EXPLORATION PERMIT WITH OPTION TO PURCHASE

EXPLORATION PERMIT WITH OPTION TO PURCHASE

     THIS EXPLORATION PERMIT WITH OPTION TO PURCHASE is made and entered into as of the effective date, by and between AURELIO RESOURCE CORPORATION, a Nevada corporation, whose address is 12345 West Alemeda Parkway, Suite 202, Lakewood, Colorado 80228 (“Optionor” or “Aurelio”) and JKR GOLD REOURCES, INC., a corporation incorporated under the laws of British Columbia, whose address is Suite 610-815 West Hastings Street, Vancouver, B.C. Canada V6C 1B4, and NEWCO, a Nevada corporation to be formed, whose address is 6121 Lakeside Drive, Suite 260, Reno, Nevada, 89511 (hereinafter jointly referred to as “Optionee”).

     A. Optionor is the Lessee under four Mining Leases covering 395 unpatented mining claims, situated in Elko County, Nevada, more particularly described as:

A.1 That Mining Lease and Agreement dated August 25, 2008, by and between KM Exploration, Ltd., (“KM”) as Lessor and SY Resources Acquisition, Inc. (“SY”) as Lessee, (the “Mathewson Lease”). The Lessor’s interest was subsequently assigned by KM to David Mathewson (“Mathewson”) by Assignment Agreement dated February 4, 2009. The Lessee’s interest was subsequently assigned by SY to C3 Resources, Inc. (“C3”) by Assignment of Mining Leases dated September 19, 2008, and from C3 to Aurelio by Assignment of Mining Leases dated June 15, 2009. The Mathewson Lease covers 172 CVN unpatented lode mining claims (collectively the “CVN Claims”) situated in Sections 4 and 5, Township 30 North, Range 51 East, and Sections 28, 29, 31, 32 and 33, Township 31 North, Range 51 East, in the County of Eureka, State of Nevada as more particularly set out in Schedule “A” hereto;

A.2 That Mining Lease dated November 30, 2006 between WFW Resources, LLC (“WFW”), as Lessor, and C3, as Lessee (the “WFW Lease”). The Lessee’s interest in the Lease was assigned by Assignment of Mining Leases to Aurelio on June 15, 2009. The WFW Lease covers to 44 WFW unpatented lode mining claims (collectively the “WFW Claims”) situated in Sections 8, 19, 20, 29 and 30, Township 31 North, Range 51 East, MDM, in the County of Eureka, State of Nevada as more particularly set out in Schedule “B” hereto;

A.3 That Mining Lease dated August 25, 2008, by and between KM as Lessor and SY as Lessee (the “KM/IC Lease”). The Lessee’s interest was transferred by Assignment of Mining Leases to Aurelio on June 15, 2009. The KM/IC Lease covers 88 IC unpatented lode mining claims (collectively the “IC Claims”) situated in Sections 5 and 6, Township 27 North, Range 54 East, and Sections 28-32, Township 28 North, Range 54 East, MDM, in the County of Elko, State of Nevada as more particularly set out in Schedule “C” hereto; and

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A.4 That Mining Lease dated August 25, 2008, between KM as Lessor, and SY as Lessee (the “KM/RC Lease”). The Lessor’s interest in this Lease was assigned by KM to David C. Mathewson by Quitclaim Deed and Assignment on January 5, 2009. The Lessee’s interest in the KM/RC Lease was subsequently assigned by SY to C3 by Assignment of Mining Leases dated September 10, 2008, and then transferred by Assignment of Mining Leases by C3 to Aurelio on June 15, 2009). The KM/RC Lease covers 91 RC unpatented lode mining claims (collectively the “RC Claims”) situated in Sections 24 and 25, Township 29 North, Range 54 East, MDM, in the County of Elko, State of Nevada as more particularly set out in Schedule “D” hereto.

     The above leases are collectively referred to as “Leases” hereunder. The underlying claims covered by the Leases are referred to as the “Claims”. The Leases and Claims are hereinafter collectively referred to as the “Property.”

     B. Optionee desires to obtain a right to explore the Property and an Option to Purchase the Property, and Optionor wishes to grant such an exploration right and purchase option, on the terms and conditions set forth herein.

     1.1 TERM. Optionor hereby grants to Optionee the exclusive right to explore the Property, together with the exclusive right to purchase all of the Optionor’s right, title and interest to the Property for a three year period from the effective date of August 31, 2009, ending on midnight on August 31, 2012.

     1.2 WORK COMMITMENT. Optionee shall expend US$1,500,000 Exploration Expenditures as defined in Paragraph 1.2.1 below on or before August 31, 2012 (the “Deadline”). If Optionee has not expended this amount by the Deadline, a payment for the amount not expended may be made to the Optionor in lieu thereof.

     1.2.1 EXPLORATION EXPENDITURES. “Exploration Expenditures” as used herein shall mean a program designed and directed toward discovery and delineation of deep-seated gold deposits and other precious minerals on the Property. Permissible expenditures shall include:

     1.2.1.1. Actual field salaries and wages (or the allocable portion thereof), including benefit costs and payroll taxes, of employees or contractors of Optionee actually performing on site exploration and related activities.

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     1.2.1.2. Costs and expenses for the use of machinery, facilities, equipment and supplies required for exploration, reclamation, and related activities.

     1.2.1.3. Travel expenses and transportation of employees and contractors, materials, equipment and supplies necessary or convenient for the conduct of on site exploration.

     1.2.1.6. Costs incurred to obtain permits, rights-of-way and other similar rights as may be incurred in connection with exploration.

     1.2.1.7. Costs incurred in preparation and acquisition of environmental permits necessary to commence, carry out or complete on site exploration.

     1.2.1.8. Costs and expenses of performing feasibility and other studies to evaluate the economic feasibility of mining.

Property by the Elko County Assessor or other government entity and paid by Optionee pursuant to Section 1.15.

     1.2.1.11. All federal claim maintenance fees and county recording fees paid by Optionee pursuant to Section 1.16.

     1.2.1.12 Optionee shall be entitled to charge a management fee on all exploration expenditures, which fee shall be included in the calculation of Exploration Expenditures.

     1.2.1.13 Copies of all data generated for the Property, including, but not limited to, drill hole logs, exploration information, including interpretive information, maps, metallurgical studies, geophysical studies, all assay data, drill hole check assays, survey records, down hole surveys and other information of any sort (the “Data”) shall be provided to Optionor on an annual basis. To the extent practical all Data shall be provided in electronic format as well as hard copy. All colored maps shall be furnished in color. Optionee makes no representation or warranty, express or implied, of any kind or nature whatsoever with respect to the accuracy or reliability of the Data.

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     1.2.1.14 In the event that Optionee does not exercise the Purchase Option, upon termination of this Agreement all core and drill sample pulps not consumed in assaying or metallurgical tests shall be delivered to Optionor at an address in Elko, Nevada specified by Optionor. Duplicates of all sample cuttings shall be saved in a building or in tightly closed barrels on the Property, or at such other location as may be mutually acceptable to the parties.

     1.5 Right to Explore Only . Upon execution of this Agreement, Optionee shall have the exclusive right to explore the Property, including, without limitation, the right to conduct geological and geophysical investigations and surveys, drilling, trenching, and related activities to evaluate the mineral potential of the Property. Optionee shall not have the right to develop or mine the Property in any form prior to exercising the Purchase Option and compliance with such other covenants as may be contained in the Leases. Optionee may take samples up to five hundred (500) pounds each for metallurgical testing.

     1.6 Data . Upon execution of this Agreement Optionor shall make available, for copying by Optionee, all maps, deeds, and other documents pertaining to the title, boundaries, prior work, production history, and similar material associated with the Property which Optionee requests and which are in Optionor’ possession

     1.7 Area of Interest . Parties agree that as between themselves there is no area of interest provision affecting this Agreement.

     1.8 Conduct of Work . Optionee shall perform its exploration activities under this Agreement and any mining activities on the Property after exercise of the Purchase Option in accordance with all applicable laws and regulations relating to the performance of exploration and mining operations on the Property, including those relating to environmental reclamation and clean-up, and in compliance with applicable workers’ compensation laws of the State of Nevada.

     1.9 Liability and Insurance . During the term of this Agreement and after exercise of the Purchase Option, Optionee shall indemnify and hold Optionor harmless from any claims, demands, liabilities or liens arising out of Optionee’s activities on the Property, unless arising from the sole negligence of Optionor. During the term of this Agreement, Optionee shall obtain and carry a policy of public liability insurance as covenanted in the Leases, but in no case less than ONE MILLION DOLLARS ($1,000,000) for personal injury and ONE HUNDRED THOUSAND DOLLARS ($100,000) for property damage, protecting Optionor against any claims for injury to persons or damage to property resulting from Optionee’s activities under this Agreement. The insurance policy shall name Optionor as an additional insured and evidence of such shall be delivered to Optionor within thirty (30) days of the Effective Date of this Agreement.

     1.10 Liens . Optionee shall keep the Property free and clear from any and all mechanics’ or laborers’ liens arising from labor performed on, or material furnished to the Property at Optionee’s request. However, a lien on the Property shall not constitute a default if

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Optionee, in good faith, disputes the validity of the claim, in which case the existence of the lien shall constitute a default thirty (30) days after the validity of the lien has been adjudicated adversely to Optionee.

     1.11 Installation of Equipment . Optionee may install, maintain, replace, and remove any and all mining machinery, equipment, tools and facilities (“Equipment”) which it places on the Property to use in connection with its exploration activities under the Agreement. In the event Optionee does not exercise the Purchase Option, upon termination of this Agreement for any reason Optionee shall have a period of thirty (30) days following such termination during which it shall remove all of the Equipment at its sole cost and expense.

     1.12 Acquisition of Permits . In addition to any covenants contained in the Leases, Optionee covenants to Optionor that it shall acquire all federal, state and local permits required for its operations under this Agreement, including without limitation those pertaining to reclamation and the posting of a reclamation bond, as may be required by law.

     1.12.1 Optionee shall simultaneously deliver to Optionor copies of all permit applications filed with regulatory agencies pertaining to the Property or its operations hereunder. Optionee shall, promptly upon their receipt, deliver to Optionor copies of all permits, amendments, and modifications issued for the Property or its operations hereunder.

     1.12.2 In the event Optionee does not exercise the Purchase Option, Optionee shall be responsible solely for that reclamation and clean-up liability on the Property associated with Optionee’s activities under this Agreement. Optionee shall reclaim any disturbance, including drilling, created by its activities under this Agreement in accordance with applicable rules and regulations of the appropriate state and federal agencies.

     1.13 Inspection of Property . Optionor, or its authorized agents or representatives, shall be permitted to enter the Property at all reasonable times for the purpose of inspection, surveying and sampling, but shall enter the Property at their own risk and so as not to unreasonably hinder the operations of Optionee. Optionor shall give reasonable notice before any visit and shall indemnify and hold Optionee harmless from any damage, claim or demand by reason of injury to Optionor or its agents or representatives, including death or damage to or destruction of any property of Optionor or said agents or representative while on the Property or the approaches thereto.

     1.14 Taxes . Optionee shall pay all taxes levied or assessed against the Property and any improvements placed on the Property by Optionee. Optionor shall provide promptly to Optionee copies of all documents relating to such taxes. Optionee may take such action, at its expense, as it deems proper to obtain a reduction or refund of taxes paid or payable by it, and Optionor shall cooperate in such action, including but not limited to allowing such action to be taken and prosecuted in Optionor' name. In the event Optionee does not exercise the Purchase Option, upon termination of this Agreement, taxes shall be apportioned between Optionor and Optionee on a calendar year basis for the remaining portion of the calendar year. Optionor shall not be liable for taxes on any Equipment placed on the Property under this Agreement.

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     1.15 Maintenance of Claims . Optionee shall be responsible for the payment of all required federal claim maintenance fees, or performance and filing of assessment work (if such should ever be reinstated), and payment of the necessary fees and recordation of the required documents with the appropriate county offices for all unpatented mining claims included in the Property according to the terms of the Lease.

     1.16 Relocation, Amendment and Patent . During the term of this Agreement Optionee may, at Optionee’s sole expense and subject to the prior written consent of the Lessors under the Leases and the Optionor, relocate, amend, or apply for patent on any of the unpatented claims included in the Property. Any such relocated, amended or patented claims shall be deemed to be part of the Property, subject to all terms of this Agreement and such Lease may be affected.

     1.17 Mining Law Revision . In the event the General Mining Law is repealed or substantially changed, Optionee shall have whatever rights may be afforded to Optionor under the new laws, including, but not limited to, whatever preferred right Optionor might have to a lease or other form of tenure in the lands covered by the Property, all of which rights shall be subject to the terms of this Agreement and the underlying Leases.

     1.18 Termination . Subject to the other terms of this Agreement, Optionee shall have the right to terminate this Agreement at its sole discretion at any time after by providing written notice to Optionor. Upon termination Optionor shall retain all payments previously made and this Agreement shall cease and terminate. Within thirty (30) days after termination, Optionee shall provide to Optionor all Data developed by Optionee about the Property. To the extent practical all Data shall be provided in electronic format as well as hard copy. Optionee makes no representation or warranty, express or implied of any kind or nature whatsoever with respect to the accuracy or reliability of the Data. Termination by Optionee shall be effective as of the date Optionee transmits to Optionor a written notice of termination and a quitclaim deed conveying to Optionor all of Optionee’s right, title and interest in the Property.

     1.19 Default . Prior to exercise of the Purchase Option or termination by Optionee, if Optionee fails to perform its obligations under this Agreement, and in particular fails to make any payment due Optionor hereunder, Optionor may declare Optionee in default by giving Optionee written notice specifying the obligation(s) which Optionee has failed to perform. If Optionee fails to remedy a default in payment within fifteen (15) days of receiving notice of such default, or has not begun to cure any other default within thirty (30) days and thereafter diligently prosecute such action to completion, Optionor may terminate this Agreement and Optionee shall peaceably surrender possession of the Property to Optionor. However, if Optionee disputes in writing that any default has occurred, the matter shall be determined by litigation in a court of competent jurisdiction. If Optionee is found to be in default hereunder, Optionee shall have a reasonable time to cure such default, and if so cured, Optionor shall have no right to terminate this Agreement by reason of such default. Optionee shall promptly respond in writing to any notice of default served on Optionee, either by curing the default or providing a written explanation as to why, in Optionee’s opinion, a condition of default does not exist.

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     1.20 Obligations Following Termination . In the event of any termination of this Agreement, Optionee shall surrender possession of the Property to Optionor. In the event of any termination of this Agreement, Optionee shall have no further liability or obligations under this Agreement, except for any obligations: (1) to pay its apportioned share of taxes as provided in Section 1.15 hereof, (2) to pay any production royalty or other payments owed to Optionor upon the effective date of termination, (3) to remove Equipment as provided in Section 1.12 hereof, (4) to fulfill its reclamation obligations pursuant to Section 1.4 hereof, and (5) to satisfy any other accrued obligations or liabilities imposed by this Agreement or by operation of law.

     2.1 Grant of Option . In consideration of the mutual promises and covenants set forth herein, and for and in consideration of the following payments and other consideration, OPTIONOR grants to OPTIONEE the exclusive and irrevocable option to purchase all of its right, title and interest in and to the Leases, the Claims and any additional claims free and clear of all mortgages, liens, charges, encumbrances, leases, licenses, third party interests or other claims of any nature or kind whatsoever, save and except for those royalties more particularity described in Paragraph 2.4 and 2.8 below.

     2.2 Term. Pursuant to the payment schedule set forth in Paragraph 1.3 below, Optionee shall have the right to obtain an undivided 100% interest in the properties at anytime prior to August 31, 2012.

     2.3 Purchase Price and Payment Schedule. The option price shall be TWO HUNDRED SIXTEEN THOUSAND, SIX HUNDRED FIFTY SEVEN DOLLARS (US$216,657) to be paid as set forth below, plus 600,000 common shares in the capital stock of JKR, plus a work commitment for exploration expenditures in the amount of US$1,500,000, plus a royalty as set forth in 1.4 below.

2.3.1 Optionee shall pay a total of US$216,657 as follows:

of JKR Gold Resources Inc., (the “JKR shares”) on or before August 31, 2009;

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     2.3.1.5 Expend a total of US$1,500,000 in exploration expenditures (“Exploration Expenditures”) on the Properties on or before August 31, 2012, as set forth in Paragraph 1.2 above.

     2.4 Reserved Royalty. Optionor reserves a 1% Net Smelter Return (“NSR”) royalty in the Properties in the event that the option is exercised (the “Aurelio Royalties”). In each case the NSR royalty shall be calculated and paid on the same basis as set forth in the underlying Lease affecting the claims on which production is taking place.

     2.5 Outstanding Royalties. Optionee acknowledges that the Leases are subject to the following Royalties:

     2.5.1 The Mathewson Royalty. The Mathewson Lease is subject to annual lease payments and an underlying production royalty of 4% net smelter returns in favor of Mathewson (the “Mathewson Royalty”) as more particularly described in Schedule “A”;

     2.5.1.1 Royalty Buy Down on the Mathewson Lease. In the event Optionor exercises the Option in the aforesaid manner, Mathewson covenants and agrees that, from and after the date of exercise of the Option (the “Exercise Date”) and notwithstanding section 5 of the Mathewson Lease, Optionor, as tenant, shall have the sole, exclusive and irrevocable right and option (the “Mathewson Buy Down Option”) to buy down the Production Royalty (as such term is defined in the Mathewson Lease) on gold in favor of Mathewson, as owner, from 4% net smelter returns to 2% net smelter returns on the following terms and conditions:

     2.5.1.1.1 One royalty “point” or 1% net smelter returns (the “First Point”) for US$1,000,000 cash payable on or before the fifth anniversary of the Exercise Date or US$5,000,000 cash payable after the fifth anniversary of the Exercise Date but on or before the tenth anniversary of the Exercise Date; and

     2.5.1.1.2 An additional one royalty “point” or 1% net smelter returns (the “Second Point”) for an additional US$5,000,000 payable on or before the tenth anniversary of the Exercise Date,

     2.5.1.2 Failure to Exercise the Mathewson Royalty Buy Down. If Optionee fails to exercise the Mathewson Buy Down Option in regards to purchasing either the First Point or the Second Point, the Mathewson Buy Down Option shall thereafter lapse and terminate and the original terms of the Mathewson Lease with respect the tenant’s right to buy down the owner’s Production Royalty as set out in section 5 thereof shall again apply to the Mathewson Lease.

     2.5.2 The WFW Royalty. The WFW Lease is subject to annual lease payments and an underlying production royalty of 3% net smelter returns in favor of WFW (the “WFW Royalty”) as more particularly described in Schedule “B”;

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     2.5.3 The KM/IC Royalty. The KM/IC Lease is subject to annual lease payments and an underlying production royalty of 4% net smelter returns in favor of KM or its assignees (the “KM/IC Royalty”) as more particularly described in Schedule “C”; and

     2.5.4 The KM/RC Royalty. The KM/RC Lease is subject to annual lease payments and an underlying production royalty of 4% net smelter returns in favor of KM or its assignees (the “KM/RC Royalty”) as more particularly described in Schedule “D”.

Province of British Columbia, Canada and that the JKR Shares will be issued to Optionee pursuant to an exemption (the "Exemption") from the registration and prospectus requirements of the applicable securities laws and regulations in Canada (collectively, the "Canadian Legislation") and, as a consequence:

     2.6.1.1.1 Optionor is restricted from using certain of the civil remedies available under the Canadian Legislation;

     2.6.1.1.2 Optionor may not receive information that might otherwise be required to be provided to Optionee under the Canadian Legislation if the Exemption was not being used;

     2.6.1.1.3 Optionee is relieved from certain obligations that would otherwise apply under the Canadian Legislation if the Exemption was not being used;

     2.6.1.1.4 No securities commission or similar regulatory authority has reviewed or passed on the merits of the JKR Shares;

the JKR Shares and it is the responsibility of Aurelio to find out what those restrictions are and to comply with them before selling the JKR Shares;

     2.6.1.1.8 JKR is not a reporting issuer in any province or territory of Canada and, accordingly, any applicable hold periods under the Canadian Legislation may never expire, and the JKR Shares may be subject to restrictions on resale for an indefinite period of time; and

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     2.6.1.1.9 The JKR Shares have not been registered under the United States Securities Act of 1933 (the “U.S. Securities Act”) or the securities laws of any state in the United States, Optionee has no obligation or present intention of filing a registration statement under the U.S. Securities Act or any state securities laws in respect of the JKR Shares and that the certificate representing the JRK Shares to be issued to Optionor will bear restrictive legends in accordance with applicable United States federal and state securities laws.

     2.7 Exercise of Option. In the event Optionor exercises the Option in accordance with this Agreement, Optionor shall have earned a 100% undivided legal and beneficial interest in the Properties and Optionee shall forthwith execute and deliver to Optionor such transfers and assignments as shall be effective to transfer and convey to Optionor a 100% undivided legal and beneficial interest in the Properties free and clear of all Encumbrances save and except for the Aurelio Royalties as defined in Paragraph 2.4 above, the KM Royalty, the WFW Royalty, the KM/IC Royalty, the KM/RC Royalty as defined in Paragraphs 2.5.1 through 2.5.4 below, (collectively the “Royalties”). All such transfers and assignments shall be in recordable form.

     2.8 Option Termination. If Optionor fails to make the cash payments, issue the JKR Shares or incur the Exploration Expenditures by the Deadline (or pay the amount equivalent to the amount not expended to Optionor) or within 5 business days following receipt of a written notice of default from Optionee, the Option shall terminate and be of no further force or effect. In the event of any lapse, termination or surrender of the Option, Optionor shall: 2.8.1 Ensure that the Leases and underlying claims are in good standing for a period of not less than six months from the lapse, termination or surrender of the Option; 2.8.2 Ensure that the Leases and underlying claims are in at least the same state concerning environmental and hazardous conditions as they were on the date of this Agreement and that they are free and clear of all Encumbrances that may have been created by Optionor; and 2.8.3 Deliver to Optionee any and all reports, maps, assessment reports and maps, samples, assay results, drill cores, data and other information of any kind whatsoever pertaining to the leases or underlying claims or Optionor’s work thereon which have not been previously delivered to Optionee.

     Notwithstanding the foregoing, Optionor may, at any time during the Option Period in its discretion, elect to release one or more claims from the provisions of this Agreement and the Leases upon written notice to Optionee and the underlying lessor provided that such released claims are in good standing for a period of not less than six months from the date of the notice.

acknowledges that Optionee is relying upon such representations and warranties in connection with this Agreement:

2.9.1.1 Optionor is the legal and beneficial owner of a 100%

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undivided interest and has good and marketable title to the leasehold interest in the Leases, free and clear of all Encumbrances of whatsoever nature or kind, save and except for the Royalties;

     2.9.1.2 Optionor acknowledges that any of the claims from the CVN, RC and IC group whose 2010 claim fee payments were not paid prior to July 1, 2009 as per the underlying Lease, will be reinstated and become part of this Agreement if the claim fees are paid by Optionor prior to August 15, 2009.

     2.9.1.3 The Mathewson Lease, the WFW Lease the IC Lease and the RC Lease are in full force and effect and in good standing in accordance with their respective terms, all lease payments, fees, royalties and taxes payable thereunder are current and up to date and there have been no changes, amendments, alterations or modifications to the Mathewson Lease the WFW Lease, the IC Lease or the RC Lease whatsoever save and except as set out in Schedules “A,”“B”,” &ldquo