THIS AGREEMENT is made effective as of the 6th day of May, 2004

AMONG:

AND:

AND:

AND:

WHEREAS:

A. The Selling Shareholders are the registered and beneficial owners of all of the issued and outstanding common shares in the capital of Pan American;

B. Tri-Lateral has agreed to issue 3,370,000 common shares in the capital of Tri-Lateral to the Selling Shareholders as consideration for the purchase all of the issued and outstanding common shares of Pan American; and

C. Upon the terms and subject to the conditions set forth in this Agreement, the Selling Shareholders have agreed to sell all of the issued and outstanding common shares of Pan American to Tri-Lateral in exchange for common shares of Tri-Lateral.

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NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of covenants and agreements set forth herein and of the sum of $10.00 paid by Tri-Lateral to each of the Selling Shareholders and to Pan American, the receipt of which is hereby acknowledged, the parties hereto agree each with the other as follows:

1.1 Definitions . The following terms have the respective meanings specified in this Article, unless the context indicates otherwise.

1. " Agreement " shall mean this Agreement, and all the exhibits, schedules and other documents attached to or referred to in the Agreement, and all amendments and supplements, if any, to this Agreement;
2. " Closing " shall mean the closing of the Transaction at which the Closing Documents shall be exchanged by the parties, except for those documents or other items specifically required to be exchanged at a later time;
3. " Closing Date " shall mean May 7, 2004, or such other date as agreed to in writing by the parties on which the Closing occurs;
4. " Closing Documents " shall mean the papers, instruments and documents required to be executed and delivered at the Closing pursuant to this Agreement;
5. " Exchange Act " shall mean the United States Securities Exchange Act of 1934, as amended;
6. " GAAP " shall mean United States generally accepted accounting principles applied in a manner consistent with prior periods;
7. " Pan American Shares" means the 3,370,000 common shares of Pan American held by the Selling Shareholders, being all of the issued and outstanding common shares of Pan American;
8. " Tri-Lateral Shares " means those 3,370,000 fully paid and non-assessable common shares of Tri-Lateral to be issued to the Selling Shareholders by Tri-Lateral on the Closing Date;
9. " SEC " shall mean the Securities and Exchange Commission;
10. " Securities Act " shall mean the United States Securities Act of 1933, as amended;
11. " Taxes " shall include federal, state, provincial and local income taxes, capital gains tax, value-added taxes, franchise, personal property and real property taxes, levies, assessments, tariffs, duties (including any customs duty), business license or other fees, sales, use and any other taxes relating to the assets of the designated party or the business of the designated party for all periods up to and including the Closing Date, together with any related charge or amount, including interest, fines, penalties and additions to tax, if any, arising out of tax assessments; and
12. " Transaction " shall mean the purchase of the Pan American Shares by Tri-Lateral from the Selling Shareholders in consideration for the issuance of the Tri-Lateral Shares.

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1.2 Schedules . The following schedules are attached to and form part of this Agreement:

Disclosure Schedule 2.3 - Certificate of Non-U.S. Shareholder and Certificate of U.S. Shareholder

Disclosure Schedule 3.4 - Pan American Shareholders

Disclosure Schedule 3.17 - Leases, Subleases, Claims and Other Real Property Interests

Disclosure Schedule 3.18 - Material Contracts

1.3 Currency . All dollar amounts referred to in this Agreement are in United States funds, unless expressly stated otherwise.

2. THE OFFER, PURCHASE AND SALE OF SHARES

2.1 Offer, Purchase and Sale of Shares . Subject to the terms and conditions of this Agreement, the Selling Shareholders hereby covenant and agree to sell, assign and transfer to Tri-Lateral, and Tri-Lateral hereby covenants and agrees to purchase from the Selling Shareholders all of the Pan American Shares held by the Selling Shareholders.

2.2 Consideration . As consideration for the sale of Pan American Shares by the Selling Shareholders, Tri-Lateral shall allot and issue the TriLateral Shares to the Selling Shareholders on the basis of one Tri-lateral Share, after completion of the Stock Split contemplated by Section 7.10 of this Agreement, for each Pan American Share held by each Selling Shareholder. The Selling Shareholders acknowledge and agree that the Tri-Lateral Shares are being issued pursuant to the safe harbour from the prospectus and registration requirements of Securities Act. The Selling Shareholders agree to abide by all applicable resale restrictions and hold periods imposed by all applicable securities legislation. All certificates representing the Tri-Lateral Shares issued on Closing will be endorsed with one of the following legends pursuant to the Securities Act in order to reflect the fact that the Tri-Lateral Shares will be issued to the shareholders of Pan American pursuant to exemptions or safe harbors from the registration requirements of the Securities Act:

For holders of Pan American Shares resident in the United States:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT

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PROVIDED BY REGULATION D OF THE ACT OR PURSUANT TO THE SAFE HARBOR FROM THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S OF THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT".

For holders of Pan American Shares resident outside the United States:

"THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT").

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT."

2.3 Share Exchange Procedure . Each Selling Shareholder may exchange his, her or its certificate representing the Pan American Shares by delivering such certificate to Tri-Lateral duly endorsed in blank (or accompanied by duly executed stock powers duly endorsed in blank), in each case in proper form for transfer, with signatures guaranteed, and, if applicable, with all stock transfer and any other required documentary stamps affixed thereto and with appropriate instructions to allow the transfer agent to issue certificates for the Tri-Lateral Shares to the holder thereof together with: (i) a Regulation S Investment Letter (if such holder is resident outside of the United States), a copy of which is attached hereto in Disclosure Schedule 2.3, or (ii) a Regulation D Investment Letter (if such holder is resident in the United States), a copy of which is attached hereto in Disclosure Schedule 2.3.

2.4 Closing Date. The Closing will take place, subject to the terms and conditions of this Agreement, on the Closing Date.

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2.5 Restricted Shares . The Selling Shareholders acknowledge that the Tri-Lateral Shares issued pursuant to the terms and conditions set forth in this Agreement will have such hold periods as are required under applicable securities laws and as a result may not be sold, transferred or otherwise disposed, except pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case only in accordance with all applicable securities laws.

2.6 Exemptions . The Selling Shareholders acknowledge that Tri-Lateral has advised such Selling Shareholders that Tri-Lateral is relying on an exemption from the prospectus requirements of the Securities Act (British Columbia) (the "British Columbia Act") to issue the Tri-Lateral Shares to each of the Selling Shareholders and, as a consequence, certain protections, rights and remedies provided by the British Columbia Act, including statutory rights of rescission or damages, will not be available to the Selling Shareholders.

2.7 Resale Restrictions . The Selling Shareholders acknowledge that resale of any of the Tri-Lateral Shares by Selling Shareholders resident in Canada is restricted except pursuant to an exemption from applicable securities legislation.

3. REPRESENTATIONS AND WARRANTIES OF PAN AMERICAN and the PRINCIPAL SHAREHOLDER

Pan American and the Principal Shareholder each jointly and severally represent and warrant to Tri-Lateral, and acknowledge that Tri-Lateral is relying upon such representations and warranties, in connection with the execution, delivery and performance of this Agreement, notwithstanding any investigation made by or on behalf of Tri-Lateral, as follows:

3.1 Organization and Good Standing . Pan American and 680102 B.C. Ltd. (the " Subsidiary ") are each a corporation duly organized, validly existing and in good standing under the laws of their respective jurisdiction and have all requisite corporate power and authority to own, lease and to carry on their respective business as now being conducted. Each of Pan American and the Subsidiary is duly qualified to do business and is in good standing as a foreign corporation in each of the jurisdictions in which it owns property, leases property, does business, or is otherwise required to do so, where the failure to be so qualified would have a material adverse effect on the business of Pan American taken as a whole.

3.2 Authority . Pan American has all requisite corporate power and authority to execute and deliver this Agreement and any other document contemplated by this Agreement (collectively, the " Pan American Documents ") to be signed by Pan American and to perform its obligations thereunder and to consummate the transactions contemplated thereby. The execution and delivery of each of the Pan American Documents by Pan American and the consummation of the transactions contemplated thereby have been duly authorized by Pan American's Board of Directors. No other corporate or shareholder proceedings on the part of Pan American is necessary to authorize such documents or to consummate the transactions contemplated thereby. This Agreement has been, and the other Pan American Documents when executed

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and delivered by Pan American as contemplated by this Agreement will be, duly executed and delivered by Pan American and this Agreement is, and the other Pan American Documents when executed and delivered by Pan American as contemplated hereby, will be valid and binding obligations of Pan American enforceable in accordance with their respective terms except (1) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, (2) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (3) as limited by public policy.

3.3 Capitalization of Pan American and the Subsidiary . The entire authorized capital stock and other equity securities of Pan American consist of 25,000,000 common shares (the " Pan American Common Stock "), par value of $0.001 per share. There are 3,370,000 shares of Pan American Common Stock issued and outstanding as of the date of this Agreement. The sole shareholder of the Subsidiary is Pan American. All of the issued and outstanding shares of Pan American Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. There are no outstanding options, warrants, subscriptions, conversion rights, or other rights, agreements, or commitments obligating Pan American to issue any additional shares of Pan American Common Stock or any shares of the Subsidiary, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Pan American any shares of Pan American Common Stock or any shares of the Subsidiary. There are no agreements purporting to restrict the transfer of the Pan American Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the Pan American Common Stock.

3.4 Title to Pan American Common Stock . Disclosure Schedule 3.4 contains a true and complete list of the holders of all issued and outstanding shares of Pan American Common Stock (the " Pan American Stockholders ") including each holder's name, address and number of shares held.

3.5 No Subsidiaries . Other than the Subsidiary, Pan American does not have any subsidiaries or agreements of any nature to acquire any subsidiary or to acquire or lease any other business operations and will not prior to the Closing Date acquire, or agree to acquire, any subsidiary or business without the prior written consent of Tri-Lateral.

3.6 Non-contravention . Neither the execution, delivery and performance of this Agreement, nor the consummation of the Transaction, will:

1. conflict with, result in a violation of, cause a default under (with or without notice, lapse of time or both) or give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in or the loss of any material benefit under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the material properties or assets of Pan American or the Subsidiary under any term, condition or provision of any loan or credit agreement, note, debenture, bond, mortgage, indenture, lease or other agreement, instrument, permit, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Pan American or the Subsidiary, or any of their respective property or assets;

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2. violate any provision of the articles or bylaws of Pan American or the Subsidiary; or
3. violate any order, writ, injunction, decree, statute, rule, or regulation of any court or governmental or regulatory authority applicable to Pan American or the Subsidiary or any of their respective property or assets.

3.7 Actions and Proceedings . There is no basis for and there is no action, suit, judgment, claim, demand or proceeding outstanding or pending, or to the best knowledge of Pan American or the Principal Shareholder, threatened against or affecting Pan American or the Subsidiary or which involves any of the business, or the properties or assets of Pan American or the Subsidiary that, if adversely resolved or determined, would have a material adverse effect on the business, operations, assets, properties, prospects, or conditions of Pan American and the Subsidiary taken as a whole (an " Pan American Material Adverse Effect "). There is no reasonable basis for any claim or action that, based upon the likelihood of its being asserted and its success if asserted, would have such a Pan American Material Adverse Effect.

3.8 Compliance .

1. Each of Pan American and the Subsidiary is in compliance with, are not in default or violation in any material respect under, and have not been charged with or received any notice at any time of any material violation by it of, any statute, law, ordinance, regulation, rule, decree or other applicable regulation to the business or operations of Pan American or the Subsidiary;
2. Neither Pan American nor the Subsidiary is subject to any judgment, order or decree entered in any lawsuit or proceeding applicable to its business and operations that would constitute a Pan American Material Adverse Effect;
3. Each of Pan American and the Subsidiary has duly filed all reports and returns required to be filed by it with governmental authorities and has obtained all governmental permits and other governmental consents, except as may be required after the execution of this Agreement. All of such permits and consents are in full force and effect, and no proceedings for the suspension or cancellation of any of them, and no investigation relating to any of them, is pending or to the best knowledge of Pan American, threatened, and none of them will be adversely affected by the consummation of the transactions contemplated hereby; and
4. Each of Pan American and the Subsidiary has operated in material compliance with all laws, rules, statutes, ordinances, orders and regulations applicable to its business. Neither Pan American nor the Subsidiary has received any notice of any violation thereof, nor is Pan American or the Subsidiary aware of any valid basis therefore.

3.9 Filings, Consents and Approvals . No filing or registration with, no notice to and no permit, authorization, consent, or approval of any public or governmental body or authority or other person or entity is necessary for the consummation by Pan American of the Transaction contemplated by this Agreement or to enable Tri-Lateral to continue to conduct Pan American's

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business after the Closing Date in a manner which is consistent with that in which it is presently conducted.

3.10 Financial Representations . On the Closing Date, Pan American will have net assets of a least $200,000. For the purposes of this Section 3.10, net assets shall be equal to Pan American's current assets less all short and long term liabilities, other than any liabilities associated with the Leases disclosed in Disclosure Schedule 3.17 attached hereto.

3.11 Absence of Undisclosed Liabilities . Neither Pan American nor the Subsidiary has any liabilities or obligations either direct or indirect, matured or unmatured, absolute, contingent or otherwise, which:

1. have not heretofore been paid or discharged;
2. did not arise in the regular and ordinary course of business under any agreement, contract, commitment, lease or plan specifically disclosed in Disclosure Schedule 3.17; or
3. have not been incurred in amounts and pursuant to practices consistent with past business practice, in or as a result of the regular and ordinary course of its business.

For purposes of this Agreement, the term "liabilities" includes, any direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known or unknown, asserted choate or inchoate, liquidated or unliquidated, secured or unsecured.

3.12 Tax Matters .

1. As of the date hereof, (i) each of Pan American and the Subsidiary has timely filed all tax returns in connection with any Taxes which are required to be filed on or prior to the date hereof, taking into account any extensions of the filing deadlines which have been validly granted to them; and (ii) all such returns are true and correct in all material respects.
2. Each of Pan American and the Subsidiary has paid all Taxes that have become or are due with respect to any period ended on or prior to the date hereof, and has established an adequate reserve therefore on its balance sheet for those Taxes not yet due and payable, except for any Taxes the non-payment of which will not have a Pan American Material Adverse Effect.
3. Each of Pan American and the Subsidiary is not presently under and has not received notice of, any contemplated investigation or audit by the Canada Customs and Revenue Agency or the Internal Revenue Service or any foreign or state taxing authority concerning any fiscal year or period ended prior to the date hereof.

 

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4. All Taxes required to be withheld on or prior to the date hereof from employees for income Taxes, social security Taxes, unemployment Taxes and other similar withholding Taxes have been properly withheld and, if required on or prior to the date hereof, have been deposited with the appropriate governmental agency.

3.13 Absence of Changes . Since October 24, 2003, neither Pan American nor the Subsidiary has:

1. incurred any liabilities, other than liabilities incurred in the ordinary course of business consistent with past practice, or discharged or satisfied any lien or encumbrance, or paid any liabilities, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or properties;
2. sold, encumbered, assigned or transferred any fixed assets or properties which would have been included in the assets of Pan American if the closing had been held on October 24, 2003 or on any date since then, except for ordinary course of business transactions consistent with past practice;
3. created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the assets or properties of Pan American to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever;
4. made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or cancelled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, whether or not in the ordinary course of business;
5. declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its capital shares or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its capital shares or equity securities;
6. suffered any damage, destruction or loss, whether or not covered by insurance, materially and adversely its business, operations, assets, properties or prospects;
7. suffered any material adverse change in its business, operations, assets, properties, prospects or condition (financial or otherwise);
8. received notice or had knowledge of any actual or threatened labor trouble, termination, resignation, strike or other occurrence, event or condition of any similar character which has had or might have an adverse effect on its business, operations, assets, properties or prospects;

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9. made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate $10,000 (other than in connection with the Leases disclosed in Disclosure Schedule 3.17), except such as may be involved in ordinary repair, maintenance or replacement of its assets;
10. other than in the ordinary course of business, increase the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to, any of its employees or made any increase in, or any addition to, other benefits to which any of its employees may be entitled;
11. entered into any transaction other than in the ordinary course of business consistent with past practice; or
12. agreed, whether in writing or orally, to do any of the foregoing.

3.14 Personal Property . Pan American and the Subsidiary possess all property and items necessary for the continued operation of the business of Pan American and the Subsidiary as presently conducted and as represented to Tri-Lateral. All of such items are in good operating condition (normal wear and tear excepted), and are reasonably fit for the purposes for which such item is presently used. All material equipment, furniture, fixtures and other tangible personal property and assets owned or leased by Pan American or the Subsidiary are owned by Pan American or the Subsidiary free and clear of all liens, security interests, charges, encumbrances, and other adverse claims.

3.15 Insurance . The assets, properties and operations of Pan American and the Subsidiary are insured under various policies of general liability and other forms of insurance consistent with prudent business practices. All such policies are in full force and effect in accordance with their terms, no notice of cancellation has been received, and there is no existing default by Pan American or the Subsidiary or any event which, with the giving of notice, the lapse of time or both, would constitute a default thereunder. All premiums to date have been paid in full.

3.16 Employees and Consultants . All employees and consultants of Pan American and the Subsidiary have been paid all salaries, wages, income and any other sum due and owing to them by Pan American or the Subsidiary, as applicable, as at the end of the most recent completed pay period. Neither Pan American nor the Subsidiary is aware of any labor conflict with any of Pan American's employees that might reasonably be expected to have a Pan American Material Adverse Effect. Neither Pan American nor the Subsidiary has entered into any written contracts of employment or consulting agreements. All amounts required to be withheld by Pan American or the Subsidiary from employees salaries or wages and paid to any governmental or taxing authority have been so withheld and paid. No employee of Pan American or the Subsidiary is in violation of any term of any employment contract, non-disclosure agreement, non-competition agreement or any other contract or agreement relating to the relationship of such employee with Pan American or the Subsidiary or any other nature of the business conducted or to be conducted by Pan American.

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3.17 Real Property . Pan American does not own any real property . Each of the leases, subleases, claims or other real property interests (collectively, the " Leases ") to which Pan American or the Subsidiary is a party or is bound, as described in Disclosure Schedule 3.17 attached hereto, is legal, valid, binding, enforceable and in full force and effect in all material respects. All rental and other payments required to be paid by Pan American or the Subsidiary pursuant to any such Leases have been duly paid and no event has occurred which, upon the passing of time, the giving of notice, or both, would constitute a breach or default by any party under any of the Leases. The Leases will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing Date. Neither Pan American nor the Subsidiary has assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in the Leases or the leasehold property pursuant thereto.

3.18 Material Contracts and Transactions . Disclosure Schedule 3.18 attached hereto lists each material contract, agreement, license, permit, arrangement, commitment, instrument, understanding or contract, whether written or oral, express or implied, contingent, fixed or otherwise, to which Pan American or the Subsidiary is a party (each, a " Contract "). Each Contract is in full force and effect, and there exists no material breach or violation of or default by Pan American or the Subsidiary under any Contract, or any event that with notice or the lapse of time, or both, will create a material breach or violation thereof or default under any Contract by Pan American or the Subsidiary. The continuation, validity, and effectiveness of each Contract will in no way be affected by the consummation of the Transaction contemplated by this Agreement. There exists no actual or threatened termination, cancellation, or limitation of, or any amendment, modification, or change to any Contract.

3.19 Certain Transactions . Neither Pan American nor the Subsidiary is indebted, directly or indirectly, to any of its officers, directors or shareholders or to their respective spouses or children, in any amount whatsoever. Neither Pan American nor the Subsidiary is a guarantor or indemnitor of any indebtedness of any other person, firm or corporation.

3.20 No Brokers . Neither Pan American nor the Subsidiary has incurred any obligation or liability to any party for any brokerage fees, agent's commissions, or finder's fees in connection with the Transaction contemplated by this Agreement for which Tri-Lateral would be responsible.

3.21 Completeness of Disclosure . No representation or warranty by Pan American or the Subsidiary in this Agreement nor any certificate, schedule, statement, document or instrument furnished or to be furnished to Tri-Lateral pursuant hereto contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or therein or necessary to make any statement herein or therein not materially misleading.

4. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS

Each of the Selling Shareholder severally covenants with and represents and warrants to Tri-Lateral as follows, and acknowledges that Tri-Lateral is relying upon such covenants,

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representations and warranties in connection with the purchase by Tri-Lateral of the Pan American Shares and the issuance by Tri-Lateral of the Tri-Lateral Shares, as follows:

4.1 The Pan American Shares owned by the Selling Shareholder are owned by them as the recorded owners with a good and marketable title thereto, free and clear of all mortgages, liens, charges, security interests, adverse claims, pledges, encumbrances and demands whatsoever and the Selling Shareholders have all necessary power and authority to deal with Pan American Shares in accordance with this Agreement.

4.2 No person, firm or corporation has any agreement or option or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option for the purchase from the Selling Shareholder of any of the Pan American Shares held by the Selling Shareholder.

4.3 This Agreement has been duly authorized, validly executed and delivered by the Principal Shareholder.

4.4 The Selling Shareholder is an investor in securities of companies in the development stage and acknowledges that he is able to fend for himself, can bear the economic risk of his investment, and has such knowledge and experience in financial or business matters such that he is capable of evaluating the merits and risks of the investment in the Tri-Lateral Shares.

4.5 The Selling Shareholder believes it has received all the information it considers necessary or appropriate for deciding whether to execute this Agreement, including a copy of the Tri-Lateral SEC Documents. The Selling Shareholder further represents that he has had an opportunity to ask questions and receive answers from Tri-Lateral regarding the terms and conditions of the Transaction and the business, properties, prospects and financial condition of Tri-Lateral. The Selling Shareholder has had full opportunity to discuss this information with the Selling Shareholder's legal and financial advisers prior to execution of this Agreement.

4.6 The Selling Shareholder acknowledges that the Transaction has not been reviewed by the SEC and that the Tri-Lateral Shares will be issued pursuant to an exemption from registration under the Securities Act and the British Columbia Act.

4.7 The Selling Shareholder understands that the Tri-Lateral Shares he will be issued and will be characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances. In this connection, the Selling Shareholder represents that he is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

4.8 The Tri-Lateral Shares will be acquired by the Selling Shareholder for investment for the Selling Shareholder's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Selling Shareholder has no present intention of selling, granting any participation in, or otherwise distributing the same. The Selling Shareholder does not have any contract, undertaking, agreement or arrangement with any person

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to sell, transfer or grant participations to such person or to any third person, with respect to any of the Tri-Lateral Shares to be issued on Closing.

4.9 The representations and warranties set out in the Regulation S Investment Letter (if such holder is resident outside of the United States), a copy of which is attached hereto in Disclosure Schedule 2.3, or the Regulation D Investment Letter (if such holder is resident in the United States), a copy of which is attached hereto in Disclosure Schedule 2.3, as applicable, are true, correct and accurate as of the date of this Agreement and as of the Closing Date.

5. REPRESENTATIONS AND WARRANTIES OF TRI-LATERAL

Tri-Lateral represents and warrants to Pan American and the Selling Shareholders and acknowledge that Pan American and the Selling Shareholders are relying upon such representations and warranties in connection with the execution, delivery and performance of this Agreement, notwithstanding any investigation made by or on behalf of Pan American, as follows:

5.1 Organization and Good Standing . Tri-Lateral is duly organized, validly existing and in good standing under the laws of Ontario and have all requisite corporate power and authority to own, lease and to carry on its business as now being conducted. Tri-Lateral is qualified to do business and is in good standing as a foreign corporation in each of the jurisdictions in which it owns property, leases property, does business, or is otherwise required to do so, where the failure to be so qualified would have a material adverse effect on the businesses, operations, or financial condition of Tri-Lateral.

5.2 Authority . Tri-Lateral has all requisite corporate power and authority to execute and deliver this Agreement and any other document contemplated by this Agreement (collectively, the " Tri-Lateral Documents ") to be signed by Tri-Lateral and to perform its obligations thereunder and to consummate the Transaction contemplated thereby. The execution and delivery of each of the Tri-Lateral Documents by Tri-Lateral and the consummation by Tri-Lateral of the Transaction contemplated thereby have been duly authorized by its Board of Directors and no other corporate or shareholder proceedings on the part of Tri-Lateral is necessary to authorize such documents or to consummate the Transaction contemplated thereby. This Agreement has been, and the other Tri-Lateral Documents when executed and delivered by Tri-Lateral as contemplated by this Agreement will be, duly executed and delivered by Tri-Lateral and this Agreement is, and the other Tri-Lateral Documents when executed and delivered by Tri-Lateral, as contemplated hereby will be, the valid and binding obligations of Tri-Lateral enforceable in accordance with their respective terms, except: (1) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, (2) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (3) as limited by public policy.

5.3 Capitalization of Tri-Lateral . The entire authorized capital stock and other equity securities of Tri-Lateral consists of an unlimited number of shares of common stock, no par value (the " Tri-Lateral Common Stock ") and an unlimited number of shares of preferred stock (the " Tri-Lateral Preferred Stock "). There are 30,515,373 shares of Tri-Lateral Common

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Stock (after completion of the Stock Split) and no shares of Tr-Lateral Preferred Stock issued and outstanding as of the date of this Agreement. All of the issued and outstanding shares of Tri-Lateral Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. There are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating Tri-Lateral to issue any additional shares of Tri-Lateral Common Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Tri-Lateral any shares of Tri-Lateral Common Stock. There are no agreements purporting to restrict the transfer of the Tri-Lateral Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the Tri-Lateral Common Stock.

5.4 Validity of Tri-Lateral Common Stock Issuable upon the Transaction . The Tri-Lateral Shares to be issued to the Selling Shareholders upon consummation of the Transaction in accordance with this Agreement will, upon issuance, have been duly and validly authorized and, when so issued in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and non-assessable.

5.5 Actions and Proceedings . There is no claim, charge, arbitration, grievance, action, suit, investigation or proceeding by or before any court, arbiter, administrative agency or other governmental authority now pending or, to the best knowledge of Tri-Lateral, threatened against Tri-Lateral which involves any of the business, or the properties or assets of Tri-Lateral that, if adversely resolved or determined, would have a material adverse effect on the business, operations, assets, properties, prospects or conditions of Tri-Lateral taken as a whole. There is no reasonable basis for any claim or action that, based upon the likelihood of its being asserted and its success if asserted, would have such a material adverse effect.

5.6 SEC Filings . Tri-Lateral has furnished or made available to Pan American and the Selling Shareholders a true and complete copy of each report, schedule, registration statement and proxy statement filed by Tri-Lateral with the SEC (as such documents have since the time of their filing been amended, the " Tri-Lateral SEC Documents "). Tri-Lateral has timely filed with the SEC all documents required to have been filed pursuant to the Securities Act and the Exchange Act. As of their respective dates, the Tri-Lateral SEC Documents complied in all material respects with the requirements of the Securities Act, or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Tri-Lateral SEC Documents.

5.7 Financial Representations . Included with the Tri-Lateral SEC Documents are true, correct, and complete copies of unaudited balance sheets for Tri-Lateral dated as of September 30, 2003 and audited balance for Tri-Lateral dated as of December 31, 2002, together with related statements of income, cash flows, and changes in shareholder's equity for the fiscal year then ended (collectively, the " Tri-Lateral Financial Statements "). The Tri-Lateral Financial Statements (a) are in accordance with the books and records of Tri-Lateral, (b) present fairly the financial condition of Tri-Lateral as of the respective dates indicated and the results of operations for such periods, and (c) have been prepared in accordance with GAAP. Tri-Lateral has not received any advice or notification from its independent certified public accountants that

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Tri-Lateral has used any improper accounting practice that would have the effect of not reflecting or incorrectly reflecting in the Tri-Lateral Financial Statements or the books and records of Tri-Lateral, any properties, assets, liabilities, revenues, or expenses. The books, records, and accounts of Tri-Lateral accurately and fairly reflect, in reasonable detail, the assets, and liabilities of Tri-Lateral. Tri-Lateral has not engaged in any transaction, maintained any bank account, or used any funds of Tri-Lateral, except for transactions, bank accounts, and funds which have been and are reflected in the normally maintained books and records of Tri-Lateral.

5.8 Absence of Undisclosed Liabilities . Tri-Lateral has no liabilities or obligations either direct or indirect, matured or unmatured, absolute, contingent or otherwise, which:

1. are not set forth in the Tri-Lateral Financial Statements or have not heretofore been paid or discharged;
2. did not arise in the regular and ordinary course of business under any agreement, contract, commitment, lease or plan specifically disclosed (or are not required to be disclosed in accordance with GAAP); or
3. have not been incurred in amounts and pursuant to practices consistent with past business practice, in or as a result of the regular and ordinary course of its business since the date of the last Tri-Lateral Financial Statements.

For purposes of this Agreement, the term "liabilities" includes, any direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known or unknown, asserted choate or inchoate, liquidated or unliquidated, secured or unsecured.

5.9 Absence of Certain Changes or Events . Except as and to the extent disclosed in the Tri-Lateral SEC Documents, there has not been (a) a material adverse effect to the business, operations or financial conditions of Tri-Lateral, or (b) any significant change by Tri-Lateral in its accounting methods, principles or practices.

5.10 Filings, Consents and Approvals . No filing or registration with, no notice to and no permit, authorization, consent, or approval of any public or governmental body or authority or other person or entity is necessary for the consummation by Tri-Lateral of the Transaction contemplated by this Agreement to continue to conduct its business after the Closing Date in a manner which is consistent with that in which it is presently conducted.

5.11 Personal Property . There are no material equipment, furniture, fixtures and other tangible personal property and assets owned or leased by Tri-Lateral, except as disclosed in the Tri-Lateral SEC Documents.

5.12 Employees and Consultants . Tri-Lateral does not have any employees or consultants, except as disclosed in the Tri-Lateral SEC Documents.

5.13 Material Contracts and Transactions . Other than as expressly contemplated by this Agreement, there are no material contracts, agreements, licenses, permits, arrangements, commitments, instruments, understandings or contracts, whether written or oral, express or

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implied, contingent, fixed or otherwise, to which Tri-Lateral is a party except for this Agreement and except as disclosed in the Tri-Lateral SEC Documents.

5.14 No Brokers . Tri-Lateral has not incurred any obligation or liability to any party for any brokerage fees, agent's commissions, or finder's fees in connection with the Transaction contemplated by this Agreement for which Tri-Lateral would be responsible.

5.15 Completeness of Disclosure . No representation or warranty by Tri-Lateral in this Agreement nor any certificate, schedule, statement, document or instrument furnished or to be furnished to Pan American pursuant hereto contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or therein or necessary to make any statement herein or therein not materially misleading.

6. CLOSING CONDITIONS

6.1 Conditions Precedent to Closing by Tri-Lateral . The obligation of Tri-Lateral to consummate the Transaction is subject to the satisfaction of the conditions set forth below, unless any such condition is waived by Tri-Lateral at the Closing. The Closing of the Transaction contemplated by this Agreement will be deemed to mean a waiver of all conditions to Closing. These conditions of closing are for the benefit of Tri-Lateral and may be waived by Tri-Lateral in their discretion.

1. Representations and Warranties . The representations and warranties of Pan American and the Selling Shareholders set forth in this Agreement will be true, correct and complete in all respects as of the Closing Date, as though made on and as of the Closing Date and Pan American will have delivered to Tri-Lateral a certificate dated as of the Closing Date, to the effect that the representations and warranties made by Pan American in this Agreement are true and correct.
2. Performance . All of the covenants and obligations that Pan American and the Selling Shareholders are required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been performed and complied with in all material respects.
3. Transaction Documents . This Agreement, the Pan American Documents and all other documents necessary or reasonably required to consummate the Transaction, all in form and substance reasonably satisfactory to Tri-Lateral, will have been executed and delivered to Tri-Lateral.
4. Secretary's Certificate - Pan American . Tri-Lateral will have received a certificate of the Secretary of Pan American attaching (i) a copy of Pan American's articles of incorporation and bylaws, as amended through the Closing Date; and (ii) copies of resolutions duly adopted by the Board of Directors of Pan American approving the execution and delivery of this Agreement and the consummation of the transactions contemplated therein.

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5. Third Party Consents . Pan American will have received duly executed copies of all third-party consents and approvals contemplated by this Agreement, in form and substance reasonably satisfactory to Tri-Lateral.
6. No Material Adverse Change . No Pan American Material Adverse Effect will have occurred since the date of this Agreement.
7. No Action . No suit, action, or proceeding will be pending or threatened which would (i) prevent the consummation of any of the transactions contemplated by this Agreement, or (ii) cause the Transaction to be rescinded following consummation.
8. Outstanding Liabilities . Pan American and the Subsidiary will have no more than $10,000 in outstanding liabilities on a consolidated basis on the Closing Date.
9. Outstanding Shares . Pan American will have no more than 3,370,000 shares of Pan American Common Stock outstanding on the Closing Date.
10. Due Diligence Review . Tri-Lateral will be reasonably satisfied in all respects with their due diligence investigation and review of Pan American.
11. Compliance with Securities Laws . Tri-Lateral will have received evidence satisfactory to Tri-Lateral that the Tri-Lateral Shares issuable in the Transaction will be issuable without registration pursuant to the Securities Act in reliance on the exemptions from the registration requirements of the Securities Act provided by Rule 506 of Regulation D or in reliance on the safe harbor from the registration requirements of the Securities Act provided by Regulation S. In order to establish the availability of an exemption or safe harbor from the registration requirements of the Securities Act for each issuance of Tri-Lateral Shares to each Selling Shareholder, Pan American will deliver to Tri-Lateral on Closing investment representation letters executed by each Selling Shareholder as follows:

1. for each Selling Shareholder who is not a U.S. Person and who otherwise satisfies the eligibility requirements for issuance of Tri-Lateral Shares in accordance with Rule 903 of Regulation S of the Securities Act, Pan American will deliver the Regulation S Investment Letter in a form reasonably acceptable to legal counsel for Tri-Lateral and for Pan American; and
2. for each Selling Shareholder resident in the United States, Pam American will deliver the Regulation D Investment Letter in a form reasonably acceptable to legal counsel for Tri-Lateral and for Pan American.

6.2 Conditions Precedent to Closing by Pan American . The obligation of Pan American and the Selling Shareholders to consummate the Transaction is subject to the satisfaction of the conditions set forth below, unless such condition is waived by Pan American and the Selling Shareholders at the Closing. The Closing of the Transaction will be deemed to mean a waiver of all conditions to Closing. These conditions precedent are for the benefit of Pan

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American and the Selling Shareholders and may be waived by Pan American and the Selling Shareholders in their discretion.

1. Representations and Warranties . The representations and warranties of Tri-Lateral set forth in this Agreement will be true, correct and complete in all respects as of the Closing Date, as though made on and as of the Closing Date and Tri-Lateral will have delivered to Pan American a certificate dated the Closing Date, to the effect that the representations and warranties made by Tri-Lateral in this Agreement are true and correct.
2. Performance . All of the covenants and obligations that Tri-Lateral are required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been performed and complied with in all material respects. Tri-Lateral must have delivered each of the documents required to be delivered by it pursuant to this Agreement.
3. Transaction Documents . This Agreement, the Tri-Lateral Documents and and all other documents necessary or reasonably required to consummate the Transaction, all in form and substance reasonably satisfactory to Pan American, will have been executed and delivered by Tri-Lateral.
4. Secretary's Certificate - Tri-Lateral . Pan American will have received a certificate of the Secretary of Tri-Lateral attaching (i) a copy of Tri-Lateral's articles of incorporation and bylaws, as amended through the Closing Date; and (ii) copies of resolutions duly adopted by the Board of Directors of Tri-Lateral approving the execution and delivery of this Agreement and the consummation of the transactions contemplated therein.
5. Third Party Consents . Tri-Lateral will have received duly executed copies of all third-party consents and approvals contemplated by this Agreement, in form and substance reasonably satisfactory to Tri-Lateral.
6. No Material Adverse . No event will have occurred since the date of this Agreement that has had a material adverse effect on the business, operations, assets, properties, prospects or conditions of Tri-Lateral taken as a whole.
7. No Action . No suit, action, or proceeding will be pending or threatened before any governmental or regulatory authority wherein an unfavorable judgment, order, decree, stipulation, injunction or charge would (i) prevent consummation of any of the transactions contemplated by this Agreement; or (ii) cause the Transaction to be rescinded following consummation.
8. Outstanding Liabilities . Tri-Lateral will have no more than Cdn$12,500 in outstanding liabilities (excluding amounts owed to shareholders and related parties of Tri-Lateral not to exceed Cdn$105,000) on the Closing Date.
9. Outstanding Shares . Tri-Lateral will have no more than 30,515,373 shares of Tri-Lateral Common Stock outstanding on the Closing Date.

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10. Public Market . The shares of Tri-Lateral Common Stock will be quoted on the National Association of Securities Dealers, Inc.'s OTC Bulletin Board.
11. Resignations . Pan American will have received the undated written resignations of Alan G. Crawford and Kevin R. Hanson of the Board of Directors of Tri-Lateral , which resignations will be effective ten days after the filing of a Schedule 14f-1 in connection with the Transaction.
12. Change in Directors . Pan American will have received a signed directors resolution appointing Richard Bachman, effective immediately, and Michael Sweatman, effective ten days after the filing of a Schedule 14f-1 in connection with the Transaction, to the Board of Directors of Tri-Lateral and accepting the resignations of Alan G. Crawford and Kevin R. Hanson from the Board of Directors of Tri-Lateral , which resignations will be effective ten days after the filing of a Schedule 14f-1 in connection with the Transaction.

7. ADDITIONAL COVENANTS OF THE PARTIES

7.1 Access and Investigation . Between the date of this Agreement and the Closing Date, Pan American, on the one hand, and Tri-Lateral, on the other hand, will, and will cause each of their respective representatives to, (a) afford the other and its representatives full and free access to its personnel, properties, contracts, books and records, and other documents and data, (b) furnish the other and its representatives with copies of all such contracts, books and records, and other existing documents and data as required by this Agreement and as the other may otherwise reasonably request, and (c) furnish the other and its representatives with such additional financial, operating, and other data and information as the other may reasonably request. All of such access, investigation and communication by a party and its representatives will be conducted during normal business hours and in a manner designed not to interfere unduly with the normal business operations of the other party. Each party will instruct its auditors to cooperate with the other party and its representatives in connection with such investigations.

7.2 Confidentiality . All information regarding the business of Pan American including, without limitation, financial information that Pan American provides to Tri-Lateral during Tri-Lateral's due diligence investigation of Pan American will be kept in strict confidence by Tri-Lateral and will not be used (except in connection with due diligence), dealt with, exploited or commercialized by Tri-Lateral or disclosed to any third party (other than Tri-Lateral's professional accounting and legal advisors) without the prior written consent of Pan American. If the Transaction contemplated by this Agreement do not proceed for any reason, then upon receipt of a written request from Pan American, Tri-Lateral will immediately return to Pan American any information received regarding Pan American's business. Likewise, all information regarding the business of Tri-Lateral including, without limitation, financial information that Tri-Lateral provides to Pan American during its due diligence investigation of Tri-Lateral will be kept in strict confidence by Pan American and will not be used (except in connection with due diligence), dealt with, exploited or commercialized by Pan American or disclosed to any third party (other than Pan American's professional accounting and legal advisors) without Tri-Lateral's prior written consent. If the Transaction contemplated by this Agreement do not proceed for any reason, then upon receipt of a written request from Tri-

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Lateral, Pan American will immediately return to Tri-Lateral (or as directed by Tri-Lateral) any information received regarding Tri-Lateral's business.

7.3 Notification . Between the date of this Agreement and the Closing Date, each of the parties to this Agreement will promptly notify the other parties in writing if it becomes aware of any fact or condition that causes or constitutes a material breach of any of its representations and warranties as of the date of this Agreement, if it becomes aware of the occurrence after the date of this Agreement of any fact or condition that would cause or constitute a material breach of any such representation or warranty had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition. Should any such fact or condition require any change in the Disclosure Schedules relating to such party, such party will promptly deliver to the other parties a supplement to the Disclosure Schedules specifying such change. During the same period, each party will promptly notify the other parties of the occurrence of any material breach of any of its covenant in this Agreement or of the occurrence of any event that may make the satisfaction of such conditions impossible or unlikely.

7.4 Exclusivity . Until such time, if any, as this Agreement is terminated pursuant to this Agreement, Pan American will not, directly or indirectly solicit, initiate, entertain or accept any inquiries or proposals from, discuss or negotiate with, provide any non-public information to, or consider the merits of any unsolicited inquiries or proposals from, any person or entity (other than Tri-Lateral) relating to any transaction involving the sale of the business or assets (other than in the ordinary course of business), or any of the capital stock of Pan American, or any merger, consolidation, business combination, or similar transaction.

7.5 Conduct of Pan American Business Prior to Closing . From the date of this Agreement to the Closing Date, and except to the extent that Tri-Lateral otherwise consents in writing, Pan American will operate its business substantially as presently operated and only in the ordinary course and in compliance with all applicable laws, and use its best efforts to preserve intact its good reputation and present business organization and to preserve its relationships with persons having business dealings with it.

7.6 Certain Acts Prohibited - Pan American . Except as expressly contemplated by this Agreement, between the date of this Agreement and the Closing Date, Pan American will not, without the prior written consent of Tri-Lateral:

1. amend its memorandum and articles, by-laws or other organizational documents;
2. incur any liability or obligation other than in the ordinary course of business or encumber or permit the encumbrance of any properties or assets of Pan American;
3. dispose of or contract to dispose of any Pan American property or assets except in the ordinary course of business consistent with past practice;
4. issue, deliver, sell, pledge or otherwise encumber or subject to any lien any shares of Pan American Common Stock, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities;

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5. not (i) declare, set aside or pay any dividends on, or make any other distributions in respect of the Pan American Common Stock, or (ii) split, combine or reclassify any Pan American Common Stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of Pan American Common Stock; or
6. not materially increase benefits or compensation expenses of Pan American, other than as contemplated by the terms of any employment agreement in existence on the date of this Agreement, increase the cash compensation of any director, executive officer or other key employee or pay any benefit or amount not required by a plan or arrangement as in effect on the date of this Agreement to any such person.

7.7 Certain Acts Prohibited - Tri-Lateral . Except as expressly contemplated by this Agreement, between the date of this Agreement and the Closing Date, Tri-Lateral will not, without the prior written consent of Pan American:

1. other than to effect the Stock Split, amend its certificate of incorporation, by-laws or other organizational documents;
2. incur any liability or obligation other than in the ordinary course of business or encumber or permit the encumbrance of any properties or assets of Tri-Lateral;
3. dispose of or contract to dispose of any Tri-Lateral property or assets except in the ordinary course of business consistent with past practice;
4. issue or sell shares of Tri-Lateral Common Stock, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities; or
5. not (i) declare, set aside or pay any dividends on, or make any other distributions in respect of the Tri-Lateral common Stock, or (ii) split, combine or reclassify any Tri-Lateral Common Stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of Tri-Lateral Common Stock.

7.8 Public Announcements . Tri-Lateral and Pan American each agree that they will not release or issue any reports or statements or make any public announcements relating to this Agreement or the Transaction contemplated herein without the prior written consent of the other party, except as may be required upon written advice of counsel to comply with applicable laws or regulatory requirements after consulting with the other party hereto and seeking their consent to such announcement.

7.9 Tri-Lateral Board of Directors . Immediately upon the Closing, the current directors of Tri-Lateral will adopt resolutions appointing a new directors to the Board of Directors for Tri-Lateral consisting of Richard Bachman and Michael Sweatman, and will accept the resignations of Alan G. Crawford and Kevin R. Hanson, which appointments and resignations will be effective ten days after the filing of a Schedule 14f-1 in connection with the

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Transaction.. Tri-Lateral will prepare and file a Schedule 14f-1 information statement with the SEC as required under the Exchange Act in connection with the change of directors arising in connection with the completion of the Transaction.

7.10 Stock Split . Tri-Lateral agrees that it will complete the forward split on a seven (7) for one (1) basis of the Tri-Lateral Common Stock (the " Stock Split ") , that was approved by Tri-Lateral's shareholders at a meeting of Tri-Lateral's shareholders on February 3, 2004.

8. CLOSING

8.1 Closing . The Closing shall take place on the Closing Date at the offices of the lawyers for Tri-Lateral or at such other location as agreed to by the parties. Notwithstanding the location of the Closing, each party agrees that the Closing may completed by the exchange of undertakings between the respective legal counsel for Pan American, the Principal Shareholder and Tri-Lateral, provided such undertakings are satisfactory to each party's respective legal counsel.

8.2 Closing Deliveries of Pan American and the Selling Shareholders . At Closing, Pan American and the Selling Shareholder will deliver or cause to be delivered the following, fully executed and in form and substance reasonably satisfactory to Tri-Lateral:

1. copies of all resolutions and/or consent actions adopted by or on behalf of the Board of Directors of Pan American evidencing approval of this Agreement and the Transaction;
2. all certificates and other documents required by Section 6.1 of this Agreement;
3. a certificate of an officer of Pan American, dated as of Closing, certifying that (a) each covenant and obligation of Pan American has been complied with, and (b) each representation, warranty and covenant of Pan American is true and correct at the Closing as if made on and as of the Closing; and
4. the Pan American Documents and any other necessary documents, each duly executed by Pan American, as required to give effect to the Transaction.

8.3 Closing Deliveries of Tri-Lateral . At Closing, Tri-Lateral will deliver or cause to be delivered the following, fully executed and in form and substance reasonably satisfactory to Pan American:

1. copies of all resolutions and/or consent actions adopted by or on behalf of the Board of Directors of Tri-Lateral evidencing approval of this Agreement and the Transaction;
2. all certificate and other documents required by Section 6.2 of this Agreement;
3. a certificate of an officer of Tri-Lateral, dated as of Closing, certifying that (a) each covenant and obligation of Tri-Lateral has been complied with, and (b) each representation, warranty and covenant of Tri-Lateral is true and correct at the Closing as if made on and as of the Closing;

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4. the Tri-Lateral Documents and any other necessary documents, each duly executed by Tri-Lateral, as required to give effect to the Transaction;
5. the resignations required by Section 6.2 of this Agreement; and
6. the resolution required by Section 6.2 of this Agreement.

9. TERMINATION

9.1 Termination . This Agreement may be terminated at any time prior to the Closing Date contemplated hereby by:

1. mutual agreement of Tri-Lateral and Pan American;
2. Tri-Lateral, if there has been a breach by Pan American or any of the Selling Shareholders of any material representation, warranty, covenant or agreement set forth in this Agreement on the part of Pan American or the Selling Shareholders that is not cured, to the reasonable satisfaction of Tri-Lateral, within ten business days after notice of such breach is given by Tri-Lateral (except that no cure period will be provided for a breach by Pan American or the Selling Shareholders that by its nature cannot be cured);
3. Pan American, if there has been a breach by Tri-Lateral of any material representation, warranty, covenant or agreement set forth in this Agreement on the part of Tri-Lateral that is not cured by the breaching party, to the reasonable satisfaction of Pan American, within ten business days after notice of such breach is given by Pan American (except that no cure period will be provided for a breach by Tri-Lateral that by its nature cannot be cured);
4. Tri-Lateral or Pan American, if the Transaction contemplated by this Agreement has not been consummated prior to May 31, 2004, unless the parties agree to extend such date; or
5. Tri-Lateral or Pan American if any permanent injunction or other order of a governmental entity of competent authority preventing the consummation of the Transaction contemplated by this Agreement has become final and non-appealable.

9.2 Effect of Termination . In the event of the termination of this Agreement as provided in Section 9.1, this Agreement will be of no further force or effect, provided, however, that no termination of this Agreement will relieve any party of liability for any breaches of this Agreement that are based on a wrongful refusal or failure to perform any obligations

10. INDEMNIFICATION, REMEDIES, SURVIVAL

10.1 Certain Definitions . For the purposes of this Article 10, the terms " Loss " and " Losses " mean any and all demands, claims, actions or causes of action, assessments, losses, damages. liabilities, costs, and expenses, including without limitation, interest, penalties, fines

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and reasonable attorneys, accountants and other professional fees and expenses, but excluding any indirect, consequential or punitive damages suffered by Tri-Lateral or Pan American including damages for lost profits or lost business opportunities.

10.2 Agreement of Pan American to Indemnify . Pan American and the Principal Shareholder will indemnify, defend, and hold harmless Tri-Lateral, its respective officers, directors, shareholders, employees and affiliates from, against, and in respect of any and all Losses asserted against, relating to, imposed upon, or incurred by Tri-Lateral by reason of, resulting from, based upon or arising out of:

1. the breach by Pan American or the Selling Shareholders of any representation or warranty of Pan American or the Selling Shareholders contained in or made pursuant to this Agreement, any Pan American Document or any certificate or other instrument delivered pursuant to this Agreement; or
2. the breach or partial breach by Pan American or the Selling Shareholders of any covenant or agreement of Pan American made in or pursuant to this Agreement, any Pan American Document or any certificate or other instrument delivered pursuant to this Agreement.

10.3 Agreement of Tri-Lateral to Indemnify . Tri-Lateral will indemnify, defend, and hold harmless Pan American and the Selling Shareholders from, against, for, and in respect of any and all Losses asserted against, relating to, imposed upon, or incurred by Pan American and the Selling Shareholders by reason of, resulting from, based upon or arising out of:

1. the breach by Tri-Lateral of any representation or warranty of Tri-Lateral contained in or made pursuant to this Agreement, any Tri-Lateral Document or any certificate or other instrument delivered pursuant to this Agreement; or
2. the breach or partial breach by Tri-Lateral of any covenant or agreement of Tri-Lateral made in or pursuant to this Agreement, any Tri-Lateral Document or any certificate or other instrument delivered pursuant to this Agreement.

11.1 Effectiveness of Representations; Survival . Each party is entitled to rely on the representations, warranties and agreements of each of the other parties and all such representation, warranties and agreement will be effective regardless of any investigation that any party has undertaken or failed to undertake. The representation, warranties and agreements will survive the Closing Date and continue in full force and effect until six (6) months after the Closing Date.

11.2 Further Assurances . Each of the parties hereto will cooperate with the others and execute and deliver to the other parties hereto such other instruments and documents and take such other actions as may be reasonably requested from time to time by any other party hereto as necessary to carry out, evidence, and confirm the intended purposes of this Agreement.

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11.3 Amendment . This Agreement may not be amended except by an instrument in writing signed by each of the parties.

11.4 Expenses . Each party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the Transaction contemplated hereby, including all fees and expenses of agents, representatives, counsel, and accountants.

11.5 Entire Agreement . This Agreement, the exhibits, schedules attached hereto and the other documents in connection with this transaction contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior arrangements and understandings, both written and oral, expressed or implied, with respect thereto. Any preceding correspondence or offers are expressly superseded and terminated by this Agreement.

11.6 Notices . All notices and other communications required or permitted under to this Agreement must be in writing and will be deemed given if sent by personal delivery, faxed with electronic confirmation of delivery, internationally-recognized express courier or registered or certified mail (return receipt requested), postage prepaid, to the parties at the following addresses (or at such other address for a party as will be specified by like notice):

11.7 Headings . The headings contained in this Agreement are for convenience purposes only and will not affect in any way the meaning or interpretation of this Agreement.

11.8 Benefits . This Agreement is and will only be construed as for the benefit of or enforceable by those persons party to this Agreement.

11.9 Assignment . This Agreement may not be assigned (except by operation of law) by any party without the consent of the other parties.

11.10 Governing Law . This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia applicable to contracts made and to be performed therein.

11.11 Construction . The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party.

11.12 Counterparts . This Agreement may be executed in one or more counterparts, all of which will be considered one and the same agreement and will become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

11.13 Fax Execution . This Agreement may be executed by delivery of executed signature pages by fax and such fax execution will be effective for all purposes.

11.14 Schedules and Exhibits . The schedules and exhibits are attached to this Agreement and incorporated herein.

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

PAN AMERICAN GOLD CORPORATION

Per: /s/ Graham Douglas
Authorized Signatory
Name: Graham Douglas
Title: President

TRI-LATERAL VENTURE CORPORATION

Per: /s/ Greg Burnett
Authorized Signatory
Name: Greg Burnett
Title: President

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DISCLOSURE SCHEDULE 2.3
TO THE SHARE PURCHASE AGREEMENT
AMONG PAN AMERICAN GOLD CORPORATION, J. GRAHAM DOUGLAS,
THE SHAREHOLDERS OF PAN AMERICAN GOLD CORPORATION
AND TRI-LATERAL VENTURE CORPORATION

Certificate of Non-U.S. Shareholder and Certificate of U.S. Shareholder

In connection with the issuance of common stock ("Pubco Common Stock") of Tri-Lateral Venture Corporation, an Ontario corporation ("Pubco"), to the undersigned, pursuant to that certain Share Purchase Agreement dated May 6, 2004 among Pubco, Pan American Gold Corporation, a Nevada corporation (the "Target") and the shareholders of the Target, the undersigned hereby agrees, represents and warrants that he, she or it:

1. is not a "U.S. Person" as such term is defined by Rule 902 of Regulation S under the United States Securities Act of 1933, as amended ("U.S. Securities Act") (the definition of which includes, but is not limited to, an individual resident in the U.S. and an estate or trust of which any executor or administrator or trust, respectively is a U.S. Person and any partnership or corporation organized or incorporated under the laws of the U.S.);

2. none of the Tri-Lateral Shares have been or will be registered under the Securities Act, or under any state securities or "blue sky" laws of any state of the United States, and may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Regulation S, except in accordance with the provisions of Regulation S or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act;

3. Tri-Lateral has not undertaken, and will have no obligation, to register any of the Tri-Lateral Shares under the Securities Act;

4. Tri-Lateral is entitled to rely on the acknowledgements, agreements, representations and warranties and the statements and answers of the Selling Shareholder contained in the Agreement and this Certificate, and the Selling Shareholder will hold harmless the Tri-Lateral from any loss or damage either one may suffer as a result of any such acknowledgements, agreements, representations and/or warranties made by the Selling Shareholder not being true and correct;

5. the Selling Shareholder has been advised to consult their own respective legal, tax and other advisors with respect to the merits and risks of an investment in the Tri-Lateral Shares

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and, with respect to applicable resale restrictions, is solely responsible (and the Tri-Lateral is not in any way responsible) for compliance with applicable resale restrictions;

6. none of the Tri-Lateral Shares are listed on any stock exchange or automated dealer quotation system and no representation has been made to the Selling Shareholder that any of the Tri-Lateral Shares will become listed on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in the common shares of Tri-Lateral on the OTC Bulletin Board;

7. the Selling Shareholder is outside the United States when receiving and executing this Agreement and is acquiring the Tri-Lateral Shares as principal for their own account, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof, in whole or in part, and no other person has a direct or indirect beneficial interest in the Tri-Lateral Shares;

8. neither the SEC nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Tri-Lateral Shares.

9. the Pubco Common Stock is not being acquired, directly or indirectly, for the account or benefit of a U.S. Person or a person in the United States;

10. acknowledges and agrees that Pubco shall refuse to register any transfer of the Pubco Common Stock not made in accordance with the provisions of Regulation S, pursuant to registration under the U.S. Securities Act, or pursuant to an available exemption from registration under the U.S. Securities Act;

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11. understands and agrees that the Pubco Common Stock will bear the following legends:

IN WITNESS WHEREOF, I have executed this Certificate of Non-U.S. Shareholder.

__________________________ Date: , 2004
Signature

__________________________
Print Name


__________________________
Title (if applicable)


__________________________
Address

__________________________

In connection with the issuance of common stock ("Pubco Common Stock") of Tri-Lateral Venture Corporation, an Ontario corporation ("Pubco"), to the undersigned, pursuant to that certain Share Purchase Agreement dated May 6, 2004 among Pubco, Pan American Gold Corporation, a Nevada corporation (the "Target") and the shareholders of the Target, the undersigned hereby agrees, represents and warrants that he, she or it:

1. Acquired Entirely for Own Account .

The undersigned represents and warrants that he, she or it is acquiring the Pubco Common Stock solely for the undersigned's own account for investment and not with a view to or for sale or distribution of the Pubco Common Stock or any portion thereof and without any present intention of selling, offering to sell or otherwise disposing of or distributing the Pubco Common Stock or any portion thereof in any transaction other than a transaction complying with the registration requirements of the U.S. Securities Act of 1933, as amended (the "Securities Act"), and applicable state and provincial securities laws, or pursuant to an exemption therefrom. The undersigned also represents that the entire legal and beneficial interest of the Pubco Common Stock that he, she or it is acquiring is being acquired for, and will be held for, the undersigned's account only, and neither in whole nor in part for any other person or entity.

2. Information Concerning Pubco .

The undersigned acknowledges that he, she or it has received all such information as the undersigned deems necessary and appropriate to enable him, her or it to evaluate the financial risk inherent in making an investment in the Pubco Common Stock, including but not limited to Pubco's Form 20-F and other reports filed with the U.S. Securities and Exchange Commission, and the documents and materials included therewith, which includes a description of the risks inherent in an investment in Pubco (as such term is defined in this Agreement) (the "Disclosure Documents"). The undersigned further acknowledges that he, she or it has received satisfactory and complete information concerning the business and financial condition of Pubco in response to all inquiries in respect thereof.

3. Economic Risk and Suitability .

The undersigned represents and warrants as follows:

4. Restricted Securities .

The undersigned acknowledges that Pubco has hereby disclosed to the undersigned in writing:

5. Legends .

The undersigned agrees that the Pubco Common Stock will bear the following legends:

6. Suitable Investor .

In order to establish the qualification of the undersigned to acquire the Pubco Common Stock, the information requested in either subsection 6(a) or (b) below must be supplied.

(a) The undersigned is an "accredited investor," as defined in Securities and Exchange Commission (the "SEC") Rule 501. An "accredited investor" is one who meets any of the requirements set forth below. The undersigned represents and warrants that the undersigned falls within the category (or categories) marked. PLEASE INDICATE EACH CATEGORY OF ACCREDITED INVESTOR THAT YOU, THE UNDERSIGNED, SATISFY, BY PLACING AN "X" ON THE APPROPRIATE LINE BELOW.

_____ Category 1. A bank, as defined in Section 3(a)(2) of the Securities Act, whether acting in its individual or fiduciary capacity; or

_____ Category 2. A savings and loan association or other institution as defined in Section 3(a) (5) (A) of the Securities Act, whether acting in its individual or fiduciary capacity; or

_____ Category 3. A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; or

_____ Category 4. An insurance company as defined in Section 2(13) of the Securities Act; or

_____ Category 5. An investment company registered under the Investment Company Act of 1940; or

_____ Category 6. A business development company as defined in Section 2(a) (48) of the Investment Company Act of 1940; or

_____ Category 7. A small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; or

_____ Category 8. A plan established and maintained by a state, its political subdivision or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with assets in excess of $5,000,000; or

_____ Category 9. An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 in which the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment advisor, or an employee benefit plan with total assets in excess of $5,000,000 or, if a self-directed plan, the investment decisions are made solely by persons who are accredited investors; or

_____ Category 10. A private business development company as defined in Section 202(a) (22) or the Investment Advisers Act of 1940; or

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_____ Category 11. An organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the Interest, with total assets in excess of $5,000,000; or

_____ Category 12. A director or executive officer of Pubco; or

_____ Category 13. A natural person whose individual net worth, or joint net worth with that person's spouse, at the time of this purchase exceeds $1,000,000; or

_____ Category 14. A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or

_____ Category 15. A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Interest, whose purchase is directed by a sophisticated person as described in SEC Rule 506(b)(2)(ii); or

_____ Category 16. An entity in which all of the equity owners are accredited investors.

(b) The undersigned is not an accredited investor and meets the requirements set forth below. PLEASE INDICATE THAT YOU, THE UNDERSIGNED, SATISFY THESE REQUIREMENTS BY PLACING AN "X" ON THE LINE BELOW.

_____ The undersigned, either alone or with the undersigned's representative, has such knowledge, skill and experience in business, financial and investment matters so that the undersigned is capable of evaluating the merits and risks of an investment in the Pubco Common Stock. To the extent necessary, the undersigned has retained, at the undersigned's own expense, and relied upon, appropriate professional advice regarding the investment, tax and legal merits and consequences of owning the Pubco Common Stock. In addition, the amount of the undersigned's investment in the Pubco Common Stock does not exceed ten percent (10%) of the undersigned's net worth. The undersigned agrees to furnish any additional information requested to assure compliance with applicable federal and state securities laws in connection with acquiring the Pubco Common Stock.

7. Understandings .

The undersigned understands, acknowledges and agrees that:

IN WITNESS WHEREOF, I have executed this Certificate of U.S. Shareholder.

__________________________ Date: , 2004
Signature

__________________________
Print Name


__________________________
Title (if applicable)

__________________________
Address

__________________________

DISCLOSURE SCHEDULE 3.4
TO THE SHARE PURCHASE AGREEMENT
AMONG PAN AMERICAN GOLD CORPORATION, J. GRAHAM DOUGLAS,
THE SHAREHOLDERS OF PAN AMERICAN GOLD CORPORATION
AND TRI-LATERAL VENTURE CORPORATION

Pan American Shareholders

DISCLOSURE SCHEDULE 3.17
TO THE SHARE PURCHASE AGREEMENT
AMONG PAN AMERICAN GOLD CORPORATION, J. GRAHAM DOUGLAS,
THE SHAREHOLDERS OF PAN AMERICAN GOLD CORPORATION
AND TRI-LATERAL VENTURE CORPORATION

Leases, Subleases, Claims and
Other Real Property Interests

1. Agreement dated December 8, 2003 between Nevada Sunrise, LLC ("Nevada Sunrise") and Pan American Gold Corporation ("Pan American") pursuant to which Pan American may earn a 60% interest on the Kinsley Mountain Property described as follows:

The property is located in Elko County, Nevada. It is comprised of approximately 125 claims covering approximately 2,600 acres over the know mineralization of the area. The claims are situated in the following Township, Range and Section of the Mount Diablo Base & Meridian (MDB&M):

Township	Range	Sections
27 North	67 East	36
27 North	68 East	31 & 32
26 North	67 East	01, 12 & 13
26 North	68 East	05, 06, 07 & 08

2. Agreement dated December 8, 2003 between Nevada Sunrise, LLC ("Nevada Sunrise") and Pan American Gold Corporation ("Pan American") pursuant to which Pan American may earn a 60% interest on the Pinnacle Property described as follows:

The property is located in Nye County, Nevada. It is comprised of approximately 80 claims covering approximately 1,600 acres over the known mineralization in the area. All the claims are situated in Township 14 North, Range 40 East, Sections 09, 10, 15, 16, 17, 19, 20, 21, 29 & 30 of the Mount Diablo Base & meridian (MDB&M).

3. Eskay Property Sale and Purchase Agreement, dated January 16, 2004, between Matthew J. Mason and 680102 B.C. Ltd., pursuant to which 680102 B.C. Ltd. may earn a 75% interest on the Eskay Creek Property described as follows:

The Property is located in the Eskay Creek region of British Columbia. It is comprised on approximately 37 claims.

4. First Amended and Restated Operating Agreement of Cactus Precious Metals LLC, effective November 26, 2003, pursuant to which Pan American Gold Corporation acquired 100 Class of Membership Units of Cactus Precious Metals LLC.

DISCLOSURE SCHEDULE 3.18
TO THE SHARE PURCHASE AGREEMENT
AMONG PAN AMERICAN GOLD CORPORATION, J. GRAHAM DOUGLAS,
THE SHAREHOLDERS OF PAN AMERICAN GOLD CORPORATION
AND TRI-LATERAL VENTURE CORPORATION

Material Contracts

1. Agreement dated December 8, 2003 between Nevada Sunrise, LLC ("Nevada Sunrise") and Pan American Gold Corporation ("Pan American") pursuant to which Pan American may earn a 60% interest on the Kinsley Mountain Property described as follows:

The property is located in Elko County, Nevada. It is comprised of approximately 125 claims covering approximately 2,600 acres over the know mineralization of the area. The claims are situated in the following Township, Range and Section of the Mount Diablo Base & Meridian (MDB&M):

Township	Range	Sections
27 North	67 East	36
27 North	68 East	31 & 32
26 North	67 East	01, 12 & 13
26 North	68 East	05, 06, 07 & 08

2. Agreement dated December 8, 2003 between Nevada Sunrise, LLC ("Nevada Sunrise") and Pan American Gold Corporation ("Pan American") pursuant to which Pan American may earn a 60% interest on the Pinnacle Property described as follows:

The property is located in Nye County, Nevada. It is comprised of approximately 80 claims covering approximately 1,600 acres over the known mineralization in the area. All the claims are situated in Township 14 North, Range 40 East, Sections 09, 10, 15, 16, 17, 19, 20, 21, 29 & 30 of the Mount Diablo Base & meridian (MDB&M).

3. Eskay Property Sale and Purchase Agreement, dated January 16, 2004, between Matthew J. Mason and 680102 B.C. Ltd., pursuant to which 680102 B.C. Ltd. may earn a 75% interest on the Eskay Creek Property described as follows:

The Property is located in the Eskay Creek region of British Columbia. It is comprised on approximately 37 claims.

4. First Amended and Restated Operating Agreement of Cactus Precious Metals LLC, effective November 26, 2003, pursuant to which Pan American Gold Corporation acquired 100 Class of Membership Units of Cactus Precious Metals LLC.

December 8, 2003

Pan American Gold Corporation
Suite 1880, 1055 West Georgia Street
Vancouver, BC V6E 3B3
CANADA

Dear Mr. Douglas:

Following are the key points of agreement necessary for the implementation of a Joint Venture (JV) between our companies on the Kinsley Mountain Property (The Property).

The Property is located in Elko County, Nevada. It is comprised of approximately 125 claims covering approximately 2,600 acres over the known mineralization in the area. The claims are situated in the following Township, Range and Sections of the Mount Diablo Base & Meridian (MDB&M):

1. All monetary amounts in this agreement are denominated in US Dollars.

2. Nevada Sunrise, LLC (Nevada) will grant Pan American Gold Corporation (Pan American) an option to earn a 60% ownership interest in The Property by complying with the various terms and conditions outlined in this Agreement.

3. All option payments will be made to Nevada on or before their due dates. There is no grace period. However, Nevada must notify Pan American by Federal Express letter (or equivalent means) of any pending payments between 30 and 60 days prior to the due date of said payment Should Nevada fail to provide said notification in a timely

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manner, a 30-day grace period will automatically be triggered. Failure to make payment on or before the mandatory date under this formula (whether or not a grace period has been triggered) may result in forfeiture of all Pan American's rights to and interests in The Property at Nevada's sole discretion.

4. All fees due to the Bureau of Land Management (BLM) for the maintenance of claims will be made by Pan American on or before August 1 of each year this agreement is in force. Payments due to BLM are not subject to any grace period. Should BLM make any changes in its procedures for maintaining mining claims, required payments will be made at least 30 days prior to any deadlines.

5. All fees due to Elko County for the maintenance of claims will be made by Pan American on or before October 1 of each year this agreement is in force. Payments due to Elko County are not subject to any grace period.

6. Prior to commencement of any work by Pan American on The Property, Pan American will acquire a $2,000,000 liability insurance policy naming Nevada as primary beneficiary. Pan American will also hold Nevada harmless for any damages or injuries incurred due to Pan American's work on The Property. This is valid even if it is determined that dangerous conditions contributing to said damages and/or injuries pre-dated this agreement.

7. Pan American will cover the cost of construction for the installation of a safety gate across the main entrance to The Property in accordance with BLM's specifications. Nevada is responsible for the necessary permits and design approvals of this gate and for overseeing its proper installation. This gate will allow all existing roads on the property to remain open for maximum access to the property.

8. Pan American will comply with all the environmental and mining laws of The United States of America, The State of Nevada and of Elko County.

9. Pan American will post all required bonds prior to commencement of any work on The Property in a manner compliant with the regulating authority requiring said bond.

10. Pan American will apply for and receive any and all permits necessary for the exploration, development and mining of The Property prior to commencing any activity requiring a permit.

11. Pan American will keep The Property free of all liens and encumbrances.

1. Annual Option Payments (pre-payments against future royalties):

2. There is no work commitment defined on The Property. So long as the terms of this Agreement are followed and all payments are made in a timely manner, Pan American is free to advance The Property at a rate consistent with business conditions and with its strategic goals.

3. Pan American has the option (assuming it is a listed publicly traded company) upon the First Anniversary of this agreement and thereafter to pay up to 25% of its annual option payment with shares of its own stock having a valuation equal to one half the average daily close of the previous 30 trading days. (For example, if the stock maintained an average daily close of $1.00 per share over the previous 30 trading days, Nevada would credit $0.50 per share against as much as 25% of the payment due on any option anniversary from the First Anniversary forward.)

4. Pan American agrees to advance The Property through "Bankable Feasibility" in order to secure its 60% earn-in and establish a Joint Venture between Pan American and Nevada using the Rocky Mountain Joint Venture Agreement Form 5.

5. Upon "Bankable Feasibility", Pan American and Nevada will enter a formal Joint Venture agreement and share the expense of operating the property based upon their ownership interest.

6. At a minimum, Nevada will retain a 2% NSR on The Property against which the cash portion of any annual option payments made by Pan American will be deducted prior to NSR payments. NSR payments may be taken in cash or "in kind" solely at Nevada's option. The choice of payment type must be declared by Nevada at least six months prior to the NSR payment(s) affected.

7. Nevada maintains a 1 mile area of influence around The Property as it is presently defined by Nevada's existing claims. Any claims added within this area of influence by Nevada during the term of this agreement will become part of this agreement at the sole option of Pan American. Any claims added by Pan American within the one mile area of influence will become subject to the terms and conditions of this agreement. In either case, the area of influence held by Nevada will not increase from its original size.

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8. Nevada, at its sole expense, will prepare all documents and file all newly located claims on The Property within 30 days of the initiation of this agreement.

9. Nevada, at its sole expense, will have the title to its claims reviewed by Richard W. Harris (Nevada's attorney) resulting in a formal Title Report followed by a Title Opinion fully backed by Harris' professional liability insurance. The Title Opinion be completed within 90 days of the initiation of this Agreement.

10. All factual data acquired by Pan American will be made available to Nevada and at Nevada's expense on a reasonable basis.

11. In the event of any disputes between Nevada and Pan American arising from this agreement or a possible Joint Venture Agreement in the future, both companies to submit to binding arbitration in the State of Nevada. Each party's share of payment for such arbitration will be set by the arbitration process.

12. Should, for any reason, this Agreement or the Joint Venture Agreement to follow be terminated, Pan American will make all factual data available to Nevada. Any direct costs incurred by Pan American for the transfer of said data will be covered by Nevada.

Agreed to this 9th day of December, 2003:

/s/ William B. Henderson
William B. Henderson, Manager
Nevada Sunrise, LLC

/s/ J. Graham Douglas
J. Graham Douglas, President
Pan American Gold Corporation

December 8, 2003

Pan American Gold Corporation
Suite 1880, 1055 West Georgia Street
Vancouver, BC V6E 3B3
CANADA

Dear Mr. Douglas:

Following are the key points of agreement necessary for the implementation of a Joint Venture (JV) between our companies on the Pinnacle Property (The Property).

The Property is located in Nye County, Nevada. It is comprised of approximately 80 claims covering approximately 1,600 acres over the known mineralization in the area. All the claims are situated in Township 14 North, Range 40 East, Sections 09, 10, 15, 16, 17, 19, 20, 21, 29 & 30 of the Mount Diablo Base & Meridian (MDB&M).

1. All monetary amounts in this agreement are denominated in US dollars.

2. Nevada Sunrise, LLC (Nevada) will grant Pan American Gold Corporation (Pan American) an option to earn a 60% ownership interest in The Property by complying with the various terms and conditions outlined in this Agreement.

3 . All option payments will be made to Nevada on or before their due dates. There is no grace period. However, Nevada must notify Pan American by Federal Express letter (or equivalent means) of any pending payments between 30 and 60 days prior to the due date of said payment. Should Nevada fail to provide said notification in a timely manner, a 30-day grace period will automatically be triggered. Failure to make payment on or before the mandatory date under this formula (whether or not a grace period has been triggered) may result in forfeiture of all Pan American's rights to and interests in The Property at Nevada's sole discretion.

4. All fees due to the Bureau of Land Management (BLM) for the maintenance of claims will be made by Pan American on or before August 1 of each year this agreement is in force. Payments due to BLM are not subject to any grace period.

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Should BLM make any changes in its procedures for maintaining mining claims, required payments will be made at least 30 days prior to any deadlines.

5. All fees due to Nye County for tile maintenance of claims will be made by Pan American on or before October 1 of each year this agreement is in force. Payments made to Nye County are not subject to any grace period.

6. Prior to commencement of any work by Pan American on The Property, Pan American will acquire a $2,000,000 liability insurance policy naming Nevada as primary beneficiary. Pan American will also hold Nevada harmless for any damages or injuries incurred due to Pan American's work on The Property. This is valid even if it is determined that dangerous conditions contributing to said damages and/or injuries pre-dated this agreement.

7. Pan American will comply with all the environmental and mining laws of The United States of America, The State of Nevada, and Nye County.

8. Pan American will post all required bonds prior to commencement of any work on The Property in a manner compliant with the regulating authority requiring said bond.

9. Pan American will apply for and receive any and all permits necessary for the exploration, development and mining of The Property prior to commencing any activity requiring a permit.

10. Pan American will keep the property free of all liens and encumbrances.

1. Option Payments (pre-payments against future royalties) will be scheduled as follows:

2. There is a $150,000 work commitment required for the first year. Thereafter, there is no formal work commitment. Pan American is free to advance The Property at a rate consistent with business conditions and with its strategic goals provided the terms and conditions of this agreement are followed.

3. Pan American has the option (assuming it is a listed publicly traded company) upon the First Anniversary of this agreement and thereafter to pay up to 25% of its annual option payment with shares of its own stock having a valuation equal to one half the average daily close of the previous 30 trading days. (For example, if the stock

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maintained an average daily close of $1.00 per share over the previous 30 trading days, Nevada would credit as much as $0.50 per share against as much as 25% of the payment due on any option anniversary from the first anniversary forward.)

4. Pan American agrees to advance The Property through "Bankable Feasibility" in order to secure its 60% earn-in and establish a Joint Venture between Pan American and Nevada using the Rocky Mountain Joint Venture Agreement Form 5.

5. Upon "Bankable Feasibility", Pan American and Nevada will enter a formal Joint Venture agreement and share the expense of operating the property based upon their ownership interest.

6. At a minimum, Nevada will retain a 2% NSR on The Property against which the cash portion of any annual option payments made by Pan American will be deducted prior to NSR payments. NSR payments may be taken in cash or "in kind" solely at Nevada's option. The choice of payment type must be declared by Nevada at least six months prior to the NSR payment(s) affected.

7. Nevada maintains a 1 mile area of influence around The Property as it is presently defined by Nevada's existing claims. Any claims added within this area of influence by Nevada during the term of this agreement will become part of this agreement at the sole option of Pan American. Any claims added by Pan American within the one mile area of influence will become subject to the terms and conditions of this agreement. In either case, the area of influence held by Nevada will not increase from its original size.

8. Nevada, at its sole expense, will prepare all documents and file all newly located claims on The Property within 30 days of the initiation of this agreement.

9. Nevada, at its sole expense, will have the title to its claims reviewed by Richard W. Harris (Nevada's attorney) resulting in a formal Tide Report to be completed within 60 days of the initiation of this agreement. If a full Title Opinion is requested by Pan American, Nevada and Pan American will share equally in any expense above and beyond the cost of preparation of the Title Report to create a formal Title Opinion fully backed by Harris' professional liability insurance.

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10. All factual data acquired by Pan American will be made available to Nevada and at Nevada's expense on a reasonable basis.

11. In the event of any disputes between Nevada and Pan American arising from this agreement or possible Joint Venture Agreement in the future, both companies agree to submit to binding arbitration in the State of Nevada. Each party's share of payment for such arbitration will be set by the arbitration process.

12. Should, for any reason, this Agreement or the Joint Venture Agreement to follow be terminated, Pan American will make all factual data available to Nevada. Any direct costs incurred by Pan American for the transfer of said data will be covered by Nevada.

Agreed to this 9th day of December, 2003:

/s/ William B. Henderson
William B. Henderson, Manager
Nevada Sunrise, LLC

/s/ J. Graham Douglas
J. Graham Douglas, President
Pan American Gold Corporation

THIS AGREEMENT is made as of the 16th day of January, 2004,

BETWEEN:

OF THE FIRST PART,

AND:

OF THE SECOND PART.

A. WHEREAS the Vendor is the legal and beneficial owner of a 100% interest in and to certain mining claims situated in the Eskay Creek region, Skeena Mining Division, British Columbia (more particularly set out in Schedule "A" hereto and hereinafter referred to as the "Property");

B. AND WHEREAS the Vendor wishes to sell to the Purchaser, and the Purchaser wishes to buy from the Vendor, a 75% undivided interest in and to the Property;

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants and agreements herein contained and subject to the terms and conditions hereinafter set out, the parties hereto agree as follows:

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1.01 The Vendor hereby sells to the Purchaser and the Purchaser hereby buys from the Vendor a 75% undivided interest in and to the Property by:

1.02 The Vendor shall be entitled to receive 2% of "Net Smelter Returns" (as defined and paid in accordance with Schedule "B" which is made a part hereof and hereinafter referred to as the "Royalty" ). The Vendor's entitlement to the Royalty is a contractual right only and does not entitle the Vendor to any right, title or interest in and to the Property.

1.03 The Purchaser shall pay all costs and expenses incurred in exploring and developing the Property and maintaining the Property in good standing by the performance and recording of work for the benefit of the Property until such time as a "feasibility study" (as that term is defined in National Instrument 43-101) indicates that production from the Property is commercially viable (a "Positive Feasibility Study" ). For certainty, the Vendor shall have neither the right nor the obligation to make any contribution with respect to the Property until such time as the Vendor has received a copy of the Positive Feasibility Study. Upon receipt of the Positive Feasibility Study by the Vendor, all further work shall take place pursuant to a joint venture agreement, substantially the same as the mining joint venture agreement most recently published by the Continuing Legal Education Society of British Columbia. The material terms and conditions of the joint venture are set out in Schedule "C".

1.07 Prior to the Closing, the Vendor shall deliver to the Purchaser Bills of Sale or other applicable conveyances, in registerable or recordable form, conveying the interest hereby purchased from the Vendor to the Purchaser.

1.08 In this agreement, "Closing" means the completion of the transaction hereby contemplated, and will take place at the offices of VECTOR Corporate Finance Lawyers, Barristers & Solicitors, 1040-999 West Hastings Street, Vancouver, B.C., V6C 2W2, and the

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"Date of Closing" means the day on which the Closing takes place, and which the parties agree shall be April 2, 2004, or such later date as may be mutually agreed to.

2.01 The Vendor hereby represents and warrants to the Purchaser that:

2.02 The representations and warranties hereinbefore set out are conditions upon which the Purchaser has relied on entering into this agreement and shall survive the Closing, and the Vendor hereby forever indemnities and saves the Purchaser harmless from all loss, damage, costs, actions and suits arising out of or in connection with any breach of any representation or warranty made by it and contained in this agreement.

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3.01 The Purchaser represents and warrants to the Vendor that:

3.02 The representations and warranties hereinbefore set out are conditions upon which the Vendor has relied on entering into this agreement and shall survive the Closing, and the Purchaser hereby indemnifies and saves the Vendor harmless from all loss, damages, costs, actions and suits arising out of or in connection with any breach of any representation or warranty made by it and contained in this agreement.

4.01 The Vendor hereby covenants with and to the Purchaser that up to and including the Closing Date:

5.01 The Purchaser hereby covenants with and to the Vendor that it will, on Closing and thereafter, assume and discharge for the benefit of the Vendor all duties, obligations and liabilities arising out of or related to the Property, whether or not such duties, obligations and

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liabilities were incurred prior to Closing, and the Purchaser hereby indemnities and saves harmless the Vendor from all claims, actions, liabilities, damages, costs and expenses resulting from any breach of or failure to comply with any and all of the then applicable federal, provincial, municipal or local laws, statutes, regulations, treaties, orders, judgments, decrees, ordinances, official directives and all authorizations relating to the environment or occupational health or safety which arise and relate to the Vendor's right, title and interest in and to the Property and which relate to events which occurred prior to the Closing.

5.02 The Purchaser is accepting the physical, including environmental, condition of the Property, as is.

5.03 The Purchaser hereby covenants and agrees with the Vendor that it will:

6.01 The obligation of the Purchaser to complete the sale of the 75% interest in the Property pursuant hereto is subject to the following conditions being satisfied:

The foregoing conditions shall be for the exclusive benefit of tile Purchaser and may, without prejudice to any of the rights of the Purchaser hereunder (including reliance on or enforcement of warranties or covenants which are preserved dealing with or similar to the condition or conditions waived) be waived by it in writing, in whole or in part, at any time. In case any of the

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said conditions shall not be complied with, or waived by the Purchaser, at or before the Closing, the Purchaser may rescind and terminate this agreement by written notice to the Vendor and, in such event, the Purchaser and the Vendor shall be released from all obligations hereunder.

7.01 If there is any disagreement, dispute or controversy (hereinafter collectively called a "Dispute" ) between the parties with respect to any matter arising under this agreement or the construction hereof, then the Dispute shall be determined by arbitration in accordance with the following procedures:

The arbitration shall be conducted in accordance with the Commercial Arbitration Act (British Columbia) and the decision of the arbitrator shall be made within 30 days following his being named, shall be based exclusively on the advancement of exploration, development and production work on the Property and not on the financial circumstances of the parties. The costs of arbitration shall be borne equally by the parties to the Dispute unless otherwise determined by the arbitrator in the award.

8.01 If any party should be delayed in or prevented from performing any of the terms, covenants or conditions of this agreement by reason of a cause beyond the control of such party, including fires, floods, earthquakes, subsidence, ground collapse or landslides, interruptions or delays in transportation or power supplies, strikes, lockouts, wars, acts of God, government regulation or interference, including but without restricting the generality of the foregoing, forest or highway closures or any other cause beyond such party's control, then any such failure on the part of such party to so perform shall not be deemed to be a breach of this agreement and the time within which such party is obliged to comply with any such term, covenant or condition of this agreement shall be extended by the total period of all such delays. In order that the provisions of this article may become operative, such party shall give notice in writing to the other party,

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forthwith and for each new cause of delay or prevention and shall set out in such notice particulars of the cause thereof and the day upon which the same arose, and shall give like notice forthwith following the date that such cause ceased to subsist.

9.01 Any notice, election, consent or other writing required or permitted to be given hereunder shall be deemed to be sufficiently given if delivered or if mailed by registered air mail or by telegram or fax, addressed as follows:

and any such notice given as aforesaid shall be deemed to have been given to the parties hereto if delivered, when delivered, or if mailed, on the tenth business day following the date of mailing, or, if telegraphed or taxed, on the next succeeding day following the telegraphing or taxing thereof PROVIDED HOWEVER that during the period of any postal interruption in either the country of mailing or the country of delivery, any notice given hereunder by mail shall be deemed to have been given only as of the date of actual delivery of the same. Any party may from time to time by notice in writing change its address for the purpose of this paragraph.

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10.01 The parties hereto hereby covenant and agree that they will execute such further agreements, conveyances and assurances as may be requisite, or which counsel for the parties may deem necessary to effectually carry out the intent of this agreement.

10.02 This agreement shall represent the entire understanding between the parties with respect to the Property. No representations or inducements have been made save as herein set forth. No changes, alterations, or modifications of this agreement shall be binding upon either party until and unless a memorandum in writing to such effect shall have been signed by all parties hereto.

10.03 The titles to the articles to this agreement shall not be deemed to form part of this agreement but shall be regarded as having been used for convenience of reference only.

10.04 The schedules to this agreement shall be construed with and as an integral part of this agreement to the same extent as if they were set forth verbatim herein.

10.05 All reference to dollar amounts contained in this agreement are references to Canadian funds.

10.06 This agreement shall be governed by and interpreted in accordance with the laws in effect in British Columbia, and the parties hereto attorn to the courts of British Columbia for the resolution of any disputes arising out of this agreement.

10.07 This agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

IN WITNESS WHEREOF this agreement has been executed by the parties hereto as of the day and year first above written.

This is page 10 of that certain agreement dated the 16th day of January, 2004 between Matthew J. Mason , of the first part and 680102 B.C. Ltd. , of the second part.

TO THAT CERTAIN AGREEMENT MADE AS OF THE 16th DAY OF JANUARY, 2004 BETWEEN MATTHEW J. MASON OF THE FIRST PART AND 680102 B.C. LTD. OF THE SECOND PART

MINING DIVISION: SKEENA, LIARD, B.C.

AREA: Iskut River

N.T.S.: 104 B, 104 G

TO THAT CERTAIN AGREEMENT MADE AS OF THE 16th DAY OF JANUARY, 2004, BETWEEN MATTHEW J. MASON (THE "OWNER" ) OF THE FIRST PART AND 680102 B.C. LTD. (THE "PAYOR" ) OF THE SECOND PART

1. In the Agreement, "Net Smelter Returns" means the actual proceeds received by the Payor for its own account from the sale of ore, or ore concentrates or other products from the Property to a smelter or other ore buyer after deduction of smelter and/or refining charges, ore treatment charges, penalties and any and all charges made by the purchaser of ore or concentrates, less all umpire charges which the purchaser may be required to pay. Not less than 60 days prior to the commencement of any fiscal year of the Payor, the Owner shall have the right to receive Net Smelter Returns in kind for any fiscal year of the Payor. Upon the Owner giving such notice, the Owner and the Payor shall enter into good faith negotiations with each other to settle the manner in which the payment shall be calculated and paid, it being the intent that the payment received in kind shall be commercially equivalent to the payment that the Owner would have been received if it had been made in the form of money.

2. Payment of Net Smelter Returns by the Payor to the Owner shall be made semi-annually within 60 days after the end of each fiscal half year of the Payor and shall be accompanied by unaudited financial statements pertaining to the operations carried out by the Payor on the Property. Within 90 days after the end of each fiscal year of the Payor in which Net Smelter Returns are payable to the Owner, the records relating to the calculation of Net Smelter Returns for such year shall be audited and any resulting adjustments in the payment of Net Smelter Returns payable to the Owner shall be made forthwith. A copy of the said audit shall be delivered to the Owner within 30 days of the end of such 90-day period.

3. Each annual audit shall be final and not subject to adjustment unless the Owner delivers to the Payor written exceptions in reasonable detail within six months after the Owner receives the report. The Owner, or its representative duly authorized in writing, at its expense, shall have the right to audit the books and records of the Payor related to Net Smelter Returns to determine the accuracy of the report, but shall not have access to any other books and records of the Payor. The audit shall be conducted by a chartered or certified public accountant of recognized standing. The Payor shall have the right to condition access to its books and records on execution of a written agreement by the auditor that all information will be held in confidence and used solely for purposes of audit and resolution of any disputes related to the report. A copy of the Owner's report shall be delivered to the Payor upon completion, and any discrepancy between the amount actually paid by the Payor and the amount which should have been paid according to the Owner's report shall be paid forthwith, one party to the other. In the event that the said discrepancy is to the detriment of the Owner and exceeds 5% of the amount actually paid by the Payor, then the Payor shall pay the entire cost of the audit.

4. Any dispute arising out of or related to any report, payment, calculation or audit shall be resolved solely by arbitration as provided in the Agreement. No error in accounting or in interpretation of the Agreement shall be the basis for a claim of breach of fiduciary duty, or the like, or give rise to a claim for exemplary or punitive damages or for termination or rescission of the Agreement or the estate and rights acquired and held by the Payor under the terms of the Agreement.

TO THAT CERTAIN AGREEMENT MADE AS OF THE 16th DAY OF JANUARY, 2004 BETWEEN MATTHEW J. MASON OF THE FIRST PART AND 680102 B.C. LTD. OF THE SECOND PART

MATERIAL TERMS OF THE JOINT VENTURE AGREEMENT

1. Each party will contribute to all costs in proportion to its percentage undivided Property interest ( "Interest" ) from time to time.

2. All operations on and in connection with the Property shall be managed by a committee (the "Management Committee" ) comprising two representatives of each party. All decisions of the Management Committee shall be made by simple majority of the votes cast. The representative of a party in the Management Committee shall have such number of votes as equals such party's Interest at the time of the vote.

3. All operations on and in connection with the Property shall be carried out exclusively by the "Operator" . The Operator shall have the right to retain such subcontractors as it sees fit. The Purchaser shall be the initial Operator and shall remain as the Operator for so long as its Interest is 50% or greater. If the Purchaser's Interest is less than 50%, the party with the highest Interest shall be the Operator.

4. Each party shall elect whether on not it will fund its proportionate share of construction costs and mining costs. Any party which elects not to fund its proportionate share of construction costs and mining costs shall transfer its entire Interest to the other participants and shall receive, as consideration for such transfer, a royalty equal to 10% of Net Profits.

5. The Operator shall be entitled to include in each budget, in addition to the amounts to be actually expended, the reasonably estimated cost of satisfying continuing obligations relating to environmental protection, rehabilitation, reclamation and de-commissioning.

Dated: January 2, 2004

BETWEEN:

MATTHEW J. MASON

OF THE FIRST PART

AND:

680102 B.C. LTD.

OF THE SECOND PART

VECTOR Corporate Finance Lawyers
Barristers & Solicitors
1040-999 West Hastings Street
Vancouver, B.C. V6C 2W2
Tel: (604) 683-1102

GHS/kj

This Operating Agreement is made and entered into this __26 day of November, 2003, by and among the Members whose signatures appear on the signature page hereof and the Company, by its Managers, James D. Frank and Robert A. Prescott.

WHEREAS, the undersigned include all of the Members of the Company prior to the date hereof, and

WHEREAS, such Members have unanimously agreed to admit Pan American Gold Corporation., a Nevada corporation as a Class B Member upon the signature of this Operating Agreement by its sole Director and President, J. Graham Douglas, and contribution of $90,000 to the capital of the Company, and

WHEREAS, the Members desire to add a transfer by a Member to Pan American Gold Corporation, a Nevada corporation, of which J. Graham Douglas is the President and sole Director, to the list of Permitted Transfers under Section 11.2.

NOW THEREFORE, the Members hereby amend the operating agreement and restate the entire amended operating agreement as follows:

In consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

The following capitalized terms used in this Operating Agreement shall have the following meanings:

1.1 " Act " shall mean the Colorado Limited Liability Company Act as the same exists on the date hereof and as may be amended from time to time.

1.2 " Adjusted Capital Contributions " of an Equity Owner shall mean an amount equal to such Equity Owner's Capital Contributions, if any, made pursuant to Article 8, less any Distributions made to such Equity Owner.

1.3 " Affiliate " shall mean, with respect to any Person, (i) any Person directly or indirectly controlling, controlled by, or under common control with such Person, (ii) any Person owning or controlling ten percent or more of the outstanding Voting Interests of such Person, (iii) any officer, director, manager, trustee, or general partner of such Person, (iv) any Person who is an officer, director, manager, trustee, general partner, or holder of ten percent or more of

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the Voting Interests of any Person described in clauses (i) through (iii) of this sentence, (v) a member of the Family of such Person, or (vi) any Person directly or indirectly controlled by or under common control with a member of the Family of such Person. For purposes of this definition, the term "controls," "is controlled by," or "is under common control with" shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

1.4 " Articles of Organization " shall mean the Articles of Organization of the Company as filed with the Colorado Secretary of State on September 30, 2002, as the same may be amended from time to time.

1.5 " Capital Account " as of any given date shall mean the Capital Contribution to the Company by an Equity Owner as adjusted up to the date in question pursuant to Article 8.

1.6 " Capital Contribution " shall mean any contribution to the capital of the Company in cash or property by an Equity Owner whenever made. " Initial Capital Contribution " shall mean the initial Capital Contribution of an Equity Owner to the capital of the Company pursuant to this Operating Agreement.

1.7 " Class A Members " shall mean those Persons designated in Section 4.1.

1.8 " Class B Members " shall mean those Persons designated in Section 4.3.

1.9 " Class C Members " shall mean those persons admitted as Class C Members pursuant to section 12.1(b), the names, addresses, facsimile numbers, and units of which shall be added to Schedule 4.5 attached here to and incorporated by reference herein, by an amendment to this operating agreement pursuant to Section 14.6.

1.10 " Code " shall mean the Internal Revenue Code of 1986. Any reference to a specific section of the Code shall be to such section in effect as of the date of this Operating Agreement, or, if such referenced section is subsequently amended or superseded, to the corresponding section of the Code that so amends or supersedes the referenced section of the Code.

1.11 " Company " shall mean Cactus Precious Metals LLC.

1.12 " Deadlock " shall mean a situation in which (a) either (i) a vote of the Managers is evenly split, and a majority vote of the Managers is required thereon or (ii) a sufficient number of Managers refuse to vote on two consecutive matters and (b) irreparable injury to the Company is threatened or the business and affairs of the Company can no longer be conducted to the advantage of the Members generally as a result thereof.

1.13 " Default Rate " shall mean a floating interest rate equal to five percentage points

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higher than the Prime Rate on the applicable date.

1.14 " Deficit Capital Account " shall mean with respect to any Equity Owner, the deficit balance, if any, in such Equity Owner's Capital Account as of the end of the taxable year, after giving effect to the adjustments set forth in Section 8.5(e). This definition of Deficit Capital Account is intended to comply with the provisions of Sections 1.704-1(b)(2)(ii)(d) and 1.704-2 of the Treasury Regulations, and will be interpreted consistently with those provisions.

1.15 " Depreciation " shall mean, for each Fiscal Year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable under the Code or the Treasury Regulations with respect to an asset for such Fiscal Year, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such Fiscal Year bears to such beginning adjusted tax basis; provided, however, that if the adjusted basis for federal income tax purposes of an asset at the beginning of such Fiscal Year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Managers.

1.16 " Distributable Cash " shall mean all cash and cash equivalents received by the Company, less the sum of the following to the extent paid or set aside by the Company: (i) all principal and interest payments on indebtedness of the Company and all other sums paid to lenders; (ii) all cash expenditures incurred incident to the normal operation of the Company's business; and (iii) such Reserves as the Managers reasonably deem necessary for the proper operation of the Company's business.

1.17 " Distribution " shall mean any transfer of Company money or other property including, without limitation, the capital of the Company, to an Equity Owner on account of an Economic Interest, regardless of whether the transfer occurs during the operation of the Company, on Liquidation of the Company, in exchange for the Member's interest, or otherwise.

1.18 " Economic Interest " shall mean an Equity Owner's share of one or more of the Company's Net Profits, Net Losses and Distributions pursuant to this Operating Agreement and the Act, but shall not include any right to participate in the management or affairs of the Company, including, the right to vote on, consent to or otherwise participate in any decision of the Members or Managers.

1.19 " Economic Interest Owner " shall mean the owner of an Economic Interest who is not a Member.

1.20 " Enforceable Obligation " shall mean an obligation designated as an Enforceable Obligation in Section 8.1, 8.2 or 8.3.

1.21 " Entity " shall mean any general partnership, limited partnership, limited liability

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company, corporation, joint venture, trust, foundation, business trust, cooperative or association or any foreign trust or foreign business organization.

1.22 " Equity Owner " shall mean an Economic Interest Owner or a Member.

1.23 " Family " of a Person shall mean such Person's spouse, parent or children.

1.24 " Fiscal Year " shall mean the Company's fiscal year, which shall be the calendar year, unless otherwise required by the Code or the Treasury Regulations or pursuant to election made thereunder.

1.25 " Gift " shall mean to make a gift, to bequeath or to otherwise transfer for no consideration, whether or not by operation of law. For purposes of this Operating Agreement, a Transfer of an asset to a bankruptcy trustee or a bankruptcy estate shall not be considered a Gift.

1.26 " Gross Asset Value " shall mean, with respect to any asset, the asset's adjusted basis for federal income tax purposes, subject to the following:

(a) The initial Gross Asset Value of property contributed shall be as set forth in Section 8.4;

(b) The Gross Asset Values of all Company assets shall be adjusted to equal their respective fair market values, as reasonably determined by the Managers, as of the following times: (i) the acquisition of an additional interest by any new or existing Equity Owner in exchange for more than a de minimis contribution of property (including money); (ii) the Distribution by the Company to an Equity Owner of more than a de minimis amount of property as consideration for an Ownership Interest; and (iii) the liquidation of the Company within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations; provided, however, that adjustments pursuant to clauses (i) and (ii) above shall be made only if the Managers reasonably determine that such adjustments are necessary or appropriate to reflect the relative interests of the Equity Owners in the Company;

(c) The Gross Asset Value of any Company asset distributed to any Equity Owner shall be adjusted to equal the fair market value of such asset on the date of Distribution as reasonably determined by the distributes and the Managers, provided that, if the distributes is a Manager, the determination of the fair market value of the distributed asset shall require the Unanimous Consent of the Members (determined without regard to the Voting Interest of the distributes Member); and

(d) The Gross Asset Values of Company assets shall be 'increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Section 734(b) of the Code or Section 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Section 1.704-

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1(b)(2)(iv)(m) of the Treasury Regulations, Section 8.5 of this Operating Agreement and subparagraph (d) under the definition of Net Profits and Net Losses. However, the Gross Asset Values of Company assets shall not be adjusted pursuant to the foregoing sentence, to the extent the Managers reasonably determine that an adjustment pursuant to subparagraph (b) of this definition is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to the foregoing sentence.

If the Gross Asset Value of an asset has been determined or adjusted pursuant to subparagraph (a), (b) or (d) of this definition, then such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Profits and Net Losses.

1.27 " Liquidation " shall mean the termination of the Company under Section 708(b)(1) of the Code or the cessation of the Company as a going concern, including the dissolution of the Company pursuant to Section 13.1 hereof (even though the Company may continue in existence for the purpose of winding up its affairs, paying its debts, and distributing any remaining funds or property to the Equity Owners).

1.28 " Majority Interest " with respect to a matter shall mean one or more Voting Interests of the Members which taken together exceed 50% of the aggregate of all Voting Interests of the Members.

1.29 " Managers " shall mean the managers designated or appointed in accordance with Section 5.2.

1.30 " Member " shall mean each of the Persons who executes a counterpart of this Operating Agreement as a Member, each Person listed on Schedule 4.5, and each of the Persons who may hereafter become a Member.

1.31 " Membership Interest " shall mean a Member's entire interest in the Company including such Member's Economic Interest and Voting Interest, if any.

1.32 " Net Profits " and " Net Losses " shall mean for each taxable year of the Company an amount equal to the Company's net taxable income or loss for such year as determined for federal income tax purposes (including separately stated items) in accordance with the accounting method and rules used by the Company and in accordance with Section 703 of the Code with the following adjustments:

(a) Any items of income, gain, loss and deduction allocated to Equity Owners pursuant to Sections 10.2, 10.3 or 10. 15 shall not be taken into account in computing Net Profits or Net Losses;

(b) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Profits and Net Losses (pursuant to this

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definition) shall be added to such taxable income or loss;

(c) Any expenditure of the Company described in Section 705(a)(2)(B) of the Code and not otherwise taken into account in computing Net Profits and Net Losses (pursuant to this definition) shall be subtracted from such taxable income or loss;

(d) In the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (b) or (c) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as income or loss from the disposition of such asset for purposes of computing Net Profits and Net Losses;

(e) Gain or loss resulting from any disposition of any Company asset with respect to which income or loss is recognized for federal income tax purposes shall be computed with reference to the Gross Asset Value of the asset disposed of, notwithstanding that the adjusted tax basis of such asset differs from its Gross Asset Value;

(f) In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year; and

(g) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) of the Code or Section 743(b) of the Code is required pursuant to Section 1.704-1 (b)(2)(iv)(m)(4) of the Treasury Regulations to be taken into account in determining Capital Accounts as a result of a Distribution other than in liquidation of a Ownership Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Profits or Net Losses.

1.33 " Officers " shall mean the officers designated or appointed in accordance with Article 6.

1.34 " Operating Agreement " shall mean this First Amended and Restated Operating Agreement as originally executed and as amended from time to time.

1.35 " Ownership Interest " shall mean:

(a) in the case of a Member, the Member's Membership Interest; and

(b) in the case of an Economic Interest Owner, the Economic Interest Owner's Economic Interest.

1.36 " Person " shall mean any individual or Entity, and the heirs, executors, administrators, legal representatives, successors, and assigns of such "Person" where the context so permits.

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1.37 " Prime Rate " shall mean a floating interest rate equal to the prime rate published in The Wall Street Journal on the applicable date.

1.38 " Property " shall mean that certain real property described by its legal description as Sections 8 and 17, T10N, R13W, SBB&M, Kern County, California.

1.39 " Proxy " shall mean the appointment of a natural Person over the age of 21 years, as a proxy to vote or otherwise act for a Member with respect to the Member's Voting Interest, which proxy shall be revocable unless the appointment form conspicuously states that is irrevocable, and any such irrevocable proxy shall be irrevocable, regardless of whether it is coupled with an interest, and shall be specifically enforceable.

1.40 " Reserves " shall mean funds set aside or amounts allocated to reserves which shall be maintained in amounts reasonably deemed sufficient by the Managers for working capital and to pay taxes, insurance, debt service or other costs, capital expenditures or expenses incident to the ownership or operation of the Company's business.

1.41 " Sell " shall mean to sell, assign, transfer, exchange, or otherwise transfer for consideration.

1.42 " Sharing Ratio " shall mean the measure of an Equity Owner's Economic Interest, determined by the quotient of such Equity Owners' Units divided by the sum of all of the Equity Owners' Units.

1.43 " Tax Distribution Amount " shall have the meaning set forth in Section 10.4(a).

1.44 " Transfer " shall mean, as a noun, any voluntary or involuntary transfer, assignment, sale, gift, bequest, devise or other disposition and, as a verb, to voluntarily or involuntarily transfer, assign, Sell, Gift, bequest, devise or otherwise dispose of. For purposes of this Operating Agreement: (1) a grant of a Proxy shall not be deemed to be a Transfer; but (2) a change in the trustee of a trust described in Section I 1.2(e) shall be deemed to be a Transfer.

1.45 " Transferring Equity Owner " shall mean any Equity Owner who Transfers all or any portion of his Membership Interest or Economic Interest.

1.46 " Treasury Regulations " shall include proposed, temporary and final regulations promulgated under the Code. Any reference to a specific section of the Treasury Regulations shall be to such section, in effect as of the date of this Operating Agreement, or, if such referenced section is subsequently amended or superseded, to the corresponding section of the Treasury Regulations that so amends or supersedes the referenced section of the Treasury Regulations.

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1.47 " Units " of an Equity Owner shall be that number set forth adjacent to the Equity Owner's name in the column entitled Units in Sections 4.2 or 4.4 or on Schedule 4.5.

1.48 "Two Thirds Interest" with respect to a matter shall mean one or more Voting Interests of Members which taken together equal or exceed two thirds of the aggregate of all Voting Interests entitled to vote thereon.

1.49 " Unrecovered Losses " shall have the meaning set forth in Section 10.1.

1.50 "Voting Interest" of a Member shall be (a) the quotient of (i) the Units held by such Member, divided by (ii) the aggregate of Units held by all the Members (b) multiplied by 100.

2.1 Formation . On September 30, 2002, James D. Frank organized a Colorado limited liability company by causing articles of organization to be delivered to the Colorado Secretary of State in accordance with and pursuant to the Act.

2.2 Name . The name of the Company is Cactus Precious Metals LLC.

2.3 Places of Business . The Company may locate its places of business, including its principal place of business, at any place or places as the Managers may from time to time deem advisable.

2.4 Registered Agent and Office . The Company's initial registered agent in Colorado and the business address thereof shall be as set forth in the Articles of Organization. The Colorado registered agent and its business address may be changed, in the discretion of the Managers, from time to time, by filing the business address of the new office and/or the name of the new registered agent with the Colorado Secretary of State pursuant to the Act.

2.5 Term . The Company shall continue in existence until its termination in accordance with the provisions of this Operating Agreement or the Act.

2.6 Limitation of Liability . Except as required by the non-waivable provisions of the Act or by this Operating Agreement, no Equity Owner shall be liable for an obligation of the Company solely by reason of being or acting as an Equity Owner.

3.1 Permitted Businesses . The purpose of the Company shall be:

(a) To accomplish any lawful business whatsoever, or which shall at any time appear conducive to or expedient for the protection or benefit of the Company and its assets;

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(b) To exercise all powers necessary to or reasonably connected with the Company's business which may be legally exercised by limited liability companies under the Act;

(c) To explore and exploit the natural resources located at the Property; and

(d) To engage in all activities necessary, customary, convenient, or incident to any of the foregoing.

4.1 Class A Members . The names, addresses, facsimile numbers and Capital Contributions to date of the Class A Members are as follows:

4.2 Class A Units . Unless and until adjusted pursuant to the terms of this Operating Agreement, the Units of the Class A Members, shall be as follows:

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4.3 Class B Members . The names, addresses, facsimile numbers and Initial Capital Contributions of the Class B Members are as follows:

4.4 Class B Units . Unless and until adjusted pursuant to the terms of this Operating Agreement, the Units of the Class B Members, shall be as follows:

4.5 Class C Members . The names, addresses, facsimile numbers, Initial Capital Contributions, and Units of the Class C Members, if any, shall be as set forth in schedule 4.5 attached hereto and incorporated by reference herein.

5.1 Management . The business and affairs of the Company shall be managed by the Managers. Unless authorized to do so by the Managers or as expressly set forth in this Operating Agreement, no Member, Equity Owner, attorney-in-fact, employee or other agent or Affiliate of the Company shall have any power or authority to direct the affairs of the Company, bind the Company in any way, pledge its credit or to render it liable pecuniarily for any purpose. Except for situations in which the approval of the Members is expressly required by this Operating Agreement or by non-waivable provisions of applicable law, the Managers shall have full and complete authority, power and discretion to manage and control the business, affairs an properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business. Without limiting the generality of the foregoing, except as limited by Section 5.4 of this Operating Agreement, the Managers shall have power and authority without further action of the Members, on behalf of the Company:

(a) To acquire real and/or personal property from any Person, on such terms as the Managers may deem appropriate;

(b) To borrow money for the Company or incur indebtedness for the Company's business from banks or other lending institutions, on such terms as the Managers deem appropriate, and in connection therewith, to hypothecate, encumber and grant security interests in the assets of the Company to secure repayment of the borrowed sums;

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(c) To obligate the Company to indemnify any Manager or Member who shall guarantee any debt of the Company or who shall pledge or hypothecate such Manager or Member's property to secure the debts of the Company;

(d) To purchase liability and other insurance to protect the Company's property and business;

(e) To hold and own any Company real and/or personal properties in the name of the Company;

(f) To invest any Company funds temporarily (by way of example but not limitation) in time deposits, short-term governmental obligations, commercial paper or other investments;

(g) To Sell or otherwise dispose of the Company's real or personal property, in whole or in part, on such terms as the Managers shall deem appropriate;

(h) To execute on behalf of the Company all instruments and documents, including, without limitation, checks; drafts; notes and other negotiable instruments; mortgages or deeds of trust; security agreements; employment agreements; distribution and sales agreements; financing statements; documents providing for the acquisition, mortgage or disposition of the Company's property; assignments; bills of sale; leases; brokerage agreements; partnership agreements, operating agreements of other limited liability companies; and any other instruments or documents necessary, in the reasonable opinion of the Managers, to the ordinary conduct of the business of the Company;

(i) To employ accountants, legal counsel, managing agents or other experts to perform services for the Company and to compensate them from Company funds;

(j) To enter into any and all other agreements on behalf of the Company, with any other Person for any purpose, in such forms as the Managers may approve;

(k) To do and perform all other acts as may be necessary or appropriate to the ordinary conduct of the Company's business;

(1) To make Distributions which are authorized pursuant to Sections 9.4 or 9.5 of this Operating Agreement; and

(m) To delegate to one or more Managers the powers, rights and authority of the Managers with respect to the Company's powers and the management of the business and affairs of the Company, whether in general or confined to specific instances, provided that such delegation shall be revocable, upon notice to the one or more Mangers to whom the delegated powers, rights and authority are granted, and that such delegation does not

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alone constitute compliance with applicable standards of conduct by each of the Mangers.

5.2 Number, Tenure and Qualifications . The Company shall initially have two Managers. The initial Managers shall be James D. Frank and Robert A. Prescott. The number of Managers of the Company shall be fixed from time to time by the affirmative vote of Members holding a Majority Interest, but 'in no instance shall there be less than one Manager. Each Manager shall hold office until he or she resigns pursuant to Section 5.9, is removed pursuant to Section 5.10, or dies. Managers need not be residents of the State of Colorado. Managers may, but need not be, Members of the Company.

5.3 Manner of Acting . At any time when there is more than one manager, any action permitted to be taken by the Managers shall require an affirmative vote of a majority of the Managers, unless the approval of a greater or smaller number of the Managers is expressly required or permitted by this Operating Agreement.

5.4 Limitation on Authority . The Managers shall not cause or commit the Company to do any of the following unless approved by the affirmative vote of Members holding a Majority Interest:

(a) Sell or otherwise dispose of any Company property, real or personal, tangible or intangible, to any Manager or any Affiliate of a Manager;

(b) lend money to or guaranty or become surety for the obligations of any Person;

(c) Sell or otherwise dispose of all, or substantially all, of the Company's assets (other than in the ordinary course of the Company's business) which is to occur as part of a single transaction or plan; or

(d) file, on behalf of or against the Company, for relief under the federal bankruptcy laws.

5.5 Deadlock . Upon a Deadlock of the Managers, the Managers shall hold a meeting of the Managers at which meeting the Managers shall consider and vote upon the matters to which the Deadlock relates. If, at such meeting, the Managers are unsuccessful in resolving the Deadlock of the Managers, the matter in question shall be submitted to a vote of the Members at a meeting of the Members held for such purpose, which matter shall be deemed passed upon an affirmative vote of Members holding a Majority Interest. If the vote of the Members results in a Deadlock of the Members, a second vote of the Members shall be taken on the matter, at the same meeting of the Members. If such second vote of the Members is unsuccessful in resolving the Deadlock of the Members, the Company shall be dissolved pursuant to Article 13.

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5.6 Duty of Care . Managers of the Company shall perform their duties as Managers in good faith, in a manner they reasonably believe to be in the best interests of the Company, and with such care as ordinarily prudent persons in a like position would use under similar circumstances. The Managers do not, in any way, guarantee the return of the Equity Owners' Capital Contributions or a profit for the Equity Owners from the operations of the Company. No Manager shall be liable to the Company or to any Equity Owner for any loss or damage sustained by the Company or any Equity Owner, unless the loss or damage shall have been the result of fraud, deceit, gross negligence, willful misconduct, material breach of this Operating Agreement or a wrongful taking by such Manager. No Manager shall be liable to any Equity Owner or the Company with respect to any act performed in good faith or any act which, in good faith, was not performed, provided that such Manager believed the action or failure to take action was necessary or appropriate in connection with the ordinary and proper conduct of the Company's business or the preservation of its property, and consistent with the provisions of this Operating Agreement.

In performing their duties, the Managers shall be entitled to rely, in good faith, on information, opinions, reports, or statements, including financial statements and other financial data, in each case prepared or presented by Persons and groups reasonably believed to have knowledge, experience or judgment pertaining to a matter in question, but they shall not be considered to be acting in good faith if they have knowledge concerning the matter in question that would cause such reliance to be unwarranted. Those Persons and groups on whose information, opinions, reports, and statements a Manager is entitled to rely include, but are not limited to: (a) one or more employees or other agents of the Company whom the Managers reasonably believe to be reliable and competent in the matters presented and (b) legal counsel, public accountants, or other persons as to matters that the Managers reasonably believe to be within such persons' professional or expert competence.

5.7 Managers, Officers, and Members Have No Exclusive Duty to Company . The Managers shall not be required to manage the Company as their sole and exclusive occupation. The Managers, Officers and any Equity Owner may have other business interests and may engage in other investments, occupations and activities in addition to those relating to the Company, including those investments, occupations and activities which may be in competition with the activities and interests of the Company, provided that no Manager, Officer or Member may engage in any financial activity or transaction relating to the Property other than in such capacity. Neither the Company nor any Equity Owner shall have any right, by virtue of this Operating Agreement, to share or participate in such other investments or activities of any Manager, Officer, or any Equity Owner or to the income or proceeds derived therefrom. Although a business opportunity of the sort engaged in by the Company may come to the attention of one or more of the Managers, Officers or Equity Owners, e Managers, Office and the Equity Owners shall not be under a duty, express or implied, to first offer such opportunity to the Company or to the other Equity Owners before such Managers, Officers or Equity Owner may, personally or on behalf of another entity with which the Manager or Equity Owner is affiliated, take advantage of such opportunity, and the Equity Owners personally and the Company as an Entity, hereby discharge and release the Managers, Officers and other Equity

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Owners of and from any duty to the contrary which may be owed by Managers, Officers or Equity Owners, directly or indirectly, from the doctrine generally referred to as the "corporate opportunity doctrine" or any like principle of law applicable to limited liability companies. No Managers, Officers or Equity Owner shall incur any liability to the Company or to any of its Equity Owners as a result of engaging in any other business venture.

5.8 Indemnity of the Managers, Officers, Employees and Other Agents . The Company shall indemnify the Managers for and hold them harmless from any liability, whether civil or criminal, and any loss, damage, or expense, including reasonable attorneys' fees, incurred in connection with the ordinary and proper conduct of the Company's business and the preservation of its business and property, or by reason of the fact that such Person is or was a Manager; provided the Manager to be indemnified acted in good faith and in a manner such Manager believed to be consistent with the provisions of this Operating Agreement; and provided further that with respect to any criminal action or proceeding, the Manager to be indemnified had no reasonable cause to believe the conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that indemnification is not available hereunder. The obligation of the Company to indemnify any Manager hereunder shall be satisfied out of Company assets only, and if the assets of the Company are insufficient to satisfy its obligation to indemnify any Manager, such Manager shall not be entitled to contribution from any Member. The Company may indemnify its officers, employees, and other agents who are not Managers to the fullest extent permitted by law, provided that such indemnification in any given situation is approved by the Managers.

5.9 Resignation . Any Manager may resign at any time by giving written notice to any other Manager or, if no other Managers exist, to the Members. The resignation of any Manager shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. The resignation of a Manager who is also an Equity Owner shall not affect the Manager's rights as an Equity Owner.

5.10 Removal . A Manager may be removed with or without cause at any time by the affirmative vote of Members holding a Majority Interest. The removal of a Manager who is also an Equity Owner shall not affect the Manager's rights as an Equity Owner and shall not constitute a withdrawal of an Equity Owner.

5.11 Vacancies . Any vacancy occurring for any reason in the number of Managers of the Company shall be filled by the Unanimous Consent of Members (determined without regard to the Voting Interest, if any, owned by a Manager who was removed for cause pursuant to the Section 5.10 during the preceding 24-month period). Any Manager's position to be filled by reason of an increase in the number of Managers shall be filled by the Unanimous Consent of Members.

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5.12 Compensation, Reimbursement, Organization Expenses .

(a) No Manager shall be entitled to compensation from the Company for services provided to the Company as a Manager. Upon the submission of appropriate documentation each Manager shall be reimbursed by the Company for reasonable out-of-pocket expenses incurred by such Manager on behalf of the Company or at the Company's request.

(b) The Company shall make an appropriate election to treat the expenses incurred by the Company in connection with the formation and organization of the Company to be amortized under the 60-month period beginning with the month in which the Company begins business to the extent that such expenses constitute "organizational expenses" of the Company within the meaning of Code Section 709(b)(2).

5.13 Right to Rely on the Managers . Any Person dealing with the Company may rely (without duty of further inquiry) upon a certificate signed by any Manager as to:

(a) The identity of any Manager or Equity Owner;

(b) The existence or nonexistence of any fact or facts which constitute a condition precedent to acts on behalf of the Company by any Manager or which are in any other manner germane to the affairs of the Company;

(c) The Persons who are authorized to execute and deliver any instrument or document of the Company; or

(d) Any act or failure to act by the Company or any other matter whatsoever involving the Company or any Equity Owner.

6.1 General . Except as provided in this Operating Agreement, the powers and authority of the Managers, or any individual Manager may not be delegated to any other person or entity. The Company shall have as Officers a President, a Vice President of Operations and a Chief Geologist, as well as any other Officers that the Managers may deem necessary in their sole discretion, which Officers shall be appointed by the Managers. The Officers of the Company shall hold their offices for the terms, exercise their authority and perform their duties as shall be determined from time to time by this Operating Agreement and by the Managers. The same Person may hold any two or more offices.

6.2 Term . Each Officer shall hold office from the time of appointment until he or she dies, is removed pursuant to Section 6.3 or resigns pursuant to Section 6.4.

6.3 Removal . Any Officer appointed by the Managers may be removed at any time without cause by the unanimous vote of the Managers or with cause by the affirmative vote of at

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least two-thirds of the Managers. For purposes of this Section 6.3 the term "cause" shall mean (a) the willful and continued refusal by an Officer to substantially perform duties and responsibilities required of the Officer in this Operating Agreement or by the Managers other than any such refusal based upon the written advice received by the Officer's legal counsel that performance of his or her duties would cause a breach of his or her duties to the Company or be a violation of applicable law or regulation; (b) the willful engagement by an Officer in activities which would result in a material injury to the Company; or (c) the acknowledged or admitted commission by an Officer of acts of fraud, embezzlement, theft or other dishonest acts against the Company or the good faith determination by the Managers that an Officer has committed the foregoing acts. For the purposes hereof, no act or failure or refusal to act on an Officer's part shall be considered "willful" if done, or omitted to be done, by such Officer in good faith and with belief that his or her action or omission was in the best interest of the Company. The removal of an Officer pursuant to this Section 6.3 shall not affect the Officer's status as a Manager, if any, of the Company or his or her rights as an Equity Owner, if any.

6.4 Resignation . Any Officer appointed by the Managers may resign at any time by giving written notice of resignation to any Manager (other than himself or herself, unless he or she is the sole Manager at the time of such resignation, in which case written notice shall be given to the members). Such resignation shall take effect upon the receipt of notice thereof or at such later time as shall be specified in the notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. The resignation of an Officer shall not, unless so expressly stated in the notice of resignation, constitute a resignation by the Officer of his or her position of Manager or a withdrawal of the Officer as an Equity Owner, as the case may be.

6.5 President . Subject to the direction and control of the Managers, the President shall be the chief operating officer of the Company and as such, and subject to the direction and control of the Managers, shall have control over the operations of the business of the Company and shall see that all orders and resolutions of the Managers are carried into effect. Without limiting the generality of the foregoing, the President, without further action of the Managers: (a) may negotiate, enter into, and execute contracts, deeds, and other 'instruments on behalf of the Company as are necessary and appropriate to the conduct of the business and affairs of the Company or as are approved by the Managers, (b) may purchase liability and other insurance to protect the Company's property and business, (c) may invest any Company funds temporarily (by way of example but not limitation) in time deposits, short term governmental obligations, commercial paper, or other investments, (d) to sell or otherwise dispose of the Company's real or personal property, in whole or in part, on such terms as the President shall deem appropriate, provided that the total sales price thereof may not exceed $100,000 without the prior written consent of the Managers, and (e) may employ accountants, legal counsel, managing agents, or other experts to perform services for the Company and to compensate them from Company funds. The President shall have such additional authority and duties as are appropriate and customary for the office of chief executive officer, except as the same may be expanded or limited by the Managers from time to time.

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6.6 Vice-President of Operations . Subject to the direction of the President, the Vice-President of Operations shall manage the design, permitting, construction, operation and reclamation of the mining operations of the Company, and shall assist the President and other Officers with feasibility studies, fund raising and other duties. The Vice-President of Operations may hire employees, and execute contracts, deeds, and other instruments on behalf of the Company as necessary and appropriate to the management of the mining operations of the Company.

6.7 Chief Geologist . Subject to the direction of the President, the Chief Geologist shall manage the exploration for minerals on the mining properties of the Company, and shall evaluate, document and interpret the results of the exploration work undertaken. The Chief Geologist shall assist in establishing and monitoring procedures for mining the mineral deposits identified. The Chief Geologist shall assist the President and other Officers with feasibility studies, permitting, land management, fund-raising and other duties. The Chief Geologist may hire employees, and execute contracts, deeds, and other instruments on behalf of the Company as necessary and appropriate to the management of the exploration work.

6.8 Compensation . Officers shall receive, in addition to any compensation or expense reimbursement received by them as a Manager pursuant to Section 5.12, such compensation for their services as may be authorized or ratified by the Managers.

6.9 Effect of Delegation . Nothing in this Article 6, nor any delegation of a Manager's duties hereunder, shall, by itself, cause any Manager to cease to be a Manager.

7.1 Records, Audits and Reports . At the expense of the Company, the Company shall maintain records and accounts of its operations and expenditures. The Company shall keep at its principal place of business the following records:

(a) A copy of the Articles of Organization of the Company and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any amendment has been executed;

(b) Copies of the Company's currently effective written Operating Agreement and copies of any writings permitted or required with respect to an Equity Owner's obligation to contribute cash, property or services;

(c) A current list of the full name, the last known business, residence, or mailing address and the Ownership Interest of each Equity Owner and the full name and last known business, residence, or mailing address of each Manager, both past and present;

(d) Copies of the Company's federal, state, and local income tax returns and

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reports, if any, for the four most recent years;

(e) Copies of any financial statements of the Company for the three most recent years;

(f) Minutes of every annual, special meeting and court-ordered meeting and any written consents obtained from Members for actions taken by Members without a meeting.

7.2 Inspection Rights .

(a) Upon reasonable request, each Member shall have the right, during ordinary business hours, at the requesting Member's expense, to:

(i) Inspect and copy the documents maintained by the Company pursuant to Section 7.1(a) through (f);

(ii) Obtain from the Managers from time to time, but not more often than annually, for any purpose reasonably related to the Member's interest as a Member:

(A) True and full information regarding the state of the business and financial condition of the Company and any other information regarding the affairs of the Company; and

(B) Promptly after becoming available, a copy of the Company's federal, state and local income tax returns for each year; and

(iii) Have a formal accounting of the Company affairs whenever circumstances render it just and reasonable.

(b) Upon reasonable request, at the requesting Economic Interest Owner's expense, each Economic Interest Owner shall have the right, during ordinary business hours, to inspect and copy the documents maintained by the Company pursuant to Section 7.1(a) through (f) and, subject to the affirmative vote of Members holding a Majority Interest, to:

(i) Obtain from the Managers from time to time, but not more often than annually, for any purpose reasonably related to the Economic Interest Owner's interest as an Economic Interest Owner:

(A) True and full information regarding the state of the business and financial condition of the Company and any other information regarding the affairs of the Company; and

(B) Promptly after becoming available, a copy of the Company's federal, state and local income tax returns for each year; and

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(ii) Have a formal accounting of the Company affairs whenever circumstances render it just and reasonable.

8.1 No Required Meetings . The Members may but shall not be required to hold any annual, periodic or other formal meetings. Meetings of the Members may be called by any Manager or by any Member or Members holding at least ten percent of the Voting Interests of the Members.

8.2 Place of Meetings . The Managers or Member(s) calling the meeting may designate any place within the State of Colorado as the place of meeting for any meeting of the Members. If no designation is made, the place of meeting shall be the registered office of the Company within the State of Colorado.

8.3 Notice of Meetings . Except as provided in Section 8.4, written notice stating the place, day and hour of the meeting and the purpose or purposes for which the meeting is called shall be delivered not less than ten nor more than fifty days before the date of the meeting, either personally or by mail, by or at the direction of the Manager or Member(s) calling the meeting, to each Member entitled to vote at such meeting.

8.4 Meeting of all Members . If all of the Members shall meet at any time and place, either within or outside of the State of Colorado, and consent to the holding of a meeting at such time and place, such meeting shall be valid without call or notice, and at such meeting lawful action may be taken.

8.5 Record Date . For the purpose of determining Members: (a) entitled to notice of or to vote at any meeting of Members or any adjournment thereof; (b) Members entitled to receive payment of any Distribution; or (c) Members for any other purpose, the date on which notice of the meeting is mailed or the date on which the resolution declaring such Distribution is adopted, or the date on which determination of Members is made for any other purpose, respectively, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this Section 8.5, such determination shall apply to any adjournment thereof.

8.6 Quorum . Members holding a Two Thirds Interest, represented in person or by Proxy, shall constitute a quorum with respect to a matter to be voted upon at any meeting of Members. In the absence of a quorum at any such meeting, a majority of the Voting Interests so represented may adjourn the meeting from time to time for a period not to exceed 60 days without further notice. However, if the adjournment is for more than 60 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Member of record entitled to vote at the meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. The Members

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present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal during such meeting of that number of Voting Interests whose absence would cause less than a quorum.

8.7 Manner of Acting .

(a) If a quorum is present with respect to a matter, the affirmative vote of Members holding a Majority Interest shall be the act of the Members, unless the vote of a greater or lesser proportion or number is otherwise required by the Act or this Operating Agreement.

(b) Unless otherwise expressly provided herein or required under applicable law, Members who have an interest (economic, as a Manager or otherwise) in the outcome of any particular matter upon which the Members vote or consent may vote or consent upon any such matter and their Voting Interest, vote or consent, as the case may be, shall be counted in the determination of whether the requisite matter was approved by the Members.

(c) If a Person voting, consenting, waiving, appointing a Proxy, or revoking a Proxy appointment is not a Member, the Managers, if acting in good faith, may accept such vote, consent, waiver, Proxy appointment or Proxy appointment revocation and to give it effect as the act of the Member for whom such Person purports to be acting, if. (i) subject to the provisions of Section 11.3(a), (A) the Person so acting purports to be that of an administrator, personal representative, executor, trustee (other than a trustee in bankruptcy), guardian, or conservator representing the Member and, if the Managers request, evidence of fiduciary status acceptable to the Managers has been presented with respect to the vote, consent, waiver, Proxy appointment or Proxy appointment revocation; (B) the Person so acting purports to be a receiver or trustee in bankruptcy of the Member and, if the Managers request, evidence of this status acceptable to the Managers has been presented with respect to the vote, consent, waiver, Proxy appointment or Proxy appointment revocation; or (C) the Person so acting purports to be a pledgee, beneficial owner or attorney-in-fact of the Member and, if the Managers request, evidence acceptable to the Managers of the Person's authority to so act for the Member has been presented with respect to the vote, consent, waiver, Proxy appointment or Proxy appointment revocation; (ii) the Member is an Entity and the Person so acting purports to be that of an officer or agent of the Entity; (iii) two or more Persons are the Member as co-tenants or fiduciaries and the Person so acting purports to be at least one of the co-tenants or fiduciaries, and appears to be acting on behalf of all the co-tenants or fiduciaries; or (iv) the acceptance of the vote, consent, waiver, Proxy appointment or Proxy appointment revocation is otherwise proper under rules established by the Managers that are not inconsistent with this Operating Agreement.

The Managers may reject a vote, consent, waiver, Proxy appointment or Proxy appointment revocation of a Person if (a) they are acting in good faith, and (b) either (i) the Managers have reasonable basis for doubt about the validity of the authority of the Person so acting to act for the Member, or (ii) the requirements of Section 11.3(a) have not been met.

None of the Company, its Managers, or any agent who accepts or rejects a vote, consent

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waiver, Proxy appointment or Proxy appointment revocation in good faith and in accordance with the standards of Section 8.7(c) is liable in damages for the consequences of the acceptance or rejection.

8.8 Proxies . At all meetings of Members, a Member may vote in person or by Proxy executed in writing by the Member. Such Proxy shall be filed with the Managers of the Company before or at the time of the meeting.

8.9 Action by Members Without a Meeting . Action required or permitted to be taken at a meeting of Members may be taken without a meeting if the action is evidenced by one or more written consents or approvals describing the action taken and signed by Members holding sufficient Voting Interests to approve such action had such action been properly voted on at a duly called meeting of the Members. Action taken under this Section 8.9 is effective when Members with the requisite Voting Interests have signed the consent or approval, unless the consent specifies a different effective date. The record date for determining Members entitled to take action without a meeting shall be the date the first Member signs a written consent.

8.10 Waiver of Notice . When any notice is required to be given to any Member, a waiver thereof 'in writing signed by the Person entitled to such notice, whether before, at, or after the time stated therein, shall be equivalent to the giving of such notice.

8.11 Meetings by Telecommunication . Any or all of the Members may participate in a meeting of Members by, or the meeting may be conducted through the use of, any means of communication by which all persons participating in the meeting may hear each other during the meeting. A Member participating in a meeting by this means is deemed to be present in person at the meeting.

9.1 Initial Capital Contributions . Each Class A Member has contributed to the capital of the Company cash or property in such amount as is set forth in the column entitled Capital Contribution in Section 4.1. Each Class B Member shall contribute to the capital of the Company cash or property in such amount as is set forth in the column entitled Initial Capital Contribution in Section 4.3. Each Class C Member shall contribute to the capital of the Company cash or property in such amount as is set forth in the column entitled Initial Capital Contribution on Schedule 4.5. The obligation of a Member to contribute its Initial Capital Contribution under the foregoing two sentences shall be an Enforceable Obligation of such Member. Except for the foregoing, and as set forth in Sections 9.2 and 9.3, no Equity Owner shall be required to make any Capital Contributions.

9.2 Permitted Additional Capital Contributions . To the extent recommended by the Managers and approved by an affirmative vote of Members holding a Two Thirds Interest, the Members may be permitted to make additional Capital Contributions (the "Permitted Additional Capital Contributions"), provided that all of the Members shall have the opportunity (but not the

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obligation) to participate 'in such Permitted Additional Capital Contribution proportionate to their Sharing Ratios. The Managers shall provide to each of the Members a statement of the terms on which the Permitted Additional Capital Contributions may be made, including the effect of the Permitted Additional Capital Contributions on the Equity Owners' Sharing Patios and Voting Interests (the "Permitted Additional Capital Contribution Notice"). All Permitted Additional Capital Contributions shall be made 'in cash or cash equivalent only. Any Member electing to participate in a Permitted Additional Capital Contribution shall deliver written and executed notice of such election (the "Member Election Notice") to the Company on or before the (late set forth in Permitted Additional Capital Contribution Notice. Upon the delivery by a Member of the Member's written election to participate in a Permitted Additional Capital Contribution, the amount of such contribution shall be an Enforceable Obligation against such Member.

9.3 Mandatory Additional Capital Contributions . No Equity Owner shall be required to make any Capital Contribution, other than that which is an Enforceable Obligation under Sections 9.1 and 9.2.

9.4 Valuation of Contributed Property .

(a) The fair market value and the initial Gross Asset Value of property contributed by a Member as its Initial Capital Contribution shall be the amount set forth in the column entitled "Initial Capital Contribution" in Sections 4.1 or 4.3 or Schedule 4.5, as the case may be.

(b) Other than as described in Section 9.4(a), the fair market value and initial Gross Asset Value of any property other than cash shall be determined as follows:

(i) The value of the property other than cash contributed shall be the fair market value thereof, taking 'into consideration any liabilities to which the property is subject, as determined by the Managers 'in good faith. Upon such a determination by the Managers, the Managers shall give notice thereof to the Members, which determination shall be final, conclusive and binding, unless, within 20 days after the giving of such notice a Member makes demand upon the Company objecting to such determination.

(ii) In the case of an objection to the Managers' determination made pursuant to Section 9.4(b)(i), the value of the property other than cash contributed shall be the fair market value of such item, taking into consideration any liabilities to which the property is subject, as determined by the Company's independent certified public accountants or such other certified public accountants that are acceptable to the Managers and the objecting Member, which determination shall be final, conclusive and binding or, if there be no such certified public accountants or if they refuse or are unable to make such a determination, then the determination of fair market value, taking into consideration any liabilities to which the property is subject, shall be submitted to and settled by binding arbitration under and pursuant to the Colorado Uniform Arbitration Act and the Rules and Regulations of the American Arbitration Association, the decision or award from which shall be final, conclusive and binding and a final judgment

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may be entered thereon by any court of competent jurisdiction. The cost of such determination by certified public accountants or arbitration shall be borne and paid by the objecting Member, unless the determination of fair market value thereby is 20% less than the fair market value determined by the Managers under Section 9.4(b)(i), in which case such cost shall be home by the Company.

9.5 Capital Accounts .

(a) A separate Capital Account will be maintained for each Equity Owner. Each Equity Owner's Capital Account will be increased by (1) the amount of money contributed by such Equity Owner to the Company; (2) the fair market value of property contributed by such Equity Owner to the Company (net of liabilities secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Code); (3) allocations to such Equity Owner of Net Profits; (4) any items 'in the nature of 'income and gain which are specially allocated to the Equity Owner pursuant to Sections 10.2 or 10.3 and (5) allocations to such Equity Owner of income described in Section 705(a)(1)(B) of the Code. Each Equity Owner's Capital Account will be decreased by (1) the amount of money distributed to such Equity Owner by the Company; (2) the fair market value of property distributed to such Equity Owner by the Company (net of liabilities secured by such distributed property that such Equity Owner is considered to assume or take subject to under Section 752 of the Code); (3) allocations to such Equity Owner of expenditures described in Section 705(a)(2)(B) of the Code; (4) any items in the nature of deduction and loss that are specially allocated to the Equity Owner pursuant to Sections 10.2 or 10.3 and (5) allocations to such Equity Owner of Net Losses.

(b) In the event of a permitted sale or exchange of an Ownership Interest in the Company, the Capital Account of the transferor shall become the Capital Account of the transferee to the extent it relates to the transferred Ownership Interest in accordance with Section
1.704-1(b)(2)(iv) of the Treasury Regulations.

(c) The manner in which Capital Accounts are to be maintained pursuant to this Section 9.5 is intended to comply with the requirements of Section 704(b) of the Code and the Treasury Regulations promulgated thereunder. If in the opinion of the Company's accountants the manner in which Capital Accounts are to be maintained pursuant to the preceding provisions of this Section 9.5 should be modified in order to comply with Section 704(b) of the Code and the Treasury Regulations thereunder, then notwithstanding anything to the contrary contained in the preceding provisions of this Section 9.5, the method in which Capital Accounts are maintained shall be so modified; provided, however, that any change in the manner of maintaining Capital Accounts shall not materially alter the economic agreement between or among the Equity Owners.

(d) Upon Liquidation of the Company, liquidating distributions will in all cases be made in accordance with the positive Capital Account balances of the Equity Owners, as determined after taking into account all Capital Account adjustments for the Company's taxable year during which the Liquidation occurs by the end of such taxable year (or, if later,

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within 90 days after the date of Liquidation). The Company may offset damages for breach of this Operating Agreement by an Equity Owner whose interest is liquidated (either upon the withdrawal of the Equity Owner or the Liquidation of the Company) against the amount otherwise distributable to such Equity Owner. Except as otherwise required in the Act (and subject to Sections 9.1, 9.2 and 9.3), no Equity Owner shall have any liability to restore all or any portion of a deficit balance in such Equity Owner's Capital Account.

(e) For purposes of this Section 9.5, each Equity Owner's Deficit Capital Account, if any, shall be adjusted as follows:

(i) credit to such Deficit Capital Account any amount which such Equity Owner is obligated to restore under Section 1.704-1(b)(2)(ii)(c) of the Treasury Regulations, as well as any addition thereto pursuant to the next to last sentence of Sections 1.704-2(g)(1) and (i)(5) of the Treasury Regulations, after taking into account thereunder any changes during such year in partnership minimum gain (as determined 'in accordance with Section 1.704-2(d) of the Treasury Regulations) and 'in the minimum gain attributable to any partner nonrecourse debt (as determined under Section 1.704-2(i)(3) of the Treasury Regulations); and

(ii) debit to such Deficit Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations.

9.6 Remedies for Non-Payment of Enforceable Obligations . Upon a failure of any Equity Owner (the "Defaulting Equity Owner"), to make full and timely payment to the Company of an Enforceable Obligation, the Defaulting Equity Owner, if it is a Member, shall become, upon the date of such failure, instead, an Economic Interest Owner with no night to participate in the Management of the Company, and, the Managers shall promptly give notice to the Defaulting Equity Owner of- (a) the failure and (b) that, if the Defaulting Equity Owner is a Member, it has so become an Economic Interest Owner.

10.1 Allocations of Profits and Losses from Operations . The Net Profits and Net Losses of the Company for each Fiscal Year shall be allocated as follows:

(a) Except as provided in Section 10.2, Net Losses shall be allocated as follows:

(i) First, to each Equity Owner whose Adjusted Capital Contribution is greater than zero, until the total amount of Net Losses allocated to each such Equity Owner pursuant to this Section 10.1(a)(i) is equal to the total amount of each such Equity Owner's Adjusted Capital Contribution. Net Losses allocated pursuant to this Section 10.1(a)(i) shall be allocated to the Equity Owners in proportion to their respective Adjusted Capital Contributions.

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(ii) Second, to the Equity Owners in proportion to their relative Sharing Ratios.

(b) Except as provided in Section 10.2, Net Profits shall be allocated to the Equity Owners as follows:

(i) First, to each Equity Owner which previously has been allocated Net Losses pursuant to Section 10.1(a) which have not been fully offset by allocations of Net Profits pursuant to this Section 10.1(b)(i) ("Unrecovered Losses") until the total amount of Net Profits allocated to each such Equity Owner pursuant to this Section 10.1(b)(i) is equal to the total amount of Net Losses which have been allocated to such Equity Owner pursuant to Section 10.1(a). Net Profits allocated pursuant to this Section 10.1(b)(i) shall be allocated to the Equity Owners in proportion to the respective Unrecovered Losses;

(ii) Second, to each Equity Owner an amount equal to the total amount distributed to such Equity Owner pursuant to Section 10.5(a) proportionate with the total amount distributed to the Equity Owners pursuant to Section 10.5(a);

(iii) Third, to each Class A Member an amount equal to the total amount distributed to such Class A Member pursuant to Section 10.5(b)(ii) proportionate with the total amount distributed to the Class A Members pursuant to Section 10.5(b)(ii).

(iv) Fourth, to the Equity Owners in proportion to their Sharing Ratio.

10.2 Special Allocations to Capital Accounts . The allocations of Net Profits and Net Losses of the Company made pursuant to Section 10.1 shall be subject to the following special allocations:

(a) In the event any Equity Owner unexpectedly receives any adjustments, allocations, or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6) of the Treasury Regulations, which create or increase a Deficit Capital Account of such Equity Owner, then items of Company income and gain (consisting of a pro rata portion of each item of Company income, including gross income, and gain for such year and, if necessary, for subsequent years) shall be specially allocated to such Equity Owner in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Deficit Capital Account so created as quickly as possible. It is the intent that this Section 10.2(a) be interpreted to comply with the alternate test for economic effect set forth in Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations.

(b) In the event any Equity Owner would have a Deficit Capital Account at the end of any Company taxable year which is in excess of the sum of any amount that such Equity Owner is obligated to restore to the Company under Section 1.704-1(b)(2)(ii)(c) of the Treasury Regulations and such Equity Owner's share of minimum gain as defined in Section 1.704-2(g)(1) of the Treasury Regulations (which is also treated as an obligation to restore in

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accordance with Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations), the Capital Account of such Equity Owner shall be specially credited with items of Company income (including gross income) and gain in the amount of such excess as quickly as possible.

(c) Notwithstanding any other provision of this Section 10.2, if there is a net decrease in the Company's minimum gain as defined in Section 1.704-2(b) of the Treasury Regulations during a taxable year of the Company, then, the Capital Accounts of each Equity Owner shall be allocated items of income (including gross income) and gain for such year (and if necessary for subsequent years) equal to that Equity Owner's share of the net decrease in Company minimum gain. This Section 10.2(c) is intended to comply with the minimum gain chargeback requirement of Section 1.704-2 of the Treasury Regulations and shall be interpreted consistently therewith. If in any taxable year that the Company has a net decrease in the Company's minimum gain, if the minimum gain chargeback requirement would cause a distortion in the economic arrangement among the Equity Owners and it is not expected that the Company will have sufficient other income to correct that distortion, the Managers may in their discretion (and shall, if requested to do so by a Member) seek to have the Internal Revenue Service waive the minimum gain chargeback requirement in accordance with Section 1.7042(f)(4) of the Treasury Regulations.

(d) Notwithstanding any other provision of this Section 10.2, except Section 10.2(c), if there is a net decrease in Partner Nonrecourse Debt Minimum Gain, as defined in Section 1.704-2(i)(2) of the Treasury Regulations, attributable to a Partner Nonrecourse Debt during any Company Fiscal Year, each Member who has a share of the Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt (determined 'in accordance with Section 1.704-2(i)(5) of the Treasury Regulations) as of the beginning of the year shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) equal to such Member's share of the net decrease in Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt. A Member's share of the net decrease in Partner Nonrecourse Debt Minimum Gain shall be determined in accordance with Section 1.704-2(i)(4) of the Treasury Regulations; provided that a Member shall not be subject to this provision to the extent that an exception is provided by Section 1.704-2(i)(4) of the Treasury Regulations and any Revenue Rulings issued with respect thereto. Any Partner Nonrecourse Debt Minimum Gain allocated pursuant to this provision shall consist of flat, gains recognized from the disposition of Company property subject to the Partner Nonrecourse Debt, and, second, if necessary, a pro rata portion of the Company's other items of income or gain for that year. This Section 10.2(d) is intended to comply with the minimum gain chargeback requirement in Section 1.704-2(i)(4) of the Treasury Regulations and shall be interpreted consistently therewith.

(e) Items of Company loss, deduction and expenditures described in Section 705(a)(2)(B) of the Code which are attributable to any nonrecourse debt of the Company and are characterized as partner nonrecourse deductions under Section 1.704-2(i) of the Treasury Regulations shall be allocated to the Equity Owners' Capital Accounts in accordance with said Section 1.704-2(i) of the Treasury Regulations.

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(f) Beginning in the first taxable year in which there are allocations of nonrecourse deductions" (as described in Section 1.704-2(b) of the Treasury Regulations), such deductions shall be allocated to the Equity Owners in the same manner as Net Losses are allocated for such period.

10.3 Application of Credits and Charges . Any credit or charge to the Capital Accounts of the Equity Owners pursuant to Section 10.2 hereof shall be taken into account in computing subsequent allocations of Net Profits and Net Losses pursuant to Section 10.1, so that the net amount of any items charged or credited to Capital Accounts pursuant to Sections 10.1 and 10.2 hereof shall to the extent possible, be equal to the net amount that would have been allocated to the Capital Account of each Equity Owner pursuant to the provisions of this Article 10 if the special allocations required by Section 10.2 hereof had not occurred.

10.4 Mandatory Distributions . Except as set forth in this Section 10.4, no Distributions shall be required to be made. The following Mandatory Distributions shall be made

(a) With respect to any year that the Company is taxed as a partnership under Section 7701 of the Code and that the Company has taxable income, a Distribution of cash to the existing Equity Owners, in proportion to their relative Sharing Ratios, in an amount equal to the Tax Distribution Amount, as such term is defined hereafter, shall be made. The Tax Distribution Amount with respect to a particular taxable year of the Company shall equal the Company's Partnership Income for that year multiplied by the percentage equal to the sum of (i) the then current highest individual federal income tax rate and (ii) the difference of (A) the then current highest individual Colorado income tax rate and (B) the product of the then current highest individual federal income tax rate and the then current highest Colorado income tax rate. The Tax Distribution Amount expressed as a formula shall be: X + [Y-(X x Y)], where "X" represents the current highest income tax rate and "Y" represents the then current highest Colorado income tax rate. The Company shall distribute the Tax Distribution Amount on or before the tenth day following the last day of taxable year for which the Company was taxed as a partnership.

(b) A distribution of $15,000.00 to each Class A Members ( the "Preferred Amounts")

(c) Distributions resulting from a Liquidation of the Company, to which the provisions of Section 9.5(d) shall apply.

(d) Distributions of Distributable Cash, if approved by the Managers.

10.5 Method of Distribution . All Distributions described in Section 10.4, except Distributions resulting from Liquidation, shall be made to the Equity Owners as follows:

(a) First, the Tax Distribution Amount shall be distributed to the Equity Owners;

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(b) Second, Distributions described in Section 10.4, other than the Tax Distribution Amount and Distributions resulting from Liquidation, shall be made to the Equity Owners as follows:

(i) First, to each Equity Owner whose Adjusted Capital Contribution is greater than zero, proportionate with their Adjusted Capital Contributions, until the amount of their respective Adjusted Capital Contributions equals zero;

(ii) Second, to each Class A Member, the Preferred Amount shall be distributed; and

(iii) Third, to the Equity Owners 'in proportion to their Sharing Ratios.

10.6 Limitation Upon Distributions . An Equity Owner may not receive a Distribution to the extent that, after giving effect to the Distribution, all liabilities of the Company, other than liabilities to Members on account of their Membership Interest, would exceed the fair market value of the Company. Other than Distributions described in Section 10.4, no Distributions may be made.

10.7 Distributions In Kind . The Managers may not compel any Equity Owner, except in the case of a Distribution to the Equity Owners in proportion to their Sharing Ratios, to accept a Distribution in property other than cash, except upon Liquidation.

10.8 Accounting Principles . The profits and losses of the Company shall be determined in accordance with accounting principles applied on a consistent basis using the accrual of accounting. It is intended that the Company will elect those accounting methods which provide the Company with the greatest tax benefits.

10.9 Interest On and Return of Capital Contributions . No Member shall be entitled to interest on its Capital Contribution or to return of its Capital Contribution, except as otherwise specifically provided for herein.

10.10 Loans to Company . Nothing in this Operating Agreement shall prevent any Equity Owner from making secured or unsecured loans to the Company by agreement with the Company nor require that any Equity Owner make secured or unsecured loans to the Company.

10.11 Accounting Period . The Company's accounting period shall be the Fiscal Year.

10.12 Priority and Return of Capital . Except as expressly provided in this Article 10, no Equity Owner shall have priority over any other Equity Owner, either as to the return of Capital Contributions or as to Net Profits, Net Losses or Distributions; provided that this Section 10.12 shall not apply to loans (as distinguished from Capital Contributions) which an Equity

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Owner has made to the Company.

10.13 Returns and other Elections . The Managers shall cause the preparation and timely filing of all tax returns required to be filed by the Company pursuant to the Code and all other tax returns deemed necessary and required in each jurisdiction 'in which the Company does business. Copies of such returns, or pertinent information therefrom, shall be furnished to the Equity Owners within a reasonable time after the end of the Company's Fiscal Year. All elections permitted to be made by the Company under federal or state laws shall be made by the Managers in their sole discretion.

10.14 Tax Matters Partner . James D. Frank, so long as he is a Member, is hereby designated the Tax Matters Partner ("TMP") as defined in Section 623l(a)(7) of the Code. The TMP and the other Members shall use their best efforts to comply with the responsibilities outlined in Sections 6221 through 6233 of the Code (including any Treasury Regulations promulgated thereunder), and in doing so shall incur no liability to any other Member.

10.15 Certain Allocations for Income Tax (But Not Book Capital Account) Purposes .

(a) In accordance with Section 704(c)(1)(A) of the Code and Section 1.704-3 of the Treasury Regulations, if a Member contributes property with a initial Gross Asset Value that differs from its adjusted basis at the time of contribution, income, gain, loss and deductions with respect to the property shall, solely for federal income tax purposes (and not for Capital Account purposes), be allocated among the Equity Owners so as to take account of any variation between the adjusted basis of such property to the Company and its Gross Asset Value at the time of contribution pursuant to the traditional method under Section 1.704-3(b) of the Treasury Regulations, the traditional method with curative allocations under Section 1.704-3(c) of the Treasury Regulations, the remedial allocation method under Section 1.704-3(d) of the Treasury Regulations, or such other method determined by the Managers on a property-by-property basis to be reasonable in appropriate circumstances.

(b) Pursuant to Section 704(c)(1)(B) of the Code, if any contributed property is distributed by the Company other than to the Equity Owner who had contributed such property within seven years of the contribution, then, except as provided in Section 704(c)(2) of the Code, the contributing Equity Owner shall, solely for federal income tax purposes (and not for Capital Account purposes), be treated as recognizing gain or loss from the sale of such property in an amount equal to the gain or loss that would have been allocated to such Equity Owner under Section 704(c)(1)(A) of the Code if the property had been sold at its fair market value at the time of the Distribution.

(c) In the case of any Distribution by the Company to an Equity Owner, such Equity Owner shall, solely for federal income tax purposes (and not for Capital Account purposes), be treated as recognizing gain in an amount equal to the lesser of:

(1) the excess (if any) of (A) the fair market value of the property

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(other than money) received in the Distribution over (B) the adjusted basis of such Equity Owner's Ownership Interest immediately before the Distribution reduced (but not below zero) by the amount of money received in the Distribution, or

(2) the Net Precontribution Gain (as defined in Section 737(b) of the Code) of the Equity Owner. The Net Precontribution Gain means tile net gain (if any) which would have been recognized by the distributes Equity Owner under Section 704(c)(1)(B) of the Code if all property which (1) had been contributed to the Company within seven years of the Distribution, and (2) is held by the Company immediately before the Distribution, had been distributed by the Company to another Equity Owner. If any portion of the property distributed consists of property which had been contributed by the distributes Equity Owner to the Company, then such property shall not be taken into account under this Section 10.15(c) and shall not be taken into account in determining the amount of the Net Precontribution Gain. If the property distributed consists of an interest in an Entity, the preceding sentence shall not apply to the extent that the value of such interest is attributable to the property contributed to such Entity after such interest had been contributed to the Company.

(d) All recapture of income tax deductions resulting from sale or disposition of Company property shall be allocated to the Equity Owners to whom the deduction that gave rise to such recapture was allocated hereunder to the extent that such Equity Owner is allocated any gain from the sale or other disposition of such property.

11.1 Restriction on Transfers . Except as otherwise permitted by this Article 11, no Equity Owner shall Transfer all or any portion of his Ownership Interest.

11.2 Permitted Transfers . Subject to the conditions and restrictions set forth in Section 11.3, an Equity Owner may at any time Transfer its Ownership Interest as follows:

(a) any Economic Interest Owner may Transfer its Economic Interest to any Equity Owner or to Pan American Gold Corporation, a Nevada corporation;

(b) any Member may Transfer its Membership Interest to any Member or to Pan American Gold Corporation, a Nevada corporation;

(c) any Equity Owner may Transfer its Ownership Interest to an administrator, personal representative, executor, receiver, trustee involuntarily by operation of law, Family member, or trustee of a trust in which the Equity Owner or any one or more members of its Family retains the entire beneficial interest; provided however , that (i) any such administrator, personal representative, executor, trustee or Family member shall not be entitled to any Voting Interest by reason of such Transfer, except if the Managers, in their sole and absolute discretion, accept a vote of such Voting Interest pursuant to Section 8.7(c), and (ii) any Transfer by such administrator, personal representative, executor, receiver, trustee or Family

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member shall be subject to all of the limitations upon Transfers of Ownership Interests arising or provided under Sections 11.3 and 11.6 of this Operating Agreement;

(d) any Equity Owner may Transfer its interest as collateral to a secured party under a grant of a security interest in an Ownership Interest, provided that the transferor and transferee shall execute and deliver to the Company such documents and instruments of conveyance as may be necessary or appropriate in the opinion of counsel to the Company to effect such Transfer and to confirm the agreement of the transferee to be bound by the provisions of this Operating Agreement, including without limitation: (i) acknowledgment and agreement by the transferee that it shall have no Voting Interest, except if the Managers, in their sole and absolute discretion accept a vote of such Voting Interest pursuant to Section 8.7(c); and (ii) acknowledgment and agreement by the transferee that the provisions of Article 11.3 shall apply to any subsequent Transfer, including a Transfer under the rights of sale accorded to the transferee as secured party; or

(e) any Equity Owner may Gift all or any portion of its Ownership Interest to any trust, so long as the Equity Owner is the sole trustee of such trust;

(Each of the Transfers described in this Section 11.2 shall be referred to in this Operating Agreement as a "Permitted Transfer").

11.3 Conditions to and Restrictions on Permitted Transfers .

(a) Each of the Permitted Transfers set forth in Section 11.2 shall be subject to the following conditions:

(i) The Transfer shall be confirmed by presentation to the Company of legal evidence of such Transfer, in form and substance satisfactory to the Managers.

(ii) The transferor and transferee shall execute such certificates or other documents and perform such other acts as may be reasonably requested by the Managers from time to time in connection with a Permitted Transfer.

(iii) The transferee shall attorn to and ratify this Operating Agreement;

(iv) Unless waived by the Managers, the transferor or the transferee shall provide an opinion of counsel, which opinion and counsel shall be reasonably satisfactory to the Managers, to the effect that such Transfer is exempt from all applicable securities registration requirements and that such Permitted Transfer will not violate any applicable laws regulating the Transfer of securities.

(v) No Transfer of an Ownership Interest that causes the Company to terminate under Section 708(b)(1)(B) of the Code shall be permitted, unless such Transfer is approved by the affirmative vote of Members holding a Majority Interest determined without

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regard to any Voting Interest held by the transferor, if any.

(vi) Unless waived by the Managers, the transferor and transferee shall furnish to the Company an opinion of counsel, which counsel and opinion shall be reasonably satisfactory to the Managers, that the Transfer will not cause the Company to terminate for federal income tax purposes and that such Transfer will not cause the application of the rules of Sections 168(g)(1)(B) and 168(h) of the Code (generally referred to as the "tax exempt entity leasing rules") or similar rules to apply to the Company, property of the Company, or the Equity Owners.

(b) Each of the Permitted Transfers set forth in Section 11.2 shall be subject to the following restrictions:

(i) The transferor and transferee shall reimburse and indemnify the Company and the remaining Equity Owners against any and all loss, damage, or expense arising directly or indirectly as a result of or in connection with any such Permitted Transfer.

(ii) The transferor or transferee shall furnish the Company with the transferee's taxpayer identification number and any other information reasonably necessary to permit the Company to file all required federal and state tax returns and other legally required information statements or returns.

(iii) No Transfer of any Ownership Interest in the Company shall be effective unless and until written notice (including the name and address of the proposed transferee or donee and the date of such Transfer) has been provided to the Company and the non-transferring Members.

(iv) Notwithstanding anything contained herein to the contrary (including, without limitation, Sections 11.2 and 11.3, hereof), if the Members do not approve a proposed Transfer of a transferring Member's Membership Interest by the affirmative vote of Members holding a Two Thirds Interest, as determined without regard to the Voting Interest of the Transferring Equity Owner, if any, then the transferee shall have no night to participate in the management of the business and affairs of the Company or to become a Member.

11.4 Effective Date . Any Transfer of an Ownership Interest in compliance with this Article 11 shall be deemed effective as of the later of (a) the date agreed upon by the transferor and transferee or (b) the date on which the transferor and transferee comply with all of the conditions set forth in Sections 11.3.

11.5 Effect of Transfers Not In Compliance with Agreement .

(a) In the event of a Transfer not in compliance with this Operating Agreement, the transferee shall be merely an Economic Interest Owner.

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(b) The Transferring Equity Owner shall indemnify the Company and the remaining Equity Owners against any and all loss, damage, or expense (including, without limitation, tax liabilities or loss of tax benefits) arising directly or indirectly as a result of any Transfer or purported Transfer in violation of this Article 11.

(c) The Company shall not be required to make any Distribution otherwise provided for in this Operating Agreement with respect to any transferred Ownership Interest until the requirements of this Article I 1 are met. The Company shall have the night to withhold payment of any Distribution otherwise payable on account of the interest conveyed until the amount, if any, of any damages, costs, or losses (including without limitation attorneys' fees) incurred by the Company or its Equity Owners as a result of or 'in connection with the Transfer has been determined by the Company and paid by the transferee and may apply such amount withheld toward any debt, liability or obligation owed to the Company or the other Members.

12.1 Admission of Additional Members . Additional Members may be admitted to the Company, provided that they execute a copy of this Operating Agreement, as follows:

(a) upon a Permitted Transfer of a Membership Interest, so long as it is approved pursuant to Section 11.3(b)(iv); or

(b) upon the affirmative vote of Members holding a Two Thirds Interest, by the issuance by the Company of a Membership Interest for such cash consideration and upon such terms ('including issuance of voting rights and Economic Interests) as determined by the affirmative vote of Members holding a Two Thirds Interest.

12.2 Effect of Admission of a New Member . No new Members shall be entitled to any retroactive allocation of losses, income or expense deductions incurred by the Company. In accordance with the provisions of Section 706(d) of the Code and the Treasury Regulations promulgated thereunder, the Managers may, at their option, at the time a Member is admitted, close the Company books (as though the Company's tax year had ended) or make pro rata allocations of loss, income and expense deductions to a new Equity Owner for that portion of the Company's tax year during which such Equity Owner was an Equity Owner.

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12.3 Creation of New Classes . By executing this Operating Agreement, the Members hereby consent to the creation of new classes of Membership Interests, assigning to such new classes those rights, privileges, duties and obligations determined by the Managers in their sole discretion.

13.1 Dissolution .

(a) The Company shall be dissolved only upon the occurrence of any of the following events:

(i) by the unanimous written agreement of all Members;

(ii) upon the death, retirement, resignation, expulsion, bankruptcy or dissolution of the final Member of the Company, unless the remaining Economic Interest Owners holding a Two-Thirds Interest affirmatively vote to continue the Company's business. For purposes of the foregoing sentence, each Economic Interest Owner shall have a Voting Interest equal to its Sharing Ratio multiplied by 100. If the Economic Interest Owners holding a Two-Thirds Interest so vote to continue the Company's business, each Economic Interest Owner may elect to become a Member by delivering written notice thereof to the other Economic Interest Owners, in which case, the Voting Interest of each electing Economic Interest Owner shall be its Sharing Ratio multiplied by 100; provided, however, that if no Economic Interest Owners elect to become Members, the Company shall be dissolved; or

(iii) upon an unresolved Deadlock under Section 5.6.

The Company shall not be dissolved upon the death, retirement, resignation, expulsion, bankruptcy or dissolution of an Equity Owner, except as set forth above.

(b) As soon as possible following the occurrence of any of the events specified in Section 13.1(a) effecting the dissolution of the Company, the Managers shall file a statement of intent to dissolve in such form as shall be prescribed by the Colorado Secretary of State with the Colorado Secretary of State's office.

13.2 Effect of Filing of Dissolving Statement . Upon the filing with the Colorado Secretary of State of a statement of intent to dissolve, the Company shall cease to carry on its business, except insofar as may be necessary for the winding up of its business, but its separate existence shall continue until a certificate of dissolution has been issued by the Secretary of State or until a decree dissolving the Company has been entered by a court of competent jurisdiction.

13.3 Winding Up and Distribution of Assets .

(a) Upon dissolution, an accounting shall be made by the Company's independent accountants of the accounts of the Company and of the Company's assets, liabilities

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and operations, from the date of the last previous accounting until the date of dissolution. The Managers shall immediately proceed to wind up the affairs of the Company.

(b) If the Company is dissolved and its affairs are to be wound up, the Managers shall:

(i) Sell or otherwise reduce to cash all of the Company's assets as promptly as practicable (except to the extent the Managers may determine to distribute any assets to the Equity Owners in kind),

(ii) Allocate any Net Profit or Net Loss resulting from such sales to the Equity Owners' Capital Accounts in accordance with Article 10 hereof,

(iii) Discharge all liabilities of the Company, including liabilities to Equity Owners who are also creditors, to the extent otherwise permitted by law, other than liabilities to Equity Owners for Distributions and the return of capital, and establish such reserves as may be reasonably necessary to provide for contingent liabilities of the Company (for purposes of determining the Capital Accounts of the Equity Owners, the amounts of such reserves shall be deemed to be an expense of the Company),

(iv) Distribute the remaining assets in the following manner:

(A) First, if any assets of the Company are to be distributed in kind, the fair market value of such assets as of the date of dissolution shall be determined in the same manner set forth in Section 9.4(b). Such assets shall, for all purposes, including the determination of Company income and gain, be deemed to have been sold as of the date of dissolution for their fair market value. The Capital Accounts of the Equity Owners shall be adjusted pursuant to the provisions of Section 9.5 and Article 10 to reflect such deemed sale.

(B) Second, to the Equity Owners 'in accordance with the positive balance (if any) of each Equity Owner's Capital Account (as determined after taking into account all Capital Account adjustments for the Company's taxable year during which the Liquidation occurs) shall be distributed to the Equity Owners, either in cash or in kind, as determined by the Managers, with any assets distributed in kind being valued for this purpose at their fair market value as determined in Section 13.3(b)(iv)(A). Any such Distributions to the Equity Owners in respect of their Capital Accounts shall be made in accordance with the time requirements set forth in Section 1.704-1(b)(2)(ii)(b)(2) of the Treasury Regulations.

(c) Notwithstanding anything to the contrary in this Operating Agreement, upon a liquidation within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations, if any Equity Owner has a Deficit Capital Account (after giving effect to all contributions, Distributions, allocations and other Capital Account adjustments for all taxable years, including the year during which such liquidation occurs), such Equity Owner shall have no obligation to make any Capital Contribution, and the negative balance of such Member's Capital

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Account shall not be considered a debt owed by such Equity Owner to the Company or to any other Person for any purpose whatsoever.

(d) Upon completion of the winding up and distribution of the assets, the Company shall be deemed terminated.

(e) Subject to the provisions of this Article 13, the Managers shall comply with any applicable requirements of applicable law pertaining to the winding up of the affairs of the Company and the final distribution of its assets.

13.4 Articles of Dissolution . When all debts, liabilities and obligations have been paid and discharged or adequate provisions have been made therefor and all of the remaining property and assets have been distributed to the Equity Owners, articles of dissolution in the form required by the Act shall be delivered to the Colorado Secretary of State. Upon the filing of the articles of dissolution, the existence of the Company shall cease, except for the purpose of suits, other proceedings and appropriate action as provided in the Act. The Manager shall have authority to distribute any Company property discovered after dissolution, convey real estate and take such other action as may be necessary on behalf of and in the name of the Company.

14.1 Offset and Security Interest . The Company may offset any amount owing by an Equity Owner to the Company (including damages for breach of this Operating Agreement), against any amount otherwise distributable to or on account of such Equity Owner, including, without limitation, Distributions on account of Liquidation or upon liquidation of the interest of an Equity Owner. As security for performance by the Equity Owners of all Enforceable Obligations of each Equity Owner and all other debts, liabilities and obligations of each Equity Owner to the Company, each Equity Owner hereby grants to the Company a security interest in the Equity Owner's Ownership Interest, and the Company shall have all the rights of a secured party under Article 9 of the Colorado Uniform Commercial Code. Contemporaneously with the execution of this Operating Agreement, or at such other time or times as requested by the Managers, each Equity Owner shall execute a UCC-1 Financing Statement evidencing such security interest.

14.2 Notices . Any notice, demand, or communication required or permitted to be given by any provision of this Operating Agreement shall be deemed to have been sufficiently given or served and effective (a) immediately for all purposes if delivered personally to the party or to an executive officer of the party to whom the same is directed or (b) upon transmission by facsimile transmission on a machine capable of verifying receipt, if receipt is so verified, or (c) effective two business days after it is deposited in a regularly maintained depository of the United States Postal Service, if sent by registered or certified mail, return receipt requested, postage and charges prepaid, or (d) on the next business day if sent by overnight delivery courier service (including but not limited to, Federal Express), if addressed or sent to the Equity Owner's and/or Company's address and/or facsimile number, as appropriate, which is set forth in this

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Operating Agreement, or to such other address or facsimile number of an Equity Owner of which notice has been given to the other Equity Owners and the Company in the manner set forth above.

14.3 Application of Colorado Law . This Operating Agreement, and the application of interpretation hereof, shall be governed exclusively by the internal laws of the State of Colorado, without respect to principles of conflicts of law, and specifically, the Act.

14.4 Arbitration . Except as set forth otherwise herein, any and all disputes arising out of this Operating Agreement will be determined by submission to binding arbitration, which arbitration shall be conducted in Denver, Colorado, pursuant to the Rules of Arbitration of the American Arbitration Association, the jurisdiction to which all parties hereto, as well as their successors, assigns and transferees, hereby consent.

14.5 Waiver of Action for Partition . Each Equity Owner irrevocably waives during the ten-n of the Company any right that it may have to maintain any action for partition with respect to the property of the Company.

14.6 Amendments . Amendments may be made to this Operating Agreement from time to time by the Managers as they shall determine necessary for purposes of continuing to qualify the Company as a limited liability company under the laws of the State of Colorado, to qualify the Company as a partnership, as opposed to an association taxable as a corporation, for purposes of federal, state and local income tax law, and to effectuate the admission of additional Members pursuant to Section 12.1. In all other respects, amendments to this Operating Agreement shall be made upon the affirmative vote of Members holding a Majority Interest.

14.7 Conversion to Corporation .

(a) The Members hereby acknowledge that a conversion of the Company to a corporation may be desirable and hereby consent to such a conversion at such time as determined by the Managers and under such terms and conditions as determined by the Managers in their sole discretion, provided that, as a result of such conversion, each then existing Class A Member, Class B Member and Class C Member shall receive voting common shares of the stock of the corporation in proportion to the Units of the Class A Members, Class B Members and Class C Members, respectively, immediately prior to the conversion, and the relative economic interests and night to participate in the management of the corporation held by the shareholders of the corporation after the conversion shall be substantially similar as that of the Members immediately prior to the conversion.

(b) Upon the determination that the Company shall be converted into a corporation, the Managers shall deliver to each Member a statement of the terms on which the conversion shall be made, including the effect of the conversion on each Members' economic interest and right to participate in the management of the Company (the "Conversion Notice").

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(i) In the case of an objection made within to the Managers' determination that the Members' relative economic interests and right to participate in the management of the corporation after the conversion are substantially similar to that of the Members immediately prior to the conversion, the objecting Member or Members shall deliver by certified mail or personal delivery notice of such objection (the "Objection Notice") to the Managers no later than ten days following the receipt of the Conversion Notice by the objecting Member or Members.

(ii) Upon receipt of the Objection Notice, the Managers shall provide for a review of the terms of the conversion by independent legal counsel or such other legal counsel that is acceptable to the Managers and the objecting Member or Members. If it is determined by such legal counsel that the Members' relative economic interests and right to participate in the management of the corporation after the conversion are substantially similar to that of the Members immediately prior to the conversion, the legal counsel shall revise the terms of the conversion so that the Members' relative economic interests and right to participate in the management of the corporation after the conversion are substantially similar to that of the Members immediately prior to the conversion, which revision shall be final, conclusive and binding. If there be no such legal counsel or if the legal counsel refuses or is unable to make such a revision, then the revision to the terms of the conversion shall be submitted to and settled by a private bench trial through the Judicial Arbiter Group of Denver, Colorado ("JAG") or to its successor or similar private judicial group agreed to by the parties should JAG no longer be in existence, the decision or award from which shall be final, conclusive and binding and a final judgment may be entered thereon by any court of competent jurisdiction. The judge in such private bench trial shall be selected by JAG, or the successor private bench trial group, on the basis of his or her expertise in the subject matter of the dispute. The private bench trial shall take place in Denver, Colorado. The cost of such determination by legal counsel or private bench trial shall be borne and paid by the objecting Member or Members, unless otherwise allocated among the objecting Member(s) and the Company by such legal counsel or arbitration panel.

14.8 Execution of Additional Instruments . Each Equity Owner and transferee of an Ownership Interest hereby agrees to execute such other and further statements of interest and holdings, designations, powers of attorney, amendments to this Operating Agreement permitted pursuant to the first sentence of Section 14.6 and other instruments necessary to comply with any laws, rules or regulations and the terms of this Operating Agreement provided that if the Equity Owner or transferee fails or refuses to so execute, the Equity Owner or transferee hereby grants to the Managers an irrevocable power-of-attorney for the purposes of so executing, which power-of-attorney may be exercised upon the failure of refusal to so execute.

14.9 Construction . Whenever the singular number is used in this Operating Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa.

14.10 Effect of Inconsistencies with the Act . The Members and the Company hereby agree that the duties and obligations imposed on the Members of the Company as such shall be

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those set forth in this Operating Agreement, which is intended to govern the relationship among the Company and the Equity Owners, notwithstanding any provision of the law to the contrary. In the event the Act is subsequently amended or interpreted in such a way to make valid any provision of this Operating Agreement that was formerly invalid, such provision shall be considered to be valid from the effective date of such interpretation or amendment. If any provision of this Operating Agreement or the application thereof to any Person or circumstance shall be 'invalid, illegal or unenforceable to any extent, the remainder of this Operating Agreement and the application there of shall not be affected and shall be enforceable to the fullest extent permitted by law. Without limiting the generality of the foregoing sentence, to the extent any provision of this Operating Agreement is prohibited or ineffective under the Act or common law, this Operating Agreement shall be considered amended to the smallest degree possible in order to make the Operating Agreement effective under the Act or common law.

14.11 Headings . The headings in this Operating Agreement are inserted for convenience only and are in no way intended to describe, interpret, define, or limit the scope, extent or intent of this Operating Agreement or any provision hereof.

14.12 Waivers . The failure of any party to seek redress for violation of or to insist upon the strict performance of any covenant or condition of this Operating Agreement shall not prevent a subsequent act, which would have originally constituted a violation, from having the effect of an original violation.

14.13 Rights and Remedies Cumulative . The rights and remedies provided by this Operating Agreement are cumulative and the use of any one night or remedy by any party shall not preclude or waive the right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise.

14.14 Heirs, Successors and Assigns . Each and all of the covenants, terms, provisions and agreements herein contained shall be binding upon and inure to the benefit of the parties hereto and shall be binding upon and, to the extent permitted by this Operating Agreement, inure to the benefit of their respective heirs, legal representatives, successors and assigns.

14.15 Creditors . None of the provisions of this Operating Agreement shall be for the benefit of or enforceable by any creditors of the Company, except as provided in Section 5.14 or the Act.

14.16 Counterparts . This Operating Agreement may be executed in counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

14.17 Rule Against Perpetuities . The parties hereto intend that the Rule Against Perpetuities (and any similar rule of law) not be applicable to any provisions of this Operating Agreement. However, notwithstanding anything to the contrary in this Operating Agreement, if

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any provision in this Operating Agreement would be invalid or unenforceable because of the Rule Against Perpetuities or any similar rule of law but for this Section 14.17, the parties hereto hereby agree that any future interest which is created pursuant to said provision shall cease if it is not vested within twenty-one years after the death of the survivor of the group composed of the natural persons who are currently Members and their issue who are living on the date of this Operating Agreement and their issue, if any, who are living on the effective date of this Operating Agreement.

14.18 Investment Representations . The undersigned Members, if any, understand (1) that the Ownership Interests evidenced by this Operating Agreement have not been registered under the Securities Act of 1933, the Colorado Securities Act or any other state securities laws (the "Securities Acts") because the Company is issuing these Ownership Interests in reliance upon the exemptions from the registration requirements of the Securities Acts providing for issuance of securities not involving a public offering, (2) that the Company has relied upon the fact that the Ownership Interests are to be held by each Equity Owner for investment, and (3) that exemption from registrations under the Securities Acts would not be available if the Ownership Interests were acquired by a Member with a view to distribution.

Accordingly, each Member hereby confirms to the Company that such Member is acquiring the Ownership Interests for such own Member's account, for investment and not with a view to the resale or distribution thereof Each Member agrees not to transfer, Sell or offer for sale any of portion of the Ownership Interests unless there is an effective registration or other qualification relating thereto under the Securities Act of 1933 and under any applicable state securities laws or unless the holder of Ownership Interests delivers to the Company an opinion of counsel, satisfactory to the Company, that such registration or other qualification under such Act and applicable state securities laws is not required in connection with such transfer, offer or sale. Each Member understands that the Company is under no obligation to register the Ownership Interests or to assist such Member in complying with any exemption from registration under the Securities Acts if such Member should at a later date, wish to dispose of the Ownership Interest. Furthermore, each Member realizes that the Ownership Interests are unlikely to qualify for disposition under Rule 144 of the Securities and Exchange Commission unless such Member is not an "affiliate" of the Company and the Ownership Interest has been beneficially owned and fully paid for by such Member for at least two years.

Each Member, prior to acquiring an Ownership Interest, has made an investigation of the Company and its business, and the Company has made available to each such Member all information with respect thereto which such Member needed to make an informed decision to acquire the Ownership Interest. Each Member considers himself, herself or itself to be a Person possessing experience and sophistication as an investor which are adequate for the evaluation of the merits and risks of such Member's investment in the Ownership Interest.

Each Member who is a resident of a country other than the United States hereby represents and warrants to the Company and the other Members that the offer and sale of Ownership Interests by the Company to such Member does not conflict with or constitute a

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violation of any law or regulation of such country and does not require any additional action on the part of the Company, and such Member agrees to indemnify, defend and hold harmless the Company and the other Members from any liability, whether civil or criminal, and any loss, damage, or expense, including reasonable attorneys' fees resulting from a breach of such representation and warranty.

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CERTIFICATE

The undersigned hereby agrees, acknowledge and certify that the foregoing Operating Agreement, consisting of 42 pages, excluding the attached Signature Pages and Schedules, constitutes the Operating Agreement of Cactus Precious Metals LLC adopted by the Members of the Company and by the Company as of November_26_2003.

______________________________
James D. Frank

______________________________
Robert A. Prescott

______________________________
Charles F. Bauer

______________________________
Gregory A. Hahn

Pan American Gold Corp.
By: /s/ J. Graham Douglas
J. Graham Douglas, Director and President

_____________________________
James D. Frank, Manager

_____________________________
Robert A. Prescott, Manager

Date: ________________________
_____________________________
Name: _______________________

Date: ________________________
_____________________________
Name: _______________________

Date: ________________________
_____________________________
Name: _______________________

Date: ________________________
_____________________________
Name: _______________________

Date: ________________________
_____________________________
Name: _______________________

SCHEDULE 4.5
Class C Members