NU-MEX URANIUM CORP. & STRATHMORE RESOURCES (US) LTD. NOSE ROCK PROPERTY - OPTION AND JOINT VENTURE AGREEMENT

NU-MEX URANIUM CORP. & STRATHMORE RESOURCES (US) LTD.

NOSE ROCK PROPERTY - OPTION AND JOINT VENTURE AGREEMENT

I N D E X

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• • • • THIS AGREEMENT dated the 14th day of September, 2007,

BETWEEN:

• • • • Strathmore Resources (US) Ltd. , a Nevada corporation, with an address at 2420 Watt Court , Riverton, Wyoming 82501

        (hereinafter referred to as " Optionor ")

AND:

• • • • Nu-Mex Uranium Corp., a Nevada corporation, with an address at Suite 110 - 4801 Lang Avenue N.E., Albuquerque, New Mexico 87109

        (hereinafter referred to as " Optionee ")

RECITALS:

A.                     The Optionor has the right to explore, develop and mine certain property located to the northeast of Crownpoint within the Grants Mineral Belt in the State of New Mexico known as the Nose Rock Property;

B.                     By a Letter of Intent dated June 14, 2007 (the "LOI"), the Optionor agreed to grant an exclusive option to the Optionee to acquire up to an undivided 65% interest in the Property (as defined below), upon the terms set out herein; and

C.                     The LOI contemplated that the Parties would enter into this Agreement to replace and encompass the terms of the LOI.

IN CONSIDERATION OF the mutual covenants and agreements herein contained and the sum of Ten Dollars ($10.00) paid by the Optionee to the Optionor (the receipt of which is hereby acknowledged), the Parties hereto agree as follows:

1.         INTERPRETATION

1.1       In this Agreement the following words, phrases and expressions will have the following meanings:

• • (a)        "Accounting Procedure" means the procedure attached to this Agreement as Appendix II.

    (b)         "Affiliate" means an affiliated body corporate in that one body corporate is affiliated with another body corporate if one of them is the subsidiary of the other or both are subsidiaries of the same body corporate or each of them is controlled by the same person, and if two bodies corporate are affiliated with the same body corporate at the same time, they are deemed to be affiliated with each other.

    (c)        "Area of Common Interest" will have the meaning attributed to it in paragraph 24.1.

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• • (d)        "Assets" means all tangible and intangible goods, chattels, improvements or other items including, without limiting generality, land, buildings, and equipment but excluding the Property, acquired for or made to the Property after the Effective Date, or otherwise attributed to the Property pursuant to this Agreement in connection with the Mining Operations.

    (e)        "Completion Date" means the date on which the Management Committee resolves that the preparing and equipping of the Mine is complete and is the date on which commercial production commences.

    (f)        "Construction" means every kind of work carried out during the Construction Period by the Operator in accordance with the Feasibility Report and as approved by the Management Committee.

    (g)        "Construction Period" means the date on which one or more Parties elect to contribute its or their Proportionate Share of Construction Costs, and ending on the Completion Date.

    (h)        "Control" means, for the purposes of paragraph 10.3(e), the ability, directly or indirectly through one or more intermediaries, to direct or cause the direction of the management and policies of the Operator through (i) the legal or beneficial ownership of voting securities, (ii) the right to appoint managers, directors or corporate management, (iii) contract, (iv) operating agreement, (v) voting trust, or otherwise.

    (i)        "Costs" means all items of outlay and expense whatsoever, direct or indirect, with respect to Mining Operations, including the Expenditure Costs, recorded by the Operator in accordance with this Agreement and will include all obligations and liabilities incurred or to be incurred with respect to the protection of the environment such as future decommissioning, reclamation and long-term care and monitoring, even if not then due and payable so long as the amounts can be estimated with reasonable accuracy, and whether or not a mine reclamation trust fund has been established. Without limiting generality, the following are also included as Costs and have the following meanings:

    • • (i)        "Exploration Costs" means those costs incurred for surveying, drilling, testing, and exploration of the Property;

        (ii)       "Construction Costs" means those costs recorded by the Operator for Construction during the Construction Period, including, without limitation, permitting costs, development costs, and financing costs;

        (iii)      "Operating Costs" means those Costs recorded by the Operator subsequent to the Completion Date to fund the Mining Operations; and

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• • • • (iv)       the Operator' s fee contemplated in paragraphs 18.1 and 18.2.

    (j)        "Effective Date" means September 14, 2007.

    (k)        "Expenditure Costs" means all items of outlay and expense whatsoever, direct or indirect, with respect to Mining Operations which are funded solely by the Optionee to earn in its Interest in the Property pursuant to Article 3, including the Operator's fee contemplated in paragraphs 18.1 and 18.2.

    (l)        "Feasibility Report" means a detailed report, in form and substance sufficient for presentation to arm's length institutional lenders considering project financing, showing the feasibility of placing any part of the Property into commercial production as a Mine and will include a reasonable assessment of the various categories of mineral reserves and their amenability to metallurgical treatment, a complete description of the work, equipment and supplies required to bring such part of the Property into commercial production and the estimated cost thereof, a description of the mining methods to be employed and a financial appraisal of the proposed operations and including at least the following:

    • • (i)        a description of that part of the Property to be covered by the proposed Mine;

        (ii)       the estimated recoverable reserves of Minerals and the estimated composition and content thereof;

        (iii)      the proposed procedure for development, mining and production;

        (iv)       results of ore amenability treatment tests (if any);

        (v)        the nature and extent of the facilities proposed to be acquired, which may include a central processing plant if the size, extent and location of the ore body makes such processing facilities feasible, in which event the study will also include a preliminary design for such plant;

        (vi)       the total costs, including capital budget, which are reasonably required to purchase, construct and install all structures, machinery and equipment required for the proposed Mine, including a schedule of timing of such requirements;

        (vii)      all environmental impact studies and costs of implementation;

        (viii)     the period in which it is proposed the Property will be brought to commercial production; and

        (ix)       such other data and information as are reasonably necessary to substantiate the existence of an ore deposit of sufficient size and grade to justify development of a mine, taking into account all relevant business, tax and other economic considerations including a cost comparison between purchasing or leasing and renting of facilities and equipment required for the operation of the Property as a Mine.

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• • (m)        "First Operative Date" means, subject to the Optionor's rights under Article 15, the date upon which the Optionee acquires an undivided 25% Interest in the Property in accordance with paragraph 3.3.

    (n)        "Interest" means an undivided beneficial percentage interest in the Property, the Assets and any Mine, calculated in accordance with this Agreement.

    (o)        "Joint Venture" has the meaning attributed to it in paragraph 8.1.

    (p)        "LOI" has the meaning attributed to it in recital B.

    (q)        "Management Committee" means the committee established pursuant to Article 9.

    (r)        "Mine" means the workings established and Assets acquired, including, without limiting generality, wellfields, plant, ion exchange units, utilities, infrastructure, housing, and other facilities in order to bring the Property into commercial production.

    (s)        "Mine Closure Plan" has the meaning attributed to it in paragraph 23.2.

    (t)        "Mine Maintenance Plan" has the meaning attributed to it in paragraph 23.1.

    (u)        "Minerals" means any and all ores (and concentrates derived therefrom) and minerals, precious and base, metallic and nonmetallic, in, on or under the Property which may lawfully be explored for, mined and sold.

    (v)        "Mining Operations" means every kind of work done by the Operator:

    • • (i)        on or in respect of the Property in accordance with a Program or Operating Plan; or

        (ii)       if not provided for in a Program or Operating Plan, unilaterally and in good faith to maintain the Property in good standing, to prevent waste or to otherwise discharge any obligation which is imposed upon it pursuant to this Agreement and in respect of which the Management Committee has not given it directions;

        including, without limiting generality, investigating, prospecting, exploring, developing, property maintenance, preparing reports, estimates and studies, designing, equipping, improving, surveying, construction and mining, milling, concentrating, rehabilitation, reclamation, and environmental protection.

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• • (w)        "Notice of Election to Contribute" has the meaning attributed to it in paragraph 16.1.

    (x)        "Operating Plan" means the annual plan of Mining Operations submitted pursuant to paragraph 20.2.

    (y)        "Operator" means the Party appointed as the Operator in accordance with Article 10.

    (z)        "Option" has the meaning attributed to it in paragraph 3.1.

    (aa)      "Option Period" means a period of time commencing on the Effective Date and terminating either upon the Second Operative Date, or such earlier date as this Agreement is terminated prior to the Second Operative Date, pursuant to Article 5.

    (bb)       "Participant" means a Party that is contributing to Expenditure Costs or Costs, as the case may be.

    (cc)       "Party" or "Parties" means the Parties to this Agreement and their respective successors and permitted assigns which become Parties pursuant to this Agreement.

    (dd)       "Prime Rate" means the rate of interest per annum established from time to time by CitiBank as its reference rate of interest for the determination of interest rates that CitiBank will charge to customers of varying degrees of credit worthiness in the United States for American Dollar demand loans made by it in the United States and designated by CitiBank as its "prime rate".

    (ee)       "Program" means a work plan and budget of Mining Operations, and adopted by the Management Committee in accordance with this Agreement.

    (ff)       "Property" means the mineral properties more specifically identified in Appendix I that are subject to this Agreement on or after the Effective Date, any additional mineral properties that become part of the Property pursuant to this Agreement, the Minerals thereon, all information obtained from Mining Operations and those rights and benefits appurtenant to the Property that are acquired for the purpose of conducting Mining Operations.

    (gg)       "Proportionate Share(s)" means that share or shares which is equal to a Party's percentage Interest.

    (hh)       "Second Operative Date" means, subject to the Optionor's rights under Article 15, the date upon which the Optionee acquires an undivided 65% Interest, or would have acquired an undivided 65% Interest if the Optionor did not exercise its right to retain the 16% Interest under Article 15, in the Property in accordance with paragraph 3.3.

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• • (ii)       "Simple Majority" means a decision made by the Management Committee by more than 50% of the votes represented and entitled to be cast at a meeting thereof.

    (jj)       "Special Majority" means a decision made by the Management Committee by more than 66.6% percent of the votes represented and entitled to be cast at a meeting thereof.

    (kk)       "$" means US Dollars.

1.2       The words "Article", "paragraph", "sub-paragraph", "herein" and "hereunder" refer to articles, paragraphs and sub-paragraphs in this Agreement. The words "this Agreement" include every Schedule or Appendix attached hereto.

1.3       The captions and the emphases of the defined terms have been inserted for convenience and do not define the scope of any provision.

2.         REPRESENTATIONS, WARRANTIES AND COVENANTS

2.1       Each Party represents and warrants to the other Parties hereto that:

• • (a)        it is a company duly incorporated, organized and validly subsisting under the laws of its incorporating jurisdiction;

    (b)        it has full power and authority to carry on its business and to enter into this Agreement and any agreement or instrument referred to or contemplated by this Agreement;

    (c)        neither the execution and delivery of this Agreement nor any of the agreements referred to herein or contemplated hereby, nor the consummation of the transactions hereby contemplated conflict with, result in the breach of or accelerate the performance required by, any agreement to which it is a Party; and

    (d)        the execution and delivery of this Agreement and the agreements contemplated hereby will not violate or result in the breach of the laws of any jurisdiction applicable or pertaining thereto or of its constating documents.

2.2       The Optionor represents and warrants to the Optionee that:

• • (a)        unless otherwise provided herein, the Optionor, or an agent of the Optionor, is the holder of approximately 5,000 acres of land currently comprising the Property, which was obtained by the acquisition of mineral leases over or by claim staking such lands;

    (b)        to the best of the knowledge of the Optionor, the Property is free and clear of all liens and encumbrances, and is in good standing under the mining laws of the State of New Mexico and the United States of America;

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• • (c)        to the best of the knowledge of the Optionor, all of the mineral claims comprising the Property have been located in accordance with the mining laws of the State of New Mexico and the United States of America, and in accordance with local customs, rules and regulations; and

    (d)        there is no litigation, proceeding or investigation pending or threatened against the Optionor with respect to the Property, nor does the Optionor know, or have any grounds to know after due enquiry, of any basis for any litigation, proceeding or investigation which would affect the Property.

2.3       The representations, warranties and covenants herein-before set out are conditions on which the Parties have relied in entering into this Agreement and will survive the acquisition of any interest in the Property by the Optionee and each Party will indemnify and save the other harmless from all loss, damage, cause, actions and suits arising out of or in connection with any breach of any representation, warranty, covenant, agreement or condition made by them and contained in this Agreement.

3.           OPTION

3.1       Subject to Article 15, the Optionor hereby gives and grants to the Optionee the sole and exclusive right and option to acquire up to a 65% undivided Interest in the Property, free and clear of all charges, encumbrances and claims, in accordance with the terms of this Agreement (the "Option").

3.2       The Option will be exercised by the Optionee as follows:

• • (a)        paying to the Optionor $250,000 on the Effective Date;

    (b)        issuing to the Optionor 5,000,000 common shares in the capital of the Optionee on the Effective Date;

    (c)        subject to the terms of Article 5, incurring minimum Expenditure Costs of $44,500,000 on the Property as follows:

    • • (i)        $1,000,000 on or before first anniversary of the Effective Date;

        (ii)       a further $1,000,000 on or before the second anniversary of the Effective Date;

        (iii)      a further $1,500,000 on or before the third anniversary of the Effective Date;

        (iv)       a further $10,000,000 on or before the fourth anniversary of the Effective Date;

        (v)        a further $10,000,000 on or before the fifth anniversary of the Effective Date;

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• • • • (vi)       a further $10,000,000 on or before the sixth anniversary of the Effective Date; and

        (vii)      a further $11,000,000 on or before the seventh anniversary of the Effective Date.

3.3       Provided the Optionee is not default of the requirements of paragraph 3.2, once the Optionee has incurred:

• • (a)        $13,500,000 of the $44,500,000 in Expenditure Costs set out in paragraph 3.2(c), the Optionee will have immediately acquired an undivided 25% Interest and the First Operative Date will be deemed to have occurred; and

    (b)        the remaining $31,000,000 of the $44,500,000 in Expenditure Costs set out in sub-paragraph 3.2(c), the Optionee will have immediately acquired a further undivided 40% Interest and the Second Operative Date will be deemed to have occurred.

3.4       Upon the Optionee earning the initial 25% Interest, or the further 40% Interest, the Optionor will take all steps to transfer the undivided Interest to the Optionee, including, without limitation, the delivery to the Optionee a duly executed transfer in registrable form transferring the applicable undivided percentage right, title and Interest in the Property free and clear of all charges, encumbrances and claims, in favour of the Optionee. Prior to the delivery of such transfer, the transfer will be deemed to have occurred on the date the 25% Interest, or the further 40% Interest, was earned and the Optionee will be entitled to its share of Minerals in accordance with the Optionee's earned Interest at the time.

3.5       Until the Optionee has incurred all of the Expenditure Costs and earned its entire Interest, the Optionor will keep the Property in good standing, free and clear of all liens and encumbrances resulting from its activities, by the doing and filing of assessment work as described in paragraph 7.2(a).

3.6       This Agreement, or a memorandum of this Agreement, will, upon the written request of the Optionee, be recorded in the office of any governmental agency so requested, in order to give notice to third parties of the option interest of the Optionee in the Property and this Agreement. Each Party hereby covenants and agrees with the requesting Party to execute such documents as may be necessary to perfect such recording.

4.           CONFIRMATION OF RESOURCES

4.1       Within 60 days of the fourth anniversary of the Effective Date the Operator will cause a detailed evaluation, conducted in accordance with National Instrument 43-101 of the Canadian Securities Administrators by a third party engineering firm selected by the Optionor and agreed to by the Optionee, that calculates the weight in pounds of measured, indicated and/or inferred mineral resources consisting of U ₃ O ₈ based on a cut-off grade of 0.02% on the Property based upon the information and results from previous exploration and development work conducted on the Property, including the results from the work funded by the Optionee and conducted on the Property after the Effective Date. The costs of the evaluation will constitute Expenditure Costs.

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5.         TERMINATION OF OPTION

5.1       This Agreement and the Option will terminate and the Optionee will have no further interest:

• • (a)        if, by 5:00 p.m. (Pacific Time) on the seventh day after the Effective Date, the Optionee fails to pay the Optionor the amount set out in sub-paragraph 3.2(a) by way of wire transfer, certified cheque or bank draft;

    (b)        if, by 5:00 p.m. (Pacific Time) on the seventh day after the Effective Date, the Optionee fails to provide the Optionor with the share certificate representing 5,000,000 common shares in the capital of the Optionee in accordance with sub-paragraph 3.2(b);

    (c)        if the Optionee fails to incur the Expenditure Costs pursuant to sub-paragraphs 3.2(c)(i), 3.2(c)(ii), 3.2(c)(iii), 3.2(c)(iv), 3.2(c)(v), 3.2(c)(vi) or 3.2(c)(vii) by 5:00 p.m. (Pacific Time) on the seventh day after each respective anniversary of the Effective Date and the failure to incur the Expenditure Costs is not due to events or circumstances beyond the Optionee's control; or

    (d)        if the Optionee gives notice in accordance with paragraph 6.1.

Notwithstanding paragraph 5.1(c), the Optionee will continue to own any Interest earned pursuant to paragraph 3.3(a).

6.           TERMINATION PRIOR TO THE second OPERATIVE DATE

6.1       At any time prior to the Second Operative Date, the Optionee may terminate this Agreement and the Option so long as it is not in default of any of its obligations under this Agreement, by giving 30 days notice in writing to that effect to the Optionor and on receipt of such notice by the Optionor, or if the Option is terminated pursuant to paragraph 5.1, this Agreement will be of no further force or effect provided, however, that the Optionee will:

• • (a)        have the right and obligation to remove from the Property within six (6) months of the effective date of termination, all equipment erected, installed or brought upon the Property by or at the instance of the Optionee, unless such equipment was erected, installed or brought upon the Property in satisfaction of the Optionee's obligations to contribute Expenditure Costs as set out in sub-paragraph 3.2;

    (b)        pay for any environmental clean-up or remediation costs or liability which have been incurred or arise from Mining Operations between the Effective Date up to the date this Agreement is terminated;

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• • (c)        quitclaim any Interest in the Property and return any shares or other property which represents its Interest to the Optionor (excluding any Interest which the Optionee may have already earned pursuant to sub-paragraph 3.3(a); and

    (d)        deliver to the Optionor all technical information, surveys, data, reports, and other documents relating to the Property.

7.         OBLIGATIONS OF THE OPTIONOR DURING OPTION PERIOD

7.1       The Parties agree that during the Option Period the Optionor will be the Operator of the Property and will be responsible for all administration, exploration, development and field operations with respect to the exploration and development of the Property.

7.2       During the Option Period the Optionor will:

• • (a)        maintain in good standing those mineral claims comprising the Property by the doing and filing of assessment work or the making of payments in lieu thereof, by the payment of taxes and rentals, and the performance of all other actions which may be necessary in that regard and in order to keep such mineral claims free and clear of all liens and other charges arising from the Optionor's activities thereon except those at the time contested in good faith by the Optionor;

    (b)        permit the Optionee, or its representative duly authorized in writing, at the Optionee's expense, to visit and inspect the Property at all reasonable times and intervals, and data obtained by the Optionor as a result of its operations thereon, provided always that the Optionee or its representative will abide by the rules and regulations laid down by the Optionor relating to matters of safety and efficiency in its operations;

    (c)        do all work, and will ensure that all work performed by the Optionor's contractors on the Property is done in a good and workmanlike fashion and in accordance with all applicable laws, regulations, orders and ordinances of any governmental authority;

    (d)        indemnify and save the Optionee harmless in respect of any and all costs, claims, liabilities and expenses arising out of the negligent performance by the Optionor of its activities on the Property;

    (e)        indemnify and save the Optionee harmless in respect of any and all costs, claims, liabilities and expenses arising out of Mining Operations which were not approved by the Management Committee in accordance with the terms of this Agreement; and

    (f)        deliver to the Optionee, forthwith upon receipt thereof, copies of all reports, maps, assay results and other technical data compiled by or prepared at the direction of the Optionor with respect to the Property, as well as regular reports as to the spending of the Expenditure Costs made by the Optionor.

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8.         FORMATION OF THE JOINT VENTURE

8.1       Upon the Optionee earning the initial 25% Interest in the Property, the Optionor and Optionee agree to associate and participate in a joint venture (the "Joint Venture") for the further exploration and development of the Property, and, if deemed warranted, bringing the Property or a portion thereof into commercial production by establishing and operating a Mine. The Joint Venture will be administered in accordance with the terms of this Agreement, unless otherwise agreed upon in writing by the Parties prior to the First Operative Date, which will include, without limitation, the provision for all Expenditure Costs to be incurred in accordance with Article 12.

8.2       On the Second Operative Date, and if the Optionor does not exercise its right to retain or earn back a 16% Interest pursuant to Article 15, the respective Interests of the Parties will be Optionor - 35%, and Optionee - 65%. If the Optionor does exercise its right to retain or earn back a 16% Interest pursuant to Article 15, then on the Second Operative Date, the respective Interests of the Parties will be Optionor-51%, and Optionee-49%.

8.3       Before the Second Operative Date, the Optionor will not be required to contribute to the costs of the exploration and development of the Property. After the Second Operative Date, each of the Optionor and Optionee will contribute to the Costs in accordance with their Proportionate Share.

8.4       Except as expressly provided in this Agreement, and except for any activities involving or affecting the Area of Common Interest, each Party will have the right independently to engage in and receive full benefits from business activities, whether or not competitive with the Joint Venture, without consulting any other Party. The doctrines of "corporate opportunity" or "business opportunity" will not be applied to any other activity, venture or operation of any Party and no Party will have any obligation to another Party with respect to any opportunity to acquire any assets outside of the Property at any time, or within the Property after the termination of this Agreement. Unless otherwise agreed in writing, no Party will have any obligation to mill, beneficiate or otherwise treat any Minerals or any other Party's share of Minerals in any facility owned or controlled by such Party.

8.5       Except as otherwise provided herein, the Parties will bear all Costs and all liabilities arising under this Agreement (as they relate to the Property only) and will own the Property, the Assets and any Mine all in proportion to their respective Interests.

9.         MANAGEMENT COMMITTEE

9.1       A Management Committee will be established on or forthwith after the Effective Date. Except as herein otherwise provided, the Management Committee will make all decisions in respect of Mining Operations.

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9.2       Each Party will forthwith appoint one representative and one alternate representative to the Management Committee. The alternate representative may act for a Party's representative in his or her absence.

9.3       The Operator will call a Management Committee meeting at least once every three months, and, in any event within 14 days of being requested to do so by any representative.

9.4       The Operator will give notice, specifying the time and place of, and the agenda for, the meeting to all representatives at least seven days before the time appointed for the meeting. The Management Committee will determine the location of the meetings of the Management Committee having regard to balance of convenience of all Parties. Each agenda for a meeting will include the consideration and approval of the minutes of the immediately preceding meeting of the Management Committee.

9.5       Notice of a meeting will not be required if representatives of all of the Parties are present and unanimously agree upon the agenda.

9.6       A quorum for any Management Committee meeting will be present if a representative of each of the Parties holding an Interest is present. If a quorum is present at the meeting, the Management Committee will be competent to exercise all of the authorities, powers and discretions bestowed upon it hereunder. If a Management Committee meeting is terminated and rescheduled because of a lack of quorum, the Management Committee will be able to transact any business at the re-scheduled meeting even if a quorum is not present at the commencement of the rescheduled meeting. A representative may attend and vote at a meeting of the Management Committee by telephone conference call in which each representative may hear, and be heard by, the other representatives.

9.7       Subject to paragraph 9.8 the Management Committee will decide every question submitted to it by consensus, however in the event consensus is not possible, the question will be determined by a vote with each representative being entitled to cast that number of votes which is equal to its Party's Interest percentage. Other than as is expressly set out herein to the contrary, the Management Committee will make decisions by Simple Majority.

9.8       Notwithstanding anything else in this Agreement, the following decisions of the Management Committee shall require approval of 100% of the votes cast at a duly called meeting:

• • (a)        any cessation of operations of any mine for a period exceeding 10 days;

    (b)        any recommencement of operations after a cessation of operations contemplated in (a) above;

    (c)        the disposition of any Assets which have a value in excess of $1 million;

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• • (d)        incurring any liability or obligation not in the ordinary course and not approved in a Program and Budget that exceeds $500,000;

    (e)        settling any law suit or insurance claim;

    (f)        acceptance of a Feasibility Report; and

    (g)        commencement of Construction of a Mine.

9.9       The representative of the Operator will be the chair of the Management Committee meeting.

9.10     The Operator will ensure that minutes of Management Committee meetings are taken and circulated to each representative within a reasonable time following the termination of the meeting, and in any event no later than the time of delivery of the notice of the next meeting of the Management Committee.

9.11     The Management Committee may make decisions by obtaining the consent in writing of the representatives of all Parties. Any decision so made will be as valid as a decision made at a duly called and held meeting of the Management Committee.

9.12     Management Committee decisions made in accordance with this Agreement will be binding upon all of the Parties.

9.13     Each Party will bear the expenses incurred by its representative and alternate representative in attending meetings of the Management Committee.

9.14     The Management Committee may, by agreement of the representatives of all the Parties, establish such other rules of procedure, not inconsistent with this Agreement, as the Management Committee deems fit.

10.       APPOINTMENT OF OPERATOR

10.1     Unless otherwise agreed by the Parties in writing, and except as otherwise provided in this Article 10, the Optionor will act as Operator until the Second Operative Date, at which time the Operator will be the party with the largest Interest. If, after the Second Operative Date, the Parties' Interests change, the party with the largest Interest will be the Operator.

10.2     The Party acting as Operator may resign as Operator on at least 90 days' notice to all the Parties. In that event, the Operator will be selected by the Management Committee by the casting of that number of votes which is equal to each Party's Interest, such resignation to be effective as of a date designated by the Management Committee.

10.3     The Management Committee may, by Special Majority, remove the Party acting as Operator if:

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• • (a)        that Party makes an assignment for the benefit of its creditors, or consents to the appointment of a receiver for all or substantially all of its property, or files a petition in bankruptcy or is adjudicated bankrupt or insolvent; or

    (b)        a court order is entered without that Party's consent:

    • • (i)        appointing a receiver or trustee for all or substantially all of its property; or

        (ii)       approving a petition in bankruptcy or for a reorganization pursuant to the applicable bankruptcy legislation or for any other judicial modification or alteration of the rights of creditors;

    (c)        the Operator is in default under this Agreement and fails to cure such default, or to commence bona fide curative measures, within 30 days of receiving notice of the default from a non-Operator;

    (d)        the Operator fails to meet any of its obligations pursuant to section 11; or

    (e)        the Operator undergoes a change in Control.

10.4     If the Management Committee, acting in accordance with paragraph 10.3, removes the Party acting as Operator, such removal will be effective as of a date designated by the Management Committee.

10.5     If the Operator resigns or is removed, in accordance with paragraph 10.3, the Management Committee will thereupon select another Party to become the Operator effective as of a date established by the Management Committee.

10.6     The new Operator will assume all of the rights, duties, liabilities and status of the previous Operator as provided in this Agreement. The new Operator will have no obligation to hire any employees of the former Operator resulting from this change of Operator.

10.7     Upon ceasing to be Operator, the former Operator will forthwith deliver to the new Operator custody of all Assets, Property, books, records, and other property both real and personal which it prepared or maintained in its capacity as Operator.

10.8     If the Operator resigns or is removed and no other Party consents to act as Operator, the Joint Venture will be terminated and the Party which was the Operator may, if it consents to act, continue to act as Operator to effect the termination. The Parties will be obligated to fund each of their respective Proportionate Shares of the Costs incurred to effect the termination.

11.       RIGHTS, DUTIES AND STATUS OF OPERATOR

11.1     The Operator in its operations hereunder will be deemed to be an independent contractor. The Operator will not act or hold itself out as agent for any of the Parties nor make any commitments on behalf of any of the Parties unless specifically permitted by this Agreement or directed in writing by a Party.

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11.2     Subject to any specific provision of this Agreement and subject to it having the right to reject any direction on reasonable grounds by virtue of its status as an independent contractor, the Operator will perform its duties hereunder in accordance with the directions of the Management Committee and in accordance with this Agreement.

11.3     The Operator will manage and carry out Mining Operations substantially in accordance with Programs, Feasibility Reports, Operating Plans, Mine Maintenance Plans and Mine Closure Plans adopted by the Management Committee and in connection therewith will, in advance if reasonably possible, notify the Management Committee of any change in Mining Operations which the Operator considers material and if it is not reasonably possible, the Operator will notify the Management Committee so soon thereafter as is reasonably possible.

11.4     The Operator will have the sole and exclusive right and authority to manage and carry out all Mining Operations in accordance herewith and to incur the costs required for that purpose. In so doing the Operator will:

• • (a)        comply with the provisions of all agreements or instruments of title under which the Property or Assets are held;

    (b)        obtain all work permits, environmental approvals, and subject to Article 27 insurances, as required to carry out exploration and development programs,

    (c)        maintain the Property's mineral leases and rights in good standing,

    (d)        pay all Costs properly incurred promptly as and when due;

    (e)        keep the Property and Assets free of all liens and encumbrances (other than those, if any, in effect on the Effective Date, those the creation of which is permitted pursuant to this Agreement, or builder's or mechanic's liens) arising out of the Mining Operations and, in the event of any lien being filed as aforesaid, proceed with diligence to contest or discharge the same;

    (f)        with the approval of the Management Committee prosecute claims and, where a defence is available, defend litigation arising out of the Mining Operations, provided that any Participant may join in the prosecution or defence at its own expense;

    (g)        subject to paragraph 24.6, perform such assessment work or make payments in lieu thereof and pay such rentals, taxes or other payments and do all such other things as may be necessary to maintain the Property in good standing, including, without limiting generality, staking and re-staking mining claims, and applying for licenses, leases, grants, concessions, permits, patents and other rights to and interests in the Minerals;

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• • (h)        maintain books of account in accordance with the Accounting Procedure, provided that the judgment of the Operator as to matters related to the accounting, for which provision is not made in the Accounting Procedure, will govern if the Operator's accounting practices are in accordance with generally accepted accounting principles in the mining industry in Canada;

    (i)        perform its duties and obligations hereunder in a sound and workmanlike manner, in accordance with sound mining and engineering practices and other practices customary in the United States mining industry, in substantial compliance with all applicable federal, state, county and municipal laws, by-laws, ordinances, rules and regulations and this Agreement and in accordance with the care and skill normally expected by someone conducting and managing exploration, development and mining activities on behalf of the legal or beneficial owners of the Property;

    (j)        prepare and deliver the reports provided for in paragraph 25.2;

    (k)        have such additional duties and obligations as the Management Committee may from time to time determine; and

    (l)        manage and execute all Programs approved in accordance with this Agreement, including payments to any third party consultants and contractors engaged by the Operator.

12.       APPROVAL OF PROGRAMS PRIOR TO THE SECOND OPERATIVE DATE

12.1     The Operator will prepare draft Programs for consideration by the Management Committee. Unless otherwise agreed to by the Management Committee, each Program will cover a calendar quarter. The draft Program will contain a statement in reasonable detail of the proposed Mining Operations, estimates of all Expenditure Costs to be incurred and an estimate of the time when they will be incurred, and will be delivered to the Optionee by no later than 30 days prior to the period to which the draft Program relates. Each draft Program will be accompanied by such reports and data as are reasonably necessary for the Optionee to evaluate and assess the results from the Program for the then current year and, to the extent not previously delivered, from earlier Programs.

12.2     The Optionee will review the draft Program prepared by the Operator, and no later than 15 days after receiving a draft Program, either reject the Program or approve the Program. In the event the Program is rejected the Operator will prepare an alternate Program mutually acceptable to the Optionee and the Operator.

12.3     Once the Program is adopted by the Optionee, the Optionee will fund the Program within 15 days of such adoption by depositing the amount of the program budget into a bank account maintained by the Operator solely for receipt and payment of the Expenditure Costs the Optionee is obligated to make pursuant to sub-paragraph 3.2. The Operator will be entitled to an allowance for a cost overrun of twenty-five percent (25%) in addition to any budgeted Costs and any cost overruns so incurred will be deemed to be included in the Program, as adopted. Unless approved by the Optionee, the Operator will be exclusively liable for the payment of all cost overruns incurred in excess of 125% of any budgeted Expenditure Costs.

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12.4     The Operator will be entitled to invoice the Optionee:

• • (a)        no more frequently than monthly, the Expenditure Costs incurred and paid by the Operator in carrying out a Program; or

    (b)        60 days in advance of requirements, estimated to be incurred and paid by the Operator in carrying out a Program.

Each invoice will be signed by a financial officer of the Operator. The Optionee will pay to the Operator the amount invoiced within 30 days of receipt of the invoice.

12.5     Unless otherwise directed by the Management Committee, the Operator may suspend or terminate prematurely any Program when the Operator, in good faith, considers that conditions are not suitable for the proper continuation or completion of the Program or the results obtained to that time eliminate or substantially impair the technical rationale on which the Program was based.

12.6     If the Operator suspends or prematurely terminates a Program pursuant to paragraph 12.5, any funds advanced by the Optionee for that Program in excess of the Expenditure Costs incurred prior to the suspension or premature termination, and such funds will be refunded within 60 days of the suspension or premature termination. Unless approved by the Optionee, the Operator will be exclusively liable for the payment of all cost overruns incurred in excess of 125% of any budgeted Expenditure Costs.

13.       APPROVAL OF PROGRAMS AFTER THE SECOND OPERATIVE DATE

13.1     Any Programs required subsequent to the Second Operative Date to bring the Property to the stage of the Feasibility Report, will be approved in the same manner as set out in Section 16.

13.2     All costs incurred by the Operator in implementing Programs approved after the Second Operative Date will be deemed to be Costs and will be paid for by the Parties pro-rata in accordance with their Proportionate Shares.

14.       FEASIBILITY REPORT

14.1     Except as provided in paragraph 14.2, a Feasibility Report will only be prepared with the approval of:

• • (a)        the Management Committee and Optionee if it will be funding the Feasibility Report as part of t