Management Services Agreement

14.

Obligations on termination

11

15.

Assignment

12

16.

Relationship of the parties

12

17.

Personnel

12

18.

Warranties

13

19.

Notices

13

19.1

In writing

13

19.2

Forms of Notice

13

19.3

Certificate

13

19.4

Deemed receipt

13

19.5

Confirmation of receipt

14

19.6

Recipient to confirm receipt

14

19.7

Recipient

14

19.8

Addresses for service

14

20.

GST

15

20.1

Definitions and interpretation

15

20.2

Consideration exclusive of GST

15

20.3

Consideration

15

20.4

Tax Invoice

15

20.5

Payments

15

20.6

Adjustment Event

15

21.

Entire Agreement

16

22.

Severance

16

23.

Waiver

16

24.

Variation of Agreement

16

25.

Counterparts

16

26.

Legal costs and stamp duty

16

27.

Governing Law

17

  Schedule 1

18

Date

July 1, 2008

Parties

Volcan Australia Corporation Pty Ltd ACN 131 553 341 of Level 34, 50 Bridge Street, Sydney, New South Wales, Australia

( Company )

Australian Gemstone Mining Pty Ltd ACN 073 120 591 of 67 Penkivil Street, Bondi, New South Wales, Australia

( Manager )

Background

A.

The Company carries on the Business.

B.

The Manager has particular skill, experience and expertise in providing management services including executive, administrative, corporate compliance, accounting and secretarial services and geological and technical expertise.

C.

The Company wishes to retain the Manager to provide management services to the Company.

D.

The Key Persons are employees of the Manager.

E.

The Manager has, at the request of the Company, agreed to provide the Services and make the Key Persons available to the Company on the terms of this Agreement.

1.

Definitions and interpretation

1.1

Definitions

In this Agreement, unless the context indicates a contrary intention:

Agreement means this agreement, the Schedules and Annexures attached to this agreement and any document or documents supplemental to this agreement;

Board means the board of directors of the Company from time to time;

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(a)

Business, operations or strategies;

(b)

the terms of this Agreement;

(c)

information designated as confidential by the Company;

(d)

information acquired by the Manager solely by virtue of the provisions of this Agreement;

(e)

actual or prospective customers, clients or competitors.

(f)

it is in the public domain, unless it came into the public domain by a breach of confidentiality;

(g)

it is already known by the other person at the time this Agreement is entered into; or

(h)

it is obtained lawfully from a third party without any breach of confidentiality;

(a)

a receiver, receiver and manager, trustee, administrator, other controller (as defined in the Corporations Act) or similar official is appointed over any of the assets or undertakings of the party;

(b)

a party suspends payment of its debts generally;

(c)

a party is or becomes unable to pay its debts as and when they fall due or is or becomes unable to pay its debts or is presumed to be insolvent within the meaning of the Corporations Act;

(d)

a party enters into or resolves to enter into any arrangement, composition or compromise with, or assignment for the benefit of, its creditors, or any class of them;

(e)

a party ceases to carry on business or threatens to cease to carry on business;

(f)

a resolution is passed or any steps are taken to appoint, or to pass a resolution to appoint, an administrator; or

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(g)

an application or order is made for the winding up or dissolution of a party, or a resolution is passed or any steps are taken to pass a resolution for the winding up or dissolution of a party, otherwise than for the purpose of an amalgamation or restructuring that has the prior written consent of the other party;

(a)

copyright;

(b)

all rights conferred under statute, common law or equity in relation to inventions (including patents);

(c)

registered and unregistered trademarks;

(d)

registered and unregistered designs;

(e)

circuit layouts;

(f)

Confidential Information; and

(g)

all other agreed rights resulting from intellectual activity in the industrial and mining fields;

(a)

Pnina Feldman

(b)

Sholom Dovber Feldman,

(c)

Simon Robert Pecover; and

(d)

Robert Coenraads

and such other person as agreed in writing between the parties, and Key Person means any one of them;

Land means all rights, estates and interests (whether freehold or leasehold) and including mining tenements now or in the future owned by the Company in any real property and all buildings, fences, structures, plan, machinery, fixtures, tailings and equipment now or in the future affixed to such real property;

Manager means Australian Gemstone Mining Pty Ltd ACN 073 120 591 and includes the employees and agents of the Manager and any other persons duly authorised to act on its behalf in relation to the Business;

Service Fee means the fee set out in item 4 of Schedule 1; and

Services means all duties and responsibilities to be performed and carried out by the Manager in relation to the Business as reasonably required by the Company and agreed to under the terms of this Agreement, and as set out in item 3 of Schedule 1.

1.2

Interpretation

In this Agreement unless the context requires otherwise:

(a)

headings are included for convenience only and do not affect interpretation;

(b)

a reference to a document includes a reference to that document as amended, novated, supplemented, varied or replaced;

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(c)

a reference to a part, clause, party, annexure, exhibit or Schedule is a reference to an item of that type in this Agreement and includes a reference to the provisions or terms of that part, clause, Annexure, exhibit or Schedule;

(d)

a reference to a party to this document includes the party’s successors and permitted assigns and includes any person to whom this Agreement is novated;

(e)

reference to $, Dollars or dollars is a reference to the lawful tender for the time being and from time to time of the Commonwealth of Australia;

(f)

a covenant, representation, warranty or an agreement between more than one person binds them jointly and severally;

(g)

a provision of this Agreement is not to be construed against a party solely on the ground that the party is responsible for the preparation of this Agreement or a particular provision;

(h)

a reference to liquidation includes appointment of an administrator, compromise, arrangement, merger, amalgamation, reconstruction, winding up, dissolution, assignment for the benefit of creditors, scheme composition or arrangement of creditors, insolvency, bankruptcy or any similar procedure or if applicable changes in the constitution of a partnership or the death of a person; and

(i)

a reference to a body which is not a party to this Agreement which ceases to exist or whose power or function is transferred to another body, is a reference to the body which replaces or substantially succeeds to the power or function of the first body.

1.3

Parties

(a)

An obligation, representation or warranty in favour of more than one person is for the benefit of them separately and jointly.

(b)

A party which is a trustee is bound both personally and in its capacity as a trustee.

2.

Engagement

(a)

The Company engages the Manager to provide the Services to the Company as an independent contractor on the terms of this Agreement, and the Manager accepts the engagement.

(b)

The engagement starts on the Commencement Date and shall continue until terminated in accordance with clause 13.

3.

Services

(a)

The Manager shall, during the term of this Agreement, provide or procure the provision of the Services to or for the Company to the extent and at the times reasonably requested by the Company during normal business hours.

(b)

During the term of this Agreement the Manager shall supply the Services by retaining the Key Persons to provide the Services to the Company.

(c)

The parties may agree from time to time to add or remove Services, and from the date of that agreement, Schedule 1 shall be amended accordingly.

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4.

Promotion

The Manager shall use its best efforts and shall procure that the Key Persons use their best efforts to promote and enhance the Business and the interests and reputation of the Company and must not do anything which may injure the Business or the Company’s reputation.

5.

Duties of the Manager

(a)

The Manager shall:

(i)

act in accordance with the directions of the Board of the Company which may from time to time in writing vary or override the obligations, powers and authorities of the Manager;

(ii)

procure that the Services are carried out:

(A)

diligently and competently;

(B)

expeditiously;

(C)

in accordance with all laws and requirements of any government or government agency; and

(D)

to the professional standard of skill and care to be reasonably expected from a person engaged in providing the Services;

(iii)

devote the time and attention to the interests of the Company necessary to discharge effectively its duties to the Company under this Agreement;

(iv)

honestly discharge its duties in the course of providing the Services to the Company;

(v)

comply in a timely manner with all reasonable requests of the Company or its representatives in connection with its duties and responsibilities under this Agreement; and

(vi)

provide the Company with any information it reasonably requires from time to time.

(b)

The Manager must keep adequate books and records in sufficient detail to record the Services provided and retain such books and records for a period of six years after the termination or expiration of this Agreement. On request by the Company, the Manager must provide the Company with reasonable access during business hours to examine and copy such books and records.

6.

Powers of the Manager

Subject to clause 5(a)(i), the Manager in the performance of its obligations under this Agreement shall have the power and authority, in Australia or elsewhere, to do all things necessary or convenient to be done for or in connection with, or incidental to the provision of the Services to the Company including without limitation, the power and authority:

(a)

to pay out of the Company's money all professional advisers to the Company (including solicitors and accountants), managers, clerks and other servants employed by the Company;

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(b)

to incur on behalf of the Company all expenses as the Manager considers reasonable and necessary and which would normally be expected to be incurred in the normal course of managing the Business including the cost of printing stationery, insurances, legal costs, postage and other general office costs which would normally be expended in the course of business;

(c)

to enter into possession and take control of the Company Property;

(d)

to lease, let or hire or dispose of the Company Property;

(e)

to grant options over the Company Property on such conditions as the Manager thinks fit;

(f)

to borrow any money which may be required for any of the purposes mentioned in this clause 6 in the name of the Company or otherwise and secure any moneys so borrowed by mortgage or charge over the Company Property or any part of it provided however that the Manager shall not be bound to enquire as to the necessity or propriety of any such borrowing nor be responsible for the misapplication or non- application of any moneys so borrowed;

(g)

to insure the whole or any party of the Company Property which is of an insurable nature against loss or damage by fire or other risks in such sums as the Manager shall think fit;

(h)

to repair, renew or enlarge the Company Property;

(i)

to convert the Company Property into money;

(j)

to carry on any business of the Company;

(k)

to take on lease or on hire, or to acquire, any property necessary or convenient in connection with the carrying on of a business of the Company;

(l)

to sell or concur in selling or otherwise dispose of absolutely or conditionally all or any part of the Company Property either by public auction or private treaty or by tender for cash or on credit and either in one lot or in parcels and either with or without special conditions or stipulations as to title or time or mode of payment of purchase money or otherwise and with power to allow the whole or any part of the purchase money to remain on mortgage over the property sold or over any other security or to remain owing without any security and upon such other terms and conditions as the Manager may consider expedient without being responsible for any loss occasioned thereby and with full power to buy in and rescind or vary any contract for sale and resell without being responsible for loss and to compel the specific performance of any contract by suite in equity or otherwise and to execute assurances of all or any part of the mortgage property in the name and on behalf of the Company or otherwise and to do all other acts and things for completing any such sale which the Manager may deem necessary;

(m)

to sever fixtures belonging to the Company and sell them apart from any other part of the Company Property;

(n)

to make any arrangement or compromise which the Manager shall think expedient in the interests of the Company;

(o)

to carry out and enforce specific performance of or otherwise obtain the benefit of all contracts entered into or held by the Company or entered into in exercise of the powers or authorities hereby conferred;

(p)

to execute any document, bring or defend any proceedings or do any other act or thing in the name of and on behalf of the Company;

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(q)

to draw, accept, make and endorse a bill of exchange or promissory note on behalf of the Company;

(r)

to use a seal of the Company;

(s)

to engage or discharge employees on behalf of the Company;

(t)

to appoint a solicitor, accountant or other professionally qualified person to assist the Manager;

(u)

to appoint an agent to do any business that the Manager is unable to do, or that it is unreasonable to expect the Manager to do, in person;

(v)

where a debt or liability is owed to the Company, to prove the debt or liability in a bankruptcy, insolvency or winding up, and in connection therewith, to receive dividends and to assent to a proposal for a composition or a scheme or arrangement;

(w)

to make or defend an application for the winding up of the Company;

(x)

to settle, arrange, compromise and submit to arbitration any accounts, claims, questions or disputes whatsoever which may arise in connection with the business of the Company or in respect of the Company Property or in any way relating to this Agreement and to execute releases or other discharges in relation to those matters; and

(y)

to do or cause to be done all such acts and things without limitation as such Manager shall think expedient in the interests of the Company.

7.

Service Fee

(a)

In consideration for the Services provided by the Manager, the Company shall pay the Service Fee to the Manager within 30 Business Days of receipt of an invoice.

(b)

The Manager must issue an invoice to the Company monthly.

(c)

Payments must be made to the Manager at its place of business or in any other manner that the Manager reasonably nominates.

(d)

If the parties agree to alter the Services in accordance with clause 3(c) as the case may be, the parties may agree to