CONVERSE URANIUM PROJECT EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

Exhibit 10.9

CONVERSE URANIUM PROJECT
EXPLORATION, DEVELOPMENT AND
MINE OPERATING AGREEMENT

between

CANYON RESOURCES CORPORATION

and

NEW HORIZON URANIUM CORPORATION

EFFECTIVE DATE: January 23, 2006

TABLE OF CONTENTS

CONVERSE URANIUM PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

          This CONVERSE URANIUM PROJECT EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT (“Agreement”) is made as of January 23, 2006 (“ Effective Date ”) between Canyon Resources Corporation, a Delaware corporation (“ Canyon ”), with an office located at 14142 Denver West Parkway, Suite 250, Golden, CO 80401 and New Horizon Uranium Corporation, a British Columbia corporation (“ Horizon ”), with an office located at 2221 East Street, Suite 200, Golden, Colorado 80401.

RECITALS

          A. Canyon owns or controls certain Properties and other Assets located in or concerning Converse and Niobrara Counties, State of Wyoming, which Properties and other Assets are described further in Exhibit A and defined in Exhibit D .

          B. Horizon wishes to participate with Canyon in the exploration, evaluation and if justified the development and mining of mineral resources within the Properties, and Canyon is willing to grant such rights to Horizon.

          NOW THEREFORE, in consideration of the covenants and conditions contained herein, Canyon and Horizon agree as follows:

ARTICLE I
DEFINITIONS AND CROSS-REFERENCES

           1.1 Definitions . The terms defined in Exhibit D and elsewhere shall have the defined meaning wherever used in this Agreement, including in Exhibits.

           1.2 Cross-References . References to “ Exhibits ,” “ Articles ,” “ Sections ” and “ Subsections ” refer to Exhibits, Articles, Sections and Subsections of this Agreement. References to “ Paragraphs ” and “ Subparagraphs ” refer to paragraphs and subparagraphs of the referenced Exhibits.

ARTICLE II
NAME, PURPOSES AND TERM

           2.1 General . Canyon and Horizon hereby enter into this Agreement for the purposes hereinafter stated. All of the rights and obligations of the Participants in connection with the Assets or the Area of Interest and all Operations shall be subject to and governed by this Agreement.

           2.2 Name . The Assets shall be managed and operated by the Participants under the name of the “Converse Joint Venture”. The Manager shall accomplish any registration required by applicable assumed or fictitious name statutes and similar statutes.

           2.3 Purposes . This Agreement is entered into for the following purposes and for no others, and shall serve as the exclusive means by which each of the Participants accomplishes such purposes:

           2.4 Limitation . Unless the Participants otherwise agree in writing, the Operations shall be limited to the purposes described in Section 2.3 , and nothing in this Agreement shall be construed to enlarge such purposes or to change the relationships of the Participants as set forth in Article IV .

           2.5 Term . The term of this Agreement shall be for thirty (30) years from the Effective Date and for so long thereafter as Products are produced from the Properties on a continuous basis, and thereafter until all materials, supplies, equipment and infrastructure have been salvaged and disposed of, any required Environmental Compliance is completed and accepted and the Participants have agreed to a final accounting, unless the Business is earlier terminated as herein provided. For purposes hereof, Products shall be deemed to be produced from the Properties on a “ continuous

basis ” so long as production in commercial quantities is not halted for more than one year for reasons other than Force Majeure as provided for in Section 19.7 .

ARTICLE III
REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS; INDEMNITIES

           3.1 Representations and Warranties of Both Participants . As of the Effective Date, each Participant warrants and represents to the other that:

               (a) it is a corporation duly organized and in good standing in its state or province of incorporation and it shall become qualified to do business and shall be in good standing in those states where necessary in order to carry out the purposes of this Agreement within thirty (30) calendar days following the Effective Date;

               (b) it has the capacity to enter into and perform this Agreement and all transactions contemplated herein and that all corporate, board of directors, shareholder, surface and mineral rights owner, lessor, lessee and other actions required to authorize it to enter into and perform this Agreement have been properly taken;

               (c) it will not breach any other agreement or arrangement by entering into or performing this Agreement;

               (d) it is not subject to any governmental order, judgment, decree, debarment, sanction or Laws that would preclude the permitting or implementation of Operations under this Agreement; and

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

           3.2 Representations and Warranties of Canyon . As of the Effective Date, Canyon makes the following representations and warranties to Horizon:

               (a) Canyon does not own any of the Properties in fee simple.

               (b) With respect to those Properties in which Canyon holds an interest under leases or other contracts: (i) Canyon is in exclusive possession of such Properties; (ii) Canyon has not received any notice of default of any of the terms or provisions of such leases or other contracts; (iii) Canyon has the authority under such leases or other contracts to perform fully its obligations under this Agreement; (iv) to Canyon’s knowledge, such leases and other contracts are valid and are in good standing; (v) Canyon has no knowledge of any act or omission or any condition on the Properties which could be considered or construed as a default under any such lease or other

contract; and (vi) to Canyon’s knowledge, such Properties are free and clear of all Encumbrances or defects in title except for those specifically identified in Paragraph 1.1 of Exhibit A .

               (c) Canyon has delivered to or made available for inspection by Horizon all Existing Data in its possession or control, and true and correct copies of all leases or other contracts relating to the Properties.

               (d) With respect to unpatented mining claims located by Canyon that are included within the Properties, except as provided in Paragraph 1.1 of Exhibit A and subject to the paramount title of the United States: (i) the unpatented mining claims were properly laid out and monumented; (ii) all required location and validation work was properly performed; (iii) location notices and certificates were properly recorded and filed with appropriate governmental agencies; (iv) all assessment work required to hold the unpatented mining claims has been performed and all Governmental Fees have been paid in a manner consistent with that required of the Manager pursuant to Subsection 8.2(k) through the assessment year ending August 31, 2006; (v) all affidavits of assessment work, evidence of payment of Governmental Fees, and other filings required to maintain the claims in good standing have been properly and timely recorded or filed with appropriate governmental agencies; (vi) the claims are free and clear of Encumbrances or defects in title; and (vii) Canyon has no knowledge of conflicting mining claims. Nothing in this Subsection, however, shall be deemed to be a representation or a warranty that any of the unpatented mining claims contains a valuable mineral deposit.

               (e) The Properties do not include any unpatented mining claims not located by Canyon.

               (f) With respect to the Properties, to Canyon’s knowledge, there are no pending or threatened actions, suits, claims or proceedings, and there have been no previous transactions affecting its interests in the Properties which have not been for fair consideration.

               (g) Except as to matters otherwise disclosed in writing to Horizon prior to the Effective Date,

                    (i) to Canyon’s knowledge, the conditions existing on or with respect to the Properties and its ownership and operation of the Properties are not in violation of any Laws (including without limitation any Environmental Laws), nor causing or permitting any damage (including Environmental Damage, as defined below) or impairment to the health, safety, or enjoyment of any person at or on the Properties or in the general vicinity of the Properties;

                    (ii) to Canyon’s knowledge, there have been no past violations by it or by any of its predecessors in title of any Environmental Laws or other Laws affecting or pertaining to the Properties, nor any past creation of damage or threatened damage to the air, soil, surface waters, groundwater, flora, fauna, or other natural resources on, about or in the general vicinity of the Properties (“ Environmental Damage ”); and

                    (iii) Canyon has not received inquiry from or notice of a pending investigation from any governmental agency or of any administrative or judicial proceeding concerning the violation of any Laws.

               The representations and warranties set forth above shall survive the execution and delivery of any documents of Transfer provided under this Agreement. For a representation or warranty made to a Participant’s “ knowledge ,” the term “knowledge” shall mean actual knowledge on the part of the officers, employees, and agents of the representing Participant or of facts that would reasonably lead to the indicated conclusions.

           3.3 Disclosures . Each of the Participants represents and warrants that at the time this Agreement is entered into and as of the Effective Date, if different, it is unaware of any material facts or circumstances that have not been disclosed in this Agreement, which should be disclosed to the other Participant in order to prevent the representations and warranties in this Article from being materially misleading. Canyon has disclosed to Horizon all information it believes to be relevant concerning the Assets, including without limitation all information in its possession concerning Environmental Liabilities, and has provided to or made available for inspection by Horizon all such information, but does not make any representation or warranty, express or implied, as to the accuracy or completeness of the information (except as provided in Section 3.2 ) or as to the boundaries or value of the Assets. Each Participant represents to the other that in negotiating and entering into this Agreement it has relied solely on its own appraisals and estimates as to the value of the Assets and upon its own geologic and engineering interpretations related thereto.

           3.4 Record Title . Until directed otherwise by the Management Committee, title to the Assets shall be held by Canyon for Canyon and Horizon, as their Participating Interests are determined pursuant to this Agreement.

           3.5 Loss of Title . Any failure or loss of title to the Assets, and all costs of defending title, shall be charged to the Business Account, except that all costs and losses arising out of or resulting from breach of the representations and warranties of Canyon or Horizon as to title shall be charged to Canyon or Horizon, as the case may be.

           3.6 Royalties, Production Taxes and Other Payments Based on Production . The Manager shall make all required payments of production royalties, taxes based on production of Products, and other payments out of production to private parties and governmental entities with such payments subject to timely reimbursement from each Participant in proportion to its Participating Interest. The Manager undertakes to make such payments timely and otherwise in accordance with applicable laws and agreements. The Manager may require each Participant to advance its proportionate share and each Participant shall timely advance such funds. The Manager shall record all funds received in the Business Account and maintain evidence of timely payment for all such required payments. In the event that either Participant fails to advance or reimburse its proportionate share of any such required payment, the other Participant shall have the right to advance such funds to cover such payment and shall thereby become subrogated to the rights of such third party; provided, however , that the reimbursement or advance of funds by the paying Participant to cover the share of the other Participant shall not constitute acceptance by the paying Participant of any liability to such third party for the underlying obligation.

           3.7 Indemnities/Limitation of Liability .

               (a) Each Participant shall indemnify the other Participant, its directors, officers, employees, agents and attorneys, or Affiliates (collectively “ Indemnified Participant ”) from and against the entire amount of any Material Loss. A “ Material Loss ” shall mean all costs, expenses, damages or liabilities, including attorneys’ fees and other costs of litigation (either threatened or pending) arising out of or based on a breach by a Participant (“ Indemnifying Participant ”) of any representation, warranty or covenant contained in this Agreement, including without limitation:

                    (i) any failure by a Participant to timely advance or reimburse funds to the Manager for the Participant’s proportionate share of required royalties, production taxes and other payments out of production due to third parties as required by Section 3.6 ;

                    (ii) any action taken for or obligation or responsibility assumed on behalf of the other Participant, its directors, officers, employees, agents and attorneys, or Affiliates by a Participant, any of its directors, officers, employees, agents and attorneys, or Affiliates, in violation of Section 4.1 ;

                    (iii) failure of a Participant or its Affiliates to comply with the non-compete or Area of Interest provisions of Section 12.6 or Article XIII ;

                    (iv) any Transfer that causes termination of the tax partnership established by Section 4.2 , against which the transferring Participant shall indemnify the non-transferring Participant as provided in Article V of Exhibit C ; and

                    (v) failure of a Participant or its Affiliates to comply with the preemptive right under Section 16.3 .

               A Material Loss shall not be deemed to have occurred until, in the aggregate, an Indemnified Participant incurs losses, costs, damages or liabilities in excess of One Hundred Thousand Dollars ($100,000) relating to breaches of warranties, representations and covenants contained in this Agreement. Canyon’s aggregate liability to all Indemnified Participants under this Section for breaches of the representations in Subsection 3.2(g) shall not, however, exceed Five Hundred Thousand Dollars ($500,000).

               (b) If any claim or demand is asserted against an Indemnified Participant in respect of which such Indemnified Participant may be entitled to indemnification under this Agreement, written notice of such claim or demand shall promptly be given to the Indemnifying Participant. The Indemnifying Participant shall have the right, but not the obligation, by notifying the Indemnified Participant within thirty (30) days after its receipt of the notice of the claim or demand, to assume the entire control of (subject to the right of the Indemnified Participant to participate, at the Indemnified Participant’s expense and with counsel of the Indemnified Participant’s choice), the defense, compromise, or settlement of the matter, including, at the Indemnifying Participant’s expense, employment of counsel of the Indemnifying Participant’s choice. Any damages to the assets or business of the Indemnified Participant caused by a failure by the Indemnifying Participant to defend, compromise, or settle a claim or demand in a reasonable and expeditious manner requested by the Indemnified Participant, after the Indemnifying Participant has given notice that it will assume control of the defense, compromise, or settlement of the matter, shall be included in the damages for which the Indemnifying Participant shall be obligated to indemnify the Indemnified Participant. Any settlement or compromise of a matter by the Indemnifying Participant shall include a full release of claims against the Indemnified Participant which has arisen out of the indemnified claim or demand.

ARTICLE IV
RELATIONSHIP OF THE PARTICIPANTS

           4.1 No Partnership . Nothing contained in this Agreement shall be deemed to constitute either Participant the partner of the other, or, except as otherwise herein expressly provided, to constitute either Participant the agent or legal representative of the other, or to create any fiduciary relationship between them. The Participants do not intend to create, and this Agreement shall not be construed to create, any mining, commercial or other partnership. Neither Participant, nor any of its directors, officers, employees, agents and attorneys, or Affiliates, shall act for or assume any obligation or responsibility on behalf of the other Participant, except as otherwise expressly provided herein, and any such action or assumption by a Participant’s directors, officers, employees, agents and attorneys, or Affiliates shall be a breach by such Participant of this Agreement. The rights, duties, obligations and liabilities of the Participants shall be several and not joint or collective. Each Participant shall be responsible only for its obligations as herein set out and shall be liable only for its share of the costs and expenses as provided herein, and it is the express purpose and intention of the Participants that their ownership of Assets and the rights acquired hereunder shall be as tenants in common.

           4.2 Federal Tax Elections and Allocations . Without changing the effect of Section 4.1 , the relationship of the Participants shall constitute a tax partnership within the meaning of Section 761(a) of the United States Revenue Code of 1986. Tax elections and allocations shall be made as set forth in Exhibit C .

           4.3 State Income Tax . To the extent permissible under applicable law, the relationship of the Participants shall be treated for state income tax purposes in the same manner as it is for federal income tax purposes.

           4.4 Tax Returns . After approval of the Management Committee, any tax returns or other required tax forms shall be filed in accordance with Exhibit C .

           4.5 Other Business Opportunities . Except as expressly provided in this Agreement, each Participant shall have the right to engage in and receive full benefits from any independent business activities or operations, whether or not competitive with this Business, without consulting with, or obligation to, the other Participant. The doctrines of “ corporate opportunity ” or “ business opportunity ” shall not be applied to this Business nor to any other activity or operation of either Participant. Neither Participant shall have any obligation to the other with respect to any opportunity to acquire any property outside the Area of Interest at any time, or, except as otherwise provided in Section 12.6 , within the Area of Interest after the termination of the Business. Unless otherwise agreed in writing, neither Participant shall have any obligation to process or otherwise treat any Products in any facility owned or controlled by such Participant.

           4.6 Waiver of Rights to Partition or Other Division of Assets . The Participants hereby waive and release all rights of partition, or of sale in lieu thereof, or other division of Assets except as provided in Article XV , including any such rights provided by Law.

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

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

           4.9 No Third Party Beneficiary Rights . This Agreement shall be construed to benefit the Participants and their respective successors and assigns only, and shall not be construed to create third party beneficiary rights in any other party or in any governmental organization or agency, except to the extent required by Project Financing and as provided in Subsection 3.7(a) .

ARTICLE V
CONTRIBUTIONS BY PARTICIPANTS

           5.1 Participants’ Initial Contributions .

               (a) Canyon, as its Initial Contribution, hereby contributes the Assets described in Exhibit A to the purposes of this Agreement. The amount of Two Million Dollars ($2,000,000) shall be credited to Canyon’s Equity Account on the Effective Date with respect to Canyon’s Initial Contribution.

               (b) Subject to Horizon’s right of withdrawal as set forth in Section 5.2 , Horizon, as its Initial Contribution shall fund Operations under Subsection 5.1(e) totaling One Million Dollars ($1,000,000.00) on or before the third anniversary of the Effective Date, with Two Hundred Thousand Dollars ($200,000) of the Initial Contribution estimated as the minimum to be funded in the first year following the Effective Date, Three Hundred Thousand Dollars ($300,000) of the Initial Contribution estimated to be funded in the second year following the Effective Date, and the remaining Five Hundred Thousand Dollars ($500,000) of the Initial Contribution estimated to be funded in the third year following the Effective Date. All funding by Horizon in excess of the stated amount for each year shall be credited towards Horizon’s subsequent year(s) funding commitment. Horizon may elect, at any time during the period ending on the third anniversary of the Effective Date to complete the funding of the One Million Dollars ($1,000,000) Initial Contribution amount, including by lump sum payment made to the Business Account

equal to the remaining unfunded portion of the One Million Dollar ($1,000,000) Initial Contribution amount. In determining whether Horizon’s funding obligation has been met, only costs that are properly chargeable to the Business Account under Exhibit B shall be included (“ Qualifying Expenses ”); provided, however , Horizon shall not be entitled to an Administrative Charge during the time it is making Qualifying Expenses. Upon completion of the Initial Contribution funding, such amount shall be credited to Horizon’s Equity Account.

          (c) Upon Horizon’s completion of its Initial Contribution under Subsection 5.1(b) and concurrent with Horizon’s earn-in of its Initial Participating Interest set forth in Section 6.1 , Horizon shall tender to Canyon five hundred thousand (500,000) Horizon common shares for no additional consideration. Issuance of such common shares is subject to approval of Horizon’s listing of common shares on the TSX Venture Exchange or an alternate stock exchange solely at Horizon’s election of such exchange. Should Horizon not have such approval within one hundred eighty (180) days of the Effective Date, the common shares shall be issued from Horizon’s treasury shares.

          (d) Upon Horizon’s completion of its Initial Contribution under Subsection 5.1(b) and concurrent with Horizon’s earn-in of its Initial Participating Interest set forth in Section 6.1 , Horizon shall also tender to Canyon a warrant for the acquisition of an additional five hundred thousand (500,000) Horizon common shares at a price equal to one hundred twenty five percent (125%) of the then current market price of Horizon stock. The “then current market price” shall be: i) if Horizon is a public company trading on any Canadian or United States stock exchange at the date of tender, the thirty (30) day trailing average price of Horizon common shares sold on the stock exchange on which Horizon is traded on the date five (5) business days prior to tender; or ii) if Horizon is not a publicly traded company at the date of tender, the price of the most recent private placement completed for ownership in Horizon.

          (e) Subject only to the provisions of Sections 9.1 and 7.2 , until Horizon has completed its Initial Contribution, and if Horizon has elected to fund Additional Contribution(s) under Subsections 5.3(a) and (b) then for so long thereafter as Horizon bears all Qualifying Expenses for Operations, Horizon shall have the sole right to determine the nature, timing, scope, extent and method of all Operations without obtaining the approval or consent of Canyon or the Management Committee. In conducting such Operations, Horizon shall exercise the standard of care set forth in Section 8.3 . Horizon has agreed to fulfill the Manager’s monthly reporting requirements set forth in Section 8.2(o) beginning as of the Effective Date. With the exception of Section 8.2(o) , for so long as Horizon bears all Qualifying Expenses for Operations, Horizon shall be entitled, but shall not be obligated, to exercise any of the applicable powers of the Manager in Section 8.2 , except that until Horizon has completed its Initial Contribution it shall not be entitled or required to perform the activities described in Subsections 8.2(g) , (i) , (l) and (s) that would otherwise require consent of the Management Committee or of

Canyon. For all such Operations, Horizon shall provide for accrual of reasonably anticipated Environmental Compliance expenses, which shall constitute Qualifying Expenses, and upon completion of its Initial Contribution, Horizon shall transfer any accrued but unexpended amounts to the Environmental Compliance Fund established under Paragraph 2.14 of Exhibit B .

               (f) Canyon shall provide Horizon with written notice of any exceptions it may have to the statement of Qualifying Expenses submitted to it as provided above within three (3) months after receipt of the statement. Failure to provide such notice within the three (3) month period shall constitute acceptance by Canyon of the stated Qualifying Expenses, subject to audit provisions of Section 10.6 .

           5.2 Failure to Make Initial Contribution .

               (a) Horizon’s failure to make its Initial Contribution in accordance with the provisions of this Article V , if not cured within thirty (30) days after notice by Canyon of such default, shall be deemed to be a withdrawal of Horizon from the Business, the termination of its Participating Interest hereunder and a transfer of its Participating Interest and Capital Account to Canyon. Upon such deemed withdrawal, Horizon shall have no further right, title or interest in the Assets and it shall take such actions as are necessary to ensure that all Assets are free and clear of any Encumbrances arising by, through or under it, except for such Encumbrances to which the Participants may have agreed. Subject to Subsection 5.2(b) below, Horizon’s withdrawal shall be effective upon such failure, but such withdrawal shall not relieve Horizon of its obligation to Canyon to fund Operations up to the amount of Horizon’s contractual obligations to third parties, nor shall such withdrawal relieve Horizon of its responsibility to fund and satisfy Horizon’s share of liabilities to third persons (regardless of whether such liabilities accrue before or after such withdrawal), including Environmental Liabilities, Continuing Obligations and Environmental Compliance, arising prior to Horizon’s withdrawal, which responsibility shall be based on Horizon’s initial Participating Interest.

               (b) Notwithstanding Subsection 5.2(a) above, Horizon shall have the right, within ninety (90) days after the Effective Date, to conduct an investigation and perform a baseline assessment of the environmental conditions of the Properties including sampling and analyses as Horizon deems advisable. Upon completion of such baseline assessment, Horizon shall promptly provide the report and any analytical results to Canyon. If Horizon determines that conditions may exist on the Properties which may, in Horizon’s judgment, result in violation of Environmental Laws, Horizon shall have the right to withdraw from the Business by giving written notice to Canyon of such withdrawal. Horizon’s withdrawal shall be effective upon receipt by Canyon of such notice, but such withdrawal shall not relieve Horizon of its obligation to fund Operations up to the amount of Horizon’s agreed contribution to the Initial Program and Budget. Such withdrawal shall, however, relieve Horizon of its responsibility to fund and satisfy

Horizon’s share of liabilities to third parties (regardless of whether such liabilities accrue before or after such withdrawal), including Environmental Liabilities, Continuing Obligations and Environmental Compliance, other than those arising out of Operations conducted by Horizon after the Effective Date and prior to its withdrawal. Horizon shall fund and satisfy one hundred percent (100%) of such liabilities only until it has contributed the full amount of its agreed contribution to the Initial Program and Budget. Except as provided in this Subsection and except as may be otherwise expressly provided herein, Horizon’s withdrawal shall relieve Horizon from any other obligation to make contributions hereunder.

      5.3 Additional Contribution(s) . At such time as Horizon has contributed the full amount of its Initial Contribution under Subsection
5.1(b) , Horizon may elect to increase its Participating Interest by funding one or both Additional Contribution(s) described in Subsections 5.3(a) and(b) below.

          (a) Horizon may elect, at its sole discretion, by advance notice to Canyon within forty-five (45) days prior to the completion of its Initial Contribution, to solely fund the next One Million Dollars ($1,000,000) of Operations within the two (2) year period following completion of the funding of its Initial Contribution and thereby earn an additional twenty percent (20%) Participating Interest. During this period of sole funding by Horizon, Canyon shall have no obligation to fund its pro rata share of expenditures and Horizon shall have the sole right and control over Operations consistent with Subsection 5.1(e) . Upon completion of Horizon’s Additional Contribution described within this Subsection, One Million Dollars ($1,000,000) shall be credited to Horizon’s Equity Account, Horizon’s Participating Interest shall be increased by twenty percent (20%) to a total of seventy percent (70%), and Canyon’s Participating Interest shall be decreased by twenty percent (20%) to a total of thirty percent (30%).

          (b) Horizon may elect, at its sole discretion and by advance notice to Canyon within forty-five (45) days prior to the completion of its funding of the second One Million Dollar ($1,000,000) contribution described in Subsection 5.3(a), to acquire an additional twenty percent (20%) Participating Interest, by funding a Feasibility Study prepared by a Feasibility Contractor and thereby earning an additional five percent (5%) Participating Interest, for a total of seventy-five percent (75%) Participating Interest at the time the Feasibility Study is completed and paid for. If Horizon elects to fund a Feasibility Study prepared by a Feasibility Contractor, Horizon shall proceed with reasonable diligence to complete the same within a reasonable time following completion of Horizon’s funding of the second One Million Dollar ($1,000,000) contribution. During this period of sole funding by Horizon, Canyon shall have no obligation to fund its pro rata share of expenditures and Horizon shall have the sole right and control over Operations consistent with Subsection 5.1(e) . Upon completion of such funding, an amount equal to the cost of such Feasibility Study shall be credited to Horizon’s Equity Account, Horizon’s Participating Interest shall be increased by five percent (5%) to a total of seventy-five

percent (75%), and Canyon’s Participating Interest shall be decreased by five percent (5%) to a total of twenty-five percent (25%).

          (c) Upon the Management Committee’s decision to construct a Mining facility based on the Feasibility Study and subject to applicable securities laws and regulations, Horizon shall tender to Canyon either the number of common shares of Horizon equal in value to Two Million Dollars ($2,000,000) if at that date Horizon is a publicly traded company, or a payment of Two Million Dollars ($2,000,000) if Horizon is not a publicly traded company. The price to be used for the determination of the number of such shares to be transferred to Canyon shall be consistent with the pricing mechanism set forth in Subsections 5.1(d)(i) and (ii).

          (d) If Horizon does not elect to increase its initial Participating Interest pursuant to Subsections 5.3(a) and (b) , the Participants, subject to any election permitted by Subsection 9.5(a) , shall be obligated to contribute funds to adopted Programs and Budgets in proportion to their respective initial Participating Interests set forth in Section 6.1 .

ARTICLE VI
INTERESTS OF PARTICIPANTS

      6.1 Initial Participating Interests . Horizon’s initial Participating Interest set forth below shall become effective immediately once Horizon has fulfilled its Initial Contribution obligations set forth in Section 5.1 . Once Horizon has earned its initial Participating Interest, the Participants shall have the following Participating Interests:

      6.2 Changes in Participating Interests . The Participating Interests shall be eliminated or changed as follows:

          (a) Upon withdrawal or deemed withdrawal as provided in Sections 5.2 , 6.3 , and Article XII ;

          (b) Upon an election by a Participant pursuant to Section 9.5 to contribute more or less to an adopted Program and Budget than the percentage equal to its Participating Interest, or to contribute nothing to an adopted Program and Budget;

          (c) In the event of default by either Participant in making its agreed-upon contribution to an adopted Program and Budget, followed by an election by the other Participant to invoke any of the remedies in Section 10.5 ;

          (d) Upon Transfer by either Participant of part or all of its Participating Interest in accordance with Article XVI ; or

          (e) Upon acquisition by either Participant of part or all of the Participating Interest of the other Participant, including any elections by Horizon to increase its Participating Interest by completing Additional Contribution(s) in accordance with Section 5.3 .

      6.3 Elimination of Minority Interest .

          (a) At such time as a Reduced Participant’s Recalculated Participating Interest drops to less than fifteen percent (15%), its Recalculated Participating Interest shall automatically be converted to a three percent (3%) production royalty as calculated in accordance with Exhibit E (“ Production Royalty ”). Once converted to a Production Royalty, the Reduced Participant shall be deemed to have relinquished its entire Participating Interest free and clear of any Encumbrances arising by, through or under the Reduced Participant, except any such Encumbrances listed in Paragraph 1.1 of Exhibit A or to which the Participants have agreed. Such relinquished Participating Interest shall be deemed to have accrued automatically to the other Participant. The Reduced Participant’s Capital Account shall be transferred to the remaining Participant. Upon conversion of its Recalculated Participating Interest to the Production Royalty, and subject to Section 6.4 , the Reduced Participant shall thereafter have no other further right, title, or interest in the Assets or under this Agreement, and the tax partnership established by Exhibit C shall dissolve pursuant to Paragraph 4.2 of Exhibit C . In such event, the Reduced Participant shall execute and deliver an appropriate conveyance of all of its right, title and interest in the Assets to the remaining Participant in consideration of the other Participant’s execution and delivery of a royalty deed conveying the Production Royalty.

          (b) The relinquishment, withdrawal and entitlements for which this Section provides shall be effective as of the effective date of the recalculation under Sections 9.5 or 10.5 . However, if the final adjustment provided under Section 9.6 for any recalculation under Section 9.5 results in a Recalculated Participating Interest of fifteen percent (15%) or more: (i) the Recalculated Participating Interest shall be deemed, effective retroactively as of the first day of the Program Period, to have automatically revested; (ii) the Reduced Participant shall be reinstated a Participant, with all of the rights and obligations pertaining thereto; (iii) the right to the Production Royalty under Subsection 6.3(a ) shall terminate; and (iv) the Manager, on behalf of the Participants, shall make any necessary reimbursements, reallocations of Products, contributions and other adjustments as provided in Subsection 9.6(d) . Similarly if such final adjustment under Section 9.6 results in a Recalculated Participating interest of less than fifteen percent (15%) for a Program Period as to which the provisional calculation under Section 9.5 had not resulted

in a Participating Interest of less than fifteen percent (15%), then such Participant, at its election within thirty (30) days after notice of the final adjustment, may contribute an amount resulting in a revised final adjustment and resultant Recalculated Participating Interest of fifteen percent (15%). If no such election is made, such Participant shall be deemed to have withdrawn under the terms of Subsection 6.3(a) as of the beginning of such Program Period, and the Manager, on behalf of the Participants, shall make any necessary reimbursements, reallocations of Products, contributions, and other adjustments as provided in Subsection 9.6(d) , to which such Participant may be entitled for such Program Period.

      6.4 Continuing Liabilities Upon Adjustments of Participating Interests . Any reduction or conversion of either Participant’s Participating Interest under Section 6.2 shall not relieve such Participant of its share of any liability, including, without limitation, Continuing Obligations, Environmental Liabilities and Environmental Compliance, whether arising, before or after such reduction or conversion, out of acts or omissions occurring or conditions existing prior to the Effective Date or out of Operations conducted during the term of this Agreement but prior to such reduction or conversion, regardless of when any funds may be expended to satisfy such liability. For purposes of this Section, such Participant’s share of such liability shall be equal to its Participating Interest at the time the act or omission giving rise to the liability occurred after first taking into account any reduction, readjustment and restoration of Participating Interests under Sections 6.3, 9.5, 9.6 and 10.5 (or, as to such liability arising out of acts or omissions occurring or conditions existing prior to the Effective Date, equal to such Participant’s initial Participating Interest). Should the cumulative cost of satisfying Continuing Obligations be in excess of cumulative amounts accrued or otherwise charged to the Environmental Compliance Fund as described in Exhibit B , each of the Participants shall be liable for its proportionate share ( i.e. , Participating Interest at the time of the act or omission giving rise to such liability occurred) after first taking into account any reduction, readjustment and restoration of Participating Interests under Sections 6.3, 9.5, 9.6 and 10.5 , of the cost of satisfying such Continuing Obligations, notwithstanding that either Participant has previously withdrawn from the Business or that its Participating Interest has been reduced or converted to a Production Royalty pursuant to Subsection 6.3(a) .

      6.5 Documentation of Adjustments to Participating Interests . Adjustments to the Participating Interests need not be evidenced during the term of this Agreement by the execution and recording of appropriate instruments, but each Participant’s Participating Interest and related Equity Account balance shall be shown in the accounting records of the Manager, and any adjustments thereto, including any reduction, readjustment, and restoration of Participating Interests under Sections 9.5 , 9.6 and 10.5 , shall be made monthly. However, either Participant, at any time upon the request of the other Participant, shall execute and acknowledge instruments necessary to evidence such adjustments in form sufficient for filing and recording in the jurisdiction where the Properties are located.

      6.6 Grant of Lien and Security Interest .

          (a) Subject to Section 6.7 , each Participant grants to the other Participant a lien upon and a security interest in its Participating Interest, including all of its right, title and interest in the Assets, whenever acquired or arising, and the proceeds from and accessions to the foregoing.

          (b) The liens and security interests granted by Subsection 6.6(a) shall secure every obligation or liability of the Participant granting such lien or security interest created under this Agreement, including the obligation to repay a Cover Payment in accordance with Section 10.4 . Each Participant hereby agrees to take all action necessary to perfect such lien and security interest and hereby appoints the other Participant its attorney-in-fact to execute, file and record all financing statements and other documents necessary to perfect or maintain such lien and security interest.

      6.7 Subordination of Interests . Each Participant shall, from time to time, take all necessary actions, including execution of appropriate agreements, to pledge and subordinate its Participating Interest, any liens it may hold which are created under this Agreement including those created pursuant to Section 6.6 hereof, and any other right or interest it holds with respect to the Assets (other than any statutory lien of the Manager) to any secured borrowings for Operations approved by the Management Committee, including any secured borrowings relating to Project Financing, and any modifications or renewals thereof.

ARTICLE VII
MANAGEMENT COMMITTEE

      7.1 Organization and Composition . The Participants hereby establish a Management Committee to determine overall policies, objectives, procedures, methods and actions under this Agreement. The Management Committee shall consist of an equal number of member(s) appointed by Canyon and Horizon. Each Participant may appoint one or more alternates to act in the absence of a regular member. A Participant shall have at least one member until such time as its Participating Interest is converted to a Production Royalty pursuant to Section 6.3 . Appointments by a Participant shall be made or changed by notice to the other members.

      7.2 Decisions . After Horizon has completed the funding of its Initial Contribution, each Participant, acting through its appointed member(s) in attendance at the meeting, shall have the votes on the Management Committee in proportion to its Participating Interest. Except for
super-majority voting matters identified herein or as otherwise provided in this Agreement, the vote of the Participant with a Participating

Interest greater than fifty percent (50%) shall determine the decisions of the Management Committee. Unanimous consent of the Participants shall be required for the following matters designated as super-majority voting matters: (i) the sale or other disposition of Assets in accordance with Section 8.2(i) and Article XIV ; (ii) the initiation of litigation against third parties in accordance with Section 8.2(g) ; (iii) liquidation or wind-up of the Business except in accordance with Article XII ; (iv) changes to the Administrative Charge provided for in Exhibit B in accordance with Section 8.5 ; (v) disbursements from the Business Account or other distributions to the Manager except disbursements due the Manager Participant from its share of Products, other distributions made to all Participants, or otherwise as authorized by this Agreement; and (vi) disbursements from the Environmental Compliance Fund for any purpose other than ongoing Environmental Compliance conducted during Operations, mine closure, post-Operations Environmental Compliance or Continuing Obligations.

      7.3 Meetings .

          (a) Beginning as of the Effective Date, the Management Committee shall hold regular meetings at least quarterly in Golden, Colorado, or at other agreed places. The Manager shall give fourteen (14) days notice to the Participants of such meetings. Additionally, either Participant may call a special meeting upon seven (7) days notice to the other Participant. In case of an emergency, reasonable notice of a special meeting shall suffice. There shall be a quorum if at least one member representing each Participant is present; provided, however , that if a Participant fails to attend two consecutive properly called meetings, then a quorum shall exist at the second meeting if the other Participant is represented by at least one appointed member, and a vote of such Participant shall be considered the vote required for the purposes of the conduct of all business properly noticed even if such vote would otherwise require unanimity.

          (b) If business cannot be conducted at a regular or special meeting due to the lack of a quorum, either Participant may call the next meeting upon thirty (30) days notice to the other Participant.

          (c) Each notice of a meeting shall include an itemized agenda prepared by the Manager in the case of a regular meeting or by the Participant calling the meeting in the case of a special meeting, but either Participant may add matters to the agenda at least three (3) days before the meeting or with the consent of the other Participant. The Manager shall prepare and distribute minutes of all meetings to the other Participant within fifteen (15) days after the meeting. Either Participant may electronically record the proceedings of a meeting with the consent of the other Participant. The other Participant shall sign and return or object to the minutes prepared by the Manager within thirty (30) days after receipt, and failure to do either shall be deemed acceptance of the minutes as prepared by the Manager. The minutes, when signed or deemed accepted by both Participants, shall be the official record of the decisions made by the Management

Committee. Decisions made at a Management Committee meeting shall be implemented in accordance with adopted Programs and Budgets. If a Participant timely objects to minutes proposed by the Manager, the members of the Management Committee shall seek, for a period not to exceed thirty (30) days from receipt by the Manager of notice of the objections, to agree upon minutes acceptable to both Participants. If the Management Committee does not reach agreement on the minutes of the meeting within such thirty (30) day period, the minutes of the meeting as prepared by the Manager together with the other Participant’s proposed changes shall collectively constitute the record of the meeting. If personnel employed in Operations are required to attend a Management Committee meeting, reasonable costs incurred in connection with such attendance shall be charged to the Business Account. All other costs shall be paid by the Participants individually.

      7.4 Action Without Meeting in Person . In lieu of meetings in person, the Management Committee may conduct meetings by telephone or video conference, so long as minutes of such meetings are prepared in accordance with Subsection 7.3(c) . The Management Committee may also take actions in writing signed by all members.

      7.5 Matters Requiring Approval . Except as provided in Subsection 5.1(e) and as otherwise delegated to the Manager in Section 8.2 , the Management Committee, acting in accordance with Section 7.2 , shall have exclusive authority to determine all matters related to overall policies, objectives, procedures, methods and actions under this Agreement.

ARTICLE VIII
MANAGER

      8.1 Appointment . The Participants hereby appoint Horizon as the initial Manager with overall management responsibility for Operations. Horizon hereby agrees to serve until it resigns or has been deemed to resign as provided in Section 8.4 . The Participants agree that notwithstanding Horizon’s appointment as Manager, for up to one (1) year from the Effective Date, Canyon shall continue to maintain all mining claims and lease rights and take all other actions to maintain the Properties until Horizon expressly assumes this responsibility. Horizon shall promptly reimburse expenses directly incurred by Canyon to maintain the Properties following receipt of invoice and reasonable supporting documentation.

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

          (a) The Manager shall manage, direct and control Operations, and shall prepare and present to the Management Committee proposed Programs and Budgets as provided in Article IX .

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

          (c) The Manager shall use reasonable efforts to: (i) purchase or otherwise acquire all material, supplies, equipment, water, utility and transportation services required for Operations, such purchases and acquisitions to be made to the extent reasonably possible on the best terms available, taking into account all of the circumstances; (ii) obtain such customary warranties and guarantees as are available in connection with such purchases and acquisitions; and (iii) keep the Assets free and clear of all Encumbrances, except any such Encumbrances listed in Paragraph 1.1 of Exhibit A and those existing at the time of, or created concurrent with, the acquisition of such Assets, or mechanic’s or materialmen’s liens (which shall be contested, released or discharged in a diligent matter) or Encumbrances specifically approved by the Management Committee. The Manager shall use its best efforts to obtain bids from multiple third party suppliers for individual, or related aggregate, purchases or purchase commitments that exceed Fifty Thousand Dollars ($50,000).

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

          (e) Except as to be performed by Canyon under Section 8.1 , the Manager shall: (i) make or arrange for all payments required by leases, licenses, permits, contracts and other agreements with third parties related to the Assets; (ii) pay all taxes, assessments and like charges on Operations and Assets except taxes determined or measured by a Participant’s sales revenue or net income, and shall otherwise promptly pay and discharge expenses incurred in Operations; provided, however , that the Manager shall have the right to contest (in the courts or otherwise) the validity or amount of any taxes, assessments or charges or take other reasonable steps or proceedings to seek a reduction or readjustment prior to payment but in no event shall the Manager permit or allow title to the Assets to be lost as the result of the nonpayment of any taxes, assessments or like charges; and (iii) do all other acts reasonably necessary to maintain the Assets.

          (f) The Manager shall: (i) apply for all necessary permits, licenses and approvals; (ii) comply with all Laws; (iii) notify promptly the Management Committee of any actual or alleged substantial violations thereof; and (iv) maintain records and prepare and file all reports or notices required for or as a result of Operations. The Manager shall not be in breach of this provision if a violation has occurred in spite of the Manager’s good faith efforts to comply consistent with its standard of care under Section 8.3 . In the event of any such violation, the Manager shall timely cure or dispose of such

violation on behalf of both Participants through performance, payment of fines and penalties, or both, and the cost thereof shall be charged to the Business Account.

          (g) The Manager shall prosecute and defend, but shall not initiate without unanimous consent of the Participants in accordance with Section 7.2 , all litigation against third parties or administrative proceedings arising out of Operations. The non-managing Participant shall have the right to participate, at its own expense, in such litigation or administrative proceedings. The non-managing Participant shall approve in advance any settlement involving payments, commitments or obligations in excess of Fifty Thousand Dollars ($50,000) in cash or value.

          (h) The Manager shall provide insurance for the benefit of the Participants as follows or as may otherwise be determined from time to time by the Management Committee. The Manager shall, at all times while conducting Operations, comply fully with the applicable worker’s compensation laws and purchase, or provide protection for the Participants comparable to that provided under standard form insurance policies for the following risk categories: (i) comprehensive general liability and property damage with combined limits of not less than Two Million Dollars ($2,000,000) for bodily injury and property damage; (ii) automobile insurance with combined limits of not less than One Million Dollars ($1,000,000); and (iii) adequate and reasonable insurance against risk of fire and other risks ordinarily insured against in similar operations. Insurance coverage and limits shall be subject to annual review and approval by the Management Committee. Each Participant shall self-insure or purchase for its own account such additional insurance as it deems necessary.

          (i) Except as expressly authorized in Article XII , unanimous consent of both Participants in accordance with Section 7.2 is required before the Manager may: (i) abandon or surrender Properties as provided in Article XIV; (ii) dispose of Assets in any one transaction (or in any series of related transactions) having a value in excess of Fifty Thousand Dollars ($50,000); (iii) begin a liquidation or initiate wind up of the Business; or (iv) dispose of Assets necessary to achieve the purposes of the Business.

          (j) The Manager shall have the right to carry out its responsibilities hereunder through agents, Affiliates or independent contractors subject to Section 8.6 and prior disclosure to the Management Committee of the scope of responsibilities to be carried out by agents, Affiliates or independent contractors.

          (k) Except as to be performed by Canyon under Section 8.1 , the Manager shall perform or cause to be performed all assessment and other work, and shall pay all Governmental Fees required by Law in order to maintain the unpatented mining claims, mill sites and tunnel sites included within the Properties. The Manager shall have the right to perform the assessment work required hereunder pursuant to a common plan of exploration and continued actual occupancy of such claims and sites shall not be

required. The Manager shall not be liable on account of any determination by any court or governmental agency that the work performed by the Manager does not constitute the required annual assessment work or occupancy for the purposes of preserving or maintaining ownership of the claims, provided that the work done is pursuant to an adopted Program and Budget and is performed in accordance with the Manager’s standard of care under Section 8.3 . The Manager shall timely record with the appropriate county and file with the appropriate United States agency any required affidavits, notices of intent to hold and other documents in proper form attesting to the payment of Governmental Fees, the performance of assessment work or intent to hold the claims and sites, in each case in sufficient detail to reflect compliance with the requirements applicable to each claim and site. The Manager shall not be liable on account of any determination by any court or governmental agency that any such document submitted by the Manager does not comply with applicable requirements, provided that such document is prepared and recorded or filed in accordance with the Manager’s standard of care under Section 8.3 .

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

          (m) The Manager shall keep and maintain all required accounting and financial records pursuant to the procedures described in Exhibit B and in accordance with generally accepted accounting principles used by companies based in the United States (“US GAAP”) as further described in Exhibit B , and shall ensure appropriate separation of accounts unless otherwise agreed by the Participants.

          (n) The Manager shall maintain Equity Accounts for each Participant. Each Participant’s Equity Account shall be credited with the value of such Participant’s contributions under Subsections 5.1(a), 5.1(b), 5.3(a), and 5.3(b) and shall be credited with amounts contributed by such Participant under Subsection 5.3(d) . Each Participant’s Equity Account shall be charged with the cash and the fair market value of property distributed to such Participant (net of liabilities assumed by such Participant and liabilities to which such distributed property is subject). Contributions and distributions shall include all cash contributions or distributions plus the agreed value (expressed in dollars) of all in-kind contributions or distributions. Solely for purposes of determining

the Equity Account balances of the Participants, the Manager shall reasonably estimate the fair market value of all Products distributed to the Participants, and such estimated value shall be used regardless of the actual amount received by each Participant upon disposition of such Products.

          (o) Subject to Section 8.3 , the Manager shall keep the Management Committee advised of all Operations by submitting in writing to the members of the Management Committee: (i) monthly progress reports that include statements of expenditures and comparisons of such expenditures to the adopted Budget; (ii) periodic summaries of data acquired; (iii) copies of reports concerning Operations; (iv) a detailed final report within sixty (60) days after completion of each Program and Budget, which shall include comparisons between actual and budgeted expenditures and comparisons between the objectives and results of Programs; and (v) such other reports as any member of the Management Committee may reasonably request. Subject to Article XVIII , at all reasonable times and upon reasonable advance notice the Manager shall provide the Management Committee, or other authorized representative of a Participant access to, and the right to inspect and, at such Participant’s cost and expense, copies of the Existing Data and all maps, drill logs and other drilling data, core, pulps, reports, surveys, assays, analyses, production reports, operations, technical, accounting and financial records, and other Business Information, in the possession of the Manager, subject to Article XVIII . In addition, the Manager shall allow authorized representatives of the non-managing Participant, at the latter’s sole risk, cost and expense, and subject to reasonable safety regulations, to inspect the Assets and Operations at all reasonable times and upon reasonable advance notice, so long as the representative does not unreasonably interfere with Operations.

          (p) The Manager shall prepare an Environmental Compliance plan for all Operations consistent with applicable Laws or contractual obligations and shall include in each Program and Budget sufficient funding to implement the Environmental Compliance plan and to satisfy the financial assurance requirements of any applicable Law or contractual obligation pertaining to Environmental Compliance. To the extent practical, the Environmental Compliance plan shall incorporate concurrent reclamation of Properties disturbed by Operations.

          (q) The Manager shall undertake Continuing Obligations when and as economic and appropriate, whether before or after termination of the Business. As part of each Program and Budget submittal, the Manager shall specify the measures to be taken for performance of Continuing Obligations and the cost of such measures and shall describe the Manager’s efforts to discharge Continuing Obligations. Authorized representatives of each Participant upon reasonable advance notice shall have the right from time to time to enter the Properties to inspect work directed toward satisfaction of Continuing Obligations and audit books, records, and accounts related thereto.

          (r) The Environmental Compliance Fund shall be maintained by the Manager as a separate, interest bearing cash management account, which may include, but is not limited to, money market investments and/or in longer term investments if approved by the Management Committee. Such funds shall be used solely for Environmental Compliance and Continuing Obligations, including the committing of such funds, interests in property, insurance or bond policies, or other security to meet financial assurance obligations for the reclamation or restoration of the Properties, and for other Environmental Compliance requirements.

          (s) If Participating Interests are adjusted in accordance with this Agreement the Manager shall propose from time to time one or more methods for fair pro rata allocation of costs for Continuing Obligations.

          (t) The Manager shall undertake all other activities reasonably necessary to fulfill the foregoing, and to implement the policies, objectives, procedures, methods and actions determined by the Management Committee pursuant to Section 7.1 .

      8.3 Standard of Care . The Manager shall discharge its duties under Section 8.2 and conduct all Operations in a good, workmanlike and efficient manner, in accordance with sound mining and other applicable industry standards and practices, and in accordance with Laws and with the terms and provisions of leases, licenses, permits, contracts and other agreements pertaining to the Assets. Without limiting the generality of the foregoing, all statements, reports or compilations of factual, financial or other data, and summaries of such data presented by Manager to the Management Committee shall be prepared to at least the level of detail, care and attention as those statements, reports or compilations prepared by the Manager Participant for its own use. The Manager shall not be liable to the other Participant for any act or omission resulting in damage or loss except to the extent caused by or attributable to the Manager’s willful misconduct or gross negligence. The Manager shall not be in default of any of its duties under Section 8.2 if its inability or failure to perform results from the failure of the other Participant to perform acts or to contribute amounts required of it by this Agreement.

      8.4 Resignation; Deemed Offer to Resign . The Manager may resign upon not less than six (6) months’ prior notice to the other Participant, in which case the other Participant may elect to become the new Manager by notice to the resigning Participant within sixty (60) days after receipt of the notice of resignation. The Manager shall be deemed to have resigned upon the occurrence of the event described in each of the following Subsections, with the other Participant to appoint itself or a third party as the successor Manager at a subsequently called meeting of the Management Committee, at which the Manager shall not be entitled to vote.

          (a) The aggregate Participating Interest of the other Participant and its Affiliates becomes greater than fifty percent (50%);

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

          (c) The Manager fails to pay or contest in good faith its bills and Business debts as such obligations become due;

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

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

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

Under Subsections (d) , (e) or (f) above, the appointment of a successor Manager shall be deemed to pre-date the event causing a deemed resignation.

      8.5 Payments To Manager . The Manager shall be compensated for its services and reimbursed for its costs hereunder in accordance with Exhibit B . Unanimous consent of both Participants is required to increase the Administrative Charge, described in Paragraph 2.13 of Exhibit B , due Manager under this Agreement. Except as specifically set out in this Agreement including Exhibit B or agreed to by unanimous consent of both Participants, the Manager may not collect additional costs, expenses, fees, charges, or other disbursements from the Business Account.

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

      8.7 Activities During Deadlock . If the Management Committee for any reason fails to adopt a proposed Program or Budget, the Manager shall continue Operations at levels sufficient to maintain the then current Operations and Properties. Additionally, if Mining has already been established, the Manager shall continue Mining Operations at a level comparable with the last adopted Mining Program and Budget exclusive of capital items. All of the foregoing shall be subject to the contrary direction of the Management Committee and the receipt of necessary funds.

ARTICLE IX
PROGRAMS AND BUDGETS

      9.1 Initial Program and Budget . The Initial Program and Budget to which both Participants have agreed is hereby adopted and is attached as Exhibit F .

      9.2 Operations Pursuant to Programs and Budgets . Except as otherwise provided in Subsection 5.1(e) , Section 9.13 , and Article XIII , Operations shall be conducted, expenses shall be incurred, and Assets shall be acquired only pursuant to adopted Programs and Budgets. Every Program and Budget adopted pursuant to this Agreement shall provide for cash accrual of reasonably anticipated Environmental Compliance expenses for all Operations contemplated under the Program and Budget in accordance with Paragraph 2.14 of Exhibit B .

      9.3 Presentation of Programs and Budgets . Proposed Programs and Budgets shall be prepared by the Manager to encompass a period of one (1) year or any other period and broken out by quarterly periods as approved by the Management Committee, and shall be submitted to the Management Committee for review and consideration. All proposed Programs and Budgets may include Exploration, Pre-Feasibility Studies, Feasibility Study, Development, Mining and Expansion or Modification Operations components, or any combination thereof, and shall be reviewed and adopted upon a vote of the Management Committee in accordance with Sections 7.2 and 9.4 . Each Program and Budget adopted by the Management Committee, shall be reviewed quarterly at a meeting of the Management Committee. At least three (3) months prior to the expiration of the then current annual Program and Budget, a proposed Program and Budget for the succeeding period shall be submitted to the Management Committee for review and consideration.

      9.4 Review and Adoption of Proposed Programs and Budgets. A Participant shall be deemed to have approved and voted to adopt a proposed Plan and Budget unless it submits in writing to the Management Committee, within thirty (30) days after receipt, its rejection of or proposed modification(s) to any or all of the components of the proposed Plan and Budget. If a Participant timely submits its rejection or proposed

modification(s) to the Management Committee then the Manager working with the other Participant shall seek for a period of time not to exceed twenty (20) days to develop a complete Program and Budget acceptable to both Participants. The Manager shall then call a Management Committee meeting in accordance with Section 7.3 for purposes of reviewing and voting upon the proposed Program and Budget.

      9.5 Election to Participate.

          (a) By notice to the Management Committee within twenty (20) days after the final vote adopting a Program and Budget, and notwithstanding its vote concerning adoption of a Program and Budget, a Participant may elect to participate in the approved Program and Budget: (i) in proportion to its respective Participating Interest, (ii) in some lesser amount than its respective Participating Interest, (iii) not at all; or (iv) if a Reduced Participant, some greater amount than its Recalculated Participating Interest subject to Subsection 9.5(d) . In case of an election under Subsection 9.5(a)(ii) or (iii) , its Participating Interest shall be recalculated as provided in Subsection 9.5(b) below, with dilution effective as of the first day of the Program Period for the adopted Program and Budget. If a Participant fails to so notify the Management Committee of the extent to which it elects to participate, the Participant shall be deemed to have elected to contribute to such Program and Budget in proportion to its respective Participating Interest as of the beginning of the Program Period.

          (b) If a Participant elects to contribute to an adopted Program and Budget some lesser amount than in proportion to its respective Participating Interest, or not at all, and the other Participant elects to fund all or any portion of the deficiency, the Participating Interest of the Reduced Participant shall be provisionally recalculated by dividing: (A) the sum of (1) the amount credited to the Reduced Participant’s Equity Account with respect to its Initial Contribution under Section 5.1 , (2) the total of all of the Reduced Participant’s contributions under Section 5.3 , and (3) the amount, if any, the Reduced Participant elects to contribute to the adopted Program and Budget; by (B) the sum of (1), (2) and (3) above for both Participants; and then multiplying the result by one hundred. The Participating Interest of the other Participant shall be increased by the amount of the reduction in the Participating Interest of the Reduced Participant, and if the other Participant elects not to fund the entire deficiency, the Manager shall adjust the Program and Budget to reflect the funds available.

          (c) Whenever the Participating Interests are recalculated pursuant to this Section 9.5 , (i) the Equity Accounts of both Participants shall be revised to bear the same ratio to each other as their recalculated Participating Interests; and (ii) the portion of Capital Account attributable to the reduced Participating Interest of the Reduced Participant shall be transferred to the other Participant.

          (d) Until such time as a Reduced Participant’s Recalculated Participating Interest drops to less than fifteen percent (15%) and is converted to a Production Royalty in accordance with Section 6.3 , a Reduced Participant may elect to restore its diluted Participating Interest by participating in an approved Program and Budget in an amount greater than in proportion to its Recalculated Participating Interest. At such time as the Reduced Participant has (i) funded its share of the current Program and Budget at least in proportion to its current Recalculated Participating Interest, as well as (ii) contributed funds to the Business Account equal to one hundred fifty percent (150%) or more of the amount the Reduced Participant should have contributed to any prior Program and Budget in order to maintain its Participating Interest in effect on the first day of the Program Period for such Program and Budget, the Reduced Participant’s Participating Interest shall be recalculated in accordance with Subsection 9.5(b ) and shall be effective in accordance with Subsection 9.6(d) .

      9.6 Recalculation or Restoration of Reduced Interest Based on Actual Expenditures.

          (a) If a Participant makes an election under Subsection 9.5(a)(ii) or (iii) , then within thirty (30) days after the conclusion of such Program and Budget, the Manager shall report the total amount of money expended plus the total obligations incurred by the Manager for such Budget.

          (b) If the Manager expended or incurred obligations that were more or less than the adopted Budget, the Participating Interests shall be recalculated pursuant to Subsection 9.5(b) by substituting each Participant’s actual contribution to the adopted Budget for that Participant’s estimated contribution at the time of the Reduced Participant’s election under Subsection 9.5(a) . Such recalculation shall take into account any payments or contributions made by a Reduced Participant pursuant to Subsection 9.5(d) .

          (c) If the Manager expended or incurred obligations of less than eighty percent (80%) of the adopted Budget, within twenty (20) days of receiving the Manager’s report on expenditures, the Reduced Participant may reimburse the other Participant for the difference between any amount contributed by the Reduced Participant to such adopted Program and Budget and the Reduced Participant’s proportionate share (at the Reduced Participant’s former Participating Interest) of the actual amount expended or incurred for the Program, plus interest on the difference accruing at the rate described in Section 10.3 plus three (3) percentage points. Failure of the Reduced Participant to timely reimburse shall result in dilution occurring in accordance with this Article IX and shall bar the Reduced Participant from its rights under this Subsection 9.6(c) concerning the relevant adopted Program and Budget.

          (d) All recalculations under this Article IX shall be effective as of the first day of the Program Period for the Program and Budget. The Manager, on behalf of both Participants, shall make such adjustments so that, to the extent possible, each Participant will be placed in the position it would have been in had its Participating Interests as recalculated under this Section been in effect as of the first day of the Program Period for such Program and Budget. If the Participants are required to make contributions, reimbursements or other adjustments pursuant to this Section, the Manager shall have the right to purchase or sell a Participant’s share of Products in the same manner as under Section 11.2 and to apply the proceeds of such sale to satisfy that Participant’s obligation to make such contributions, reimbursements or adjustments.

          (e) Whenever the Participating Interests are recalculated pursuant to this Section, (i) the Participants’ Equity Accounts shall be revised to bear the same ratio to each other as their Recalculated Participating Interests; and (ii) the portion of Capital Account attributable to the reduced Participating Interest of the Reduced Participant shall be transferred to the other Participant.

      9.7 Pre-Feasibility Study Program and Budgets.

          (a) At such time as either Participant is of the good faith and reasonable opinion that economically viable Mining Operations may be possible on the Properties, the Participant may propose by written notice to the other Participant that a Pre-Feasibility Study Program and Budget component be prepared. Such proposal shall reference the data upon which the proposing Participant bases its opinion, and shall call a meeting of the Management Committee pursuant to Section 7.3 . If such proposal is adopted by the Management Committee, the Manager shall cause to have prepared a Pre- Feasibility Study Program and Budget component as approved by the Management Committee and shall submit the same to the Management Committee within thirty (30) days following adoption of the proposal.

          (b) Pre-Feasibility Studies may be conducted by the Manager, Feasibility Contractors, or both, or may be conducted by the Manager and audited by Feasibility Contractors, as the Management Committee determines. A Pre-Feasibility Study Program shall include the work approved in the proposal adopted by the Management Committee, which may include some or all of the following:

               (i) analyses of various alternatives for mining, processing and treating of Products;

               (ii) analyses of alternative rates of mining, processing and treating of Products;

               (iii) analyses of alternative sites for placement of facilities ( i.e. , water supply facilities, transport facilities, reagent storage, offices, shops, warehouses, stock yards, explosives storage, handling facilities, housing, public facilities);

               (iv) analyses of alternatives for waste treatment and handling (including a description of each alternative of the method of tailings disposal and the location of the proposed disposal site);

               (v) estimates of recoverable proven and probable reserves of Products and of related substances, in terms of technical and economic constraints (extraction and treatment of Products), including the effect of grade, losses, and impurities, and the estimated mineral composition and content thereof, and review of mining rates commensurate with such reserves;

               (vi) analyses of environmental impacts of the various alternatives, including an analysis of the permitting, environmental liability and other Environmental Law implications of each alternative, and costs of Environmental Compliance for each alternative;

               (vii) tests to determine the efficiency of alternative extraction, recovery and processing techniques, including an estimate of water, power, and reagent consumption requirements;

               (viii) hydrologic studies related to any required use of water or dewatering; and

               (ix) other studies and analyses approved by the Management Committee.

          (c) If data results reasonably support a conclusion that further work would be unwarranted for a particular alternative, the Manager shall have no obligation to continue expenditures on other Pre-Feasibility Studies related solely to such alternative.

      9.8 Completion of Pre-Feasibility Studies and Selection of Approved Alternatives. As soon as reasonably practical following completion of all Pre-Feasibility Studies required to evaluate fully the alternatives studied, the Manager shall prepare a report summarizing all Pre-Feasibility Studies and shall submit the same to the Management Committee. Such report shall incorporate the following:

          (a) the results of the analyses of the alternatives and other matters evaluated by the Pre-Feasibility Programs;

          (b) reasonable estimates of capital costs for the Development and start-up of the facilities required by the Development and Mining alternatives evaluated (based on flowsheets, piping and instrumentation diagrams, and other major engineering diagrams), which cost estimates shall include reasonable estimates of:

               (i) capitalized pre-stripping expenditures, if an open pit or surface mine is proposed;

               (ii) expenditures required to purchase, construct and install all machinery, equipment and other facilities and infrastructure (including contingencies) required to bring a mine into commercial production, including an analysis of costs of equipment or supply contracts in lieu of Development costs for each Development and Mining alternative evaluated;

               (iii) expenditures required to perform all other related work required to commence commercial production of Products and, if applicable, process Products (including reasonable estimates of working capital requirements); and

               (iv) all other direct and indirect costs and general and administrative expenses that may be required for a proper evaluation of the Development and Mining alternatives and annual production levels evaluated. The capital cost estimates shall include a schedule of the timing of the estimated capital requirements for each alternative;

          (c) a reasonable estimate of the monthly expenditures required for the first year of Operations after completion of the capital program described in Subsection 9.8(b) for each Development alternative evaluated, and for subsequent quarters of Operations, including estimates of annual production, processing, administrative, operating and maintenance expenditures, taxes (other than income taxes), working capital requirements, royalty and purchase obligations, equipment leasing or supply contract expenditures, work commitments, Environmental Compliance costs, post- Operations Environmental Compliance and Continuing Obligations funding requirements and all other anticipated costs of such Operations. This analysis shall also include an estimate of the number of workers required to conduct such Operations for each alternative;

          (d) a review of the nature, extent and rated capacity of the mine, machinery, equipment and other facilities preliminarily estimated to be required for the purpose of producing and marketing Products under each Development and Mining alternative analyzed;

          (e) an analysis (and sensitivity analyses reasonably requested by either Participant), based on various target rates of return and price assumptions requested

by either Participant, of whether it is technically, environmentally, and economically feasible to place a prospective ore body or deposit within the Properties into commercial production for each of the Development and Mining alternatives analyzed (including a discounted cash flow rate of return investment analysis for each alternative and net present value estimate using various discount rates requested by either Participant); and

          (f) such other information as the Management Committee deems appropriate.

Within sixty (60) days after delivery of the Pre-Feasibility Study summary to the Participants, a Management Committee meeting shall be convened for the purposes of reviewing the Pre-Feasibility Study summary and selecting one or more Approved Alternatives, if any.

      9.9 Programs and Budgets for Feasibility Study. Within ninety (90) days following the selection of an Approved Alternative, the Manager shall submit to the Management Committee a Program and a Budget component, which shall include necessary Operations, for the preparation of a Feasibility Study. A Feasibility Study shall be prepared by Feasibility Contractors.

      9.10 Development Programs and Budgets; Project Financing.

          (a) Unless otherwise determined by the Management Committee, the Manager shall not submit to the Management Committee a Program and Budget component including Development of the mine described in a completed Feasibility Study until ninety (90) days following the receipt by Manager of a favorable Feasibility Study. The Program and Budget, which includes Development of the mine described in the completed Feasibility Study, shall be based on the estimated cost of Development described in the Feasibility Study for the Approved Alternative, unless otherwise directed by the Management Committee.

          (b) Promptly following adoption of the Program and Budget, which includes Development as described in a completed Feasibility Study the Manager shall submit to the Management Committee a report on material bids received for Development work (“ Bid Report ”). If bids described in the Bid Report result in the aggregate cost of Development work exceeding one hundred twenty percent (120%) of the Development cost estimates that formed the basis of the Development component of the adopted Program and Budget, the Program and Budget, which includes relevant Development, shall be deemed to have been resubmitted to the Management Committee based on the aggregate costs as described in the Bid Report on the date of receipt of the Bid Report and shall be reviewed and adopted in accordance with Sections 7.2 and 9.4 .

          (c) If the Management Committee approves the Development of the mine described in a Feasibility Study and also decides to seek Project Financing for such mine, each Participant shall, at its own cost, cooperate in seeking to obtain Project Financing for such mine; provided, however, that all fees, charges and costs (including attorneys and technical consultants fees) paid to the Project Financing lenders shall be borne by the Participants in proportion to their Participating Interests, unless such fees are capitalized as a part of the Project Financing.

      9.11 Expansion or Modification Programs and Budgets. Any Program and Budget proposed by the Manager involving Expansion or Modification shall be based on a Feasibility Study prepared by the Manager, Feasibility Contractors, or both, or prepared by the Manager and audited by Feasibility Contractors, as the Management Committee determines. The Program and Budget, which include Expansion or Modification, shall be submitted for review and approval by the Management Committee within ninety (90) days following receipt by the Manager of such Feasibility Study.

      9.12 Budget Overruns; Program Changes . For Programs and Budgets adopted after completion of Horizon’s Initial Contribution, the Manager shall immediately notify the Management Committee of any material departure from an adopted Program and Budget. If the Manager exceeds an adopted Budget by more than twenty percent (20%) in the aggregate, then the excess over ten percent (10%), except to the extent caused by a Force Majeure condition, emergency or unexpected expenditure made pursuant to Section 9.13 or unless otherwise authorized or ratified by the Management Committee, shall be for the sole account of the Manager and such excess shall not be included in the calculations of the Participating Interests nor deemed a contribution under this Agreement. Budget overruns of twenty percent (20%) or less in the aggregate shall be borne by the Participants in proportion to their respective Participating Interests.

      9.13 Emergency or Unexpected Expenditures . In case of emergency, the Manager may take any reasonable action it deems necessary to protect life or property, to protect the Assets or to comply with Laws. The Manager may make reasonable expenditures on behalf of the Participants for unexpected events that are beyond its reasonable control and that do not result from a breach by it of its standard of care. The Manager shall promptly notify the Participants of the emergency or unexpected expenditure, and the Manager shall be reimbursed for all resulting costs by the Participants in proportion to their respective Participating Interests.

ARTICLE X
ACCOUNTS AND SETTLEMENTS

      10.1 Monthly Statements . The Manager shall promptly submit to the Management Committee monthly statements of account reflecting in reasonable detail the charges and credits to the Business Account during the preceding month in accordance with Section 8.3 .

      10.2 Cash Calls . Following Horizon’s Initial Contribution under Subsection 5.1(b) and any Additional Contribution(s) it elects under Section 5.3 , on the basis of each adopted Program and Budget, the Manager shall submit pri