FUNDING AGREEMENT

A.     

Pursuant to the terms of a put/call option agreement (the “ Put/Call Agreement ”), dated June 15, 2004, as amended September 29, 2004, between Wilshire and Alberta Capital Trust Corporation (“ Alberta Trust ”), Wilshire has been granted an option to purchase or may be required to purchase certain indebtedness due and owing to Alberta Trust.

B.     

Resource Company has agreed to make available to Wilshire a credit facility which may be drawn upon from time to time to assist Wilshire in satisfying its obligations pursuant to the Put/Call Agreement on the terms and conditions set out in this Agreement.

1.1      

Computation of Time Periods.

In this Agreement, in the computation of periods of time from a specified date to a later specified date, unless otherwise expressly stated, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.

1.2      

Singular, Plural, etc.

As used herein, each gender shall include all genders, and the singular shall include the plural and the plural shall include the singular as the context shall require.

1.3      

Currency.

Unless otherwise expressly stated, any reference herein to any sum of money shall be construed as a reference to lawful currency of Canada.

1.4      

Time.

Unless otherwise expressly stated, any reference herein to time shall be construed as a reference to the local time in Calgary, Alberta.

1.5      

Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein and each party hereby irrevocably attorns to the jurisdiction of the courts of the Province of Alberta.

1.6      

Entire Agreement.

This Agreement constitutes the entire agreement between Wilshire and Resource Company in connection with the credit facility created hereunder and supersedes all prior agreements, whether oral or written, between Wilshire and Resource Company in respect of the transactions contemplated hereby.

1.7      

Severability.

If any one or more of the provisions of this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of such provision in any other jurisdiction and the validity, legality and enforceability of any other provision hereof shall not in any way be affected or impaired.

2.1      

Credit Facility.

Subject to the terms and conditions hereof, Resource Company agrees to establish a credit facility in favour of Wilshire (the “ Loan ”) up to a maximum aggregate amount at any time equal to the amounts of indebtedness owing by Alberta Trust to Resource Company evidenced by the Promissory Note as defined in the Funding Pledge Agreement (as hereinafter defined) (the “ Loan Maximum ”), provided that all conditions precedent to the Loan have been satisfied and there exists no Event of Default (as hereinafter defined) that has not been waived by Resource Company.

2.2      

Repayment.

Wilshire agrees to repay the Advance (as hereinafter defined) (the “ Indebtedness ”) to Resource Company by no later than December 31, 2014 (the “ Maturity Date ”) and,

upon repayment by Wilshire to Resource Company of the Indebtedness, Resource Company shall surrender the Promissory Note (as hereinafter defined) to Wilshire.

2.3      

Advance.

Subject to the terms of a Funding Pledge Agreement among Resource Company, Wilshire and Alberta Trust entered into on the date hereof (the “ Funding Pledge Agreement ”), Resource Company agrees to advance or cause to be advanced such amounts up to the Loan Maximum in effect at that time to Wilshire on such date or dates as Wilshire may request after receipt of a Put Notice a Call Notice or a notice pursuant to section 2.4 of the Put/Call Agreement, as the case may be, as defined in and pursuant to the Put/Call Agreement; provided that each request for an advance (an “ Advance ”) shall be made by Wilshire in writing and delivered to Resource Company five (5) business days prior to the date of such Advance. Wilshire acknowledges and agrees that the Advance to be made by Resource Company hereunder may be made and satisfied exclusively by endorsing and transferring the Promissory Note or by assigning the Note Proceeds (as such term is defined in the Funding Pledge Agreement) notwithstanding any security interest in the Note Proceeds and that Resource Company shall have no other liability or obligations in respect of the making or other satisfaction of the Advance hereunder and such endorsement or assignment shall constitute an Advance hereunder. Such payment shall be made without recourse to Resource Company and shall be valid notwithstanding the insolvency or bankruptcy of Alberta Trust or any other circumstance which results in the obligations of Alberta Trust being invalid or unenforceable.

2.4      

Use of Proceeds.

Wilshire covenants and agrees that it shall only use the proceeds of the Advance exclusively to satisfy its obligations to Alberta Trust under the Put/Call Agreement.

2.5      

Security.

Resource Company hereby agrees to enter into the Funding Pledge Agreement in order to provide security for its obligations to make the Advance hereunder. The parties further agree to execute and deliver such documentation as may be required by Wilshire and Alberta Trust to enable Wilshire and Alberta Trust to perfect the security interest in such instrument or instruments.

2.6      

Promissory Note.

As evidence of the Indebtedness, Wilshire shall deliver to Resource Company a promissory note (the “ Promissory Note ”) in the form set out in Schedule “A” hereto. The Promissory Note shall be non-negotiable.

2.7      

Interest.

The Advance shall bear interest from the date of the Advance at a rate per annum equal to six percent (6%) calculated daily and payable in arrears annually on February 15 of each

year by cheque or other form of negotiable instrument acceptable to Resource Company until such Advance is paid in full.

3.1      

Representations and Warranties of Wilshire.

Wilshire hereby represents and warrants to Resource Company as follows and acknowledges that Resource Company is relying on such representations and warranties without independent inquiry in entering into this Agreement and that such representations and warranties shall be continuing representations and warranties until repayment in full of the Indebtedness and shall be deemed to be made as of the date of each request for an Advance hereunder:

(a)     

Formation . Wilshire is a corporation formed under the laws of the Province of Alberta and is duly qualified or licensed to do business in all jurisdictions in which such qualification or licences are required at the date hereof in view of the business carried on by it and the assets which its owns;

(b)     

Corporate Power . Wilshire has full power and authority to borrow the Loan and to execute, deliver and perform all of its obligations under this Agreement and any other instrument or agreement required or referred to hereunder;

(c)     

Corporate Proceedings . All acts and proceedings on the part of Wilshire necessary for the authorization, execution, delivery and performance of this Agreement and any other instrument or agreement of Wilshire required or referred to hereunder have been duly taken;

(d)     

Due Execution and Enforceability . Each of this Agreement and any other instrument or agreement of Wilshire required or referred to hereunder has been duly authorized, executed and delivered by Wilshire and constitutes a legal, valid and binding obligation of Wilshire enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, arrangement and the laws generally affecting the enforceability of creditors’ rights (other than those pertaining to fraudulent assignments and preferences) and the availability, in the discretion of a court of competent jurisdiction, of equitable remedies;

(e)     

No Contravention . There is no provision of Wilshire’s constating documents and no provision of any indenture or agreement, written or oral, to which Wilshire is a party or under which Wilshire is obligated, nor is there, to the best of the knowledge of Wilshire, any statute, rule or regulation, or any judgment, decree or order of any court or agency binding on Wilshire which would be contravened by the execution and delivery of this Agreement or any other instrument, agreement or document required or referred to hereunder, or by the performance of any provision, condition, covenant or other term hereof or thereof; and

(f)     

No Litigation . There is no matter, litigation, tax claim, proceeding or dispute pending or, to the knowledge of Wilshire, threatened against or affecting Wilshire or its property, the adverse determination of which might materially and adversely affect Wilshire’s financial condition or operations or impair Wilshire’s ability to perform its obligations hereunder.

(g)     

Conduct of Business in Ordinary Course . Wilshire carries on the business of providing consulting and management services to Red Miles Resources Fund Limited Partnership (“ RMRF ”) and certain other limited partnerships in which RMRF is or will become a limited partner (the “ Business ”). The Business is the only business operation carried on by Wilshire.

3.2      

Survival.

The representations and warranties made by Wilshire in this Agreement shall survive the completion of the transactions contemplated by this Agreement and shall continue in full force and effect thereafter until such time as the Indebtedness has been repaid in full.

3.3      

Representations and Warranties of Resource Company.

Resource Company represents and warrants to Wilshire as follows, and acknowledges that Wilshire is relying thereon without independent inquiry in entering into this Agreement:

(a)     

Formation and Issuance . Resource Company is a corporation incorporated pursuant to the laws of the Province of British Columbia and has the right to enter into and perform its obligations hereunder;

(b)     

Corporate Power . Lender has the full corporate right, power and authority to enter into and perform its obligations under this Agreement and any other instrument or agreement required or referred to hereunder;

(c)     

No Litigation . There is no matter, litigation, tax claim, proceeding or dispute pending or, to the knowledge of Resource Company, threatened against or affecting Resource Company or its property, the adverse determination of which might materially and adversely affect Resource Company’s financial condition or operations or impair Resource Company’s ability to perform its obligations hereunder; and

(d)     

Due Execution and Enforceability . This Agreement has been duly executed and delivered by Resource Company and constitutes a legal, valid and binding obligation of Resource Company, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, arrangement and the laws generally affecting the enforceability of creditors’ rights (other than those pertaining to fraudulent assignments and preferenc