JOINT VENTURE CONTRACT

Exhibit 10.2

JOINT VENTURE CONTRACT

1.     General Principles

THIS CONTRACT is made by and between YUNNAN NONFERROUS GEOLOGY AND MINING LTD OF YUNNAN PROVINCE and LUNA GOLD (CHINA) CORP. for the establishment of Xinan Mineral Resources Co. Ltd. and the joint exploration and if successful mining of viable deposits discovered in the Dongchuan and its surrounding area, approximately **** km ² (hereinafter referred to as the " Dongchuan Project " or the " Project Area ") in Yunnan Province, People's Republic of China ("PRC") and other agreed projects in the PRC in accordance with the "Laws of the People's Republic of China on Chinese-Foreign Cooperative Enterprises" and other applicable relevant PRC laws and regulations, based on the principle of equality and mutual benefits and through friendly consultations. Unless the terms or context of this CONTRACT otherwise provide, the words and phrases set out in Appendix 1 shall have the meanings set out in that Appendix when used in this CONTRACT and the Appendices hereto.

2.     Parties to this CONTRACT

2.1     The parties to this CONTRACT (hereinafter referred to jointly as the "Parties" and individually as a
            "Party" ) are

Yunnan Nonferrous Geology and Mining Ltd. of Yunnan Province ( "Party A" ), a company registered in Yunnan Province, PRC with its place of business at "No. 93 Remin East Road, Kunming, Yunnan Province 650051, P.R.C. "

Fax: 86-871-3177670
Legal Representative: Lang Zhijun
Position: Chairman
Nationality: Chinese

Luna Gold (China) Corp. ( "Party B" ), a subsidiary of Luna Gold Corp., or its associated company, registered in British Virgin Islands with its place of business at Suite 1600, 777 Dunsmuir Street, P.O. Box 10425, Pacific Centre, Vancouver, British Columbia, Canada V7Y 1K4

Fax: (1-604) 688-0094 with copy to Fax: (612) 9983 1682
Legal Representative: Lee Mun-Kit
Position: Chairman
Nationality: Australian

3.     Establishment of Joint Venture

3.1     Establishment of Joint Venture

In accordance with the "Law of PRC on Chinese-Foreign Co-operative Enterprises" and other applicable PRC laws and regulations, Party A and Party B hereby agree to establish a Sino-foreign cooperative joint venture company in Yunnan Province, PRC.

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3.2     Name and Address

The Chinese name of the Company shall be: (tentative)

The English name of the Company shall be Xinan Mineral Resources Co. Ltd. (Tentative)

The legal address of the Company shall be: No.93 Ren Min Dong Rd., Kunming, Yunnan Province, PRC.

3.3     Law

The Company shall be subject to the jurisdiction and protection of the laws and regulations of PRC. All activities shall be in compliance with the laws and regulations of PRC.

3.4     Limited Liability

The Company is a limited liability company. The liability of Party A and Party B shall be limited to the amount of their respective contributions.

3.5     Formation of the Company

The Company shall be established on the date of the issuance of its business license.

3.6     Prior Act and Indemnification

3.6.1     Subject to Article 3.6.2 below, neither Party shall be liable to the other Party for any loss or damages claimed by any third party arising from acts or events which occurred prior to and after the date of the establishment of the Company . Subject to the provisions in Article 3.4 above, the Company shall indemnify each Party against any and all losses, damages or liabilities suffered by each Party in respect of third party claims arising out of the operation of the Company .

3.6.2     The Company and Party B shall not be liable for any acts or omissions that have occurred in the activities of the Project Area prior to the assignment of the current Exploration Rights to the Company , such acts or omissions to include, without limitation, environmental pollution; and the Company and Party B shall not be liable for any acts or omissions that might occur in the future as a result of any actions by Party A including without limitation any and all liabilities for environmental pollutions . In case of any claim against the Company and/or Party B for the liabilities for the foresaid acts and omissions, Party A shall use its best endeavours to hold the Company and/or Party B harmless from such claims and shall indemnify the Company and Party B against any damages and loss caused by such claims.

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3.7     Change of Law

In the event that after the execution of this CONTRACT and any Appendices hereto, the issuance, amendment, supplement or rescission by government or any subdivision or agency thereof of any applicable tax, customs, foreign exchange or other laws, rules, regulations, policies or changes of any interpretations thereof may allow treatment to the Company or either of the Parties different to that agreed in this CONTRACT, both Parties shall take appropriate actions:

3.7.1     in case of a favourable change to enable the Company or that Party to receive that favourable treatment; or

3.7.2     in case of a detrimental change, the Parties shall meet to resolve how to deal with such changes but with the intent that the profit sharing arrangements and the management and the control of the Company shall not be altered from that provided in this CONTRACT. If agreement cannot be reached, then the relevant issues shall be determined in accordance with Article 17 of this CONTRACT.

4.     Purpose, Scope and Scale of Business Operations

4.1     Purpose

The purpose of the Company is initially to conduct prospecting and exploration work on the Project Area (the "Pre-bankable Feasibility Study" ) and thereafter, if Party B considers the results of the Pre-bankable Feasibility Study justify it, to conduct a bankable feasibility study in respect to the Project Area ( the "Bankable Feasibility Study" ) to investigate the viability of mining the metals including but not limited to gold and silver ores, copper, lead and zinc ores and iron ores in the Project Area (the Pre-bankable Feasibility Study and the Bankable Feasibility Study hereinafter shall collectively be referred to as the "Bankable FS" ). If the Board has determined to proceed with the Dongchuan Project based on the Bankable FS , the Company shall thereafter conduct the mining operations within the Project Area , including without limitation, ongoing exploration, development, production and sale of gold, gold concentrate, other metals and minerals mined in any such mine or the Project Area , by adopting advanced and appropriate technologies and scientific management methods in order to achieve business results satisfactory to both Parties .

4.2     Business Scope of the Company

4.2.1     The Company shall engage in prospecting, exploration, mining, development, production and sale of gold, gold concentrates, other metals and minerals (the "Products" ).

4.2.2     The Products shall be sold by the Company as stipulated by the prevailing PRC laws based on the international prices. IT BEING THE INTENT that the Company shall obtain an international marketing price permit as early as possible.

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4.2.3     After the Parties agree that the activities of the Company may be extended to include other projects in the PRC, subject to the approval of the Board , Party A agrees to assist the Company in every way possible to achieve all agreed new activities.

4.3     Scale of Business Operations

The actual production scale and the total amount of the investment required to develop, mine and produce Products from the Dongchuan Project shall be decided by the Board based on the results of the Bankable Feasibility Study and the then prevailing market conditions.

4.4     Project Area

4.4.1     The Project Area is defined by the map in Appendix 2 and covers an area approximately 1,500 square kilometres. Party A currently holds three Exploration Rights, namely a. Laohuoshan (101.46 sq. km); b. Jiduosikeshu (100.68 sq. km) and c. -Xicha - Daliangzi (40.48 sq km); and two Exploration Rights Application a. Budo (95.2 sq. km) and b. Lumuo (122.28 sq. km) within the Project Area . The Exploration Rights and Exploration Right Applications are detailed in Appendix 3 attached hereto. The Exploration Rights are currently registered under the name of Party A subsidiary entity Yunnan Non-ferrous Geology & Exploration Institute and the Exploration Rights Applications have been submitted to relevant governmental authority by Yunnan Non-ferrous Geology & Exploration Institute.

4.4.2     Party A shall provide all information on geology, past exploration and mining activities it or any of its related units has at its or any of its related unit's disposal to the Company so as to enable the Company to select new areas and apply for or accept the transfer of exploration and or mining rights in addition to the existing exploration right currently being held by Party A as included in the Appendix 2 and Appendix 3.

4.4.3     Party A shall transfer all the exploration rights and/or any mining rights it or any of its related units currently holds within the Project Area to the Company upon the Company's request. With the Company's written consent as approved by the Board , Party A may, in its discretion, dispose of any of the rights that are not selected by the Company provided however that Party A is solely responsible for any liabilities associated with any rights that it may decide to dispose of in accordance with this Article 4.4.3

4.4.4     If either Party or its related unit wishes to apply for exploration or mining right for any particular area within the Project Area , it must notify the Company first and grant the Company the first right of refusal to apply for exploration or mining right for such area. If the Company elects to file such application and apply for such exploration or mining right then the Company does not have to pay for such right. If the Company elects not to proceed with such application, then with the written consent of the Company , such Party or its related unit may act freely, including act jointly with a third party, provided that such Party shall be solely responsible for any liabilities associated therewith.

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4.4.5     The Company may, at any time during the term of this Contract, relinquish part of the Project Area or may decide to relinquish the entire area comprising the Project Area . Either Party has the right to apply for exploration or mining right for the relinquished area, provided that such Party shall be solely responsible for any liabilities associated therewith. Upon either Party's request, the Company will assist such Party to do so.

5.     Registered Capital, Total Amount of Investment and Profit Distribution Ratio

5.1     Registered Capital

5.1.1     The initial registered capital of the Company shall be US$3.1 million which is the amount estimated by Party B required to complete the initial exploration work program in the Project Area.

(A)     Party B shall be responsible for subscribing for the initial US$3.1 million worth of registered capital according to the schedule in Article 6.2.2.

(B)     Any additional contribution to and increase of the Company registered capital shall be done in accordance with Article 6.5.2, Article 6.8 and Article 11.

5.2     Total amount of investment

The total amount of investment by the Company shall be US$ 6.2 million. The Company may satisfy the difference between its registered capital and its total amount of investment by procuring loans.

5.3     Profit Distribution Ratio

Subject to Article 12, the profit generated by the Company shall be distributed to the Parties in proportion to their respective equity interest percentage, as adjusted from time to time in accordance with this Contract.

6.     Provision of Cooperative Conditions

6.1     Cooperative Conditions to be Provided by Party A

6.1.1     Party A shall provide the following as its initial cooperative condition (the " Initial Cooperative Conditions ") to the Company at the establishment of the Company :

(A)     the Laohuoshan and the Jiduosikeshu exclusive Exploration Rights (the Laohuoshan Exploration License No. 5300000420019 and the Jiduosikeshu Exploration License No.: 5300000310199) including any rights that any of its related units currently hold in the Project Area. Party A shall first acquire the above Exploration Rights in its own name at its own cost and, then,apply to the relevant government agency to transfer these Exploration Rights to the Company and submit all documents required by such transfer within 30 days of the Company being granted its business licence and shall make its best endeavours to complete the transfer within the shortest period possible. Party A shall provide to Party B a copy of all abovementioned documents the soonest possible.

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(B)     Party A shall, immediately after the issuance of the Company's business license, provide the Company with legal access to all part of the Project Area for the purpose of undertaking exploration work and preparing a geological report.

(C)     all reports prepared in respect of, the Project Area to enable the Company to carry out initial exploration and complete the Bankable FS.

(D)     all data and plans with respect to the geology, exploration and mining within the Project Area at its or any of its related unit's disposal or obtainable as provided in Article 4.4.2.;

(E)     Party A will provide technical staff and facilities to the Company at the request of the Company or the General Manager as long as the costs of such technical staff and facilities are competitive in accordance with industry standards and approved by the Company or the General Manager ; and [Comment: why delete this?]

(F)     Party A will have priority to be contracted to perform exploration work by Company as long as the contract charges will not be higher than any other contractors and they can satisfy the Company and the General Manager that the contract is carried out in a professional and business like manner and meet the standards required by the Company and the General Manager. Each contract will be negotiated and signed by Party A or its associated unit as the Contractor and the Company as the client.

(G)     If the Board has determined to proceed with the development, mining and production of the Dongchuan Project based on the results of the Bankable FS, then Party A shall:

a.     assist the Company to apply for the exclusive Mining Right in the Project Area in accordance with PRC laws;

b.     assist the Company to apply or secure for any land use rights required and requested by the Company.

c.     Provide additional funding in accordance with Article 11;

d.     assist the Company in obtaining any other approvals, licenses or registration necessary for mining operations.

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6.2     Cooperative Conditions to be Provided by Party B

6.2.1     Party B shall, subject to Article 6.7.1 and Article 18.3.2, provide the following assets as its initial Cooperative Conditions:

(A)     Cash in an amount of US$ 3.1 million as contribution to the Company registered capital.

(B)     Any additional funding required by the Company in accordance with Article 11.

(C)     the technical and management expertise necessary for the management of the business of the Company .

6.2.2     Party B shall pay the above US$ 3.1 million into the Company in accordance with the following time schedule after Party A has completed its contribution as provided in Article 6.1.1 (A) and (B):

Within 45 days after the signing of this CONTRACT, Party B will remit to Party A a sum of US$0.10 million. This amount is an advance for expenses for pre-operating expenses to obtain government approvals, business licence and registration fees for the Company . This amount shall be credited as part of Party B contribution to the Company as in Article 6.2.1 (A). If this amount of US$0.10million is not remitted within the 45 days, this CONTRACT will be terminated without incurring any liability for breach of contract on Party B unless Party A agrees to extend this 45 day period.

In the event that Party A fails to perform any part of its contribution obligations, Party B shall have the right to suspend its capital contribution until Party A's failure has been rectified to Party B's satisfaction.

6.3     Representations and Warranties

6.3.1     Party A hereby represents and warrants that

(A)     it has lawfully obtained all permits required for exploring the reserves in the Project Area from the appropriate governmental authorities.

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(B)     It is a company duly established, validly existing and in good standing in accordance with PRC laws;

(C)     It holds all necessary power and authorization and all necessary licenses and permits to execute and perform this Contract and be bound by the terms and conditions hereof. The execution, delivery and performance of this Contract will not violate any provisions of its Articles of Association, any obligations assumed by it under other contracts to which it is a party and PRC laws;

(D)     From the date hereof to the date of transfer to the Company , the Exploration Rights will be solely owned by Party A and free from any third party's interests, and Party A is the only person conducting exploration and mining activities within the Project Area ;

(E)     On the date of contribution, there is no activity by any person within the spaces and areas covered by the Exploration Rights to be contributed or transferred by it to the Company, which may hinder the transfer of the said rights to the Company, and there is no disputes, potential or present, which may hinder the said transfer and contribution to the Company under this Contract; and

(F)     its representative whose signature is affixed to this Contract has been duly authorized to execute this Contract.

6.3.2     Party B hereby represents and warrants that:

(A)     Party B is a company duly incorporated, validly existing and in good standing under the laws of British Virgin Islands;

(B)     Party B holds all necessary power and authorization and all necessary licenses and permits to execute and perform this Contract and be bound by the terms and conditions hereof. The execution, delivery and performance of this Contract by Party B will not violate any provisions of Party B 's Articles of Association, any obligations assumed by it under other contracts to which it is a party and the laws of British Virgin Islands; and

(C)     Party B 's representative whose signature is affixed to this Contract has been duly authorized to execute this Contract.

6.4     Schedule of Provisions of Cooperative Conditions

6.4.1     Both Parties shall, provide their respective cooperative conditions to the Company in accordance with the applicable PRC laws.

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6.4.2     Party B shall, subject to the provisions of Articles 18.3.2, progressively over the period as in schedule in Article 6.2.2 contribute its cooperative conditions up to initial Registered Capital of US$3.1 million in accordance with Article 5.1.1 and based upon the needs of the actual operations and requirements of the Company, as determined by the Board , and as required by the PRC laws.

6.5     Proportions of Equity

The proportions of the equity of the Company shall be decided by the cooperative conditions contributed by the Parties as follows:

6.5.1     When both Parties have made their initial Cooperative Conditions as required under this CONTRACT, Party A shall hold 30% of the shareholdings of the Company and Party B shall hold 70% of the shareholdings of the Company .

6.5.2     Party B shall have the right to increase its shareholding in the Company from 70% to 90% and reduce the shareholding of Party A from 30% to 10%, by investing an additional US$3.9 million into the Company registered capital on a schedule as determined by the Board and by paying a share transfer price or compensation fee to Party A at a rate of 53.85% of this additional investment made by Party B as such additional investment is being made but no more than a total of US$2.1 million; both Parties agree that upon Party B request to increase its shareholding ratio and its investment into the Company registered capital as provided in this Article 6.5.2, they shall make their best endeavours to make the directors they respectively appoint to the Board of Directors to vote in favour of Party B request and shall cooperate with each other in achieving the increase of Party B shareholding ratio as provided herein.

6.5.3     When additional capital contribution is required for the Bankable FS and the completion of the Dongchuan Project as so decided by the Board after Party B has completed its total capital contribution (including its initial capital contribution and the capital contribution provided in the preceding Art. 6.5.2), either Party proportion of equity shall be determined in accordance with Article 11.

6.6     Verification and Certification

When any Party has completed its total cooperative contribution, an accounting firm registered in the PRC shall be engaged by the Company to verify such contributions and issue a verification report to such effect. The Company shall within 14 days thereafter provide an investment certificate to that Party . Each certificate shall bear the name of the Company , the date of its establishment, the name of the Party and its cooperative conditions required and the date of the issuance of the contribution.

6.7     Operation Unprofitable

6.7.1     Notwithstanding any provisions herein, if the Board decides, at any time during the term of this Contract, that, based upon the results of the exploration work on the Project Area or based on the results of the Pre-Bankable Feasibility Study or the Bankable FS that the operation of the Dongchuan Project is unprofitable then,

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neither Party has the obligation to make any contribution in whatever form to the Company other than those that have been already contributed to the Company in respect to the Dongchuan Project.

6.7.2     In the event of the Board decision under Article 6.7.1, unless the Parties have agreed to enter into any other project or projects in respect of the Dongchuan Project, the Parties shall terminate this CONTRACT and dissolve the Company as provided in Articles 18.3.2 and Party B shall have no further interest in, or liability with respect to the Dongchuan Project and the Company shall return all materials, Exploration Rights and Mining Rights with the exception that when Party B is entitled to a residual interest as in Article 18.4.2.

6.8     Change of Registered Capital of the Company

6.8.1     The Company may increase, decrease, assign or otherwise change the registered capital of the Company in light of its business needs in accordance with the terms with this CONTRACT as well as the approval of the Board and the original approval authority. Once the Company has decided to make such changes, both Parties shall consent and cooperate with the Company to seek approval from the relevant government authorities.

6.8.2     Both Parties agree that the increase of the Company registered capital shall be based on the need to provide additional funding to the Bankable BF or to the mining, construction, production and development within the Project Area and that only Party B has the right to propose the increase of the registered capital. Upon Party B proposal, both Parties shall use their best endeavours to make the directors they appointed to the Board to vote in favour of such increase and to assist the Company in obtaining necessary approval by the original approving authority for such increase. The increased registered capital shall be contributed by both Parties in the ratio as provided in Article 11, unless otherwise provided in Article 6.5.2.

7.     Acquisition of Exploration Rights by the Company

7.1     Existing Exploration Rights

7.1.1     Party A shall, within 30 days, submit the applications to competent approving authorities for transferring to the Company Xicha -Daliangzi Exploration Right (Exploration License No. 5300000310810); Budo Exploration Right Application and Lumuo Exploration Right Application, after so requested in writing by the Company and shall do its best endeavours to complete the transfer within the shortest period possible.

7.1.2     In consideration of the transfer of the Exploration Rights as specified in the preceding paragraph, the Company shall pay to Party A the purchase price in accordance with the following time schedule and formula after the Company has obtained the Exploration Licenses issued by the competent authorities in respect of the Exploration Rights transferred as specified in the preceding Article 7.1.1:

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7.1.3     The payment of the transfer price as stipulated in Article 7.1.2 is condition upon the Company has been provided fully and legal access to all parts of the Project Area to conduct exploration work and Bankable BF. If for whatever reason, the above condition (i), and (ii) is not fulfilled, the Company shall have the right to suspend the payment of purchase price to Party A until such unfulfillment is rectified to the satisfaction of the Company and Party B.

8.     Responsibilities of the Parties

8.1     Responsibilities of Party A

8.1.1     Party A shall be responsible for

(A)     fulfilling its cooperative conditions in accordance with the terms and conditions as provided under this CONTRACT;

(B)     obtaining in the Company's name all approvals, permits, licenses and registrations from and with the PRC authorities for the due establishment, the good standing and the normal operation of the Company , including but not limited to obtaining favourable tax treatment and filing of the international loan agreement with the appropriate administration for exchange control in order to repay any obligation or liability arising out thereof;

(C)     assisting the Company in obtaining all necessary credits or funds from financial institutions inside or outside PRC for the business operation of the Company as approved by the Board;

(D)     providing the Company with all necessary documents for the purpose of financing of the Dongchuan Project.

(E)     assisting the Company in applying for exploration licenses or mining permits, in other areas not included within the Project Area as directed from time to time by the Board;

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(F)     assisting the Company with the import of machinery, equipment, materials and supplies required by the Company , and assisting with the transportation thereof within the PRC as directed by the Board ;

(G)     assisting the Company in obtaining Chinese machinery, equipment, external water supply, transportation, communications and other items required for the Company's operation at competitive prices in accordance with local industry standards as approved by the Board ;

(H)     assisting the Company in recruiting qualified Chinese employees and obtaining all entry visas and work permits for the Company's foreign staff and employees in accordance with applicable laws and regulations, arranging lodging of the foreign staff and providing office, local transportation and medical emergency; and

(I)     assisting the Company in handling other matters entrusted to it by the Company from time to time.

8.2     The Responsibilities of Party B

8.2.1     Party B shall be responsible for:

(A)     fulfilling its cooperative conditions in accordance with the t