THE SECURITIES REPRESENTED BY THIS RESTATED CONVERTIBLE LOAN AND OPTION AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT COVERING THIS RESTATED CONVERTIBLE LOAN AND OPTION AGREEMENT OR AN OPINION OF COUNSEL TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. THIS PROMISSORY NOTE IS NOT A SUITABLE INVESTMENT FOR PERSONS WHO ARE NOT ABLE TO BEAR THE TOTAL LOSS OF THIS INVESTMENT AND HAS ADEQUATE FINANCIAL RESOURCES TO PROVIDE AND MEET ITS FINANCIAL NEEDS

Restated Convertible Loan and Option Agreement

between

Eastern Goldfields SA (Proprietary) Limited

and

Eastern Goldfields Inc

and

Asian Investment Management Services Limited

Restated Convertible Loan and Option Agreement 

1.                       PARTIES

1.1                Eastern Goldfields SA (Proprietary) Limited , a private limited liability company duly incorporated in accordance with the company laws of the RSA under registration number 1993/006883/07 ( EGSA );

1.2                    Eastern Goldfields Inc, a Nevada corporation with registration number 88-0441307 ( EGI ); and

1.3                    Asian Investment Management Services Limited , a limited liability company duly incorporated in accordance with the company laws of the British Virgin Islands under registration number 30267 ( AIMS ).

2.                       RECITALs

2.1                EGSA, AIMS and the Phoenix Gold Fund entered into the Convertible Loan Agreement on 31 March 2008 in terms of which, amongst other things:

2.1.1                 the EGSA required pre-listing funds prior to its proposed listing on the JSE as well as working capital in order to fund its mining operations;

2.1.2                 the EGSA intended listing its issued ordinary share capital on the JSE within 12 (twelve) months from the signature date of the Convertible Loan Agreement;

2.1.3                 AIMS and the Phoenix Gold Fund advanced to EGSA an amount of R32 000 000  (thirty two million Rand) and agreed to convert that sum into ordinary shares of EGSA upon the JSE having approved the Company for listing; and

2.1.4                 for the purposes of the Convertible Loan Agreement, EGSA, AIMS and the Phoenix Gold Fund valued the Company at ZAR 432 000 000 (four hundred and thirty two million Rand) and the percentage shareholding that would have been issued to AIMS and the Phoenix Gold Fund in order to discharge the Initial Loan was to have been calculated accordingly.

2.2                    For various economic, financial and practical reasons, EGSA did not list its issued ordinary share capital on the JSE as contemplated in the Convertible Loan Agreement.

2.3                   Prior to 27 March 2009, the Phoenix Gold Fund ceded and assigned all of its rights and obligations under the Convertible Loan Agreement to AIMS with the result that AIMS become the sole counter-party to EGSA under the Convertible Loan Agreement.

2.4                   On 30 May 2008, EGSA entered into the Investec Loan Agreement in terms of which Investec advanced an amount of R80 000 000 (eighty million Rand) to EGSA, which amount (plus accrued interest) is due for repayment on or before 29 May 2009.

2.5                   By way of an offer letter dated, 14 April 2009, AIMS proposed to EGI that in exchange for EGI undertaking to adopt certain operational strategies in the development of its gold projects and listing of the Eastern Goldfields Group on an Acceptable Stock Exchange, AIMS would:

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Restated Convertible Loan and Option Agreement 

2.5.1                provide technical and corporate assistance to EGSA in relation to realising certain strategies and objectives of EGSA;

2.5.2                advance additional loan funding to EGSA in such amount as would enable it to repay the outstanding amount under the Investec Loan in full, which loan would be convertible into ordinary shares in a member of the Eastern Goldfields Group, as the case may be, immediately prior to the listing of the Eastern Goldfields Group on an Acceptable Stock Exchange; and

2.5.3                acquire and exercise an option from EGSA in terms of which AIMS would be entitled to subscribe for 10% (ten percent) of the issued share capital of EGSA.

2.6                  EGSA and EGI have accepted the proposal put forward by AIMS in its letter referred to in clause 2.5 and the Parties now wish to enter into this Agreement to record, amongst other things, the definitive terms and conditions on which the Parties will achieve the relevant objectives referred to in clause 2.5 as well as various other matters ancillary to those objectives.

3.                       DEFINITIONS

3.1                    In this Agreement and the Recitals, unless the context indicates otherwise, the words and expressions below shall have the following meanings:

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Restated Convertible Loan and Option Agreement 

3.2                    Where any term is defined within the context of any particular clause in this Agreement, the term so defined, unless it is clear from the clause in question that the term so defined has limited application to the relevant clause, shall bear the meaning ascribed to it for all purposes in terms of this Agreement, notwithstanding that that term has not been defined in this definitions clause.

3.3                    This Agreement shall be interpreted in accordance with the following principles:

3.3.1            a reference to a “person” includes a reference to an individual, partnership, company, close corporation, other body corporate, a trust, an unincorporated association or a joint venture and that person’s legal representatives, successors and permitted assigns;

3.3.2                words importing the masculine shall include a reference to the feminine and vice versa ;

3.3.3                words importing the singular shall include a reference to the plural and vice versa;

3.3.4                reference to a document includes an amendment or supplement to, or replacement or novation of that document;

3.3.5                any reference in this Agreement to legislation or a statute shall be a reference to such legislation or statute as at the Signature Date and as amended, varied or re-enacted from time to time;

3.3.6                the headings appearing in this Agreement are for reference purposes only and shall not affect the interpretation hereof;

3.3.7                where numerical figures are referred to in numerals and words, if there is any conflict between the two, the words shall prevail;

3.3.8                if any provision is a definition and is a substantive provision conferring rights or imposing obligations on any Party, notwithstanding that it is only in the definition (or such other clause), effect shall be given to it as if it were a substantive provision in the body of this Agreement;

3.3.9                in the event that the day for performance of any obligation to be performed in terms of this Agreement should fall on a day which is not a Business Day, the relevant day for performance shall be the immediately succeeding Business Day;

3.3.10              where any number of days is prescribed in this Agreement, that number shall be determined inclusively of the first and exclusively of the last day, unless the last day falls on a day which is not a Business Day, in which case the last day shall be the immediately succeeding Business Day;

3.3.11               the terms “holding company” and “subsidiary” bear the same meaning given to those terms in the Companies Act;

3.3.12               the use of the word "including" followed by specific examples shall not be construed as limiting the meaning of the general wording preceding it and the eiusdem generis rule shall not be applied in the interpretation of such general wording or such specific examples;

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Restated Convertible Loan and Option Agreement 

3.3.13               the expiration or termination of this Agreement shall not affect such of the provisions of this Agreement as expressly provide that they will operate after any such expiration or termination or which of necessity must continue to have effect after such expiration or termination, notwithstanding that the clauses themselves do not expressly provide for this;

3.3.14               unless expressly otherwise stated, no provision of this Agreement shall constitute a stipulation for the benefit of any person ( stipulatio alteri ) who is not a party to this Agreement; and

3.3.15               the terms of this Agreement having been negotiated, the rule of construction that, in the event of ambiguity, the agreement shall be interpreted against the Party responsible for the drafting thereof, shall not apply in the interpretation of this Agreement.

4.                       suspensive condition s

4.1                  This Agreement (other than the rights and obligations of the Parties contained in this clause 4 and clauses 1, 2, 3, and clauses 13 to 18 (inclusive) which shall commence with effect from the Signature Date) is subject to and conditional upon the fulfilment of the following Suspensive Conditions:

4.1.1                that the directors of EGI resolve to investigate and, if considered feasible and in the interests of EGI, undertake the Listing, which resolution shall be evidenced by way of a certified copy of an extract of the relevant minute(s) of a meeting of the board of directors of EGI reflecting the adoption of the relevant resolution;

4.1.2                that EGI has obtained such shareholder consents as may be necessary to ensure that AIMS shall not be required to make an offer to any other shareholder and/or interest holder in EGI directly as a result of the conversion referred to in clause 8.1;

4.1.3                Investec has undertaken in writing to waive its right of first refusal to provide additional funding to EGSA pursuant to clause 10.1 of the Investec Loan Agreement on receipt of the funds advanced under the Additional Loan Facility in terms of clause 6.4 of this Agreement and otherwise has provided its consent, if and to the extent that it may be necessary, in writing to the conclusion by EGSA of this Agreement ; and

4.1.4                EGSA obtains such approval as may be necessary from the Exchange Control Department of the South African Reserve Bank for the transactions contemplated in this Agreement.

4.2