LOAN AGREEMENT

A.

The Lender advanced funds of US$175,000 (the “Principal”) to the Borrower on December 17, 2008 (the “Advance Date”);

B.

Pursuant to the terms of a letter agreement between the parties dated March 11, 2008 (the “Letter Agreement”) under the terms of which the Lender was to receive a working interest in the Borrower’s Diamond Springs Prospect (the “Prospect”), the Lender made a payment of US$50,000 towards the exercise of the option (the “Option”) to acquire the Prospect (the “Option Exercise Payment”);

C.

The Lender did not perform all required conditions to exercise the Option under the Letter Agreement and the Option expired on December 15, 2008; and

D.

The parties wish to enter into this Loan Agreement to set out the terms and conditions of the Loan as more particularly set out in herein.

1.

Definitions and Interpretation

1.1

Definitions. In this Loan Agreement the following words and phrases shall have the following meanings:

(a)

“Advance Date” has the meaning ascribed thereto in Recital A.

(b)

“Event of Default” means any of the events of default described in Section 5.

(c)

“Interest” has the meaning ascribed thereto in Section 2.2.

(d)

“Interest Rate” means the rate of 10% per annum calculated and compounded annually.

(e)

“Letter Agreement” has the meaning ascribed thereto in Recital A.

(f)

“Loan” means the Principal and Interest owing by the Borrower to the Lender in accordance with this Loan Agreement.

(g)

“Option” has the meaning ascribed thereto in Recital B.

(h)

“Option Exercise Payment” has the meaning ascribed thereto in Recital B.

(i)

“Principal” has the meaning ascribed thereto in Recital A.

1.2

Captions and Section Numbers . The headings and section references in this Loan Agreement are for convenience of reference only and do not form a part of this Loan Agreement and are not intended to interpret, define or limit the scope, extent or intent of this Loan Agreement or any provision thereof.

1.3

Extended Meanings . The words “hereof”, “herein”, “hereunder” and similar expressions used in any clause, paragraph or section of this Loan Agreement shall relate to the whole of this Loan Agreement and not to that clause, paragraph or section only, unless otherwise expressly provided.

1.4

Number and Gender . Whenever the singular or masculine or neuter is used in this Loan Agreement, the same shall be construed to mean the plural or feminine or body corporate where the context of this Loan Agreement or the parties hereto so require.

1.5

Section References and Schedules . Any reference to a particular “article”, “section”, “subsection” or other subdivision is to the particular article, section or other subdivision of this Loan Agreement and any reference to a schedule by letter shall mean the appropriate schedule attached to this Loan Agreement and by such reference the appropriate schedule is incorporated into and made part of this Loan Agreement.

1.6

Governing Law . This Loan Agreement and all matters arising hereunder shall be governed by, construed and enforced in accordance with the laws of the State of Nevada and all disputes arising under this Loan Agreement shall be referred to the Courts of the State of Nevada.

1.7

Severability of Clauses . In the event that any provision of this Loan Agreement or any part thereof is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

1.8

Currency . All sums of money to be paid or calculated pursuant to this Loan Agreement shall be paid or calculated in currency of the United States unless otherwise expressly stated.

1.9

Prior Agreements. Except as otherwise specifically provided in this Loan Agreement, upon the execution of this Loan Agreement by all parties hereto, this Loan Agreement shall supercede and replace all prior agreements between the parties.

2.

Loan

2.1

Amount of Loan . In reliance upon the representations and warranties contained herein and subject to the terms and conditions of this Loan Agreement, the Lender agrees to lend to the Borrower the Principal.

2.2

Interest . The Principal will bear interest (the “Interest”) at the Interest Rate as of May 31, 2009.

2.3

Repayment of the Loan . The Loan shall be repayable in full on December 17, 2010.

2.4

Accelerated Payment on an Event of Default . Notwithstanding anything else to the contrary herein contained, upon an Event of Default, at the option of the Lender, and upon notice in writing from the Lender to the Borrower, the Loan shall become due and payable in full.

2.5

Option Exercise Payment. In consideration of the Lender entering into this Loan Agreement and advancing the Principal to the Borrower, the Borrower has agreed to credit the total amount of the Option Exercise Payment towards the final purchase price for the acquisition by the Lender of a working interest in the Prospect.

2.6

Acquisition of Working Interest in Prospect. The Borrower acknowledges that the parties hereto are proceeding in good faith to settle and execute a definitive agreement for the acquisition by the Lender of a working interest in the Prospect and agrees to credit the amount of the Loan against the final purchase price of a working interest in the Prospect.

3.

Representations and Warranties

3.1

Representations and Warranties of the Borrower. The Borrower represents and warrants to the Lender as follows, with the intent that the Lender will rely