MIDAS 15 838 334 687853
MIDAS 16 838 335 687854
MIDAS 30 838 306 687857
MIDAS 33 838 462 687860
MIDAS NO. 34 838 463 687861
MIDAS 35 838 309 687862
MIDAS 36 838 310 687863
MIDAS 37 838 311 687864
MIDAS 38 838 312 687865
MIDAS 39 838 313 687866
MIDAS 40 838 314 687867
MIDAS 41 838 315 687868
MIDAS 81 838 345 687871
MIDAS 94 838 318 687872
MIDAS 96 838 464 687874
MIDAS 114 838 351 687876
MIDAS 115 838 352 687877
MIDAS 118 838 355 687878
MIDAS 119 838 356 687879
MIDAS 121 838 358 687880
MIDAS 122 838 359 687881
MIDAS 123 838 360 687882
MIDAS 124 838 361 687883
MIDAS 125 838 362 687884
MIDAS 126 838 363 687885
MIDAS 127 838 364 687886
MIDAS 128 838 365 687887
MIDAS 129 838 366 687888
MIDAS 130 838 367 687889
MIDAS NO.131 838 466 687890
MIDAS NO.132 838 467 687891

132


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS NO.133 838 468 687892
MIDAS NO.134 838 469 687893
MIDAS 135 838 470 687894
MIDAS 136 838 471 687895
MIDAS NO.137 838 472 687896
MIDAS 138 838 473 687897
MIDAS 139 838 474 687898
MIDAS 140 838 475 687899
MIDAS 141 838 476 687900
MIDAS 142 838 477 687901
MIDAS 143 838 478 687902
MIDAS 144 838 479 687903
MIDAS 146 838 481 687905
MIDAS 147 838 482 687906
MIDAS 148 838 483 687907
MIDAS 149 838 484 687908
MIDAS 150 838 485 687909
MIDAS 151 838 486 687910
MIDAS 152 838 487 687911
MIDAS 153 838 488 687912
MIDAS 154 838 814 687913
MIDAS 1R 840 886 692622
MIDAS 2R 840 887 692623
MIDAS 3R 840 888 692624
MIDAS 4R 840 889 692625
MIDAS 5R 840 890 692626
MIDAS 6R 840 891 692627
MIDAS 7R 840 892 692628
MIDAS 8R 840 893 692629
MIDAS 9R 840 894 692630
MIDAS 10R 840 895 692631
MIDAS NO.11R 840 896 692632
MIDAS 12R 840 897 692633
MIDAS 17R 840 898 692634
MIDAS 18R 840 899 692635
MIDAS 19R 840 900 692636
MIDAS 20R 840 901 692637
MIDAS 21R 840 902 692638
MIDAS 22R 840 903 692639
MIDAS 23R 840 904 692640
MIDAS 25R 840 905 692641
MIDAS 27R 840 907 692643
MIDAS 28R 840 908 692644

133


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS 109R 840 909 692645
MIDAS 111R 840 910 692646
MIDAS NO.112R 840 911 692647
MIDAS NO.113R 840 912 692648
MIDAS 116R 840 913 692649
MIDAS 117R 840 914 692650
MIDAS 155 853 939 699982
MIDAS 156 853 940 699983
MIDAS 157 853 941 699984
MIDAS 158 853 942 699985
MIDAS # 165 878 163 709778
MIDAS # 166 878 164 709779
MIDAS # 167 878 165 709780
MIDAS # 168 878 166 709781
MIDAS # 169 878 167 709782
MIDAS # 170 878 168 709783
MIDAS # 171 878 169 709784
MIDAS # 172 878 170 709785
MIDAS # 173 878 171 709786
MIDAS # 174 878 172 709787
AMSTERDAM # 1 879 937 710875
AMSTERDAM # 2 879 938 710876
AMSTERDAM # 3 879 939 710877
AMSTERDAM # 4 879 940 710878
AMSTERDAM # 5 879 941 710879
AMSTERDAM # 6 879 942 710880
AMSTERDAM # 7 879 943 710881
AMSTERDAM # 8 879 944 710882
AMSTERDAM # 9 879 945 710883
AMSTERDAM # 10 879 946 710884
AMSTERDAM # 11 879 947 710885
AMSTERDAM # 12 879 948 710886
AMSTERDAM # 13 879 949 710887
AMSTERDAM # 14 879 950 710888
AMSTERDAM # 15 879 951 710889
AMSTERDAM # 16 879 952 710890
AMSTERDAM # 17 879 953 710891
AMSTERDAM # 18 879 954 710892
AMSTERDAM # 19 879 955 710893
AMSTERDAM # 20 879 956 710894
AMSTERDAM # 21 879 957 710895
AMSTERDAM # 22 879 958 710896
AMSTERDAM # 23 879 959 710897

134


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
AMSTERDAM # 24 879 960 710898
AMSTERDAM # 25 879 961 710899
AMSTERDAM # 26 879 962 710900
AMSTERDAM # 27 879 963 710901
AMSTERDAM # 28 879 964 710902
AMSTERDAM # 29 879 965 710903
AMSTERDAM # 30 879 966 710904
AMSTERDAM # 31 879 967 710905
AMSTERDAM # 32 879 968 710906
AMSTERDAM # 33 879 969 710907
AMSTERDAM # 34 879 970 710908
AMSTERDAM # 35 879 971 710909
AMSTERDAM # 36 879 972 710910
AMSTERDAM # 37 879 973 710911
AMSTERDAM # 38 879 974 710912
AMSTERDAM # 39 879 975 710913
AMSTERDAM # 40 879 976 710914
AMSTERDAM # 41 879 977 710915
AMSTERDAM # 42 879 978 710916
AMSTERDAM # 43 879 979 710917
AMSTERDAM # 44 879 980 710918
AMSTERDAM # 45 879 981 710919
AMSTERDAM # 46 879 982 710920
AMSTERDAM # 47 879 983 710921
AMSTERDAM # 48 879 984 710922
AMSTERDAM # 49 879 985 710923
AMSTERDAM # 50 879 986 710924
AMSTERDAM # 51 879 987 710925
AMSTERDAM # 52 879 988 710926
AMSTERDAM # 53 879 989 710927
AMSTERDAM # 54 879 990 710928
AMSTERDAM # 55 879 991 710929
AMSTERDAM # 56 879 992 710930
AMSTERDAM # 57 879 993 710931
AMSTERDAM # 58 879 994 710932
AMSTERDAM # 59 879 995 710933
AMSTERDAM # 60 879 996 710934
AMSTERDAM # 61 880 1 710935
AMSTERDAM # 62 880 2 710936
AMSTERDAM # 63 880 3 710937
AMSTERDAM # 64 880 4 710938
AMSTERDAM # 65 880 5 710939
AMSTERDAM # 66 880 6 710940

135


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
AMSTERDAM # 67 880 7 710941
AMSTERDAM # 68 880 8 710942
AMSTERDAM # 69 880 9 710943
AMSTERDAM # 70 880 10 710944
AMSTERDAM # 71 880 11 710945
AMSTERDAM # 72 880 12 710946
AMSTERDAM # 73 880 13 710947
AMSTERDAM # 74 880 14 710948
AMSTERDAM # 75 880 15 710949
AMSTERDAM # 76 880 16 710950
AMSTERDAM # 77 880 17 710951
AMSTERDAM # 78 880 18 710952
AMSTERDAM # 79 880 19 710953
AMSTERDAM # 80 880 20 710954
AMSTERDAM # 81 880 21 710955
AMSTERDAM # 82 880 22 710956
AMSTERDAM # 83 880 23 710957
AMSTERDAM # 84 880 24 710958
AMSTERDAM # 85 880 25 710959
AMSTERDAM # 86 880 26 710960
AMSTERDAM # 87 880 27 710961
AMSTERDAM # 88 880 28 710962
AMSTERDAM # 89 880 29 710963
AMSTERDAM # 90 880 30 710964
AMSTERDAM # 91 880 31 710965
AMSTERDAM # 92 880 32 710966
AMSTERDAM # 93 880 33 710967
AMSTERDAM # 94 880 34 710968
AMSTERDAM # 95 880 35 710969
AMSTERDAM # 96 880 36 710970
MIDAS # 181 881 86 712502
MIDAS # 182 881 87 712503
MIDAS # 183 881 88 712504
MIDAS # 184 881 89 712505
MIDAS # 185 881 90 712506
MIDAS # 186 881 91 712507
MIDAS # 187 881 92 712508
MIDAS # 188 881 93 712509
MIDAS # 191 881 96 712512
MIDAS # 192 881 97 712513
MIDAS # 193 881 98 712514
MIDAS # 194 881 99 712515
MIDAS # 195 881 100 712516

136


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS # 196 881 101 712517
MIDAS # 197 881 102 712518
MIDAS # 198 881 103 712519
MIDAS # 199 881 104 712520
MIDAS # 200 881 105 712521
MIDAS # 201 881 106 712522
MIDAS # 202 881 107 712523
MIDAS # 203 881 108 712524
MIDAS # 204 881 109 712525
MIDAS # 205 881 110 712526
MIDAS # 206 881 111 712527
MIDAS # 207 881 112 712528
MIDAS # 208 881 113 712529
MIDAS # 209 881 114 712530
MIDAS # 210 881 115 712531
MIDAS # 211 881 116 712532
MIDAS # 212 881 117 712533
MIDAS # 213 881 118 712534
MIDAS # 214 881 119 712535
MIDAS # 215 881 120 712536
MIDAS # 216 881 121 712537
MIDAS # 217 881 122 712538
MIDAS # 218 881 123 712539
MIDAS # 219 881 124 712540
MIDAS # 220 881 125 712541
MIDAS # 221 881 126 712542
MIDAS # 222 881 127 712543
MIDAS # 269 881 128 712544
MIDAS # 270 881 129 712545
MIDAS # 271 881 130 712546
MIDAS # 272 881 131 712547
MIDAS # 273 881 132 712548
MIDAS # 274 881 133 712549
MIDAS # 275 881 134 712550
MIDAS # 276 881 135 712551
MIDAS # 277 881 136 712552
MIDAS # 278 881 137 712553
MIDAS # 280 881 139 712555
MIDAS # 282 881 141 712557
MIDAS # 284 881 143 712559
MIDAS # 285 881 144 712560
MIDAS # 287 881 146 712562
MIDAS 243 882 82 712882

137


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.


Claim Name
Book & Page or
Document No.
  BLM Serial No.
MIDAS 244 882 83 712883
MIDAS # 245 882 84 712884
MIDAS #246 882 85 712885
MIDAS 247 882 86 712886
MIDAS 248 882 87 712887
MIDAS 249 882 88 712888
MIDAS 250 882 89 712889
MIDAS 251 882 90 712890
MIDAS 252 882 91 712891
MIDAS 253 882 92 712892
MIDAS 254 882 93 712893
MIDAS 255 882 94 712894
MIDAS 256 882 95 712895
MIDAS 288 882 96 712896
MIDAS 289 882 97 712897
MIDAS 290 882 98 712898
AMSTERDAM FRACTION #1 883 541 713546
AMSTERDAM FRACTION #2 883 542 713547
MIDAS 257 883 553 713554
MIDAS 258 883 554 713555
MIDAS 259 883 555 713556
MIDAS 260 883 556 713557
MIDAS 261 883 557 713558
MIDAS #262 883 558 713559
MIDAS 263 883 559 713560
MIDAS 264 883 560 713561
MIDAS 325 883 564 713569
MIDAS 326 883 565 713570
MIDAS NO. 223 885 190 714056
MIDAS NO. 224 885 191 714057
MIDAS NO. 225 885 192 714058
MIDAS NO. 226 885 193 714059
MIDAS NO. 227 885 194 714060
MIDAS 228 885 195 714061
MIDAS 229 885 196 714062
MIDAS 230 885 197 714063
AMSTERDAM # 99 897 643 717737
AMSTERDAM # 100 897 644 717738
AMSTERDAM # 101 897 645 717739
AMSTERDAM # 102 897 646 717740
AMSTERDAM # 103 897 647 717741
AMSTERDAM # 104 897 648 717742
AMSTERDAM # 105 897 649 717743

138


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
AMSTERDAM # 106 897 650 717744
AMSTERDAM # 107 897 651 717745
AMSTERDAM # 108 897 652 717746
AMSTERDAM # 112 897 656 717750
AMSTERDAM # 113 897 657 717751
AMSTERDAM # 114 897 658 717752
AMSTERDAM # 115 897 659 717753
AMSTERDAM # 117 897 661 717755
AMSTERDAM # 119 897 663 717757
AMSTERDAM # 123 897 667 717761
AMSTERDAM # 124 897 668 717762
AMSTERDAM # 125 897 669 717763
AMSTERDAM # 126 897 670 717764
AMSTERDAM # 127 897 671 717765
AMSTERDAM 128 897 672 717766
AMSTERDAM # 129 897 673 717767
AMSTERDAM # 130 897 674 717768
AMSTERDAM # 131 897 675 717769
AMSTERDAM # 132 897 676 717770
AMSTERDAM # 133 897 677 717771
AMSTERDAM # 134 897 678 717772
AMSTERDAM # 135 897 679 717773
AMSTERDAM # 136 897 680 717774
AMSTERDAM # 139 897 683 717777
AMSTERDAM # 140 897 684 717778
AMSTERDAM # 141 897 685 717779
AMSTERDAM # 142 897 686 717780
AMSTERDAM # 143 897 687 717781
AMSTERDAM # 144 897 688 717782
AMSTERDAM # 146 897 690 717784
AMSTERDAM # 147 897 691 717785
AMSTERDAM # 148 897 692 717786
AMSTERDAM # 149 897 693 717787
AMSTERDAM # 150 897 694 717788
AMSTERDAM # 151 897 695 717789
AMSTERDAM # 152 897 696 717790
AMSTERDAM # 153 897 697 717791
AMSTERDAM # 154 897 698 717792
AMSTERDAM # 155 897 699 717793
AMSTERDAM # 156 897 700 717794
AMSTERDAM # 157 897 701 717795
AMSTERDAM # 158 897 702 717796
AMSTERDAM # 159 897 703 717797

139


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
AMSTERDAM # 160 897 704 717798
AMSTERDAM # 161 897 705 717799
AMSTERDAM # 162 897 706 717800
AMSTERDAM # 163 897 707 717801
AMSTERDAM # 164 897 708 717802
AMSTERDAM # 165 897 709 717803
AMSTERDAM # 168 897 712 717806
AMSTERDAM # 169 897 713 717807
AMSTERDAM # 170 897 714 717808
AMSTERDAM # 171 897 715 717809
AMSTERDAM # 172 897 716 717810
AMSTERDAM # 176 902 267 718844
AMSTERDAM # 177 902 268 718845
AMSTERDAM # 178 902 269 718846
AMSTERDAM # 179 902 270 718847
AMSTERDAM # 180 902 271 718848
AMSTERDAM # 181 902 272 718849
AMSTERDAM # 182 902 273 718850
AMSTERDAM # 183 902 274 718851
AMSTERDAM # 184 902 275 718852
AMSTERDAM # 185 902 276 718853
MIDAS #231 902 253 718854
MIDAS #232 902 254 718855
MIDAS #233 902 255 718856
MIDAS #234 902 256 718857
MIDAS #235 902 257 718858
MIDAS #236 902 258 718859
MIDAS #237 902 259 718860
MIDAS #238 902 260 718861
MIDAS #239 902 261 718862
MIDAS #240 902 262 718863
MIDAS #241 902 263 718864
MIDAS #242 902 264 718865
MIDAS #349 902 265 718866
MIDAS #350 902 266 718867
AMSTERDAM # 188 909 855 721420
AMSTERDAM # 189 909 856 721421
AMSTERDAM # 190 909 857 721422
AMSTERDAM # 191 909 858 721423
AMSTERDAM # 192 909 859 721424
AMSTERDAM # 193 909 860 721425
AMSTERDAM # 194 909 861 721426
AMSTERDAM 195 909 862 721427

140


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
AMSTERDAM # 197 909 864 721429
AMSTERDAM # 198 909 865 721430
AMSTERDAM # 199 909 866 721431
AMSTERDAM # 200 909 867 721432
AMSTERDAM # 201 909 868 721433
AMSTERDAM # 202 909 869 721434
AMSTERDAM # 203 909 870 721435
AMSTERDAM # 204 909 871 721436
AMSTERDAM # 205 909 872 721437
AMSTERDAM # 206 909 873 721438
AMSTERDAM # 207 909 874 721439
AMSTERDAM # 208 909 875 721440
AMSTERDAM # 209 909 876 721441
AMSTERDAM # 210 909 877 721442
AMSTERDAM # 211 909 878 721443
AMSTERDAM # 212 909 879 721444
AMSTERDAM # 213 909 880 721445
AMSTERDAM # 214 909 881 721446
AMSTERDAM # 215 909 882 721447
AMSTERDAM # 216 909 883 721448
AMSTERDAM # 217 909 884 721449
AMSTERDAM # 218 909 885 721450
AMSTERDAM # 219 909 886 721451
AMSTERDAM # 220 909 887 721452
AMSTERDAM # 221 909 888 721453
AMSTERDAM # 222 909 889 721454
AMSTERDAM # 223 909 890 721455
AMSTERDAM # 224 909 891 721456
AMSTERDAM # 225 909 892 721457
AMSTERDAM # 226 909 893 721458
AMSTERDAM # 227 909 894 721459
AMSTERDAM # 228 909 895 721460
AMSTERDAM # 229 909 896 721461
AMSTERDAM # 230 909 897 721462
AMSTERDAM # 231 909 898 721463
AMSTERDAM # 232 909 899 721464
AMSTERDAM # 233 909 900 721465
AMSTERDAM # 234 909 901 721466
AMSTERDAM # 235 909 902 721467
AMSTERDAM # 236 909 903 721468
AMSTERDAM # 237 909 904 721469
AMSTERDAM # 238 909 905 721470
AMSTERDAM # 239 909 906 721471

141


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
AMSTERDAM # 240 909 907 721472
AMSTERDAM # 241 909 908 721473
AMSTERDAM # 242 909 909 721474
AMSTERDAM # 243 909 910 721475
AMSTERDAM # 244 909 911 721476
AMSTERDAM # 245 909 912 721477
AMSTERDAM # 246 909 913 721478
AMSTERDAM # 247 909 914 721479
AMSTERDAM # 248 909 915 721480
AMSTERDAM # 249 909 916 721481
AMSTERDAM # 250 909 917 721482
AMSTERDAM # 251 909 918 721483
AMSTERDAM # 252 909 919 721484
AMSTERDAM # 253 909 920 721485
AMSTERDAM # 254 909 921 721486
AMSTERDAM # 255 909 922 721487
AMSTERDAM # 256 909 923 721488
AMSTERDAM # 257 909 924 721489
AMSTERDAM # 258 909 925 721490
AMSTERDAM # 259 909 926 721491
AMSTERDAM # 260 909 927 721492
AMSTERDAM # 261 909 928 721493
AMSTERDAM # 262 909 929 721494
AMSTERDAM # 263 909 930 721495
AMSTERDAM # 264 909 931 721496
AMSTERDAM # 265 909 932 721497
AMSTERDAM # 266 909 933 721498
AMSTERDAM # 267 909 934 721499
AMSTERDAM # 268 909 935 721500
AMSTERDAM # 269 909 936 721501
AMSTERDAM # 270 909 937 721502
AMSTERDAM # 271 909 938 721503
AMSTERDAM # 272 909 939 721504
AMSTERDAM # 273 909 940 721505
AMSTERDAM # 274 909 941 721506
AMSTERDAM # 275 909 942 721507
AMSTERDAM # 276 909 943 721508
AMSTERDAM # 277 909 944 721509
AMSTERDAM # 278 909 945 721510
AMSTERDAM # 279 909 946 721511
AMSTERDAM # 280 909 947 721512
AMSTERDAM # 281 909 948 721513
AMSTERDAM # 282 909 949 721514

142


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
AMSTERDAM # 283 909 950 721515
AMSTERDAM # 284 910 1 721516
AMSTERDAM # 285 910 2 721517
AMSTERDAM # 286 910 3 721518
AMSTERDAM # 287 910 4 721519
AMSTERDAM # 288 910 5 721520
AMSTERDAM # 289 910 6 721521
AMSTERDAM # 290 910 7 721522
AMSTERDAM # 291 910 8 721523
AMSTERDAM # 292 910 9 721524
AMSTERDAM # 293 910 10 721525
AMSTERDAM # 294 910 11 721526
AMSTERDAM # 295 910 12 721527
AMSTERDAM # 296 910 13 721528
AMSTERDAM # 297 910 14 721529
AMSTERDAM # 298 910 15 721530
AMSTERDAM # 299 910 16 721531
AMSTERDAM # 300 910 17 721532
AMSTERDAM # 303 910 20 721535
AMSTERDAM # 304 910 21 721536
AMSTERDAM # 305 910 22 721537
AMSTERDAM # 306 910 23 721538
AMSTERDAM # 307 910 24 721539
AMSTERDAM # 308 910 25 721540
AMSTERDAM # 309 910 26 721541
AMSTERDAM # 310 910 27 721542
AMSTERDAM # 311 910 28 721543
AMSTERDAM # 312 910 29 721544
AMSTERDAM # 313 910 30 721545
AMSTERDAM # 314 910 31 721546
AMSTERDAM # 315 910 32 721547
AMSTERDAM # 316 910 33 721548
AMSTERDAM # 317 910 34 721549
AMSTERDAM # 318 910 35 721550
AMSTERDAM # 319 910 36 721551
AMSTERDAM # 320 910 37 721552
AMSTERDAM # 321 910 38 721553
AMSTERDAM # 322 910 39 721554
AMSTERDAM # 323 910 40 721555
AMSTERDAM # 324 910 41 721556
AMSTERDAM # 325 910 42 721557
AMSTERDAM # 326 910 43 721558
AMSTERDAM # 327 910 44 721559

143


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
AMSTERDAM # 328 910 45 721560
AMSTERDAM # 329 910 46 721561
AMSTERDAM # 330 910 47 721562
AMSTERDAM # 331 910 48 721563
AMSTERDAM # 332 910 49 721564
AMSTERDAM # 333 910 50 721565
AMSTERDAM # 334 910 51 721566
AMSTERDAM # 335 910 52 721567
AMSTERDAM # 336 910 53 721568
AMSTERDAM # 337 910 54 721569
AMSTERDAM # 338 910 55 721570
AMSTERDAM # 339 910 56 721571
AMSTERDAM # 340 910 57 721572
AMSTERDAM # 341 910 58 721573
AMSTERDAM # 342 910 59 721574
AMSTERDAM # 343 910 60 721575
AMSTERDAM # 344 910 61 721576
AMSTERDAM # 345 910 62 721577
AMSTERDAM # 346 910 63 721578
AMSTERDAM # 347 910 64 721579
AMSTERDAM # 348 910 65 721580
AMSTERDAM # 349 910 66 721581
AMSTERDAM # 350 910 67 721582
AMSTERDAM # 351 910 68 721583
AMSTERDAM # 352 910 69 721584
AMSTERDAM # 353 910 70 721585
AMSTERDAM # 354 910 71 721586
AMSTERDAM # 355 910 72 721587
AMSTERDAM # 356 910 73 721588
AMSTERDAM # 357 910 74 721589
AMSTERDAM # 358 910 75 721590
AMSTERDAM # 359 910 76 721591
AMSTERDAM # 360 910 77 721592
AMSTERDAM # 361 910 78 721593
AMSTERDAM # 362 910 79 721594
AMSTERDAM # 363 910 80 721595
AMSTERDAM # 364 910 81 721596
AMSTERDAM # 365 910 82 721597
AMSTERDAM # 366 910 83 721598
AMSTERDAM # 367 910 84 721599
AMSTERDAM # 368 910 85 721600
AMSTERDAM # 369 910 86 721601
AMSTERDAM # 370 910 87 721602

144


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
AMSTERDAM # 371 910 88 721603
AMSTERDAM # 372 910 89 721604
AMSTERDAM # 373 910 90 721605
AMSTERDAM # 374 910 91 721606
AMSTERDAM # 375 910 92 721607
AMSTERDAM # 376 910 93 721608
AMSTERDAM # 377 910 94 721609
AMSTERDAM # 378 910 95 721610
AMSTERDAM # 379 910 96 721611
AMSTERDAM # 380 910 97 721612
MIDAS #353 910 101 721616
MIDAS #354 910 102 721617
MIDAS #355 910 103 721618
MIDAS #356 910 104 721619
MIDAS #357 910 105 721620
MIDAS #358 910 106 721621
MIDAS # 359 910 107 721622
MIDAS # 360 910 108 721623
MIDAS # 361 910 109 721624
MIDAS # 362 910 110 721625
MIDAS # 363 910 111 721626
MIDAS # 364 910 112 721627
MIDAS # 365 910 113 721628
MIDAS # 366 910 114 721629
MIDAS # 367 910 115 721630
MIDAS # 368 910 116 721631
MIDAS # 369 910 117 721632
MIDAS # 370 910 118 721633
MIDAS # 371 910 119 721634
MIDAS # 372 910 120 721635
MIDAS # 373 910 121 721636
MIDAS # 374 910 122 721637
MIDAS # 375 910 123 721638
MIDAS # 376 910 124 721639
MIDAS # 377 910 125 721640
MIDAS # 378 910 126 721641
MIDAS # 379 910 127 721642
MIDAS # 380 910 128 721643
MIDAS # 381 910 129 721644
MIDAS # 382 910 130 721645
MIDAS # 383 910 131 721646
MIDAS # 384 910 132 721647
MIDAS # 385 910 133 721648

145


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS # 386 910 134 721649
MIDAS # 387 910 135 721650
MIDAS # 388 910 136 721651
MIDAS # 389 910 137 721652
MIDAS # 390 910 138 721653
MIDAS # 391 910 139 721654
MIDAS # 392 910 140 721655
MIDAS # 393 910 141 721656
MIDAS # 394 910 142 721657
MIDAS # 395 910 143 721658
MIDAS # 396 910 144 721659
MIDAS # 397 910 145 721660
MIDAS # 398 910 146 721661
MIDAS # 399 910 147 721662
MIDAS # 400 910 148 721663
MIDAS # 401 910 149 721664
MIDAS # 402 910 150 721665
MIDAS # 403 910 151 721666
MIDAS # 404 910 152 721667
MIDAS # 405 910 153 721668
MIDAS # 406 910 154 721669
MIDAS # 407 910 155 721670
MIDAS # 408 910 156 721671
MIDAS # 409 910 157 721672
MIDAS # 410 910 158 721673
MIDAS # 411 910 159 721674
MIDAS # 412 910 160 721675
MIDAS # 413 910 161 721676
MIDAS # 414 910 162 721677
MIDAS # 415 910 163 721678
MIDAS # 416 910 164 721679
MIDAS # 417 910 165 721680
MIDAS # 418 910 166 721681
MIDAS # 419 910 167 721682
MIDAS # 420 910 168 721683
MIDAS # 423 910 171 721686
MIDAS # 424 910 172 721687
MIDAS # 425 910 173 721688
MIDAS # 426 910 174 721689
MIDAS # 427 910 175 721690
MIDAS # 428 910 176 721691
MIDAS # 429 910 177 721692
MIDAS # 430 910 178 721693

146


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS # 431 910 179 721694
MIDAS # 432 910 180 721695
MIDAS # 433 910 181 721696
MIDAS # 434 910 182 721697
MIDAS # 435 910 183 721698
MIDAS # 436 910 184 721699
MIDAS # 437 910 185 721700
MIDAS # 438 910 186 721701
MIDAS # 439 910 187 721702
MIDAS # 440 910 188 721703
MIDAS # 441 910 189 721704
MIDAS # 442 910 190 721705
MIDAS # 443 910 191 721706
MIDAS # 444 910 192 721707
MIDAS # 445 910 193 721708
MIDAS # 446 910 194 721709
MIDAS # 447 910 195 721710
MIDAS # 448 910 196 721711
MIDAS # 449 910 197 721712
MIDAS # 450 910 198 721713
MIDAS # 451 910 199 721714
MIDAS # 452 910 200 721715
MIDAS # 453 910 201 721716
MIDAS # 454 910 202 721717
MIDAS # 455 910 203 721718
MIDAS 456 910 204 721719
MIDAS 457 910 205 721720
MIDAS 458 910 206 721721
MIDAS 459 910 207 721722
MIDAS # 460 910 208 721723
MIDAS # 461 910 209 721724
MIDAS # 462 910 210 721725
MIDAS # 463 910 211 721726
MIDAS # 464 910 212 721727
MIDAS # 465 910 213 721728
MIDAS # 466 910 214 721729
MIDAS 467 910 215 721730
MIDAS # 468 910 216 721731
MIDAS # 469 910 217 721732
MIDAS # 470 910 218 721733
MIDAS # 471 910 219 721734
MIDAS # 472 910 220 721735
MIDAS # 473 910 221 721736

147


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS # 474 910 222 721737
MIDAS # 475 910 223 721738
MIDAS # 476 910 224 721739
MIDAS # 477 910 225 721740
MIDAS # 478 910 226 721741
MIDAS # 479 910 227 721742
MIDAS # 480 910 228 721743
MIDAS # 481 910 229 721744
MIDAS # 482 910 230 721745
MIDAS # 483 910 231 721746
MIDAS # 484 910 232 721747
MIDAS # 506 910 254 721769
MIDAS # 507 910 255 721770
MIDAS # 508 910 256 721771
MIDAS # 509 910 257 721772
MIDAS # 543 910 291 721806
MIDAS # 544 910 292 721807
MIDAS # 545 910 293 721808
MIDAS # 546 910 294 721809
MIDAS # 547 910 295 721810
MIDAS # 548 910 296 721811
MIDAS # 549 910 297 721812
MIDAS # 550 910 298 721813
MIDAS # 583 910 331 721846
MIDAS # 584 910 332 721847
MIDAS # 585 910 333 721848
MIDAS # 586 910 334 721849
MIDAS # 588 910 336 721851
MIDAS # 623 910 371 721886
MIDAS # 624 910 372 721887
MIDAS # 625 910 373 721888
MIDAS # 626 910 374 721889
MIDAS # 627 910 375 721890
MIDAS # 628 910 376 721891
MIDAS # 629 910 377 721892
MIDAS # 630 910 378 721893
MIDAS # 631 910 379 721894
MIDAS # 632 910 380 721895
MIDAS # 633 910 381 721896
MIDAS # 634 910 382 721897
MIDAS # 635 910 383 721898
MIDAS # 636 910 384 721899
MIDAS # 637 910 385 721900

148


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS # 639 910 387 721902
MIDAS # 641 910 389 721904
MIDAS # 643 910 391 721906
MIDAS # 645 910 393 721908
MIDAS # 647 910 395 721910
MIDAS # 649 910 397 721912
MIDAS # 651 910 399 721914
MIDAS # 661 910 409 721924
MIDAS # 663 910 411 721926
MIDAS # 665 910 413 721928
MIDAS # 667 910 415 721930
MIDAS # 669 910 417 721932
MIDAS # 670 910 418 721933
MIDAS # 671 910 419 721934
MIDAS # 672 910 420 721935
MIDAS # 673 910 421 721936
MIDAS # 674 910 422 721937
MIDAS # 675 910 423 721938
MIDAS # 676 910 424 721939
MIDAS # 677 910 425 721940
MIDAS # 678 910 426 721941
MIDAS # 679 910 427 721942
MIDAS # 680 910 428 721943
MIDAS # 681 910 429 721944
MIDAS # 682 910 430 721945
MIDAS # 683 910 431 721946
MIDAS # 684 910 432 721947
MIDAS # 685 910 433 721948
MIDAS # 686 910 434 721949
MIDAS # 687 910 435 721950
MIDAS # 688 910 436 721951
MIDAS # 689 910 437 721952
MIDAS # 690 910 438 721953
MIDAS # 691 910 439 721954
MIDAS # 692 910 440 721955
MIDAS # 693 910 441 721956
MIDAS # 694 910 442 721957
MIDAS # 695 910 443 721958
MIDAS # 696 910 444 721959
MIDAS # 697 910 445 721960
MIDAS # 698 910 446 721961
MIDAS # 699 910 447 721962
MIDAS # 700 910 448 721963

149


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS # 701 910 449 721964
MIDAS # 702 910 450 721965
MIDAS # 703 910 451 721966
MIDAS # 704 910 452 721967
MIDAS # 705 910 453 721968
MIDAS # 706 910 454 721969
MIDAS # 707 910 455 721970
MIDAS # 708 910 456 721971
MIDAS # 709 910 457 721972
MIDAS # 710 910 458 721973
MIDAS # 711 910 459 721974
MIDAS # 712 910 460 721975
MIDAS # 713 910 461 721976
MIDAS # 714 910 462 721977
MIDAS # 715 910 463 721978
MIDAS # 716 910 464 721979
MIDAS # 717 910 465 721980
MIDAS # 718 910 466 721981
MIDAS # 719 910 467 721982
MIDAS # 720 910 468 721983
MIDAS # 721 910 469 721984
MIDAS # 722 910 470 721985
MIDAS # 723 910 471 721986
MIDAS # 724 910 472 721987
MIDAS # 725 910 473 721988
MIDAS # 726 910 474 721989
MIDAS # 727 910 475 721990
MIDAS # 728 910 476 721991
MIDAS # 729 910 477 721992
MIDAS # 730 910 478 721993
MIDAS # 731 910 479 721994
MIDAS # 732 910 480 721995
MIDAS # 733 910 481 721996
MIDAS # 734 910 482 721997
MIDAS # 735 910 483 721998
MIDAS # 736 910 484 721999
MIDAS # 737 910 485 722000
MIDAS # 738 910 486 722001
MIDAS # 739 910 487 722002
MIDAS # 740 910 488 722003
MIDAS # 741 910 489 722004
MIDAS # 742 910 490 722005
MIDAS # 743 910 491 722006

150


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS # 744 910 492 722007
MIDAS # 745 910 493 722008
MIDAS # 746 910 494 722009
MIDAS # 747 910 495 722010
MIDAS # 748 910 496 722011
MIDAS # 749 910 497 722012
MIDAS # 750 910 498 722013
MIDAS # 751 910 499 722014
MIDAS # 752 910 500 722015
MIDAS # 753 910 501 722016
MIDAS # 754 910 502 722017
MIDAS # 755 910 503 722018
MIDAS # 756 910 504 722019
MIDAS # 757 910 505 722020
MIDAS # 758 910 506 722021
MIDAS # 759 910 507 722022
MIDAS # 760 910 508 722023
MIDAS # 761 910 509 722024
MIDAS # 762 910 510 722025
MIDAS # 763 910 511 722026
MIDAS # 764 910 512 722027
MIDAS # 765 910 513 722028
MIDAS # 766 910 514 722029
MIDAS # 767 910 515 722030
MIDAS # 768 910 516 722031
MIDAS # 769 910 517 722032
MIDAS # 770 910 518 722033
MIDAS # 771 910 519 722034
MIDAS # 772 910 520 722035
MIDAS # 773 910 521 722036
MIDAS # 774 910 522 722037
MIDAS # 775 910 523 722038
MIDAS # 776 910 524 722039
MIDAS # 777 910 525 722040
MIDAS # 778 910 526 722041
MIDAS # 779 910 527 722042
MIDAS # 780 910 528 722043
MIDAS # 781 910 529 722044
MIDAS # 782 910 530 722045
MIDAS # 783 910 531 722046
MIDAS # 784 910 532 722047
MIDAS # 785 910 533 722048
MIDAS # 786 910 534 722049

151


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS # 787 910 535 722050
MIDAS # 788 910 536 722051
MIDAS # 789 910 537 722052
MIDAS # 790 910 538 722053
MIDAS # 791 910 539 722054
MIDAS # 792 910 540 722055
MIDAS # 793 910 541 722056
MIDAS # 794 910 542 722057
MIDAS # 795 910 543 722058
MIDAS # 796 910 544 722059
MIDAS # 798 910 546 722061
MIDAS # 809 910 557 722072
MIDAS # 810 910 558 722073
MIDAS # 811 910 559 722074
MIDAS # 812 910 560 722075
MIDAS # 813 910 561 722076
MIDAS # 814 910 562 722077
MIDAS # 815 910 563 722078
MIDAS # 816 910 564 722079
MIDAS # 817 910 565 722080
MIDAS # 818 910 566 722081
MIDAS # 819 910 567 722082
MIDAS # 820 910 568 722083
MIDAS # 821 910 569 722084
MIDAS # 822 910 570 722085
MIDAS # 823 910 571 722086
MIDAS # 824 910 572 722087
MIDAS # 825 910 573 722088
MIDAS # 826 910 574 722089
MIDAS # 827 910 575 722090
MIDAS # 828 910 576 722091
MIDAS # 829 910 577 722092
MIDAS # 830 910 578 722093
MIDAS # 831 910 579 722094
MIDAS # 832 910 580 722095
MIDAS # 841 910 589 722104
MIDAS # 842 910 590 722105
MIDAS # 843 910 591 722106
MIDAS # 845 910 593 722108
MIDAS # 846 910 594 722109
MIDAS # 847 910 595 722110
MIDAS # 848 910 596 722111
MIDAS # 849 910 597 722112

152


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS # 851 910 599 722114
MIDAS # 856 910 604 722119
MIDAS # 857 910 605 722120
MIDAS # 858 910 606 722121
MIDAS # 859 910 607 722122
MIDAS # 860 910 608 722123
MIDAS # 861 910 609 722124
MIDAS # 862 910 610 722125
MIDAS # 863 910 611 722126
MIDAS # 864 910 612 722127
MIDAS # 865 910 613 722128
MIDAS # 866 910 614 722129
MIDAS # 869 910 617 722132
MIDAS 870 915 61 723687
MIDAS 871 915 62 723688
MIDAS 872 915 63 723689
MIDAS # 873 915 64 723690
MIDAS 876 915 67 723693
MIDAS 877 915 68 723694
MIDAS # 882 915 73 723699
MIDAS # 883 915 74 723700
MIDAS # 884 915 75 723701
MIDAS # 885 915 76 723702
MIDAS # 886 915 77 723703
AMSTERDAM # 383 918 355 726451
AMSTERDAM # 384 918 356 726452
AMSTERDAM # 385 918 357 726453
AMSTERDAM # 386 918 358 726454
AMSTERDAM # 387 918 359 726455
AMSTERDAM # 388 918 360 726456
AMSTERDAM # 389 918 361 726457
AMSTERDAM # 390 918 362 726458
AMSTERDAM # 391 918 363 726459
AMSTERDAM # 392 918 364 726460
AMSTERDAM # 393 918 365 726461
AMSTERDAM # 394 918 366 726462
AMSTERDAM # 395 918 367 726463
AMSTERDAM # 396 918 368 726464
AMSTERDAM # 397 918 369 726465
AMSTERDAM # 398 918 370 726466
AMSTERDAM # 399 918 371 726467
AMSTERDAM # 400 918 372 726468
AMSTERDAM # 401 918 373 726469

153


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
AMSTERDAM # 402 918 374 726470
AMSTERDAM # 403 918 375 726471
AMSTERDAM # 404 918 376 726472
AMSTERDAM # 405 918 377 726473
AMSTERDAM # 406 918 378 726474
AMSTERDAM # 407 918 379 726475
AMSTERDAM # 408 918 380 726476
AMSTERDAM # 409 918 381 726477
AMSTERDAM # 410 918 382 726478
AMSTERDAM # 411 918 383 726479
MIDAS 889 944 358 740783
MIDAS 890 944 359 740784
MIDAS 891 944 360 740785
MIDAS 892 944 361 740786
ACME R 944 362 740787
ESMERALDA NO. 1R 944 364 740788
MIDAS 44R 945 568 741243
MIDAS 45R 945 569 741244
MIDAS 46R 945 570 741245
MIDAS 47R 945 571 741246
MIDAS 48R 945 572 741247
MIDAS 49R 945 573 741248
MIDAS 50R 945 574 741249
MIDAS 51R 945 575 741250
MIDAS 52R 945 576 741251
MIDAS 53R 945 577 741252
MIDAS 54R 945 578 741253
MIDAS 55R 945 579 741254
MIDAS 56R 945 580 741255
MIDAS 57R 945 581 741256
MIDAS 58R 945 582 741257
MIDAS 59R 945 583 741258
MIDAS 60R 945 584 741259
MIDAS 61R 945 585 741260
MIDAS 62R 945 586 741261
MIDAS 63R 945 587 741262
MIDAS 64R 945 588 741263
MIDAS 65R 945 589 741264
MIDAS 66R 945 590 741265
MIDAS 67R 945 591 741266
MIDAS 68R 945 592 741267
MIDAS 69R 945 593 741268
MIDAS 70R 945 594 741269

154


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS 71R 945 595 741270
MIDAS 72R 945 596 741271
MIDAS 73R 945 597 741272
MIDAS 74R 945 598 741273
MIDAS 75R 945 599 741274
MIDAS 76R 945 600 741275
MIDAS 77R 945 601 741276
MIDAS 78R 945 602 741277
MIDAS 79R 945 603 741278
MIDAS 80R 945 604 741279
MIDAS 82R 945 605 741280
MIDAS 83R 945 606 741281
MIDAS 84R 945 607 741282
MIDAS 85R 945 608 741283
MIDAS 86R 945 609 741284
MIDAS 87R 945 610 741285
MIDAS 88R 945 611 741286
MIDAS 89R 945 612 741287
MIDAS 90R 945 613 741288
MIDAS 91R 945 614 741289
MIDAS 93R 945 615 741290
MIDAS 97R 945 616 741291
MIDAS 98R 945 617 741292
MIDAS 99R 945 618 741293
MIDAS 100R 945 619 741294
MIDAS 101R 945 620 741295
MIDAS 102R 945 621 741296
MIDAS 103R 945 622 741297
MIDAS 104R 945 623 741298
MIDAS 105R 945 624 741299
MIDAS 106R 945 625 741300
MIDAS 42R 945 566 741302
MIDAS 43R 945 567 741303
NEW GRANT R 946 511 741642
RICO R 946 513 741643
GOLD SOVEREIGN R 946 515 741644
LINK R 946 517 741645
MIDAS 92R 960 708 749179
MIDAS 159R 960 705 749180
MIDAS 160R 960 706 749181
MIDAS 873A 960 709 749182
MIDAS 844R 971 656 756605
MIDAS 850R 971 657 756606

155


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS 894 979 282 765359
MIDAS 895 979 283 765360
MIDAS 896 979 284 765361
MIDAS 897 979 285 765362
MIDAS 898 979 286 765363
MIDAS 899 979 287 765364
MIDAS 900 979 288 765365
MIDAS 901 979 289 765366
MIDAS 902 979 290 765367
MIDAS 903 979 291 765368
MIDAS 904 979 292 765369
MIDAS 905 979 293 765370
MIDAS 906 979 294 765371
MIDAS 907 979 295 765372
MIDAS 908 979 296 765373
MIDAS 909 979 297 765374
MIDAS 910 979 298 765375
MIDAS 911 979 299 765376
MIDAS 912 979 300 765377
MIDAS 913 979 301 765378
MIDAS 914 979 302 765379
MIDAS 915 979 303 765380
MIDAS 916 979 304 765381
MIDAS 917 979 305 765382
MIDAS 918 979 306 765383
MIDAS 919 979 307 765384
MIDAS 920 979 308 765385
MIDAS 921 979 309 765386
MIDAS 922 979 310 765387
MIDAS 923 979 311 765388
MIDAS 924 979 312 765389
MIDAS 925 979 313 765390
MIDAS 926 979 314 765391
MIDAS 927 979 315 765392
MIDAS 928 979 316 765393
MIDAS 929 979 317 765394
MIDAS 930 979 318 765395
MIDAS 931 979 319 765396
MIDAS 932 979 320 765397
MIDAS 933 979 321 765398
MIDAS 934 979 322 765399
MIDAS 935 979 323 765400
MIDAS 936 979 324 765401

156


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS 937 979 325 765402
MIDAS 938 979 326 765403
MIDAS 939 979 327 765404
MIDAS 893 979 281 765405
MIDAS 31R 999 526 774779
AMSTERDAM 413 1003 801 776194
AMSTERDAM 414 1003 802 776195
AMSTERDAM 415 1003 803 776196
AMSTERDAM 416 1003 804 776197
AMSTERDAM 417 1003 805 776198
AMSTERDAM 418 1003 806 776199
AMSTERDAM 420 1003 808 776201
AMSTERDAM 421 1003 809 776202
AMSTERDAM 422 1003 810 776203
AMSTERDAM 423 1003 811 776204
AMSTERDAM 425 1003 813 776206
AMSTERDAM 426 1003 814 776207
AMSTERDAM 427 1003 815 776208
AMSTERDAM 428 1003 816 776209
AMSTERDAM 433 1003 821 776214
AMSTERDAM 438 1003 826 776219
AMSTERDAM 439 1003 827 776220
AMSTERDAM 442 1003 830 776223
AMSTERDAM 443 1003 831 776224
AMSTERDAM 444 1003 832 776225
AMSTERDAM 445 1003 833 776226
AMSTERDAM 446 1003 834 776227
AMSTERDAM 447 1003 835 776228
AMSTERDAM 448 1003 836 776229
AMSTERDAM 449 1003 837 776230
AMSTERDAM 450 1003 838 776231
MIDAS 943 1003 840 776233
MIDAS 944 1003 841 776234
MIDAS 941 1022 202 783117
MIDAS 266R 1022 881 783443
MIDAS 267R 1022 882 783444
MIDAS 268R 1022 883 783445
MIDAS 189R 1023 661 784239
MIDAS 190R 1023 662 784240
MIDAS 279R 1023 663 784241
MIDAS 281R 1023 664 784242
MIDAS 283R 1023 665 784243
MIDAS 286R 1023 666 784244

157


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS 940 1023 667 784245
MIDAS 945 1023 668 784246
MIDAS 946 1023 669 784247
AMSTERDAM 109R 1023 670 784248
AMSTERDAM 110R 1023 671 784249
AMSTERDAM 111R 1023 672 784250
AMSTERDAM 116R 1023 673 784251
AMSTERDAM 118R 1023 674 784252
AMSTERDAM 120R 1023 675 784253
AMSTERDAM 121R 1023 676 784254
AMSTERDAM 122R 1023 677 784255
AMSTERDAM 137R 1023 678 784256
AMSTERDAM 138R 1023 679 784257
AMSTERDAM 166R 1023 680 784258
AMSTERDAM 167R 1023 681 784259
AMSTERDAM 173R 1023 682 784260
AMSTERDAM 175R 1023 683 784261
AMSTERDAM 381R 1023 684 784262
AMSTERDAM 382R 1023 685 784263
AMSTERDAM 412R 1023 686 784264
AMSTERDAM 424R 1023 687 784265
AMSTERDAM 440R 1023 688 784266
AMSTERDAM 452 1023 689 784267
AMSTERDAM 453 1023 690 784268
AMSTERDAM 454 1023 691 784269
MIDAS 510R 1024 821 785013
MIDAS 511R 1024 822 785014
MIDAS 512R 1024 823 785015
MIDAS 513R 1024 824 785016
MIDAS 514R 1024 825 785017
AMSTERDAM 301R 1027 209 785710
AMSTERDAM 302R 1027 210 785711
MIDAS 942 1027 211 785712
MIDAS 947 1028 415 785921
MIDAS 954 1028 422 785928
MIDAS 955 1028 423 785929
MIDAS 956 1028 424 785930
MIDAS 957 1028 425 785931
MIDAS 958 1028 426 785932
MIDAS 959 1028 427 785933
AMSTERDAM 455 1028 428 785934
MIDAS 966 1053 44 790924
MIDAS 867R 1053 479 790929

158


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS 868R 1053 480 790930
MIDAS 962 1053 481 790931
MIDAS 963 1053 482 790932
MIDAS 967 1053 486 790933
MIDAS 968 1053 487 790934
MIDAS 969 1053 488 790935
MARTY 2R 1065 325 792518
MARTY 3R 1065 326 792519
MARTY 4R 1065 327 792520
MARTY 5R 1065 328 792521
MARTY 6R 1065 329 792522
MIDAS 95R 1065 330 792523
MIDAS 971 1067 797 793064
MIDAS 972 1067 798 793065
MIDAS 960 1072 25 793495
MIDAS 961 1072 26 793496
AMSTERDAM 456 1072 27 793497
AMSTERDAM 457 1072 28 793498
AMSTERDAM 458 1072 29 793499
MIDAS 970 1072 30 793500
MIDAS 973 1072 31 793501
AMSTERDAM 459 1086 303 800377
MIDAS 421R 1086 301 800378
MIDAS 422R 1086 302 800379
ESPERENZA RR 1101 35 804479
MIDAS 26RR 1101 36 804480
MIDAS 32R 1101 37 804481
MIDAS 120RR 1101 39 804483
MIDAS 175R 1101 40 804484
MIDAS 176R 1101 41 804485
MIDAS 177R 1101 42 804486
MIDAS 178R 1101 43 804487
MIDAS 179R 1101 44 804488
MIDAS 180R 1101 45 804489
MIDAS 299R 1101 54 804498
MIDAS 300R 1101 55 804499
MIDAS 301R 1101 56 804500
MIDAS 302R 1101 57 804501
MIDAS 303R 1101 58 804502
MIDAS 304R 1101 59 804503
MIDAS 305R 1101 60 804504
MIDAS 306R 1101 61 804505
MIDAS 307R 1101 62 804506

159


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS 308R 1101 63 804507
MIDAS 309R 1101 64 804508
MIDAS 310R 1101 65 804509
MIDAS 311R 1101 66 804510
MIDAS 312R 1101 67 804511
MIDAS 313R 1101 68 804512
MIDAS 314R 1101 69 804513
MIDAS 315R 1101 70 804514
MIDAS 316R 1101 71 804515
MIDAS 317R 1101 72 804516
MIDAS 318R 1101 73 804517
MIDAS 319R 1101 74 804518
MIDAS 320R 1101 75 804519
MIDAS 321R 1101 76 804520
MIDAS 322R 1101 77 804521
MIDAS 323R 1101 78 804522
MIDAS 324R 1101 79 804523
MIDAS 335R 1101 88 804532
MIDAS 336R 1101 89 804533
MIDAS 337R 1101 90 804534
MIDAS 338R 1101 91 804535
MIDAS 339R 1101 92 804536
MIDAS 340R 1101 93 804537
MIDAS 341R 1101 94 804538
MIDAS 342R 1101 95 804539
MIDAS 351R 1101 102 804546
MIDAS 352R 1101 103 804547
MIDAS 874R 1101 108 804552
MIDAS 875R 1101 109 804553
MIDAS 878R 1101 110 804554
MIDAS 879R 1101 111 804555
MIDAS 880R 1101 112 804556
MIDAS 881R 1101 113 804557
MIDAS 888R 1101 115 804559
MIDAS 964 1101 116 804560
MIDAS 965 1101 117 804561
AMSTERDAM 97R 1101 118 804562
AMSTERDAM 98R 1101 119 804563
AMSTERDAM 145R 1101 120 804564
AMSTERDAM 174R 1101 121 804565
AMSTERDAM 186R 1101 122 804566
MIDAS 327RR 1 14939 823693
MIDAS 328RR 1 14940 823694

160


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS 330RR 1 14941 823695
MIDAS 332RR 1 14942 823696
MIDAS 343RR 1 14943 823697
MIDAS 344RR 1 14944 823698
MIDAS 345RR 1 14945 823699
MIDAS 346RR 1 14946 823700
MIDAS 347RR 1 14947 823701
MIDAS 852RR 1 14948 823702
MIDAS 854RR 1 14949 823703
MIDAS 855RR 1 14950 823704
AMSTERDAM 187RR 1 14951 823705
MIDAS 1000 1 30521 825287
MIDAS 1001 1 30522 825288
MIDAS 1002 1 30523 825289
MIDAS 1003 1 30524 825290
MIDAS 1004 1 30525 825291
MIDAS 1005 1 30526 825292
MIDAS 1006 1 30527 825293
MIDAS 1007 1 30528 825294
MIDAS 1008 1 30529 825295
MIDAS 1009 1 30530 825296
MIDAS 1010 1 30531 825297
MIDAS 1011 1 30532 825298
MIDAS 1012 1 30533 825299
MIDAS 1013 1 30534 825300
MIDAS 1014 1 30535 825301
MIDAS 1015 1 30536 825302
MIDAS 1016 1 30537 825303
MIDAS 1017 1 30538 825304
MIDAS 1018 1 30539 825305
MIDAS 1019 1 30540 825306
MIDAS 1020 1 30541 825307
MIDAS 1021 1 30542 825308
MIDAS 1022 1 30543 825309
MIDAS 1023 1 30544 825310
MIDAS 1024 1 30546 825311
MIDAS 1025 1 30547 825312
MIDAS 1026 1 30548 825313
MIDAS 1027 1 30549 825314
MIDAS 1028 1 30550 825315
MIDAS 1029 1 30551 825316
MIDAS 1030 1 30552 825317
MIDAS 1031 1 30553 825318

161


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS 1032 1 30554 825319
MIDAS 1033 1 30555 825320
MIDAS 1034 1 30556 825321
MIDAS 1035 1 30557 825322
MIDAS 1036 1 30558 825323
MIDAS 1037 1 30559 825324
MIDAS 1038 1 30560 825325
MIDAS 1039 1 30561 825326
MIDAS 1040 1 30562 825327
MIDAS 1041 1 30563 825328
MIDAS 1042 1 30564 825329
MIDAS 1043 1 30565 825330
MIDAS 1044 1 30566 825331
MIDAS 1045 1 30567 825332
MIDAS 1046 1 30568 825333
MIDAS 1047 1 30569 825334
MIDAS 1048 1 30570 825335
MIDAS 1049 1 30571 825336
MIDAS 1050 1 30572 825337
MIDAS 1051 1 30573 825338
MIDAS 1052 1 30574 825339
MIDAS 1053 1 30575 825340
MIDAS 1054 1 30576 825341
MIDAS 1055 1 30577 825342
MIDAS 1056 1 30578 825343
MIDAS 1057 1 30579 825344
MIDAS 1058 1 30580 825345
MIDAS 1059 1 30581 825346
MIDAS 1060 1 30582 825347
MIDAS 1061 1 30583 825348
MIDAS 1062 1 30584 825349
MIDAS 1063 1 30586 825350
MIDAS 1064 1 30587 825351
MIDAS 1065 1 30588 825352
MIDAS 1066 1 30589 825353
MIDAS 1067 1 30590 825354
MIDAS 1068 1 30591 825355
MIDAS 1069 1 30592 825356
MIDAS 1070 1 30593 825357
MIDAS 1071 1 30594 825358
MIDAS 1072 1 30595 825359
MIDAS 1073 1 30596 825360
MIDAS 1074 1 30597 825361

162


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MIDAS 1075 1 30598 825362
MIDAS 1076 1 30599 825363
MIDAS 1077 1 30600 825364
MIDAS 1078 1 30601 825365
MIDAS 1079 1 30602 825366
MIDAS 1080 1 30603 825367
MIDAS 1081 1 30604 825368
MIDAS 1082 1 30605 825369
MIDAS 1083 1 36620 827051
MIDAS 1084 1 36621 827052
MIDAS 1085 1 36622 827053
MIDAS 1086 1 36623 827054
MIDAS 1087 1 36624 827055
MIDAS 1088 1 36625 827056
MIDAS 1089 1 36626 827057
MIDAS 1090 1 36627 827058
MDS 1   537844 905317
MDS 2   537845 905318
MDS 3   537846 905319
MDS 4   537847 905320
MDS 5   537848 905321
MDS 6   537849 905322
MDS 7   537850 905323
MDS 8   537851 905324
MDS 9   537852 905325
MDS 10   537853 905326
MDS 11   537854 905327
MDS 12   537855 905328
MDS 13   537856 905329
MDS 14   537857 905330
MDS 15   537858 905331
MDS 16   537859 905332
MDS 17   537860 905333
MDS 18   537861 905334
MDS 19   537862 905335
MDS 20   537863 905336
MDS 21   537864 905337
MDS 22   537865 905338
MDS 23   537866 905339
MDS 24   537867 905340
MDS 25   537868 905341
MDS 26   537869 905342
MDS 27   537870 905343

163


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
MDS 28   537871 905344
MDS 29   537872 905345
MDS 30   537873 905346
MDS 31   537874 905347
MDS 32   537875 905348
MDS 33   537876 905349
MDS 34   537877 905350
MDS 35   537878 905351
MDS 36   537879 905352
MDS 37   537880 905353
MDS 38   537881 905354
MDS 39   537882 905355
MDS 40   537883 905356
MDS 41   537884 905357
MDS 42   537885 905358
MDS 43   537886 905359
MDS 44   537887 905360
MDS 45   537888 905361
MDS 46   537889 905362
MDS 47   537890 905363
MDS 48   537891 905364
MDS 49   537892 905365
CAT 1   559184 933598
CAT 2   559185 933599
CAT 3   559186 933600
CAT 4   559187 933601
CAT 5   559188 933602
CAT 6   559189 933603
CAT 7   559190 933604
CAT 8   559191 933605
CAT 9   559192 933606
CAT 10   559193 933607
CAT 11   559194 933608
CAT 12   559195 933609
CAT 13   559196 933610
CAT 14   559197 933611
CAT 15   559198 933612
CAT 16   559199 933613
CAT 17   559200 933614
CAT 18   559201 933615
CAT 19   559202 933616
CAT 20   559203 933617
CAT 21   559204 933618

164


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Claim Name Book & Page or
Document No.
BLM Serial No.
CAT 22   559205 933619
CAT 23   559206 933620
CAT 24   559207 933621
CAT 25   559208 933622
CAT 26   559209 933623
CAT 27   559210 933624
CAT 28   559211 933625
CAT 29   559212 933626
CAT 30   559213 933627
CAT 31   559214 933628
CAT 32   559215 933629
CAT 33   559216 933630
CAT 34   559217 933631
CAT 35   559218 933632
CAT 36   559219 933633
CAT 37   559220 933634
CAT 38   559221 933635
CAT 39   559222 933636
CAT 40   559223 933637
CAT 41   559224 933638
CAT 42   559225 933639
CAT 43   559226 933640
CAT 44   559227 933641
CAT 45   559228 933642
CAT 46   559229 933643
CAT 47   559230 933644
CAT 48   559231 933645
CAT 49   559232 933646
CAT 50   559233 933647
CAT 51   559234 933648
CAT 52   559235 933649
CAT 53   559236 933650
CAT 54   559237 933651
CAT 55   559238 933652
CAT 56   559239 933653
CAT 57   559240 933654
CAT 58   559241 933655

  4.

Leasehold Interests – Fee Property

BARRICK GOLD EXPLORATION INC. – Mining Sublease and Option dated April 2, 2007, by and between Barrick Gold Exploration Inc. and Newmont USA Limited, recorded as a memorandum as Document No. 571656 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, on April 20, 2007, covering 50% mineral interest in 1,984.5 acres in portions of Sections 3, 9-12, 15-16, 20-21, 29, T39N-R46E; Sections 6, 7, 18, T39N-R47E; Sections 35-36, T40N-R46E, Elko County, Nevada and 100% mineral interest in 1,169.7 acres in portions of Sections 13, 23-26, 28, 29, 33, T39N-R46E; Sections 7, 18, T39N, R47E, Elko County, Nevada.

165


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

FRAZIER CREEK EXPLORATION CO. INC. - Lease of Estar, Redar and Laura Unpatented Lode Mining Claims and Sublease of Domenichelli Lease, dated July 1, 2000, by and between Frazer Creek Exploration Company, Inc., a Nevada corporation, and Franco-Nevada Mining Corporation, Inc., a Nevada corporation (predecessor-in-interest to Newmont Midas Operations Inc.), recorded as a memorandum as Document No. 467521 in Book 1, Pages 5290-5317 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, on February 28, 2001. The Lease affects unpatented lode mining claims and agreements pertaining to lands situated in Sections 12 and 13, Township 39 North, Range 46 East, and in Sections 7, 18 and 19, Township 39 North, Range 47 East, MDM, Elko County, Nevada, covering 28 acres of fee land in Sections 12, 13, T39N, R46E, and Secs. 7, 18, 19, T39N, R47E, MDM, Elko County, Nevada.

DOMENICHELLI, RAMERIZ, WILLIAMS and FRAZER CREEK EXPLORATION CO. -Mining Lease dated August 1, 1990, by and between William and Rose Domenichelli, John Kenneth Domenichelli, William Melvin Domenichelli, Barbara Jean Rameriz and Ruth Ann Williams, as lessors, and Frazer Creek Exploration Company, Inc. a Nevada corporation, as lessee, recorded in short form version as Document No. 297863 in Book 735 at Pages 508-514 of the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, covering 28 acres of fee land in the E/2 NE/4 of Section 13, T39N, R46E, MDM, Elko County, Nevada.

  5.

Leasehold Interests – Unpatented mining claims

1.     Mining Lease by and between Clark Powell and his Associates and Romarco Nevada Inc., a Nevada corporation (predecessor-in-interest to Newmont Midas Operations Inc.), dated October 30, 1995. The Mining Lease affects the following unpatented lode mining claims situated in Sections 21 and 28, Township 39 North, Range 46 East, MDM, Elko County, Nevada:

  Recording Information  
Claim Name Book Page BLM Serial Number
King Midas 1095 890 105502
King Midas No. 2 1095 891 105503
Dixie 1095 892 105504
Dixie No. 1 1095 893 105505
Dixie No. 2 1095 894 105506
Dixie No. 3 1095 895 105507
H-2 1095 896 105509

2.     Lease of Estar, Redar and Laura Unpatented Lode Mining Claims and Sublease of Domenichelli Lease, dated July 1, 2000, by and between Frazer Creek Exploration Company, Inc., a Nevada corporation, and Franco-Nevada Mining Corporation, Inc., a Nevada corporation (predecessor-in-interest to Newmont Midas Operations Inc.), recorded as a memorandum as Document No. 467521 in Book 1, Pages 5290-5317 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, on February 28, 2001. The Lease affects unpatented lode mining claims and agreements pertaining to lands situated in Sections 12 and 13, Township 39 North, Range 46 East, and in Sections 7, 18 and 19, Township 39 North, Range 47 East, MDM, Elko County, Nevada, covering the following unpatented lode mining claims and agreements pertaining to lands situated in Sections 12 and 13, Township 39 North, Range 46 East, and in Sections 7, 18 and 19, Township 39 North, Range 47 East, MDM, Elko County, Nevada:

166


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  Recording Information
Claim Name Book Page BLM Serial Number
Laura 6 510 423 354642
Laura 20 510 435 354655
REDAR 1 875 938 708819
REDAR 2 875 939 708820
REDAR 3 875 940 708821
REDAR 4 875 941 708822
REDAR 5 875 942 708823
ESTAR 1 875 943 708824
ESTAR 2 875 944 708825
ESTAR 3 875 945 708826
ESTAR 4 875 946 708827
ESTAR 5 875 947 708828
ESTAR 6 875 948 708829
ESTAR 7 912 400 722747
ESTAR 8 912 401 722748
ESTAR 9 912 402 722749
ESTAR 10 912 403 722750
ESTAR 11 912 404 722751
ESTAR 12 912 405 722752
ESTAR 13 912 406 722753
ESTAR 14 912 407 722754
ESTAR 15 912 408 722755
ESTAR 16 912 409 722756
ESTAR 17 912 410 722757
ESTAR 18 912 411 722758
ESTAR 19 912 412 722759

  6.

Property Leases

1.     Mining Lease by and between Clark Powell and his Associates and Romarco Nevada, Inc., a Nevada corporation (predecessor-in-interest to Newmont Midas Operations Inc.), dated October 30, 1995. The Mining Lease affects the following unpatented lode mining claims situated in Sections 21 and 28, Township 39 North, Range 46 East, MDM, Elko County, Nevada:

  Recording Information  
Claim Name Book Page BLM Serial Number
King Midas 1095 890 105502
King Midas No. 2 1095 891 105503
Dixie 1095 892 105504
Dixie No. 1 1095 893 105505
Dixie No. 2 1095 894 105506
Dixie No. 3 1095 895 105507
H-2 1095 896 105509

2.     Lease of Estar, Redar and Laura Unpatented Lode Mining Claims and Sublease of Domenichelli Lease, dated July 1, 2000, by and between Frazer Creek Exploration Company, Inc., a Nevada corporation, and Franco-Nevada Mining Corporation, Inc., a Nevada corporation (predecessor-in-interest to Newmont Midas Operations Inc.), recorded as a memorandum as Document No. 467521 in Book 1, Pages 5290-5317 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, on February 28, 2001. The Lease affects unpatented lode mining claims and agreements pertaining to lands situated in Sections 12 and 13, Township 39 North, Range 46 East, and in Sections 7, 18 and 19, Township 39 North, Range 47 East, MDM, Elko County, Nevada.

167


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

3.     Mining Lease dated August 1, 1990, by and between William and Rose Domenichelli, John Kenneth Domenichelli, William Melvin Domenichelli, Barbara Jean Rameriz and Ruth Ann Williams, as lessors, and Frazer Creek Exploration Company, Inc. a Nevada corporation, as lessee, recorded in short form version as Document No. 297863 in Book 735 at Pages 508-514 of the Official Records of the Elko County Recorder’s Office, Elko County, Nevada.

4.     Agreement Transferring Property Interests and Terminating Mining Lease With Option to Joint Venture, Quitclaim Deed and Grant of Royalty, dated August 11, 2000, by and between Frazer Creek Exploration Company, Inc., and Nevada corporation and Homestake Mining Company of California, a California corporation, recorded as Document No. 462327 in Book 0 at Pages 23222-23233 of the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, and on September 18, 2000. The terms of which the Laura 6 and 20 unpatented lode mining claims are subject to a two percent (2%) net smelter returns royalty and portions of the REDAR 3, 4 and 5, and ESTAR 1, 7, 8, 11, 18 and 19 unpatented lode mining claims are subject to a one percent (1%) net smelter returns royalty.

5.     Mining Sublease and Option dated April 2, 2007, by and between Barrick Gold Exploration Inc. and Newmont USA Limited, recorded as a memorandum as Document No. 571656 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, on April 20, 2007.

6.     Land Lease Agreement dated March 26, 2012 by and between Newmont Midas Operations Inc., a Nevada corporation, as Lessor, and Southwestco Wireless LP, d/b/a Verizon Wireless, by Southwestco Wireless Inc., its managing partner, as Lessee, recorded as a memorandum as Document No. 654417 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, on April 19, 2012.

168


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

DESCRIPTION OF FIRE CREEK PROPERTY

  1.

Title to Properties

831 Unpatented Lode Mining Claims Owned by Klondex Gold & Silver Mining Company

Located in Sections 2, 10, 14, 16, 20, 22, 24, 26, 28, 30, 31, 32, 34 and 36, T30N R47E; and Section 36, T31N R47E; MDM, Lander County, Nevada

BLM Serial # Claim Name & # Loc Date DOC; Book; Page
       
NMC429292 WOOD TICK # 2 7/18/1987 144804;295;528
NMC429294 WOOD TICK # 4 7/18/1987 144806;295;530
NMC429296 WOOD TICK # 6 7/18/1987 144808;295;532
NMC429298 WOOD TICK # 8 7/18/1987 144810;295;534
NMC429300 WOOD TICK # 10 7/18/1987 144812;295;536
NMC429302 WOOD TICK # 12 7/18/1987 144814;295;538
NMC429304 WOOD TICK # 14 7/18/1987 144816;295;540
NMC429306 WOOD TICK # 16 7/18/1987 144818;295;542
NMC429308 WOOD TICK # 18 7/18/1987 144820;295;544
NMC429310 WOOD TICK # 20 7/18/1987 144822;295;546
NMC429312 WOOD TICK # 22 7/18/1987 144824;295;548
NMC429314 WOOD TICK # 24 7/19/1987 144826;295;550
NMC429316 WOOD TICK # 26 7/19/1987 144828;295;552
NMC429318 WOOD TICK # 28 7/18/1987 144830;295;554
NMC429320 WOOD TICK # 30 7/18/1987 144832;295;556
NMC429322 WOOD TICK # 32 7/19/1987 144834;295;558
NMC429324 WOOD TICK # 34 7/19/1987 144836;295;560
NMC429326 WOOD TICK # 36 7/19/1987 144838;295;562
NMC429328 WOOD TICK # 38 7/21/1987 144840;295;564
NMC429330 WOOD TICK # 40 7/21/1987 144842;295;566
NMC429332 WOOD TICK # 42 7/21/1987 144844;295;568
NMC429334 WOOD TICK # 44 7/21/1987 144846;295;570
NMC429336 WOOD TICK # 46 7/21/1987 144848;295;572
NMC429338 WOOD TICK # 48 7/21/1987 144850;295;574
NMC429340 WOOD TICK # 50 7/21/1987 144852;295;576
NMC429342 WOOD TICK # 52 7/21/1987 144854;295;578
       
NMC588642 G 1 1/23/1990 163499
NMC588643 G 2 1/23/1990 163500
NMC588644 G 3 1/23/1990 163501
NMC588645 G 4 1/23/1990 163502
NMC588646 G 5 1/23/1990 163503
NMC588647 G 6 1/23/1990 163504
NMC588648 G 7 1/23/1990 163505
NMC588649 G 8 1/23/1990 163506
NMC588650 G 9 1/23/1990 163507
NMC588651 G 10 1/23/1990 163508
NMC588652 G 11 1/23/1990 163509
NMC588653 G 12 1/23/1990 163510
NMC588654 G 13 1/23/1990 163511
NMC588655 G 14 1/23/1990 163512

169


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

BLM Serial # Claim Name & # Loc Date DOC; Book; Page
       
NMC588656 G 15 1/23/1990 163513
NMC588657 G 16 1/23/1990 163514
       
NMC636760 DEB # 2 12/13/1991 171442;403/94
NMC636762 DEB # 4 12/13/1991 171444;403/94
       
NMC642589 REVENGE 2 12/16/1991 172707
NMC642591 REVENGE 4 12/17/1991 172709
NMC642593 REVENGE 6 12/17/1991 172711
NMC642595 REVENGE 8 1/26/1992 172713
NMC642597 REVENGE 10 12/18/1991 172715
NMC642599 REVENGE 12 12/18/1991 172717
NMC642601 REVENGE 14 12/18/1991 172719
NMC642603 REVENGE 16 2/6/1992 172721
NMC642605 REVENGE 18 2/6/1992 172723
NMC642607 REVENGE 20 12/16/1991 172725
NMC642609 REVENGE 22 1/9/1992 172727
NMC642611 REVENGE 24 2/13/1992 172729
NMC642613 REVENGE 26 2/13/1992 172731
NMC642615 REVENGE 28 1/26/1992 172733
       
NMC654400 K 1 6/25/1992 176394
NMC654401 K 2 6/25/1992 176395
NMC654402 K 3 6/25/1992 176396
NMC654403 K 4 6/25/1992 176397
NMC654404 K 5 6/25/1992 176398
NMC654405 K 6 6/25/1992 176399
NMC654406 K 7 6/25/1992 176400
NMC654407 K 8 6/25/1992 176401
NMC654408 K 9 6/25/1992 176402
NMC654409 K 10 6/25/1992 176403
NMC654410 K 11 6/25/1992 176404
NMC654411 K 12 6/25/1992 176405
NMC654412 K 13 6/25/1992 176406
NMC654413 K 14 6/25/1992 176407
NMC654414 K 15 6/25/1992 176408
NMC654415 K 16 6/25/1992 176409
NMC654416 K 17 6/25/1992 176410
  Amended     8/17/1992 177514
NMC654417 K 18 6/25/1992 176411
  Amended     8/14/1992 177515
NMC654418 K 19 6/25/1992 176412
NMC654419 K 20 6/25/1992 176413
  Amended     8/14/1992 177516
NMC654420 K 21 6/26/1992 176414
NMC654421 K 22 6/26/1992 176415
  Amended     8/17/1992 177517
NMC654422 K 23 6/26/1992 176416
NMC654423 K 24 6/26/1992 176417

170


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

BLM Serial # Claim Name & # Loc Date DOC; Book; Page
       
  Amended    8/17/1992 177518
NMC654424 K 25 6/26/1992 176418
  Amended    8/17/1992 177519
NMC654425 K 26 6/26/1992 176419
  Amended    8/17/1992 177520
NMC654426 K 27 6/26/1992 176420
  Amended    8/17/1992 177521
       
NMC677352 ALAN 1 2/15/1993 183752;392;688
NMC677353 ALAN 2 2/15/1993 183753
NMC677354 ALAN 3 2/15/1993 183754
NMC677355 ALAN 4 2/15/1993 183755
NMC677356 ALAN 5 2/15/1993 183756
NMC677357 ALAN 6 2/15/1993 183757
NMC677358 ALAN 7 2/15/1993 183758
NMC677359 ALAN 8 2/15/1993 183759
NMC677360 ALAN 9 2/15/1993 183760
NMC677361 ALAN 10 2/15/1993 183761
NMC677362 ALAN 11 2/15/1993 183762
NMC677363 ALAN 12 2/15/1993 183763
NMC677364 ALAN 13 2/15/1993 183764
NMC677365 ALAN 14 2/15/1993 183765;392;701
       
NMC689348 N 2 11/17/1993 187015;403;45
NMC689350 N 4 11/17/1993 187017
NMC689352 N 6 11/17/1993 187019
NMC689354 N 8 11/17/1993 187021
NMC689356 N 10 11/17/1993 187023
NMC689358 N 12 11/17/1993 187025
NMC689360 N 14 11/17/1993 187027
NMC689362 N 16 11/17/1993 187029
NMC689364 N 18 11/17/1993 187031
NMC689366 N 20 11/18/1993 187033
NMC689368 N 22 11/18/1993 187035
NMC689370 N 24 11/18/1993 187037
NMC689372 N 26 11/18/1993 187039
NMC689374 N 28 11/18/1993 187041
NMC689376 N 30 11/18/1993 187043;403;73
       
NMC689380 TL 2 11/8/1993 187048;403;78
NMC689382 TL 4 11/8/1993 187050
NMC689384 TL 6 11/8/1993 187052
NMC689386 TL 8 11/10/1993 187054
NMC689388 TL 10 11/10/1993 187056
NMC689390 TL 12 11/10/1993 187058
NMC689392 TL 14 11/10/1993 187060
NMC689394 TL 16 11/10/1993 187062
NMC689396 TL 18 11/10/1993 187064;40394

171


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

BLM Serial # Claim Name & # Loc Date DOC; Book; Page
       
NMC703411 TL 20 6/21/1994 190187;409;652
NMC703413 TL 22 6/21/1994 190189;409;654
NMC703415 TL 24 6/21/1994 190191;409;656
NMC703417 TL 26 6/21/1994 190193;409;658
       
NMC725845 FCRA 1 9/28/1995 195570;422;371
NMC725846 FCRA 2 9/28/1995 195571;422;372
NMC725847 FCRA 3 9/28/1995 195572;422;373
NMC725848 FCRA 4 9/28/1995 195573;422;374
NMC725849 FCRA 5 9/28/1995 195574;422;375
NMC725850 FCRA 6 9/28/1995 195575;422;376
NMC725851 FCRA 7 9/28/1995 195576;422;377
NMC725852 FCRA 8 9/28/1995 195577;422;378
NMC725853 FCRA 9 9/28/1995 195578;422;379
NMC725854 FCRA 10 9/28/1995 195579;422;380
NMC725855 FCRA 11 9/28/1995 195580;422;381
NMC725856 FCRA 12 9/28/1995 195581;422;382
NMC725857 FCRA 13 9/28/1995 195582;422;383
NMC725858 FCRA 14 9/28/1995 195583;422;384
NMC725859 FCRA 15 9/28/1995 195584;422;385
NMC725860 FCRA 16 9/28/1995 195585;422;386
NMC725861 FCRA 17 9/28/1995 195586;422;387
NMC725862 FCRA 18 9/28/1995 195587;422;388
NMC725863 FCRA 19 9/28/1995 195588;422;389
NMC725864 FCRA 20 9/28/1995 195589;422;390
       
NMC810915 T 1 10/13/1999 213996;470;446
NMC810916 T 2 10/13/1999 213997;470;447
NMC810917 T 3 10/13/1999 213998;470;448
NMC810918 T 4 10/13/1999 213999;470;449
NMC810919 T 5 10/13/1999 214000;470;450
NMC810920 T 6 10/13/1999 214001;470;451
NMC810921 T 7 10/13/1999 214002;470;452
NMC810922 T 8 10/13/1999 214003;470;453
NMC810923 T 9 10/13/1999 214004;470;454
NMC810924 T 10 10/13/1999 214005;470;455
       
NMC858199 T 11 9/24/2003 229498
NMC858200 T 12 9/24/2003 229499
NMC858201 T 13 9/24/2003 229500
NMC858202 T 14 9/24/2003 229501
NMC858203 T 15 9/24/2003 229502
NMC858204 T 16 9/24/2003 229503
NMC858205 T 17 9/24/2003 229504
NMC858206 T 18 9/24/2003 229505
NMC858207 T 19 9/23/2003 229506
NMC858208 T 20 9/23/2003 229507
NMC858209 T 21 9/23/2003 229508
NMC858210 T 22 9/23/2003 229509

172


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

BLM Serial # Claim Name & # Loc Date DOC; Book; Page
       
NMC858211 T 23 9/23/2003 229510
NMC858212 T 24 9/23/2003 229511
NMC858213 T 25 9/23/2003 229512
NMC858214 T 26 9/23/2003 229513
NMC858215 T 27 9/24/2003 229514
NMC858216 T 28 9/24/2003 229515
NMC858217 T 29 9/24/2003 229516
NMC858218 T 30 9/24/2003 229517
NMC858219 T 31 9/24/2003 229518
NMC858220 T 32 9/24/2003 229519
NMC858221 T 33 9/24/2003 229520
NMC858222 T 34 9/24/2003 229521
NMC858223 T 35 9/24/2003 229522
NMC858224 T 36 9/24/2003 229523
       
NMC858225 HONDO 1 9/20/2003 229421
NMC858226 HONDO 3 9/20/2003 229422
NMC858227 HONDO 5 9/20/2003 229423
NMC858228 HONDO 7 9/20/2003 229424
NMC858229 HONDO 9 9/20/2003 229425
NMC858230 HONDO 11 9/20/2003 229426
NMC858231 HONDO 13 9/20/2003 229427
NMC858232 HONDO 15 9/20/2003 229428
NMC858233 HONDO 18 9/20/2003 229429
NMC858234 HONDO 20 9/20/2003 229430
NMC858235 HONDO 22 9/20/2003 229431
NMC858236 HONDO 24 9/20/2003 229432
NMC858237 HONDO 26 9/20/2003 229433
NMC858238 HONDO 28 9/20/2003 229434
NMC858239 HONDO 30 9/20/2003 229435
NMC858240 HONDO 32 9/20/2003 229436
NMC858241 HONDO 157 9/20/2003 229437
NMC858242 HONDO 158 9/20/2003 229438
       
NMC858243 DEB 1 9/22/2003 229477
NMC858244 DEB 3 9/22/2003 229478
NMC858245 DEB 5 9/22/2003 229479
       
NMC858246 REVENGE 1 9/22/2003 229480
NMC858247 REVENGE 3 9/23/2003 229481
NMC858248 REVENGE 5 9/23/2003 229482
NMC858249 REVENGE 7 9/23/2003 229483
NMC858250 REVENGE 9 9/23/2003 229484
NMC858251 REVENGE 11 9/22/2003 229485
NMC858252 REVENGE 13 9/22/2003 229486
NMC858253 REVENGE 15 9/22/2003 229487
NMC858254 REVENGE 17 9/22/2003 229488
NMC858255 REVENGE 19 9/22/2003 229489
NMC858256 REVENGE 21 9/22/2003 229490

173


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

BLM Serial # Claim Name & # Loc Date DOC; Book; Page
       
NMC858257 REVENGE 23 9/22/2003 229491
NMC858258 REVENGE 25 9/22/2003 229492
NMC858259 REVENGE 27 9/22/2003 229493
NMC858260 REVENGE 29 9/23/2003 229494
NMC858261 REVENGE 30 9/23/2003 229495
NMC858262 REVENGE 31 9/23/2003 229496
       
NMC858263 FC 1 9/21/2003 229440
NMC858264 FC 2 9/21/2003 229441
NMC858265 FC 3 9/21/2003 229442
NMC858266 FC 4 9/21/2003 229443
NMC858267 FC 5 9/21/2003 229444
NMC858268 FC 6 9/21/2003 229445
NMC858269 FC 7 9/21/2003 229446
NMC858270 FC 8 9/21/2003 229447
NMC858271 FC 9 9/21/2003 229448
NMC858272 FC 10 9/21/2003 229449
NMC858273 FC 11 9/21/2003 229450
NMC858274 FC 12 9/21/2003 229451
NMC858275 FC 13 9/21/2003 229452
NMC858276 FC 14 9/21/2003 229453
NMC858277 FC 15 9/21/2003 229454
NMC858278 FC 16 9/21/2003 229455
NMC858279 FC 17 9/21/2003 229456
NMC858280 FC 18 9/21/2003 229457
       
NMC858281 WHAT IF 29 9/21/2003 229458
NMC858282 WHAT IF 30 9/21/2003 229459
NMC858283 WHAT IF 31 9/21/2003 229460
NMC858284 WHAT IF 32 9/21/2003 229461
NMC858285 WHAT IF 33 9/21/2003 229462
NMC858286 WHAT IF 34 9/21/2003 229463
NMC858287 WHAT IF 35 9/21/2003 229464
NMC858288 WHAT IF 36 9/21/2003 229465
NMC858289 WHAT IF 37 9/21/2003 229466
       
NMC858290 FC 38 9/21/2003 229467
NMC858291 FC 39 9/21/2003 229468
NMC858292 FC 40 9/21/2003 229469
NMC858293 FC 41 9/21/2003 229470
NMC858294 FC 42 9/21/2003 229471
NMC858295 FC 43 9/21/2003 229472
NMC858296 FC 44 9/21/2003 229473
NMC858297 FC 45 9/21/2003 229474
NMC858298 FC 46 9/21/2003 229475
       
NMC858346 T 38 10/5/2003 229833
NMC858347 T 39 10/5/2003 229834
NMC858348 T 40 10/5/2003 229835

174


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

BLM Serial # Claim Name & # Loc Date DOC; Book; Page
       
NMC858349 T 41 10/5/2003 229836
NMC858350 T 42 10/5/2003 229837
NMC858351 T 43 10/5/2003 229838
NMC858352 T 44 10/5/2003 229839
NMC858353 T 45 10/5/2003 229840
NMC858354 T 46 10/5/2003 229841
NMC858355 T 47 10/5/2003 229842
NMC858356 T 48 10/5/2003 229843
NMC858357 T 49 10/5/2003 229844
NMC858358 T 50 10/5/2003 229845
NMC858359 T 51 10/5/2003 229846
NMC858360 T 52 10/5/2003 229847
NMC858361 T 53 10/5/2003 229848
NMC858362 T 54 10/5/2003 229849
NMC858363 T 55 10/5/2003 229850
NMC858364 T 56 10/5/2003 229851
NMC858365 T 57 10/5/2003 229852
NMC858366 T 58 10/5/2003 229853
NMC858367 T 59 10/5/2003 229854
NMC858368 T 60 10/5/2003 229855
NMC858369 T 61 10/6/2003 229856
NMC858370 T 62 10/6/2003 229857
NMC858371 T 63 10/6/2003 229858
NMC858372 T 64 10/6/2003 229859
NMC858373 T 65 10/6/2003 229860
NMC858374 T 66 10/6/2003 229861
NMC858375 T 67 10/6/2003 229862
NMC858376 T 68 10/6/2003 229863
NMC858377 T 69 10/6/2003 229864
NMC858378 T 70 10/6/2003 229865
NMC858379 T 71 10/6/2003 229866
NMC858380 T 72 10/6/2003 229867
       
NMC883199 FCXX 1 11/24/2004 234689
NMC883200 FCXX 2 11/24/2004 234690
NMC883201 FCXX 3 11/24/2004 234691
NMC883202 FCXX 4 11/24/2004 234692
NMC883203 FCXX 5 11/24/2004 234693
NMC883204 FCXX 6 11/24/2004 234694
NMC883205 FCXX 7 11/24/2004 234695
NMC883206 FCXX 8 11/24/2004 234696
NMC883207 FCXX 9 11/24/2004 234697
NMC883208 FCXX 10 11/24/2004 234698
NMC883209 FCXX 11 11/24/2004 234699
NMC883210 FCXX 12 11/24/2004 234700
NMC883211 FCXX 13 11/24/2004 234701
NMC883212 FCXX 14 11/24/2004 234702
NMC883213 FCXX 15 11/24/2004 234703
NMC883214 FCXX 16 11/24/2004 234704

175


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

BLM Serial # Claim Name & # Loc Date DOC; Book; Page
       
NMC883215 FCXX 17 11/24/2004 234705
NMC883216 FCXX 18 11/24/2004 234706
NMC883217 FCXX 19 11/24/2004 234707
NMC883218 FCXX 20 11/24/2004 234708
NMC883219 FCXX 21 11/24/2004 234709
NMC883220 FCXX 22 11/24/2004 234710
NMC883221 FCXX 23 11/24/2004 234711
NMC883222 FCXX 24 11/24/2004 234712
NMC883223 FCXX 25 11/24/2004 234713
NMC883224 FCXX 26 11/24/2004 234714
NMC883225 FCXX 27 11/24/2004 234715
NMC883226 FCXX 28 11/24/2004 234716
NMC883227 FCXX 29 11/24/2004 234717
NMC883228 FCXX 30 11/24/2004 234718
NMC883229 FCXX 31 11/24/2004 234719
NMC883230 FCXX 32 11/24/2004 234720
NMC883231 FCXX 33 11/24/2004 234721
NMC883232 FCXX 34 11/24/2004 234722
NMC883233 FCXX 35 11/24/2004 234723
NMC883234 FCXX 36 11/24/2004 234724
NMC883235 FCXX 37 11/24/2004 234725
NMC883236 FCXX 38 11/24/2004 234726
NMC883237 FCXX 39 11/24/2004 234727
NMC883238 FCXX 40 11/24/2004 234728
       
NMC941456 CH 1 9/19/2006 245941
NMC941457 CH 2 9/19/2006 245942
NMC941458 CH 3 9/19/2006 245943
NMC941459 CH 4 9/19/2006 245944
NMC941460 CH 5 9/19/2006 245945
NMC941461 CH 6 9/19/2006 245946
NMC941462 CH 7 9/19/2006 245947
NMC941463 CH 8 9/19/2006 245948
NMC941464 CH 9 9/19/2006 245949
NMC941465 CH 10 9/19/2006 245950
NMC941466 CH 11 9/19/2006 245951
NMC941467 CH 12 9/19/2006 245952
NMC941468 CH 13 9/19/2006 245953
NMC941469 CH 14 9/19/2006 245954
NMC941470 CH 15 9/19/2006 245955
NMC941471 CH 16 9/19/2006 245956
NMC941472 CH 17 9/19/2006 245957
NMC941473 CH 18 9/19/2006 245958
       
NMC941474 HONDO 2 10/4/2006 245960
NMC941475 HONDO 4 10/4/2006 245961
NMC941476 HONDO 6 10/4/2006 245962
NMC941477 HONDO 8 10/4/2006 245963
NMC941478 HONDO 10 10/4/2006 245964

176


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

BLM Serial # Claim Name & # Loc Date DOC; Book; Page
       
NMC941479 HONDO 12 10/4/2006 245965
NMC941480 HONDO 14 10/4/2006 245966
NMC941481 HONDO 16 10/4/2006 245967
NMC941482 HONDO 17 10/4/2006 245968
NMC941483 HONDO 19 10/4/2006 245969
NMC941484 HONDO 21 10/4/2006 245970
NMC941485 HONDO 23 10/4/2006 245971
NMC941486 HONDO 25 10/4/2006 245972
NMC941487 HONDO 27 10/4/2006 245973
NMC941488 HONDO 29 10/4/2006 245974
NMC941489 HONDO 31 10/4/2006 245975
NMC941490 HONDO 155 10/4/2006 245976
NMC941491 HONDO 156 10/4/2006 245977
       
NMC941492 N 1 9/11/2006 245979
NMC941493 N 3 9/11/2006 245980
NMC941494 N 5 9/12/2006 245981
NMC941495 N 7 9/12/2006 245982
NMC941496 N 9 9/12/2006 245983
NMC941497 N 11 9/11/2006 245984
NMC941498 N 13 9/11/2006 245985
NMC941499 N 15 9/12/2006 245986
NMC941500 N 17 9/12/2006 245987
NMC941501 N 19 9/11/2006 245988
NMC941502 N 21 9/11/2006 245989
NMC941503 N 23 9/11/2006 245990
NMC941504 N 25 9/11/2006 245991
NMC941505 N 27 9/11/2006 245992
NMC941506 N 29 9/12/2006 245993
NMC941507 N 31 9/12/2006 245994
       
NMC941508 TL 1 9/13/2006 245996
NMC941509 TL 3 9/13/2006 245997
NMC941510 TL 5 9/13/2006 245998
NMC941511 TL 7 9/13/2006 245999
NMC941512 TL 9 9/13/2006 246000
NMC941513 TL 11 9/13/2006 246001
NMC941514 TL 13 9/13/2006 246002
NMC941515 TL 15 9/13/2006 246003
NMC941516 TL 17 9/13/2006 246004
NMC941517 TL 19 9/14/2006 246005
NMC941518 TL 21 9/14/2006 246006
NMC941519 TL 23 9/14/2006 246007
NMC941520 TL 25 9/14/2006 246008
NMC941521 TL 27 9/14/2006 246009
NMC941522 TL 28 9/14/2006 246010
NMC941523 TL 29 9/14/2006 246011
NMC941524 TL 30 9/14/2006 246012
NMC941525 TL 31 9/14/2006 246013

177


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

BLM Serial # Claim Name & # Loc Date DOC; Book; Page
       
NMC941526 TWE 1 10/10/2006 246015
NMC941527 TWE 2 10/10/2006 246016
NMC941528 TWE 3 10/10/2006 246017
NMC941529 TWE 4 10/10/2006 246018
NMC941530 TWE 5 10/10/2006 246019
NMC941531 TWE 6 10/10/2006 246020
NMC941532 TWE 7 10/10/2006 246021
NMC941533 TWE 8 10/10/2006 246022
NMC941534 TWE 9 10/10/2006 246023
NMC941535 TWE 10 10/10/2006 246024
NMC941536 TWE 11 10/10/2006 246025
NMC941537 TWE 12 10/10/2006 246026
NMC941538 TWE 13 10/10/2006 246027
NMC941539 TWE 14 10/10/2006 246028
NMC941540 TWE 15 10/10/2006 246029
NMC941541 TWE 16 10/10/2006 246030
NMC941542 TWE 17 10/10/2006 246031
NMC941543 TWE 18 10/10/2006 246032
NMC941544 TWE 19 9/20/2006 246033
NMC941545 TWE 20 9/20/2006 246034
NMC941546 TWE 21 9/20/2006 246035
NMC941547 TWE 22 9/20/2006 246036
NMC941548 TWE 23 9/20/2006 246037
NMC941549 TWE 24 9/20/2006 246038
NMC941550 TWE 25 9/20/2006 246039
NMC941551 TWE 26 9/20/2006 246040
NMC941552 TWE 27 9/20/2006 246041
NMC941553 TWE 28 9/20/2006 246042
NMC941554 TWE 29 9/20/2006 246043
NMC941555 TWE 30 9/20/2006 246044
NMC941556 TWE 31 9/20/2006 246045
NMC941557 TWE 32 9/20/2006 246046
NMC941558 TWE 33 9/20/2006 246047
NMC941559 TWE 34 9/20/2006 246048
NMC941560 TWE 35 9/20/2006 246049
NMC941561 TWE 36 9/20/2006 246050
       
NMC941562 WT 1 10/31/2006 246052
NMC941563 WT 3 10/31/2006 246053
NMC941564 WT 5 10/31/2006 246054
NMC941565 WT 7 10/31/2006 246055
NMC941566 WT 9 10/31/2006 246056
NMC941567 WT 11 10/31/2006 246057
NMC941568 WT 13 10/31/2006 246058
NMC941569 WT 15 10/31/2006 246059
NMC941570 WT 17 10/31/2006 246060
NMC941571 WT 19 11/7/2006 246061
NMC941572 WT 21 11/7/2006 246062

178


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

BLM Serial # Claim Name & # Loc Date DOC; Book; Page
       
NMC941573 WT 23 11/7/2006 246063
NMC941574 WT 25 11/7/2006 246064
NMC941575 WT 27 11/7/2006 246065
NMC941576 WT 29 10/31/2006 246066
NMC941577 WT 31 10/31/2006 246067
NMC941578 WT 33 10/31/2006 246068
NMC941579 WT 35 10/31/2006 246069
NMC941580 WT 37 11/1/2006 246070
NMC941581 WT 39 11/1/2006 246071
NMC941582 WT 41 11/1/2006 246072
NMC941583 WT 43 11/112006 246073
NMC941584 WT 45 11/1/2006 246074
NMC941585 WT 47 11/1/2006 246075
NMC941586 WT 49 11/1/2006 246076
NMC941587 WT 51 11/1/2006 246077
NMC941588 WT 53 11/1/2006 246078
NMC941589 WT 54 11/1/2006 246079
NMC941590 WT 55 11/1/2006 246080
NMC941591 WT 56 11/8/2006 246081
NMC941592 WT 57 11/8/2006 246082
NMC941593 WT 58 11/8/2006 246083
NMC941594 WT 59 11/8/2006 246084
NMC941595 WT 60 11/8/2006 246085
NMC941596 WT 61 11/8/2006 246086
NMC941597 WT 62 11/8/2006 246087
NMC941598 WT 63 11/8/2006 246088
NMC941599 WT 64 11/8/2006 246089
NMC941600 WT 65 11/8/2006 246090
NMC941601 WT 66 11/8/2006 246091
NMC941602 WT 67 11/8/2006 246092
NMC941603 WT 68 11/8/2006 246093
NMC941604 WT 69 11/8/2006 246094
NMC941605 WT 70 11/8/2006 246095
NMC941606 WT 71 11/8/2006 246096
NMC941607 WT 72 11/8/2006 246097
NMC1105104- MALPAIS 1-347 10/4/2014 to  
1105450   10/7/2014  
Total 831 Claims      

179


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  2.

Summary of Fire Creek Mine Fee Holdings


APN Legal Description Royalty Acres
Section 5 T30N R47E MDB&M    
007-070-13 NW1/4NW1/4 N/A 46
       
Section 9 T30N R47E MDB&M    
007-110-01 NW1/4 N/A 160
007-110-13 E1/2 NE 1/4 NE1/4, SE1/4 NE1/4, SE1/4 SW1/4 NE1/4 N/A 70
007-110-22 NE1/4 SE1/4 SW1/4 N/A 10
007-110-23 SE1/4 NE1/4 SW1/4 N/A 10
007-110-10 W1/2NW1/4SW1/4 N/A 20
       
Section 11 T30N R47E MDB&M    
007-120-06 SE1/4 SW1/4 N/A 40
007-120-15 S1/2 SE1/4 NW1/4, N1/2 NE1/4 SW1/4, N1/2 NW1/4 SE1/4 N/A 60
007-120-29 N1/2 NW1/4 NW1/4 N/A 20
       
Section 15 T30N R47E MDB&M    
007-140-01 N1/2 NW1/4 N/A 80
007-140-03 SW1/4 NW1/4 N/A 40
007-140-05 SW1/4 NE1/4 N/A 40
007-140-12 SE1/4 SW1/4 N/A 40
007-140-14 Lots 1 & 2, also described as S1/2 SE1/4 N/A 65.39
007-140-15 SE1/4 NE1/4 SW1/4 N/A 10
007-140-17 SE1/4 NE1/4 NE1/4 N/A 10
007-140-19 S1/2 NW1/4 NE1/4 N/A 20
007-140-20 N1/2 NW1/4 NE1/4 N/A 20
007-140-21 NW1/4 NE1/4 SW1/4 N/A 10
007-140-22 NE1/4 NE1/4 SW1/4 N/A 10
007-140-23 SW1/4 NE1/4 SW1/4 N/A 10
007-140-25 NW1/4 NE1/4 NE1/4 N/A 10
007-140-26 NE1/4 NE1/4 NE1/4 N/A 10
       
Section 19 T30N R47E MDB&M    
007-150-16 E1/2 SE1/4 NE1/4 N/A 20
       
Section 21 T30N R47E MDB&M    
007-610-01 NW1/4 N/A 160
007-610-07 NE1/4SE1/4NE1/4; SE1/4SE1/4NE1/4 N/A 20
007-610-10 SE1/4 N/A 160
       
Section 23 T30N R47E MDB&M

180


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

APN Legal Description Royalty Acres
007-160-01 NW1/4 NE1/4 N/A 40
007-160-02 NE1/4 NE1/4 N/A 40
007-160-06 E1/2 SE1/4 NE1/4 N/A 20
007-160-08 N1/2 NE1/4 SE1/4 N/A 20
007-160-09 SE1/4 NE1/4 SE1/4 N/A 10
007-160-16 N1/2 SE1/4 NW1/4 5% NSR 20
007-160-17 N1/2 NW1/4 SW1/4 N/A 20
007-160-18 NW1/4 NW1/4 N/A 40
007-160-19 NE1/4 NW1/4 N/A 40
007-160-20 NE1/4 SW1/4 NW1/4 N/A 10
007-160-21 S1/2 SE1/4 NW1/4 N/A 20
007-160-22 NE1/4 NE/1/4 SW1/4 N/A 10
007-160-23 E1/2 SE1/4 SE1/4 N/A 20
007-160-25 W1/2 SW1/4 NW1/4, NE1/4 SW1/4 NW1/4 5% NSR 30
007-160-26 NW1/4 NE1/4 SW1/4 N/A 10
007-160-27 NW1/4, SW1/4 SE1/4, SE1/4 NW1/4 SE1/4 N/A 20
007-160-28 SW1/4 NE1/4 SE1/4 NW1/4 SE1/4 SE1/4 N/A 20
       
Section 27 T30N R47E MDB&M    
007-620-03 NE1/4 NE1/4 N/A 40
007-620-05 NW1/4 SE1/4 N/A 40
007-620-06 SW1/4 SE1/4 N/A 40
       
Section 29 T30N R47E MDB&M    
007-170-03 NE1/4 N/A 160
       
Section 33 T30N R47E MDB&M    
007-640-06 S1/2 NW1/4 N/A 80
                               47 Fee Parcels   1855.39
       
Section 21 T30N R48E MDB&M    
003-083-03 Lot 7, Block 11. and Lot 3, Block 15,
Crescent Valley Ranch and Farms,
Unit No. 4, Map recorded
November 5, 1959, File NO. 34552
N/A 4.77
                               48 Fee Parcels   1860.16

181


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  3.

Summary of Fire Creek Mine Leased Fee Holdings


APN Description Lessor Royalty Expiration Acres
Section 15 T30N R47E MDB&M        
007-140-04 SE1/4 NW1/4 Third Party Lessor 4% NSR (2) 40
007-140-06 SE1/4 NE1/4 Third Party Less 4% NSR (2) 40
007-140-10 NE1/4 SE1/4, E1/2
NW1/4 SE1/4
Third Party Lessor 2.5% NSR (2) 60
007-140-07 N2NW4SW4 Third Party Less 3.0% NSR & 0.5%
wheelage royalty (1)
31-Jul-33 20
007-140-09 W2NW4SE4 Third Party Lessor 3.0% NSR & 0.5%
wheelage royalty (1)
31-Jul-33 20
Section 19 T30N R47E MDB&M        
007-160-04 SW4NE4 Third Party Lessor 3.0% NSR & 0.5%
wheelage royalty (1)
31-Jul-33 40
007-160-24 NE4NW4SE4 Third Party Lessor 3.0% NSR & 0.5%
wheelage royalty (1)
31-Jul-33 10
Section 19 T30N R47E MDB&M        
007-060-69 Parcel 1 of the Sharp
Hospital Map recorded
in the Office of the Lander County
Recorder in Book 375,
Official Records, Page 170
Third Party Lessor 3.0% NSR & 0.5%
wheelage royalty (1)
31-Jul-33 9.28
                           8 Leased Fee Parcels       239.2
          8

182


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

DESCRIPTION OF MANITOBA AND ONTARIO PROPERTIES

1.

Title to Properties


(1)

Title No. 2827781/1

Legal Description:

LOT 25 BLOCK 1 PLAN 38619 WLTO
EXC FIRSTLY: THE RIGHT TO ALL MINERALS WITHIN THE MEANING OF THE REGULATIONS FOR THE DISPOSAL OF QUARTZ MINING CLAIMS ON DOMINION LANDS FOUND IN VEINS, LODES OR ROCK IN PLACE AND WHETHER SUCH MINERALS ARE FOUND SEPARATELY OR IN COMBINATION WITH EACH OTHER AS CONTAINED WITHIN
THE LIMITS OF LOT 11 GROUP 124
OTHERWISE KNOWN AS "ANNEX" MINERAL CLAIM, PLAN 3621 WLTO AND
LOT 13 GROUP 124
OTHERWISE KNOWN AS THE "DELUXE" MINERAL CLAIM, PLAN 3622 WLTO, AND
SECONDLY: ALL COAL AND COAL MINES AND ALL PLACER MINES AS SET FORTH
IN THE ORIGINAL GRANT FROM THE CROWN,
IN UNSURVEYED 11-24-13 EPM.

Encumbrances: Caveat No. 261741/1; Mortgage No. 4465085/1; Personal Property Security Notice No. 4465086/1; Mortgage No. 4565457/1, Personal Property Security Notice No. 456458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(2)

Title No. 2827785/1

Legal Description:

LOT 26 BLOCK 1 PLAN 38619 WLTO
EXC FIRSTLY: THE RIGHT TO ALL MINERALS WITHIN THE MEANING OF THE REGULATIONS FOR THE DISPOSAL OF QUARTZ MINING CLAIMS ON DOMINION LANDS FOUND IN VEINS, LODES OR ROCK IN PLACE AND WHETHER SUCH MINERALS ARE FOUND SEPARATELY OR IN COMBINATION WITH EACH OTHER AS CONTAINED WITHIN
THE LIMITS OF LOT 11 GROUP 124
OTHERWISE KNOWN AS "ANNEX" MINERAL CLAIM, PLAN 3621 WLTO AND
LOT 13 GROUP 124
OTHERWISE KNOWN AS THE "DELUXE" MINERAL CLAIM, PLAN 3622 WLTO, AND
SECONDLY: ALL COAL AND COAL MINES AND ALL PLACER MINES AS SET FORTH
IN THE ORIGINAL GRANT FROM THE CROWN,
IN UNSURVEYED 11-24-13 EPM.

Encumbrances: Caveat No. 261741/1; Mortgage No. 4465085/1; Personal Property Security Notice No. 4465086/1; Mortgage No. 4565457/1, Personal Property Security Notice No. 456458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No 4695095/1 and Mortgage No. 4696415/1.

(3)

Title No. 2827786/1

Legal Description:

LOT 17 PLAN 10968 WLTO
EXC ALL MINES AND MINERALS AS SET FORTH IN
INSTRUMENT NO. K47226/1 WLTO
IN UNSURVEYED 24-13 EPM

183


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Encumbrances: Mortgage No. 4465085/1, Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 4565458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(4)

Title No. 2827768/1

Legal Description:

FIRSTLY:
LOT 9 GROUP 124 IN 24-13 EPM
OTHERWISE KNOWN AS THE "SCARABE" MINERAL CLAIM, PLAN 3618 WLTO AND PLAN 3619 WLTO,

SECONDLY:
LOT 10 IN SAID GROUP
OTHERWISE KNOWN AS THE "WEST SCARABE" MINERAL CLAIM, PLAN 3620 WLTO,

THIRDLY:
LOT 11 IN SAID GROUP 124
OTHERWISE KNOWN AS THE "ANNEX" MINERAL CLAIM, PLAN 3621 WLTO
EXC OUT OF THIRDLY, ALL THAT PORTION WHICH LIES SOUTHWEST OF A STRAIGHT LINE DRAWN FROM THE NORTHEAST CORNER POST OF THE "CARTWRIGHT"
MINERAL CLAIM SHOWN AS CARTWRIGHT P NO.3, PLAN 3631 WLTO, TO THE
SOUTHEAST CORNER POST OF ANNEX MINERAL CLAIM, SHOWN AS ANNEX P NO. 5 ON SAID PLAN 3621,

FOURTHLY:
LOT 13 IN SAID GROUP 124
OTHERWISE KNOWN AS THE "DELUXE" MINERAL CLAIM, PLAN 3622 WLTO,

FIFTHLY:
LOT 14 IN SAID GROUP 124
OTHERWISE KNOWN AS THE "MITE FL." MINERAL CLAIM, PLAN 3623 WLTO, AND

SIXTHLY:
LOT 12 IN SAID GROUP 124
OTHERWISE KNOWN AS THE NLY 200 FEET OF THE "ROSS FL." MINERAL CLAIM, PLAN 3624 WLTO,

TOGETHER IN EACH FIRSTLY TO SIXTHLY, WITH THE RIGHT TO ALL MINERALS WITHIN THE MEANING OF THE REGULATIONS FOR THE DISPOSAL OF QUARTZ MINING CLAIMS ON DOMINION LANDS FOUND IN VEINS, LODES OR ROCK IN PLACE AND WHETHER SUCH MINERALS ARE FOUND SEPARATELY OR IN COMBINATIONS WITH EACH OTHER IN, UPON OR UNDER THE SAID LANDS, EXC OUT OF ALL THE ABOVE DESCRIBED LANDS, ALL MINES AND MINERALS AS SET FORTH IN THE ORIGINAL GRANT FROM THE CROWN.

Encumbrances: Caveat No. 219924/1, Mortgage No. 4465085/1; Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 456458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

184


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

(5)

Title No. 2827775/1

Legal Description:

LOT 11 GROUP 124 IN 24-13 EPM
OTHERWISE KNOWN AS THE "ANNEX" MINERAL CLAIM, PLAN 3621 WLTO
TOGETHER WITH THE RIGHT TO ALL MINERALS WITHIN THE MEANING OF THE REGULATIONS FOR THE DISPOSAL OF QUARTZ MINING CLAIMS ON DOMINION LANDS FOUND IN VEINS, LODES OR ROCK IN PLACE AND WHETHER SUCH MINERALS ARE FOUND SEPARATELY OR IN COMBINATION WITH EACH OTHER IN, UPON OR UNDER THE SAID LAND,
EXC FIRSTLY: ALL THAT PORTION WHICH LIES NORTHEAST OF A STRAIGHT LINE DRAWN FROM THE NORTHEAST CORNER POST OF THE "CARTWRIGHT" MINERAL CLAIM SHOWN AS CARTWRIGHT P NO.3 ON PLAN 3631 WLTO, TO THE SOUTHEAST CORNER POST OF ANNEX MINERAL SHOWN AS ANNEX P NO.5 ON SAID PLAN 3621, AND SECONDLY: ALL MINES AND MINERALS AS SET FORTH IN THE ORIGINAL
GRANT FROM THE CROWN.

Encumbrances: Caveat No. 219924/1, Mortgage No. 4465085/1; Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 456458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(6)

Title No. 2827777/1

Legal Description:

LOT 65 GROUP 124 IN 24-13 EPM
OTHERWISE KNOWN AS THE "GOLD CUP NO.2 FL." MINERAL CLAIM, PLAN 4204 WLTO
TOGETHER WITH THE RIGHT TO ALL MINERALS WITHIN THE MEANING OF THE REGULATIONS FOR THE DISPOSAL OF QUARTZ MINING CLAIMS OF DOMINION LANDS FOUND IN VEINS, LODES OR ROCK IN PLACE AND WHETHER SUCH MINERALS ARE FOUND SEPARATELY OR IN COMBINATION WITH EACH OTHER IN, UPON OR UNDER THE SAID LAND, EXC ALL MINES AND MINERALS AS SET FORTH IN THE ORIGINAL
GRANT FROM THE CROWN.

Encumbrances : Caveat No. 219924/1, Mortgage No. 4465085/1; Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 456458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(7)

Title No. 2827757/1

Legal Description:

PARCEL ONE:
LOT 45, GROUP 124 IN 24-13 EPM
OTHERWISE KNOWN AS THE "ISLAND FL." MINERAL CLAIM, PLAN 10362 WLTO
TOGETHER WITH THE RIGHT TO ALL MINERALS WITHIN THE MEANING OF THE REGULATIONS FOR THE DISPOSAL OF QUARTZ MINING CLAIMS ON DOMINION LANDS FOUND IN VEINS, LODES OR ROCK IN PLACE AND WHETHER SUCH MINERALS ARE FOUND SEPARATELY OR IN COMBINATION WITH EACH OTHER IN, UPON OR UNDER THE SAID LAND,
EXC FIRSTLY: ALL THAT PORTION CONTAINED WITHIN THE LIMITS OF PARCEL 6 PLAN 10850 WLTO, AND
SECONDLY: ALL MINES AND MINERALS AS SET FORTH IN THE ORIGINAL
GRANT FROM THE CROWN.

185


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

PARCEL TWO:
ALL THAT PORTION OF SAID LOT 45
CONTAINED WITHIN THE LIMITS OF SAID PARCEL 6,
EXC OUT OF PARCEL TWO, ALL MINES AND MINERALS AS SET FORTH IN THE
ORIGINAL GRANT FROM THE CROWN.

Encumbrances: Caveat No. 219924/1, Mortgage No. 4465085/1; Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 456458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(8)

Title No. 2827762/1

Legal Description:

FIRSTLY:
LOT 7 GROUP 124 IN 24-13 EPM
OTHERWISE KNOWN AS THE "GOLD FIELD" MINERAL CLAIM, PLAN 4042 WLTO.

SECONDLY:
LOT 64 IN SAID GROUP 124
OTHERWISE KNOWN AS THE "GOLD CUP" MINERAL CLAIM, PLAN 4041 WLTO.

THIRDLY:
LOT 66 IN SAID GROUP 124
OTHERWISE KNOWN AS THE "BIG FOUR FL" MINERAL CLAIM, PLAN 4040 WLTO
EXC OUT OF THIRDLY, SO MUCH OF THE SURFACE RIGHTS AS IS COMPRISED
WITHIN THE BED OF BIG RICE LAKE,

TOGETHER WITH THE RIGHT TO ALL MINERALS WITHIN THE MEANING OF THE REGULATIONS FOR THE DISPOSAL OF QUARTZ MINING CLAIMS ON DOMINION LANDS FOUND IN VEINS, LODES OR ROCK IN PLACE AND WHETHER SUCH MINERALS ARE FOUND SEPARATELY OR IN COMBINATION WITH EACH OTHER IN, UPON OR UNDER THE SAID ABOVE DESCRIBED LANDS,
EXC OUT OF ALL THE ABOVE SAID DESCRIBED LANDS, ALL MINES
AND MINERALS AS SET FORTH IN THE ORIGINAL GRANT FROM THE CROWN

Encumbrances: Mortgage No. 4465085/1, Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 4565458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(9)

Title No. 2827765/1

Legal Description:

LOT 8 GROUP 124 IN 24-13 EPM
OTHERWISE KNOWN AS THE "EMMA" MINERAL CLAIM, PLAN 3618 WLTO
TOGETHER WITH A RIGHT TO ALL MINERALS WITHIN THE MEANING OF THE REGULATIONS FOR THE DISPOSAL OF QUARTZ MINING CLAIMS ON DOMINION LANDS FOUND IN VEINS, LODES OR ROCK IN PLACE AND WHETHER SUCH MINERALS ARE FOUND SEPARATELY OR IN COMBINATION WITH EACH OTHER IN, UPON OR UNDER THE SAID LAND,
EXC ALL MINES AND MINERALS AS SET FORTH IN THE ORIGINAL
GRANT FROM THE CROWN.

186


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Encumbrances: Mortgage No. 4465085/1, Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 4565458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(10)

Title No. 2827749/1

Legal Description:

THE RIGHT TO ALL MINERALS WITHIN THE MEANING OF THE REGULATIONS FOR THE DISPOSAL OF QUARTZ MINING CLAIMS ON DOMINION LANDS FOUND IN VEINS, LODES OR ROCK IN PLACE AND WHETHER SUCH MINERALS ARE FOUND SEPARATELY OR IN COMBINATION WITH EACH OTHER IN, UPON OR UNDER THE FOLLOWING DESCRIBED LAND:

PARCEL ONE:
LOT 5 GROUP 124 IN 24-13 EPM
OTHERWISE KNOWN AS THE "GABRIELLE" MINERAL CLAIM, PLAN 3728 WLTO
EXC FIRSTLY: ROAD, PLAN 3790 WLTO
SECONDLY: ALL COAL AND COAL MINES AND ALL PLACER MINES AS SET FORTH
IN THE ORIGINAL GRANT FROM THE CROWN, AND
THIRDLY: ALL PORTIONS OF SAID LOT WHICH MAY BE COMPRISED WITHIN THE LIMITS OF STATUTORY ROAD ALLOWANCES WHEN THE TRACT WITHIN WHICH SAID LOT IS SITUATED WILL BE SUBDIVIDED INTO SECTIONS AND QUARTER SECTIONS
AS SET FORTH IN THE ORIGINAL GRANT FROM THE CROWN.

PARCEL TWO:
LOT 6 IN SAID GROUP 124
OTHERWISE KNOWN AS THE "CARTWRIGHT" MINERAL CLAIM, PLAN 3631 WLTO
EXC FIRSTLY: SAID PLAN 3790
SECONDLY: ALL COAL AND COAL MINES AND ALL PLACER MINES AS SET FORTH
IN THE ORIGINAL GRANT FROM THE CROWN, AND

THIRDLY: ALL PORTIONS OF SAID LOT 6 WHICH MAY BE COMPRISED WITHIN THE LIMITS OF STATUTORY ROAD ALLOWANCES WHEN THE TRACT WITHIN WHICH SAID LOT IS SITUATED WILL BE SUBDIVIDED INTO SECTIONS AND QUARTER SECTIONS

AS SET FORTH IN THE ORIGINAL GRANT FROM THE CROWN.

Encumbrances: Caveat No. 219924/1, Mortgage No. 4465085/1; Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 456458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(11)

Title No. 2827754/1

Legal Description:

LOT 15 GROUP 124 IN 24-13 EPM
OTHERWISE KNOWN AS THE "JUMPING CAT" MINERAL CLAIM, PLAN 3767 WLTO
TOGETHER WITH THE RIGHT TO ALL MINERALS WITHIN THE MEANING OF THE
REGULATIONS FOR THE DISPOSAL OF QUARTZ MINING CLAIMS ON DOMINION LANDS
FOUND IN VEINS, LODES OR ROCK IN PLACE AND WHETHER SUCH MINERALS ARE
FOUND SEPARATELY OR IN COMBINATION WITH EACH OTHER IN, UPON OR UNDER
THE SAID LAND,
EXC ALL MINES AND MINERALS AS SET FORTH IN THE ORIGINAL
GRANT FROM THE CROWN.

187


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Encumbrances: Mortgage No. 4465085/1, Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 4565458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(12)

Title No. 2827755/1

Legal Description:

LOT 47 GROUP 124 IN 24-13 EPM
OTHERWISE KNOWN AS THE "RACHEL" MINERAL CLAIM, PLAN 3712 WLTO
TOGETHER WITH A RIGHT TO ALL MINERALS WITHIN THE MEANING OF THE
REGULATIONS FOR THE DISPOSAL OF QUARTZ MINING CLAIMS ON DOMINION LANDS
FOUND IN VEINS, LODES OR ROCK IN PLACE AND WHETHER SUCH MINERALS ARE
FOUND SEPARATELY OR IN COMBINATION WITH EACH OTHER IN, UPON OR UNDER
THE SAID LAND,
EXC ALL MINES AND MINERALS AS SET FORTH IN
INSTRUMENT NO. 203635/1 WLTO.
IN 24-13 EPM

Encumbrances: Mortgage No. 4465085/1, Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 4565458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(13)

Title No. 2827833/1

Legal Description:

FIRSTLY:
LOT 46 GROUP 124 IN 24-13 EPM
OTHERWISE KNOWN AS THE "SAN ANTONIO" MINERAL CLAIM, PLAN 10361 WLTO
EXC ALL THAT PORTION CONTAINED WITHIN THE LIMITS BORDERED RED ON PLAN 10850 WLTO
TOGETHER WITH THE RIGHT TO ALL MINERALS WITHIN THE MEANING OF THE REGULATIONS FOR THE DISPOSAL OF QUARTZ MINING CLAIMS ON DOMINION LANDS FOUND IN VEINS, LODES OR ROCK IN PLACE AND WHETHER SUCH MINERALS ARE FOUND SEPARATELY OR IN COMBINATION WITH EACH OTHER,
IN UPON OR UNDER THE SAID LAND,
EXC ALL MINES AND MINERALS AS SET FORTH IN THE ORIGINAL
GRANT FROM THE CROWN, AND

SECONDLY:
PARCEL 2 BORDERED RED ON SAID PLAN 10850
TOGETHER WITH THE RIGHT TO ALL MINERALS WITHIN THE MEANING OF THE REGULATIONS FOR THE DISPOSAL OF QUARTZ MINING CLAIMS ON DOMINION LANDS, FOUND IN VEINS, LODES OR ROCK IN PLACE AND WHETHER SUCH MINERALS ARE FOUND SEPARATELY OR IN COMBINATION WITH EACH OTHER,
IN UPON OR UNDER SAID PARCEL 2,
EXC OUT OF SECONDLY, ALL MINES AND MINERALS AS SET FORTH IN THE
ORIGINAL GRANT FROM THE CROWN.
IN SAID LOT 46, AND
ALL THOSE PORTIONS OF PARCELS 1, 3, 4, 5 AND 6 BORDERED RED ON SAID PLAN 10850
OTHERWISE KNOWN AS THE "SAN ANTONIO" MINERAL CLAIM, ON SAID PLAN 10361
TOGETHER WITH THE RIGHT TO ALL MINERALS WITHIN THE MEANING OF THE REGULATIONS FOR THE DISPOSAL OF QUARTZ MINING CLAIMS ON DOMINION LANDS FOUND IN VEINS, LODES OR ROCK IN PLACE AND WHETHER SUCH MINERALS ARE FOUND SEPARATELY OR IN COMBINATION WITH EACH OTHER, IN, UPON OR UNDER SAID PARCELS 1, 3, 4, 5 AND 6
EXC OUT OF SAID PARCELS 1, 3, 4, 5 AND 6,
ALL MINES AND MINERALS AS SET FORTH IN THE ORIGINAL GRANT FROM THE CROWN, IN SAID LOT 46.

188


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Encumbrances: Mortgage No. 4465085/1, Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 4565458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(14)

Title No. 2827746/1

Legal Description:

LOT 18 PLAN 10968 WLTO
EXC ALL MINES AND MINERALS AS SET FORTH IN
INSTRUMENT NO. K47226/1 WLTO
IN UNSURVEYED 24-13 EPM

Encumbrances: Mortgage No. 4465085/1, Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 4565458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(15)

Title No. 2827791/1

Legal Description:

LOT 15 PLAN 10968 WLTO
EXC ALL MINES AND MINERALS AS SET FORTH IN
INSTRUMENT NO. K47226/1 WLTO
IN UNSURVEYED 24-13 EPM.

Encumbrances: Mortgage No. 4465085/1, Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 4565458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(16)

Title No. 2827795/1

Legal Description:

LOT 16 PLAN 10968 WLTO
EXC ALL MINES AND MINERALS AS SET FORTH IN
INSTRUMENT NO. K47226/1 WLTO
IN UNSURVEYED 24-13 EPM.

189


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Encumbrances: Caveat No. 261741/1; Mortgage No. 4465085/1; Personal Property Security Notice No. 4465086/1; Mortgage No. 4565457/1, Personal Property Security Notice No. 456458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(17)

Title No. 2827800/1

Legal Description:

LOT 10 BLOCK 5 PLAN 15331 WLTO
EXC ALL MINES AND MINERALS AND OTHER MATTERS AS SET FORTH IN
THE CROWN LANDS ACT,
IN UNSURVEYED 24-13 EPM.

Encumbrances: Mortgage No. 4465085/1, Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 4565458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

(18)

Title No. 2827802/1

Legal Description:

LOT 11 BLOCK 5 PLAN 15331 WLTO
EXC ALL MINES AND MINERALS AND OTHER MATTERS AS SET FORTH IN
THE CROWN LANDS ACT,
IN UNSURVEYED 24-13 EPM.

Encumbrances: Mortgage No. 4465085/1, Personal Property Security Notice No. 4465086/1, Mortgage No. 4565457/1, Personal Property Security Notice No. 4565458/1, Mortgage No. 4636307/1; Debenture from KLONDEX CANADA LTD. in favour of 7097914 MANITOBA LTD. dated January 21, 2016 and registered as Mortgage No. 4695095/1 and Mortgage No. 4696415/1.

  1.

MANITOBA MINES AND MINERALS

HOLDER: (100% Interest)

TYPE CLAIM NAME CLAIM NUMBER
 
Mineral Lease [No claim name] ML63
     
Patent Emma P10_8
  Gabrielle P12_227
  Goldcup P15_64
  Gold Cup No. 2 Fr. P16_65
  Goldfield P20_7
  Jumping Cat P26_15
  Annex P2_11
  Mite Fr. P32_14
  Rachel P35_47
  Ross Fr. P38_951
  Ross Fr. (N200) P39_12A
  Big Four Fr. P3_66
  San Antonio P41_46
  Scarabe P42_9

190


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

TYPE CLAIM NAME CLAIM NUMBER
  West Scarabe P47_10
  Island Fr. P48_45
  Cartwright P4_6
  Deluxe P9_13
     
 
Claim RICE NO 4 CB11704
Claim GOLD HORSE 3 MB1296
Claim GOLD HORSE 1 MB1327
Claim GOLD HORSE 2 MB1328
Claim GOLD HORSE 4 MB1354
Claim JADE 3 MB1846
Claim JADE 4 MB1847
Claim SANANTONIO JR 4 MB1928
Claim GEO5 MB1932
Claim BUB 1 MB2101
Claim BUB 2 MB2102
Claim BUB 3 MB2103
Claim BUB 4 MB2104
Claim BUB 5 MB2105
Claim BUB 6 MB2106
Claim BERE 6 MB3433
Claim BILL 100 MB3737
Claim HURON #1 MB3949
Claim BILL 90 MB3950
Claim BILL 91 MB3951
Claim BILL 92 MB3952
Claim BILL 93 MB3953
Claim BILL 94 MB3954
Claim BILL 95 MB3955
Claim BILL 96 MB3956
Claim BILL 97 MB3957
Claim BILL 98 MB3960
Claim BILL 99 MB3961
Claim SAN 6 MB4423
Claim SAN 8 MB4425
Claim SAN 9 MB4498
Claim VAN MB4563
Claim SAN 16 MB4942
Claim GOLDRIDGE 1 MB5035
Claim GOLDRIDGE 2 MB5036
Claim GOLDRIDGE 3 MB5037
Claim GOLDRIDGE 4 MB5038
Claim GOLDRIDGE 5 MB5039
Claim GOLDRIDGE 6 MB5040
Claim GOLDRIDGE 15 MB5455
Claim GOLDRIDGE 14 MB5457
Claim AAA MB5465
Claim CONTACT 1 MB5589
Claim CONTACT 2 MB5590
Claim ROSS FR MB5931
Claim JILL FRACTION MB5932

191


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

TYPE CLAIM NAME CLAIM NUMBER
Claim SAN 18 MB5935
Claim SAN 21 MB6134
Claim SAN 20 MB6135
Claim SAN 22 FR MB6136
Claim RICK FR. MB6645
Claim SAN 31 MB6646
Claim SAN 40 FR MB6647
Claim BBB MB7168
Claim ULTRA 24 MB7506
Claim ULTRA 26 MB7507
Claim ULTRA 25 MB7508
Claim ULTRA 21 MB7509
Claim CUD 3 MB8111
Claim SAN 22 MB8377
Claim SAN 23 MB8378
Claim SAN 24 MB8379
Claim SAN 25 MB8380
Claim SAN 26 MB8381
Claim SAN 27 MB8382
Claim SAN 28 MB9383
Claim ROSS 1 FR. MB8384
Claim TOM 4 MB9150
Claim TOM 3 MB9151
Claim TOM 5 MB9152
Claim TOM 6 MB9154
Claim TOM 7 MB9155
Claim TOM 8 MB9162
Claim ROSS 2 MB9379
Claim SAN 29 MB9433
Claim SAN 30 MB9434
Claim GOLD HORSE 7 MB9521
Claim GOLD HORSE 10 MB9522
Claim GOLD HORSE 6 MB9523
Claim GOLD HORSE 9 MB9524
Claim GOLD HORSE 11 MB9525
Claim GOLD HORSE 5 MB9526
Claim GOLD HORSE 8 MB9527
Claim SAN 54 MB9538
Claim SAN 50 MB9540
Claim BILL 31 FR MB9575
Claim SGR MB9600
Claim SAN 2 FR MB9732
Claim SAN 11 P2169F
Claim SAN 12 P2170F
Claim NUPIC 1 FR. W44496
Claim NUPIC 2 FR. W44497
Claim NUPIC 3 W44498
Claim NUPIC 4 W44499
Claim NUPIC 5 W44500
Claim NUPIC 6 W44501
Claim NUPIC 7 W44502
Claim NUPIC 14 W44509

192


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

TYPE CLAIM NAME CLAIM NUMBER
Claim NUPIC 17 FR. W44512
Claim NUPIC 18 W44513
Claim NUPIC 19 W44514
Claim NUPIC 20 W44515
Claim RICE NO 5 W46385
Claim GOLD CREEK #5 W47000
Claim ALIX W48116
Claim KAREN W48245
Claim ZORRO W48247
Claim LUANA # EXT W48337
Claim LUANA W48442
Claim BISSETT 1 W48765
Claim BISSETT W48796
Claim RICE 45 W48797
Claim ODESSA W49083
Claim JADE W49440
Claim JADE 2 W49441
Claim SHARON W49444
Claim WAWA W49445
Claim BISSETT 3 FR W49484
Claim NUG 1 W49605
Claim JADE #1 W50355
Claim DANCER W51793
Claim LUANA FR. W51799
Claim FLORA W52076
Claim LODE W52077
Claim ERIC W52779
Claim HENRIKSON W52780
Claim SCUD W52781
Claim FLASH W52840
Claim FRUM W52841
Claim BEAR W52842
Claim SPIDER W52843
Claim FLY W52844
Claim WEB FRACTION W52845
Claim PATRIOT W53116
Claim SAN 1 W53314
Claim ORE 1 W53340
Claim NUG 2 W53341
Claim BEA W53391
Claim ORO W53447
Claim SAN 4 W53803
Claim SAN 2 W53846
Claim SAN 3 W53847
Claim BERE 5 W53930
Claim BERE 1 W54255
Claim MALIBU FR. MB2118
Claim [No claim name] W45949
Claim [No claim name] CB8043
Claim GEO 3 MB1357
Claim GEO 4 MB1915
Claim GOLD PERCULATOR 1 MB1922

193


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

TYPE CLAIM NAME CLAIM NUMBER
Claim SANANTONIO JR 1 MB1924
Claim SANANTONIO JR 2 MB1925
Claim SANANTONIO JR 3 MB1926
Claim GOLDEN CANYONS 1 MB1927
Claim GOLD CANYON 3 MB1930
Claim GOLD CANYON 4 MB1931
Claim GOLD CANYON 5 MB1934
Claim GOLDEN CANYONS 2 MB1935
Claim GOLDEN CANYONS 3 MB1936
Claim GOLD PERCULATOR 2 MB1937
Claim GOLD CANYON 1 MB1943
Claim GOLD CANYON 6 MB1944
Claim MOTHERLOAD 1 MB1945
Claim GOLD TWINS 1 MB1946
Claim GOLD TWINS 2 MB1947
Claim GOLD TWINS 3 MB1948
Claim GOLD TWINS 4 MB1949
Claim GOLD TWINS 5 MB1950
Claim OLD PROSPECTOR 2 MB1951
Claim OLD PROSPECTOR 3 MB1979
Claim GEO 7 MB2002
Claim GEO 9 MB2004
Claim GEO 10 MB2005
Claim MARLEEN MB2067
Claim MALIBU 1 MB2115
Claim MALIBU 2 MB2116
Claim JADE MB2120
Claim PAULA 5 MB2175
Claim KIM 10 MB2180
Claim KIM 1 MB2181
Claim PAULA 2378 MB2378
Claim PAULA 2379 MB2379
Claim PAULA 2380 MB2380
Claim PAULA 2381 MB2381
Claim KIM 8 MB2707
Claim PAULA 10 MB2710
Claim PAULA 12 MB2712
Claim LOOK OUT MB2753
Claim PAULA 13 MB2755
Claim SABINA 5 MB2787
Claim SABINA 1 MB2791
Claim SABINA 2 MB2792
Claim LAURALEE 8 MB2798
Claim KIM 9 MB2799
Claim LAURALEE 1 MB2801
Claim LAURALEE 2 MB2802
Claim MONA 2945 MB2945
Claim MONA 2949 MB2949
Claim KIM 2975 MB2975
Claim LAURALEE MB2978
Claim LAURALEE 2979 MB2979
Claim LAURALEE 2980 MB2980

194


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

TYPE CLAIM NAME CLAIM NUMBER
Claim LAURALEE 2981 MB2981
Claim LAURALEE 2982 MB2982
Claim LAURALEE 2983 MB2983
Claim LAURALEE 2984 MB2984
Claim OX 2987 MB2987
Claim YORK MB2991
Claim MONA 2998 MB2998
Claim MONA 3000 MB3000
Claim MONA 3001 MB3001
Claim MONA 3028 MB3028
Claim MONA 3029 MB3029
Claim RACHELLE 3030 MB3030
Claim MONA 3031 MB3031
Claim RACHELLE 3032 MB3032
Claim RACHELLE 3033 MB3033
Claim LAURALEE 3035 MB3035
Claim DEB 36 MB3036
Claim MONA 3037 MB3037
Claim JACQUIE 3038 MB3038
Claim KIM 3227 MB3227
Claim DEB 3229 MB3229
Claim SABINA 3 MB3261
Claim KIM 3593 MB3593
Claim REO 3596 MB3596
Claim REO 3893 MB3893
Claim REO 3895 MB3895
Claim REO 3897 MB3897
Claim OLD EDKE MB4604
Claim OLD EDKE 1 MB4605
Claim OLD EDKE 3 MB4606
Claim OLD EDKE 4 MB4607
Claim JARY 1 MB4611
Claim JARY 2 MB4612
Claim SABINA 7 MB4781
Claim SABINA 6 MB4782
Claim SABINA 4 MB4783
Claim JARY 5 F MB5005
Claim ROBERT PETER MB5006
Claim TATONGA 1 MB5007
Claim WANI 1 MB5568
Claim WANI 2 MB5569
Claim MARA MB5694
Claim JARY 6112 MB6112
Claim JARY 6113 MB6113
Claim RIO 5F MB6115
Claim RIO 4 MB6116
Claim RIO 3 MB6117
Claim RIO 2 MB6118
Claim RIO 1 MB6119
Claim AUDREY 6122 MB6122
Claim AUDREY 6123 MB6123
Claim PAULA 632 MB632

195


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

TYPE CLAIM NAME CLAIM NUMBER
Claim PAULA 633 MB633
Claim JONA MB2109
Claim DREW MB3260
Claim PFG MB5272
Claim PFG 1 MB5273
Claim PFG 2 MB5274
Claim PFG 3 MB5275
Claim PFG 4 MB5276
Claim PFG 5 MB5277
Claim PFG 6 MB5278
Claim PFG 7 MB5279
Claim PFG 8 MB5280
Claim PFG 9 MB5281
Claim BILL 31 MB9231
Claim BILL 32 MB9232
Claim BILL 33 MB9233
Claim BILL 34 MB9378
Claim BILL 35 MB9380
Claim PFG 10 MB9382
Claim CHCALA 1 W53405
Claim GLORIA W53619
Claim REX 4 MB1756
Claim SAN 70 MB11576
Claim SAN 71 MB11577
Claim SAN 73 MB11579
Claim SAN 74 MB11580

HOLDER: (50% Interest) and GREENBELT GOLD MINES INC. (50% Interest)

TYPE CLAIM NAME CLAIM NUMBER
 
Claim GOLDSTONE 15876
Claim FOX 15922
Claim WOLF 25885
Claim FISHER 25896
Claim GOLDEN STAR 1 27506
Claim MARIGOLD 27508
Claim GOLD FLY 27510
Claim WOLVERINE FRACTIONAL 28950
Claim LISGAR 29940
Claim GOLDEN TRUTH FR 31682
Claim I.X.L. W1097
Claim A.B. NO 1 W14003
Claim A.B. NO 2 W14004
Claim A.B. NO 3 W14005
Claim A.B. NO 4 W14006
Claim A.B. NO 5 W14007
Claim A.B. NO 6 W14008
Claim SOUTH SIDE #1 W232
Claim SOUTH SIDE W233
Claim PAYUK W44240
Claim MARQUIS W44242

196


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

TYPE CLAIM NAME CLAIM NUMBER
Claim PRIME W44243
Claim GOLDZONE NO 12 W4464
Claim GOLDZONE FRAC W46424
Claim I.X.L. FR. W5856
Claim LOON W89
Claim WHITE W90

  2.

ONTARIO MINES AND MINERALS

PORCUPINE MINING CLAIMS
PART ONE HOLDER: (100% INTEREST)

No. Claim Number Mining Division Township/Area Status Due Date
 1. 817604 PORCUPINE KEEFER Active 2016-JUN-28
 2. 817605 PORCUPINE KEEFER Active 2016-JUN-28
 3. 817608 PORCUPINE KEEFER Active 2016-JUN-28
 4. 833192 PORCUPINE KEEFER Active 2016-JUN-28
 5. 833195 PORCUPINE KEEFER Active 2016-JUN-28
 6. 947837 PORCUPINE DENTON Active 2016-JUN-28
 7. 947838 PORCUPINE DENTON Active 2016-JUN-28
 8. 947839 PORCUPINE DENTON Active 2016-JUN-28
 9. 947840 PORCUPINE DENTON Active 2016-JUN-28
 10. 947841 PORCUPINE DENTON Active 2016-JUN-28
 11. 947842 PORCUPINE DENTON Active 2016-JUN-28
 12. 947843 PORCUPINE DENTON Active 2016-JUN-28
 13. 947844 PORCUPINE DENTON Active 2016-JUN-28
 14. 947845 PORCUPINE DENTON Active 2016-JUN-28
 15. 947846 PORCUPINE DENTON Active 2016-JUN-28
 16. 947847 PORCUPINE DENTON Active 2016-JUN-28
 17. 947848 PORCUPINE DENTON Active 2016-JUN-28
 18. 947849 PORCUPINE DENTON Active 2016-JUN-28
 19. 947850 PORCUPINE DENTON Active 2016-JUN-28

197


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

No. Claim Number Mining Division Township/Area Status Due Date
20. 947851 PORCUPINE DENTON Active 2016-JUN-28
21. 947852 PORCUPINE DENTON Active 2016-JUN-28
22. 947853 PORCUPINE DENTON Active 2016-JUN-28
23. 947854 PORCUPINE DENTON Active 2016-JUN-28
24. 947858 PORCUPINE DENTON Active 2016-JUN-28
25. 947863 PORCUPINE KEEFER Active 2016-JUN-28
26. 947864 PORCUPINE KEEFER Active 2016-JUN-28
27. 947865 PORCUPINE KEEFER Active 2016-JUN-28
28. 947866 PORCUPINE KEEFER Active 2016-JUN-28
29. 947867 PORCUPINE KEEFER Active 2016-JUN-28
30. 947869 PORCUPINE KEEFER Active 2016-JUN-28
31. 947870 PORCUPINE KEEFER Active 2016-JUN-28
32. 947871 PORCUPINE KEEFER Active 2016-JUN-28
33. 947872 PORCUPINE KEEFER Active 2016-JUN-28
34. 947873 PORCUPINE KEEFER Active 2016-JUN-28
35. 947874 PORCUPINE KEEFER Active 2016-JUN-28
36. 947875 PORCUPINE KEEFER Active 2016-JUN-28
37. 947876 PORCUPINE KEEFER Active 2016-JUN-28
38. 947877 PORCUPINE KEEFER Active 2016-JUN-28
39. 947878 PORCUPINE KEEFER Active 2016-JUN-28
40. 947879 PORCUPINE KEEFER Active 2016-JUN-28
41. 947880 PORCUPINE KEEFER Active 2016-JUN-28
42. 947881 PORCUPINE KEEFER Active 2016-JUN-28
43. 947882 PORCUPINE KEEFER Active 2016-JUN-28
44. 947885 PORCUPINE KEEFER Active 2016-JUN-28
45. 947886 PORCUPINE KEEFER Active 2016-JUN-28

198


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

No. Claim Number Mining Division Township/Area Status Due Date
46. 947887 PORCUPINE KEEFER Active 2016-JUN-28
47. 947888 PORCUPINE KEEFER Active 2016-JUN-28
48. 947889 PORCUPINE KEEFER Active 2016-JUN-28
49. 949074 PORCUPINE KEEFER Active 2016-JUN-28
50. 949904 PORCUPINE DENTON Active 2016-JUN-28
51. 949905 PORCUPINE DENTON Active 2016-JUN-28
52. 949906 PORCUPINE DENTON Active 2016-JUN-28
53. 949907 PORCUPINE DENTON Active 2016-JUN-28
54. 949908 PORCUPINE DENTON Active 2016-JUN-28
55. 949909 PORCUPINE DENTON Active 2016-JUN-28
56. 949910 PORCUPINE DENTON Active 2016-JUN-28
57. 949911 PORCUPINE DENTON Active 2016-JUN-28
58. 949912 PORCUPINE DENTON Active 2016-JUN-28
59. 949913 PORCUPINE DENTON Active 2016-JUN-28
60. 949914 PORCUPINE DENTON Active 2016-JUN-28
61. 949915 PORCUPINE DENTON Active 2016-JUN-28
62. 949921 PORCUPINE DENTON Active 2016-JUN-28
63. 949922 PORCUPINE DENTON Active 2016-JUN-28
64. 949923 PORCUPINE DENTON Active 2016-JUN-28
65. 949924 PORCUPINE DENTON Active 2016-JUN-28
66. 949925 PORCUPINE DENTON Active 2016-JUN-28
67. 949928 PORCUPINE DENTON Active 2016-JUN-28
68. 982288 PORCUPINE DENTON Active 2016-JUN-28
69. 982289 PORCUPINE DENTON Active 2016-JUN-28
70. 982290 PORCUPINE DENTON Active 2016-JUN-28
71. 982291 PORCUPINE DENTON Active 2016-JUN-28

199


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

No. Claim Number Mining Division Township/Area Status Due Date
72. 982292 PORCUPINE DENTON Active 2016-JUN-28
73. 996605 PORCUPINE KEEFER Active 2016-JUN-28
74. 996609 PORCUPINE KEEFER Active 2016-JUN-28
75. 997233 PORCUPINE DENTON Active 2016-JUN-28
76. 1087474 PORCUPINE KEEFER Active 2016-JUN-28
77. 1087475 PORCUPINE KEEFER Active 2016-JUN-28
78. 1087476 PORCUPINE KEEFER Active 2016-JUN-28
79. 1087477 PORCUPINE KEEFER Active 2016-JUN-28
80. 4241345 PORCUPINE KEEFER Active 2017-APR-14
81. 4241346 PORCUPINE KEEFER Active 2017-APR-14
82. 4241347 PORCUPINE DENTON Active 2017-APR-14
83. 3002972 PORCUPINE CARSCALLEN Active 2016-NOV-29
84. 3002999 PORCUPINE CARSCALLEN Active 2016-NOV-29
85. 3010654 PORCUPINE WHITESIDES Active 2016-APR-22

PORCUPINE MINING CLAIMS
PART TWO HOLDER: (50% INTEREST)

No. Claim Number Mining Division Township/Area Status Due Date
1. 3010236 PORCUPINE TULLY Active 2018-JUL-14
2. 3010237 PORCUPINE TULLY Active 2018-JUL-14

MINING LEASE
HOLDER: (50% INTEREST)

PIN 65330−0016 (LT), being PCL 469 SEC LC; LT 10 CON 1 TULLY; MINING CLAIM P. 57471 TULLY; MINING CLAIM P. 57472 TULLY; MINING CLAIM P. 57473 TULLY; MINING CLAIM P. 57474 TULLY; MINING CLAIM P. 57475 TULLY; MINING CLAIM P. 57476 TULLY; MINING CLAIM P. 102250 TULLY; MINING CLAIM P. 102251 TULLY; S 1/2 OF S 1/2 LT 11 CON 2 TULLY; MINING CLAIM P. 57463 TULLY; MINING CLAIM P. 57464 TULLY; PT LT 11 CON 1 TULLY BEING N 1/2 & N 1/2 OF S 1/2; MINING CLAIM P. 57479 TULLY; MINING CLAIM P. 57480 TULLY; MINING CLAIM P. 57467 TULLY; MINING CLAIM P. 57468 TULLY; MINING CLAIM P. 57485 TULLY; MINING CLAIM P. 57486 TULLY; DISTRICT OF COCHRANE

COCHRANE PATENTED CLAIMS

200


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

PIN 65473−0179 (LT), being MINING RIGHTS ONLY PCL 6966 SEC CST; MINING CLAIM P22841
KEEFER; DISTRICT OF COCHRANE; TOWN OF COCHRANE

PIN 65473−0181 (LT), being MINING RIGHTS ONLY PCL 7311 SEC CST; MINING CLAIM P27877
KEEFER BEING LAND AND LAND COVERED WITH THE WATER OF PART OF AN UNNAMED LAKE
WITHIN THE LIMITS OF THIS MINING CLAIM; DISTRICT OF COCHRANE; CITY OF TIMMINS

PIN 65473−0183 (LT), being MINING RIGHTS ONLY PCL 7864 SEC CST; MINING CLAIM P26782
KEEFER; DISTRICT OF COCHRANE; CITY OF TIMMINS

PIN 65473−0185 (LT), being MINING RIGHTS ONLY PCL 7281 SEC CST; MINING CLAIM P25078
KEEFER; DISTRICT OF COCHRANE; CITY OF TIMMINS

PIN 65473−0187 (LT), being MINING RIGHTS ONLY PCL 7943 SEC CST; MINING CLAIM P26781
KEEFER; DISTRICT OF COCHRANE; CITY OF TIMMINS

PIN 65473−0189 (LT), being MINING RIGHTS ONLY PCL 7362 SEC CST; MINING CLAIM P25079
KEEFER; DISTRICT OF COCHRANE; CITY OF TIMMINS

KENORA MINING CLAIMS
HOLDER: KLONDEX CANADA LTD. (100% INTEREST)

No. Claim Number Mining Division Township/Area Status Due Date
1. 4208700 KENORA ATIKWA LAKE AREA Active-Hold 2016-FEB-07
2. 4208701 KENORA ATIKWA LAKE AREA Active-Hold 2016-FEB-07
3. 4208702 KENORA ATIKWA LAKE AREA Active-Hold 2016-FEB-07
4. 4208703 KENORA ATIKWA LAKE AREA Active-Hold 2016-FEB-07
5. 4208704 KENORA ATIKWA LAKE AREA Active-Hold 2016-FEB-07
6. 4208705 KENORA ATIKWA LAKE AREA Active-Hold 2016-FEB-07
7. 4208706 KENORA ATIKWA LAKE AREA Active 2017-FEB-07
8. 4208707 KENORA ATIKWA LAKE AREA Active-Hold 2016-FEB-07
9. 4208708 KENORA ATIKWA LAKE AREA Active - Hold 2016-FEB-07
10. 4208709 KENORA ATIKWA LAKE AREA Active - Work
Report Pending
2017-FEB-07
11. 4212129 KENORA ATIKWA LAKE AREA Active 2016-AUG-24
12. 4212130 KENORA ATIKWA LAKE AREA Active 2016-AUG-24
13. 4212131 KENORA ATIKWA LAKE AREA Active 2016-AUG-24
14. 4212132 KENORA ATIKWA LAKE AREA Active 2016-AUG-24
15. 4212133 KENORA ATIKWA LAKE AREA Active - Work 2016-AUG-24

201


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

No. Claim Number Mining Division Township/Area Status Due Date
        Report Pending  
16. 4213420 KENORA ATIKWA LAKE AREA Active 2016-MAY-04
17. 4213421 KENORA ATIKWA LAKE AREA Active 2016-MAY-04
18. 4213422 KENORA ATIKWA LAKE AREA Active 2016-APR-23
19. 4213423 KENORA ATIKWA LAKE AREA Active 2016-APR-23
20. 4213424 KENORA ATIKWA LAKE AREA Active 2016-MAY-04
21. 4213425 KENORA ATIKWA LAKE AREA Active 2016-MAY-04
22. 4214238 KENORA ATIKWA LAKE AREA Active 2017-APR-03
23. 4219064 KENORA ATIKWA LAKE AREA Active-Hold 2016-MAR-03
24. 4219065 KENORA ATIKWA LAKE AREA Active-Hold 2016-MAR-03
25. 4219066 KENORA ATIKWA LAKE AREA Active-Hold 2016-MAR-03
26. 4219067 KENORA ATIKWA LAKE AREA Active-Hold 2016-MAR-03
27. 4219068 KENORA ATIKWA LAKE AREA Active-Hold 2016-MAR-03
28. 4228981 KENORA ATIKWA LAKE AREA Active 2016-APR-02
29. 1247471 KENORA TURTLEPOND LAKE AREA Active 2017-FEB-03
30. 1247472 KENORA TURTLEPOND LAKE AREA Active 2017-MAY-29
31. 3012581 KENORA TURTLEPOND LAKE AREA Active 2016-DEC-06
32. 4219025 KENORA TURTLEPOND LAKE AREA Active 2016-DEC-19
33. 4219026 KENORA TURTLEPOND LAKE AREA Active 2016-DEC-19
34. 4219027 KENORA TURTLEPOND LAKE AREA Active 2016-DEC-19
35. 4219028 KENORA TURTLEPOND LAKE AREA Active 2016-DEC-19
36. 4219029 KENORA TURTLEPOND LAKE AREA Active 2016-DEC-19

202


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

No. Claim Number    Mining Division Township/Area Status Due Date
37. 4219030 KENORA TURTLEPOND LAKE  AREA Active 2016-DEC-19
38. 4219031 KENORA TURTLEPOND LAKE  AREA Active 2016-DEC-19
39. 4219032 KENORA TURTLEPOND LAKE  AREA Active 2016-DEC-19
40. 4219033 KENORA TURTLEPOND LAKE  AREA Active 2016-DEC-19
41. 4219034 KENORA TURTLEPOND LAKE  AREA Active 2016-DEC-19
42. 4219035 KENORA TURTLEPOND LAKE  AREA Active 2016-DEC-19
43. 4219036 KENORA TURTLEPOND LAKE  AREA Active 2016-DEC-19
44. 4219037 KENORA TURTLEPOND LAKE  AREA Active 2016-DEC-19
45. 4219038 KENORA TURTLEPOND LAKE  AREA Active 2016-DEC-19
46. 4219039 KENORA TURTLEPOND LAKE  AREA Active 2016-DEC-19
47. 4219040 KENORA TURTLEPOND LAKE  AREA Active 2016-DEC-19
48. 4219041 KENORA TURTLEPOND LAKE  AREA Active 2016-DEC-19
49. 4219042 KENORA TURTLEPOND LAKE  AREA Active 2016-DEC-19

203


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE I

Litigation

  1.

Civil Litigation Matters

William J. Solloway v. Klondex Mines Ltd. / Ontario Superior Court of Justice / Court File No CV-13-488349

On September 9, 2013, Willliam J. Solloway (" Solloway ") commenced an application against Klondex Mines Ltd. (" Klondex ") in the Ontario Superior Court of Justice seeking a declaration to reinstate 1.85 million options to acquire common shares of Klondex, which he obtained as a former director and officer of Klondex. On January 9, 2014, Klondex successfully moved for a stay of this proceeding before Mr. Justice Perell on the grounds that Ontario was not the appropriate forum for this dispute. The proceedings were moved to Nevada. Klondex was awarded CDN$42,000 in costs by the Ontario Superior Court of Justice and on appeal an additional CDN$10,000 in costs by the Ontario Court of Appeal.

Rick Magness v. Klondex Gold & Silver Mining Company / Second Judicial District Court, Washoe County, Nevada, Case No. CV13-02482

In July 2013, Rick Magness (" Magness ") filed a claim against Klondex for one year of salary plus accrued paid time-off (~$83,000 total) in the Nevada District Court (the " Magness litigation ").

In February 2014, Klondex added Solloway, Blane Wilson (" Wilson "), and Doug Carter (" Carter ") as third party-defendants in the Magness litigation under claims based in contract and fraud. Solloway filed a counterclaim for $8000 in expenses, $225,000 in severance (1 year of base salary) and 1.85 million cancelled stock options. Wilson filed a counterclaim for $600,000 (3 years of base salary) plus 504,000 cancelled stock options. Carter did not file a counterclaim. The case is in discovery and is scheduled for a two-week jury trial beginning September 12, 2016.

204


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SCHEDULE J

Environmental Compliance

•     Sage grouse mitigation as set forth in the Bureau of Land Management Decision Record DOI-BLM-E020-2013-0014-EA, NVN-088898. No disturbance activities have occurred under this plan (NVN-088898). When disturbance activities occur, sage grouse protection measures as outlined in DOI-BLM-NV-E020-2013-0014-EA, NVN-088898 will be followed.

•     Cultural resource issues as set forth in the Memorandum of Agreement (Undertaking #2011-1495) with the Bureau of Land Management and the Nevada Historic Preservation Officer (SHPO). Klondex is following the cultural resource treatment plan as outlined in the Memorandum of Agreement (Undertaking #2011-1495).

•     Cultural resource issues as set forth in the in Bureau of Land Management Decision Record DOI-BLM-E020-2013-0014-EA, NVN-088898. Klondex is following the cultural resource treatment plan as outlined in the Memorandum of Agreement (Undertaking #2011-1495) as required by DOI-BLM-NV-E020-2013-0014-EA, NVN-088898;

•     Nominal costs of not more than $10,000 for the removal of oil from soil.

•     Asbestos was found on the walls of an assay lab building. The building was shut down 2 years ago and the asbestos contained.

205


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE K

Employee Matters

Medical, health savings account, dental, vision, basic life insurance and accidental death and dismemberment, short term disability and long term disability. There is also a supplemental health plan for executives.

     
 

Paid vacation and leave

     
 

Paid time off

     

401-K plan established in 2014. Employees may contribute to the plan as per US regulations and the employees' contributions will be matched as follows: 100% of the first 3% and 50% of the next 2%. The match is 100% vested. The matching may change from time to time as elected by management and this plan is reviewed at least annually.

     

Incentive compensation including cash-based compensation and share incentive plan governing the grant of options under the share option plan and the grant of common shares under the share compensation plan, in each case to eligible participants, which can include directors, officers, employees and service providers

     
 

Change of control payments for officers

206


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SCHEDULE L

Capitalized Leases

  1.

Klondex Mines Ltd.


Creditor: Champion Chevrolet, 800 Lietzke Lane, Reno, NV 89502
Initial balance (Oct 22, 2013): $46,757.40.
Interest: 0.0%
Payment schedule: Sixty payments of $779.29 starting 11/21/2013
Status: Current

  2.

Klondex Gold & Silver Mining Company


Creditor: Sandvik Customer Finance LLC, 300 Technology Court, Smyrna, GA 30082
Initial balance (December 18, 2015): US$656,016
Interest: N/A
Payment schedule: An initial payment of $20,003.62 due 1/15/2016 followed by 35 monthly payments of $19,353.62
Status: Current

  3. Klondex Midas Operations Inc.

Creditor: Sandvik Customer Finance LLC, 300 Technology Court, Smyrna, GA 30082
Initial balance (December 16, 2015): US$357,572
Interest: N/A
Payment schedule: An initial payment of $11,199.00 due 1/15/2016 followed by 35 monthly payments of $10,549.00
Status: Current
 
Creditor: Sandvik Customer Finance LLC, 300 Technology Court, Smyrna, GA 30082
Initial balance (December 16, 2015) US$357,572
Interest: N/A
Payment schedule: An initial payment of $11,199.00 due 1/15/2016 followed by 35 monthly payments of $10,549.00
Status: Current

207


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Schedule 21.40

Guarantee

Debenture

Such other security documents required to effect the grant by Klondex Canada of a security interest that is pari passu with the security granted to Franco-Nevada.

208


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Schedule 33.2(C)

209


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

SIGNATURES

LENDER

INVESTEC BANK PLC

By: /s/ “ Anthony Rowe
  Name: Anthony Rowe
  Title: Authorized Signatory
   
   
By: /s/ “ Oliver Tagg
Name: Oliver Tagg
  Title: Authorized Signatory

HEDGE COUNTERPARTY

INVESTEC BANK PLC

By: /s/ “ Andrew Lillywhite
  Name: Andrew Lillywhite
  Title: Authorized Signatory
   
   
By: /s/ “ Paul Geddes
Name: Paul Geddes
  Title: Authorized Signatory

BORROWER

KLONDEX MINES LTD

By: /s/ “ Barry Dahl
  Barry Dahl

Address:     Suite 2200, 1055 West Hastings Street, Vancouver, BC, V6E 2E9, Canada

GUARANTORS

0985472 B.C. LTD

210


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By: /s/ “ Barry Dahl
  Barry Dahl

Address:     Suite 2200, 1055 West Hastings Street, Vancouver, BC, V6E 2E9, Canada

KLONDEX HOLDINGS (USA) INC.

By: /s/ “ Barry Dahl
  Barry Dahl

Address:     360 Western Road, Suite 1, Reno, Nevada, USA 89506

KLONDEX MIDAS HOLDINGS LIMITED

By: /s/ “ Barry Dahl
  Barry Dahl

Address:     360 Western Road, Suite 1, Reno, Nevada, USA 89506

KLONDEX MIDAS OPERATIONS INC.

By: /s/ “ Barry Dahl
  Barry Dahl

Address:     360 Western Road, Suite 1, Reno, Nevada, USA 89506

KLONDEX GOLD & SILVER MINING COMPANY

By: /s/ “ Barry Dahl
  Barry Dahl

Address:     360 Western Road, Suite 1, Reno, Nevada, USA 89506

211


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

KLONDEX CANADA LTD.

By: /s/ “ Barry Dahl
  Barry Dahl

Address:     Suite 2200, 1055 West Hastings Street, Vancouver, BC, V6E 2E9, Canada

212



Execution Version

AMENDMENT TO FACILITY AGREEMENT

EXECUTED by the parties hereto as of the 28th day of October, 2016.

AMONG: KLONDEX MINES LTD. , as Borrower
   
  (the Borrower )
   
AND: KLONDEX CANADA LTD., 0985472 B.C. LTD , KLONDEX HOLDINGS (USA) INC. , KLONDEX MIDAS HOLDINGS LIMITED , KLONDEX MIDAS OPERATIONS INC. and KLONDEX GOLD & SILVER MINING COMPANY , as Guarantors
   
(collectively, the Guarantors and together with the Borrower, the Obligors , and each a Obligor )
   
AND: INVESTEC BANK PLC , as Lender and Hedge Counterparty
   
  (the Lender )
   
AND: INVESTEC BANK PLC , as Security Agent
   
  (the Security Agent )

WHEREAS the Obligors, the Lender and the Security Agent signatory thereto have entered into a Facility Agreement dated as of March 23, 2016 (including all annexes, exhibits and schedules thereto, the Facility Agreement );

AND WHEREAS the parties wish to increase the amount of the secured revolving facility and amend certain provisions of the Facility Agreement, as set out below (hereinafter this Amendment );

AND WHEREAS pursuant to the Facility Agreement and the Finance Documents (as defined in the Facility Agreement), the Guarantors have guaranteed the payment and performance of all debts, liabilities and other obligations of the Borrower to the Lender;

AND WHEREAS as a condition to the Lender entering into this Amendment with the Borrower, the Guarantors have agreed to, inter alia , acknowledge and confirm the continuing nature of their guaranteed obligations under the Facility Agreement.

NOW THEREFORE for good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereby agree as follows:

Article 1 – INTERPRETATION

1.1

All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Facility Agreement (subject to any amendments to such terms herein).

   
1.2

This Amendment constitutes a Finance Document under the Facility Agreement.

1


Article 2 – AMENDMENTS

2.1

As of the Amendment Effective Date (as defined below), the Facility Agreement is hereby amended as follows:


  (a)

Section 1.1, the definition of “ Commitment ” is deleted in its entirety and replaced with the following:

     
 

Commitment means US$35,000,000, or as amended in accordance with clause 2.2 (Amendment to Commitment) and to the extent not cancelled, reduced or transferred under this Agreement.”

     
  (b)

Section 21.11(b)(vi) is deleted in its entirety and replaced with the following:

“arising under:

  (A)

any unsecured debt (excluding any marked-to-market trading exposures) not exceeding U.S.$4,000,000;

     
  (B)

any debt consisting of marked-to-market trading exposures in accordance with the terms and conditions specified in Section 21.38(b);”.


  (c)

Section 21.38(b)(i) is deleted in its entirety and replaced with the following:

“pursuant to a Counterparty Hedging Agreement, provided that at no time shall the aggregate of all outstanding Loans and marked-to-market trading exposures of the Obligors owed to the Finance Parties under this Agreement and the Counterparty Hedging Agreement exceed $50,000,000;”

2.2

As of the Amendment Effective Date, each of the following is hereby deleted in their entirety and replaced with the corresponding numbered Schedules attached hereto as Exhibit A:


  (a)

Schedule 2 Requests;

     
  (b)

Schedule 3 Form of Transfer Certificate;

     
  (c)

Schedule 4 Form of Assignment Agreement;

     
  (d)

Schedule 5 Form of Amendment Confirmation; and

     
  (e)

Schedule 6 Form of Compliance Certificate.

Article 3 – ACKNOWLEDGMENT AND CONFIRMATION

3.1

The Guarantors acknowledge and consent to such amendments to the Facility Agreement as are set forth herein.

   
3.2

The Guarantors hereby confirm that the guaranteed obligations as described in Section 17 of the Facility Agreement (the Guaranteed Obligations ) and each of the other Finance Documents executed by it,


  (a)

continue to be valid and enforceable against it in accordance with their respective terms; and

2


  (b)

continue to guarantee or secure, as applicable, all of the debts, liabilities and obligations of each Obligor whether arising pursuant to the Facility Agreement as amended by this Amendment or otherwise.


3.3

For greater certainty, and without limiting the scope of Article 4 below, the Guarantors acknowledge, confirm and agree as follows:


  (a)

it is bound by and liable to perform all of its covenants, agreements and obligations under the Finance Documents to which it is a party;

     
  (b)

neither the other Finance Documents to which it is a party nor any Security granted thereunder has been or will be terminated, released, discharged or otherwise affected by the Amendment; and

     
  (c)

the Finance Documents to which it is a party remain in full force and effect, unamended (except as contemplated in this Amendment) as of the Amendment Effective Date and the Transaction Security created thereby remain valid and duly perfected.


3.4

The Lender, the Security Agent and the Obligors acknowledge and agree that should the amount of the Facility Obligations exceed US$50,000,000,00 as a result of an increase in Hedge Obligations (as defined in the Intercreditor Agreement) (any such excess indebtedness, “ Additional Exposure ”), the Security of the Finance Parties (as defined in the Intercreditor Agreement) shall, to the extent of such Additional Exposure, rank junior and subordinate and the Additional Disclosure shall be postponed and subordinated in right of payment until repayment in full of all Gold Delivery Obligations (as defined in the Intercreditor Agreement).

Article 4 – CONDITIONS TO EFFECTIVENESS

4.1

This Amendment shall become effective upon satisfaction of the following conditions precedent (the date of satisfaction of all such conditions being referred to herein as the Amendment Effective Date ):


  (a)

the Obligors delivering to the Lender an electronic or facsimile executed copy (with subsequent delivery of originally executed copies) of this Amendment;

     
  (b)

the Obligors delivering to the Lender an electronic or facsimile executed copy (with subsequent delivery of originally executed copies) of a certificate, in form and substance satisfactory to the Lender, from a knowledgeable senior officer of each Obligor certifying in such person’s official capacity (and not in an individual capacity and without personal liability) that, inter alia , immediately after, the Amendment Effective Date, (i) no Default or Event of Default has occurred and is continuing, (ii) the representations and warranties in the Finance Documents are true and correct in all respects, except to the extent such representations and warranties specifically refer to an earlier date, in which case, they shall be true and correct in all respects as of such earlier date, and (iii) the Obligors on a consolidated basis are in pro forma compliance with the financial covenants set forth in Section 20 of the Facility Agreement (with calculations attached thereto);

     
  (c)

the Obligors delivering to the Lender an electronic or facsimile executed copy (with subsequent delivery of two originally executed copies) of a bring down officer’s certificate from each Obligor, in form and substance, and on terms and conditions, satisfactory to the Lender, and confirming certain matters of fact, to which are attached true and complete copies of their respective certified constitutive documents, operating agreements, certificates of incumbency (or satisfactory confirmation that no changes have been made to such instruments since the most recent delivery of such instruments to the Lender) and resolutions adopted on or prior to the Amendment Effective Date and approving the terms hereof;

3


  (d)

the Borrower delivering to the Security Agent updated UCC, PPSA and other searches and other evidence reasonably satisfactory to the Security Agent that the Transaction Security is the only Security over any of its assets, except Permitted Security;

     
  (e)

the Obligors delivering to the Lender a certificate of status or good standing (or other equivalent) for the jurisdiction of incorporation of each Obligor;

     
  (f)

the Obligors delivering to the Lender an electronic or facsimile executed copy (with subsequent delivery of originally executed copies) of a customary legal written opinion of Bennett Jones LLP;

     
  (g)

the Lender shall have received executed copies of the documents and copies of all other deliverables set forth in this Amendment and Exhibit B;

     
  (h)

within 10 Business Days of the date hereof the Lender shall have received an executed copy of a Utilization Request in an amount sufficient to repay the Shoreline Promissory Note and within 7 Business Days of the date hereof copies of all other deliverables set forth in Part 1 - Exhibit C and within 30 Business Days of the date hereof copies of all other deliverables set forth in Part 2 - Exhibit C ;

     
  (i)

no event shall have occurred or circumstance exist that has, or could reasonably be expected to have, a Material Adverse Effect; and

     
  (j)

the Borrowers and each other Obligor paying all accrued and unpaid fees and expenses of the Lender (including, without limitation, the fees and expenses of counsel and the fees set out in the Fee Letter) in connection with the negotiation, preparation and execution of this Amendment and the consummation of the transactions contemplated hereby.

Article 5 - REPRESENTATIONS AND WARRANTIES

5.1

Each Obligor warrants and represents to the Lender that the following statements are true, correct and complete:


  (a)

Authorization, Validity, and Enforceability of this Amendment . Each Obligor has the corporate power and authority to execute and deliver this Amendment and to perform the Facility Agreement. Each Obligor has taken all necessary corporate action (including, without limitation, obtaining approval of its shareholders if necessary) to authorize its execution and delivery of this Amendment and the performance of the Facility Agreement. This Amendment has been duly executed and delivered by each Obligor and this Amendment and the Facility Agreement constitute the legal, valid and binding obligations of each Obligor, enforceable against each of them in accordance with their respective terms without defence, compensation, setoff or counterclaim. Each Obligor’s execution and delivery of this Amendment and the performance by each Obligor of the Facility Agreement do not and will not conflict with, or constitute a violation or breach of, or constitute a default under, or result in the creation or imposition of any Security upon the property of any Obligor by reason of the terms of (a) any Security to which any Obligor is a party or which is binding on any of them, (b) any Applicable Law, or (c) the certificate or articles of incorporation or amalgamation or association or bylaws or memorandum of association or articles of association of any Obligor.

4


  (b)

Governmental Authorization . No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any governmental authority or other person is necessary or required in connection with the execution, delivery or performance by, or enforcement against any Obligor of this Amendment or the Facility Agreement except for such as have been obtained or made and filings required in order to perfect and render enforceable the Transaction Security.

     
  (c)

Incorporation of Representations and Warranties From Facility Agreement . The representations and warranties contained in the Facility Agreement and the other Finance Documents are and will be true, correct and complete in all material respects on and as of the Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date.

     
  (d)

Absence of Default . No event has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment that would constitute a Default or an Event of Default.

     
  (e)

Security . All Transaction Security delivered to or for the benefit of the Security Agent on behalf of the Lender, pursuant to the Facility Agreement and the other Finance Documents, remains in full force and effect and secures all obligations of the Obligors purported to be secured thereby, including under the Facility Agreement and the other Finance Documents.

Article 6 – MISCELLANEOUS

6.1

Forthwith following the completion of any acquisition of the Hollister Mine and/or the Esmeralda Mine, Klondex Holdings (USA) Inc. undertakes to take any steps required to grant to the Security Agent a security interest in any equity interests or any assets acquired in connection with such acquisitions.

   
6.2

Each of the Obligors (i) reaffirms its obligations under the Facility Agreement and the other Finance Documents to which it is a party, and (ii) agrees that the Facility Agreement and the other Finance Documents to which it is a party remain in full force and effect, except as amended hereby, and are hereby ratified and confirmed.

   
6.3

Each of the Obligors hereby (i) consents to and approves the execution and delivery of this Amendment, (ii) agrees that this Amendment does not and shall not limit or diminish in any manner the obligations of such Obligor under any guarantee granted by it in favour of the Lender (the Guarantee ) and that such obligations would not be limited or diminished in any manner even if such Obligor had not executed this Amendment, (iii) agrees that this Amendment shall not be construed as requiring the consent of such Obligor in any other circumstance, (iv) reaffirms each of its obligations under the Guarantee and the other Finance Documents to which it is a party, and (v) agrees that the Guarantee and the other Finance Documents to which it is a party remain in full force and effect and are hereby ratified and confirmed.

   
6.4

Nothing contained in this Amendment or any other communication between the Lender and any other Obligor shall be a waiver of any other present or future violation, Default or Event of Default under the Facility Agreement or any other Finance Document (collectively, Violations ). Similarly, nothing contained in this Amendment shall directly or indirectly in any way whatsoever either: (i) impair, prejudice or otherwise adversely affect the Lender’s right at any time to exercise any right, privilege or remedy in connection with the Facility Agreement or any other Finance Document with respect to any Violations (including, without limiting the generality of the foregoing, in respect of the non-conformity to any representation, warranty or covenant contained in any Finance Document), (ii) except as specifically provided in Article II hereof, amend or alter any provision of the Facility Agreement or any other Finance Document or any other contract or instrument, or (iii) constitute any course of dealing or other basis for altering any obligation of any of the Obligors under the Finance Documents or any right, privilege or remedy of the Lender under the Facility Agreement or any other Finance Document or any other contract or instrument with respect to Violations. Nothing in this Amendment shall be construed to be a consent by the Lender to any Violations.

5


6.5

Save as expressly set forth in this Amendment, all other terms and conditions of the Facility Agreement remain in full force and effect. All other Finance Documents remain in full force and effect.

   
6.6

Except to the limited extent set forth herein, no additional amendment in respect of any other term, condition, covenant, agreement or any other aspect of the Facility Agreement is intended or implied.

   
6.7

The Obligors, shall from time to time, do all acts and things and execute and deliver all agreements as the Lender may reasonably require for enabling the Lender to obtain the full benefits of this acknowledgement and confirmation.

   
6.8

This Amendment shall be interpreted and the rights and liabilities of the parties hereto shall be determined in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein.

   
6.9

This Amendment may be executed in original, facsimile and/or other electronic means counterparts and all such counterparts taken together shall be deemed to constitute one and the same instrument.

[signature pages follow]

6


The parties have executed this Amendment as of the date first above written.

BORROWER:

KLONDEX MINES LTD.
   
Per: /s/ “ Paul Huet
  Name: Paul Huet
  Title: President, CEO and director


GUARANTORS:

KLONDEX CANADA LTD.
   
Per: /s/ “ Paul Huet
  Name:
  Title:
   
   
0985472 B.C. LTD
   
Per: /s/ “ Paul Huet
  Name: Paul Huet
  Title: President and director
   
   
KLONDEX HOLDINGS (USA) INC.
   
Per: /s/ “ Paul Huet
  Name: Paul Huet
  Title: President and director
   
   
KLONDEX MIDAS HOLDINGS LIMITED
   
Per: /s/ “ Paul Huet
  Name: Paul Huet
  Title: President and director
   
   
KLONDEX MIDAS OPERATIONS INC.
   
Per: /s/ “ Paul Huet
  Name: Paul Huet
  Title: President and director
   
   
KLONDEX GOLD & SILVER MINING COMPANY
   
Per: /s/ “ Paul Huet
  Name: Paul Huet
  Title: President and director


FINANCE PARTIES:

INVESTEC BANK PLC ,
as Lender and Hedge Counterparty
   
Per: /s/ “ Oliver Tagg
 Name: Oliver Tagg  
  Title: Authorized Signatory
   
   
Per: /s/ “ Charles Stott
 Name: Charles Stott  
  Title: Authorized Signatory
   
   
INVESTEC BANK PLC ,
as Security Agent
   
Per: /s/ “ Oliver Tagg
 Name: Oliver Tagg  
  Title: Authorized Signatory
   
   
Per: /s/ “ Anthony Rowe
  Name: Anthony Rowe
  Title: Authorized Signatory


EXHIBIT A

See attached.


Schedule 2
Requests

Part I
Utilization Request

From: Klondex Mines Ltd
   
To: [ Lender ]

Dated:

Dear Sirs

Klondex Mines Ltd – Up to US$35,000,000 Secured Revolving Facility dated [      ] 2016
(the Agreement)

1

We refer to the Agreement. This is a Utilization Request. Terms defined in the Agreement have the same meaning in this Utilization Request unless given a different meaning in this Utilization Request.

   
2

We wish to borrow a Loan on the following terms:


Proposed Utilization Date: [   ] (or, if that is not a Business Day, the next Business Day)
     
  Currency of Loan: [   ]
     
  Amount: [   ] or, if less, the Available Commitment
     
  Interest Period: [         ]

3

We confirm that each condition specified in clause 4.2 ( Further conditions precedent ) is satisfied on the date of this Utilization Request.

   
4

[This Loan is to be made in [whole]/[part] for the purpose of refinancing [ identify maturing Loan. ] [The proceeds of this Loan should be credited to [ account ].]

   
5

This Utilization Request is irrevocable.

Yours faithfully

_________________________

authorised signatory for

Klondex Mines Ltd


Part II
Extension Request

From: Klondex Mines Ltd
   
To: [ Lender ]

Dated:

Dear Sirs

Klondex Mines Ltd – Up to US$35,000,000 Secured Revolving Facility dated [                 ] 2016
(the Agreement)

1

We refer to the Agreement. This is an Extension Request. Terms defined in the Agreement have the same meaning in this Extension Request unless given a different meaning in this Extension Request.

   
2

We hereby request pursuant to clause 6.2 ( Extension option ) to extend the Original Final by a further 12 month period to ______________.

   
3

We confirm that no Default is continuing or would result from this Extension Request.

   
4

This Extension Request is irrevocable.

Yours faithfully

_________________________

authorised signatory for

Klondex Mines Ltd


Part III
Amendment Request

From: Klondex Mines Ltd
   
To: [ Lender ]

Dated:

Dear Sirs

Klondex Mines Ltd – Up to US$35,000,000 Secured Revolving Facility dated [                     ] 2016
(the Agreement)

1

We refer to the Agreement. This is an Amendment Request. Terms defined in the Agreement have the same meaning in this Amendment Request unless given a different meaning in this Amendment Request.

   
2

We hereby request pursuant to clause 2.2(a) ( Amendment to Commitment ) that the Commitment be amended to US$[ ].

   
3

We confirm that no Default is continuing or would result from this Amendment Request.

   
4

This Amendment Request is irrevocable.

Yours faithfully

_________________________

authorised signatory for

Klondex Mines Ltd


Schedule 3
Form of Transfer Certificate

To: Investec Bank PLC
   
From: [ The New Lender ] (the New Lender)

Dated:

Klondex Mines Ltd – Up to US$35,000,000 Secured Revolving Facility dated [                     ] 2016
(the Agreement)

1

We refer to the Facility Agreement and to the Intercreditor Agreement (as defined in the Facility Agreement). This agreement (the Agreement) shall take effect as a Transfer Certificate for the purpose of the Facility Agreement. Terms defined in the Facility Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.

   
2

We refer to clause 23.4 ( Procedure for transfer ):


  (a)

The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation, and in accordance with clause 23.4 ( Procedure for transfer ), all of the Existing Lender's rights and obligations under the Agreement and the other Finance Documents which relate to that portion of the Existing Lender's Commitment and participations in Loans under the Agreement as specified in the Schedule.

     
  (b)

The proposed Transfer Date is [ ].

     
  (c)

The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of clause 28.2 ( Addresses ) are set out in the Schedule.


3

The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph (c) of clause 23.3 ( Limitation of responsibility of Existing Lender ).

   
4

This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.

   
5

This Transfer Certificate and any non-contractual obligations arising out of or in connection with it are governed by laws of the Province of British Columbia, and the federal laws of Canada as applicable therein.

   
6

This Transfer Certificate has been entered into on the date stated at the beginning of this Transfer Certificate.



THE SCHEDULE

Commitment/rights and obligations to be transferred

[insert relevant details]
[Facility Office address, fax number and attention details for notices and account details for payments,]

[Existing Lender] [New Lender]
   
By: By:

This Agreement is accepted as a Transfer Certificate for the purposes of the Facility Agreement by the Lender, the Security Agent, and the Transfer Date is confirmed as [   ].

By:


Schedule 4
Form of Assignment Agreement

From: [the New Lender ] (the New Lender)
   
To:    [the Existing Lender ] (the Existing Lender)

Dated:

Klondex Mines Ltd – Up to US$35,000,000 Secured Revolving Facility dated [                          ] 2016
(the Agreement)

1

We refer to the Facility Agreement and to the Intercreditor Agreement (as defined in the Facility Agreement). This is an Assignment Agreement. This agreement (the Agreement) shall take effect as an Assignment Agreement for the purpose of the Facility Agreement and as a Creditor/Creditor Representative Accession Undertaking for the purposes of the Intercreditor Agreement (and as defined in the Intercreditor Agreement). Terms defined in the Facility Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.

   
2

We refer to clause 23.5 ( Procedure for assignment ):


  (a)

The Existing Lender assigns absolutely to the New Lender all the rights of the Existing Lender under the Agreement and the other Finance Documents and in respect of the Transaction Security which relate to that portion of the Existing Lender's Commitment and participations in Loans under the Agreement as specified in the Schedule.

     
  (b)

The Existing Lender is released from all the obligations of the Existing Lender which correspond to that portion of the Existing Lender's Commitment and participations in Loans under the Agreement specified in the Schedule.

     
  (c)

The New Lender becomes a Party as the Lender and is bound by obligations equivalent to those from which the Existing Lender is released under paragraph (b) above.


3

The proposed Transfer Date is [   ].

   
4

On the Transfer Date the New Lender becomes Party to the Finance Documents as the Lender.

   
5

The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of clause 28.2 ( Addresses ) are set out in the Schedule.

   
6

The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph (c) of clause 23.3 ( Limitation of responsibility of Existing Lender ).

   
7

This Assignment Agreement acts as notice to the Lender (on behalf of each Finance Party) and, upon delivery in accordance with clause 23.6 ( Copy of Transfer Certificate, Assignment Agreement or Amendment Confirmation to Borrower ), to the Company (on behalf of each Obligor) of the assignment referred to in this Assignment Agreement.

   
8

This Assignment Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Assignment Agreement.



9

This Assignment Agreement and any non-contractual obligations arising out of or in connection with it are governed by laws of the Province of British Columbia, and the federal laws of Canada as applicable therein.

   
10

This Assignment Agreement has been entered into on the date stated at the beginning of this Assignment Agreement.



THE SCHEDULE

Rights to be assigned and obligations to be released and undertaken

[insert relevant details]

[Facility office address, fax number and attention details for notices and account details for payments]

[Existing Lender] [New Lender]
   
By: By:

This Agreement is accepted as an Assignment Agreement for the purposes of the Facility Agreement by the Lender, the Security Agent, and the Transfer Date is confirmed as [   ].

Signature of this Assignment Agreement by the Lender constitutes confirmation by the Lender of receipt of notice of the assignment referred to herein, which notice the Lender receives on behalf of each Finance Party.


Schedule 5
Form of Amendment Confirmation

To: [Lender] and [Security Agent]
   
From: [   ] as Borrower, for and on behalf of each Obligor

Dated:

Klondex Mines Ltd – Up to US$35,000,000 Secured Revolving Facility dated [                     ] 2016
(the Agreement)

1

We refer to the Facility Agreement. This agreement (the Agreement) shall take effect as an Amendment Confirmation for the purpose of the Facility Agreement. Terms defined in the Facility Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.

 

2

We refer to [clause 2.2 ( Amendment to Commitment )] of the Facility Agreement.

 

3

The proposed date on which the amendment is to take effect (the Amendment Date) is [   ].

 

4

On the Amendment Date, the Commitment shall be amended to be US$[   ].

 

2

This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.

 

3

This Agreement and any non-contractual obligations arising out of or in connection with it are governed by the laws of the Province of British Columbia, and the federal laws of Canada as applicable therein.

 

4

This Agreement has been entered into on the date stated at the beginning of this Agreement.



THE SCHEDULE

Relevant Commitment/rights and obligations to be assumed by the Increase Lender

[ insert relevant details ]

[ Facility office address, fax number and attention details for notices and account details for payments ]

[Increase Lender]

By:

This Agreement is accepted as an Amendment Confirmation for the purposes of the Facility Agreement by the Lender, the Security Agent and the Amendment Date is confirmed as [   ].

Lender

By:

Security Agent

By:


Schedule 6
Form of Compliance Certificate

To: [   ] as Lender
     
From: [ Company ]

Dated:

Dear Sirs

Klondex Mines Ltd – Up to US$35,000,000 Secured Revolving Facility dated [                     ] 2016
(the Agreement)

1

We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

   
2

We confirm that: [Insert details of covenants to be certified]

   
3

[We confirm that no Default is continuing.] 1


Signed:   _________________________
  Director or Chief Financial Officer
   
  of
   
  [Borrower]

_________________________

1     ✶      If this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it.


Exhibit B

Amendment Fee Letter

Amendment to the Intercreditor Agreement


Exhibit C

Step 1

Ontario Debenture (ON law) issued by Klondex Canada Ltd.

Manitoba Debenture (MB law) issued by Klondex Canada Ltd.

Step 2

Manitoba opinion of Pitblado LLP addressed to the Lender in relation to the Manitoba Debenture



Execution Version

AMENDMENT TO FACILITY AGREEMENT AMENDMENT

EXECUTED by the parties hereto as of the 6 th day of March, 2017.

AMONG:

KLONDEX MINES LTD ., as Borrower

 

 

(the Borrower )

 

AND:

KLONDEX CANADA LTD., 0985472 B.C. LTD, KLONDEX HOLDINGS (USA) INC., KLONDEX MIDAS HOLDINGS LIMITED, KLONDEX MIDAS OPERATIONS INC. and KLONDEX GOLD & SILVER MINING COMPANY, as

 

Guarantors

(collectively, the Guarantors and together with the Borrower, the Obligors , and each a Obligor )

 

AND

INVESTEC BANK PLC, as Lender and Hedge Counterparty

 

 

(the Lender )

 

AND:

INVESTEC BANK PLC, as Security Agent

 

 

(the Security Agent )

WHEREAS the Obligors, the Lender and the Security Agent signatory thereto have entered into a Facility Agreement dated as of March 23, 2016 (including all annexes, exhibits and schedules thereto, the Facility Agreement );

AND WHEREAS Obligors, the Lender and the Security Agent signatory thereto have entered into an Amendment to Facility Agreement dated as of October 28, 2016 (including all annexes, exhibits and schedules thereto, the Facility Amendment ) ;

AND WHEREAS the parties hereto wish to further amend certain provisions of the Facility Amendment, as set out below (hereinafter this Amendment ) ;

NOW THEREFORE for good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereby agree as follows:

Article 1 – INTERPRETATION

1.1

All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Facility Agreement (subject to any amendments to such terms herein).

   
1.2

This Amendment constitutes a Finance Document under the Facility Agreement.

1


Article 2 – AMENDMENTS

2.1

Section 4.1(h) of the Facility Amendment is deleted In its entirety and the remainder of Section 4.1 of the Facility Amendment shall be renumbered accordingly.

   
2.2

The Amendment Effective Date occurred as of December 14, 2016.

   
2.3

The following items (each, a “ Condition Subsequent ”) shall be completed subsequent to the Amendment Effective Date, each within the specified timeframes, with the failure to achieve any of these conditions within the specified timeframe constituting an Event of Default:


  (a)

by April 14, 2017, the Lender shall have received registered copies of all deliverables set forth in Part 1 — Exhibit C of the Facility Amendment;

     
  (b)

within five (5) Business Days of the receipt of the deliverables set forth in 2.3(a), the Lender shall have received copies of all deliverables set forth in Part 2 — Exhibit C of the Facility Amendment.

Article 3 – MISCELLANEOUS

3.1

Each of the Obligors (i) reaffirms its obligations under the Facility Agreement, the Facility Amendment and the other Finance Documents to which it is a party, and(ii) agrees that the Facility Agreement, the Facility Amendment and the other Finance Documents to which it is a party remain in full force and effect, except as amended hereby, and are hereby ratified and confirmed.

 

 

3.2

Each of the Obligors hereby (i) consents to and approves the execution and delivery of this Amendment, (ii) agrees that this Amendment does not and shall not limit or diminish in any manner the obligations of such Obligor under any guarantee granted by it in favour of the Lender (the Guarantee ) and that such obligations would not be limited or diminished in any manner even if such Obligor had not executed this Amendment,(iii) agrees that this Amendment shall not be construed as requiring the consent of such Obligor in any other circumstance, (iv) reaffirms each of its obligations under the Guarantee and the other Finance Documents to which it is a party, and (v) agrees that the Guarantee and the other Finance Documents to which it is a party remain in full force and effect and are hereby ratified and confirmed.

 

 

3.3

Nothing contained in this Amendment or any other communication between the Lender and any other Obligor shall be a waiver of any other present or future violation, Default or Event of Default under the Facility Agreement or any other Finance Document (collectively, Violations ). Similarly, nothing contained in this Amendment shall directly or Indirectly in any way whatsoever either: (i) impair, prejudice or otherwise adversely affect the Lender’s right at any time to exercise any right, privilege or remedy in connection with the Facility Agreement or any other Finance Document with respect to any Violations (Including, without limiting the generality of the foregoing, in respect to the non-conformity to any representation, warranty or covenant contained In any Finance Document), (ii) except as specifically provided in Article II hereof, amend or alter any provision of the Facility Agreement or any other Finance Document or any other contract or instrument, or (iii) constitute any course of dealing or other basis for altering any obligation of any of the Obligors under the Finance Documents or any right, privilege or remedy of the Lender under the Facility Agreement or any other Finance Document or any other contract or instrument with respect to Violations. Nothing in this Amendment shall be construed to be a consent by the Lender to any Violations.

2



3.4

Save as expressly set forth in this Amendment, all other terms and conditions of the Facility Agreement and Facility Amendment remain in full force and effect. All other Finance Documents remain in full force and effect.

   
3.5

Except to the limited extent set forth herein, no additional amendment in respect of any other term, condition, covenant, agreement or any other aspect of the Facility Agreement Is intended or implied.

   
3.6

The Obligors, shall from time to time, do all acts and things and execute and deliver all agreements as the Lender may reasonably require for enabling the Lender to obtain the full benefits of this acknowledgment and confirmation,

   
3.7

This Amendment shall be interpreted and the rights and liabilities of the parties hereto shall be determined In accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein.

   
3.8

This Amendment may be executed in original, facsimile and/or other electronic means counterparts and all such counterparts taken together shall be deemed to constitute one and the same instrument,

[ signature pages follow ]

3


Execution Version

The parties have executed this Amendment as of the date first above written:

BORROWER:

  KLONDEX MINES LTD.
     
     
  Per: / s/ Barry Dahl
    Name:    Barry Dahl
    Title:     Chief Financial Officer

4


Execution Version

GUARANTORS:

  KLONDEX CANADA LTD.
       
       
  Per: / s/ Barry Dahl
    Name:  Barry Dahl
    Title: Treasurer and Secretary
       
  0985472 B.C. LTD
       
       
  Per: / s/ Barry Dahl
    Name:  Barry Dahl
    Title: Treasurer and Secretary
       
  KLONDEX HOLDINGS (USA) INC.
       
       
  Per: / s/ Barry Dahl
    Name:  Barry Dahl
    Title: Treasurer
       
  KLONDEX MIDAS HOLDINGS LIMITED
       
       
  Per: / s/ Barry Dahl
    Name:  Barry Dahl
    Title: Treasurer
       
  KLONDEX MIDAS OPERATIONS INC.
       
       
  Per: / s/ Barry Dahl
    Name:  Barry Dahl
    Title: Treasurer
       
       
  KLONDEX GOLD & SILVER MINING
    COMPANY
       
       
  Per: / s/ Barry Dahl
    Name:  Barry Dahl
    Title: Treasurer

5


FINANCE PARTIES:

  INVESTEC BANK PLC,
  as Lender and Hedge Counterparty
     
     
  Per: / s/ Oliver Tagg
   

 Name:     Oliver Tagg 

    Title:        Authorised Signatory
     
     
  Per: / s/ Guy Stringer
 

Name:     Guy Stringer 

    Title:       Authorised Signatory
     
     
     
     
  INVESTEC BANK PLC,
  as Security Agent
     
     
  Per: / s/ Steven Cowland
    Name:      Steven Cowland
    Title:        Authorised Signatory
     
     
  Per: / s/ Anthony Rowe
    Name:       Anthony Rowe
    Title:         Authorised Signatory

6



NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Execution Version

AMENDMENT TO FACILITY AGREEMENT

EXECUTED by the parties hereto as of the 31 day of March, 2017.

AMONG: KLONDEX MINES LTD ., as Borrower
 

 

(the Borrower )

 

AND:

KLONDEX CANADA LTD., 0985472 B.C. LTD, KLONDEX HOLDINGS (USA) INC., KLONDEX MIDAS HOLDINGS LIMITED, KLONDEX MIDAS OPERATIONS INC. and KLONDEX GOLD & SILVER MINING COMPANY , as

 

Guarantors

(collectively, the Guarantors and together with Borrower, the Obligors, and each a Obligor )

 

AND:

INVESTEC BANK PLC, as Lender and Hedge Counterparty

 

 

(the Lender )

 

AND:

INVESTEC BANK PLC, as Security Agent

 

 

(the Security Agent )

WHEREAS the Obligors, the Lender and the Security Agent signatory thereto have entered into a Facility Agreement dated of March 23, 2016 (Including all annexes, exhibits and schedules thereto, the Facility Agreement );

AND WHEREAS Obligors, the Lender and the Security Agent signatory thereto have entered into an Amendment to Facility Agreement dated October 14, 1016 (with an effective date of October 28, 2016) (Including all annexes, exhibits and schedules thereto, the Facility Amendment );

AND WHEREAS the Obligors, the Lender and the Security Agent signatory thereto have entered into an Amendment to Facility Agreement dated of March 6, 2016 ( Including all annexes, exhibits and schedules thereto, the second Facility Agreement, or collectively with the Amendment, the Facility Amendments);

AND WHEREAS the parties hereto wish to extend the time for repayment of the secured revolving facility and further amend certain provisions of the Facility Agreement, as set out below (hereinafter this Amendment);

1


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

NOW THEREFORE for good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereby agrees as follows:

Article 1 – INTERPRETATION

1.1

All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Facility Agreement (subject to any amendments to such terms herein).

   
1.2

This Amendment constitutes a Finance Document under the Facility Agreement.

Article 2 – AMENDMENTS

2.1

Section 1.1, the definition of “ Original Final Maturity Date ” is deleted in its entirety and replaced with the following:

Original Final Maturity Date means December 31, 2019 or, if extended pursuant to clause 6.2 ( Extension option ), the date which is twelve months after the then Original Final Maturity Date.”

2.2

Section 19.7 is deleted in its entirety and replaced with the following:


  “(a) The Borrower shall ensure that it maintains

  (i)

a minimum of 300,000 ounces of gold in reported proven and probable reserves (in accordance with Ontario Securities Commission Instrument NI 43-101) at Fire Creek Mine, Midas Mine and Rice Lake Mine;

     
  (ii)

reported measured and indicated gold resources (as reported in accordance with Ontario Securities Commission Instrument NI 43.101 and exclusive of reserves) in a minimum amount (such amount, the Minimum Resources Undertaking ) of 300,000 ounces at Fire Creek Mine, Midas Mine and Rice Lake Mine; provided however that at all times, no more than 25% of the reported indicated resources may be used to meet the then applicable Minimum Resources Undertaking; and

     
  (iii)

sufficient reported measured, indicated and inferred resources incorporated within an economically sustainable mine plan to cover the following twelve (12) Months of production at Fire Creek Mine, Midas Mine and Rice Lake Mine provided however that inferred resources shall equal no more than 20% of total resources within the mine plan, subject to the Lender being satisfied (acting reasonably) that the inferred resources are based on reasonable assumptions after taking into account actual relevant factors such as the Borrower’s operating performance and reconciliations.


  (b)

The Borrower shall provide a certificate calculating the measured, indicated and inferred resources to the Lender within forty-five (45) days after the end of each fiscal quarter of each fiscal year based on internal calculations and technical report in accordance with NI 43-101 report on an annual basis in order to demonstrate compliance with subparagraph (i) and (ii) above, and in respect of subparagraph (iii) above, shall satisfy the same with the delivery of the mine plan upon which each Annual Budget is based .


2.3

This Amendment shall not be effective until the completion of each of the following conditions precedent, each of which is for the sole benefit of the Lender (and may be waived by the Lender in its sole discretion):


  (a)

by March 31, 2017, the Lender shall have received an extension fee payable by the Borrower equal to US $ [****] to the Lender; and

2


NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  (b)

by March 31, 2017, the Borrower shall deliver to the Lender the written consent (on a form acceptable to the Lender) of Franco-Nevada GLW Holdings Corp, to this Amendment,

Article 3 – MISCELLANEOUS

3.1

Each of the Obligors (i) reaffirms its obligations under the Facility Agreement, the Facility Amendments and the other Finance Documents to which it is a party, and(ii) agrees that the Facility Agreement, the Facility Amendments and the other Finance Documents to which it is a party remain in full force and effect, except as amended hereby, and are hereby ratified and confirmed.

 

 

3.2

Each of the Obligors hereby (i) consents to and approves the execution and delivery of this Amendment, (ii) agrees that this Amendment does not and shall not limit or diminish in any manner the obligations of such Obligor under any guarantee granted by it in favour of the Lender (the Guarantee ) and that such obligations would not be limited or diminished in any manner even if such Obligor had not executed this Amendment,(iii) agrees that this Amendment shall not be construed as requiring the consent of such Obligor in any other circumstance, (iv) reaffirms each of its obligations under the Guarantee and the other Finance Documents to which it is a party, and (v) agrees that theGuarantee and the other Finance Documents to which it is a party remain in full force and effect and are hereby ratified and confirmed.

 

 

3.3

Nothing contained in this Amendment or any other communication between the Lender and any other Obligor shall be a waiver of any other present or future violation, Default or Event of Default under the Facility Agreement or any other Finance Document (collectively, Violations ), Similarly, nothing contained in this Amendment shall directly or indirectly in any way whatsoever either: (i) impair, prejudice or otherwise adversely affect the Lender’s right at any time to exercise any right, privilege or remedy in connection with the Facility Agreement or any other Finance Document with respect to any Violations (including, without limiting the generality of the foregoing, in respect to the non-conformity to any representation, warranty or covenant contained in any Finance Document), (ii) except as specifically provided in Article II hereof, amend or alter any provision of the Facility Agreement or any other Finance Document or any other contract or instrument, or (iii) constitute any course of dealing or other basis for altering any obligation of any of the Obligors under the Finance Documents or any right, privilege or remedy of the Lender under the Facility Agreement or any other Finance Document or any other contract or instrument with respect to Violations. Nothing in this Amendment shall be construed to be a consent by the Lender to any Violations.

   
3.4

Save as expressly set forth in this Amendment, all other terms and conditions of the Facility Agreement and Facility Amendments remain in full force and effect. All other Finance Documents remain in full force and effect.

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

3.5

Except to the limited extent set forth herein, no additional amendment in respect of any other term, condition, covenant, agreement or any other aspect of the Facility Agreement is intended or implied.

   
3.6

The Obligors, shall from time to time, do all acts and things and execute and deliver all agreements as the Lender may reasonably require for enabling the Lender to obtain the full benefits of this acknowledgment and confirmation.

   
3.7

This Amendment shall be interpreted and the rights and liabilities of the parties hereto shall be determined in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein.

   
3.8

This Amendment may be executed in original, facsimile and/or other electronic means counterparts and all such counterparts taken together shall be deemed to constitute one and the same instrument.

[ Signature pages follow ]

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

The parties have executed this Amendment as of the date first above written:

BORROWER:

  KLONDEX MINES LTD.
       
       
  Per: s/ Barry Dahl
    Name:

Barry Dahl

    Title:

Chief Financial Officer

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

GUARANTORS:

  KLONDEX CANADA LTD.
       
       
  Per: / s/ Barry Dahl
    Name:  Barry Dahl
    Title: Treasurer and Secretary
       
       
  0985472 B.C. LTD
       
       
  Per: /s/ Barry Dahl
    Name:  Barry Dahl
    Title: Treasurer and Secretary
       
       
  KLONDEX HOLDINGS (USA) INC.
       
       
  Per: /s/ Barry Dahl
    Name:  Barry Dahl
    Title: Treasurer
       
       
  KLONDEX MIDAS HOLDINGS LIMITED
       
       
  Per: /s/ Barry Dahl
    Name:  Barry Dahl
    Title: Treasurer
       
       
  KLONDEX MIDAS OPERATIONS INC.
       
       
  Per: /s/ Barry Dahl
    Name:  Barry Dahl
    Title: Treasurer
       
       
  KLONDEX GOLD & SILVER MINING
  COMPANY  

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

  Per: s/ Barry Dahl
    Name:       Barry Dahl
    Title:         Treasurer

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

FINANCE PARTIES:

  INVESTEC BANK PLC,
  as Lender and Hedge Counterparty
     
     
  Per: /s/ Oliver Tagg
    Name:      Oliver Tagg
    Title:         Authorised Signatory
     
     
  Per: /s/ Paul Geddes
    Name:     Paul Geddes
    Title:       Authorised Signatory
     
     
     
     
  INVESTEC BANK PLC,
  as Security Agent
     
     
  Per: /s/ Steven Cowland
 

Name:      Steven Cowland 

    Title:       Authorised Signatory
     
     
  Per: /s/ Oliver Tagg
    Name:      Oliver Tagg
    Title:        Authorised Signatory

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[REDACTED FOR PROPRIETARY REASONS]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

EXECUTION VERSION

 

 

GOLD PURCHASE AGREEMENT

 

Between

 

KLONDEX MINES LTD.

- and -

FRANCO-NEVADA GLW HOLDINGS CORP.

 

 

____________________________________

February 11, 2014
____________________________________

 

 

 


TABLE OF CONTENTS

1. Definitions 1
     
2. Interpretation. 15
     
3. Purchase and Sale of Purchased Gold Ounces 16
     
4. Conditions for Payment of Purchase Price 18
     
5. Taxes 19
     
6. Reporting Obligations 20
     
7. Books and Records; Audits; Inspections 22
     
8. Maintenance of Existence and Property 22
     
9. Management of Mining Operations 23
     
10. Royalty and Stream Interests 24
     
11. Financing Matters 26
     
12. Insurance Matters 27
     
13. Security Matters 27
     
14. Events of Default 28
     
15. Effect of Event of Default 32
     
16. Representations and Warranties of the Buyer 32
     
17. Representations and Warranties of the Seller 32
     
18. Indemnities 33
     
19. Term 33
     
20. Restricted Transfer Rights of the Seller Entities 34
     
21. Transfer Rights of the Buyer 34
     
22. Governing Law 35
     
23. Notices 35
     
24. General Provisions 36

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TABLE OF CONTENTS
(continued)

SCHEDULES:

SCHEDULE A – DESCRIPTION OF MIDAS PROPERTY
 
SCHEDULE B – DESCRIPTION OF FIRE CREEK PROPERTY
 
SCHEDULE C – DESCRIPTION OF OTHER PROPERTIES
 
SCHEDULE D – MONTHLY DELIVERY REQUIREMENTS
 
SCHEDULE E – CONDITIONS FOR PAYMENT OF PURCHASE PRICE
 
SCHEDULE F – REPRESENTATIONS AND WARRANTIES OF THE BUYER
 
SCHEDULE G – REPRESENTATIONS AND WARRANTIES OF THE SELLER

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GOLD PURCHASE AGREEMENT

GOLD PURCHASE AGREEMENT dated February 11, 2014.

BETWEEN :

KLONDEX MINES LTD. , a corporation existing under the laws of British Columbia (the “ Seller ”)

- and -

FRANCO-NEVADA GLW HOLDINGS CORP. , a corporation incorporated under the laws of Canada (the “ Buyer ”)

WHEREAS:

(A)

In order to finance the Acquisition of the Midas Mine by the Seller, the Seller has agreed to sell the Purchased Gold Ounces to the Buyer, on and subject to the terms and conditions set out in this Agreement.

   
(B)

Upon completion of the Acquisition, the Midas Owner, which owns and has the right to operate and mine 100% of the Midas Mine, will be an indirect, wholly-owned Subsidiary of the Seller.

   
(C)

The Fire Creek Owner, which owns and has the right to develop, operate and mine 100% of the Fire Creek Project, is an indirect, wholly-owned Subsidiary of the Seller.

   
(D)

The Seller has agreed to cause the Seller Entities to enter into the Security Agreements, for the purpose of guaranteeing and securing the Delivery Obligations of the Seller due to the Buyer under this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.

Definitions

   

For the purposes of this Agreement (including the recitals), unless the context otherwise requires, each of the following terms shall have the meaning given to it, as set out below, and grammatical variations of such term shall have a corresponding meaning:

   

Accounts ” means: (i) all “accounts” as such term is used in the applicable Personal Property Securities Legislation, and (ii) all existing and hereafter arising rights to payment of a monetary obligation, whether or not earned by performance.

   

Acquisition ” means the indirect acquisition of the Midas Mine by the Seller from Newmont USA Limited through the purchase by Klondex Holdings of all of the issued and outstanding shares of capital stock of Midas Holdings pursuant to the Acquisition Agreement.

   

Acquisition Agreement ” means the stock purchase agreement dated December 4, 2013 between Newmont USA Limited, Klondex Holdings and the Seller, as amended on February 10, 2014.



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Affiliate ” means, with respect to any Person, any other Person which directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. For the purposes of this definition and the definitions of “Change of Control” and “Subsidiary”, “ control ” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by contract or otherwise.

Agreement ” means this Gold Purchase Agreement and all attached schedules, as such may be amended, restated, modified or superseded from time to time in accordance with the terms hereof.

Annual Compliance Certificate ” means a certificate signed by an authorized senior officer of the Seller certifying that as of the date of such certificate:

  (a)

all of the representations and warranties made by the Seller Entities pursuant to the Transaction Documents are true and accurate in all material respects (other than those representations and warranties which are subject to a materiality qualifier, which representations and warranties shall be true and accurate in all respects) as if made on and as of the date of such certificate;

     
  (b)

no Event of Default or Material Adverse Effect has occurred and is continuing as of the date of such certificate; and

     
  (c)

no event which with notice or lapse of time or both would become an Event of Default has occurred and is continuing as of the date of such certificate;

in each case, except as specified in such certificate, together with all material information relating to such exception, including, if applicable, any action which the Seller Entities have taken or propose to take with respect thereto.

Annual Forecast Repor t” means a written report in relation to a fiscal year, with respect to each of the Midas Mine and the Fire Creek Project, to be prepared by or on behalf of the Seller, including with reasonable detail a forecast, based on the current development or mine plan, as applicable, of the quantity of gold, silver and other Minerals expected to be produced during such fiscal year on a month-by-month basis and over the remaining life of the mine on a year-by-year basis, including:

  (a)

the amount and a description of planned operating and capital expenditures;

     
  (b)

types, tonnes and grade of Minerals to be mined;

     
  (c)

types, tonnes and grade of Minerals to be stockpiled; and

     
  (d)

with respect to the processing facilities, the types, tonnes and grade of Minerals to be processed; expected recoveries for gold, silver and other Minerals; and expected doré weight and gold and silver grade.

Annual Operational Report ” means a written report in relation to a fiscal year with respect to each of the Midas Mine and the Fire Creek Project, to be prepared by or on behalf of the Seller, which shall include all of the information pertaining to the construction, commissioning or operations contained in annual reports prepared and provided to the board of directors of any of the Seller Entities and, to the extent not contained in such reports, will also contain, for such year:


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  (a)

types, tonnes and grade of Minerals mined;

     
  (b)

types, tonnes and grade of Minerals stockpiled;

     
  (c)

with respect to the processing facilities, the types, tonnes and grade of Minerals to be processed; recoveries for gold, silver and other Minerals; and doré weight and gold and silver grade;

     
  (d)

the number of ounces of gold and silver and the quantity of other Minerals contained in the material processed during such year, but not delivered to a purchaser by the end of such year;

     
  (e)

the number of ounces of gold and silver and the quantity of other Minerals delivered to a purchaser;

     
  (f)

the amount and a description of operating and capital expenditures;

     
  (g)

a statement setting out the mineral reserves and mineral resources (by category) prepared in accordance with National Instrument 43-101 (with the assumptions used, including cut-off grade, metal prices and metal recoveries);

     
  (h)

a review of the development or operating activities for the year and a report on any material issues or departures from that contemplated by the development or mine plan, as applicable as of the first day of the fiscal year;

     
  (i)

variances from projected operating and capital expenditures and any actual or expected adverse impact on development or production or recovery of gold, silver and other Minerals, whether as to quantity or timing, together with the details of the plans to resolve or mitigate such matters;

     
  (j)

if applicable, the percentage completion compared to the initial development plan of the major elements of construction and the anticipated date of commencement of commercial production, if it has not yet then occurred; and

     
  (k)

details of any material health or safety violations and/or material violations of any Applicable Laws (including Environmental Laws).

The Annual Operational Report shall also contain a report on any Encumbrances, other than customary liens, placed on the assets or properties of the Seller Entities with respect to liabilities or obligations greater than $1,000,000 (in the aggregate).

Applicable Law ” means any law (including common law and equity), any international or other treaty, any domestic or foreign constitution or any multinational, federal, provincial, territorial, state, municipal, county or local statute, law, ordinance, code, rule, regulation, Order (including any securities laws or requirements of stock exchanges and any consent decree or administrative Order), or Authorization of a Governmental Body in any case applicable to any specified Person, property, transaction or event, or any such Person’s property or assets.


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Authorization ” means any authorization, approval, consent, concession, exemption, license, lease, grant, permit, franchise, right, privilege or no-action letter from any Governmental Body having jurisdiction with respect to any specified Person, property, transaction or event, or with respect to any of such Person’s property or business and affairs (including any zoning approval, mining permit, development permit or building permit) or from any Person in connection with any easements, contractual rights or other matters.

Bankruptcy Code ” means any of the Bankruptcy Reform Act , Title 11 of the United States Code , the Bankruptcy and Insolvency Act (Canada), the Companies Creditors Arrangement Act (Canada) and the Winding-Up and Restructuring Act (Canada) or any similar legislation, each as amended or recodified from time to time, including (unless the context otherwise requires) any rules or regulations promulgated thereunder.

Business Day ” means any day (other than a Saturday or Sunday) on which banks are open for business in Toronto, Ontario, and Elko, Nevada.

Buyer ” has the meaning set out on the first page of this Agreement.

Capital Lease ” means, as to any Person, (i) any lease of property by such Person as lessee to the extent the obligations of such Person thereunder are required to be classified and accounted for as capital lease obligations or finance lease obligations on a balance sheet of such Person in accordance with GAAP, or (ii) any synthetic lease, tax retention operating lease or any other lease having substantially the same economic effect as a conditional sale, title retention agreement or similar arrangement.

Change of Control ” means, with respect to any Person, the consummation of any transaction, including any consolidation, amalgamation, arrangement or merger or any issue, transfer or acquisition of securities, the result of which is that any other Person or group of Persons acting jointly or in concert for purposes of such transaction directly or indirectly (A) becomes the beneficial owner of more than 50% of the voting securities of such Person, measured by voting power rather than number of securities, or (B) controls such Person.

Collateral ” means all of the property and rights of the Seller Entities in and to assets, rights and property, including: (a) all Accounts, instruments, chattel paper, deposit accounts, documents, intangibles, goods (including inventory, equipment and fixtures), money, letter of credit rights, supporting obligations, claims, causes of action and other legal rights and investment property; (b) all of the Properties and Other Properties; (c) all products, proceeds, rents and profits of the foregoing; (d) all books and records of the Seller Entities related to any of the foregoing; and (e) all of the foregoing, whether now owned or existing or hereafter acquired or arising or in which any of the Seller Entities now has or hereafter acquires any rights.

Contaminant ” means any solid, liquid, gas, odor, heat, sound, vibration, radiation, or combination of any of them, that does or is reasonably expected to:

  (a)

impair the quality of the Environment for any use that can be made of it;

     
  (b)

injure or damage property or plant or animal life;

     
  (c)

adversely affect the health of any individual;

     
  (d)

impair the safety of any individual;



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  (e)

render any plant or animal life unfit for use by man; or

     
  (f)

create a liability under any Environmental Law;

and includes any “contaminant” within the meaning ascribed to such term in any Environmental Law.

Deductions ” means any and all refining, treatment and other charges, penalties, insurance, deductions, transportation, settlement, financing, price participation charges and/or other charges, penalties, deductions, set-offs, Taxes and expenses pertaining to and/or in respect of the Purchased Gold Ounces delivered under this Agreement (or payments in lieu thereof).

Default Amount ” means the sum of:

  (a)

the amount determined by the following formula:

(A - B) x C

where

“A” is the total number of Purchased Gold Ounces (being 38,250 ounces),

“B” is the total number of ounces of Refined Gold delivered by the Seller to the Buyer pursuant to the Delivery Obligations, and

“C” is [redacted for propriety reasons] , and

     
  (b)

interest on such amount at the rate of 12% per annum, calculated from the date of the notice from the Buyer to the Seller pursuant to Section 15 until the date of payment of such amount plus interest in full.

Delivery Date ” means the last Business Day of each calendar month during the Delivery Period.

Delivery Obligations ” means the obligation of the Seller to deliver the Purchased Gold Ounces to the Buyer under this Agreement and each and all of the Seller Entities’ related covenants and obligations under this Agreement (for greater certainty, including Monthly Delivery Requirements) and any Security Agreement to which it is a party, as applicable.

Delivery Period ” means the period commencing on June 1, 2014 and ending on the Final Delivery Date.

Designated Jurisdiction ” means Canada, the United Kingdom or such other location as may be agreed between the Buyer and the Seller.

Disclosure Schedule ” means the disclosure schedule delivered on the date hereof by the Seller to the Buyer setting forth exceptions to, and disclosures with respect to, the representations and warranties set forth in Section 17 and Schedule G.

Effective Date ” means the date on which the Buyer pays the Purchase Price to the Seller, or such Person as directed by the Seller, which, subject to the satisfaction of the conditions set out in Section 4, shall be the date on which the Acquisition is completed, or such other date as may be agreed to in writing by the Seller and the Buyer.

Encumbrance ” means any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, security interest, priority or other security agreement, preferential arrangement or encumbrance of any kind or nature whatsoever, including any conditional sale or other title retention agreement or the interest of a lessor under a Capital Lease or prior claims or royalties of any nature whatsoever, whether registered or recorded or unregistered or unrecorded.

Environment ” means the ambient air, all layers of the atmosphere, surface water, underground water, all land (surface and underground), all living organisms and the interacting natural systems that include components of air, land, water, organic and inorganic matter and living organisms, and includes indoor and underground spaces.

Environmental Laws ” means any Applicable Law relating to the Environment, occupational health or safety, industrial hygiene, product liability or any past, present or future activity, event or circumstance in respect of any Hazardous Materials (including the use, handling, transportation, production, disposal, discharge or storage thereof or the terms of any Authorization issued in connection therewith) or the environmental conditions on, under or about any real property (including soil, groundwater and indoor, underground and ambient air conditions).


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Event of Default ” has the meaning set forth in Section 14.

Facility Agreement ” means the senior secured facility agreement dated February 11, 2014 among the Seller, the guarantors party thereto, Royal Capital Management Inc., as security Agents', and the lenders party thereto, as amended, restated, modified, supplemented or replaced from time to time in accordance with the terms of this Agreement.

Final Delivery Date ” means the date on which all of the Purchased Gold Ounces have been delivered to the Buyer in accordance with this Agreement.

Fire Creek Owner ” means Klondex Gold & Silver Mining Company, a corporation existing under the laws of Nevada.

Fire Creek Project ” means the Fire Creek gold project located in the State of Nevada, U.S.A., including the Fire Creek Property, the mining production, processing, recovery, sale, transportation, storage and delivery operations and related assets and other assets located on or at or used in connection with the Fire Creek Property or to mine Minerals from the Fire Creek Property, including all Minerals, Authorizations, Other Rights, tailings, fixtures, mines, facilities, equipment and inventory, existing or to be developed, constructed, and operated at or in respect of the Fire Creek Property, including infrastructure assets, tailings management facilities and other plants.

Fire Creek Property ” means all right, title and interest of any of the Seller Entities to:

  (a)

patented claims, fee title and unpatented mining and millsite claims and all accessions and successions thereto, whether created privately or through government action, mineral rights and surface rights, whether owned or leased, in each case used in connection with the Fire Creek Project, including any of the foregoing described in Schedule B;

     
  (b)

all water, water rights and the permits and other evidence of authority or approval to appropriate and/or use ground or surface water in connection with the properties and rights referred to above, including the water rights described in Schedule B;

     
  (c)

all Minerals, Authorizations and Other Rights, all other property, tailings, buildings, structures, facilities and fixtures used, affixed or situated thereon, Utility Commitments and other rights or assets in each case relating to the interests referred to in (a) and (b) above; and

     
  (d)

any of the foregoing subsequently acquired.

GAAP ” means generally accepted accounting principles for publicly accountable enterprises at the relevant time determined with reference to The Handbook of the Canadian Institute of Chartered Accountants, as amended from time to time, which for certainty, for financial periods beginning on or after January 1, 2011, are International Financial Reporting Standards; provided that, with respect to the Midas Entities for periods prior to completion of the Acquisition, “GAAP” means United States generally accepted accounting principles.


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Governmental Body ” means the government of Canada, the United States of America or any other nation, or of any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, arbitrator or arbitrators, tribunal, central bank or other entity exercising executive, legislative, judicial or arbitral, taxing, regulatory or administrative powers or functions (including any applicable stock exchange).

Hazardous Materials ” means any pollutant or Contaminant, including any hazardous, dangerous, registrable or toxic chemical, material or other substance within the meaning of any Environmental Law.

Indebtedness ” of any Person means, without duplication:

  (a)

all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, bills or other similar instruments;

     
  (b)

all obligations, contingent or otherwise, relative to the face amount of all letters of credit, whether or not drawn, and banker’s acceptances issued for such Person’s account;

     
  (c)

all obligations under any Capital Lease of such Person;

     
  (d)

all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business);

     
  (e)

all obligations secured by (or for which the holder of such obligations has an existing right, contingent or otherwise, to be secured by) any Encumbrance upon or in property owned by such Person, even if such Person has not assumed or become liable for the payment of such obligations or such obligations are limited in recourse;

     
  (f)

all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property);

     
  (g)

all guarantees, indemnities and other obligations (contingent or otherwise) of such Person in respect of Indebtedness of another Person; and

     
  (h)

all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any equity, ownership or profit interests in such Person within ten years from the date of issuance thereof.

Intercreditor Agreement ” means the priority agreement entered into between, among others, the Seller, the Buyer and Royal Capital Management Corp. on the date of this Agreement.

Klondex BC Holdco ” means 0985472 BC Ltd., a corporation existing under the laws of British Columbia.

Klondex Entities ” means the Seller Entities other than, prior to the completion of the Acquisition, the Midas Entities.

Klondex Holdings ” means Klondex Holdings (USA) Inc., a corporation existing under the laws of Nevada.


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Loan ” means the loan in the aggregate principal amount of $25,000,000 provided to the Seller pursuant to the Facility Agreement by the lenders thereunder.

Losses ” means any and all damages, claims, losses, lost profits, liabilities, fines, injuries, costs, penalties and expenses (including reasonable legal fees).

Material Adverse Effect ” means any change, event, occurrence, condition, circumstance, effect, fact or development that has, or could reasonably be expected to have, a material and adverse effect on:

  (a)

the operations, results of operations, business, affairs, properties, assets, liabilities and obligations (contingent or otherwise), capitalization or condition (financial or otherwise) of the Seller Entities taken as a whole;

     
  (b)

the Midas Mine (including the ability of the Seller Entities to operate the Midas Mine as currently operated and substantially in accordance with the mine plan for the Midas Mine in effect at the time of the occurrence of the Material Adverse Effect);

     
  (c)

the Fire Creek Project (including the ability of the Seller Entities to construct, develop or operate the Fire Creek Project substantially in accordance with the applicable development or mine plan for the Fire Creek Project in effect at the time of the occurrence of the Material Adverse Effect);

     
  (d)

the ability of any Seller Entity to perform its obligations under any Transaction Document to which it is a party;

     
  (e)

the legality, validity, binding effect or enforceability of any Transaction Document or the rights and remedies of the Buyer or any of its Affiliates under any of the Transaction Documents; or

     
  (f)

the validity, perfection or priority of security under any Security Agreement.

Midas Entities ” means Midas Holdings and the Midas Owner.

Midas Holdings ” means Newmont Midas Holdings Limited, a corporation existing under the laws of Nevada.

Midas Mine ” means the Midas mine and related ore milling facility located in the State of Nevada, U.S.A., including the Midas Property, the mining production, processing, recovery, sale, transportation, storage and delivery operations and related assets and other assets located on or at or used in connection with the Midas Property or to mine Minerals from the Midas Property, including all Minerals, Authorizations, Other Rights, tailings, fixtures, mines, facilities, equipment and inventory, existing or to be developed, constructed, and operated at or in respect of the Midas Property, including infrastructure assets, tailings management facilities and other plants.

Midas Owner ” means Newmont Midas Operations Inc., a corporation existing under the laws of Nevada.

Midas Property ” means all right, title and interest of any of the Seller Entities to:


- 9 -

  (a)

patented claims, fee title and unpatented mining and millsite claims and all accessions and successions thereto, whether created privately or through government action, mineral rights and surface rights, whether owned or leased, in each case used in connection with the Midas Mine, including any of the foregoing described in Schedule A;

     
  (b)

all water, water rights and the permits and other evidence of authority or approval to appropriate and/or use ground or surface water in connection with the properties and rights referred to above, including the water rights described in Schedule A;

     
  (c)

all Minerals, Authorizations and Other Rights, all other property, buildings, structures, facilities and fixtures used, affixed or situated thereon, Utility Commitments and other rights or assets, in each case relating to the interests referred to in (a) and (b) above; and

     
  (d)

any of the foregoing subsequently acquired.

Minerals ” means any and all metals, minerals and mineral rights of every nature and kind, including metals, precious metals, base metals, gems, diamonds, industrial minerals, commercially valuable rock, aggregate, clays, and diatomaceous earth, hydrocarbons, oil, gas, and other materials in whatever form or state.

Monthly Average Gold Price ” means, for any given calendar month, the monthly average of the London p.m. fix for gold as quoted in United States dollars by the London Bullion Market Association (or any successor metals exchange) for such month, calculated by dividing the sum of all such quotations during such month by the number of such quotations.

Monthly Delivery Requirements ” means, for each calendar month ending during and including the last day of the Delivery Period, the applicable number of ounces of Refined Gold for such month set out in Schedule D.

Monthly Operational Report ” means a written report in relation to a calendar month with respect to each of the Midas Mine and the Fire Creek Project, to be prepared by or on behalf of the Seller for each month, which shall include all of the information contained in the monthly operating reports prepared and provided to the board of directors of any of the Seller Entities and, to the extent not contained in such reports, will also contain, for such month:

  (a)

types, tonnes and grade of Minerals mined;

     
  (b)

types, tonnes and grade of Minerals stockpiled;

     
  (a)

with respect to the processing facilities, the types, tonnes and grade of processed Minerals; recoveries for gold, silver and other Minerals; and doré weight and gold and silver grade;

     
  (b)

the number of ounces of gold and silver and the quantity of other Minerals contained in the material processed during such month, but not delivered to a purchaser by the end of such month;

     
  (c)

the number of ounces of gold and silver and the quantity of other Minerals produced and delivered to a purchaser;

     
  (c)

the amount and a description of operating and capital expenditures; and



- 10 -

  (d)

any material changes from the most recent production forecasts provided to the Buyer.

National Instrument 43-101 ” means National Instrument 43-101 – Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators (or any successor instrument, rule or policy).

Notice of Offer ” has the meaning set out in Section 10(b).

Offered Interest ” has the meaning set out in Section 10(b).

Other Properties ” means, except to the extent constituting part of the Properties, all right, title and interest of any of the Seller Entities to:

  (a)

patented claims, fee title and unpatented mining and millsite claims and all accessions and successions thereto, whether created privately or through government action, mineral rights and surface rights, whether owned or leased, including any of the foregoing described in Schedule C;

     
  (b)

all water, water rights and the permits and other evidence of authority or approval to appropriate and/or use ground or surface water in connection with the properties and rights referred to above, including the water rights described in Schedule C;

     
  (c)

all Minerals, Authorizations and Other Rights, all other property, buildings, structures, facilities and fixtures used, affixed or situated thereon, Utility Commitments and other rights or assets, in each case relating to the interests referred to in (a) and (b) above; and

     
  (d)

any of the foregoing subsequently acquired.

Other Rights ” means all licenses, approvals, authorizations, consents, rights (including surface rights, access rights and rights of way), privileges, concessions or franchises held by the Seller Entities or required to be obtained from any Person (other than a Governmental Body), for the construction, development and operation of the Midas Mine and/or Fire Creek Project, as applicable, as such construction, development and operation is contemplated by the current or then applicable development or mine plan, as the case may be.

Order ” means any order, directive, decree, judgment, ruling, award, injunction, direction or request of any Governmental Body or other decision-making authority of competent jurisdiction.

 “ Parties ” means the parties to this Agreement and “ Party ” means any one of the Parties.

Permitted Encumbrances ” means:

  (a)

Encumbrances arising by operation of law for Taxes, assessments or governmental charges not yet due or being contested in good faith by appropriate proceedings diligently conducted and for which reserves satisfactory to the Buyer have been established and provided that the Encumbrance is released prior to any enforcement action against any property of the Seller Entities;

     
  (b)

statutory liens of mechanics, materialmen, shippers, warehousemen, carriers, and other similar Persons for services or materials arising in the ordinary course of business for which: (i) payment is not past due; or (ii) payment is due but is being contested in good faith by appropriate and lawful proceedings diligently conducted and for which reserves satisfactory to the Buyer have been established and provided that the Encumbrance is released prior to any enforcement action against any property of the Seller Entities;



- 11 -

  (c)

nonconsensual liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security;

     
  (d)

Encumbrances specifically identified and listed on the Disclosure Schedules;

     
  (e)

Encumbrances granted in the Transaction Documents;

     
  (f)

Encumbrances granted pursuant to the Facility Agreement;

     
  (g)

Purchase Money Liens securing Indebtedness referred to in Section 11(c)(ii);

     
  (h)

Permitted Working Capital Security securing Indebtedness referred to in Section 11(c)(i);

     
  (i)

Encumbrances arising from the right of distress enjoyed by landlords or Encumbrances otherwise granted to landlords, in either case, to secure the payment of arrears of rent in respect of leased properties and customarily granted in the applicable jurisdiction; provided that such rent is not then overdue and the Seller Entities are then in compliance in all material respects with the terms of the lease or sublease in respect of such leased properties and provided further that any such Encumbrances are limited to property of the Seller Entities located at the premises subject to the applicable lease or sublease;

     
  (j)

zoning restrictions, easements, rights of way, survey exceptions, encroachments, covenants, licenses, reservations, leasehold interests, restrictions on the use of real property or minor irregularities incident thereto which do not (i) secure obligations for the repayment of money, or (ii) in the aggregate materially detract from the value or use of the property or assets of the Seller Entities or impair, in any material manner, the use of such property for the purposes for which such property is held or intended to be used by the Seller Entities;

     
  (k)

the paramount title of the United States as to any unpatented mining claims and millsite claims and any rights of third parties to the lands within such unpatented mining claims and millsite claims pursuant to Multiple Mineral Development Act of 1954 and the Surface Resources and Multiple Use Act of 1955 and the regulations of the Department of the Interior promulgated in accordance with the foregoing statutes;

     
  (l)

Encumbrances of a depository institution arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of setoff, or similar rights and remedies as to deposit accounts or other funds maintained with such institution, provided that (i) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by a Seller Entity in excess of those set forth by regulations promulgated by any Governmental Body, and (ii) such deposit account is not intended by the applicable Seller Entities to provide collateral to the depository institution;

     
  (m)

Encumbrances consisting of pledges of cash or near cash assets made to secure or facilitate the provision of security for the performance of bids, trade contracts, leases, public or statutory obligations (including but not limited to environmental, reclamation or other similar obligations) or other obligations of a like nature (including surety, appeal or performance bonds), in each case incurred in the ordinary course of business (other than for Indebtedness);



- 12 -

  (n)

any undetermined or inchoate lien or privilege incidental to current operations that has not been filed pursuant to law or that relates to obligations not due or delinquent;

     
  (o)

any right reserved to or vested in any Governmental Body by the terms of any Authorization held or acquired by a Person in the ordinary course of its business, or by any statutory provision, to terminate the Authorization or to require annual or other periodic payments as a condition of the continuance thereof;

     
  (p)

any Encumbrance created or assumed by a Person in favor of a public utility or Governmental Body when required by the utility or Governmental Body in connection with the operations of such Person in the ordinary course;

     
  (q)

any reservations, limitations, provisos and conditions expressed in original grants from any Governmental Body;

     
  (r)

any Encumbrance arising from court or arbitral proceedings, provided that the claims secured thereby or the amount thereof do not exceed [redacted for proprietary reasons] and are being contested at the time in good faith by proper legal proceedings, execution thereon has been stayed and the same is not, in the opinion of the Buyer, acting reasonably, expected to result in a Material Adverse Effect;

     
  (s)

deposits of cash or securities in connection with any appeal or contestation of any Encumbrance; and

     
  (t)

such other Encumbrances as may be approved in writing by the Buyer from time to time, whether or not such Encumbrances are registered against the Collateral or otherwise.

Permitted Refinancing Indebtedness ” means Indebtedness of any Seller Entity the net proceeds of which are used to replace, refinance, defease or discharge the Loan (or any other Permitted Refinancing Indebtedness), in whole but not in part, provided that (i) the principal amount of such Permitted Refinancing Indebtedness does not exceed the principal amount of the Indebtedness so replaced, refinanced, defeased or discharged (plus the amount of all fees, and expenses and premiums incurred in connection therewith); (ii) such Indebtedness has a maturity date which is after the date of the Indebtedness being replaced, refinanced, defeased or discharged, and a weighted average life to maturity equal to or greater than the Indebtedness being replaced, refinanced, defeased or discharged, and (iii) such Indebtedness is either (a) unsecured or (b) secured only against the Collateral and, in the case of (b), the lenders thereunder have agreed to be bound by an intercreditor agreement with the Buyer which is at least as favourable to the Buyer (as determined by it, acting reasonably) as the Intercreditor Agreement.

Permitted Working Capital Debt ” has the meaning set forth in Section 11(c).

Permitted Working Capital Security ” has the meaning set forth in Section 11(c).

Person ” means and includes individuals, corporations, bodies corporate, limited or general partnerships, joint stock companies, limited liability companies, joint ventures, associations, companies, trusts, banks, trust companies, Governmental Bodies or any other type of organization or entity, whether or not a legal entity.


- 13 -

Personal Property Security Legislation ” means with respect to the State of Nevada, Article 9 of the Uniform Commercial Code to the extent adopted in such State from time to time, and with respect to other applicable jurisdictions, the personal property security legislation in effect therein from time to time.

Properties ” means, collectively, the Midas Property and the Fire Creek Property.

Purchased Gold Ounces ” has the meaning set out in Section 3(a).

Purchase Money Lien ” means an Encumbrance created or incurred by a Person securing Indebtedness incurred to finance the acquisition of personal property (including the costs of installation thereof), provided that:

  (a)

such lien is created substantially simultaneously with the acquisition of such property;

     
  (b)

such lien does not at any time encumber any property other than the property financed by such Indebtedness;

     
  (c)

the amount of Indebtedness secured thereby is not increased subsequent to such acquisition; and

     
  (d)

the principal amount of Indebtedness secured by such lien at no time exceeds 100% of the original purchase price of such property and the cost of installation thereof; and

     
  (e)

for the purposes of this definition, the term “acquisition” includes a Capital Lease.

Purchase Price ” means $33,763,640, being the purchase price for the Purchased Gold Ounces.

Records ” means all of the Seller Entities’ present and future books, records and data of every kind or nature, including books of account, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files, electronically stored data and other data, together with the tapes, disks, diskettes, drives and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of a Seller Entity with respect to the foregoing maintained with or by any other Person).

Refined Gold ” means marketable metal bearing material in the form of gold bars or coins that is refined to a minimum 995 parts per 1,000 fine gold.

ROFR Exercise Notice ” has the meaning set out in Section 10(d).

Sales Taxes ” means sales, transfer, turnover, VAT or value added Taxes of any nature or kind.

Security ” means the Encumbrances on the Collateral created by the Security Agreements.

Security Agreements ” means the guarantees and security documents listed on Schedule E hereto, together with such other agreements made in favour of the Buyer from time to time guaranteeing or securing or intending to guarantee or secure the obligations of the Seller due to the Buyer under this Agreement.


- 14 -

SEDAR ” means the System for Electronic Document Analysis and Retrieval.

Seller ” has the meaning set out on the first page of this Agreement.

Seller Entity ” means the Seller, Klondex BC Holdco, Klondex Holdings, the Fire Creek Owner, Midas Holdings, the Midas Owner and each of their Subsidiaries.

Solvent ” means, when used with respect to a Person, that:

  (a)

the fair saleable value of the assets of such Person is in excess of the total amount of the current value of its liabilities (including for purposes of this definition all liabilities (including loss reserves), whether or not reflected on a balance sheet prepared in accordance with GAAP and whether direct or indirect, fixed or contingent, secured or unsecured, disputed or undisputed);

     
  (b)

such Person is able to pay its debts or obligations in the ordinary course as they mature;

     
  (c)

such Person has capital sufficient to carry on its business; and

     
  (d)

such Person is not otherwise insolvent as defined by any Applicable Law;

and “ Insolvent ” shall have a correlative meaning.

Subsidiary ” means with respect to any Person, any other Person which is controlled directly or indirectly by that Person.

Taxes ” means all taxes of any kind or nature whatsoever including corporation taxes, capital taxes, realty taxes (including utility charges which are collectible like realty taxes), net proceeds of mines tax, privilege taxes, excise taxes, business taxes, property transfer taxes, income taxes, Sales Taxes, customs duties, payroll taxes, levies, stamp taxes, royalties, duties, and all fees, including claim fees, deductions, compulsory loans and withholdings imposed, levied, collected, withheld or assessed as of the date hereof or at any time in the future, by any Governmental Body of any jurisdiction whatsoever having power to tax, together with penalties, fines, additions to tax and interest thereon.

Term Notes ” means the senior secured term notes issued by the Seller under the Facility Agreement.

Third Party Offer ” has the meaning set out in Section 10(b).

Third Party Offeror ” has the meaning set out in Section 10(b).

Threshold Amount ” means $2,500,000.

Time of Delivery ” has the meaning set forth in Section 3(e).

Transaction Documents ” means, collectively, this Agreement, the Intercreditor Agreement, the Security Agreements, the Disclosure Schedule and each other agreement, document, instrument or certificate delivered for the benefit of the Buyer and its Affiliates pursuant to or otherwise in connection with any of this Agreement, the Intercreditor Agreement, the Security Agreements and the Disclosure Schedule.


- 15 -

Transfer ”, when used as a verb, means to sell, grant, assign, encumber, hypothecate, pledge or otherwise dispose of or commit to dispose of, directly or indirectly, including through mergers, arrangements, amalgamations, consolidations, asset sales or spin out transactions. When used as a noun, “ Transfer ” means a sale, grant, assignment, pledge or disposal or the commitment to do any of the foregoing, directly or indirectly, including through mergers, arrangements, amalgamations, consolidations, asset sales or spin out transactions. “ Transfer ” shall not include any relocation or reconfiguration of unpatented mining claims in the ordinary course of business, or the abandonment of claims to be so relocated or reconfigured; provided, however, that in each case all modifications to the Security Agreements reasonably necessary to ensure a valid lien and encumbrance on the relocated or reconfigured unpatented mining claims are promptly executed and delivered to the Buyer in form suitable for recordation.

TSX ” means the Toronto Stock Exchange.

Utility Commitment ” means any water service commitments and agreements, transmission or electrical service commitments and agreements and other utility commitments and agreements including the infrastructure, rights of way and easements necessary to provide the aforementioned utility services.

2.

Interpretation.

     
(a)

Interpretation of Certain Matters . In this Agreement, unless otherwise specifically provided or unless the context otherwise requires:


  (i)

the terms “Agreement”, “this Agreement”, “the Agreement”, “hereto”, “hereof”, “herein”, “hereby”, “hereunder” and similar expressions refer to this Agreement in its entirety and not to any particular provision hereof;

     
  (ii)

references to a “Section” or “Schedule” followed by a number or letter refer to the specified Section of or Schedule to this Agreement;

     
  (iii)

references to a Party in this Agreement mean the Party or its successors or permitted assigns;

     
  (iv)

the division of this Agreement into articles and sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement;

     
  (v)

the words “including”, “includes” and “include” shall be deemed to be followed by the words “without limitation”;

     
  (vi)

any time period within which a payment is to be made or any other action is to be taken hereunder shall be calculated excluding the day on which the period commences and including the day on which the period ends;

     
  (vii)

whenever any payment is required to be made, action is required to be taken or period of time is to expire on a day other than a Business Day, such payment shall be made, action shall be taken or period shall expire on the next following Business Day;



- 16 -

  (viii)

references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of the Transaction Documents; and

     
  (ix)

references to statutes or regulations are to be construed as including all statutory and regulatory provisions consolidating, amending, supplementing, interpreting or replacing the statute or regulation referred to.


  (b)

Currency . All references in this Agreement to currency or to “$”, unless otherwise expressly indicated, shall be to United States dollars.

     
  (c)

Accounting Principles . Where the character or amount of any asset or liability or item of revenue or expense is required to be determined, or any consolidation or other accounting computation is required to be made, for the purposes of this Agreement and any other Transaction Document, including the contents of any certificate to be delivered hereunder, such determination, consolidation or computation shall, unless the Parties otherwise agree or the context otherwise requires, be made in accordance with GAAP applied on a consistent basis.

     
  (d)

Time of Essence. Time shall be of the essence of this Agreement.


3.

Purchase and Sale of Purchased Gold Ounces

     
(a)

Purchase and Sale . On and subject to the terms and conditions of this Agreement, in consideration of the Purchase Price, the Seller agrees to sell and deliver to the Buyer, and the Buyer agrees to purchase from the Seller, 38,250 ounces of Refined Gold (the “ Purchased Gold Ounces ”), free and clear of any and all Encumbrances. For greater certainty, the Buyer shall not be responsible for any Deductions, all of which shall be for the account of the Seller.

     
(b)

Payment . Subject to the satisfaction of the conditions set out in Section 4(a), the Buyer shall pay the Purchase Price to the Seller (or as directed by the Seller in connection with completion of the Acquisition) on the Effective Date. The Purchase Price shall be payable in cash by wire transfer to an account to be designated by the Seller and notified to the Buyer in writing at least one Business Day prior to the Effective Date. The Seller shall use the proceeds of the Purchase Price only for the purpose of paying for the Acquisition.

     
(c)

Monthly Delivery Requirements . On each Delivery Date occurring during the Delivery Period, the Seller shall deliver to the Buyer Refined Gold in an amount equal to the applicable Monthly Delivery Requirements. The Seller’s delivery obligations are fixed and not dependent on whether mining operations are being conducted on the Properties or any other properties of the Seller Entities or the results of such operations. The Seller shall not be obliged to deliver to the Buyer Refined Gold physically mined, produced or extracted from the Properties or any other properties of the Seller Entities, provided that the Seller shall not deliver any Refined Gold to the Buyer that has been purchased directly or indirectly on a commodities exchange. For greater certainty, the Seller shall be permitted to deliver to the Buyer Refined Gold from a refinery regardless of the origin of the Refined Gold, provided that the Refined Gold does not contain any minerals subject to conflict minerals legislation (or similar legislation banning the purchase, sale, delivery or use of, or requiring verification or reporting with respect to, minerals based on their origin) and the delivery of the Refined Gold to the Buyer is otherwise made in accordance with Applicable Law.



- 17 -

  (d)

Advance Deliveries . Notwithstanding any other provisions of this Agreement, the Seller may at any time deliver to the Buyer Refined Gold in advance of the Monthly Delivery Requirements, without bonus or penalty. Such advance deliveries of Refined Gold shall be credited against the next following Monthly Delivery Requirements.

       
  (e)

Manner of Delivery . The Seller shall deliver to the Buyer all Refined Gold to be delivered pursuant to the Monthly Delivery Requirements by way of credit in metal or physical allocation to the metal account designated by the Buyer, or such other location specified by the Buyer from time to time, acting reasonably, with such details to be specified by the Buyer and notified to the Seller in writing at least 10 Business Days prior to a delivery. Delivery of Refined Gold to the Buyer shall be deemed to have been made at the time such Refined Gold is credited or physically allocated to the designated metal account of the Buyer (the “ Time of Delivery ”). All costs and expenses pertaining to each delivery of Refined Gold shall be borne by the Seller provided that the Buyer’s account is located in a Designated Jurisdiction and, if the Buyer pays any of such costs and expenses, the Seller shall promptly reimburse the Buyer for such payments upon receipt of satisfactory evidence of the Buyer’s payment of such costs and expenses.

       
  (f)

Passing of Title . Title to, and risk of loss of, Refined Gold shall pass from the Seller to the Buyer at the Time of Delivery. The Seller represents, warrants and covenants to the Buyer that, immediately prior to each Time of Delivery:

       
  (i)

it will be the legal and beneficial owner of the Refined Gold credited or physically allocated to the designated metal account of the Buyer;

       
  (ii)

it will have good, valid and marketable title to such Refined Gold; and

       
  (iii)

such Refined Gold will be free and clear of all Encumbrances.


  (g)

Notification and Confirmation . The Parties agree to the following notification and confirmation protocol in respect of the delivery of the Purchased Gold Ounces under this Agreement:

         
  (i)

In the case of any deliveries contemplated by Section 3(d), the Seller shall notify the Buyer in writing at least three Business Days before any delivery and credit or physical allocation to the metal account specified by the Buyer of:

         
  (A)

the number of ounces of Refined Gold to be delivered and credited or physically allocated; and

         
  (B)

the estimated Time of Delivery.

         
  (ii)

At the Time of Delivery, the Seller shall deliver to the Buyer an invoice setting out:

         
  (A)

the number of ounces of Refined Gold so credited or physically allocated; and



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  (B)

such other information regarding the Refined Gold so delivered as reasonably requested by the Buyer from time to time.


  (h)

Late Charge . If delivery of Refined Gold is not made by the applicable Delivery Date, the Buyer may give the Seller written notice of such default. Unless the Seller shall have made such delivery within five days of receipt of such notice, an additional cash sum equal to [redacted for proprietary reasons] of the value of the delinquent delivery determined based on the Monthly Average Gold Price for the month during which the Delivery Date occurred (the “late charge”) shall be payable to the Buyer, plus interest on such amount and the late charge at the rate of [redacted for proprietary reasons] per annum, which shall accrue from the day the delinquent delivery was due to the date of such delivery in full and the payment of the late charge and accrued interest in full.


4.

Conditions for Payment of Purchase Price

       
(a)

Conditions in Favour of the Buyer . The obligation of the Buyer to pay the Purchase Price to the Seller shall be subject to the following:

       
(i)

the Buyer shall have received all documents set out in Schedule E and all conditions set out in Schedule E shall have been satisfied;

       
(ii)

all of the representations and warranties made by the Seller Entities pursuant to the Transaction Documents shall be true and accurate in all respects as if made on and as of the Effective Date;

       
(iii)

no Event of Default or Material Adverse Effect shall have occurred and be continuing;

       
(iv)

no event which with notice or lapse of time or both would become an Event of Default shall have occurred and be continuing;

       
(v)

all of the conditions precedent to the completion of the Acquisition pursuant to the Acquisition Agreement (other than payment of the funds required to complete the Acquisition) shall have been satisfied or, in the case of conditions precedent in favour of the Seller, with the prior written consent of the Buyer (which shall not be unreasonably withheld), waived;

       
(vi)

all of the conditions precedent to the funding pursuant to the Facility Agreement and the Subscription Receipt Agreement dated as of January 9, 2014, between the Seller, GMP Securities L.P. and Computershare Trust Company of Canada shall have been satisfied or waived and such funding shall be available to be paid to or as directed by the Seller for the purposes of completing the Acquisition;

       
(vii)

the funds from the Purchase Price to be paid, together with the other funds referred to in clause (vi) above, will be sufficient to complete the Acquisition;

       
(viii)

the 9% Senior Unsecured Notes due January 5, 2015 issued by the Seller shall have been repaid in full (such repayment not to exceed an amount equal to 102.5% of principal plus any unpaid accrued interest); provided that, if the funds referred to in clause (vi) above are to be used to repay such notes, the funds from the Purchase Price to be paid, together with the remainder of the funds referred to in clause (vi) above after repayment of such notes, will be sufficient to complete the Acquisition; and



- 19 -

  (ix)

the Buyer shall have received a certificate signed by an authorized senior officer of the Seller confirming the matters set forth in clauses (ii) through (viii) above.


  (b)

Conditions in Favour of the Seller . The obligation of the Seller to sell and deliver the Purchased Gold Ounces to the Buyer shall be subject to the Buyer having paid the Purchase Price and the Acquisition having been completed.

     
  (c)

Obligation to Satisfy Conditions . The Seller shall use all commercially reasonable efforts and take all reasonable action as may be necessary or advisable to satisfy and fulfill all the conditions set forth in this Section 4 as soon as practicable. The Buyer shall co-operate with the Seller in exchanging such information and providing such assistance as may be reasonably required in connection with the foregoing.

     
  (d)

Waiver of Conditions . Each of the conditions set forth in Section 4(a) is for the exclusive benefit of the Buyer, and may be waived by the Buyer in writing, in its sole discretion in whole or in part.


5.

Taxes

     
(a)

Taxes Payable by Seller . Except as required by Applicable Law or expressly contemplated herein, all deliveries of the Purchased Gold Ounces and any other payment or transfer of property of any kind made under this Agreement to the Buyer shall be made free and clear and without any present or future deduction, withholding, charge or levy on account of Taxes, without setoff or counterclaim. The Seller shall be liable for all such Taxes directly or indirectly imposed on the Buyer and shall indemnify and save the Buyer harmless from any such Taxes imposed on the Buyer.

     
(b)

Gross-up . All Taxes, if any, as are required by Applicable Law to be so deducted, withheld, charged or levied by the Seller on any such delivery (or payment, as applicable), shall be paid by the Seller delivering (or paying, as applicable) to the Buyer or on its behalf, in addition to such delivery (or payment, as applicable), such additional deliveries (or payments, as applicable) as are necessary to ensure that the net delivery (or payment, as applicable) received by the Buyer (net of any such Taxes, including any Taxes required to be deducted, withheld, charged or levied on any such additional amount) equals the full delivery (or payment, as applicable) that the Buyer would have received had no such deduction, withholding, charge or levy been required.

     
(c)

Additional Taxes. Notwithstanding Sections 3(a), 5(a) and 5(b), the Buyer shall be responsible for, and the Seller shall be entitled to deduct, withhold, charge or levy, any additional Taxes in respect of deliveries of the Purchased Gold Ounces and any other payment or transfer of property of any kind made under this Agreement to the Buyer where such additional Taxes arise solely because the Buyer is not resident in Canada for purposes of the Income Tax Act (Canada) or the location of the Buyer’s specified metal account is not located in a Designated Jurisdiction. For greater certainty, such additional Taxes shall be limited to the amount by which the Taxes required to be deducted, withheld, charged or levied in respect of deliveries of the Purchased Gold Ounces and any other payment or transfer of property of any kind made under this Agreement to the Buyer because the Buyer is not resident in Canada for purposes of the Income Tax Act (Canada) or the location of the Buyer’s specified metal account is not located in a Designated Jurisdiction exceeds the Taxes that would have been deducted, withheld, charged or levied had the Buyer been resident in Canada for purposes of the Income Tax Act (Canada) or the location of the Buyer’s metal account been in a Designated Jurisdiction, as the case may be.



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  (d)

Withholding by Buyer. To the extent required by Applicable Law, the Buyer may deduct, withhold, charge or levy, any Taxes imposed by any Governmental Authority on the Seller or any of its Affiliates, or otherwise required to be withheld, in respect of any payment made by the Buyer to the Seller or any of its Affiliates under this Agreement.

     
  (e)

Application to Guarantors . The provisions of Sections 5(a), 5(b) and 5(c) shall also apply to all deliveries and payments made by any other Seller Entity to the Buyer whether made pursuant to its guarantee obligations under the Securities Documents or otherwise.

     
  (f)

Cooperation . The Parties agree to reasonably cooperate to: (i) ensure that no more Taxes, duties or other charges are payable than is required under Applicable Law; and (ii) obtain a refund or credit of any Taxes which have been overpaid.

     
  (g)

Tax Planning. Following the execution and delivery of this Agreement, each of the Parties will co-operate reasonably with the other Party in implementing any proposed adjustments to the structure or terms of this Agreement to facilitate tax planning, provided that such adjustments have no material adverse impact on the non-proposing Party and that the costs of such adjustments shall be paid for by the proposing Party.


6.

Reporting Obligations

       
(a)

Reports. The Seller shall deliver or cause to be delivered to the Buyer:

       
(i)

within 15 days after the end of each calendar month, a Monthly Operational Report in respect of the Midas Mine and the Fire Creek Project;

       
(ii)

within 45 days after the end of each fiscal year, an Annual Operational Report, which shall be accompanied by an Annual Compliance Certificate dated the date on which such Annual Compliance Certificate is delivered to the Buyer; and

       
(iii)

at least 45 days before the beginning of each fiscal year, an Annual Forecast Report.


  (b)

Financial Statements . Except if the Seller is a reporting issuer and such materials are filed on SEDAR prior to the dates specified below, the Seller shall deliver to the Buyer:

       
  (i)

within 45 days after the end of each of the first three fiscal quarters of each fiscal year, a copy of the Seller’s interim consolidated financial statements; and

       
  (ii)

within 90 days after the end of each fiscal year, a copy of the Seller’s audited annual consolidated financial statements.

       
  (c)

Shareholder Documents . Except if the Seller is a reporting issuer and such materials are filed on SEDAR promptly after they become available, the Seller shall promptly deliver to the Buyer a copy of each management information circular and other notices issued to its shareholders.



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  (d)

Geological Reports . Except if the Seller is a reporting issuer and such materials are filed on SEDAR promptly after they become available, the Seller shall promptly deliver to the Buyer a copy any technical reports prepared in accordance with National Instrument 43- 101 or initial or updated mineral reserve and mineral resource estimates produced that pertain to the Properties.

     
  (e)

Claims Fee Filings and Payment Receipts . By no later than August 1st of each year, the Seller shall deliver to the Buyer documentation of acknowledgement by the United States Bureau of Land Management that the annual maintenance fees for all unpatented mining claims within the Properties have been paid, and copies of the Affidavit and Notice of Intent to Hold Claims recorded in the State of Nevada with respect to the Properties.

     
  (f)

Development and Mine Plans . The Seller shall promptly deliver to the Buyer a copy of the current development plan or mine plan, as applicable, for each of the Midas Mine and the Fire Creek Project, and a new copy thereof promptly upon any material amendment thereto.

     
  (g)

Other Notices . The Seller shall deliver to the Buyer:


  (i)

promptly after the Seller has knowledge or becomes aware thereof, notice of the occurrence of any Event of Default;

     
  (ii)

promptly after the Seller has knowledge or becomes aware thereof, written notice of all actions, suits and proceedings before any Governmental Body or arbitrator, pending or threatened, against or directly affecting any Seller Entity, the Midas Mine, the Fire Creek Project or any other mineral project of the Seller Entities, including any actions, suits, claims, notices of violation, hearings, investigations or proceedings against or affecting any Seller Entity, or with respect to the ownership, use, maintenance and operation of its properties, including those relating to Environmental Laws;

     
  (iii)

promptly after the Seller has knowledge or becomes aware thereof, written notice of any other condition or event which has resulted, or that could reasonably be expected to result, in a Material Adverse Effect; and

     
  (iv)

such other statements, lists of property and accounts, budgets, forecasts, projections, reports, or other information respecting the operations, properties, business or condition (financial or otherwise) of any Seller Entity (including with respect to the Collateral) as the Buyer may from time to time reasonably request.

Each notice pursuant to clauses (i) through (iii) above shall be accompanied by a written statement by an authorized senior officer of the Seller setting forth all material information relating to the occurrence referred to therein, including any action which the Seller Entities have taken or propose to take with respect thereto.


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7.

Books and Records; Audits; Inspections

     
(a)

Books and Records . The Seller shall, and shall cause each of the Seller Entities to, keep true, complete and accurate books and records of all material operations and activities with respect to the Properties and any other properties of the Seller Entities, and in which complete entries will be made, in accordance with GAAP applied on a consistent basis, reflecting all material financial transactions of each of the Seller Entities.

     
(b)

Audits . Upon not less than three Business Days’ notice, the Buyer and its authorized representatives shall be entitled, at its own cost and expense, to perform audits or other reviews and examinations of the books and records of the Seller Entities to confirm compliance by the Seller Entities with the terms of this Agreement and the other Transaction Documents. The Seller shall, and shall cause each of the Seller Entities to, provide the Buyer with complete access to all the Seller Entities’ books and records at the Seller Entities’ offices during usual business hours. If any such audits reveal a material breach of any provision of this Agreement or the other Transaction Documents, the Seller shall reimburse the Buyer for its costs and expenses incurred in such audit.

     
(c)

Inspections . At reasonable times and with the prior consent of the Seller (not to be unreasonably withheld or delayed), the Buyer and its authorized representatives shall have a right of access to all surface and subsurface portions of the Properties and any other properties of the Seller Entities and to any related operations of the Seller Entities for the purpose of enabling the Buyer to monitor compliance by the Seller Entities with the terms of this Agreement and the other Transaction Documents.

     
(d)

Investor Tours . Upon not less than 10 Business Days’ notice to the Seller and up to two times in any fiscal year, the Buyer shall have the right to conduct an investors tour on the Properties and any facilities associated therewith.

     
(e)

Additional Requirements . Access to the Seller Entities’ properties and associated facilities pursuant to Sections 7(c) and 7(d) shall be subject to the following: (i) any such access shall be at the sole risk and expense of the Buyer, its representatives and its invitees; (ii) any such access shall not unreasonably interfere with the Seller Entities’ activities and operations; (iii) the Buyer shall comply, and request that its representatives and invitees comply, with the policies and procedures that the Seller Entities apply to their own invitees; (iv) the Buyer shall give the Seller prompt notice of any injuries, property damage or environmental harm that may occur during such tour; and (v) the Buyer shall indemnify the Seller Entities from any Losses (excluding loss of profit and consequential or punitive damages) suffered or incurred by any Seller Entity as a consequence of injury to the Buyer, or its representatives or invitees incurred during such access, provided that the foregoing shall not apply to any Losses to the extent they arise primarily from the gross negligence or willful misconduct of any Seller Entity.


8.

Maintenance of Existence and Property

     
(a)

Maintenance of Existence . The Seller shall at all times do or cause to be done all things necessary to maintain each of the Seller Entities’ corporate or other entity existence and to obtain and, once obtained, maintain all Authorizations necessary to carry on its business and own its assets in each jurisdiction in which they carry on business or in which their assets are located.



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  (b)

Maintenance of Properties. The Seller shall at all times do or cause to be done all things necessary to maintain the Properties and any other properties of the Seller Entities in good standing, including paying or causing to be paid all Taxes owing in respect thereof, performing or causing to be performed all required assessment work thereon, paying or causing to be paid all claim, permit and license maintenances fees in respect thereof, paying or causing to be paid all rents and other payments in respect of leased properties forming a part thereof and otherwise maintaining the Properties and any other properties of the Seller Entities in accordance with Applicable Laws.

     
  (c)

Encumbrances . The Seller shall not, and shall ensure that the other Seller Entities do not, cause or allow to be registered or otherwise permit to exist any Encumbrance other than Permitted Encumbrances against any of the Collateral.

     
  (d)

Abandonment . The Seller shall not, and shall ensure that the other Seller Entities do not, abandon any patented or unpatented claims comprising part of the Properties or any other interest in the Properties unless it first complies with this Section 8(d) (provided that in the case of leased properties, the Owner shall comply with this Section 8(d) to the extent permitted under the applicable lease or sublease). If any Seller Entity wishes to abandon any of the patented or unpatented claims comprising part of the Properties or any other interest in the Properties (“ Abandonment Property ”), the Seller shall first give notice of such intention to the Buyer at least 90 days in advance of the proposed date of abandonment. If, not less than 10 days before the proposed date of abandonment, the Seller receives from the Buyer written notice that the Buyer wishes to acquire the Abandonment Property, the Seller shall, or shall cause the relevant Seller Entity to, without additional consideration, convey the Abandonment Property in good standing by quit claim deed, without warranty, to the Buyer or an assignee thereof, and shall thereafter have no further obligation to maintain title to the Abandonment Property. If the Buyer does not give such notice to the Seller within the prescribed period of time, the relevant Seller Entity may abandon the Abandonment Property and shall thereafter have no further obligation to maintain title to the Abandonment Property.

     
  (e)

Right of Buyer to Cure Defects . The Buyer may undertake such investigation of the title and status of the Midas Mine, Fire Creek Property and any other properties of the Seller Entities as it shall deem necessary. If that investigation should reveal defects in the title, the Seller shall forthwith proceed to cure such title defects to the satisfaction of the Buyer. If the Seller fails to do so: (i) the Buyer may proceed to cure such title defects; (ii) any costs and expenses incurred (including attorney’s fees and costs) by the Buyer shall be promptly reimbursed by the Seller; and (iii) the Buyer may lien such properties for such amounts until the Seller reimburses the Buyer in full.


9.

Management of Mining Operations

     
(a)

Performance of Mining Operations. The Seller shall ensure that all exploration, construction, development and mining operations and other activities in respect of the Properties will be performed in a commercially reasonable manner in compliance with Applicable Laws, Authorizations and Other Rights, and in accordance with good mining, processing, engineering and environmental practices prevailing in the industry. The Seller shall cause the other Seller Entities to use all commercially reasonable and lawful efforts to obtain and, once obtained, maintain all Authorizations necessary to commence and continue development and mining operations on the Properties.



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  (b)

Maintenance of Mining Rights. The Seller shall cause the other Seller Entities to use all commercially reasonable and lawful efforts to maintain and apply for and obtain any and all available renewals and extensions of the Properties, Authorizations, Other Rights and any and all other necessary rights in respect of the Midas Mine, the Fire Creek Project, and, other than as would not constitute an Event of Default, not abandon any of the Midas Mine or the Fire Creek Project (including Utility Commitments) or allow or permit any of the Properties, Authorizations, Other Rights or such other necessary rights referred to above to terminate or lapse.

     
  (c)

Compliance with Applicable Laws. The Seller shall, and shall cause the other Seller Entities to, and shall cause all operations and activities conducted at, on or in respect of the Midas Mine and the Fire Creek Project to, comply in all material respects with all Applicable Laws, all Authorizations and the terms and conditions of Other Rights.

     
  (d)

Reclamation Obligations. The Seller shall, and shall cause each other Seller Entity to, timely and fully perform, pay and observe, or cause to be performed, observed and paid, in all material respects, any and all liabilities and obligations required by any Applicable Laws, Authorizations or the terms and conditions of Other Rights or by any Governmental Body for the reclamation, restoration or closure of any facility or land used in connection with the Seller Entities’ operations or activities at, on or in respect of the Midas Mine and the Fire Creek Project or required under this Agreement. The Seller shall not, and shall ensure that the other Seller Entities do not, undertake, cause, suffer, or permit any condition or activity at, on or in the vicinity of the Properties which constitutes or results in a material violation of Environmental Laws. If any Seller Entity (i) fails to comply with Environmental Laws in any material respect or (ii) undertakes any activity giving rise to liability under Environmental Laws (except as permitted or authorized by any Authorization or by Applicable Law), the Seller shall promptly remedy and correct such failure to comply, satisfy such liability and otherwise take all necessary or desirable action to cure (whether through remediation, payment of penalties or otherwise) such non-compliance or liability and satisfy all obligations in connection therewith.


10.

Royalty and Stream Interests

     
(a)

General Prohibition . The Seller shall not, and shall not permit any other Seller Entity to, without the Buyer’s prior written consent, create, grant, convey or otherwise agree to any royalty or stream interest, or enter into any agreements that are similar to a royalty agreement or a stream agreement, in each case in respect of any mineral interests of the Seller Entities, whether owned now or hereafter acquired, except as expressly permitted by and subject to this Section 10.

     
(b)

Right of First Refusal . If any Seller Entity receives a bona fide written offer (a “ Third Party Offer ”) from any Person dealing at arm’s length with the Seller Entities to purchase a new or existing royalty or stream interest (the “ Offered Interest ”) in any mineral interests of the Seller Entities, whether owned now or hereafter acquired, for cash consideration, which such Seller Entity either wishes to accept or has accepted conditional on and subject to the Buyer’s right of first refusal pursuant to this Section 10, the Seller shall promptly give notice of the Third Party Offer (the “ Notice of Offer ”) to the Buyer and comply with this Section 10. The Notice of Offer must contain a copy of the Third Party Offer, disclose the identity and address of the Person making the Third Party Offer (the “ Third Party Offeror ”) and provide reasonably sufficient evidence to establish that the Third Party Offeror has the power and capacity, including the financial capacity, to complete the purchase of the Offered Interest. Upon the Notice of Offer being given, the Buyer will have the right to purchase all, but not less than all, of the Offered Interest at the same price and upon the same terms and conditions as are contained in the Third Party Offer.



- 25 -

  (c)

Determination of Price . If the Offered Interest is being offered for sale to the Third Party Offeror together with or in conjunction with other unrelated assets of the Seller Entities, the Buyer will be entitled to purchase only the Offered Interest and the Notice of Offer must specify the Seller’s good faith estimate of the cash being offered by the Third Party Offeror for the Offered Interest. If the Buyer does not agree with the Seller’s estimate, the value of the cash being offered for the Offered Interest shall be conclusively determined by a firm of qualified mineral valuators jointly appointed (and the cost of which shall be borne equally) by the Seller and the Buyer, each acting reasonably. Such determination shall be binding upon the Seller Entities and the Buyer. All time periods referred to in this Section 10 shall be extended by the time taken to obtain such determination.

     
  (d)

Exercise and Closing . If the Buyer desires to exercise its right to purchase all of the Offered Interest as contemplated by Section 10(b), it will give notice of exercise (the “ ROFR Exercise Notice ”) to the Seller within 30 Business Days of having been given the Notice of Offer. The giving of the ROFR Exercise Notice shall constitute a legally binding agreement between the Buyer and the relevant Seller Entity for the sale by such Seller Entity to the Buyer of the Offered Interest in accordance with the terms set out in the Third Party Offer, which sale transaction will be completed (subject to entry into a royalty or stream agreement reflecting the Offered Interest and such other customary industry terms in form and substance satisfactory to the Buyer) on the date therein provided (or on such other date as the Buyer and such Seller Entity may agree) by delivery of the Offered Interest (including such agreement referred to above) by such Seller Entity to the Buyer with title, free and clear of all Encumbrances arising on or after the date such Seller Entity received such Third Party Offer, against payment by the Buyer to such Seller Entity of the cash consideration by bank wire transfer to the account designated by such Seller Entity. If, at the time of completion, any portion of the Offered Interest is subject to any Encumbrance arising on or after the date such Seller Entity received such Third Party Offer, the Buyer will be entitled to deduct from the purchase money to be paid to such Seller Entity the amount required to discharge such Encumbrance and will apply such amount to discharge such Encumbrance, on behalf of such Seller Entity.

     
  (e)

No Exercise . If the Buyer does not give the ROFR Exercise Notice in accordance with the provisions of Section 10(d), the right of the Buyer to purchase the Offered Interest will terminate and the Seller Entities may sell all, but not less than all, of the Offered Interest to the Third Party Offeror in accordance with the terms of the Third Party Offer at any time within 50 Business Days after the expiry of the 30 Business Day period specified in Section 10(d). If the sale of the Offered Interest is not completed within such 50 Business Day period on such terms, the rights of the Parties pursuant to this Section 10 will again take effect with respect thereto.

     
  (f)

Exceptions . The restrictions set out in this Section 10 shall not apply to: (i) any royalties or levies imposed by any Governmental Body on mineral production; (ii) any royalty interests purchased by or granted to a Seller Entity (including the purchase or buy-back of any royalty interest previously granted by a Seller Entity); (iii) any royalty interests granted by a Seller Entity pursuant to a bona fide option or joint venture agreement in respect of the Properties or other mineral interests of such Seller Entity (provided the entering into of such agreement is not prohibited by the terms of the Transaction Documents and that any such royalty interests shall be junior in priority to any royalties owned by the Buyer or any of its Affiliates on the Properties); or (iv) any royalty or stream interest granted by a Seller Entity after a Change of Control of the Seller in respect of mineral interests of the Seller Entities acquired after such Change of Control (for greater certainty, the restrictions set out in this Section 10 shall continue to apply to mineral interests of the Seller Entities owned as at the time of such Change of Control).



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  (g)

Survival. For greater certainty, this Section 10 shall, pursuant to Section 19(c), survive termination of this Agreement.


11.

Financing Matters

     
(a)

Compliance with Facility Agreement. So long as the Loan or any Permitted Refinancing Indebtedness is outstanding, the Seller shall, and shall cause each of the other Seller Entities to, comply with all of the covenants in the Facility Agreement (or any agreement governing any Permitted Refinancing Indebtedness) as in effect from time to time (as such covenants may be amended, supplemented or added to from time to time), without any waiver thereof and without regard to any amendment thereof which has the effect of making such provisions less restrictive on the Seller Entities, except as consented to from time to time by the Buyer.

     
(b)

Refinancing of Loan. The Seller will not, and will cause the other Seller Entities not to, refinance, replace, repurchase or enter into any other transaction the effect of which would be to repay the Loan and replace it with other Indebtedness, except Permitted Refinancing Indebtedness. For greater certainty, this provision will not apply to restrict repayments of the Loan in accordance with its terms if such repayment or prepayment is not effected with the proceeds of additional Indebtedness of any Seller Entity.

     
(c)

Limitation on Indebtedness. The Seller shall ensure that none of the Seller Entities shall incur any Indebtedness (other than Permitted Refinancing Indebtedness) except: (i) Indebtedness solely for ordinary course working capital purposes in an aggregate maximum amount at any time outstanding not to exceed [redacted for proprietary reasons] (“ Permitted Working Capital Debt ”); (ii) [redacted for proprietary reasons] and (iii) bonds, letters of credit, guarantees and other instruments or arrangements securing or guaranteeing performance of the Seller Entities’ obligations in respect of the reclamation, restoration or closure of any facility or land used in connection with the Seller Entities’ operations or activities to the extent required by Applicable Law. The Permitted Working Capital Debt may be secured against the Collateral provided that the security thereunder is expressly subordinated to the security provided under the Security Agreements pursuant to an intercreditor agreement between the Persons extending such Indebtedness and the Buyer providing for such subordination and other customary provisions, all in form and substance satisfactory to the Buyer (any such security, and the “ Permitted Working Capital Security ”).

     
(d)

Amendments to Facility Documents. The Seller agrees that (i) no Facility Documents (as defined in the Intercreditor Agreement) to which any Seller Entity is a party will be amended, modified, replaced or supplemented in such manner as to make the terms of such Facility Documents less favourable to any Seller Entity in any material respect (including, for greater certainty, by increasing the interest rate or fees payable thereunder, shortening the term to maturity thereof, imposing increased amortization requirements or imposing additional (or more restrictive) covenants thereunder) unless such amendment, modification, replacement or supplement is consented to by the Buyer in writing, and (ii) none of the Seller Entities shall take any action under or in connection with any of the Facility Documents that would require or result in payment by any of them of any amount in advance of any scheduled or mandatory payment, redemption or prepayment date, including purchasing the Term Notes by tender or private contract (except for refinancing the Facility Obligations (as defined in the Intercreditor Agreement) with Permitted Refinancing Indebtedness), unless such action is consented to by the Buyer in writing.



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12.

Insurance Matters

     
(a)

Maintenance of Insurance. The Seller shall, and shall cause the other Seller Entities to, maintain with reputable insurance companies insurance with respect to the Midas Mine, Fire Creek Project and any other mineral projects of the Seller Entities and the operations conducted at, on and in respect thereof against such casualties and contingencies and of such types and in such amounts as is customary in the case of similar operations in the United States of America. Without limiting the foregoing, such insurance shall include workers compensation insurance in amounts required by Applicable Laws, and commercial general liability insurance in such amounts as will, in the Buyer’s reasonable judgment, adequately protect the Seller Entities, the Buyer, and the Properties and any other mineral projects of the Seller Entities from any Losses which may reasonably be expected to arise with respect to this Agreement or the Properties or any other mineral projects of the Seller Entities and that can be covered by commercial general liability insurance.

     
(b)

Shipment of Minerals. The Seller shall, and shall cause the other Seller Entities to, ensure that each shipment of Minerals is adequately insured in such amounts and with such coverage as is customary in the mining industry, until the time that risk of loss and damage for such Minerals is transferred to the purchaser.

     
(c)

Additional Insured. The Seller shall cause the Buyer to be named a loss payee (as its interests may appear) under all property insurance policies of the Seller Entities and as additional insured under all liability insurance policies of the Seller Entities.

     
(d)

Notice of Loss or Damage. The Seller shall promptly provide the Buyer with written notice of any material loss or damage suffered to any assets or property of the Seller Entities and whether it plans to make any insurance claim.


13.

Security Matters

     
(a)

Grant of Security Interest. The Seller shall, and shall cause each of the other Seller Entities to, grant to the Buyer a continuing security interest and a first priority lien on the Collateral, including all proceeds and products thereof, subject only to the Permitted Encumbrances, as security for the due and punctual performance by the Seller of the Delivery Obligations or, in the case of any other Seller Entity, its guarantee of the Delivery Obligations of the Seller. The Buyer’s security interest and lien on the Collateral shall be further evidenced by the Security Agreements and such other security documents as the Buyer may at any time reasonably request. The Security shall be effective from the Effective Date and continue until the Delivery Obligations have been satisfied in full, provided that, notwithstanding any other provisions of this Agreement, the Security provided by the Midas Entities shall only become effective upon completion of the Acquisition and for certainty will continue until the Delivery Obligations have been satisfied in full. Upon creating or acquiring any other new Subsidiary, the Seller shall cause such Subsidiary to provide Security in favour of the Buyer, in substantially the same form as the Security Agreements.



- 28 -

  (b)

Renewal. The Seller shall cause the personal property registrations relating to the Security to be properly renewed under Applicable Law no later than three months before the expiry date thereof (if any) to ensure that, except as may be otherwise provided herein, at all times until the Final Delivery Date, the Security remains in full force and effect and duly registered and perfected under Applicable Law. The Seller shall provide evidence satisfactory to the Buyer of each such re-registration and renewal on or before the date that is three months before the expiry date of the Security, failing which the Buyer shall have the right (but not the obligation) to proceed with such renewal, and the Seller shall be responsible for all costs and fees related thereto and shall reimburse the Buyer for such amounts on demand.

     
  (c)

Further Assurances. Without limiting the foregoing, the Seller shall, and shall cause each of the other Seller Entities to, from time to time, at the cost and expense of the Seller Entities, promptly execute and deliver all further instruments and documents and take all further action that may be necessary or desirable or that the Buyer may reasonably request in order to perfect and protect any pledge, assignment, or security interest granted or purported to be granted by any Transaction Document or to enable the Buyer to exercise and enforce its rights and remedies under any Transaction Documents with respect to any Collateral. The Seller Entities each irrevocably make, constitute, and appoint the Buyer (and any of the Buyer’s officers, employees, or Agents' designated by the Buyer) as its true and lawful attorney with power, upon the failure or refusal of any Seller Entity to comply with its undertakings contained in this paragraph, to sign the name of such Seller Entity on any of the above described documents or on any other similar documents that need to be executed, recorded, and/or filed in order to perfect or continue the Buyer’s perfected security interest in the Collateral.


14.

Events of Default

     

Each of the events or circumstances set out in this Section 14 shall constitute an event of default (“ Event of Default ”):

     
(a)

Delivery Obligations. The Seller fails to deliver all or any portion of the Purchased Gold Ounces to the Buyer in accordance with the Delivery Obligations or to make any payment to the Buyer in accordance with the provisions of this Agreement.

     
(b)

Representations and Warranties; Reports; Certificates. Any representation or warranty made, or any report or certificate furnished to the Buyer, by any Seller Entity under or in connection with the Transaction Documents proves to have been incorrect or misleading in any material respect (or in any respect where such representation or warranty is subject to a materiality qualification) when made, deemed made or furnished (as applicable), and the facts or circumstances which made such representation or warranty incorrect or misleading shall remain unrectified for a period of 30 days from the earlier of: (a) the Buyer giving notice to the Seller, and (b) the Seller becoming aware that such representation or warranty is incorrect or misleading, unless such facts or circumstances are not capable of rectification in which event the default shall occur immediately.



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  (c)

Failure to Perform Certain Covenants. Failure by any Seller Entity to perform, comply with or observe any term, covenant or agreement contained in Sections 8(a), 8(b), 8(c) and 8(d) (Maintenance of Existence and Property) (provided that, in the case of Sections 8(b) and 8(d) only, this Section 14(c) shall not apply to any such failure with respect to the Other Properties, and in which case Section 14(d) shall apply), 10 (Royalty and Stream Interests), 11 (Financing Matters), 13 (Security Matters) or 20 (Restricted Transfer Rights of the Seller Entities).

         
  (d)

Failure to Perform Other Covenants. Any Seller Entity fails to perform, comply with or observe any term, covenant or agreement contained in any Transaction Document (other than those referred to above in Sections 14(a) to (c) above) and any such failure shall remain unremedied or unresolved for a period of 30 days from the earlier of: (a) the Buyer giving notice to the Seller, and (b) the Seller becoming aware of the failure to comply, unless such failure is not capable of remedy in which event the default shall occur immediately.

         
  (e)

Insolvency. (i) Any Seller Entity becomes Insolvent, or suffers or consents to or applies for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or is generally unable to or fails to pay its debts as they become due, or makes a general assignment for the benefit of creditors; (ii) any Seller Entity files a voluntary petition in bankruptcy, or seeks to effect a plan or other arrangement with creditors or any other relief under any Bankruptcy Code, or under any Applicable Law granting relief to debtors, whether now or hereafter in effect; (iii) any involuntary petition or proceeding pursuant to any Bankruptcy Code or any other Applicable Law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against any Seller Entity and is not dismissed, stayed or vacated within 30 days thereafter; (iv) any Seller Entity files an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; (v) any Seller Entity is adjudicated bankrupt, or an order for relief is entered by any court of competent jurisdiction under any Bankruptcy Code or any other Applicable Law relating to bankruptcy, reorganization or other relief for debtors; (vi) any Seller Entity voluntarily ceases to conduct its business in the ordinary course or materially changes the nature of the business it carries on; or (vii) any Seller Entity takes any action authorizing or in furtherance of any of the foregoing.

         
  (f)

Liquidation. Any Seller Entity liquidates, winds up or dissolves (or suffers any liquidation, wind-up or dissolution), suspends its operations other than in the ordinary course of business, or takes any action authorizing or in furtherance of any of the foregoing.

         
  (g)

Cross Default . Any Seller Entity:

         
  (i)

fails:

         
  (A)

to make any payment of any principal, interest or premium in connection with the Loan or any other Indebtedness having an aggregate principal amount of more than the Threshold Amount (or its equivalent in another currency) when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable notice or grace period, if any, specified in the agreement or instrument relating to such Indebtedness as of the date of such failure; or



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  (B)

to perform or observe any term, covenant or condition on its part to be performed or observed under any agreement or instrument relating to the Loan or any other Indebtedness having an aggregate principal amount of more than the Threshold Amount (or its equivalent in another currency), when required to be performed or observed, or any other event shall occur or condition shall exist under any such agreement or instrument, and such failure, event or condition shall continue after the later of 10 days from written notice of such failure, event or condition by the applicable counterparty or the Buyer or the applicable, notice or grace period, if any, specified in such agreement or instrument, if the effect of such failure, event or condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness; or


  (ii)

is subject to a declaration that any Indebtedness referred to in Section 14(g)(i) is due and payable, or required to be prepaid (other than by a regularly scheduled required repayment), prior to the stated maturity thereof;

     
  (iii)

is subject to any facility or commitment available to it under the Facility Agreement or any other Indebtedness in an aggregate amount at any one time of not less than the Threshold Amount (or its equivalent in any other currency) being withdrawn, suspended or cancelled by reason of any default (however described) of any Seller Entity; or

     
  (iv)

fails to perform or observe any term, covenant or condition on its part to be performed or observed under any agreement or instrument relating to Indebtedness referred to in Section 14(g)(i) which would result in a Material Adverse Effect.


  (h)

Creditors’ Process. Either:

       
  (i)

a final Order for the payment of money in excess of the Threshold Amount (or its equivalent in another currency) which is not fully covered by third-party insurance is rendered against any Seller Entity; or

       
  (ii)

any non-monetary judgment or Order is rendered against any Seller Entity which would constitute a Material Adverse Effect,

and in each case there shall be any period of 30 days during which such judgment or Order continues unsatisfied or during which a stay of enforcement of such judgment or Order, by reason of a pending appeal or otherwise, shall not be in effect.


- 31 -

  (i)

Security Agreements.

         
  (i)

Any Seller Entity:

         
  (A)

contests in any manner the validity or enforceability of any of the Security Agreements; or

         
  (B)

denies that it has any further liability or obligation under any of the Security Agreements.


  (ii)

Any of the Security Agreements:

       
  (A)

for any reason, except to the extent permitted by the terms thereof, ceases to create a valid Encumbrance or the Encumbrance created thereby fails to rank in priority in the manner contemplated in the Security Agreements and the Intercreditor Agreement (other than by a direct act or omission of the Buyer), subject only to Permitted Encumbrances, in any of the Collateral purported to be covered thereby; or

       
  (B)

after delivery for any reason is revoked or invalidated, or otherwise ceases to be in full force and effect in any material respect.


  (j)

Unlawfulness. It is or becomes unlawful for any Seller Entity to perform any of its obligations under the Transaction Documents to which it is a party or any of the Security created or expressed to be created by the Transaction Documents ceases to be effective at any time at which such Security is intended to be effective.

     
  (k)

Repudiation. Any Seller Entity repudiates or rescinds any Transaction Document or purports to or evidences an intention to repudiate or rescind any Transaction Document.

     
  (l)

Authorizations. If any Authorization or Other Right is suspended, cancelled, revoked, forfeited, surrendered, refused renewal or terminated (whether in whole or in part) or otherwise is not, or ceases to be, in full force and effect, and the absence thereof would have a Material Adverse Effect.

     
  (m)

Major Damage. Any Seller Entity suffers material loss of or damage to its business, assets or operations (including any related infrastructure) which would have a Material Adverse Effect.

     
  (n)

Abandonment. Any material portion of the Midas Mine, the Fire Creek Project or the Collateral is lost, forfeited or abandoned and which would have a Material Adverse Effect.

     
  (o)

Expropriation. Any Governmental Body condemns, expropriates, seizes or appropriates any property which relates to or forms part of the Midas Mine, the Fire Creek Project or the Collateral and which would result in a Material Adverse Effect.

     
  (p)

Proceedings. There is any action, suit or proceeding against or affecting any Seller Entity before any court or by or before any Governmental Body which, if successful, could reasonably be expected to have a Material Adverse Effect, unless the action, suit, or proceeding is contested diligently and in good faith and, in circumstances where a lower court or tribunal has rendered a decision adverse to it, any Seller Entity, as applicable, is appealing such decision, and has provided a reserve in respect thereof satisfactory to the Buyer.



- 32 -

  (q)

Change of Control. There shall occur a Change of Control of any of the Seller Entities, unless such Change of Control occurs pursuant to a Transfer consented to by the Buyer in accordance with Section 20, or the Seller shall become obligated to offer to purchase all of the Term Notes then outstanding as a result of a Change of Control (as defined in the Facility Agreement).

     
  (r)

Material Adverse Effect. Any event or circumstance occurs that has a Material Adverse Effect.


15.

Effect of Event of Default

     

Upon each occurrence of an Event of Default, and for so long as such Event of Default is continuing:

     
(a)

upon written notice to the Seller, and in addition to and not in substitution for any other remedies available to it hereunder or at law or in equity, the Buyer shall have the right to terminate the Seller’s obligation to deliver any further Purchased Gold Ounces (which shall not be less than all of the Purchased Gold Ounces not then delivered) if it so elects, and upon such election, the Default Amount shall become immediately due and payable by the Seller (it being acknowledged by the Seller that the Default Amount is intended to be a genuine pre-estimate of liquidated damages that would be suffered by the Buyer upon the occurrence of an Event of Default);

     
(b)

the Buyer shall be entitled to enforce its security under the Transaction Documents; and

     
(c)

the Buyer shall be entitled to such other rights and remedies as are available to it at law.


16.

Representations and Warranties of the Buyer

   

The Buyer, acknowledging that the Seller is entering into this Agreement in reliance thereon, hereby makes the representations and warranties to the Seller as set out in Schedule F.

   
17.

Representations and Warranties of the Seller

   

The Seller, acknowledging that the Buyer is entering into this Agreement in reliance thereon, hereby makes the representations and warranties to the Buyer: (i) as set out in Schedule G; and (ii) as set out in Article IV of the Acquisition Agreement, in each case to the extent relating to the Midas Entities or their properties and assets, as if such representations and warranties were set forth in this Agreement. The representations and warranties in Schedule G shall be deemed to be repeated by the Seller: (a) as of the Effective Date; and (b) as of the date of each Annual Compliance Certificate, except to the extent that on or prior to such date the Seller shall have advised the Buyer in writing of a variation in any such representation or warranty and the Buyer has approved such variation.



- 33 -

18.

Indemnities

     

The Seller agrees to indemnify and save the Buyer, and its Affiliates and the directors, officers, employees and Agents' of the foregoing harmless from and against any and all Losses suffered or incurred by any of them as a result of, in respect of, or arising as a consequence of the Buyer entering into the Transaction Documents and the matters contemplated therein, including:

     
(a)

any breach or inaccuracy of any representation or warranty of the Seller Entities contained in this Agreement or the other Transaction Documents, including the representations and warranties set forth in Schedules G hereto, or in any document, instrument or agreement delivered pursuant hereto or thereto;

     
(b)

any breach, including breach due to non-performance, by the Seller Entities of any covenant or agreement to be performed by any of the Seller Entities contained in this Agreement or the other Transaction Documents or in any document, instrument or agreement delivered pursuant hereto or thereto;

     
(c)

the development or operation of the Midas Mine, the Fire Creek Project or any other mineral project of the Seller Entities;

     
(d)

the failure of any of the Seller Entities to comply with any Applicable Law, including any Applicable Law relating to environmental matters and reclamation obligations, with respect to the Midas Mine, the Fire Creek Project or any other mineral project of the Seller Entities;

     
(e)

the physical environmental condition of the Midas Mine, the Fire Creek Project or any other mineral project of the Seller Entities and matters of health and safety related thereto or any action or claim brought with respect thereto (including conditions arising before the date of this Agreement); and

     
(f)

any actual or threatened withdrawal by any Governmental Body of any Authorization under Environmental Laws which is necessary for the construction or operation of the Midas Mine, the Fire Creek Project or any other mineral project of the Seller Entities, or any actual or threatened challenge by any Person to any Authorization under Environmental Laws which is necessary for the development or operation of the Midas Mine, the Fire Creek Project or any other mineral project of the Seller Entities,


provided that the foregoing shall not apply to any Losses to the extent they arise primarily from the gross negligence or willful misconduct of such indemnified persons. For greater certainty, this Section 18 shall, pursuant to Section 19(c), survive termination of this Agreement.

     
19.

Term

     
(a)

Term. The term of this Agreement shall commence on the date of this Agreement and, unless terminated earlier pursuant to Section 19(b), shall terminate on the Final Delivery Date.

     
(b)

Termination. The Buyer shall have the right to terminate this Agreement upon written notice of termination to the other parties at or after 12:01 a.m. (Toronto time) on February 12, 2014, if the Acquisition has not yet been completed, whereupon the Seller shall immediately return the Purchase Price in full to the Buyer, without interest or setoff or counterclaim, and thereafter no Party shall have any further obligation to the other Parties under this Agreement (other than in connection with any antecedent breach).



- 34 -

  (c)

Survival. Notwithstanding the termination of this Agreement pursuant to Section 19(a) or (b), Sections 1 (to the extent applicable to other surviving provisions), 2, 5, 7 (in respect of periods ending on or prior to the Final Delivery Date), 10, 18, 22, 23 and 24 shall survive indefinitely.


20.

Restricted Transfer Rights of the Seller Entities

       
(a)

Prohibited Transfers. The following Transfers are prohibited, in each case unless the Buyer gives its prior written consent to such Transfer (which consent may be withheld for any reason):

       
(i)

the Seller may not Transfer, in whole or in part, its rights and obligations under this Agreement, the Collateral or its shares of Klondex BC Holdco;

       
(ii)

Klondex BC Holdco may not Transfer, in whole or in part, its rights and obligations under this Agreement, the Collateral or its shares of Klondex Holdings;

       
(iii)

Klondex Holdings may not Transfer, in whole or in part, its rights and obligations under this Agreement, the Collateral, its shares of the Fire Creek Owner or, after completion of the Acquisition, its shares of Midas Holdings;

       
(iv)

Midas Holdings may not Transfer, in whole or in part, its rights and obligations under this Agreement, the Collateral or its shares of the Midas Owner;

       
(v)

the Midas Owner may not Transfer, in whole or in part, its rights and obligations under this Agreement or the Collateral; and

       
(vi)

the Fire Creek Owner may not Transfer, in whole or in part, its rights and obligations under this Agreement or the Collateral.


  (b)

Transfers of Interests in Seller. Notwithstanding any other provision of this Agreement, neither (i) an amalgamation, merger or consolidation of the Seller with or into another body corporate, including by way of a plan of arrangement, nor (ii) a transfer of shares of the Seller, including a transfer of all of the shares pursuant to a takeover bid and subsequent acquisition transaction (including a compulsory acquisition) or a plan of arrangement, is a Transfer to which this Section 20 applies; provided, however, that in the case of clause (i) any successor entity to the Seller shall have acknowledged in writing to the Buyer that it is bound by this Agreement.

     
  (c)

Effect of Prohibited Transfer. Any Transfer made in violation of this Section 20 shall be null and void and of no force or effect whatsoever.


21.

Transfer Rights of the Buyer

     
(a)

Transfers. The Buyer shall have the right to Transfer or encumber, in whole or in part, its rights and obligations under this Agreement to any Person, without the consent of any Seller Entity, upon the delivery of notice of such Transfer to the Seller. In such a case, provided that such Person has agreed to be bound by such Transferred obligations under this Agreement, the Buyer, shall be released from such Transferred obligations under this Agreement.



- 35 -

  (b)

Encumbrances. Notwithstanding anything in this Agreement, the Buyer shall have the right to Transfer by way of Encumbrance, in whole or in part, its rights and obligations under this Agreement to one or more lenders providing financing to the Buyer or any of its Affiliates without notice to, or the consent of, any Seller Entity. If such transferee enforces such Encumbrance, it will provide notice to the Seller and upon delivery of such notice, which notice shall confirm that such transferee agrees to be bound by such Transferred obligations under this Agreement, such transferee shall become a party to this Agreement with all of the rights and obligations of the Buyer.


22.

Governing Law

   

This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. Each of the Parties irrevocably submits to the non-exclusive jurisdiction of the courts of the Province of Ontario.

   
23.

Notices

   

Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be sent or delivered to the respective Parties at their respective addresses, facsimile numbers or e-mail addresses set forth below (or at or to such other address, facsimile, number or e-mail address as shall be designated by any Party in a written notice to the other Parties):

If to the Seller:

Klondex Mines Ltd.
Suite 600-595 Howe Street
Vancouver BC V6C 2T5

Attention:        Paul Huet
Fax Number:     604.662.3904
Email:                phuet@klondexmines.com

with a copy (which shall not constitute notice) to:

Bennett Jones LLP
3400 One First Canadian Place
PO Box 130
Toronto ON M5X 1A4

Attention:        Abbas Ali Khan
Facsimile:         416.863.1716
Email:                alikhana@bennettjones.com


- 36 -

If to the Buyer:

Franco-Nevada GLW Holdings Corp.
c/o Franco-Nevada Corporation
199 Bay Street, Suite 2000
P.O. Box 285
Commerce Court Postal Station
Toronto, Ontario
Canada M5L 1G9

Attention:        Chief Legal Officer
Fax Number:    (416) 306-6330
Email:                hong@franco-nevada.com

Any notice and communications shall be effective:

  (a)

if delivered by hand, sent by certified or registered mail or sent by an overnight courier service, when received; and, provided that if such date is a day other than a Business Day, where the recipient Party is located, then such notice shall be deemed to have been given and received on the first Business Day, where the recipient Party is located, following the date of such delivery; and

     
  (b)

if sent by facsimile or e-mail transmission and successfully transmitted before 5:00 p.m. on a Business Day, where the recipient Party is located, then on that Business Day, and if transmitted after 5:00 p.m. on that day or on a day that is not a Business Day, then on the first Business Day, where the recipient Party is located, following the date of transmission.


24.

General Provisions

     
(a)

Further Assurances. Each Party shall execute all such further instruments and documents and shall take all such further actions as may be necessary to effect the transactions contemplated herein, in each case at the cost and expense of the Party requesting such further instrument, document or action, unless expressly indicated otherwise.

     
(b)

Obligations of Seller Entities. The Seller agrees to take all action necessary to cause each and every other Seller Entity to observe, comply with and perform its covenants and obligations in this Agreement. To the extent that any covenants or obligations in this Agreement are stated to be covenants or obligations of the Seller Entities or any of them, and a Seller Entity is not a party to this Agreement (including any Person that becomes a Seller Entity after the date of this Agreement), the Seller shall take all action necessary to cause such non-party Seller Entity to observe, comply with and perform such covenants or obligations, including causing such non-party Seller Entity to agree in writing in favour of the Buyer to be bound by this Agreement.

     
(c)

Confidentiality. The Buyer shall not, without the express written consent of the Seller, which consent shall not be unreasonably withheld, disclose any data or information concerning the operations of the Seller Entities obtained in connection with the Transaction Documents which is not already in the public domain (the “ Confidential Information ”); provided, however, the Buyer may disclose Confidential Information without the consent of the Seller: (i) if required by Applicable Law or requested by a Government Body having jurisdiction over the Buyer or its Affiliates; (ii) to the Buyer’s Affiliates and to any representatives, consultants or advisers of the Buyer or its Affiliates for the purpose of providing services to the Buyer or its Affiliates; and (iii) to any Person to whom the Buyer, in good faith, anticipates Transferring an interest in this Agreement as contemplated by Section 21(a) or 21(b) and such Person’s Affiliates and the representatives, consultants and advisers of such Person or its Affiliates. In the case of disclosure pursuant to clause (ii) or (iii), the Buyer shall be responsible to ensure that the recipient of the Confidential Information does not disclose the Confidential Information to the same extent as if it were bound by the same non-disclosure obligations of the Buyer hereunder. Notwithstanding the foregoing, the Buyer shall not be restricted from disclosing the terms of this Agreement and deliveries of Refined Gold hereunder. For greater certainty, the Buyer shall be entitled to disclose publicly data or information concerning the operations of the Seller Entities, without the consent of the Seller, once such information has been publicly disclosed by any of the Seller Entities.



- 37 -

  (d)

No Partnership. Nothing herein shall be construed to create, expressly or by implication, a joint venture, agency relationship, fiduciary relationship, mining partnership, commercial partnership or other partnership relationship between the Parties.

     
  (e)

Severability. If any provision of this Agreement is wholly or partially invalid, this Agreement shall be interpreted as if the invalid provision had not been a part hereof so that the invalidity shall not affect the validity of the remainder of this Agreement which shall be construed as if this Agreement had been executed without the invalid portion.

     
  (f)

Rate of Interest. The Parties do not intend that the purchase of the Purchased Gold Ounces be in the nature of a loan, but, if it were so characterized by an arbitrator, court or tribunal of competent jurisdiction, the Parties agree that the return to the Buyer, whether for interest, fees or otherwise, not exceed the maximum amount permitted by Applicable Law. Accordingly, if such arbitrator, court or tribunal should rule that: (i) the purchase of the Purchase Gold Ounces is of the nature of or is deemed to be a loan; and (ii) a portion of the total return to the Buyer is of the nature of or is deemed to be interest, and the portion of the total return, for deemed interest, fees or otherwise would, but for this provision, exceed the amount of return permitted under Applicable Law, then the delivery schedule for the aggregate quantity of Refined Gold remaining deliverable shall automatically be extended such that the amount of return does not exceed the maximum amount permitted under Applicable Law, and this Agreement shall not be terminated solely as a result of such violation.

     
  (g)

Entire Agreement. This Agreement and the other Transaction Documents constitute the entire agreement among the Parties pertaining to the subject matter hereof and thereof and supersede all prior agreements, negotiations, discussions and understandings, written or oral, among the Parties. The Seller and the Buyer agree that the confirmation letter dated December 5, 2013 between the Seller and the Buyer is hereby terminated with effect from the date of this Agreement.

     
  (h)

Amendments. This Agreement may not be changed, amended or modified in any manner, except pursuant to an instrument in writing signed on behalf of each of the Parties.



- 38 -

  (i)

Waiver. The failure by any Party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision unless such waiver is acknowledged in writing, nor shall such failure affect the validity of this Agreement or any part thereof or the right of a Party to enforce each and every provision. No waiver of a breach of this Agreement shall be held to be a waiver of any other or subsequent breach.

     
  (j)

Specific Performance. Each of the Parties acknowledges that any breach of this Agreement may cause the other Parties irreparable harm for which damages are not an adequate remedy. The Parties agree that, in the event of any such breach, in addition to other remedies at law or in equity that a Party may have, a Party shall be entitled to seek specific performance.

     
  (k)

No Beneficiaries. This Agreement is intended for the benefit of the Parties and their respective successors and permitted assigns and, except for the indemnified Persons referred to in Section 18, is not for the benefit of, nor may any provision in this Agreement be enforced by, any other Person. With respect to any indemnified Person who is not a party to this Agreement, the Buyer shall obtain and hold the rights and benefits of Section 18 in trust for and on behalf of such indemnified Person.

     
  (l)

Costs and Expenses. Each of the Parties shall be responsible for paying all costs and expenses incurred by them, respectively, in connection with the negotiation and preparation of this Agreement and the related Transaction Documents.

     
  (m)

Counterparts. This Agreement may be executed in one or more counterparts and by the Parties in separate counterparts, each of which when executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier or electronic format shall be effective as delivery of a manually executed counterpart of this Agreement.

[Signature page follows.]


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

KLONDEX MINES LTD.

 

  By: (signed) Paul Huet
    Paul Huet
    President and Chief Executive Officer

 

FRANCO-NEVADA GLW HOLDINGS CORP.

 

  By: (signed) David Harquail
    David Harquail
    President and Chief Executive Officer


SCHEDULE A

DESCRIPTION OF MIDAS PROPERTY

Title to Properties

(i)

Fee Properties

The real property and property rights, situated in Elko County, Nevada, which is more particularly described as:

Township 38 North, Range 46 East, MDM, APN 004-250-0003
             approx. 40.9 acres owned by Newmont USA Limited
Section 2: NW4NW4

Township 39 North, Range 46 East, MDM, APN 004-260-03
            Surface and mineral estate (approximately 840 acres)
Section 9: E2NE4
Section 10: W2NW4, SW4
Section 22: E2N W4, SE4
Section 27: NE4, NE4NW4
Section 28: W2NW4
         Surface estate only (approximately 1.019 acres, commonly referred to as the Buckingham Lands)
Section 9: W2NE4, E2NW4
Section 15: E2W2, W2E2
Section 22: NE4
Section 28: W2SE4, E2SW4
Section 33: NE4
Section 34: SW4NW4, Lot 1

Midas Town site Lots

Lot No. Block No. Assessor's Parcel No.
6-7 I (Gold Circle)
03-523-03-2
8 03-523-02-4
11-12 Q (Gold Circle) 03-526-01-9
1 S (Gold Circle)
03-521-05-1
2 03-521-04-4
1 W (Gold Circle)
03-513-03-3
3-16 03-513-01-7

Patented Mining Claims

1



Patent Name M.S. No. Patent No. Assessor Parcel No.
Elko Prince Annex Fraction 4034







314565







0PM- 314-056







Elko Prince No. 1
Elko Prince No. 2
Elko Prince No. 4 Fraction
Todd Fraction
Hanks Fraction
Little Willie Fraction
Merle
June Bell
June Belle Fraction
   Water Witch No. 1 (E. Portion) 4192 567990
004-26C-004
   Water Witch No. 2 (E. Portion) 004-26C-008
Water Witch No. 3 0PM-567-099

Water Witch No. 4
Water Witch Fraction
Water Witch No. 1 (Parcel 1) 004-26C-001
Water Witch No. 1 (Parcel 2) 004-26C-002
Water Witch No. 1 (Parcel 3) 004-26C-003
Water Witch No. 2 (Parcel 4) 004-26C-005
Water Witch No. 2 (Parcel 5) 004-26C-006
Water Witch No. 2 (Parcel 6) 004-26C-007
Ripsaw No. 2 3991 298366 0PM-298-036
Gold Crown 3738 256016 0PM-256-001
Oversight Fraction (Portion)
Banner 0PM-560-016
Gift No. 1
Oversight Fraction (Portion) 0PM-060-016
Gift No. 2
Rabbit's Foot 0PM-256-006
Banner Fraction
Wedge 0PM-668-021
Old Judge No. 1 4327 668211
Sleeping Beauty 4666 1054830
0PM-373-058







Poor Man
Orphan Boy
Pan Handle
Pan Handle No. 2
Red Top
Orphan Boy No. 2
Little Dot
Sunset Fraction  4667 1037358
Hardscrabble No. 1 4356 827131 0PM-827-013

Hardscrabble No. 2
Hardscrabble Fraction

2



(ii)

Unpatented Mining Claims



Claim Name
Book & Page or
Document No.

BLM Serial No.
ACME 41 89 27590
ACME NO. 1 41 279 27591
ACME NO. 2 42 165 27592
ACME NO. 3 42 166 27593
DOT LODE 43 483 27594
DOT LODE #2 135 551 27596
DOT LODE NO. 4 100 523 27597
MARTY 366 156 218384
DOT LODE #1 472 575 321676
MIDAS 110 838 347 687827
MIDAS NO. 13 838 332 687851
MIDAS 14 838 333 687852
MIDAS 15 838 334 687853
MIDAS 16 838 335 687854
MIDAS 30 838 306 687857
MIDAS 33 838 462 687860
MIDAS NO. 34 838 463 687861
MIDAS 35 838 309 687862
MIDAS 36 838 310 687863
MIDAS 37 838 311 687864
MIDAS 38 838 312 687865
MIDAS 39 838 313 687866
MIDAS 40 838 314 687867
MIDAS 41 838 315 687868
MIDAS 81 838 345 687871
MIDAS 94 838 318 687872
MIDAS 96 838 464 687874
MIDAS 114 838 351 687876
MIDAS 115 838 352 687877
MIDAS 118 838 355 687878
MIDAS 119 838 356 687879
MIDAS 121 838 358 687880
MIDAS 122 838 359 687881
MIDAS 123 838 360 687882
MIDAS 124 838 361 687883
MIDAS 125 838 362 687884
MIDAS 126 838 363 687885
MIDAS 127 838 364 687886
MIDAS 128 838 365 687887

3




Claim Name
Book & Page or
Document No.

BLM Serial No.
MIDAS 129 838 366 687888
MIDAS 130 838 367 687889
MIDAS NO.131 838 466 687890
MIDAS NO.132 838 467 687891
MIDAS NO.133 838 468 687892
MIDAS NO.134 838 469 687893
MIDAS 135 838 470 687894
MIDAS 136 838 471 687895
MIDAS NO.137 838 472 687896
MIDAS 138 838 473 687897
MIDAS 139 838 474 687898
MIDAS 140 838 475 687899
MIDAS 141 838 476 687900
MIDAS 142 838 477 687901
MIDAS 143 838 478 687902
MIDAS 144 838 479 687903
MIDAS 146 838 481 687905
MIDAS 147 838 482 687906
MIDAS 148 838 483 687907
MIDAS 149 838 484 687908
MIDAS 150 838 485 687909
MIDAS 151 838 486 687910
MIDAS 152 838 487 687911
MIDAS 153 838 488 687912
MIDAS 154 838 814 687913
MIDAS 1R 840 886 692622
MIDAS 2R 840 887 692623
MIDAS 3R 840 888 692624
MIDAS 4R 840 889 692625
MIDAS 5R 840 890 692626
MIDAS 6R 840 891 692627
MIDAS 7R 840 892 692628
MIDAS 8R 840 893 692629
MIDAS 9R 840 894 692630
MIDAS 10R 840 895 692631
MIDAS NO.11R 840 896 692632
MIDAS 12R 840 897 692633
MIDAS 17R 840 898 692634
MIDAS 18R 840 899 692635
MIDAS 19R 840 900 692636
MIDAS 20R 840 901 692637

4




Claim Name
Book & Page or
Document No.

BLM Serial No.
MIDAS 21R 840 902 692638
MIDAS 22R 840 903 692639
MIDAS 23R 840 904 692640
MIDAS 25R 840 905 692641
MIDAS 27R 840 907 692643
MIDAS 28R 840 908 692644
MIDAS 109R 840 909 692645
MIDAS 111R 840 910 692646
MIDAS NO.112R 840 911 692647
MIDAS NO.113R 840 912 692648
MIDAS 116R 840 913 692649
MIDAS 117R 840 914 692650
MIDAS 155 853 939 699982
MIDAS 156 853 940 699983
MIDAS 157 853 941 699984
MIDAS 158 853 942 699985
MIDAS # 165 878 163 709778
MIDAS # 166 878 164 709779
MIDAS # 167 878 165 709780
MIDAS # 168 878 166 709781
MIDAS # 169 878 167 709782
MIDAS # 170 878 168 709783
MIDAS # 171 878 169 709784
MIDAS # 172 878 170 709785
MIDAS # 173 878 171 709786
MIDAS # 174 878 172 709787
AMSTERDAM # 1 879 937 710875
AMSTERDAM # 2 879 938 710876
AMSTERDAM # 3 879 939 710877
AMSTERDAM # 4 879 940 710878
AMSTERDAM # 5 879 941 710879
AMSTERDAM # 6 879 942 710880
AMSTERDAM # 7 879 943 710881
AMSTERDAM # 8 879 944 710882
AMSTERDAM # 9 879 945 710883
AMSTERDAM # 10 879 946 710884
AMSTERDAM # 11 879 947 710885
AMSTERDAM # 12 879 948 710886
AMSTERDAM # 13 879 949 710887
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Claim Name
Book & Page or
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19




Claim Name
Book & Page or
Document No.

BLM Serial No.
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Claim Name
Book & Page or
Document No.

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Claim Name
Book & Page or
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Claim Name
Book & Page or
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Claim Name
Book & Page or
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Claim Name
Book & Page or
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Claim Name
Book & Page or
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Claim Name
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Claim Name
Book & Page or
Document No.

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Claim Name
Book & Page or
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Book & Page or
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Book & Page or
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MIDAS 1004 1 30525 825291
MIDAS 1005 1 30526 825292
MIDAS 1006 1 30527 825293
MIDAS 1007 1 30528 825294
MIDAS 1008 1 30529 825295
MIDAS 1009 1 30530 825296
MIDAS 1010 1 30531 825297

33




Claim Name
Book & Page or
Document No.

BLM Serial No.
MIDAS 1011  1 30532 825298
MIDAS 1012  1 30533 825299
MIDAS 1013  1 30534 825300
MIDAS 1014  1 30535 825301
MIDAS 1015  1 30536 825302
MIDAS 1016  1 30537 825303
MIDAS 1017  1 30538 825304
MIDAS 1018  1 30539 825305
MIDAS 1019  1 30540 825306
MIDAS 1020  1 30541 825307
MIDAS 1021  1 30542 825308
MIDAS 1022  1 30543 825309
MIDAS 1023  1 30544 825310
MIDAS 1024  1 30546 825311
MIDAS 1025  1 30547 825312
MIDAS 1026  1 30548 825313
MIDAS 1027  1 30549 825314
MIDAS 1028  1 30550 825315
MIDAS 1029  1 30551 825316
MIDAS 1030  1 30552 825317
MIDAS 1031  1 30553 825318
MIDAS 1032  1 30554 825319
MIDAS 1033  1 30555 825320
MIDAS 1034  1 30556 825321
MIDAS 1035  1 30557 825322
MIDAS 1036  1 30558 825323
MIDAS 1037  1 30559 825324
MIDAS 1038  1 30560 825325
MIDAS 1039  1 30561 825326
MIDAS 1040  1 30562 825327
MIDAS 1041  1 30563 825328
MIDAS 1042  1 30564 825329
MIDAS 1043  1 30565 825330
MIDAS 1044  1 30566 825331
MIDAS 1045  1 30567 825332
MIDAS 1046  1 30568 825333
MIDAS 1047  1 30569 825334
MIDAS 1048  1 30570 825335
MIDAS 1049  1 30571 825336
MIDAS 1050  1 30572 825337
MIDAS 1051  1 30573 825338

34




Claim Name
Book & Page or
Document No.

BLM Serial No.
MIDAS 1052  1 30574 825339
MIDAS 1053  1 30575 825340
MIDAS 1054  1 30576 825341
MIDAS 1055  1 30577 825342
MIDAS 1056  1 30578 825343
MIDAS 1057  1 30579 825344
MIDAS 1058  1 30580 825345
MIDAS 1059  1 30581 825346
MIDAS 1060  1 30582 825347
MIDAS 1061  1 30583 825348
MIDAS 1062  1 30584 825349
MIDAS 1063  1 30586 825350
MIDAS 1064  1 30587 825351
MIDAS 1065  1 30588 825352
MIDAS 1066  1 30589 825353
MIDAS 1067  1 30590 825354
MIDAS 1068  1 30591 825355
MIDAS 1069  1 30592 825356
MIDAS 1070  1 30593 825357
MIDAS 1071  1 30594 825358
MIDAS 1072  1 30595 825359
MIDAS 1073  1 30596 825360
MIDAS 1074  1 30597 825361
MIDAS 1075  1 30598 825362
MIDAS 1076  1 30599 825363
MIDAS 1077  1 30600 825364
MIDAS 1078  1 30601 825365
MIDAS 1079  1 30602 825366
MIDAS 1080  1 30603 825367
MIDAS 1081  1 30604 825368
MIDAS 1082  1 30605 825369
MIDAS 1083  1 36620 827051
MIDAS 1084  1 36621 827052
MIDAS 1085  1 36622 827053
MIDAS 1086  1 36623 827054
MIDAS 1087  1 36624 827055
MIDAS 1088  1 36625 827056
MIDAS 1089  1 36626 827057
MIDAS 1090  1 36627 827058
MDS 1   537844 905317
MDS 2   537845 905318

35




Claim Name

Book & Page or
Document No.

BLM Serial No.
MDS 3   537846 905319
MDS 4   537847 905320
MDS 5   537848 905321
MDS 6   537849 905322
MDS 7   537850 905323
MDS 8   537851 905324
MDS 9   537852 905325
MDS 10   537853 905326
MDS 11   537854 905327
MDS 12   537855 905328
MDS 13   537856 905329
MDS 14   537857 905330
MDS 15   537858 905331
MDS 16   537859 905332
MDS 17   537860 905333
MDS 18   537861 905334
MDS 19   537862 905335
MDS 20   537863 905336
MDS 21   537864 905337
MDS 22   537865 905338
MDS 23   537866 905339
MDS 24   537867 905340
MDS 25   537868 905341
MDS 26   537869 905342
MDS 27   537870 905343
MDS 28   537871 905344
MDS 29   537872 905345
MDS 30   537873 905346
MDS 31   537874 905347
MDS 32   537875 905348
MDS 33   537876 905349
MDS 34   537877 905350
MDS 35   537878 905351
MDS 36   537879 905352
MDS 37   537880 905353
MDS 38   537881 905354
MDS 39   537882 905355
MDS 40   537883 905356
MDS 41   537884 905357
MDS 42   537885 905358
MDS 43   537886 905359

36




Claim Name
Book & Page or
Document No.

BLM Serial No.
MDS 44   537887 905360
MDS 45   537888 905361
MDS 46   537889 905362
MDS 47   537890 905363
MDS 48   537891 905364
MDS 49   537892 905365
CAT 1   559184 933598
CAT 2   559185 933599
CAT 3   559186 933600
CAT 4   559187 933601
CAT 5   559188 933602
CAT 6   559189 933603
CAT 7   559190 933604
CAT 8   559191 933605
CAT 9   559192 933606
CAT 10   559193 933607
CAT 11   559194 933608
CAT 12   559195 933609
CAT 13   559196 933610
CAT 14   559197 933611
CAT 15   559198 933612
CAT 16   559199 933613
CAT 17   559200 933614
CAT 18   559201 933615
CAT 19   559202 933616
CAT 20   559203 933617
CAT 21   559204 933618
CAT 22   559205 933619
CAT 23   559206 933620
CAT 24   559207 933621
CAT 25   559208 933622
CAT 26   559209 933623
CAT 27   559210 933624
CAT 28   559211 933625
CAT 29   559212 933626
CAT 30   559213 933627
CAT 31   559214 933628
CAT 32   559215 933629
CAT 33   559216 933630
CAT 34   559217 933631
CAT 35   559218 933632

37




Claim Name
Book & Page or
Document No.

BLM Serial No.
CAT 36   559219 933633
CAT 37   559220 933634
CAT 38   559221 933635
CAT 39   559222 933636
CAT 40   559223 933637
CAT 41   559224 933638
CAT 42   559225 933639
CAT 43   559226 933640
CAT 44   559227 933641
CAT 45   559228 933642
CAT 46   559229 933643
CAT 47   559230 933644
CAT 48   559231 933645
CAT 49   559232 933646
CAT 50   559233 933647
CAT 51   559234 933648
CAT 52   559235 933649
CAT 53   559236 933650
CAT 54   559237 933651
CAT 55   559238 933652
CAT 56   559239 933653
CAT 57   559240 933654
CAT 58   559241 933655

(iii)

Leasehold Interests – Fee Property

BARRICK GOLD EXPLORATION INC. – Mining Sublease and Option dated April 2, 2007, by and between Barrick Gold Exploration Inc. and Newmont USA Limited, recorded as a memorandum as Document No. 571656 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, on April 20, 2007, covering 50% mineral interest in 1,984.5 acres in portions of Sections 3, 9-12, 15-16, 20-21, 29, T39N-R46E; Sections 6, 7, 18, T39N-R47E; Sections 35-36, T40N-R46E, Elko County, Nevada and 100% mineral interest in 1,169.7 acres in portions of Sections 13, 23-26, 28, 29, 33, T39N-R46E; Sections 7, 18, T39N, R47E, Elko County, Nevada.

OXY USA INC. - Mining Lease and Agreement dated April 18, 2005, by and between Transamerica Minerals Company, a California corporation, as Owner (predecessor-in-interest to Oxy USA Inc.), and Newmont USA Limited, a Delaware corporation, recorded as a memorandum as Document No. 534181 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, and amended on December 21, 2006, covering 50% mineral interest in 3,560 acres in Sections 2, 9-12, 15-16, 20-21, 29, T39N, R46E; Sections 7, 18, T39N, R47E; Sections 17, 19, 21-22, 26-29, 33-36, T40N, R46E, Elko County, Nevada.

FRAZIER CREEK EXPLORATION CO. INC. - Lease of Estar, Redar and Laura Unpatented Lode Mining Claims and Sublease of Domenichelli Lease, dated July 1, 2000, by and between Frazer Creek Exploration Company, Inc., a Nevada corporation, and Franco-Nevada Mining Corporation, Inc., a Nevada corporation (predecessor-in-interest to Newmont Midas Operations Inc.), recorded as a memorandum as Document No. 467521 in Book 1, Pages 5290-5317 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, on February 28, 2001. The Lease affects unpatented lode mining claims and agreements pertaining to lands situated in Sections 12 and 13, Township 39 North, Range 46 East, and in Sections 7, 18 and 19, Township 39 North, Range 47 East, MDM, Elko County, Nevada, covering 28 acres of fee land in Sections 12, 13, T39N, R46E, and Secs. 7, 18, 19, T39N, R47E, MDM, Elko County, Nevada.

38


DOMENICHELLI, RAMERIZ, WILLIAMS and FRAZER CREEK EXPLORATION CO. -Mining Lease dated August 1, 1990, by and between William and Rose Domenichelli, John Kenneth Domenichelli, William Melvin Domenichelli, Barbara Jean Rameriz and Ruth Ann Williams, as lessors, and Frazer Creek Exploration Company, Inc. a Nevada corporation, as lessee, recorded in short form version as Document No. 297863 in Book 735 at Pages 508-514 of the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, covering 28 acres of fee land in the E/2 NE/4 of Section 13, T39N, R46E, MDM, Elko County, Nevada.

Leasehold Interests – Unpatented mining claims

1.      Mining Lease by and between Clark Powell and his Associates and Romarco Nevada Inc., a Nevada corporation (predecessor-in-interest to Newmont Midas Operations Inc.), dated October 30, 1995. The Mining Lease affects the following unpatented lode mining claims situated in Sections 21 and 28, Township 39 North, Range 46 East, MDM, Elko County, Nevada:

    Recording Information  
  Claim Name Book Page BLM Serial Number
  King Midas 1095 890 105502
  King Midas No. 2 1095 891 105503
  Dixie 1095 892 105504
  Dixie No. 1 1095 893 105505
  Dixie No. 2 1095 894 105506
  Dixie No. 3 1095 895 105507
  H-2 1095 896 105509

2.       Lease of Estar, Redar and Laura Unpatented Lode Mining Claims and Sublease of Domenichelli Lease, dated July 1, 2000, by and between Frazer Creek Exploration Company, Inc., a Nevada corporation, and Franco-Nevada Mining Corporation, Inc., a Nevada corporation (predecessor-in-interest to Newmont Midas Operations Inc.), recorded as a memorandum as Document No. 467521 in Book 1, Pages 5290-5317 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, on February 28, 2001. The Lease affects unpatented lode mining claims and agreements pertaining to lands situated in Sections 12 and 13, Township 39 North, Range 46 East, and in Sections 7, 18 and 19, Township 39 North, Range 47 East, MDM, Elko County, Nevada, covering the following unpatented lode mining claims and agreements pertaining to lands situated in Sections 12 and 13, Township 39 North, Range 46 East, and in Sections 7, 18 and 19, Township 39 North, Range 47 East, MDM, Elko County, Nevada:

39



  Recording Information  
Claim Name Book Page BLM Serial Number
Laura 6 510 423 354642
Laura 20 510 435 354655
REDAR 1 875 938 708819
REDAR 2 875 939 708820
REDAR 3 875 940 708821
REDAR 4 875 941 708822
REDAR 5 875 942 708823
ESTAR 1 875 943 708824
ESTAR 2 875 944 708825
ESTAR 3 875 945 708826
ESTAR 4 875 946 708827
ESTAR 5 875 947 708828
ESTAR 6 875 948 708829
ESTAR 7 912 400 722747
ESTAR 8 912 401 722748
ESTAR 9 912 402 722749
ESTAR 10 912 403 722750
ESTAR 11 912 404 722751
ESTAR 12 912 405 722752
ESTAR 13 912 406 722753
ESTAR 14 912 407 722754
ESTAR 15 912 408 722755
ESTAR 16 912 409 722756
ESTAR 17 912 410 722757
ESTAR 18 912 411 722758
ESTAR 19 912 412 722759

(iv)

Property Leases

1.      Mining Lease by and between Clark Powell and his Associates and Romarco Nevada, Inc., a Nevada corporation (predecessor-in-interest to Newmont Midas Operations Inc.), dated October 30, 1995. The Mining Lease affects the following unpatented lode mining claims situated in Sections 21 and 28, Township 39 North, Range 46 East, MDM, Elko County, Nevada:

    Recording Information  
  Claim Name Book Page BLM Serial Number
  King Midas 1095 890 105502
  King Midas No. 2 1095 891 105503
  Dixie 1095 892 105504
  Dixie No. 1 1095 893 105505
  Dixie No. 2 1095 894 105506
  Dixie No. 3 1095 895 105507
  H-2 1095 896 105509

2.      Lease of Estar, Redar and Laura Unpatented Lode Mining Claims and Sublease of Domenichelli Lease, dated July 1, 2000, by and between Frazer Creek Exploration Company, Inc., a Nevada corporation, and Franco-Nevada Mining Corporation, Inc., a Nevada corporation (predecessor-in-interest to Newmont Midas Operations Inc.), recorded as a memorandum as Document No. 467521 in Book 1, Pages 5290-5317 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, on February 28, 2001. The Lease affects unpatented lode mining claims and agreements pertaining to lands situated in Sections 12 and 13, Township 39 North, Range 46 East, and in Sections 7, 18 and 19, Township 39 North, Range 47 East, MDM, Elko County, Nevada.

40


3.      Mining Lease dated August 1, 1990, by and between William and Rose Domenichelli, John Kenneth Domenichelli, William Melvin Domenichelli, Barbara Jean Rameriz and Ruth Ann Williams, as lessors, and Frazer Creek Exploration Company, Inc. a Nevada corporation, as lessee, recorded in short form version as Document No. 297863 in Book 735 at Pages 508-514 of the Official Records of the Elko County Recorder’s Office, Elko County, Nevada.

4.       Agreement Transferring Property Interests and Terminating Mining Lease With Option to Joint Venture, Quitclaim Deed and Grant of Royalty, dated August 11, 2000, by and between Frazer Creek Exploration Company, Inc., and Nevada corporation and Homestake Mining Company of California, a California corporation, recorded as Document No. 462327 in Book 0 at Pages 23222-23233 of the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, and on September 18, 2000. The terms of which the Laura 6 and 20 unpatented lode mining claims are subject to a two percent (2%) net smelter returns royalty and portions of the REDAR 3, 4 and 5, and ESTAR 1, 7, 8, 11, 18 and 19 unpatented lode mining claims are subject to a one percent (1%) net smelter returns royalty.

5.       Mining Lease and Agreement dated April 18, 2005, by and between Transamerica Minerals Company, a California corporation, as Owner (predecessor-in-interest to Oxy USA Inc.), and Newmont USA Limited, a Delaware corporation, recorded as a memorandum as Document No. 534181 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, and amended on December 21, 2006.

6.       Mining Sublease and Option dated April 2, 2007, by and between Barrick Gold Exploration Inc. and Newmont USA Limited, recorded as a memorandum as Document No. 571656 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, on April 20, 2007.

7.       Land Lease Agreement dated March 26, 2012 by and between Newmont Midas Operations Inc., a Nevada corporation, as Lessor, and Southwestco Wireless LP, d/b/a Verizon Wireless, by Southwestco Wireless Inc., its managing partner, as Lessee, recorded as a memorandum as Document No. 654417 in the Official Records of the Elko County Recorder’s Office, Elko County, Nevada, on April 19, 2012.

Water Rights

All Water Rights and Certificates issued from Nevada Division of Water Resources have been issued to Newmont Midas Operations Inc.

Water Right Application number 60669 filed November 22, 1994, Certificate 16675 granted July 12, 2006.

Water Right Application number 61888 filed February 5, 1996, Certificate 18308 granted October 20, 2011.

Water Right Application number 62114 filed February 5, 1996, Certificate 15681 granted January 30, 2001.

Water Right Application number 62582 filed November 12, 1996, Proof of Beneficial Use due May 9, 2014.

Water Right Application number 65219 filed June 18, 1999, Certificate 18309 granted October 20, 2011.

41


Water Right Application number 65220 filed June 18, 1999, Certificate 18310 granted October 20, 2011.

Water Right Application number 65221 filed June 18, 1999, Certificate 18311 granted October 20, 2011.

Water Right Application number 68206 filed Nov 19, 2001, Certificate 18312 granted October 20, 2011.

Water Right Application number 75666 filed May 3, 2007, Proof of Beneficial Use due December 28, 2013.

Water Right Application number 76113 filed August 3, 2007, Proof of Beneficial Use due October 24, 2013.

Water Right Application number 76226 filed September 6, 2007, Proof of Beneficial Use due October 30, 2013.

Water Right Application number 76227 filed September 6, 2007, Proof of Beneficial Use due October 30, 2013.

Water Right Application number 76228 filed September 6, 2007, Proof of Beneficial Use due October 30, 2013.

Water Right Application number 79734E filed March 25, 2010, Proof of Completion filed May 6, 2011.

Water Right Application number 83248T; this is a temporary permit that will expire on December 2, 2015.

42


43


SCHEDULE B

DESCRIPTION OF FIRE CREEK PROPERTY

Title to Properties

484 Unpatented Lode Mining Claims Owned by Klondex Gold & Silver Mining Company

Located in Sections 2, 10, 14, 16, 20, 22, 24, 26, 28, 30, 31, 32, 34 and 36, T30N R47E; and Section 36, T31N R47E; MDM, Lander County, Nevada

BLM Serial # Claim Name & #   Loc Date DOC; Book; Page
NMC429292 WOOD TICK # 2   7/18/1987 144804;295;528
NMC429294 WOOD TICK # 4   7/18/1987 144806;295;530
NMC429296 WOOD TICK # 6   7/18/1987 144808;295;532
NMC429298 WOOD TICK # 8   7/18/1987 144810;295;534
NMC429300 WOOD TICK # 10   7/18/1987 144812;295;536
NMC429302 WOOD TICK # 12   7/18/1987 144814;295;538
NMC429304 WOOD TICK # 14   7/18/1987 144816;295;540
NMC429306 WOOD TICK # 16   7/18/1987 144818;295;542
NMC429308 WOOD TICK # 18   7/18/1987 144820;295;544
NMC429310 WOOD TICK # 20   7/18/1987 144822;295;546
NMC429312 WOOD TICK # 22   7/18/1987 144824;295;548
NMC429314 WOOD TICK # 24   7/19/1987 144826;295;550
NMC429316 WOOD TICK # 26   7/19/1987 144828;295;552
NMC429318 WOOD TICK # 28   7/18/1987 144830;295;554
NMC429320 WOOD TICK # 30   7/18/1987 144832;295;556
NMC429322 WOOD TICK # 32   7/19/1987 144834;295;558
NMC429324 WOOD TICK # 34   7/19/1987 144836;295;560
NMC429326 WOOD TICK # 36   7/19/1987 144838;295;562
NMC429328 WOOD TICK # 38   7/21/1987 144840;295;564
NMC429330 WOOD TICK # 40   7/21/1987 144842;295;566
NMC429332 WOOD TICK # 42   7/21/1987 144844;295;568
NMC429334 WOOD TICK # 44   7/21/1987 144846;295;570
NMC429336 WOOD TICK # 46   7/21/1987 144848;295;572
NMC429338 WOOD TICK # 48   7/21/1987 144850;295;574
NMC429340 WOOD TICK # 50   7/21/1987 144852;295;576
NMC429342 WOOD TICK # 52   7/21/1987 144854;295;578
         
NMC588642 G 1   1/23/1990 163499
NMC588643 G 2   1/23/1990 163500
NMC588644 G 3   1/23/1990 163501
NMC588645 G 4   1/23/1990 163502
NMC588646 G 5   1/23/1990 163503
NMC588647 G 6   1/23/1990 163504
NMC588648 G 7   1/23/1990 163505
NMC588649 G 8   1/23/1990 163506
NMC588650 G 9   1/23/1990 163507
NMC588651 G 10   1/23/1990 163508
NMC588652 G 11   1/23/1990 163509

1



BLM Serial # Claim Name & #   Loc Date DOC; Book; Page
NMC588653 G 12   1/23/1990 163510
NMC588654 G 13   1/23/1990 163511
NMC588655 G 14   1/23/1990 163512
NMC588656 G 15   1/23/1990 163513
NMC588657 G 16   1/23/1990 163514
         
NMC636760 DEB # 2   12/13/1991 171442;403/94
NMC636762 DEB # 4   12/13/1991 171444;403/94
         
NMC642589 REVENGE 2   12/16/1991 172707
NMC642591 REVENGE 4   12/17/1991 172709
NMC642593 REVENGE 6   12/17/1991 172711
NMC642595 REVENGE 8   1/26/1992 172713
NMC642597 REVENGE 10   12/18/1991 172715
NMC642599 REVENGE 12   12/18/1991 172717
NMC642601 REVENGE 14   12/18/1991 172719
NMC642603 REVENGE 16   2/6/1992 172721
NMC642605 REVENGE 18   2/6/1992 172723
NMC642607 REVENGE 20   12/16/1991 172725
NMC642609 REVENGE 22   1/9/1992 172727
NMC642611 REVENGE 24   2/13/1992 172729
NMC642613 REVENGE 26   2/13/1992 172731
NMC642615 REVENGE 28   1/26/1992 172733
         
NMC654400 K 1   6/25/1992 176394
NMC654401 K 2   6/25/1992 176395
NMC654402 K 3   6/25/1992 176396
NMC654403 K 4   6/25/1992 176397
NMC654404 K 5   6/25/1992 176398
NMC654405 K 6   6/25/1992 176399
NMC654406 K 7   6/25/1992 176400
NMC654407 K 8   6/25/1992 176401
NMC654408 K 9   6/25/1992 176402
NMC654409 K 10   6/25/1992 176403
NMC654410 K 11   6/25/1992 176404
NMC654411 K 12   6/25/1992 176405
NMC654412 K 13   6/25/1992 176406
NMC654413 K 14   6/25/1992 176407
NMC654414 K 15   6/25/1992 176408
NMC654415 K 16   6/25/1992 176409
NMC654416 K 17   6/25/1992 176410
  Amended   8/17/1992 177514
NMC654417 K 18   6/25/1992 176411
  Amended   8/14/1992 177515
NMC654418 K 19   6/25/1992 176412
NMC654419 K 20   6/25/1992 176413
  Amended   8/14/1992 177516
NMC654420 K 21   6/26/1992 176414
NMC654421 K 22   6/26/1992 176415

2



BLM Serial # Claim Name & #   Loc Date DOC; Book; Page
  Amended   8/17/1992 177517
NMC654422 K 23   6/26/1992 176416
NMC654423 K 24   6/26/1992 176417
  Amended   8/17/1992 177518
NMC654424 K 25   6/26/1992 176418
  Amended   8/17/1992 177519
NMC654425 K 26   6/26/1992 176419
  Amended   8/17/1992 177520
NMC654426 K 27   6/26/1992 176420
  Amended   8/17/1992 177521
         
NMC677352 ALAN 1   2/15/1993 183752;392;688
NMC677353 ALAN 2   2/15/1993 183753
NMC677354 ALAN 3   2/15/1993 183754
NMC677355 ALAN 4   2/15/1993 183755
NMC677356 ALAN 5   2/15/1993 183756
NMC677357 ALAN 6   2/15/1993 183757
NMC677358 ALAN 7   2/15/1993 183758
NMC677359 ALAN 8   2/15/1993 183759
NMC677360 ALAN 9   2/15/1993 183760
NMC677361 ALAN 10   2/15/1993 183761
NMC677362 ALAN 11   2/15/1993 183762
NMC677363 ALAN 12   2/15/1993 183763
NMC677364 ALAN 13   2/15/1993 183764
NMC677365 ALAN 14   2/15/1993 183765;392;701
         
NMC689348 N 2   11/17/1993 187015;403;45
NMC689350 N 4   11/17/1993 187017
NMC689352 N 6   11/17/1993 187019
NMC689354 N 8   11/17/1993 187021
NMC689356 N 10   11/17/1993 187023
NMC689358 N 12   11/17/1993 187025
NMC689360 N 14   11/17/1993 187027
NMC689362 N 16   11/17/1993 187029
NMC689364 N 18   11/17/1993 187031
NMC689366 N 20   11/18/1993 187033
NMC689368 N 22   11/18/1993 187035
NMC689370 N 24   11/18/1993 187037
NMC689372 N 26   11/18/1993 187039
NMC689374 N 28   11/18/1993 187041
NMC689376 N 30   11/18/1993 187043;403;73
         
NMC689380 TL 2   11/8/1993 187048;403;78
NMC689382 TL 4   11/8/1993 187050
NMC689384 TL 6   11/8/1993 187052
NMC689386 TL 8   11/10/1993 187054
NMC689388 TL 10   11/10/1993 187056
NMC689390 TL 12   11/10/1993 187058
NMC689392 TL 14   11/10/1993 187060

3



BLM Serial # Claim Name & #   Loc Date DOC; Book; Page
NMC689394 TL 16   11/10/1993 187062
NMC689396 TL 18   11/10/1993 187064;40394
         
NMC703411 TL 20   6/21/1994 190187;409;652
NMC703413 TL 22   6/21/1994 190189;409;654
NMC703415 TL 24   6/21/1994 190191;409;656
NMC703417 TL 26   6/21/1994 190193;409;658
         
NMC725845 FCRA 1   9/28/1995 195570;422;371
NMC725846 FCRA 2   9/28/1995 195571;422;372
NMC725847 FCRA 3   9/28/1995 195572;422;373
NMC725848 FCRA 4   9/28/1995 195573;422;374
NMC725849 FCRA 5   9/28/1995 195574;422;375
NMC725850 FCRA 6   9/28/1995 195575;422;376
NMC725851 FCRA 7   9/28/1995 195576;422;377
NMC725852 FCRA 8   9/28/1995 195577;422;378
NMC725853 FCRA 9   9/28/1995 195578;422;379
NMC725854 FCRA 10   9/28/1995 195579;422;380
NMC725855 FCRA 11   9/28/1995 195580;422;381
NMC725856 FCRA 12   9/28/1995 195581;422;382
NMC725857 FCRA 13   9/28/1995 195582;422;383
NMC725858 FCRA 14   9/28/1995 195583;422;384
NMC725859 FCRA 15   9/28/1995 195584;422;385
NMC725860 FCRA 16   9/28/1995 195585;422;386
NMC725861 FCRA 17   9/28/1995 195586;422;387
NMC725862 FCRA 18   9/28/1995 195587;422;388
NMC725863 FCRA 19   9/28/1995 195588;422;389
NMC725864 FCRA 20   9/28/1995 195589;422;390
         
NMC810915 T 1   10/13/1999 213996;470;446
NMC810916 T 2   10/13/1999 213997;470;447
NMC810917 T 3   10/13/1999 213998;470;448
NMC810918 T 4   10/13/1999 213999;470;449
NMC810919 T 5   10/13/1999 214000;470;450
NMC810920 T 6   10/13/1999 214001;470;451
NMC810921 T 7   10/13/1999 214002;470;452
NMC810922 T 8   10/13/1999 214003;470;453
NMC810923 T 9   10/13/1999 214004;470;454
NMC810924 T 10   10/13/1999 214005;470;455
         
NMC858199 T 11   9/24/2003 229498
NMC858200 T 12   9/24/2003 229499
NMC858201 T 13   9/24/2003 229500
NMC858202 T 14   9/24/2003 229501
NMC858203 T 15   9/24/2003 229502
NMC858204 T 16   9/24/2003 229503
NMC858205 T 17   9/24/2003 229504
NMC858206 T 18   9/24/2003 229505
NMC858207 T 19   9/23/2003 229506

4



BLM Serial # Claim Name & #   Loc Date DOC; Book; Page
NMC858208 T 20   9/23/2003 229507
NMC858209 T 21   9/23/2003 229508
NMC858210 T 22   9/23/2003 229509
NMC858211 T 23   9/23/2003 229510
NMC858212 T 24   9/23/2003 229511
NMC858213 T 25   9/23/2003 229512
NMC858214 T 26   9/23/2003 229513
NMC858215 T 27   9/24/2003 229514
NMC858216 T 28   9/24/2003 229515
NMC858217 T 29   9/24/2003 229516
NMC858218 T 30   9/24/2003 229517
NMC858219 T 31   9/24/2003 229518
NMC858220 T 32   9/24/2003 229519
NMC858221 T 33   9/24/2003 229520
NMC858222 T 34   9/24/2003 229521
NMC858223 T 35   9/24/2003 229522
NMC858224 T 36   9/24/2003 229523
         
NMC858225 HONDO 1   9/20/2003 229421
NMC858226 HONDO 3   9/20/2003 229422
NMC858227 HONDO 5   9/20/2003 229423
NMC858228 HONDO 7   9/20/2003 229424
NMC858229 HONDO 9   9/20/2003 229425
NMC858230 HONDO 11   9/20/2003 229426
NMC858231 HONDO 13   9/20/2003 229427
NMC858232 HONDO 15   9/20/2003 229428
NMC858233 HONDO 18   9/20/2003 229429
NMC858234 HONDO 20   9/20/2003 229430
NMC858235 HONDO 22   9/20/2003 229431
NMC858236 HONDO 24   9/20/2003 229432
NMC858237 HONDO 26   9/20/2003 229433
NMC858238 HONDO 28   9/20/2003 229434
NMC858239 HONDO 30   9/20/2003 229435
NMC858240 HONDO 32   9/20/2003 229436
NMC858241 HONDO 157   9/20/2003 229437
NMC858242 HONDO 158   9/20/2003 229438
         
NMC858243 DEB 1   9/22/2003 229477
NMC858244 DEB 3   9/22/2003 229478
NMC858245 DEB 5   9/22/2003 229479
         
NMC858246 REVENGE 1   9/22/2003 229480
NMC858247 REVENGE 3   9/23/2003 229481
NMC858248 REVENGE 5   9/23/2003 229482
NMC858249 REVENGE 7   9/23/2003 229483
NMC858250 REVENGE 9   9/23/2003 229484
NMC858251 REVENGE 11   9/22/2003 229485
NMC858252 REVENGE 13   9/22/2003 229486
NMC858253 REVENGE 15   9/22/2003 229487

5



BLM Serial # Claim Name & #   Loc Date DOC; Book; Page
NMC858254 REVENGE 17   9/22/2003 229488
NMC858255 REVENGE 19   9/22/2003 229489
NMC858256 REVENGE 21   9/22/2003 229490
NMC858257 REVENGE 23   9/22/2003 229491
NMC858258 REVENGE 25   9/22/2003 229492
NMC858259 REVENGE 27   9/22/2003 229493
NMC858260 REVENGE 29   9/23/2003 229494
NMC858261 REVENGE 30   9/23/2003 229495
NMC858262 REVENGE 31   9/23/2003 229496
         
NMC858263 FC 1   9/21/2003 229440
NMC858264 FC 2   9/21/2003 229441
NMC858265 FC 3   9/21/2003 229442
NMC858266 FC 4   9/21/2003 229443
NMC858267 FC 5   9/21/2003 229444
NMC858268 FC 6   9/21/2003 229445
NMC858269 FC 7   9/21/2003 229446
NMC858270 FC 8   9/21/2003 229447
NMC858271 FC 9   9/21/2003 229448
NMC858272 FC 10   9/21/2003 229449
NMC858273 FC 11   9/21/2003 229450
NMC858274 FC 12   9/21/2003 229451
NMC858275 FC 13   9/21/2003 229452
NMC858276 FC 14   9/21/2003 229453
NMC858277 FC 15   9/21/2003 229454
NMC858278 FC 16   9/21/2003 229455
NMC858279 FC 17   9/21/2003 229456
NMC858280 FC 18   9/21/2003 229457
         
NMC858281 WHAT IF 29   9/21/2003 229458
NMC858282 WHAT IF 30   9/21/2003 229459
NMC858283 WHAT IF 31   9/21/2003 229460
NMC858284 WHAT IF 32   9/21/2003 229461
NMC858285 WHAT IF 33   9/21/2003 229462
NMC858286 WHAT IF 34   9/21/2003 229463
NMC858287 WHAT IF 35   9/21/2003 229464
NMC858288 WHAT IF 36   9/21/2003 229465
NMC858289 WHAT IF 37   9/21/2003 229466
         
NMC858290 FC 38   9/21/2003 229467
NMC858291 FC 39   9/21/2003 229468
NMC858292 FC 40   9/21/2003 229469
NMC858293 FC 41   9/21/2003 229470
NMC858294 FC 42   9/21/2003 229471
NMC858295 FC 43   9/21/2003 229472
NMC858296 FC 44   9/21/2003 229473
NMC858297 FC 45   9/21/2003 229474
NMC858298 FC 46   9/21/2003 229475

6



BLM Serial # Claim Name & #   Loc Date DOC; Book; Page
NMC858346 T 38   10/5/2003 229833
NMC858347 T 39   10/5/2003 229834
NMC858348 T 40   10/5/2003 229835
NMC858349 T 41   10/5/2003 229836
NMC858350 T 42   10/5/2003 229837
NMC858351 T 43   10/5/2003 229838
NMC858352 T 44   10/5/2003 229839
NMC858353 T 45   10/5/2003 229840
NMC858354 T 46   10/5/2003 229841
NMC858355 T 47   10/5/2003 229842
NMC858356 T 48   10/5/2003 229843
NMC858357 T 49   10/5/2003 229844
NMC858358 T 50   10/5/2003 229845
NMC858359 T 51   10/5/2003 229846
NMC858360 T 52   10/5/2003 229847
NMC858361 T 53   10/5/2003 229848
NMC858362 T 54   10/5/2003 229849
NMC858363 T 55   10/5/2003 229850
NMC858364 T 56   10/5/2003 229851
NMC858365 T 57   10/5/2003 229852
NMC858366 T 58   10/5/2003 229853
NMC858367 T 59   10/5/2003 229854
NMC858368 T 60   10/5/2003 229855
NMC858369 T 61   10/6/2003 229856
NMC858370 T 62   10/6/2003 229857
NMC858371 T 63   10/6/2003 229858
NMC858372 T 64   10/6/2003 229859
NMC858373 T 65   10/6/2003 229860
NMC858374 T 66   10/6/2003 229861
NMC858375 T 67   10/6/2003 229862
NMC858376 T 68   10/6/2003 229863
NMC858377 T 69   10/6/2003 229864
NMC858378 T 70   10/6/2003 229865
NMC858379 T 71   10/6/2003 229866
NMC858380 T 72   10/6/2003 229867
         
NMC883199 FCXX 1   11/24/2004 234689
NMC883200 FCXX 2   11/24/2004 234690
NMC883201 FCXX 3   11/24/2004 234691
NMC883202 FCXX 4   11/24/2004 234692
NMC883203 FCXX 5   11/24/2004 234693
NMC883204 FCXX 6   11/24/2004 234694
NMC883205 FCXX 7   11/24/2004 234695
NMC883206 FCXX 8   11/24/2004 234696
NMC883207 FCXX 9   11/24/2004 234697
NMC883208 FCXX 10   11/24/2004 234698
NMC883209 FCXX 11   11/24/2004 234699
NMC883210 FCXX 12   11/24/2004 234700
NMC883211 FCXX 13   11/24/2004 234701

7



BLM Serial # Claim Name & #   Loc Date DOC; Book; Page
NMC883212 FCXX 14   11/24/2004 234702
NMC883213 FCXX 15   11/24/2004 234703
NMC883214 FCXX 16   11/24/2004 234704
NMC883215 FCXX 17   11/24/2004 234705
NMC883216 FCXX 18   11/24/2004 234706
NMC883217 FCXX 19   11/24/2004 234707
NMC883218 FCXX 20   11/24/2004 234708
NMC883219 FCXX 21   11/24/2004 234709
NMC883220 FCXX 22   11/24/2004 234710
NMC883221 FCXX 23   11/24/2004 234711
NMC883222 FCXX 24   11/24/2004 234712
NMC883223 FCXX 25   11/24/2004 234713
NMC883224 FCXX 26   11/24/2004 234714
NMC883225 FCXX 27   11/24/2004 234715
NMC883226 FCXX 28   11/24/2004 234716
NMC883227 FCXX 29   11/24/2004 234717
NMC883228 FCXX 30   11/24/2004 234718
NMC883229 FCXX 31   11/24/2004 234719
NMC883230 FCXX 32   11/24/2004 234720
NMC883231 FCXX 33   11/24/2004 234721
NMC883232 FCXX 34   11/24/2004 234722
NMC883233 FCXX 35   11/24/2004 234723
NMC883234 FCXX 36   11/24/2004 234724
NMC883235 FCXX 37   11/24/2004 234725
NMC883236 FCXX 38   11/24/2004 234726
NMC883237 FCXX 39   11/24/2004 234727
NMC883238 FCXX 40   11/24/2004 234728
         
NMC941456 CH 1   9/19/2006 245941
NMC941457 CH 2   9/19/2006 245942
NMC941458 CH 3   9/19/2006 245943
NMC941459 CH 4   9/19/2006 245944
NMC941460 CH 5   9/19/2006 245945
NMC941461 CH 6   9/19/2006 245946
NMC941462 CH 7   9/19/2006 245947
NMC941463 CH 8   9/19/2006 245948
NMC941464 CH 9   9/19/2006 245949
NMC941465 CH 10   9/19/2006 245950
NMC941466 CH 11   9/19/2006 245951
NMC941467 CH 12   9/19/2006 245952
NMC941468 CH 13   9/19/2006 245953
NMC941469 CH 14   9/19/2006 245954
NMC941470 CH 15   9/19/2006 245955
NMC941471 CH 16   9/19/2006 245956
NMC941472 CH 17   9/19/2006 245957
NMC941473 CH 18   9/19/2006 245958
         
NMC941474 HONDO 2   10/4/2006 245960
NMC941475 HONDO 4   10/4/2006 245961

8



BLM Serial # Claim Name & #   Loc Date DOC; Book; Page
NMC941476 HONDO 6   10/4/2006 245962
NMC941477 HONDO 8   10/4/2006 245963
NMC941478 HONDO 10   10/4/2006 245964
NMC941479 HONDO 12   10/4/2006 245965
NMC941480 HONDO 14   10/4/2006 245966
NMC941481 HONDO 16   10/4/2006 245967
NMC941482 HONDO 17   10/4/2006 245968
NMC941483 HONDO 19   10/4/2006 245969
NMC941484 HONDO 21   10/4/2006 245970
NMC941485 HONDO 23   10/4/2006 245971
NMC941486 HONDO 25   10/4/2006 245972
NMC941487 HONDO 27   10/4/2006 245973
NMC941488 HONDO 29   10/4/2006 245974
NMC941489 HONDO 31   10/4/2006 245975
NMC941490 HONDO 155   10/4/2006 245976
NMC941491 HONDO 156   10/4/2006 245977
         
NMC941492 N 1   9/11/2006 245979
NMC941493 N 3   9/11/2006 245980
NMC941494 N 5   9/12/2006 245981
NMC941495 N 7   9/12/2006 245982
NMC941496 N 9   9/12/2006 245983
NMC941497 N 11   9/11/2006 245984
NMC941498 N 13   9/11/2006 245985
NMC941499 N 15   9/12/2006 245986
NMC941500 N 17   9/12/2006 245987
NMC941501 N 19   9/11/2006 245988
NMC941502 N 21   9/11/2006 245989
NMC941503 N 23   9/11/2006 245990
NMC941504 N 25   9/11/2006 245991
NMC941505 N 27   9/11/2006 245992
NMC941506 N 29   9/12/2006 245993
NMC941507 N 31   9/12/2006 245994
         
NMC941508 TL 1   9/13/2006 245996
NMC941509 TL 3   9/13/2006 245997
NMC941510 TL 5   9/13/2006 245998
NMC941511 TL 7   9/13/2006 245999
NMC941512 TL 9   9/13/2006 246000
NMC941513 TL 11   9/13/2006 246001
NMC941514 TL 13   9/13/2006 246002
NMC941515 TL 15   9/13/2006 246003
NMC941516 TL 17   9/13/2006 246004
NMC941517 TL 19   9/14/2006 246005
NMC941518 TL 21   9/14/2006 246006
NMC941519 TL 23   9/14/2006 246007
NMC941520 TL 25   9/14/2006 246008
NMC941521 TL 27   9/14/2006 246009
NMC941522 TL 28   9/14/2006 246010

9



BLM Serial # Claim Name & #   Loc Date DOC; Book; Page
NMC941523 TL 29   9/14/2006 246011
NMC941524 TL 30   9/14/2006 246012
NMC941525 TL 31   9/14/2006 246013
         
NMC941526 TWE 1   10/10/2006 246015
NMC941527 TWE 2   10/10/2006 246016
NMC941528 TWE 3   10/10/2006 246017
NMC941529 TWE 4   10/10/2006 246018
NMC941530 TWE 5   10/10/2006 246019
NMC941531 TWE 6   10/10/2006 246020
NMC941532 TWE 7   10/10/2006 246021
NMC941533 TWE 8   10/10/2006 246022
NMC941534 TWE 9   10/10/2006 246023
NMC941535 TWE 10   10/10/2006 246024
NMC941536 TWE 11   10/10/2006 246025
NMC941537 TWE 12   10/10/2006 246026
NMC941538 TWE 13   10/10/2006 246027
NMC941539 TWE 14   10/10/2006 246028
NMC941540 TWE 15   10/10/2006 246029
NMC941541 TWE 16   10/10/2006 246030
NMC941542 TWE 17   10/10/2006 246031
NMC941543 TWE 18   10/10/2006 246032
NMC941544 TWE 19   9/20/2006 246033
NMC941545 TWE 20   9/20/2006 246034
NMC941546 TWE 21   9/20/2006 246035
NMC941547 TWE 22   9/20/2006 246036
NMC941548 TWE 23   9/20/2006 246037
NMC941549 TWE 24   9/20/2006 246038
NMC941550 TWE 25   9/20/2006 246039
NMC941551 TWE 26   9/20/2006 246040
NMC941552 TWE 27   9/20/2006 246041
NMC941553 TWE 28   9/20/2006 246042
NMC941554 TWE 29   9/20/2006 246043
NMC941555 TWE 30   9/20/2006 246044
NMC941556 TWE 31   9/20/2006 246045
NMC941557 TWE 32   9/20/2006 246046
NMC941558 TWE 33   9/20/2006 246047
NMC941559 TWE 34   9/20/2006 246048
NMC941560 TWE 35   9/20/2006 246049
NMC941561 TWE 36   9/20/2006 246050
         
NMC941562 WT 1   10/31/2006 246052
NMC941563 WT 3   10/31/2006 246053
NMC941564 WT 5   10/31/2006 246054
NMC941565 WT 7   10/31/2006 246055
NMC941566 WT 9   10/31/2006 246056
NMC941567 WT 11   10/31/2006 246057
NMC941568 WT 13   10/31/2006 246058
NMC941569 WT 15   10/31/2006 246059

10



BLM Serial # Claim Name & #   Loc Date DOC; Book; Page
NMC941570 WT 17   10/31/2006 246060
NMC941571 WT 19   11/7/2006 246061
NMC941572 WT 21   11/7/2006 246062
NMC941573 WT 23   11/7/2006 246063
NMC941574 WT 25   11/7/2006 246064
NMC941575 WT 27   11/7/2006 246065
NMC941576 WT 29   10/31/2006 246066
NMC941577 WT 31   10/31/2006 246067
NMC941578 WT 33   10/31/2006 246068
NMC941579 WT 35   10/31/2006 246069
NMC941580 WT 37   11/1/2006 246070
NMC941581 WT 39   11/1/2006 246071
NMC941582 WT 41   11/1/2006 246072
NMC941583 WT 43   11/112006 246073
NMC941584 WT 45   11/1/2006 246074
NMC941585 WT 47   11/1/2006 246075
NMC941586 WT 49   11/1/2006 246076
NMC941587 WT 51   11/1/2006 246077
NMC941588 WT 53   11/1/2006 246078
NMC941589 WT 54   11/1/2006 246079
NMC941590 WT 55   11/1/2006 246080
NMC941591 WT 56   11/8/2006 246081
NMC941592 WT 57   11/8/2006 246082
NMC941593 WT 58   11/8/2006 246083
NMC941594 WT 59   11/8/2006 246084
NMC941595 WT 60   11/8/2006 246085
NMC941596 WT 61   11/8/2006 246086
NMC941597 WT 62   11/8/2006 246087
NMC941598 WT 63   11/8/2006 246088
NMC941599 WT 64   11/8/2006 246089
NMC941600 WT 65   11/8/2006 246090
NMC941601 WT 66   11/8/2006 246091
NMC941602 WT 67   11/8/2006 246092
NMC941603 WT 68   11/8/2006 246093
NMC941604 WT 69   11/8/2006 246094
NMC941605 WT 70   11/8/2006 246095
NMC941606 WT 71   11/8/2006 246096
NMC941607 WT 72   11/8/2006 246097
Total 484 Claims        

11


Summary of Fire Creek Exploration Project Fee Holdings

APN Legal Description Royalty Acres
Section 9 T30N R47E MDB&M    
007-110-01 NW1/4 N/A 160
007-110-13 E1/2 NE 1/4 NE1/4, SE1/4 NE1/4, SE1/4 SW1/4 NE1/4 N/A 70
       
Section 15 T30N R47E MDB&M    
007-140-01 N1/2 NW1/4 N/A 80
007-140-03 SW1/4 NW1/4 N/A 40
007-140-05 SW1/4 NE1/4 N/A 40
007-140-12 SE1/4 SW1/4 N/A 40
007-140-14 Lots 1 & 2, also described as S1/2 SE1/4 N/A 65.39
007-140-15 SE1/4 NE1/4 SW1/4 N/A 10
007-140-19 S1/2 NW1/4 NE1/4 N/A 20
007-140-20 N1/2 NW1/4 NE1/4 N/A 20
007-140-21 NW1/4 NE1/4 SW1/4 N/A 10
007-140-22 NE1/4 NE1/4 SW1/4 N/A 10
007-140-23 SW1/4 NE1/4 SW1/4 N/A 10
007-140-25 NW1/4 NE1/4 NE1/4 N/A 10
       
Section 23 T30N R47E MDB&M    
007-160-06 E1/2 SE1/4 NE1/4 N/A 20
007-160-08 N1/2 NE1/4 SE1/4 N/A 20
007-160-09 SE1/4 NE1/4 SE1/4 N/A 10
007-160-16 N1/2 SE1/4 NW1/4 5% NSR 20
007-160-17 N1/2 NW1/4 SW1/4 N/A 20
007-160-18 NW1/4 NW1/4 N/A 40
007-160-19 NE1/4 NW1/4 N/A 40
007-160-20 NE1/4 SW1/4 NW1/4 N/A 10
007-160-21 S1/2 SE1/4 NW1/4 N/A 20
007-160-22 NE1/4 NE/1/4 SW1/4 N/A 10
007-160-25 W1/2 SW1/4 NW1/4, NE1/4 SW1/4 NW1/4 5% NSR 30
007-160-26 NW1/4 NE1/4 SW1/4 N/A 10
007-160-27 NW1/4, SW1/4 SE1/4, SE1/4 NW1/4 SE1/4 N/A 20
007-160-28 SW1/4 NE1/4 SE1/4 NW1/4 SE1/4 SE1/4 N/A 20
       
Section 21 T30N R47E MDB&M    
007-610-01 NW1/4 N/A 160
       
Section 33 T30N R47E MDB&M    
007-640-06 S1/2 NW1/4 N/A 80
                                 29 Fee Parcels   1095.39

12


Summary of Fire Creek Exploration Project Leased Fee Holdings

APN Description Lessor Royalty Expiration Acres
Section 15 T30N R47E MDB&M        
007-140-04 SE1/4 NW1/4 Third Party Lessor 4% NSR (2) 40
007-140-06 SE1/4 NE1/4 Third Party Lessor 4% NSR (2) 40
007-140-10 NE1/4 SE1/4, E1/2 NW1/4 SE1/4 Third Party Lessor 2.5% NSR (2) 60
007-140-07 N2NW4SW4 Third Party Lessor 3.0% NSR & 0.5% wheelage royalty (1) 31-Jul-33 20
007-140-09 W2NW4SE4 Third Party Lessor 3.0% NSR & 0.5% wheelage royalty (1) 31-Jul-33 20
Section 19 T30N R47E MDB&M        
007-160-04 SW4NE4 Third Party Lessor 3.0% NSR & 0.5% wheelage royalty (1) 31-Jul-33 40
007-160-24 NE4NW4SE4 Third Party Lessor 3.0% NSR & 0.5% wheelage royalty (1) 31-Jul-33 10
Section 19 T30N R47E MDB&M        
007-060-69 Parcel 1 of the Sharp Hospital Map recorded in the Office of the Lander County Recorder in Book 375, Official Records, Page 170 Third Party Lessor 3.0% NSR & 0.5% wheelage royalty (1) 31-Jul-33 9.28
8 Leased Fee Parcels       239.28

Water Rights

All Water Rights and Certificates issued from Nevada Division of Water Resources have been issued to Klondex Gold & Silver Mining Company, unless otherwise noted.

Water Right Application number 74990-T filed November 2, 2006, Corrected Application filed December 27, 2006; this is a temporary permit and will revert back to 28637 on expiration.

Water Right Application number 77002 filed April 30, 2008, Approval of State Engineer granted November 16, 2009, Proof of Beneficial Use due November 16, 2014.

Water Right Application number 28637 filed August 28, 1974, Certificate 10558 granted January 28, 1983. This permit was issued to L. E. Gilbert.

Water Right Application number 77003 filed April 30, 2008, Approval of State Engineer granted November 16, 2009, Proof of Beneficial Use due November 16, 2014.

Water Right Application number 75129 filed November 28, 2006 with a new priority date of September 17, 2009, Certificate 18863 granted September 26, 2012.

13


14


15


SCHEDULE C

OTHER PROPERTIES

Reef Project, Churchill County, Nevada

8 Unpatented Lode Mining Claims Owned by Klondex Gold & Silver Mining Company Located in Sections 24 and 25, T15N R34E, MDM, Churchill County, Nevada:

BLM Serial # Claim Name #   Loc Date County Doc Legal Desc MTRS
NMC361070 REEF 1   1/17/1986 217903 21 0150N 0340E 024
  amended   2/14/2000 327888  
NMC361071 REEF 2   1/17/1986 217904 21 0150N 0340E 024
  amended   2/14/2000 327889  
NMC361072 REEF 3   1/17/1986 217905 21 0150N 0340E 024
  amended   2/14/2000 327890  
NMC529603 REEF 4   09/01/1988 240992 21 0150N 0340E 024
  amended   2/14/2000 327891  
NMC694084 REEF 5   01/12/1994 279925 21 0150N 0340E 024
  amended   2/14/2000 327892  
NMC694085 REEF 6   01/12/1994 279926 21 0150N 0340E 024
  amended   2/14/2000 327893  
NMC694086 REEF 7   01/12/1994 279927 21 0150N 0340E 024
  amended   2/14/2000 327894  
NMC694087 REEF 8   01/12/1994 279928 21 0150N 0340E 024
  amended   2/14/2000 327895  
Total 8 Unpatented Lode Claims Reef Project    

Hot Springs Point Property, Eureka County, Nevada

81 Unpatented Lode Mining Claims Owned by Klondex Gold & Silver Mining Company

Located in Section 6, T29N R49E; and Sections 12 and 14, T29N R48E, MDM, Eureka County, Nevada:

BLM Serial # Claim Name #   Loc Date County Doc. Legal Desc MTRS
NMC689398 HS 2   10/23/1993 149491 21 0290N 0480E 012
NMC689400 HS 4   10/23/1993 149493 21 0290N 0480E 012
NMC689402 HS 6   10/23/1993 149495 21 0290N 0480E 012
NMC689404 HS 8   10/23/1993 149497 21 0290N 0480E 012
NMC689406 HS 10   10/23/1993 149499 21 0290N 0480E 012
NMC689408 HS 12   10/23/1993 149501 21 0290N 0480E 012
NMC689410 HS 14   10/23/1993 149503 21 0290N 0480E 012
NMC689412 HS 16   10/23/1993 149505 21 0290N 0480E 012
NMC689414 HS 18   10/23/1993 149507 21 0290N 0480E 012
NMC689416 HS 20   10/23/1993 149509 21 0290N 0480E 012
NMC689418 HS 22   10/23/1993 149511 21 0290N 0480E 012

1



BLM Serial # Claim Name #   Loc Date County Doc. Legal Desc MTRS
NMC689420 HS 24   10/23/1993 149513 21 0290N 0480E 012
NMC689422 HS 26   10/24/1993 149515 21 0290N 0490E 006
NMC689424 HS 28   10/24/1993 149517 21 0290N 0490E 006
NMC689426 HS 30   10/24/1993 149519 21 0290N 0490E 006
NMC689428 HS 32   10/24/1993 149521 21 0290N 0490E 006
NMC689430 HS 34   10/24/1993 149523 21 0290N 0490E 006
NMC689432 HS 36   10/24/1993 149525 21 0290N 0490E 006
NMC689434 HS 38   10/24/1993 149527 21 0290N 0490E 006
NMC689436 HS 40   10/24/1993 149529 21 0290N 0490E 006
NMC689438 HS 42   10/24/1993 149531 21 0290N 0490E 006
NMC689440 HS 44   10/24/1993 149533 21 0290N 0490E 006
NMC689442 HS 46   10/24/1993 149535 21 0290N 0490E 006
NMC689444 HS 48   10/28/1993 149537 21 0290N 0480E 014
NMC689446 HS 50   10/28/1993 149539 21 0290N 0480E 014
  amended   12/14/1993 149767  
NMC689448 HS 52   10/29/1993 149541 21 0290N 0480E 014
  amended   12/14/1993 149769  
NMC689450 HS 54   10/29/1993 149543 21 0290N 0480E 014
  amended   12/14/1993 149771  
NMC689452 HS 56   10/29/1993 149545 21 0290N 0480E 014
  amended   12/14/1993 149773  
NMC689454 HS 58   10/29/1993 149547 21 0290N 0480E 014
  amended   12/14/1993 149775  
NMC689456 HS 60   10/29/1993 149549 21 0290N 0480E 014
  amended   12/14/1993 149777  
NMC689458 HS 62   10/29/1993 149551 21 0290N 0480E 014
  amended   12/14/1993 149779  
NMC689460 HS 64   10/29/1993 149553 21 0290N 0480E 014
  amended   12/14/1993 149781  
NMC689462 HS 66   10/23/1993 149555 21 0290N 0480E 012
           
NMC692193 HS 68   12/07/1993 149958 21 0290N 0480E 014
NMC692195 HS 70   12/07/1993 149960 21 0290N 0480E 014
NMC692197 HS 72   12/07/1993 149962 21 0290N 0480E 014
NMC692199 HS 74   12/07/1993 149964 21 0290N 0480E 014
NMC692201 HS 76   12/07/1993 149966 21 0290N 0480E 014
NMC692203 HS 78   12/07/1993 149968 21 0290N 0480E 014
NMC1015124 HS 1   09/03/2009 214290 21 0290N 0480E 012
  amended   11/18/2009 214696  
NMC1015125 HS 3   09/03/2009 214289 21 0290N 0480E 012
  amended   11/18/2009 214697  
NMC1015126 HS 5   09/03/2009 214288 21 0290N 0480E 012
  amended   11/18/2009 214698  
NMC1015127 HS 7   09/03/2009 214287 21 0290N 0480E 012

2



BLM Serial # Claim Name #   Loc Date County Doc. Legal Desc MTRS
  amended   11/18/2009 214699  
NMC1015128 HS 9   09/03/2009 214286 21 0290N 0480E 012
  amended   11/18/2009 214700  
NMC1015129 HS 11   09/03/2009 214285 21 0290N 0480E 012
  amended   11/18/2009 214701  
NMC1015130 HS 13   09/03/2009 214284 21 0290N 0480E 012
  amended   11/18/2009 214702  
NMC1015131 HS 15   09/03/2009 214283 21 0290N 0480E 012
  amended   11/18/2009 214703  
NMC1015132 HS 17   09/03/2009 214282 21 0290N 0480E 012
  amended   11/18/2009 214704  
NMC1015133 HS 19   09/03/2009 214281 21 0290N 0480E 012
  amended   11/18/2009 214705  
NMC1015134 HS 21   09/03/2009 214280 21 0290N 0480E 012
  amended   11/18/2009 214706  
NMC1015135 HS 23   09/03/2009 214279 21 0290N 0480E 012
  amended   11/18/2009 214707  
NMC1015136 HS 25   09/03/2009 214278 21 0290N 0480E 012
  amended   11/18/2009 214708  
NMC1015137 HS 27   09/03/2009 214277 21 0290N 0490E 006
  amended   11/18/2009 214709  
NMC1015138 HS 29   09/03/2009 214276 21 0290N 0490E 006
  amended   11/18/2009 214710  
NMC1015139 HS 31   09/03/2009 214275 21 0290N 0490E 006
  amended   11/18/2009 214711  
NMC1015140 HS 33   09/03/2009 214274 21 0290N 0490E 006
  amended   11/18/2009 214712  
NMC1015141 HS 35   09/03/2009 214273 21 0290N 0490E 006
  amended   11/18/2009 214713  
NMC1015142 HS 37   09/03/2009 214272 21 0290N 0490E 006
  amended   11/18/2009 214714  
NMC1015143 HS 39   09/03/2009 214271 21 0290N 0490E 006
  amended   11/18/2009 214715  
NMC1015144 HS 41   09/03/2009 214270 21 0290N 0490E 006
  amended   11/18/2009 214716  
NMC1015145 HS 43   09/03/2009 214269 21 0290N 0490E 006
  amended   11/18/2009 214717  
NMC1015146 HS 45   09/03/2009 214268 21 0290N 0490E 006
  amended   11/18/2009 214718  
NMC1015147 HS 47   09/03/2009 214267 21 0290N 0490E 006
  amended   11/18/2009 214719  
NMC1015148 HS 49   09/03/2009 214248 21 0290N 0480E 014
  amended   11/18/2009 214720  
NMC1015149 HS 51   09/03/2009 214249 21 0290N 0480E 014

3



BLM Serial # Claim Name #   Loc Date County Doc. Legal Desc MTRS
  amended   11/18/2009 214721  
NMC1015150 HS 53   09/03/2009 214250 21 0290N 0480E 014
  amended   11/18/2009 214722  
NMC1015151 HS 55   09/03/2009 214251 21 0290N 0480E 014
  amended   11/18/2009 214723  
NMC1015152 HS 57   09/03/2009 214252 21 0290N 0480E 014
  amended   11/18/2009 214724  
NMC1015153 HS 59   09/03/2009 214253 21 0290N 0480E 014
  amended   11/18/2009 214725  
NMC1015154 HS 61   09/03/2009 214254 21 0290N 0480E 014
  amended   11/18/2009 214726  
NMC1015155 HS 63   09/03/2009 214255 21 0290N 0480E 014
  amended   11/18/2009 214727  
NMC1015156 HS 65   09/03/2009 214256 21 0290N 0480E 014
  amended   11/18/2009 214728  
NMC1015157 HS 67   11/24/2009 214257 21 0290N 0480E 014
  amended   11/18/2009 214729  
NMC1015158 HS 69   11/24/2009 214258 21 0290N 0480E 014
  amended   11/18/2009 214730  
NMC1015159 HS 71   11/24/2009 214259 21 0290N 0480E 014
  amended   11/18/2009 214731  
NMC1015160 HS 73   11/24/2009 214260 21 0290N 0480E 014
  amended   11/18/2009 214732  
NMC1015161 HS 75   11/24/2009 214261 21 0290N 0480E 014
  amended   11/18/2009 214733  
NMC1015162 HS 77   11/24/2009 214262 21 0290N 0480E 014
  amended   11/18/2009 214734  
NMC1015163 HS 79   11/24/2009 214263 21 0290N 0480E 014
  amended   11/18/2009 214735  
NMC1015164 HS 81   11/24/2009 214264 21 0290N 0480E 014
  amended   11/18/2009 214736  
NMC1015165 HS 83   11/24/2009 214265 21 0290N 0480E 014
  amended   11/18/2009 214737  
Total 81 Claims Hot Springs Point Project        

M aggie Creek Project, Elko County, Nevada


48 Unpatented Lode Claims Owned by:
Klondex Gold & Silver Mining Company - 2/3 Apparent Interest;
Minex Resources Inc - 1/3 Apparent Interest
Located in Sections 8, 16, and 20, T34N R52E, MDM, Elko County, Nevada:

4



BLM Serial # Claim Name # Loc Date County Doc;Bk;Pg Legal Desc MTRS
NMC165759 LOR # 51 07/09/1980 137310;328;539 21 0340N 0520E 020
NMC165760 LOR # 52 07/09/1980 137311;328;540 21 0340N 0520E 020
NMC165763 LOR # 55 07/09/1980 137314;328;543 21 0340N 0520E 020
NMC165764 LOR # 56 07/09/1980 137315;328;544 21 0340N 0520E 020
NMC165767 LOR # 59 07/09/1980 137318;328;547 21 0340N 0520E 020
NMC165768 LOR # 60 07/09/1980 137319;328;548 21 0340N 0520E 020
NMC165771 LOR # 63 07/09/1980 137322;328;551 21 0340N 0520E 020
NMC165772 LOR # 64 07/09/1980 137323;328;552 21 0340N 0520E 020
NMC165775 LOR # 67 07/09/1980 137326;328;555 21 0340N 0520E 020
NMC165776 LOR # 68 07/10/1980 137327;328;556 21 0340N 0520E 020
NMC165778 LOR # 70 07/10/1980 137329;328;558 21 0340N 0520E 020
NMC165780 LOR # 72 07/09/1980 137331;328;560 21 0340N 0520E 020
NMC165782 LOR # 74 07/09/1980 137333;328;562 21 0340N 0520E 020
NMC165784 LOR # 76 07/09/1980 137335;328;564 21 0340N 0520E 020
NMC165786 LOR # 78 7/14/1980 137337;328;566 21 0340N 0520E 020
         
NMC165788 GH # 80 7/14/1980 137339;328;568 21 0340N 0520E 016
NMC165790 GH # 82 7/14/1980 137341;328;570 21 0340N 0520E 016
NMC165792 GH # 84 7/15/1980 137343;328;572 21 0340N 0520E 016
NMC165794 GH # 86 7/15/1980 137345;328;574 21 0340N 0520E 016
NMC165796 GH # 88 7/16/1980 137347;328;576 21 0340N 0520E 016
NMC165798 GH # 90 7/15/1980 137349;328;578 21 0340N 0520E 016
NMC165800 GH # 92 7/15/1980 137351;328;580 21 0340N 0520E 016
NMC165802 GH # 94 7/15/1980 137353;328;582 21 0340N 0520E 016
NMC165804 GH # 96 7/16/1980 137355;328;584 21 0340N 0520E 016
NMC165806 GH # 98 7/16/1980 137357;328;586 21 0340N 0520E 016
NMC165808 GH #100 7/15/1980 137359;328;588 21 0340N 0520E 016
NMC165810 GH #102 07/08/1980 137393;328;622 21 0340N 0520E 016
NMC165812 GH #104 07/08/1980 137395;328;624 21 0340N 0520E 016
NMC165814 GH #106 07/08/1980 137397;328;626 21 0340N 0520E 016
NMC165816 GH #108 07/08/1980 137399;328;628 21 0340N 0520E 016
         
NMC165818 RG #110 7/23/1980 137360;328;589 21 0340N 0520E 008
NMC165820 RG #112 7/23/1980 137362;328;591 21 0340N 0520E 008
NMC165822 RG #114 7/23/1980 137364;328;593 21 0340N 0520E 008
NMC165824 RG #116 7/23/1980 137366;328;595 21 0340N 0520E 008
NMC165828 RG #120 7/23/1980 137369;328;598 21 0340N 0520E 008
NMC165830 RG #122 7/23/1980 137371;328;600 21 0340N 0520E 008
NMC165832 RG #124 7/23/1980 137373;328;602 21 0340N 0520E 008
NMC165833 RG #125 7/23/1980 137374;328;603 21 0340N 0520E 008
NMC165836 RG #128 7/17/1980 137376;328;605 21 0340N 0520E 008
NMC165838 RG #130 7/17/1980 137378;328;607 21 0340N 0520E 008
NMC165840 RG #132 7/17/1980 137380;328;609 21 0340N 0520E 008
NMC165842 RG #134 7/17/1980 137382;328;611 21 0340N 0520E 008

5



BLM Serial # Claim Name # Loc Date County Doc;Bk;Pg Legal Desc MTRS
NMC165845 RG #138 7/17/1980 137385;328;614 21 0340N 0520E 008
NMC165846 RG #139 7/17/1980 137386;328;615 21 0340N 0520E 008
NMC165847 RG #140 7/17/1980 137387;328;616 21 0340N 0520E 008
NMC165849 RG #142 7/17/1980 137389;328;618 21 0340N 0520E 008
NMC165850 RG #143 7/17/1980 137390;328;619 21 0340N 0520E 008
NMC165851 RG #144 7/17/1980 137391;328;620 21 0340N 0520E 008
Total 48 Claims Maggie Creek Project    

Other

APN Description Acres
002-038-03

Lot 11, Block 22 of Crescent Valley Ranch & Farms Unit No. 1, as per map included in the Office of the County Recorder of Eureka County, Nevada, as File No. 134081; EXCEPTING THEREFROM all petroleum, oil, natural gas and products derived therefrom, within or underlying said land or that may be produced therefrom, and all rights thereto, as reserved by Southern Pacific Land Company in Deed to H.J. Buchanau and Elsa Buchenau, recorded September 24, 1951, in Book 24 at Page 168, Eureka County, Nevada

0.690
002-038-04

Lot 10, Block 22 of Crescent Valley Ranch & Farms Unit No. 1, as per map included in the Office of the County Recorder of Eureka County, Nevada, as File No. 34081 on April 6, 1959

0.690

6


SCHEDULE D

MONTHLY DELIVERY REQUIREMENTS

This Schedule sets out, for each calendar month, the applicable ounces of Refined Gold to be delivered to the Buyer on each Delivery Date pursuant to Monthly Delivery Requirements.

2014   2015   2016
Month Ounces   Month Ounces   Month Ounces
January nil   January 625.0   January 666.7
February nil   February 625.0   February 666.7
March nil   March 625.0   March 666.7
April nil   April 625.0   April 666.7
May nil   May 625.0   May 666.7
June 964.5   June 625.0   June 666.7
July 964.5   July 625.0   July 666.7
August 964.5   August 625.0   August 666.7
September 964.5   September 625.0   September 666.7
October 964.5   October 625.0   October 666.7
November 964.5   November 625.0   November 666.7
December 963.0   December 625.0   December 666.3
Total: 6,750.0   Total: 7,500.0   Total: 8,000.0
               
               
               
2017   2018      
Month Ounces   Month Ounces      
January 666.7   January 666.7      
February 666.7   February 666.7      
March 666.7   March 666.7      
April 666.7   April 666.7      
May 666.7   May 666.7      
June 666.7   June 666.7      
July 666.7   July 666.7      
August 666.7   August 666.7      
September 666.7   September 666.7      
October 666.7   October 666.7      
November 666.7   November 666.7      
December 666.3   December 666.3      
Total: 8,000.0   Total: 8,000.0      


SCHEDULE E

CONDITIONS FOR PAYMENT OF PURCHASE PRICE

The Buyer’s obligation to pay the Purchase Price is subject to the satisfaction of the following conditions (unless waived by the Buyer in writing):

1.

Transaction Documents

   

An original, duly executed by each relevant party, of each of the Transaction Documents, as follows:


  (a)

this Agreement;

     
  (b)

Intercreditor Agreement;

     
  (c)

Guarantee by each of the Seller Entities other than the Seller (which shall be an absolute, unconditional, unlimited and primary guarantee of the Delivery Obligations and other obligations of the Seller under this Agreement);

     
  (d)

General Security Agreement between the Buyer and each of the Seller Entities;

     
  (e)

Securities Pledge Agreement between the Buyer and each of the Seller Entities (as applicable) pledging all of its shares owned by it of the other Seller Entities in favour of the Buyer;

     
  (f)

Deeds of Trust between the Fire Creek Owner, as trustor, and Stewart Title Company, as trustee, in favour of the Buyer, as beneficiary in respect of the Fire Creek Property and Other Properties;

     
  (g)

Deed of Trust between the Midas Owner, as trustor, and Stewart Title Company, as trustee, in favour of the Buyer, as beneficiary in respect of the Midas Property;

     
  (h)

Blocked Account Agreement between the Buyer, as the secured party, the Seller, as the Debtor and Bank of Montreal;

     
  (i)

Blocked Account Agreement between the Buyer, as the secured party, the Seller, as the Debtor and Bank of Montreal:

     
  (j)

Deposit Account Control Agreement between the Buyer, as the secured party, the Seller, as the Debtor and Bank of America N.A.; and

     
  (k)

Deposit Account Control Agreement between the Buyer, as the secured party, the Seller, as the Debtor and Bank of America N.A.

(the documents referred to in paragraphs (d) to (k) are collectively referred to as the “ Security Agreements ”).



2.

Perfection of Security

   

Each of the relevant Seller Entities has completed to the satisfaction of the Buyer all perfection formalities for the Security, including:


  (a)

all filings, stampings, registrations, recordings and notifications in connection with the Security Agreements; and

     
  (b)

the giving of notices of pledge, assignment or charge, as applicable in relation to the security created under the Security Agreements to each of the parties to the contractual arrangements and accounts which are the subject of the Security Agreements.


3.

Third Party Notices and Consents

   

The Seller Entities shall have obtained written consent from or provided written notice to, as applicable, the necessary parties and otherwise complied with the terms of the following agreements in connection with the completion of the transactions contemplated by the Transaction Documents:


  (a)

Lease agreement effective July 1, 2000 by and between Fraser Creek Exploration Company, Inc. and Franco-Nevada Mining Corporation (third-party consent); and

     
  (b)

Amended and Restated Gold Supply Agreement between Klondex Gold & Silver Mining Company and Waterton Global Value, L.P. dated as of March 31, 2011, as amended and restated as of October 4, 2011 (third party notice).


4.

Discharge of Encumbrances

   

The Seller has provided to the Buyer releases, discharges and postponements (in registrable form where appropriate) in respect of Encumbrances affecting any of the Properties which are not Permitted Encumbrances.

   
5.

Development and Mine Plans

   

The Seller has provided to the Buyer a copy of the development plan or mine plan, as applicable, for the Midas Mine and the Fire Creek Project.

   
6.

Legal Opinions

   

The Seller has provided to the Buyer favourable legal opinions and, in the case of fee lands, title insurance, in form, substance and detail satisfactory to the Buyer, pertaining to the Seller Entities’ title to the Properties and the validity and perfection of the Security.

   
7.

Other Documents

   

Such other documents as the Buyer may reasonably request.



SCHEDULE F

REPRESENTATIONS AND WARRANTIES OF THE BUYER

1.

Organization and Powers. The Buyer is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has all requisite power and authority to execute and deliver, and perform its obligations under, the Transaction Documents to which it is a party.

     
2.

Authorization; No Conflict. The execution and delivery by the Buyer of, the performance of its obligations under, and the consummation of the transactions contemplated by the Transaction Documents to which it is a party have been duly authorized by all necessary action of the Buyer, and do not and will not:

     
(a)

violate the terms of its constating documents; or

     
(b)

conflict with, result in a breach of, or constitute a default or an event creating rights of acceleration, termination, modification or cancellation or a loss of rights under (with or without the giving notice or lapse of time or both), any written or oral contract, agreement, license, concession, indenture, mortgage, debenture, note or other instrument to which it is a party, subject or otherwise bound (including with respect to its assets) except in each case as would not have a material adverse effect on its ability to perform its obligations under the Transaction Documents; or

     
(c)

violate in any material respect any Applicable Law to which it is subject or otherwise bound (including with respect to its assets).

     
3.

Execution; Binding Obligation. Each Transaction Document to which the Buyer is a party has been duly and validly executed and delivered by the Buyer. Each of the Transaction Documents to which the Buyer is a party constitutes, or when delivered under this Agreement will constitute, a legal, valid and binding obligation of the Buyer, enforceable against it in accordance with its terms, except to the extent enforcement may be affected by Applicable Laws and regulations relating to bankruptcy, reorganization, insolvency and creditors’ rights and by the availability of injunctive relief, specific performance and other equitable remedies.

     
4.

Consents. The Buyer is not required to give any notice to, make any filing with or obtain any authorization, consent, Order or approval of any Person in connection with the execution and delivery of any Transaction Document or the consummation of the transactions contemplated herein and therein, except, in each case, as would not have a material adverse effect on its ability to perform its obligations under the Transaction Documents.



SCHEDULE G

REPRESENTATIONS AND WARRANTIES OF THE SELLER

No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty. The representations and warranties of the Seller set out in this Schedule below are made subject to and modified by the exceptions and qualifications (if any) noted in the correspondingly numbered section of the Disclosure Schedule. No disclosure in any particular section of the Disclosure Schedule (including the listing of a document or item in any Disclosure Schedule or the inclusion of a copy thereof in such Disclosure Schedule) shall be adequate to disclose an exception or qualification to a representation or warranty in any other sections of this Agreement or in any other section of the Disclosure Schedule unless the applicability of such disclosure to the other representations and warranties is clear and obvious on its face. Each section of the Disclosure Schedule shall be numbered to correspond to the paragraph of this Schedule G to which such section relates.

1.

Organization and Powers. Each Klondex Entity is:

     
(a)

duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has all requisite power and authority to execute and deliver, and perform its obligations under, the Transaction Documents to which it is a party;

     
(b)

qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the nature and location of its assets requires such qualification or licensing except where such failure to qualify or be licensed or in good standing would not have a Material Adverse Effect; and

     
(c)

has all requisite power and authority to own and lease its assets and carry on its business.

     
2.

Authorization; No Conflict. The execution and delivery by each Klondex Entity of, the performance of its obligations under, and the consummation of the transactions contemplated by the Transaction Documents to which it is a party have been duly authorized by all necessary corporate or other action of such Klondex Entity and do not and will not:

     
(a)

violate the terms of the constating documents of such Klondex Entity;

     
(b)

conflict with, result in a breach of, or constitute a default or an event creating rights of acceleration, termination, modification or cancellation or a loss of rights under (with or without the giving notice or lapse of time or both), any written or oral contract, agreement, license, concession, indenture, mortgage, debenture, note or other instrument to which such Klondex Entity is a party, subject or otherwise bound (including with respect to its assets) in each case except as would not have a Material Adverse Effect;

     
(c)

violate in any material respect any Applicable Law to which such Klondex Entity is subject or otherwise bound (including with respect to its assets); or

     
(d)

except as contemplated by this Agreement, result in, or require, the creation or imposition of any Encumbrance upon or with respect to any of the assets or properties of such Klondex Entity.



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3.

Solvency. Each Klondex Entity is Solvent and no Klondex Entity will be rendered Insolvent by the execution and delivery of any of the Transaction Documents to which such Klondex Entity is a party.

   
4.

Execution; Binding Obligation . Each Transaction Document to which a Klondex Entity is a party has been duly and validly executed and delivered by such Klondex Entity. Each of the Transaction Documents to which each Klondex Entity is a party constitutes, or when delivered under or in connection with this Agreement will constitute, legal, valid and binding obligation of such Klondex Entity, enforceable against such Klondex Entity in accordance with its terms, except to the extent enforcement may be affected by Applicable Laws and regulations relating to bankruptcy, reorganization, insolvency and creditors’ rights and by the availability of injunctive relief, specific performance and other equitable remedies.

   
5.

Consents. Except as set out in section 3 of Schedule E of this Agreement, no Klondex Entity is required to give any notice to, make any filing with or obtain any authorization, consent, Order or approval of any Person in connection with the execution, delivery or performance of its obligations under any Transaction Document or the consummation of the transactions contemplated herein and therein, except for recordings or filings in connection with the perfection of the Encumbrances on the Collateral in favor of the Buyer.

   
6.

No Defaults. No event has occurred or circumstance exists that (with or without the giving of notice or lapse of time or both) has contravened, conflicted with or resulted in, or may contravene, conflict with or result in, a violation or breach of, or give any Klondex Entity or any other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify, any contract, lease, license, concession, Authorization, agreement, indenture, mortgage, debenture, note, instrument, or Order to which it is a party or by which it or its properties and assets may be bound, and, to the knowledge of the Seller, each other Person that is party thereto is in compliance in all material respects with the terms and requirements thereof, in each case, except as would not have a Material Adverse Effect.

   
7.

Litigation. Except as set out in Schedule G.7 of the Disclosure Schedule, there are no material actions, suits, investigations, claims or proceedings pending or, to the best of the Seller’s knowledge, threatened in writing against or directly affecting any Klondex Entity by or before any Governmental Body.

   
8.

Financial Statements; Projections. All annual and interim consolidated financial statements of the Seller filed on SEDAR since January 1, 2012 are complete and correct and fairly present, in all material respects, the financial condition and results of operations of the Klondex Entities as at the times and for the periods covered by such statements, in each case in accordance with GAAP, subject, in the case of any unaudited financial statements, to normal year-end adjustments and any absence of notes. All other consolidated or other financial statements of each Klondex Entity delivered to the Buyer are complete and correct and fairly present, in all material respects, the financial condition and results of operations of such Klondex Entity as at the times and for the periods covered by such statements, in each case in accordance with GAAP, subject, in the case of any unaudited financial statements, to normal year-end adjustments and any absence of notes. Since January 1, 2012, there has been no Material Adverse Effect. All financial projections and forecasts delivered to the Buyer represent the Seller’s reasonable estimates and assumptions as to future performance, which the Seller believes to be fair and reasonable as of the time made in the light of current and reasonably foreseeable business conditions.



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9.

Liabilities. No Klondex Entity has any material liabilities or obligations of any nature whatsoever, whether direct or indirect, matured or unmatured, known or unknown, fixed, absolute, accrued, contingent or otherwise, that are not reflected in the consolidated financial statements referred to in the first sentence of Section 8 above or in the notes thereto, other than liabilities arising in the ordinary course of business since September 30, 2013.

   
10.

Taxes. Except as disclosed in Schedule G. 10 of the Disclosure Schedule (i) each Klondex Entity has filed or caused to be filed on a timely basis all federal (United States or Canada), state, provincial and material local tax returns that were required to be filed by or with respect to it pursuant to Applicable Law, (ii) all tax returns filed by such Klondex Entity are complete and correct and comply with Applicable Law in all material respects, (iii) each Klondex Entity has paid, or made provisions for the payment of, all material Taxes that have been or could have become due for all periods covered by any tax return or otherwise, (iv) each Klondex Entity has withheld or collected and paid to the proper Governmental Body or other Person all material Taxes required to be withheld, collected or paid by it, (v) no claim has been made by any Governmental Body in a jurisdiction where any Klondex Entity does not file tax returns that such Klondex Entity is or could be subject to taxation by that jurisdiction, (vi) to the knowledge of the Seller, no tax return of any Klondex Entity is under audit by any Governmental Body, and (vii) no proceedings are pending or, to the knowledge of any Klondex Entity, threatened by or before any Governmental Body with respect to material Taxes of any Klondex Entity.

   
11.

Insurance. The properties, assets and operations of each Klondex Entity are insured with reputable insurance companies (not Affiliates of any Klondex Entity), in such amounts, with such deductibles and covering such risks as is customarily carried by companies engaged in similar businesses and owning similar properties in the localities where such Klondex Entity operates.

   
12.

Title to Collateral; Liens. Subject to Permitted Encumbrances and as set out in Schedule G.12 of the Disclosure Schedule, the Klondex Entities (i) have valid and subsisting leasehold title to all leases of real property included within the Fire Creek Property, and, following completion of the Acquisition, the Midas Property, or Collateral (including the Other Properties), (ii) have valid possessory and record title to all unpatented mining claims and millsite claims included within such Properties or Collateral (including the Other Properties), except for such claims that are leased to a Klondex Entity and are covered under part (i) of this paragraph, (iii) have good and marketable title to such other real property interests included within such Properties or Collateral (including the Other Properties) and not otherwise included under parts (i) and (ii) of this paragraph, and (iv) have good and valid title to or hold a valid leasehold interest in such properties and assets, which are not real property interests, and are included within the Collateral. There are no Encumbrances upon or with respect to any of the properties and assets included in such Properties or Collateral, except for Permitted Encumbrances. Without limiting the foregoing:


  (a)

no Person other than the Klondex Entities has any rights to participate in or operate the Fire Creek Property and the Fire Creek Project, and, following completion of the Acquisition, the Midas Property and the Midas Mine;

     
  (b)

the Fire Creek Property and the Midas Property comprise all of the real property, mineral and surface interests held by the Klondex Entities in respect of the Fire Creek Project and, following completion of the Acquisition, the Midas Mine, respectively;

     
  (c)

the Fire Creek Property and, following completion of the Acquisition, the Midas Property constitute all real property, mineral, surface interests and ancillary rights necessary for, as applicable, the construction, development and mining operations of the Fire Creek Project and the Midas Mine, respectively, as currently operated and substantially in accordance with the current or then applicable development or mine plan;



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  (d)

except as set out in Schedule G.12 of the Disclosure Schedule, none of the Fire Creek Property or, following completion of the Acquisition, the Midas Property or any Minerals produced therefrom are subject to an option, right of first refusal or right, title, interest, reservation, claim, rent, royalty, or payment in the nature of rent or royalty, or right capable of becoming an agreement, option, right of first refusal or right, title, interest, reservation, claim, rent, royalty, or payment in the nature of rent or royalty;

     
  (e)

none of the Permitted Encumbrances would have a Material Adverse Effect or otherwise materially adversely affect the ability of any Klondex Entity to enjoy the anticipated benefits of the Fire Creek Property or, following completion of the Acquisition, the Midas Property; and

     
  (f)

the Other Properties comprise all of the real property, mineral and surface interests held by the Klondex Entities other than the Fire Creek Property and as disclosed in Schedule G.12 of the Disclosure Schedule and, following completion of the Acquisition, the Midas Property.


13.

Maintenance of Property. All mining claim maintenance fees, recording fees, Taxes and all other amounts have been paid when due and payable and all other actions and all other obligations as are required to maintain the Fire Creek Property, any other properties of the Klondex Entities and, following completion of the Acquisition, the Midas Property have been taken and complied with in all material respects.

   
14.

Authorizations. The Klondex Entities have obtained or been issued all Authorizations (including environmental Authorizations and Utility Commitments) and Other Rights necessary for (i) the construction, development and mining operations of the Fire Creek Project, any other mineral project of the Klondex Entities and, following completion of the Acquisition, the Midas Mine, and (ii) the commencement and ongoing operation of commercial production transactions, other than, in each case, such Authorizations (including environmental Authorizations and Utility Commitments) and Other Rights (A) that are not necessary on the date this representation and warranty is made or deemed made for the conduct of development activities as such activities are currently being conducted, but that are expected to be obtained, in the ordinary course of business, by the time they are necessary for the conduct of development activities and the eventual commencement and ongoing commercial production, as applicable, or (B) the failure of which to be obtained would not be material to the development of the Fire Creek Project, any other mineral project of the Klondex Entities or, following completion of the Acquisition, the Midas Mine or the commencement and ongoing operation of commercial production (including commercial production transactions). There are no facts or circumstances that might reasonably be expected to adversely affect the issuance or obtaining of any such material Authorizations (including environmental Authorizations and Utility Commitments) or Other Rights.

   
15.

Compliance with Applicable Laws. Each Klondex Entity, the Fire Creek Project, any other mineral project of the Klondex Entities and, following completion of the Acquisition, the Midas Mine, is and has been in compliance in all material respects with all Applicable Laws. Without limiting the generality of the foregoing, except as set out in Schedule G.15 of the Disclosure Schedule, each Klondex Entity, the Fire Creek Project, any other mineral project of the Klondex Entities and, following completion of the Acquisition, the Midas Mine, is and has been in compliance in all material respects with all applicable Environmental Laws, and there are no actions, suits, claims, notices of violation, hearings, investigations or proceedings pending or, to the best of the Seller’s knowledge, threatened against or affecting any Klondex Entity with respect to the ownership, use, maintenance and operation of the Fire Creek Project, any other mineral project of the Klondex Entities or, following completion of the Acquisition, the Midas Mine, or the property or assets of any Klondex Entity, relating to any applicable Environmental Laws, where any adverse determination with respect thereto or liability imposed therein could have a Material Adverse Effect.



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16.

Subsidiaries; Other Ventures. Klondex BC Holdco is a direct, wholly-owned Subsidiary of Klondex, Klondex Holdings is a direct, wholly-owned Subsidiary of Klondex BC Holdco and the Fire Creek Owner is a direct, wholly-owned Subsidiary of Klondex Holdings, and, following completion of the Acquisition, Midas Holdings will be a direct, wholly-owned Subsidiary of Klondex Holdings and the Midas Owner will be a direct, wholly-owned Subsidiary of Midas Holdings. None of the Seller Entities has any other Subsidiaries or any other equity interest in any Person. No Seller Entity is engaged in any joint purchasing arrangement, joint venture, partnership or other joint enterprise with any other Person.

   
17.

Certain Indebtedness. Schedule G.17 of the Disclosure Schedule identifies as of the date hereof all Indebtedness of each Klondex Entity.

   
18.

Chief Executive Office and Other Locations. Each Klondex Entity’s chief executive office and principal place of business is set forth in Schedule G.18 of the Disclosure Schedule. Each Klondex Entity’s material Records are located at its chief executive office, and the only other offices and/or locations where it keeps the Collateral (except for inventory which is in transit) or conducts any of its business are set forth in Schedule G.18 of the Disclosure Schedule.

   
19.

No Subordination. There is no agreement, indenture, contract or instrument to which any Klondex Entity is a party or by which it or any of its properties or assets may be bound that requires the subordination in right of payment of any of the obligations of the Klondex Entity under the Transaction Documents to any other obligation of it.

   
20.

Labour Matters. There is no strike, lock-out or other work stoppage or labour dispute occurring or, to the knowledge of the Seller, threatened that would have a Material Adverse Effect.

   
21.

Employee Benefit Plans. Except as set forth in Schedule G.21 of the Disclosure Schedule, no Klondex Entity nor any of their respective Affiliates sponsors, maintains or contributes to, or at any time during the last six years has sponsored, maintained or contributed to (or been obligated to sponsor, maintain or contribute to) any Employee Benefit Plan (as defined below) that is (or was) subject to the laws of the United States of America. Each Employee Benefit Plan mandated by a Governmental Body (other than the United States of America or a constituent state thereof) or subject to the laws of a jurisdiction outside of the United States of America (“ Foreign Company Plan ”) that is intended to qualify for special tax treatment meets all of the requirements for such treatment and has obtained all necessary approvals of all relevant Governmental Bodies. No Foreign Company Plan has any unfunded liabilities, determined in accordance with GAAP, that have not been fully accrued on the Seller’s financial statements or that will not be fully offset by insurance. All Foreign Company Plans are registered where required by, and are in good standing under, all Applicable Laws. For purposes of this Section 21, “ Employee Benefit Plan ” means any employee benefit plan, program, policy or arrangement sponsored, maintained or contributed to by a Klondex Entity or any of their respective Affiliates or with respect to which the Seller, any Klondex Entity or any of their respective Affiliates has any liability or obligation.



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22.

Intellectual Property. Each Klondex Entity owns, licenses or otherwise has the right to use all material licenses, Authorizations, patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, copyright applications, franchises, authorizations and other intellectual property rights that are necessary for the operation of its business, without infringement upon or conflict with the rights of any other Person with respect thereto. No slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Klondex Entity infringes upon or conflicts with any rights owned by any other Person. No claim or litigation regarding any of the foregoing is pending or, to its knowledge, threatened.

   
23.

Mineral Reserves and Resources. The most recent estimated measured, indicated and inferred mineral resources and proven and probable mineral reserves, if any, and technical reports disclosed in the Seller Securities Documents (as defined below) for the Fire Creek Project, any other mineral project of the Klondex Entities and, following completion of the Acquisition, the Midas Mine, have been prepared and disclosed in accordance with accepted mining industry practices and in accordance with the requirements prescribed by National Instrument 43-101 and the companion policy thereto (as in effect on the date of publication of the relevant report or information); the Seller has no knowledge that the mineral resources or mineral reserves (or any other material aspect of any technical reports) as disclosed in the Seller Securities Documents are inaccurate in any material respect; there are no outstanding unresolved comments of any securities commission or other securities regulatory authority in each province and territory of Canada in which the Seller is a reporting issuer (the “ Securities Regulatory Authorities ”) in respect of the technical disclosure made in the Seller Securities Documents; and, to the knowledge of the Seller, there has been no material reduction in the aggregate amount of estimated mineral resources and reserves, if any, of the Klondex Entities, from the amounts last disclosed publicly by the Seller in the Seller Securities Documents.

   
24.

Regulatory Compliance. The Seller has filed, on a timely basis, all required reports, schedules, financial statements, forms, registrations, certifications and other documents together with any amendments required to be made with respect thereto with the Securities Regulatory Authorities and the TSX since January 1, 2012 (together with the exhibits and other information incorporated therein, the “ Seller Securities Documents ”) with the TSX and the Securities Regulatory Authorities and paid all fees and assessments due and payable in connection therewith; as of their respective dates of filing (or, if amended or superseded by a filing prior to the date hereof, as of the date of such filing), the Seller Securities Documents complied in all material respects with the requirements of Applicable Laws and none of the Seller Securities Documents contained any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they are made, not misleading; the Seller has not filed any confidential material change reports which continue to be confidential.

   
25.

Brokers and Finders . No Klondex Entity has employed any broker or finder or incurred any liability for any brokerage fee, commission, finders’ fee or any other similar payment in connection with the transactions contemplated by this Agreement that could give rise to any claim against the Buyer for brokerage fees, commissions, finders’ fees or any other similar payments.

   
26.

Disclosure. All information relating to the business, assets, liabilities, properties or financial condition of the Seller Entities provided to the Buyer or any of its representatives or advisors, or



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26.

Disclosure. All information relating to the business, assets, liabilities, properties or financial condition of the Seller Entities provided to the Buyer or any of its representatives or advisors, or made available to the Buyer or any its representatives or advisors, is true, accurate and complete in all material respects.