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Bylaws - GRYPHON GOLD CORP - 8-17-2005

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Bylaws - GRYPHON GOLD CORP - 8-17-2005 Powered By Docstoc
					EXHIBIT 3.5 BYLAWS OF BOREALIS MINING COMPANY ARTICLE I OFFICES SECTION 1.1 PRINCIPLE OFFICE. The principal office of BOREALIS MINING COMPANY (the "Corporation") shall be located at 32509 El Diente Court, Evergreen, Colorado 80439. SECTION 1.2 OTHER OFFICES. The Corporation may also have offices at such other places both within and without the State of Nevada as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II STOCKHOLDERS SECTION 2.1 ANNUAL MEETINGS. Annual meetings of the stockholders shall be held each year on a date and time designated by the Board of Directors. In the absence of such designation, the annual meeting shall be held on the second Tuesday of April each year at 10:00 a.m. At the annual meeting, the stockholders shall elect by vote a Board of Directors and transact such other business as may properly be brought before the meeting. SECTION 2.2 SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Articles of Incorporation, may be called by the Chairman of the Board of Directors, by the President or the Secretary by resolution of the Board of Directors or at the request in writing of one or more stockholders owning shares in the aggregate entitled to cast at least a majority of the votes at the meeting. Such request shall state the purpose of the proposed meeting and shall be personally delivered or sent by registered mail or by telegraph or other facsimile transmission to the Chairman of the Board of Directors, the President or the Secretary of the Corporation. The officer receiving the request shall cause notice to be promptly given to the stockholders entitled to vote, in accordance with the provisions of Section 2.4 of this Article II. If notice is not given within sixty (60) days of the request, the person or persons requesting the meeting may, subject to any applicable federal or state law including but not limited to federal securities laws, give the notice. Nothing contained in this Section 2.2 shall be construed as limiting, fixing or affecting the time when a meeting of stockholders called by action of the Board of Directors may be held. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. SECTION 2.3 PLACE OF MEETING. All annual meetings of the stockholders shall be held at the principal office of the Corporation or at such other place within or without the State of Nevada as the directors shall determine. Special meetings of the stockholders may be held at such time and place within or without the State of Nevada as shall be stated in the notice of the meeting, or in a duly executed waiver of notice thereof. SECTION 2.4 NOTICES. Notices of meetings shall be in writing and signed by the President or a VicePresident or the Secretary or an Assistant Secretary or by such other person or persons as the directors shall designate. Such notice shall state the purpose or purposes for which the meeting is called and the time and the place, which may be within or without the State of Nevada, where it is to be held. The notice of any meeting at which directors are to be elected shall include the name of any nominee or nominees whom, at the time of the notice, management intends to present for election. A copy of such notice shall be either delivered personally to or shall be mailed, postage prepaid, to each stockholder of -1-

record entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before such meeting. If mailed, it shall be directed to a stockholder at his address as it appears upon the records of the Corporation and upon such mailing of any such notice, the service thereof shall be complete and the time of the notice shall begin to run from the date upon which such notice is deposited in the mail for transmission to such stockholder. Personal delivery of any such notice to any officer of a corporation or association, or to any member of a partnership shall constitute delivery of such notice to such corporation, association or partnership. In the event of the transfer of stock after delivery of such notice of and prior to the holding of the meeting it shall not be necessary to deliver or mail notice of the meeting to the transferee. SECTION 2.5 AFFIDAVIT OF MAILING. An affidavit of the mailing or other means of giving any notice of any stockholders' meeting may be executed by the Secretary, Assistant Secretary, or any Transfer Agent of the Corporation giving the notice, and shall be filed and maintained in the minute book of the Corporation. SECTION 2.6 QUORUM. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Articles of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders or if the voting power necessary to approve a matter for which the meeting has been noticed has not voted in favor of such matter, the stockholders entitled to vote thereat, present in person or represented by proxy, the Chairman of the Board of Directors, or a majority of the Board of Directors shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented or until the voting power necessary to approve the matter for which the meeting has been noticed has been voted in favor of such matter. SECTION 2.7 ADJOURNMENT. When any meeting of stockholders, either annual or special, is adjourned to another time or place, notice may not be given of the adjourned meeting if the time and place are announced at a meeting at which the adjournment is taken, unless a new record date for the adjourned meeting is fixed, or unless the adjournment is for more than forty-five (45) days from the date set for the original meeting, in which case the Board of Directors shall set a new record date. Notice of any such adjourned meeting, if required, shall be given to each stockholder of record entitled to vote at the adjourned meeting in accordance with the provisions of Section 2.4 of this Article II. At any adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. SECTION 2.8 VOTING. When a quorum is present or represented at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall be sufficient to elect directors or to decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the Articles of Incorporation a different vote is required, in which case such express provision shall govern and control the decision of such question. Each common stockholder of record of the Corporation shall be entitled at each meeting of stockholders to one vote for each share of common stock standing in his, her or its name on the books of the Corporation. Upon the demand of any common stockholder, the vote for directors and the vote upon any question before the meeting shall be by ballot. SECTION 2.9 PROXIES; INSPECTORS OF ELECTION. At any meeting of the stockholders any stockholder may be represented and vote by a proxy or proxies appointed by an instrument in writing. In the event that any such instrument in writing shall designate two (2) or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one (1) shall be present, then that one (1) shall have and may exercise all of the powers conferred by such written instrument upon all of the persons -2-

so designated unless the instrument shall otherwise provide. No proxy or power of attorney to vote shall be used to vote at a meeting of the stockholders unless it shall have been filed with the secretary of the meeting when required by the inspectors of election. All questions regarding the qualification of voters, the validity of proxies and the acceptance or rejection of votes shall be decided by three (3) inspectors of election who shall be appointed by the Board of Directors, or if not so appointed, then by the presiding officer of the meeting. The inspectors of election shall: (a) Determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies; (b) Receive votes, ballots, or consents; (c) Hear and determine all challenges and questions in any way arising in connection with the right to vote; (d) Count and tabulate all votes or consents; (e) Determine when the polls shall close; (f) Determine the results; and (g) Do any other acts that may be proper to conduct the election or vote with fairness to all stockholders. SECTION 2.10 ACTION BY WRITTEN CONSENT. Any action which may be taken by the vote of the stockholders at a meeting may be taken without a meeting if authorized by the written consent of stockholders holding at least a majority of the voting power, unless the provisions of the statutes or of the Articles of Incorporation require a greater proportion of voting power to authorize such action in which case such greater proportion of written consents shall be required. SECTION 2.11 WAIVER OF NOTICE. The transaction of any meeting of stockholders, either annual or special, however called and noticed, and wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each person entitled to vote, who was not present in person or by proxy, signs a written waiver of notice or a consent to a holding of the meeting, or an approval of the minutes. The waiver of notice of consent need not specify either the business to be transacted or the purpose of any annual or special meeting of stockholders. All such waivers, consents, or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance by a person at a meeting shall also constitute a waiver of notice of that meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened, and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by law to be included in the notice of the meeting, but not so included, if that objection is expressly made at the meeting. -3-

ARTICLE III DIRECTORS SECTION 3.1 GENERAL POWERS. The business of the Corporation shall be managed by its Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things not otherwise required by statute, by the Articles of Incorporation or by these Bylaws to be exercised or addressed by the common stockholders. SECTION 3.2 NUMBER. The number of directors may from time to time be increased or decreased by action of the Board of Directors to not less than one (1) nor more than nine (9). SECTION 3.3 TENURE AND QUALIFICATION. Each Director shall hold office until the next annual meeting of stockholders and until his/her successor shall have been duly elected and qualified. Directors need not be residents of the State of Nevada or stockholders of the Corporation. SECTION 3.4 VACANCIES. Vacancies in the Board of Directors, including those caused by an increase in the number of directors, may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director, and each director so elected shall hold office until his successor is elected at an annual or a special meeting of the stockholders. The holders of two-thirds (2/3) of the outstanding shares of stock entitled to vote may at any time peremptorily terminate the term of office of all or any of the directors by vote at a meeting called for such purpose or by a written statement filed with the secretary or, in his absence, with any other officer. Such removal shall be effective immediately, even if successors are not elected simultaneously and the vacancies on the Board of Directors resulting therefrom shall be filled only by the stockholders. A vacancy or vacancies in the Board of Directors shall be deemed to exist in case of the death, resignation or removal of any directors, or if the authorized number of directors be increased, or if the Board of Directors by resolution declares vacant the office of director who has been declared of unsound mind by an order of the court or if the stockholders fail at any annual or special meeting of stockholders at which any director or directors are elected to elect the full authorized number of directors to be voted for at that meeting. The stockholders may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors. If the Board of Directors accepts the resignation of a director tendered to take effect at a future time, the Board of Directors or the stockholders shall have power to elect a successor to take office when the resignation is to become effective. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of his term of office. ARTICLE IV MEETINGS OF THE BOARD OF DIRECTORS SECTION 4.1 REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held at any place within or without the State of Nevada, which has been designated from time to time by resolution of the Board of Directors or by written consent of all members of the Board of Directors. In the absence of such designation regular meetings shall be held at the principal office of the Corporation. Special meetings of the Board of Directors may be held either at a place so designated or at the principal office. Any meeting, regular or special, may be held by conference telephone network or similar communications method by which all persons participating in the meeting can hear each other. Regular meetings of the Board of Directors may be held without call or notice at such time and at such place as shall from time to time be fixed and determined by the Board of Directors. -4-

SECTION 4.2 INITIAL MEETING. The first meeting of each newly elected Board of Directors shall be held at any place within or without the State of Nevada, which has been designated from time to time by resolution of the Board of Directors or by written consent of all members of the Board of Directors. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as herein provided for special meetings of the Board of Directors. SECTION 4.3 SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the Chairman, the President or by any director. Written notice of the time and place of special meetings shall be delivered personally to each director, or sent to each director by mail or by other form of written communication, charges prepaid, addressed to him at his address as it is shown upon the records or is not readily ascertainable, at the place in which the meetings of the directors are regularly held. In case such notice is mailed or telegraphed, it shall be deposited in the United States mail or delivered to the telegraph company at least forty-eight (48) hours prior to the time of the holding of the meeting. In case such notice is delivered as above provided, it shall be so delivered at least twenty-four (24) hours prior to the time of the holding of the meeting. Such mailing, telegraphing or delivery as above provided shall be deemed due, legal and personal notice to such director. SECTION 4.4 ADJOURNMENT. Notice of the time and place of holding an adjourned meeting need not be given to the absent directors if the time and place be fixed at the meeting adjourned and unless the meeting is adjourned for more than twenty-four (24) hours, in which case notice of the time and place shall be given before the time of the adjourned meeting, in the manner specified in Section 4.3, to the directors who were not present at the time of the adjournment. SECTION 4.5 VALIDITY OF TRANSACTIONS. The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present, and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, or a consent to holding such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. SECTION 4.6 QUORUM. A majority of the authorized number of directors shall be necessary to constitute a quorum for the transaction of business, except to adjourn as hereinafter provided. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, unless a greater number be required by law or by the Articles of Incorporation. Any action of a majority, although not at a regularly called meeting, and the record thereof, if assented to in writing by all of the other members of the Board of Directors shall be as valid and effective in all respects as if passed by the Board of Directors in regular meeting. A quorum of the Board of Directors may adjourn any Board of Directors' meeting to meet again at a stated day and hour; provided, however, that in the absence of a quorum, a majority of the directors present at any Board of Directors meeting, either regular or special, may adjourn from time to time until the time fixed for the next regular meeting of the Board of Directors. SECTION 4.7 WRITTEN CONSENT. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or committee. SECTION 4.8 COMPENSATION. The directors may be paid their expenses of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the -5-

Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like reimbursement and compensation for attending committee meetings. ARTICLE V COMMITTEES OF DIRECTORS SECTION 5.1 COMMITTEES. The Board of Directors may, by resolution adopted by a majority of the whole Board of Directors, designate one (1) or more committees of the Board of Directors, each committee to consist of one (1) or more of the directors of the Corporation which, to the extent provided in the resolution, shall have and may exercise the power of the Board of Directors in the management of the business and affairs of the Corporation and may have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by the Board of Directors. The members of any such committee present at any meeting and not disqualified from voting may, whether or not they constitute a quorum, unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. At meetings of such committees, a majority of the members or alternate members shall constitute a quorum for the transaction of business, and the act of a majority of the members or alternate members at any meeting at which there is a quorum shall be the act of the committee. SECTION 5.2 MINUTES. The committees shall keep regular minutes of their proceedings and report the same to the Board of Directors. SECTION 5.3 MEETING AUTHORITY. Meetings and actions of the committee shall be governed by, and held and taken in accordance with, the provisions of Article IV of these Bylaws, Section 4.1 (Regular Meetings), Section 4.2 (Initial Meeting), Section 4.3 (Special Meetings), Section 4.4 (Adjournment), Section 4.6 (Quorum), Section 4.7 (Written Consent) and Section 6.2 (Consents), with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board of Directors and its members, except that the time of regular meetings of committees may be determined either by resolution of the Board of Directors or by resolution of the committee. Special meetings of committees may also be called by resolution of the Board of Directors. Notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board of Directors may adopt rules for the government of any committee not inconsistent with the provisions of these Bylaws. ARTICLE VI NOTICES SECTION 6.1 NOTICES. Notices to directors and stockholders shall be in writing and delivered personally or mailed to the directors or stockholders at their addresses appearing on the books of the Corporation. Notice by mail shall be deemed to be given at the time when the same shall be mailed. Notice to directors may also be given by telegram or other form of written communication as provided for in these Bylaws. SECTION 6.2 CONSENTS. Whenever all parties entitled to vote at any meeting, whether of directors or stockholders, consent, either by a writing on the records of the meeting or filed with the secretary, or by presence at such meeting and oral consent entered on the minutes, or by taking part in the deliberations at such meeting without objection, the doings of such meeting shall be as valid as if had at a meeting regularly called and noticed, and at such meeting any business may be transacted which is not -6-

excepted from the written consent or to the consideration of which no objection for want of notice is made at the time, and if any meeting be irregular for want of notice or of such consent, provided a quorum was present at such meeting, the proceedings of said meeting may be ratified and approved and rendered likewise valid and the irregularity or defect therein waived by a writing signed by all parties having the right to vote at such meeting. Such consent or approval of stockholders may be by proxy or attorney, but all such proxies and powers of attorney must be in writing. SECTION 6.3 VALID NOTICE. Whenever any notice whatever is required to be given under the provisions of the Nevada Revised Statutes (the "NRS"), the Articles of Incorporation or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE VII OFFICERS SECTION 7.1 REQUIRED OFFICERS. The officers of the Corporation shall be chosen by the Board of Directors and shall be a President, a Secretary, a Treasurer and such other officers as shall be approved by the Board of Directors. Any person may hold two (2) or more offices. SECTION 7.2 OFFICERS' COMPENSATION. The salaries and compensation of all officers of the Corporation shall be fixed by the Board of Directors. SECTION 7.3 REMOVAL OF OFFICERS. The officers of the Corporation shall hold office at the pleasure of the Board of Directors. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise shall be filled by the Board of Directors. Any officer may resign at any time by giving written notice to the Corporation. SECTION 7.4 PRESIDENT. The President shall, subject to the control of the Board of Directors, actively manage the business of the Corporation. SECTION 7.5 SECRETARY. The Secretary shall act under the direction of the President. Subject to the direction of the President he shall attend all meetings of the Board of Directors and all meetings of the stockholders and record the proceedings. He shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the President or the Board of Directors. SECTION 7.6 TREASURER. The Treasurer shall act under the direction of the President. Subject to the direction of the President, he shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all monies and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the President or the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation. -7-

ARTICLE VIII CERTIFICATES OF STOCK SECTION 8.1 CERTIFICATION. Every stockholder shall be entitled to have a certificate signed by the President and the Secretary of the Corporation, certifying the number of shares owned by him, her or it in the Corporation. If the Corporation shall be authorized to issue more than one (1) class of stock or more than one (1) series of any class, the designations, preferences and relative participating, optional or other special rights of the various classes of stock or series thereof and the qualifications, limitations or restrictions of such rights, shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such stock. SECTION 8.2 REPLACED CERTIFICATES. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. SECTION 8.3 CERTIFICATE SURRENDER. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation, if it is satisfied that all provisions of the laws and regulations applicable to the Corporation regarding transfer and ownership of shares have been complied with, to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. SECTION 8.4 DIVIDENDS. The Board of Directors may fix in advance a date not exceeding sixty (60) days nor less than ten (10) days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining the consent of stockholders for any purpose, as a record date for the determination of the stockholders entitled to receive payment of any such dividend, or to give such consent, and in such case, such stockholders, and only such stockholders as shall be stockholders of record on the date so fixed, shall be entitled to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as above. SECTION 8.5 CORPORATE REGISTRAR. The Corporation shall be entitled to recognize the person registered on its books as the owner of shares to be the exclusive owner for all purposes including voting and dividends, and the Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Nevada. ARTICLE IX RECORDS AND REPORTS SECTION 9.1 STOCK LEDGER. The Corporation shall either maintain at its principal office a record of its stockholders, giving the names and addresses of all stockholders and the number and class -8-

of shares held by each stockholder, or in lieu thereof maintain at its principal office a statement setting out the name of the custodian of the stock ledger. SECTION 9.2 ACCOUNTING BOOKS AND RECORDS. The accounting books and records and minutes of proceedings of the stockholders and the Board of Directors and any committee or committees of the Board of Directors shall be kept at such place or places designated by the Board of Directors. The minutes, accounting books, and the records shall be kept either in written form or in any other form capable of being converted into written form. Subject to NRS 78.257, as amended, the minutes and accounting books and records shall be open to inspection by the stockholders. SECTION 9.3 INSPECTION. Every director shall have the absolute right at any reasonable time to inspect all books, records, and documents of every kind, and the physical properties of the Corporation and each of its subsidiary corporations. This inspection by a director may be made in person or by an agent or attorney, and the right of inspection includes the right to copy and make extracts of documents. ARTICLE X GENERAL PROVISIONS SECTION 10.1 DIVIDENDS. Dividends upon the capital stock of the Corporation, subject to the provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property or in shares of capital stock, subject to the provisions of the Articles of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, deem proper as a reserve or reserves to meet contingencies, or for equalizing dividends or for repairing or maintaining any property of the Corporation or for such other purpose as the directors shall deem conducive to the interests of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. SECTION 10.2 CHECKS OR DEMANDS. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. SECTION 10.3 FISCAL YEAR. The fiscal year of the Corporation shall be the calendar year, unless otherwise fixed by a resolution of the Board of Directors of the Corporation. SECTION 10.4 SEAL. The Corporation may adopt a corporate seal and have inscribed thereon the name of the Corporation and the words "Corporate Seal" and "Nevada." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced. SECTION 10.5 ELECTRONIC SIGNATURE. Any action taken by the Board of Directors, the stockholders of the Corporation or the individual directors, officers, employees and other agents of the Corporation, which requires a written signature, shall be deemed valid and binding if made by means of electronic signature. For purposes of these Bylaws, "electronic signature" means an electronic sound, symbol or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign such record. SECTION 10.6 AUTHORITY. The Chairman of the Board of Directors, the President or any other person authorized by resolution of the Board of Directors or by any of the foregoing designated officers, is authorized to vote on behalf of the Corporation any and all shares of any other corporation or corporations, foreign or domestic, standing in the name of the Corporation. The authority granted to these -9-

officers to vote or represent on behalf of the Corporation any and all shares held by the Corporation in any other corporation or corporations may be exercised by any of these officers in person or by any person authorized to do so by a proxy duly executed by the Chairman or the President. SECTION 10.7 GOVERNING LAW. Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the NRS shall govern the construction of these Bylaws. Without limiting the generality of these provisions, the singular number includes the plural, the plural number includes the singular, the masculine and feminine genders are intended to be used interchangeably and the term "person" includes both the Corporation and a natural person. ARTICLE XI AMENDMENTS SECTION 11.1 AMENDMENT BY STOCKHOLDERS. The Bylaws may be amended by a two-thirds (2/3) vote of all the stock issued and outstanding and entitled to vote at any annual or special meeting of the stockholders, provided notice of intention to amend shall have been contained in the notice of the meeting. SECTION 11.2 AMENDMENT BY BOARD OF DIRECTORS. The Board of Directors, by a majority vote of the entire Board of Directors at any meeting, may amend these Bylaws, including Bylaws adopted by the stockholders, but the stockholders may from time to time specify particular provisions of the Bylaws, which shall not be amended by the Board of Directors. ARTICLE XII INDEMNIFICATION SECTION 12.1 INDEMNIFICATION. Every person who was or is a party or is threatened to be a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she or a person of whom he or she is the legal representative is or was a director, officer, employee, agent, or other person of the Corporation, or is or was serving at the request of the Corporation or for its benefit as a director, officer, employee or other person of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the law of the State of Nevada as it may be amended from time to time against all expenses, liability and loss (including attorneys' fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by him or her in connection therewith. The expenses of a director or officer, incurred in defending a civil or criminal action, suit or proceeding must be paid by the Corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer, to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the Corporation. Such right of indemnification shall be a contract right which may be enforced in any manner desired by such person. Such right of indemnification shall not be exclusive of any other right which such a director or officer, agent or other person may have or hereafter acquire and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under the Articles of Incorporation, any agreement, vote of stockholders, provision of law or otherwise, as well as their rights under this Article XII. Without limiting the application of the foregoing, the Board of Directors may cause the Corporation to purchase and maintain insurance on behalf of any person who is or was a director or officer, employee, agent or other person of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, agent or other person of another corporation, partnership, -10-

joint venture, trust or other enterprise against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the Corporation would have the power to indemnify such person. APPROVED AND ADOPTED this 5th day of June, 2003.
By: /s/ Allen S. Gordon -----------------------------------Name: Allen S. Gordon Title: President

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EXHIBIT 10.1 INVESTOR RIGHTS AGREEMENT BY AND AMONG GRYPHON GOLD CORPORATION (A NEVADA CORPORATION) AND THE STOCKHOLDERS PARTY HERETO DATED AS OF MAY 1, 2003, AS AMENDED AND UPDATED FROM TIME TO TIME

TABLE OF CONTENTS
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ARTICLE 1.1 1.2 1.3 1.4 ARTICLE 2.1 2.2 2.3 2.4 2.5 2.6 2.7

1 GENERAL PROVISIONS................................................. Shares Subject to this Agreement..................................... No Partnership Relationship.......................................... Legend............................................................... Termination.......................................................... 2 ISSUE OF ADDITIONAL SHARES......................................... Treasury Share Offerings............................................. Pro-Rata Preemptive Right............................................ Sale to Third Party.................................................. Exempt Issuances..................................................... Termination.......................................................... Waiver of Rights..................................................... No Further Preemptive Rights.........................................

ARTICLE 3 RESTRICTIONS ON TRANSFER OF CAPITAL STOCK; RIGHT OF FIRST REFUSAL, CO-SALE AND RESTRICTION ON FOUNDERS' STOCK......................... 3.1 Non-Complying Transfers Prohibited................................... 3.2 Right of First Refusal on Voluntary Transfers........................ 3.3 Change of Control Co-Sale Right - Stockholder Sales.................. 3.4 Rights of Refusal for Founder's Shares............................... 3.5 Right of Co-Sale for Investors in Founder's Sale..................... 3.6 Non-Exercise of Rights............................................... 3.7 Transferees Subject to This Agreement................................ 3.8 Transfers to Permitted Transferees................................... ARTICLE 4.1 4.2 4.3 ARTICLE 5.1 5.2 5.3 5.4 5.5 4 TRANSFER OF REGISTRABLE SHARES; REGISTRATION RIGHTS................ Restrictive Legend................................................... Notice of Proposed Transfer.......................................... "Market Stand-Off" Agreement......................................... 5 BOARD OF DIRECTORS................................................. Election of Directors................................................ Removal of Directors; Filling of Vacancies........................... Committees of Directors.............................................. Board of Directors Meetings.......................................... Conflicting Provisions...............................................

5 5 6 8 9 11 12 12 12 13 13 13 14 14 14 15 15 16 17 17 17 19

ARTICLE 6 AFFIRMATIVE COVENANTS OF THE CORPORATION........................... 6.1 Financial Statements; Other Reports.................................. 6.2 Independent Accountants..............................................

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TABLE OF CONTENTS (CONTINUED)
PAGE ---19 19 19 20 20 20 20 21 21 21 21 21 21 22 22 22 22

6.3 6.4 6.5 6.6 ARTICLE 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11 7.12

Preservation of Corporate Existence.................................. Compliance With Laws................................................. Compensation......................................................... Termination.......................................................... 7 MISCELLANEOUS...................................................... Notices.............................................................. Waivers and Amendments............................................... Successors and Assigns............................................... Governing Law........................................................ Severability......................................................... Interpretation....................................................... Headings and Captions................................................ Enforcement.......................................................... No Waiver of Rights, Powers and Remedies............................. Counterparts......................................................... Aggregation of Stock................................................. Confidentiality......................................................

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INVESTOR RIGHTS AGREEMENT THIS INVESTOR RIGHTS AGREEMENT (this "Agreement") is made as of May 1, 2003, as amended from time to time, by and among (i) Gryphon Gold Corporation, a Nevada corporation (the "Corporation"), (ii) the holders of the common stock, $0.001 par value per share, of the Corporation (the "Common Stock") as set forth on Exhibits A-1 and A-2 attached hereto. WHEREAS, the Corporation proposes to issue and sell up to an aggregate of 10,000,000 shares of its Common Stock at the price of US $0.20 per share and at a price of $0.20 and $0.225 per share under the Installment Purchase Plan ("First Round Offering") to investors (the "Investors") pursuant to the terms of an Accredited Investor Common Stock Purchase Agreement of even date herewith (the "Purchase Agreement") (Founders as defined herein and Investors may be referred to individually as a "Stockholder" and collectively as "Stockholders."); WHEREAS, as a condition to consummating the transactions contemplated by the Purchase Agreement, the Corporation and the Stockholders are entering into this Agreement; WHEREAS, the Board of Directors of the Corporation has determined that it is in the best interests of the Corporation that the Corporation enter into this Agreement; WHEREAS, the Corporation anticipates having future Stockholders enter into this Agreement in subsequent rounds of financing; and NOW, THEREFORE, in consideration of the covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows: ARTICLE 1 GENERAL PROVISIONS 1.1 Shares Subject to this Agreement. The Stockholders agree that the terms and restrictions of this Agreement shall apply to all shares of capital stock of the Corporation which any of them now owns or hereafter acquires by any means, including without limitation, by purchase, assignment, conversion of convertible shares or operation of law, or as a result of any stock dividend, stock split, reorganization, reclassification, whether voluntary or involuntary, or other similar transaction, and to any shares of Capital Stock of any successor in interest of the Corporation, whether by sale, merger, consolidation or other similar transaction, or by purchase, assignment or operation of law (the "Shares"). 1.2 No Partnership Relationship. Notwithstanding, but not in limitation of, any other provision of this Agreement, the parties understand and agree that the creation, management and operation of the Corporation shall not create or imply a general partnership between or among

the Stockholders and shall not make any Stockholder the agent or partner of any other Stockholder for any purpose. 1.3 Legend. Each certificate representing Shares held of record or beneficially owned by the Stockholder shall bear a legend in substantially the following form, until such time as the Shares represented thereby are no longer subject to the provisions hereof: "THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF AN INVESTOR RIGHTS AGREEMENT AMONG THE CORPORATION AND CERTAIN HOLDERS OF ITS OUTSTANDING CAPITAL STOCK. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST BY THE HOLDER OF RECORD OF THE CERTIFICATE TO THE SECRETARY OF THE CORPORATION." 1.4 Termination. With the exception of Section 4.3 herein, the respective rights and obligations of the parties under this Agreement shall terminate upon the consummation of the Corporation's Qualified Initial Public Offering or upon Stockholder's holding not less than 75% of the Shares that are subject to this Agreement agreeing in writing to terminate this Agreement. ARTICLE 2 ISSUE OF ADDITIONAL SHARES 2.1 Treasury Share Offerings. Except as otherwise agreed to by the parties hereto, each offering by the Corporation of additional Shares that are priced lower than the price per share in the First Round Offering ("Lower Priced Shares") shall be made in accordance with this Article. 2.2 Pro-Rata Preemptive Right. Subject to Section 2.4, each time the Corporation proposes to allot, issue, sell or resell any Lower Priced Shares, the Corporation shall first offer (the "Treasury Offer") the Lower Priced Shares to the Stockholders (collectively the "Treasury Offerees" and individually a "Treasury Offeree") on the following basis: -ii-

(a) Pro Rata Portions. The number of Lower Priced Shares a particular Treasury Offeree shall be offered and may purchase shall be determined by the following formula:
Number of Shares held by the Treasury Offeree on a Fully Converted Basis immediately prior to the Treasury Offer -----------------------------------Number of Shares held by all Treasury Offerees on a Fully Converted Basis immediately prior to the Treasury Offer

Number of Lower Priced Shares which the Treasury Offeree shall be offered and may purchase

=

x

Total Number of Lower Priced Shares being offered

(b) Notice of Offer. Each Treasury Offer shall be made by written notice to the Treasury Offerees specifying: (i) the total number and class of Lower Priced Shares offered; (ii) the Treasury Offeree's pro rata portion thereof as determined by the formula in Section 2.2(a) above; (iii) the price at which the Lower Priced Shares are being offered; (iv) any other terms and conditions applicable to the offer not set out in this Section 2.2; (v) that Treasury Offerees shall have ten (10) days (the "Initial Acceptance Period") following receipt of the notice to accept the Treasury Offer (provided that if such written notice is mailed by first class mail to the address for the Treasury Offeree shown on the Corporation's register of members, that Treasury Offeree will be deemed to have received the notice three (3) days thereafter); (c) Acceptance of a Treasury Offer shall be made by notice in writing to the Corporation within the Initial Acceptance Period specifying the number of Lower Priced Shares up to the pro rata number determined above that the Treasury Offeree wishes to purchase. The Treasury Offeree may also specify in such notice an additional number of the Lower Priced Shares ("Specified Additional Amounts") offered for sale that the Treasury Offeree is prepared to purchase, if any, if the other Treasury Offerees fails to fully accept their offered portion of the Treasury Offer. The Treasury Offeree shall include with the notice a bank draft or money order payable to the Corporation for the amount equal to the aggregate price of the Lower Priced Shares and Specified Additional Amounts, if any, specified in the notice. If a Treasury Offeree does not accept the Treasury Offer -iii-

before expiration of the Initial Acceptance Period, then such Treasury Offeree shall be deemed to have refused the Treasury Offer. Additionally, if all Treasury Offerees notify the Corporation in writing that they accept or decline the Treasury Offer before the end of the Initial Acceptance Period, then the Initial Acceptance Period shall be deemed to have ended on the date the last such notice is received by the Corporation; (d) Remaining Lower Priced Shares. In the event that some Treasury Offerees do not fully accept their offered portion of the Lower Priced Shares within the Initial Acceptance Period, the unaccepted remaining portion of the Lower Priced Shares (the "Remaining Amount") shall be divided, within five (5) days of the end of the Initial Acceptance Period, among such of the Treasury Offerees as have in their notice of acceptance of the Treasury Offer indicated a preparedness to purchase Specified Additional Amounts (collectively the "Second Round Offerees" and individually a "Second Round Offeree") as follows: (i) in such manner as may be agreed among the Second Round Offerees; and (ii) failing such agreement, the Remaining Amount shall be divided pro rata among the Second Round Offerees in accordance with their respective holdings of Shares on a Fully Converted Basis in successive rounds if necessary to fully divide such Remaining Amount, provided that no Second Round Offeree shall be required to accept more than his Specified Additional Amount. If any Treasury Offerees do not receive the amount of Lower Priced Shares and Specified Additional Amounts, if any, requested in Section 2.2(c), then the Corporation shall promptly reimburse Treasury Offeree for the difference between the price of Common Stock received and the monies tendered to the Corporation. 2.3 Sale to Third Party. The Corporation shall be entitled to allot, issue or sell the balance of any of the offered Lower Priced Shares which are not purchased by the Treasury Offerees upon completion of the above process to any Person(s), other than a Treasury Offeree who did not accept the Treasury Offer, provided that such allotment, issuance or sale: (a) shall not be effected at a price which is less than the price or on terms and conditions which are more favourable (from the purchaser's perspective) than those set forth in the written notice to the Treasury Offerees concerning the Treasury Offer; and (b) shall be effected within a one hundred and eighty (180) day period following the expiration of the Initial Acceptance Period, after which period has expired, the Corporation shall comply with this Article 2 before offering Lower Priced Shares to any Person. -iv-

2.4 Exempt Issuances. The rights set forth above shall not apply to issuances (the "Exempt Issuances") in which shares of Capital Stock, Rights or Convertible Shares are issued: (i) as a dividend or distribution payable pro rata to all holders of Common Stock or other securities of the Corporation; (ii) to employees, consultants, advisors and directors of the Corporation in the form of Common Stock, stock purchase plans or options to purchase shares of Common Stock pursuant to an equity incentive plan or other arrangement approved by the Corporation's Board of Directors, which includes, but is not limited to, the initial sale of 3,000,000 shares of Common Stock of the Corporation to Founders at a price of $0.10 per share and the initial reservation of 3,500,000 shares of Common Stock of the Corporation to be sold at $0.15 per share to Directors, Officers and Management; (iii) in a Qualified Initial Public Offering; (iv) for consideration other than cash or cash equivalents pursuant to a merger, consolidation, acquisition or similar transaction approved by the Board of Directors of the Corporation; or (v) to a strategic partner of the Corporation in connection with a joint venture, arrangement. 2.5 Termination. The respective rights and obligations of the parties under this Article 2 shall terminate immediately prior to the consummation of the Corporation's Qualified Initial Public Offering. 2.6 Waiver of Rights. Notwithstanding any other provision of this Article 2, any Stockholder may waive his rights with respect to any particular offer or right given under, or any provision contained in, Article 2 by notice in writing to the Corporation. 2.7 No Further Preemptive Rights. Except as provided herein, the Stockholders have no additional preemptive rights to participate in treasury sales of shares of Capital Stock. ARTICLE 3 RESTRICTIONS ON TRANSFER OF CAPITAL STOCK; RIGHT OF FIRST REFUSAL, CO-SALE AND RESTRICTION ON FOUNDERS' STOCK 3.1 Non-Complying Transfers Prohibited. Each Stockholder understands and agrees that such Stockholder may not sell, assign, transfer, exchange, gift, devise, pledge, hypothecate, encumber or otherwise alienate or dispose of any Shares owned by such Stockholder or any right or interest therein, whether voluntarily or involuntarily, by operation of law or otherwise, except -v-

in accordance with this Agreement. Any such purported transfer in violation of any provision of this Agreement and all actions by the purported transferor and transferee in connection therewith shall be of no force or effect. The Corporation shall not be required to recognize such purported transfer for any purpose, including, without limitation, for purposes of dividend and voting rights. 3.2 Right of First Refusal on Voluntary Transfers. (a) Except as permitted pursuant to Section 2.4 or as otherwise expressly provided for herein, no Stockholder may transfer Shares other than pursuant to a bona fide and irrevocable offer for such Shares subject only to the conditions set out herein (the "Offer"), provided however that Founders shall transfer Shares in accordance with Sections 3.4 and 3.5 herein. In the event that a Stockholder (the "Proposed Seller") intends to sell, assign, transfer or otherwise voluntarily alienate or dispose of any Shares pursuant to an Offer, such Proposed Seller shall given written notice (the "Seller's Notice") to the Corporation and to each of the other Stockholders (the "Offerees") stating that the Proposed Seller intends to make such a transfer, identifying the proposed transferee (the "Proposed Transferee"), specifying the number of Shares (the "First Refusal Shares") proposed to be transferred pursuant to the Offer, and specifying the per share purchase price which the Proposed Transferee has offered to pay for the First Refusal Shares (the "Sale Price"). A copy of the Offer and a statement of the number of Shares held by each of the Offerees shall be attached to the Seller's Notice. (b) Upon delivery of the Seller's Notice, the Corporation shall have the irrevocable and exclusive option to purchase the First Refusal Shares at the Sale Price. Upon delivery of the Seller's Notice, the Corporation shall have ten (10) days to deliver to the Proposed Seller a written notice stating whether it elects to exercise its option under this Section 3.2 and the number of First Refusal Shares that it is willing to purchase, and such notice shall constitute an irrevocable commitment to purchase such First Refusal Shares, subject only to such conditions as were contained in the Offer. (c) If the Corporation does not accept the offer to purchase all of the First Refusal Shares within such 10-day period, the Proposed Seller shall deliver written notice to each Offeree indicating the number of First Refusal Shares not purchased by the Corporation (the "Offeree First Refusal Shares"), and each Offeree shall have the irrevocable and exclusive option to purchase up to that number of the Offeree First Refusal Shares at the Sale Price as equals the product of (A) the number of Offeree First Refusal Shares multiplied by (B) a fraction, the numerator of which shall be the number of shares of Common Stock on a Fully Converted Basis owned by such Offeree and the denominator of which shall be the number of shares of Common Stock owned by all of the Offerees on a Fully Converted Basis (the "Proportionate Share"). Upon delivery of such written -vi-

notice, each Offeree shall have five (5) days to deliver to the Proposed Seller a written notice stating whether it elects to exercise its option under this Section 3.2 and the maximum number of Offeree First Refusal Shares (up to all of such Offeree's Proportionate Share) that it is willing to purchase, and such notice shall constitute an irrevocable commitment to purchase such Offeree First Refusal Shares, subject only to such conditions as were contained in the Offer. (d) If an Offeree does not elect to purchase its full Proportionate Share of the Offeree First Refusal Shares, the Proposed Seller shall deliver another written notice to each Offeree that has elected to purchase its full Proportionate Share (a "Fully-Exercising Offeree") stating the number of Offeree First Refusal Shares not elected to be purchased by Offerees. Each Fully-Exercising Offeree shall be entitled, by delivering written notice to the Proposed Seller within five (5) days following the delivery of such notice, to purchase up to all of the remaining Offeree First Refusal Shares at the Sale Price. In the event of an oversubscription, the oversubscribed amount shall be allocated among such Fully-Exercising Offerees pro rata based on the number of Shares owned by each of them. The delivery of the notice of election under this paragraph shall constitute an irrevocable commitment to purchase such Offeree First Refusal Shares, subject only to such conditions as were contained in the Offer. (e) The closing of the sale of First Refusal Shares to the Corporation and/or any exercising Offerees shall occur on or before the fifth (5th) business day following the expiration of all of the first refusal rights under this Section 3.2. At such closing, the Proposed Seller shall deliver a certificate or certificates representing the First Refusal Shares, properly endorsed for transfer, and the exercising Offerees shall deliver payment of the purchase price therefor. (f) If any First Refusal Shares are not elected to be purchased pursuant to this Section 3.2, then the Proposed Seller shall be free, for a period of ninety (90) days from the expiration of all of the first refusal rights under this Section 3.2, to sell the remaining First Refusal Shares to the Proposed Transferee, at a price equal to or greater than the Sale Price and upon terms no more favorable to the Proposed Transferee than those specified in the Seller's Notice. Any transfer of the remaining First Refusal Shares by the Proposed Seller after the end of such 60-day period or any change in the terms of the sale as set forth in the Seller's Notice which are more favorable to the Proposed Transferee shall give rise anew to the rights provided in the preceding paragraphs. As a condition to the effectiveness of a transfer of Shares to a Proposed Transferee pursuant hereto, the Proposed Transferee shall agree in writing to become a "Stockholder" and be bound by all of the provisions of this Agreement and shall thereafter be permitted to transfer Shares only in accordance with this Agreement. (g) Notwithstanding anything in this Agreement to the contrary, if the Corporation and/or any of the Offerees elect to purchase any or all of the First -vii-

Refusal Shares, the Corporation and/or such Offeree shall have the right to purchase the First Refusal Shares for cash consideration whether or not part or all of the consideration specified in the Seller's Notice is other than cash. If part or all of the consideration to be paid for the First Refusal Shares as stated in the Seller's Notice is other than cash, the price stated in such Seller's Notice shall be deemed to be the sum of the cash consideration, if any, specified in the Seller's Notice, plus the fair market value of the non-cash consideration. The fair market value of the non-cash consideration shall be determined by the Board of Directors of the Corporation, and its judgment as to the fair market value of such non-cash consideration shall be binding upon the Proposed Seller and the other Offerees absent manifest error. 3.3 Change of Control Co-Sale Right - Stockholder Sales. If a Stockholder ("Selling Stockholder") becomes entitled to sell First Refusal Shares to a third party pursuant to Section 3.2(f) and the third party, which together with its Affiliates or persons acting as a group could, as a result of a voting agreement or otherwise, upon completion of such sale ("Transfer"), Control the Corporation on a Fully Converted Basis (a "Control Sale"), then all the other holders of Shares ("Other Selling Stockholders") shall have the right (the "Control Sale Right") to participate in such transfer on the following terms and conditions: (a) Intended Control Sale Notice. If the Selling Stockholder intends to proceed with a Control Sale, the Selling Stockholder shall immediately notify ("Control Sale Notice") each of the Other Selling Stockholders in writing specifying (i) a description of the Shares to be transferred ("Offered Shares"), (ii) the identity of the prospective transferee(s) and (iii) the consideration and the material terms and conditions upon which the proposed Transfer is to be made. The Control Sale Notice shall certify that the Selling Stockholder has received an irrevocable offer from the prospective transferee(s) subject only to the conditions set out herein. The Control Sale Notice shall also include a copy of any written agreements relating to the proposed Transfer. (b) For the purposes of this subsection, the Other Selling Stockholder has ten (10) days after receipt of the Control Sale Notice referred to in Section 3.3 to notify the Selling Stockholder of his intent to participate in the Control Sale ("Other Selling Stockholder Notice"), and shall have the right to participate in such sale of Shares on the same terms and conditions as specified in the Control Sale Notice. Such Other Selling Stockholders Notice to the Selling Stockholder shall indicate the number of Shares equal to the product obtained by multiplying (i) the aggregate number of Shares covered by the Control Sale Notice by (ii) a fraction, the numerator of which is the number of shares of Shares owned by the Other Selling Stockholder on a Fully Converted Basis on the date of the Control Sale Notice and the denominator of which is the total number of shares of Common Stock owned by the Selling Stockholder and all of the Other Selling Stockholders on a Fully Converted Basis on the date of the Control Sale Notice. -viii-

(c) Each Other Selling Stockholder shall effect its participation in the sale by promptly delivering to the Selling Stockholder for transfer to the prospective purchaser one or more certificates, properly endorsed for transfer, which represent the type and number of shares of Shares which such Other Selling Stockholder elects to sell. (d) The stock certificate or certificates that the Other Selling Stockholder delivers to the Selling Stockholder pursuant to Section 3.3(c) shall be transferred to the prospective purchaser in consummation of the sale of the Shares pursuant to the terms and conditions specified in the Control Sale Notice, and the Selling Stockholder shall concurrently therewith remit to such Other Selling Stockholder that portion of the sale proceeds to which such Other Selling Stockholder is entitled by reason of its participation in such sale. To the extent that any prospective purchaser or purchasers prohibits such assignment or otherwise refuses to purchase shares or other securities from an Other Selling Stockholder exercising its rights of Control Sale hereunder, the Selling Stockholder shall not sell to such prospective purchaser or purchasers any Shares unless and until, simultaneously with such sale, the Selling Stockholder shall purchase such shares or other securities from such Other Selling Stockholder for the same consideration and on the same terms and conditions as the proposed transfer described in the Control Sale Notice. (e) The Selling Stockholder shall have ninety (90) days from the last day in which the Other Selling Stockholders are required to respond to the Control Sale Notice to complete the sale of the Shares to the proposed purchaser pursuant to the terms of the Control Sale Notice and if such sale is not completed within the time limited herein, then the Shares shall be subject to the provisions of Section 3.1 herein. 3.4 Rights of Refusal for Founder's Shares. (a) Transfer Notice. If at any time a Founder proposes to transfer Shares to one or more third parties pursuant to an irrevocable agreement subject to the conditions set out herein with such third parties (a "Transfer"), then the Founder shall give the Corporation and each Stockholder written notice of the Founder's intention to make the Transfer (the "Transfer Notice"), which Transfer Notice shall include (i) a description of the Shares to be transferred ("Offered Shares"), (ii) the identity of the prospective transferee(s) and (iii) the consideration and the material terms and conditions upon which the proposed Transfer is to be made, and (iv) copies of material agreements attached thereto. (b) Corporation's Option. The Corporation shall have an option for a period of ten (10) days from receipt of the Transfer Notice to elect to purchase the Offered Shares at the same price and subject to the same material terms and conditions as described in the Transfer Notice. The Corporation may exercise -ix-

such purchase option and, thereby, purchase all (or a portion of) the Offered Shares by notifying the Founder in writing before expiration of the such ten (10) day period as to the number of such shares which it wishes to purchase. If the Corporation gives the Founder notice that it desires to purchase such shares, then payment for the Offered Shares shall be by check or wire transfer, against delivery of the Offered Shares to be purchased at a place agreed upon between the parties and at the time of the scheduled closing therefor, which shall be no later than thirty (30) days after the Corporation's receipt of the Transfer Notice, unless the Transfer Notice contemplated a later closing with the prospective third party transferee(s) or unless the value of the purchase price has not yet been established pursuant to Section 3.4(e). If the Corporation fails to purchase all of the Offered Shares by exercising the option granted in this Section 3.4(b) within the period provided, the Offered Shares shall be subject to the options granted to the Stockholders pursuant to this Agreement. (c) Additional Transfer Notice. Subject to the Corporation's right set forth in Section 3.4(b), if at any time the Founder proposes a Transfer, then, after the Corporation has declined to purchase all, or a portion of, the Offered Shares, the Founder shall give each Stockholder an "Additional Transfer Notice" which shall include all of the information and certifications required in a Transfer Notice and shall additionally identify the Offered Shares which the Corporation has declined to purchase (the "Remaining Shares") and briefly describe Stockholders' rights of first refusal and co-sale rights with respect to the proposed Transfer. (d) Stockholders' Option. The Stockholders shall have an option for a period of ten (10) days from the Stockholder's receipt of the Additional Transfer Notice from the Founder set forth in Section 3.4(c) to elect to purchase their respective pro rata shares of the Remaining Shares at the same price and subject to the same material terms and conditions as described in the Additional Transfer Notice. Each Stockholder may exercise such purchase option and, thereby, purchase all or any portion of his, her or its pro rata share (with any reallotments as provided below) of the Remaining Shares, by notifying the Founder and the Corporation in writing, before expiration of the ten (10) day period as to the number of such shares which he, she or it wishes to purchase (including any reallotment). Each Stockholder's pro rata share of the Remaining Shares shall be a fraction of the Remaining Shares, of which the number of Shares owned by such Stockholder on the date of the Transfer Notice shall be the numerator and the total number of shares of Shares held by the Founder and all Stockholders on a Fully Converted Basis on the date of the Transfer Notice shall be the denominator. Each Stockholder shall have a right of reallotment such that, if any other Stockholder fails to exercise the right to purchase its full pro rata share of the Remaining Shares, the other participating Stockholders may exercise an additional right to purchase, on a pro rata basis, the Remaining Shares not previously purchased. If a Stockholder gives the Founder notice that it desires to purchase its pro rata share of the Remaining Shares and, as the case may be, its reallotment, then payment -x-

for the Remaining Shares shall be by bank draft, money order or wire transfer, against delivery of the Remaining Shares to be purchased at a place agreed upon between the parties and at the time of the scheduled closing therefor, which shall be no later than thirty (30) days after the Corporation's receipt of the Transfer Notice, unless the Transfer Notice contemplated a later closing with the prospective third party transferee(s) or unless the value of the purchase price has not yet been established pursuant to Section 3.1(e). (e) Valuation of Property. Should the purchase price specified in the Transfer Notice or Additional Transfer Notice be payable in property other than cash or evidences of indebtedness, the Corporation (or the Stockholders) shall have the right to pay the purchase price in the form of cash equal in amount to the value of such property. If the Founder and the Corporation (or the Stockholders) cannot agree on such cash value within ten (10) days after the Corporation's receipt of the Transfer Notice (or the Stockholders' receipt of the Additional Transfer Notice), the valuation shall be made by an appraiser of recognized standing selected by the Founder and the Corporation (or the Stockholders) or, if they cannot agree on an appraiser within twenty (20) days after the Corporation's receipt of the Transfer Notice (or the Stockholders' receipt of the Additional Transfer Notice), each shall select an appraiser of recognized standing and the two appraisers shall designate a third appraiser of recognized standing, whose appraisal shall be determinative of such value. The cost of such appraisal shall be shared equally by the Founder and the Corporation (or the Stockholders), with the half of the cost borne by the Corporation and the Stockholders borne pro rata by each based on the number of shares such parties were interested in purchasing pursuant to this Section 3.4. If the time for the closing of the Corporation's purchase or the Stockholders' purchase has expired but for the determination of the value of the purchase price offered by the prospective transferee(s), then such closing shall held on or prior to the fifth business day after such valuation shall have been made pursuant to this subsection. 3.5 Right of Co-Sale for Investors in Founder's Sale. (a) To the extent the Corporation and the Stockholders do not exercise their respective rights of refusal as to all of the Offered Shares pursuant to Section 3.4, then each Stockholder (a "Selling Stockholder" for purposes of this subsection 3.5) which notifies the Founder in writing within ten (10) days after receipt of the Transfer Notice referred to in Section 3.4(a), shall have the right to participate in such sale of Shares on the same terms and conditions as specified in the Transfer Notice. Such Selling Stockholder's notice to the Founder shall indicate the number of shares of Shares the Selling Stockholder wishes to sell under his, her or its right to participate. To the extent one or more of the Stockholders exercise such right of participation in accordance with the terms and conditions set forth below, the number of shares of Shares that the Founder may sell in the Transfer shall be correspondingly reduced. -xi-

(b) Each Selling Stockholder may sell all or any part of that number of shares of Shares equal to the product obtained by multiplying (i) the aggregate number of shares of Shares covered by the Transfer Notice by (ii) a fraction, the numerator of which is the number of Shares owned by the Selling Stockholder on the date of the Transfer Notice on a Fully Converted Basis and the denominator of which is the total number of shares of Common Stock owned by Founder and all of the Selling Stockholders on a Fully Converted Basis on the date of the Transfer Notice. (c) Each Selling Stockholder shall effect its participation in the sale by promptly delivering to the Founder for transfer to the prospective purchaser one or more certificates, properly endorsed for transfer, which represent the type and number of shares of Shares which such Selling Stockholder elects to sell. (d) The stock certificate or certificates that the Selling Stockholder delivers to the Founder pursuant to Section 3.5(c) shall be transferred to the prospective purchaser in consummation of the sale of the Shares pursuant to the terms and conditions specified in the Transfer Notice, and the Founder shall concurrently therewith remit to such Selling Stockholder that portion of the sale proceeds to which such Selling Stockholder is entitled by reason of its participation in such sale. To the extent that any prospective purchaser or purchasers prohibits such assignment or otherwise refuses to purchase shares or other securities from a Selling Stockholder exercising its rights of co-sale hereunder, the Founder shall not sell to such prospective purchaser or purchasers any Shares unless and until, simultaneously with such sale, the Founder shall purchase such shares or other securities from such Selling Stockholder for the same consideration and on the same terms and conditions as the proposed transfer described in the Transfer Notice. 3.6 Non-Exercise of Rights. To the extent that the Corporation and the Stockholders have not exercised their rights to purchase the Offered Shares or the Remaining Shares within the time periods specified in Section 3.4 and the Stockholders have not exercised their rights to participate in the sale of the Offered Shares or the Remaining Shares within the time periods specified in Section 3.5, the Founder shall have a period of one hundred and twenty (120) days from the expiration of such rights in which to sell the Offered Shares or the Remaining Shares, as the case may be, upon terms and conditions (including the purchase price) no more favorable than those specified in the Transfer Notice to the third-party transferee(s) identified in the Transfer Notice. The third-party transferee(s) shall acquire the Remaining Shares free and clear of subsequent rights of first refusal and co-sale rights under this Agreement. In the event Founder does not consummate the sale or disposition of the Remaining Shares within the time limited herein, the Corporation's first refusal rights and the Stockholders' first refusal rights and co-sale rights shall continue to be applicable to any subsequent disposition of the Offered Shares or the Remaining Shares by Founder until such right lapses in accordance with the terms of this Agreement. Furthermore, the exercise or nonexercise of the rights of the Corporation and the Stockholders under this Section 3 to purchase Shares from the Founder or participate in sales of -xii-

Shares by the Founder shall not adversely affect their rights to make subsequent purchases from the Founder of Shares or subsequently participate in sales of Shares by the Founder. 3.7 Transferees Subject to This Agreement. For greater certainty, as a condition to the effectiveness of a transfer of Shares pursuant to any provisions of Article 3, the Transferee shall agree in writing to become a "Stockholder" and be bound by all the provisions of this Agreement and shall thereafter be permitted to transfer shares only in accordance with this Agreement. 3.8 Transfers to Permitted Transferees. The restrictions on transfer contained herein shall not apply (i) in the case of Stockholders who are natural persons: (a) transfers by a Stockholder to such Stockholder's spouse, children or other member of such Stockholder's immediate family, or to a trust for the sole benefit of such persons, provided that such trust is controlled by such Stockholder, (b) transfers by a Stockholder to the trustee or trustees of a trust controlled and revocable solely by such Stockholder, (c) transfers by a Stockholder to such Stockholder's guardian or conservator, or (d) transfers by a Stockholder, in the event of such Stockholder's death, to such Stockholder's executor(s) or administrator(s) and (ii) in the case of all other Stockholders, transfers by a Stockholder to any Affiliate, member, principal, director, partner, stockholder or successor of such Stockholder (collectively, "Permitted Transferees"); provided, however, that in any such event the Shares so transferred in the hands of each such Permitted Transferee shall remain subject to the provisions of this Agreement, and each such Permitted Transferee shall so acknowledge in writing as a condition precedent to the effectiveness of such transfer. ARTICLE 4 TRANSFER OF REGISTRABLE SHARES; REGISTRATION RIGHTS 4.1 Restrictive Legend. Each certificate representing Shares shall, except as otherwise provided in this Article 4, be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required under applicable state or foreign securities laws): "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SECURITIES UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF." -xiii-

Upon request of a holder of such a certificate, the Corporation shall remove the foregoing legend from the certificate or issue to such holder a new certificate therefor free of such legend if there is an effective registration statement covering the securities represented by such certificate or, with such request, the Corporation shall have received either the opinion of counsel or no-action letter referred to in Section 4.2 (unless such opinion of counsel or no-action letter is not required by Section 4.2), subject in each case to the continued effectiveness of such registration statement, opinion of counsel or no-action letter. 4.2 Notice of Proposed Transfer. Notwithstanding any other provisions of this Agreement, prior to any proposed sale, pledge, hypothecation or other transfer of any Shares, the holder thereof shall give written notice to the Corporation of its intention to effect such sale, pledge, hypothecation or other transfer. Each such notice shall describe the manner of the proposed sale, pledge, hypothecation or other transfer and, if requested by the Corporation, shall be accompanied by either (i) an opinion of counsel reasonably satisfactory to the Corporation to the effect that the proposed sale, pledge, hypothecation or other transfer may be effected without registration under the Securities Act or (ii) a "no action" letter from the Commission to the effect that the distribution of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto (it being understood that if such transfer is intended to be pursuant to the provisions of Rule 144 under the Securities Act, the Corporation shall not require an opinion of counsel or no-action letter), whereupon the holder of such securities shall be entitled to transfer such securities in accordance with the terms of its notice. Each certificate for Shares transferred as provided above shall bear the appropriate restrictive legend set forth in Section 4.1, except that such certificate shall not bear such legend if (i) such transfer is in accordance with the provisions of Rule 144 under the Securities Act (or any other rule permitting public sale without registration under the Securities Act) or (ii) the opinion of counsel or "no-action" letter referred to above is to the further effect that the transferee and any subsequent transferee (other than an affiliate of the Corporation) would be entitled to transfer such securities in a public sale without registration under the Securities Act or that such legend is not required to establish compliance with any provisions of the Securities Act. Notwithstanding any other provision hereof, the restrictions provided for in this Section 4.2 shall not apply to securities which are not required to bear the legend prescribed by Section 4.1 in accordance with the provisions of that Section. 4.3 "Market Stand-Off" Agreement. Each of the Stockholders hereby agrees, severally and not jointly, if requested by the Corporation and an underwriter of Common Stock of the Corporation, not to directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale or other similar hedging transaction), grant any option to purchase or otherwise transfer or dispose of (other than to transferees who agree to be similarly bound) any Common Stock of the Corporation held by such Stockholder (but excluding any shares acquired in or following the Corporation's initial public offering) during the ninety (90) to one hundred and eighty (180) day period to be specified by such underwriter following the effective date of the registration statement for the Corporation's Qualified Initial Public Offering, provided that, the Stockholder shall not be bound by the provisions of this Section 4.3 unless all officers and directors of the Corporation, all holders of five percent (5%) or greater of the outstanding Common Stock of the Corporation and all other Stockholders holding Shares enter -xiv-

into similar agreements, and, provided further, that, the Corporation shall, upon request by any Investor, use its reasonable efforts to cause the managing underwriter to agree to permit periodic early releases of the Common Stock held by the Investors that is subject to the foregoing restrictions and, in the event that the managing underwriter permits such early releases, the Common Stock held by all Investors is released on a pro rata basis. The Corporation may impose stop-transfer instructions with respect to the securities subject to the foregoing restriction until the end of said period. Each of the Stockholders agrees to sign such agreements or documents reasonably requested by the Corporation and/or the managing underwriters relating to and consistent with the provisions of this Section 4.3. ARTICLE 5 BOARD OF DIRECTORS 5.1 Election of Directors. Each Stockholder shall take or cause to be taken such actions as may be required from time to time to establish and maintain the number of persons comprising the Board of Directors of the Corporation at up to six (6), and to elect as directors representatives designated by the Founders provided that a minimum of two (2) of the six directors shall not be a member of senior management of the Corporation ("Outside Director(s)"). Without limiting the generality of the foregoing, at each annual meeting of the Stockholders, and at each special meeting of the Stockholders called for the purpose of electing directors of the Corporation, and at any time at which the Stockholders have the right to, or shall, elect directors of the Corporation, then, and in each event, the Stockholders shall vote all Shares owned by them (or shall consent in writing in lieu of a meeting of Stockholders, as the case may be) to set the number of, and to elect persons as, directors of the Corporation in accordance with this Section 5.1. The Founders may recommend that the number of Board of Directors from time to time be increased and each Stockholder shall then elect such additional directors as designated by the Founders provided that Outside Directors shall at all times represent at least 25% of the membership of the Board of Directors. 5.2 Removal of Directors; Filling of Vacancies. Each Stockholder shall take all action necessary to remove forthwith any director when (and only when) such removal is requested in writing for any reason, with or without cause, by the Person(s) that designated such director for election. In the case of the death, resignation or removal as herein provided of a director, each Stockholder shall vote all Shares owned by it to elect another person designated by the same Person(s) that designated the deceased, resigning or removed director in accordance with this Section 5.2 if, at the time such vacancy occurs, such Person(s) shall have the right to have a person designated by it or them elected as a director pursuant to Section 5.1. Each Stockholder and the Corporation agree to use their best efforts to (i) prevent any action from being taken by the Board of Directors during the period of any vacancy due to the death, resignation or removal of a director unless the Person entitled to have a person designated by it to fill such vacancy shall have failed for a period of ten (10) days after written notice of such -xv-

vacancy to designate a replacement and (ii) cause any and all vacancies on the Board of Directors to be filled in accordance with the provisions of Section 5.1. 5.3 Committees of Directors. The Board of Directors may, to the extent permitted by applicable law, designate one or more committees, each committee to consist of two (2) or three (3) directors of the Corporation, to have and to exercise any of the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, provided that, to the extent permitted under applicable law, at least one (1) of the directors elected pursuant to clause (i) of Section 5.1 shall be entitled to be a member of each such committee. At any meeting of any such committee, the presence (in person or by telephone) of such director is required for a quorum. The initial committees shall be constituted as follows: (a) Audit Committee. The Board shall have an audit committee comprised of at least three (3) members, two of whom shall be non-management directors. Subject to the foregoing, the members of the audit committee shall be selected by a simple majority vote of the Board. The audit committee must review all financial statements of the Corporation and its subsidiaries. The Board must also approve such statements. (b) Compensation Committee. The Board shall have a compensation committee composed of at least three (3) members, two of whom shall be non-management directors. Subject to the foregoing, the members of such committee shall be selected by a simple majority of the vote of the Board. Recommendations to the Board with respect to the compensation of the directors and officers of the Corporation and its subsidiaries and the granting of stock purchase/option plans will be within the mandate of the compensation committee. (c) Corporate Compliance Committee. The Board shall have a corporate compliance committee composed of at least three (3) members, two of whom shall be non-management directors. Subject to the foregoing, the members of the corporate compliance committee shall be selected by a simple majority vote of the Board. The corporate compliance committee must review periodic updates from the Corporation's legal counsel with respect to corporate compliance matters. 5.4 Board of Directors Meetings. (a) The Board of Directors of the Corporation and each committee of the Board of Directors shall use reasonable efforts to follow the following procedures with respect to meetings of the Board of Directors and committees thereof: (i) Notice of any meeting of the Board of Directors of the Corporation and of any committees thereof may be given by telephonic, facsimile, electronic mail or other written notice, in each case to be received at least twentyfour (24) hours before any telephonic meeting and at least seven (7) days before any in-person meeting -xvi-

to each director. Reasonable efforts shall be made to ensure that each director actually receives timely notice of any meeting. At the request of any director, the Corporation, at its cost, will arrange for that director to be able to participate by telephone, videoconference or other similar technology in any such meeting of the Board of Directors or committee thereof, so that such director can be heard by and can hear all other directors participating in the meeting. (ii) A reasonably detailed agenda shall be supplied by the directors calling the meeting or by the President (as the case may be) to each director reasonably (but in no event less than twenty-four (24) hours) in advance of each meeting of the Board of Directors of the Corporation or any committee thereof, together with other appropriate documentation with respect to agenda items calling for action by such Board of Directors or committee thereof, to inform directors adequately regarding matters to come before such Board or committee thereof. Any director wishing to place a matter on the agenda for any meeting of the Board of Directors of the Corporation or any committee thereof may do so by communicating with the chairman of the Board of Directors or committee (or, in the absence of any such chairman, the President of the Corporation or another member of such committee, as the case may be) sufficiently in advance of such meeting of the Board of Directors or committee so as to permit timely dissemination to all directors of information with respect to the agenda items. (b) The Corporation shall pay the reasonable out-of-pocket travel, lodging and other related expenses of all directors elected pursuant to Section 5.1 incurred in connection with attendance at meetings of the Board of Directors and any committee thereof, and shall not be required to pay such costs for individuals other than directors attending such meetings. 5.5 Conflicting Provisions. To the extent that any provision of this Article 5 is in conflict with or otherwise inconsistent with the By-laws of the Corporation, the provisions of this Article 5 shall govern and the Corporation and the Stockholders shall take such action as is necessary to amend the By-laws to cause them to be consistent with the provisions of this Article 5. ARTICLE 6 AFFIRMATIVE COVENANTS OF THE CORPORATION The Corporation covenants and agrees with the Investors that it will perform and observe the following covenants and provisions, and will cause each Subsidiary, if and when such -xvii-

Subsidiary exists, to perform and observe the following covenants and provisions as applicable to such Subsidiary. 6.1 Financial Statements; Other Reports. The Corporation and each Subsidiary will maintain proper books of account and records in accordance with U.S. generally accepted accounting principles ("GAAP") applied on a consistent basis, and will deliver to each Investor: (a) Quarterly Reports. Within 45 days of September 30, 2003, an unaudited consolidated balance sheet from the period of inception of the Corporation and its Subsidiaries to September 30, 2003 and thereafter within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Corporation, an unaudited consolidated balance sheet of the Corporation and its Subsidiaries as of the end of such quarter and the unaudited related statements of income and stockholders' equity and of cash flows of the Corporation for the period commencing at the end of the previous fiscal year, when applicable, and ending with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding period of the preceding fiscal year and the projections for such current year, all in reasonable detail and prepared in accordance with GAAP consistently applied (except for the absence of footnotes and subject to normal immaterial year-end adjustments consistent with past practice), and duly certified by the Chief Financial Officer or Treasurer of the Corporation. (b) Annual Reports. As soon as practicable and, in any event, within ninety (90) days after the end of each fiscal year of the Corporation, a copy of the annual audit report for such year for the Corporation, including therein a consolidated balance sheet of the Corporation and its Subsidiaries as of the end of such fiscal year and statements of income and stockholders' equity and of cash flows of the Corporation for such fiscal year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, all duly certified by the Corporation's independent public accountants. (c) Projections. As soon as practicable and, in any event, at least thirty (30) days prior to the commencement of each fiscal year, a business plan, in detail for the fiscal year, monthly operating expense and profit and loss projections, quarterly cash flow projections and a capital expenditure budget for the fiscal year including itemization of provisions for officers' compensation and each Subsidiary's operation, and, as soon as practicable, any revisions or modifications to any of the foregoing. The business plans and projections so delivered, and any proposed revisions and modifications thereto, shall have been approved by the Corporation's Board of Directors. (d) Written Reports. Promptly upon receipt thereof, any written report submitted to the Corporation by independent public accountants in connection -xviii-

with an annual or interim audit of the books of the Corporation and its Subsidiaries made by such accountants. (e) Stockholder Reports. Promptly after sending, making available, or filing the same, such reports and financial statements as the Corporation shall send or make generally available to all of the Stockholders of the Corporation. (f) Notice of Proceedings. Promptly after the commencement thereof, notice of all actions, suits and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, materially affecting the Corporation or its Subsidiaries, any Intellectual Property Rights of the Corporation or its Subsidiaries, or any other assets of the Corporation or its Subsidiaries or any key employee or officer (in their capacity as such). (g) Notice of Adverse Changes. Promptly after the occurrence thereof and in any event within ten (10) business days after it becomes aware of each occurrence, notice of any material adverse change in the business, assets, properties, management, prospects, operations or financial condition of the Corporation or its Subsidiaries. (h) Commission Reports and Other Information. Promptly upon becoming available: (i) copies of all financial statements, minutes, reports, press releases, notices, proxy statements and other documents sent by the Corporation to its Stockholders or released to the public and copies of all regular and periodic reports, if any, filed by the Corporation with the Commission or any securities exchange or self-regulatory organization; and (ii) any other financial or other information available to management of the Corporation that any of the Rights Stockholders shall have reasonably requested. Neither the foregoing provisions of this Section 6.1 nor any other provision of this Agreement shall be in limitation of any rights which an Investor may have with respect to the books and records of the Corporation and its Subsidiaries, or to inspect their properties or discuss their affairs, finances and accounts, under the laws of the jurisdictions in which they are incorporated. Management reserves the right that if it is of the view that it is in the best interests of the Corporation to withhold any information of adverse changes or material information about the Corporation from its Stockholders, it may determine not to provide such information or delay providing such information to Investors and Stockholders provided that management acts in the best interests of the Corporation. 6.2 Independent Accountants. The Corporation will retain independent public accountants of recognized national standing approved by the Corporation's Board of Directors, who shall certify the Corporation's consolidated financial statements at the end of each fiscal -xix-

year. In the event the services of the independent public accountants so selected, or any firm of independent public accountants hereafter employed by the Corporation are terminated, the Corporation will promptly thereafter notify each Stockholder and will request the firm of independent public accountants whose services are terminated to deliver to each Stockholder a letter of such form setting forth the reasons for the termination of their services. In the event of such termination, the Corporation will promptly thereafter engage another such firm of independent public accountants in accordance with the provisions of the first sentence of this Section 6.2. 6.3 Preservation of Corporate Existence. The Corporation and each Subsidiary will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified as a foreign corporation in each jurisdiction in which such qualification is necessary or desirable in view of its business and operations or the ownership of its properties. The Corporation and its Subsidiaries will use its best efforts to maintain all of its properties used or useful in the conduct of its business in good condition, and cause to be made all necessary, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Corporation may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section 6.3 shall prevent the Corporation or any of its Subsidiaries from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the judgment of the Corporation, desirable in the conduct of its business. 6.4 Compliance With Laws. The Corporation will comply, and cause each of its Subsidiaries to comply, with all applicable laws, rules, regulations and orders of any governmental authority. 6.5 Compensation. All executive compensation and all policies relating thereto shall be approved in advance by the Corporation's Board of Directors. 6.6 Termination. With the exception of Section 4.3 herein, the respective rights and obligations of the parties under this Agreement shall terminate upon the consummation of the Corporation's Qualified Initial Public Offering or upon Stockholder's holding not less than 75% of the Shares that are subject to this Agreement agreeing in writing to terminate this Agreement. ARTICLE 7 MISCELLANEOUS 7.1 Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be addressed to the receiving party's address set forth below or to such other address as a party may designate by notice hereunder, and shall be either (i) delivered by hand, (ii) made by facsimile transmission, (iii) sent by overnight courier or (iv) sent by registered or certified mail, return receipt requested, postage prepaid. -xx-

If to the Corporation: Gryphon Gold Corporation 1153 Bergen Parkway, Suite M290 Evergreen, Colorado 80439 Attention: Allen Gordon Phone: (303) 679-9819 Fax: (303) 679-9589 With a copy to (which shall not constitute notice): Snell & Wilmer L.L.P. One South Church Avenue Tucson, Arizona 85701 Attention: Lowell Thomas Phone: (520) 882-1221 Fax: (520) 884-1294 If to the Stockholders: To the addresses set forth on the Stockholder's Subscription Agreements. All notices, requests, consents and other communications hereunder shall be deemed to have been given either (i) if by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (ii) if made by facsimile transmission, at the time that receipt thereof has been acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight courier, on the next business day (or if sent overseas, on the second business day) following the day such notice is delivered to the courier service or (iv) if sent by registered or certified mail, on the fifth business day (or if sent overseas, on the tenth business day) following the day such mailing is made. 7.2 Waivers and Amendments. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in any particular instance), only with the written consent of the Corporation and holders of 75% of the issued Shares; provided, however, that in the event that such amendment or waiver adversely effects the rights or obligations of the Stockholder without having a similar adverse effect on the rights of all Stockholders, such amendment or waiver shall also require the additional written consent of the Stockholders adversely effected. Any waiver or amendment effected in accordance with the terms hereof shall be binding upon all Stockholders and the Corporation. Exhibits A-1 and A-2 hereto shall be amended from time to time to reflect the acquisition or disposition or transfer of any Capital Stock by any party hereto in accordance with the terms hereof without further action by the Stockholders or the Corporation. 7.3 Successors and Assigns. All statements, representations, warranties, covenants and agreements in this Agreement shall be binding on the parties hereto and shall inure to the benefit of the respective successors and assigns of each party hereto. Nothing in this Agreement -xxi-

shall be construed to create any rights or obligations except among the parties hereto, and no person or entity shall be regarded as a third-party beneficiary of this Agreement. 7.4 Governing Law. This Agreement shall be construed and enforced in accordance with and governed by the State of Arizona, without giving effect to the conflicts of law principles thereof. 7.5 Severability. In the event that any court of competent jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement shall be unenforceable in any respect, then such provision shall be deemed limited to the extent that such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any such provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall nevertheless remain in full force and effect. 7.6 Interpretation. The parties hereto acknowledge and agree that: (i) each party and its counsel reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; (ii) the rule of construction to the effect that any ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement; and (iii) the terms and provisions of this Agreement shall be construed fairly as to all parties hereto and not in favor of or against any party, regardless of which party was generally responsible for the preparation of this Agreement. 7.7 Headings and Captions. The headings and captions of the various subdivisions of this Agreement are for convenience of reference only and shall in no way modify or affect the meaning or construction of any of the terms or provisions hereof. 7.8 Enforcement. Each of the parties hereto acknowledges and agrees that the rights acquired by each party hereunder are unique and that irreparable damage would occur in the event that any of the provisions of this Agreement to be performed by the other parties were not performed in accordance with their specific terms or were otherwise breached. Accordingly, in addition to any other remedy to which the parties hereto are entitled at law or in equity, each party hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement by any other party and to enforce specifically the terms and provisions hereof in any federal or state court to which the parties have agreed hereunder to submit to jurisdiction. 7.9 No Waiver of Rights, Powers and Remedies. No failure or delay by a party hereto in exercising any right, power or remedy under this Agreement, and no course of dealing among the parties hereto, shall operate as a waiver of any such right, power or remedy of the party. No single or partial exercise of any right, power or remedy under this Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies. No notice to or demand on a party not expressly required under this Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other -xxii-

circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand. 7.10 Counterparts. This Agreement may be executed in one or more counterparts, and by different parties hereto on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 7.11 Aggregation of Stock. All shares of Capital Stock held by any Stockholder and its Affiliates shall be aggregated for determining the availability of any rights under this Agreement. 7.12 Confidentiality. Each Stockholder agrees to hold all confidential information received pursuant to this Agreement in confidence, and not to use or disclose any of such information to any third party, except to the extent that such information may be made publicly available by the Corporation and other than to monitor and maintain its investment in the Corporation; provided, however, that any Stockholder may, in the ordinary course of business, provide the financial results of the Corporation to its Stockholders, partners or members in the same manner such information is provided by such Stockholder with respect to its portfolio companies. -xxiii-

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed by their duly authorized representative this Investor Rights Agreement as of the date first written above. CORPORATION: GRYPHON GOLD CORPORATION By: Illegible Name: Title: FOUNDERS:
By: /s/ Albert Matter -----------------------------------Albert Matter

By: /s/ Allen Gordon -----------------------------------Allen Gordon

INVESTORS: By: Name: Title: By: Name: Title: By: Name: Title: -xxiv-

EXHIBIT A-1 GRYPHON GOLD CORPORATION
STOCKHOLDERS AND OPTIONS LOG AUTHORIZED SHARES Total Outstanding Shares Total Options Granted Total Options % of Outstanding Shares

75,000,000 14,376,000 0

OWNER ----Gordon, Allen Gordon, Allen Gordon, Allen Gordon, Allen Matter Albert Matter Albert Matter Albert Matter Albert Gordon, Allen Gordon, Allen Herald Christoper Herald Christoper Hughes Richard Hughes Richard Ker Tony Ker Tony Ker Tony Matter Albert Matter Albert Ranta Donald E Ranta Donald E Ranta Donald E Ranta Donald E Ranta Donald E Hughes Richard Ker Tony Ker Tony Ker Tony Ker Tony Ker Tony Hughes Richard Total Insiders Shareholders over 5% Other share holders @$0.20/share Other share holders @$0.225/share

QUANTITY COMMON STOCK INSIDERS -------375,000 350,000 275,000 500,000 375,000 350,000 275,000 500,000 500,000 250,000 166,667 333,333 250,000 250,000 125,000 250,000 125,000 500,000 250,000 67,500 67,500 95,000 135,000 135,000 250,000 175,000 50,000 200,000 37,500 37,500 250,000 7,500,000 1,500,000 4,903,500 472,500 14,376,000

PRICE PER SHARE --------0.100 0.100 0.100 0.100 0.100 0.100 0.100 0.100 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.200 0.200 0.200 0.200 0.200 0.225 0.225

COUNTRY ------USA USA USA USA CAN CAN CAN CAN USA USA USA CAN CAN CAN CAN CAN CAN USA USA USA USA CAN CAN CAN CAN CAN CAN CAN

PROV STATE ----CO CO CO CO BC BC BC BC CO CO CO BC BC BC BC BC BC CO CO CO CO BC BC BC BC BC BC BC

-xxv-

EXHIBIT A-2 CERTAIN DEFINITIONS As used in this Agreement, the following terms shall have the following respective meanings: "Affiliate" has the meaning ascribed to that term in Rule 12b-2 under the Exchange Act, or any successor rule. "Capital Stock" means, as to any Person that is a corporation, the authorized shares of such Person's capital stock, including all classes of common, preferred, voting and nonvoting capital stock, and, as to any Person that is not a corporation or an individual, the ownership interests in such Person, including, without limitation, the right to share in profits and losses, the right to receive distributions of cash and property, and the right to receive allocations of items of income, gain, loss, deduction and credit and similar items from such Person, whether or not such interests include voting or similar rights entitling the holder thereof to exercise control over such Person. "Certificate of Incorporation" means the Corporation's amended and restated certificate of incorporation filed with the Secretary of State of Nevada on or about the date hereof, as amended and/or restated from time to time. "Commission" means the Securities and Exchange Commission and any successor agency of the federal government administering the Securities Act and the Exchange Act. "Common Stock" means (i) the Common Stock, as otherwise defined in this Agreement, (ii) any other Capital Stock of the Corporation, however designated, authorized on or after the date hereof, which shall neither be limited to a fixed sum or percentage of par value in respect of the rights of the holders thereof to participate in dividends nor entitled to a preference in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation and (iii) any other securities into which or for which any of the securities described in clause (i) or (ii) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, consolidation, sale of assets or other similar transaction. "Control" means ownership of more than 50% of the outstanding voting Common Stock; or the right to elect or appoint directly or indirectly, a majority of directors of the Corporation. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and any similar or successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time. "Founders" means Albert Matter and Allan Gordon. "Fully Converted Basis" at any time means that all options, warrants or other rights of any kind to acquire Common Stock and all securities convertible or exchangeable into Common -i-

Stock outstanding at that time shall be deemed to have been fully exercised, converted or exchanged, as the case may be, and the Common Shares issuable as a result thereof shall be deemed to have been fully issued and to form part of the holdings of the Person(s) entitled to receive such Common Stock. "Person" means an individual, corporation, partnership, limited liability Corporation, joint venture, trust or unincorporated organization, or a government or any agency or political subdivision thereof. "Qualified Initial Public Offering" shall mean a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act covering the offer and sale of Common Stock in which (i) had an initial public offering price per share of not less than $1.00, subject to equitable adjustment whenever there shall occur a stock dividend, distribution, combination of shares, reclassification or other similar event with respect to the Common Stock) and (ii) resulting in gross proceeds to the Corporation of not less than $5,000,000.00 or alternatively the Corporation receives regulatory approval to have its stock listed for trading on the Toronto Stock Exchange, the TSX Venture Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock Market or it receives regulatory approval to have its stock quoted on the National Association of Security Dealers Automated Quotation (NASDAQ) OTC bulletin board. The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement, or, as the context may require, under the Exchange Act or applicable state securities laws. "Securities Act" means the Securities Act of 1933, as amended, and any similar or successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time. "Shares" means Capital Stock. "Subsidiary" or "Subsidiaries" means any corporation, partnership, limited liability Corporation, trust or other entity of which the Corporation and/or any of its other Subsidiaries directly or indirectly owns at the time a majority of the outstanding shares of any class of equity security of such corporation, partnership, limited liability Corporation, trust or other entity. -ii-

SUPPLEMENT TO INVESTOR RIGHTS AGREEMENT WHEREAS, all Stockholders of the Corporation have entered into the attached Investor Rights Agreement dated as of May 1, 2003, as supplemented from time to time; WHEREAS, the Investor Rights Agreement contemplates new investors investing in the Corporation from time to time; WHEREAS, the Corporation proposes to issue and sell up an aggregate of ten million (10,000,000) shares of its Common Stock at a price of US $0.65 cents per share to investors pursuant to the terms of an Accredited Investor Stock Purchase Agreement; WHEREAS, the new investors will become a party to the Investor Rights Agreement; and WHEREAS, the new investors will assume the same rights and obligations obtained by previous investors identified as participants of the "First Round Offering" in the Investor Rights Agreement. SUPPLEMENTAL PROVISION This Supplement to the Investor Rights Agreement and the Canadian and U.S. Accredited Investor Subscription Agreement forms part of the Investor Rights Agreement and Subscription Agreement, where applicable, and for greater certainty all references to Article 2 of the Investor Rights Agreement and elsewhere to the First Round Offering shall be deemed for all intents and purposes herein to refer to the terms and conditions of the current proposed offering of Common Stock at a price of $0.65 per share. Notice is also hereby provided that the Termination Date pursuant to Section 6 of the Subscription Agreement has been extended to October 31, 2004. -iii-

FIRST AMENDMENT TO GRYPHON GOLD CORPORATION INVESTOR RIGHTS AGREEMENT DEAR SHAREHOLDER: OUR LEGAL COUNSEL HAS REQUESTED THAT YOU SIGN THE ENCLOSED FIRST AMENDMENT TO THE INVESTOR RIGHTS AGREEMENT WHICH CLARIFIES THAT ALL NEW SHAREHOLDERS WHO SIGN THE AGREEMENT ARE CONFIRMED AS PARTIES TO THE AGREEMENT. -iv-

FIRST AMENDMENT TO GRYPHON GOLD CORPORATION INVESTOR RIGHTS AGREEMENT This FIRST AMENDMENT (the "Amendment") to the Investor Rights Agreement (the "Agreement") is made and entered into this ________ May, 2005, by and among Gryphon Gold Corporation, a Nevada corporation (the "Corporation") and the undersigned stockholders hereto (individually a "Stockholder" and collectively, as "Stockholders"). RECITALS A. On May 1, 2003 the Corporation and certain Stockholders entered into the Agreement for the purposes of purchasing shares of common stock of the Corporation and to provide for certain rights and restrictions relative thereto. B. The Corporation and the undersigned Stockholders deem it to be in the best interest of all parties to amend the Agreement to specifically provide for the inclusion of future Stockholders, which will be bound by and subject to the same rights and obligations under the Agreement as the undersigned. NOW THEREFORE, in consideration of the covenants and agreements set forth herein, the parties hereto agree as follows: 1. The undersigned Stockholder acknowledges, confirms and agrees that the Agreement is a valid, binding and enforceable obligation, in accordance with its terms, granting to each party who has executed the Agreement, or any amendments or supplements thereto, all of the rights and obligations of a Stockholder under the Agreement. 2. The following Section 7.13 is hereby added to the Agreement: "7.13 Future Stockholders. Each and every stockholder who enters into this Agreement after the date hereof, shall be granted each of the rights and be bound by and subject to each of the obligations of this Agreement as a Stockholder, and the Agreement, or any amendments or supplements hereto, is valid, binding and enforceable in accordance with its terms." 3. The Agreement, except as modified by this Amendment, remains in full force and effect. -v-

4. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned have executed or caused to be executed by their duly authorized representative this Amendment as of the date first above written. CORPORATION: GRYPHON GOLD CORPORATION, a Nevada corporation
By: /s/ Allen Gordon -----------------------------------Its: Chairman

STOCKHOLDER: Signed: Print Name -vi-

DOCUMENT TO BE SIGNED BY SHAREHOLDER SECOND AMENDMENT TO GRYPHON GOLD CORPORATION INVESTOR RIGHTS AGREEMENT This SECOND AMENDMENT (the "Amendment") to the Investor Rights Agreement (the "Agreement") is made and entered into this 2nd day of August 2005, by and among Gryphon Gold Corporation, a Nevada corporation (the "Corporation") and the stockholders, as defined in the Agreement ("Stockholders"). RECITALS WHEREAS, the Corporation and the undersigned Stockholders deem it to be in the best interest of all parties to amend the Agreement to enable the Corporation flexibility to negotiate and structure the terms of potential future offerings; and WHEREAS, Section 7.2 of the Agreement provides that any term of the Agreement may be amended with the written consent of the Corporation and holder of 75% of the issued shares, as defined in the Agreement ("Shares"); NOW THEREFORE, in consideration of the covenants and agreements set forth herein, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. Section 4.3 of the Investor Rights Agreement currently provides as follows: "Market Stand-Off" Agreement. Each of the Stockholders hereby agrees, severally and not jointly, if requested by the Corporation and an underwriter of Common Stock of the Corporation, not to directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale or other similar hedging transaction), grant any option to purchase or otherwise transfer or dispose of (other than to transferees who agree to be similarly bound) any Common Stock of the Corporation held by such Stockholder (but excluding any shares acquired in or following the Corporation's initial public offering) during the ninety (90) to one hundred and eighty (180) day period to be specified by such underwriter following the effective date of the registration statement for the Corporation's Qualified Initial Public Offering, provided that, the Stockholder shall not be bound by the provisions of this Section 4.3 unless all officers and directors of the Corporation, all holders of five percent (5%) or greater of the outstanding Common Stock of the Corporation and all other Stockholders holding Shares enter into similar agreements, and, provided further, that, the Corporation shall, upon request by any Investor, use its reasonable efforts to cause the managing underwriter to agree to permit periodic early releases of the Common Stock held by the Investors that is subject to the foregoing restrictions and, in the event that the managing underwriter permits such early releases, -vii-

the Common Stock held by all Investors is released on a pro rata basis. The Corporation may impose stoptransfer instructions with respect to the securities subject to the foregoing restriction until the end of said period. Each of the Stockholders agrees to sign such agreements or documents reasonably requested by the Corporation and/or the managing underwriters relating to and consistent with the provisions of this Section 4.3. Section 4.3 of the Investor Rights Agreement is hereby amended to read as follows: "Market Stand-Off" Agreement. Each of the Stockholders hereby agrees, severally and not jointly, if requested by the Corporation and an underwriter of Common Stock of the Corporation, not to directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale or other similar hedging transaction), grant any option to purchase or otherwise transfer or dispose of (other than to transferees who agree to be similarly bound) any Common Stock of the Corporation held by such Stockholder (but excluding any shares acquired in or following the Corporation's initial public offering) during the period(s) to be specified by such underwriter following the effective date of the registration statement for the Corporation's Qualified Initial Public Offering (which period may, potentially, exceed one hundred eighty (180) days), provided that, the Stockholder shall not be bound by the provisions of this Section 4.3 unless all officers and directors of the Corporation, all holders of five percent (5%) or greater of the outstanding Common Stock of the Corporation and all other Stockholders holding Shares have entered into or are contractually or legally obligated (under this Section 4.3 or otherwise) to enter into similar agreements, and, provided further, that, the Corporation shall, upon request by any Investor, use its reasonable efforts to cause the managing underwriter to agree to permit periodic early releases of the Common Stock held by the Investors that is subject to the foregoing restrictions and, in the event that the managing underwriter permits such early releases, the Common Stock held by all Investors is released on a pro rata basis. The Corporation may impose stop-transfer instructions with respect to the securities subject to the foregoing restriction until the end of said period(s). Each of the Stockholders agrees to sign such agreements or documents reasonably requested by the Corporation and/or the managing underwriters relating to and consistent with the provisions of this Section 4.3. 2. The definition for "Qualified Initial Public Offering" currently provides as follows: "Qualified Initial Public Offering" shall mean a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act covering the offer and sale of Common Stock in which (i) had an initial public offering price per share of not less than $1.00, subject to equitable adjustment whenever there shall occur a stock dividend, distribution, combination of shares, reclassification or other similar event with respect to the Common Stock) and (ii) resulting in gross proceeds to the Corporation of not less than $5,000,000.00 or alternatively the Corporation receives regulatory approval to have its stock listed for trading on the Toronto Stock Exchange, the TSX Venture Exchange, the New York Stock Exchange, the American Stock -viii-

Exchange, the NASDAQ Stock Market or it receives regulatory approval to have its stock quoted on the National Association of Security Dealers Automated Quotation (NASDAQ) OTC bulletin board. The definition for "Qualified Initial Public Offering" is hereby amended to read as follows: "Qualified Initial Public Offering" shall mean a firm commitment or best efforts underwritten public offering pursuant to an effective registration statement under the Securities Act covering the offer and sale of Common Stock resulting in gross proceeds to the Corporation of not less than $5,000,000.00 or alternatively the Corporation receives regulatory approval to have its stock listed for trading on the Toronto Stock Exchange, the TSX Venture Exchange, the New York Stock Exchange, the American Stock Exchange or the NASDAQ Stock Market or it receives regulatory approval to have its stock quoted on the National Association of Security Dealers Automated Quotation (NASDAQ) OTC bulletin board. 3. The Agreement, except as modified by this Amendment, remains in full force and effect. 4. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment via telephone facsimile transmission will be effective delivery of a manually executed counterpart of this Amendment. 5. This Amendment shall become effective and binding on the Corporation and all Stockholders once executed counterparts to the signature page hereto have been delivered to the Corporation by Stockholders holding 75% or more of the issued Shares, and this Amendment has been executed by the Corporation. -ix-

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed by their duly authorized representative this Amendment as of the date first above written. CORPORATION: GRYPHON GOLD CORPORATION, a Nevada corporation
By: /s/ ALBERT MATTER -----------------------------------Its: Chairman

STOCKHOLDER: Signed: Print Name: -x-

EXHIBIT 10.2 ASSIGNMENT OF BOREALIS MINING LEASE This Assignment ("Assignment") of the Borealis Mining Lease dated January 24, 1997, including all claims, accruements and improvements thereon and all rights, privileges and interests appurtenant thereto, a Memorandum of which is recorded as Entry 115828 in Book 169 at page 489 in the official records of Mineral County, Nevada ("Mining Lease"), is made and entered into as of the 10th day of January, 2005 (the "Effective Date"), by and between GOLDEN PHOENIX MINERAL COMPANY, a Minnesota corporation ("Golden Phoenix"), and BOREALIS MINING COMPANY, a Nevada corporation ("Borealis Mining"). RECITALS Golden Phoenix and Borealis Mining own interests in the Mining Lease; and Golden Phoenix agrees to sell and assign all of its rights, privileges and interest in the Mining Lease to Borealis Mining. AGREEMENT NOW, THEREFORE, for and in consideration of the covenants and agreements hereinafter set forth, the parties agree as follows: 1. Assignment. Golden Phoenix hereby assigns, transfers and conveys to Borealis Mining all of its rights, privileges and interest in the Mining Lease, and Borealis Mining accepts such Mining Lease. 2. Assumption. Borealis Mining hereby affirms, assumes, and agrees to keep and perform all of the covenants and obligations of the original lessee of the Mining Lease. 3. Authority. Each party represents, warrants and covenants to the other that it has the right to enter into and make this Assignment, and the person executing this Assignment on its behalf has full power and authority to do so. 4. Binding Effect. This Assignment shall inure to the benefit of and shall be binding upon the parties hereto and their respective successors and assigns. 5. Choice of Law. This Assignment shall be construed in accordance with the laws of the State of Nevada. 6. Counterparts. This Assignment may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same instrument. Electronic signatures or signatures executed and transmitted via facsimile shall be as effective as original signatures. 1

IN WITNESS WHEREOF, this Consent is executed and delivered as of the Effective Date. GOLDEN PHOENIX MINERALS, INC., a Minnesota corporation
By: /s/ Michael Fitzsimonds -----------------------------------Its: President -----------------------------------

STATE OF NEVADA County of Washoe

) ) ss. )

SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me, the undersigned Notary Public, by Michael Fitzsimonds, the President of Golden Phoenix Minerals, Inc., a Minnesota corporation, this 10th day of January, 2005.
/s/ Shirene J. Urton ---------------------------------------Notary Public My Commission Expires: 1 June 2006 -------------------------------------

BOREALIS MINING COMPANY, a Nevada corporation
By: /s/ Allen S. Gordon -----------------------------------Allen S. Gordon, Its President

STATE OF NEVADA

) ) ss.

County of Washoe ) SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me, the undersigned Notary Public, by ALLEN S. GORDON, the President of Borealis Mining Company, a Nevada corporation, this 10th day of January, 2005.
/s/ Shirene J. Urton ---------------------------------------Notary Public My Commission Expires: 1 June 2006 -------------------------------------

2

EXHIBIT 10.3 AGREEMENT AND CONSENT TO ASSIGNMENT OF BOREALIS MINING LEASE This Agreement and Consent to Assignment ("Consent"), is made and entered into as of the 26 day of January, 2005, by and among RICHARD J. CAVELL TTTEE F/T Richard J. Cavell Trust dated 02/23/1994, HARDROCK MINING COMPANY, a Nevada corporation, and JOHN W. WHITNEY (hereinafter "Lessor"), GOLDEN PHOENIX MINERALS INC., a Minnesota corporation ("Golden Phoenix"), BOREALIS MINING COMPANY, a Nevada corporation ("Borealis Mining") and Gryphon Gold Corporation, a Nevada corporation ("Gryphon Gold"). RECITALS Lessor and J.D. Welsh & Associates, Inc. a Nevada corporation ("Lessee") entered into a Borealis Mining Lease dated January 24, 1997 ("Mining Lease"), a Memorandum of which is recorded as Entry 115828 in Book 169 at page 489 in the official records of Mineral County, Nevada; and Lessee assigned all of Lessee's rights, privileges and interest in the Mining Lease to Newmex Minerals, Inc., a Canadian corporation ("Newmex"). Newmex subsequently assigned all of its rights, privileges and interest in the Mining Lease to Golden Phoenix. Lessor consented to the assignment of the Mining Lease to Golden Phoenix as evidenced by their signatures to a letter dated January 9, 2000; and Golden Phoenix has entered into negotiations with Borealis Mining to sell and assign its rights, privileges and interest in the Mining Lease to Borealis Mining; and Gryphon Gold is the owner of Borealis Mining; and Section 16 of the Mining Lease requires Lessor's consent to any assignment of the Mining Lease. AGREEMENT NOW, THEREFORE, for and in consideration of the covenants and agreements hereinafter set forth, the parties agree as follows: 1. Lessor hereby consents to the assignment to Borealis Mining of the Mining Lease. 2. Lessor further acknowledges its consent to the prior assignments by Lessee and Newmex as described in the recitals. 3. Upon Golden Phoenix's assignment to Borealis Mining of the Mining Lease, Borealis Mining will agree to keep and perform all of the Lessee's covenants and obligations pursuant thereto. 1

4. Gryphon Gold hereby absolutely and unconditionally guarantees to Lessor the full, complete and timely performance of each and all of the terms, agreements, covenants and conditions required to be paid or performed by Borealis Mining pursuant to the Mining Lease (as the Mining Lease may hereinafter be amended, modified or restated). 5. Lessor and Golden Phoenix acknowledge that the Lease is in good standing. 6. Following assignment of the Mining Lease, notice to Borealis Mining shall be addressed to: Borealis Mining Company 1153 Bergen Parkway, Suite M290 Evergreen, CO 80439-9773 Attention: Allen S. Gordon, President Telephone: (303) 679-9819 Facsimile: (303) 679-9589 WITH A COPY TO: Snell & Wilmer L.L.P. Att: Lowell Thomas, Esq. One S. Church Ave., Suite 1500 Tucson, AZ 85701-1630 Telephone: (520) 882-1221 Facsimile: (520) 884-12944 7. This Agreement and Consent shall be construed according to Nevada law and may be executed in any number of counterparts, each of which shall be an original but all of which shall constitute one and the same instrument. 8. The parties agree that if any dispute arises out of or is related to this Agreement and Consent, the courts of Washoe County, Nevada, shall have exclusive jurisdiction for the resolution of any such disputes and the parties hereto submit to the personal jurisdiction of the State of Nevada as to any such disputes. 9. If any party seeks to enforce the terms of this Agreement and Consent, the prevailing party is entitled to recover all of their costs and a reasonable attorney's fee. 10. The parties to this Agreement and Consent agree that Borealis Mining shall record the assignment of Golden Phoenix to Borealis Mining with the County Recorder of Mineral County, and shall provide a copy of the recorded document to Lessor, by providing a copy to Whitney and Whitney. 2

IN WITNESS WHEREOF, this Consent is executed and delivered as of the date first written above. RICHARD J. CAVELL TTTEE F/T Richard J. Cavell Trust dated 02/23/1994
By: /s/ Richard J. Cavell -----------------------------------------Richard J. Cavell

HARDROCK MINING COMPANY, a Nevada corporation
By: /s/ C. Lindsey -----------------------------------------Its: President ----------------------------------

/s/ John W. Whitney --------------------------------------------JOHN W. WHITNEY

GOLDEN PHOENIX MINERALS, INC., a Minnesota corporation
By: /s/ Michael Fitzsimonds -----------------------------------------Its: President ----------------------------------

BOREALIS MINING COMPANY, a Nevada corporation
By: /s/ Allen Gordon -----------------------------------------Allen S. Gordon, Its President

GRYPHON GOLD CORPORATION, a Nevada corporation
By: /s/ Allen Gordon -----------------------------------------Allen S. Gordon, Its President

3

EXHIBIT 10.4 ESCROW AGREEMENT This Escrow Agreement, dated as of January 10, 2005, (the "Escrow Agreement"), is entered into by and among Borealis Mining Company, a Nevada corporation ("Buyer"), Gryphon Gold Corporation, a Nevada corporation ("Guarantor"), and Lawyers Title Agency of Arizona, LLC., an Arizona corporation, as escrow agent (the "Escrow Agent"). RECITALS WHEREAS, Buyer, Guarantor and Golden Phoenix Minerals, Inc., a Minnesota corporation ("Seller"), have entered into a purchase agreement dated January 10, 2005 ("Purchase Agreement") whereby Seller has agreed to sell and assign its interest in certain Property and Buyer has agreed to purchase and accept such Property pursuant to the terms of the Purchase Agreement; WHEREAS, Buyer has agreed to make scheduled payments payable to Seller ("Purchase Price" as defined in the Purchase Agreement) pursuant to the terms of the Purchase Agreement; WHEREAS, Guarantor has agreed to pledge as security certain securities ("Pledged Stock" as defined in the Purchase Agreement) pursuant to the terms of the Purchase Agreement; and WHEREAS, the Escrow Agent has agreed with Buyer and Guarantor to hold the Purchase Price and Pledged Stock in escrow pursuant to the terms and conditions provided in the Purchase Agreement and this Escrow Agreement. AGREEMENT In consideration of the mutual covenants and agreements contained herein, Buyer, Guarantor and Escrow Agent hereby agree as follows: 1. Buyer agrees to deposit the Purchase Price with the Escrow Agent in accordance with the Purchase Agreement and the Purchase Price deposited to the Escrow Agent shall be immediately negotiable (wired) and Escrow Agent shall disburse the Purchase Price in accordance with the terms set out in the Purchase Agreement without any further authorization of the parties. Buyer hereby irrevocably authorizes and directs the Escrow Agent to hold and disburse the Purchase Price pursuant to the terms of the Purchase Agreement and this Escrow Agreement. 2. Guarantor agrees to deposit the Pledged Stock with Escrow Agent in accordance with the Purchase Agreement and Escrow Agent hereby agrees to hold the Pledged Stock in escrow and disburse the Pledged Stock in accordance with the terms set out in the Purchase Agreement without any further authorization of the parties. Guarantor hereby irrevocably authorizes and directs the Escrow Agent to hold and disburse the Pledged Stock pursuant to the terms of the Purchase Agreement and this Escrow Agreement 1

3. Escrow Agent Escrow Agent is not responsible for monitoring the due dates for payment of the Purchase Price as described in the Purchase Agreement. 4. Escrow shall be automatically cancelled on the 366th day following the Closing Date as described in the Purchase Agreement. 5. The Escrow Agent shall have no liability to Buyer or Guarantor, their respective shareholders or any other person with respect to any such suspension of performance or disbursement into court, specifically including any liability or claimed liability that may arise, or be alleged to have arisen, out of or as a result of any delay in the disbursement of funds held in escrow or any delay in or with respect to any other action required or requested of the Escrow Agent. 6. The Escrow Agent may resign from the performance of its duties hereunder at any time by giving ten (10) days' prior written notice to the Buyer and Guarantor. Such resignation shall take effect upon the appointment of a Successor Escrow Agent as provided herein below. Upon any such notice of resignation, the parties hereto jointly shall appoint a Successor Escrow Agent hereunder, which shall be a commercial bank, trust company or other financial institution with a combined capital and surplus in excess of $10,000,000. Upon the acceptance in writing of any appointment as escrow agent hereunder by a Successor Escrow Agent, such Successor Escrow Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Escrow Agent, and the retiring Escrow Agent shall be discharged from its duties and obligations under this Escrow Agreement, but shall not be discharged from any liability for actions taken as Escrow Agent hereunder prior to such succession. After any retiring Escrow Agent's resignation, the provisions of this Escrow Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Escrow Agent under this Escrow Agreement. The retiring Escrow Agent shall transmit all records pertaining to the Escrow Fund and shall pay all funds held by it in escrow to the successor Escrow Agent, after making copies of such records as the retiring Escrow Agent deems advisable and after deduction and payment to the retiring Escrow Agent of all fees and expenses (including court costs and attorneys' fees) payable to or incurred by the retiring Escrow Agent in connection with the performance of its duties and the exercise of its rights hereunder. 7. The Escrow Agent shall have no liability or obligation with respect to the Escrow Fund except for Escrow Agent's willful misconduct or gross negligence. The Escrow Agent's sole responsibility shall be for the safekeeping, and disbursement of the Escrow Fund in accordance with the terms of the Purchase Agreement and this Escrow Agreement. The Escrow Agent shall have no implied duties or obligations and shall not be charged with knowledge or notice of any fact or circumstance not specifically set forth herein. The Escrow Agent may rely upon any instrument, not only as to its due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein, which the Escrow Agent shall in good faith believe to be genuine, to have been signed or presented by the person or parties purporting to sign the same and to conform to the provisions of this Escrow Agreement. In no event shall the Escrow Agent be liable for incidental, indirect, special, consequential or punitive damages. The Escrow Agent shall not be obligated to take any legal action or commence any proceeding in connection with 2

the Escrow Fund, any account in which Escrow Fund are deposited, this Escrow Agreement, or the Purchase Agreement, or to appear in, prosecute or defend any such legal action or proceeding. The Escrow Agent may consult legal counsel selected by it in the event of any dispute or question as to the construction of any of the provisions hereof or of any other agreement or of its duties hereunder, or relating to any dispute involving any party hereto, and shall incur no liability and shall be fully indemnified from any liability whatsoever in acting in accordance with the opinion or instruction of such counsel. Buyer and Guarantor shall each promptly pay, upon demand, 50% of the reasonable fees and expenses of any such counsel. 8. The Escrow Agent is authorized, in its sole discretion, to comply with orders issued or process entered by any court with respect to the Escrow Fund, without determination by the Escrow Agent of such court's jurisdiction in the matter. If any portion of the Escrow Fund is at any time attached, garnished or levied upon under any court order, or in case the payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or enjoined by any court order, or in case any order, judgment or decree shall be made or entered by any court affecting such property or any part thereof, then and in any such event, the Escrow Agent is authorized, in its sole discretion, to rely upon and comply with any such order, writ, judgment or decree which it is advised by legal counsel selected by it is binding upon it without the need for appeal or other action; and if the Escrow Agent complies with any such order, writ, judgment or decree, it shall not be liable to any of the parties hereto or to any other person or entity by reason of such compliance even though such order, writ, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated. 9. From and at all times after the date of this Escrow Agreement, Buyer and Guarantor shall, to the fullest extent permitted by law and to the extent provided herein, indemnify and hold harmless the Escrow Agent and each director, officer, employee, attorney, agent and affiliate of the Escrow Agent (collectively, the "Indemnified Parties") against any and all actions, claims (whether or not valid), losses, damages, liabilities, costs and expenses of any kind or nature whatsoever (including without limitation reasonable attorneys' fees, costs and expenses) incurred by or asserted against any of the Indemnified Parties from and after the date hereof, whether direct, indirect or consequential, as a result of or arising from or in any way relating to any claim, demand, suit, action or proceeding (including any inquiry or investigation) by any person, including without limitation, Seller, Buyer or Guarantor, whether threatened or initiated, asserting a claim for any legal or equitable remedy against any person under any statute or regulation, including, but not limited to, any federal or state securities laws, or under any common law or equitable cause or otherwise, arising from or in connection with the negotiation, preparation, execution, performance or failure of performance of this Escrow Agreement or any transactions contemplated herein, whether or not any such Indemnified Party is a party to any such action, proceeding, suit or the target of any such inquiry or investigation; provided, however, that no Indemnified Party shall have the right to be indemnified hereunder for any liability finally determined by a court of competent jurisdiction, subject to no further appeal, to have resulted solely from the gross negligence or willful misconduct of such Indemnified Party. If any such action or claim shall be brought or asserted against any Indemnified Party, such Indemnified Party shall promptly notify Buyer and Guarantor, in writing, and 3

such parties shall assume the defense thereof, including the employment of counsel and the payment of all expenses. Such Indemnified Party shall, in its sole discretion, have the right to employ separate counsel (who may be selected by such Indemnified Party in its sole discretion) in any such action and to participate in the defense thereof, and the fees and expenses of such counsel shall be paid by such Indemnified Party, except that Buyer and Guarantor each shall be required to pay 50% of such fees and expenses if (a) Buyer and Guarantor agree to pay such fees and expenses, (b) Buyer and Guarantor shall have failed to assume the defense of such action or proceeding or shall have failed, in the reasonable discretion of such Indemnified Party, to employ counsel satisfactory to the Indemnified Party in any such action or proceeding, (c) Buyer and Guarantor is the plaintiff in any such action or proceeding and the Indemnified Party is not a defendant in any such action or proceeding, or (d) the named or potential parties to any such action or proceeding (including any potentially impleaded parties) include both Indemnified Party, Buyer and Guarantor, and Indemnified Party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to Buyer and Guarantor. Buyer and Guarantor shall each be liable to pay 50% of the reasonable fees and expenses of counsel pursuant to the preceding sentence, except that any obligation to pay under clause (a) shall apply only to the party so agreeing. All such fees and expenses payable by Buyer and Guarantor pursuant to the foregoing sentence shall be paid from time to time as incurred. The obligations under this Section 9 shall survive any termination of this Escrow Agreement. 10. The Escrow Agent shall be paid a fee of $2,177.00 as compensation for serving as Escrow Agent and shall be reimbursed for any out-of-pocket expenses incurred by it, which fee and reimbursement shall be payable by Buyer. 11 All notices and other communications hereunder shall be in writing and shall be deemed to have been validly served, given or delivered five (5) days after deposit in the United States mails, by certified mail with return receipt requested and postage prepaid, when delivered personally, one (1) day after delivery to any overnight courier, or when transmitted by facsimile transmission facilities, and addressed to the party to be notified as follows:
If to Buyer: Borealis Mining Company 1153 Bergen Parkway, Suite M290 Evergreen, CO 80439-9773 Attention: Allen Gordon with copies to: Snell & Wilmer LLP One S. Church Avenue, Suite 1500 Tucson, AZ 85701-1630 Facsimile: (520) 884-1294 Attention: Lowell Thomas, Esq. 4

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If to Guarantor: Gryphon Gold Corporation 1153 Bergen Parkway, Suite M290 Evergreen, CO 80439-9773 Attention: Allen Gordon with copies to: Snell & Wilmer LLP One S. Church Avenue, Suite 1500 Tucson, AZ 85701-1630 Facsimile: (520) 884-1294 Attention: Lowell Thomas, Esq. If to the Escrow Agent: Lawyers Title of Arizona, Inc. One S. Church Avenue, Suite 1800 Tucson, AZ 85701 Telephone: (520) 740-0424 Facsimile: (520) 740-0436 Attention: Pam Tighe or Cathy Hansen or to such other address as each party may designate for itself by like notice. 12. Amendment or Waiver. This Escrow Agreement may be changed, waived,

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discharged or terminated only by a writing signed by Buyer, Guarantor and the Escrow Agent. No delay or omission by any party in exercising any right with respect hereto shall operate as a waiver. A waiver on any one occasion shall not be construed as a bar to, or waiver of, any right or remedy on any future occasion. 13. Severability. To the extent any provision of this Escrow Agreement is prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Escrow Agreement. 14. Governing Law. This Escrow Agreement shall be construed and interpreted in accordance with the internal laws of the State of Arizona without giving effect to the conflict of laws principles thereof. 15. Entire Agreement. This Escrow Agreement and the Purchase Agreement constitute the entire agreement between the parties relating to the holding, investment and disbursement of the Escrow Funds and sets forth in their entirety the obligations and duties of the Escrow Agent with respect to the Escrow Funds. 5

16. Binding Effect. All of the terms of this Escrow Agreement, as amended from time to time, shall be binding upon, inure to the benefit of and be enforceable by the respective heirs, successors and assigns of Buyer, Guarantor and the Escrow Agent. 17. Execution in Counterparts. This Escrow Agreement may be executed in two or more counterparts, which when so executed shall constitute one and the same agreement or direction. The parties agree that facsimile signatures attached to this Escrow Agreement shall be valid and binding as an original signature. 18. Enforceability. Any term or provision of this Escrow Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms or provisions of this Escrow Agreement or affecting the validity or enforceability of any of the terms or provisions of this Escrow Agreement in any other jurisdiction. IN WITNESS WHEREOF, the parties have executed and delivered this Escrow Agreement as of the date first above written. BOREALIS MINING COMPANY, a Nevada corporation
By: /s/ Allen S. Gordon ------------------------------------------------Name: Allen S. Gordon Its: President

GRYPHON GOLD CORPORATION, a Nevada corporation
By: /s/ Allen S. Gordon -------------------------------------------------Name: Allen S. Gordon Its: President

LAWYERS TITLE OF ARIZONA, INC., an Arizona corporation By: Name: Title: 6

EXHIBIT 10.5 PURCHASE AGREEMENT This Purchase Agreement ("Agreement") dated as of January 10, 2005, is made
Among SELLER: GOLDEN PHOENIX MINERALS, INC., a Minnesota corporation with an address of 1675 East Paater Way, Suite 102, Sparks, Nevada 89434, ("Golden Phoenix")

And BUYER: BOREALIS MINING COMPANY, a Nevada corporation with an address of 1153 Bergen Parkway, Suite M290, Evergreen, Colorado 80439-9773 ("Borealis Mining")

And GUARANTOR: GRYPHON GOLD CORPORATION, a Nevada corporation with an address of 1153 Bergen Parkway, Suite M290, Evergreen, Colorado 80439-9773 ("Gryphon Gold") The property described on Exhibit A to this Agreement, including all claims, accruements and improvements thereon and all rights, privileges and interests appurtenant thereto (the "Property"). RECITALS A. Property; and C. Golden Phoenix and Borealis Mining own interests in the

PROPERTY:

Golden Phoenix agrees to sell and assign its rights,

privileges and interests in the Property to Borealis Mining on the terms set forth herein and Borealis Mining agrees to purchase and accept such rights, privileges and interests on the terms set forth herein. AGREEMENT OF THE PARTIES In consideration of the mutual promises and covenants set forth in this Agreement, Golden Phoenix agrees to sell and assign and Borealis Mining agrees to purchase and accept Golden Phoenix's rights, privileges and interests in the Property on the terms and conditions set forth in this Agreement. ARTICLE 1 DEFINITIONS 1.1 "Due Diligence Report" shall mean a legal report of UCC claims, liens and legal notices of record prepared by Snell & Wilmer LLP.

1.2 "Earn-In Agreement" shall mean the Earn-In Agreement dated July 21, 2003, by and between Golden Phoenix and Borealis Mining, including all exhibits attached thereto and incorporated therein described in Exhibit A-3 hereto. 1.3 "Escrow Agent" shall mean LandAmerica Lawyers Title of Arizona located at One S. Church Avenue, Suite 1800, Tucson, Arizona. 1.4 "Mining Lease" shall mean that certain Mining Lease dated January 24, 1997, by and between Richard J. Cavell TTTEE F/T Richard J. Cavell Trust dated 02/23/1994, Hardrock Mining Company, a Nevada corporation, and John W. Whitney, as Lessors, and J.D. Welsh & Associates, Inc., a Nevada corporation, as lessee, memorandum of which is recorded as Entry 115828 in Book 169 at page 489 in the official records of Mineral County, Nevada. 1.5 "Property" shall mean the property described on Exhibit A to this Agreement, including all claims, accruements and improvements thereon and all rights, privileges and interests appurtenant thereto. 1.6 "Title Abstract" shall mean the title abstract prepared by a professional title company of recorded documents of record in Mineral County, Nevada relating to Golden Phoenix and J.D. Welsh & Associates, Inc., a Nevada corporation. 1.7 "Title Report" shall mean the title reports prepared by Parr Waddoups dated October 28, 2004, and updated by Roger Gash, a Certified Professional Landman and Nevada Commissioned Abstractor, of unpatented mining claims and unpatented millsite claims that are subject to the Mining Lease. ARTICLE 2 SALE AND ASSIGN 2.1 AGREEMENT TO SELL AND ASSIGN. At the Closing, subject to the terms and conditions of this Agreement, Golden Phoenix will sell and assign and Borealis Mining will purchase and accept all of Golden Phoenix's rights, privileges and interests in and to the Property with effect from the Closing Date. 2.2 PURCHASE PRICE. The purchase price for Golden Phoenix's rights, privileges and interests in the Property shall be the sum of $1,400,000 (the "Purchase Price"). 2.3 PAYMENT SCHEDULE. The Purchase Price shall be payable to Golden Phoenix as follows: (a) $400,000.00 paid at Closing; (b) $250,000.00 payable 91 days following the Closing Date; (c) $250,000.00 payable 182 days following the Closing Date; (d) $250,000.00 payable 273 days following the Closing Date; and -2-

(e) $250,000.00 payable 364 days following the Closing Date. 2.4 PREPAYMENT. All or any portion of the Purchase Price may be paid prior to the time provided in Section 2.3. 2.5 SECURITY. All obligations of Borealis Mining owing to Golden Phoenix as provided herein shall be secured by Gryphon Gold's pledge in escrow of 150,000 shares of voting common stock of Borealis Mining which represents fifteen percent (15%) of the issued and outstanding voting common stock of Borealis Mining (the "Pledged Stock"). Furthermore, Gryphon Gold covenants to guarantee the obligations of Borealis Mining set forth in this Article 2. 2.6 RELEASE OF SECURITY. The Escrow Agent shall release to Gryphon Gold from escrow fifteen (15) shares of the Pledged Stock for every $100.00 of the Purchase Price paid by Borealis Mining in excess of the initial $400,000.00 of the Purchase Price paid at Closing. ARTICLE 3 CLOSING 3.1 CLOSING. The closing of the transactions contemplated herein (the "Closing") shall take place at 10:00 a.m. on or before January 14, 2005 (the "Closing Date"), at the Tucson offices of Snell & Wilmer LLP or such other place as may be agreed in writing by Golden Phoenix and Borealis Mining. 3.2 CONDITION PRECEDENT IN FAVOR OF BOREALIS MINING. The obligations of Borealis Mining under this Agreement shall be subject to the receipt, review and satisfaction of the following reports or the waiver by Borealis Mining, of the following conditions precedent to the Closing, each of which is for the exclusive benefit of Borealis Mining and may be waived by Borealis Mining at any time, in whole or in part, in its sole discretion without prejudice to any other rights that it may have: (a) Due Diligence Report; (b) Title Abstract; and (c) Title Report. 3.3 OPTION TO ACCELERATE CLOSING. Borealis Mining has the option to waive the condition precedent to closing as set forth in Section 3.2 and accelerate the Closing Date. 3.4 IRREVOCABLE DIRECTIONS. Upon execution of this Agreement by Golden Phoenix and Borealis Mining the parties hereto covenant to deliver this Agreement and all exhibits to the Escrow Agent and this Agreement shall thereafter serve as irrevocable directions to the Escrow Agent to act in accordance with the terms contained herein and the parties covenant to deliver to the Escrow Agent those documents and instruments contained in this Article 3 herein and elsewhere as contemplated herein. -3-

3.5 GOLDEN PHOENIX'S CLOSING DELIVERIES. At the Closing, Golden Phoenix shall deliver or cause to be delivered to Borealis Mining the following documents, each duly executed where applicable: (a) Certified copy of resolutions of the Directors of Golden Phoenix authorizing the execution and delivery of this Agreement, the sale and assignment of the Property and all documents required to be executed by Golden Phoenix pursuant hereto; (b) Assignment of Borealis Mining Lease assigning Golden Phoenix's right, title and interest in the Property to Borealis Mining in the form attached hereto as Exhibit B; (c) Consent to Assignment of Borealis Mining Lease consenting to the assignment of Golden Phoenix's right, title and interest in the Property to Borealis Mining in the form attached hereto as Exhibit C; (d) Assignment of Interest in Property assigning Golden Phoenix's rights, privileges and interest in Property, as described by the Assignment, to Borealis Mining in the form attached hereto as Exhibit D; and (e) All bills of sale, assurances, transfers, assignments, consents, and such other agreements, documents and instruments as may be reasonably required by Borealis Mining to complete the transactions provided for in this Agreement. 3.6 BOREALIS MINING CLOSING DELIVERIES. At the Closing, Borealis Mining shall deliver or cause to be delivered to Golden Phoenix the following documents, each duly executed where applicable: (a) Certified copy of resolutions of the Directors of Borealis Mining authorizing the execution and delivery of this Agreement, the purchase and acceptance of the Property and all documents required to be executed by Borealis Mining pursuant hereto; (b) Assignment of Borealis Mining Lease assigning Golden Phoenix's right, title and interest in the Property to Borealis Mining in the form attached hereto as Exhibit B; (c) Consent to Assignment of Borealis Mining Lease consenting to the assignment of Golden Phoenix's right, title and interest in the Property to Borealis Mining in the form attached hereto as Exhibit C; and (d) Assignment of Interest in Property assigning Golden Phoenix's rights, privileges and interest in Property, as described by the Assignment, to Borealis Mining in the form attached hereto as Exhibit D. 3.7 GRYPHON GOLD CLOSING DELIVERIES. At the Closing, Gryphon Gold shall deliver or cause to be delivered to the Escrow Agent the Pledged Stock. -4-

3.8 SOLE POSSESSION AND BENEFIT. On the Closing Date, Golden Phoenix shall deliver or cause to be delivered to Borealis Mining sole possession and benefit of the Property. ARTICLE 4 CONDITIONS OF CLOSING 4.1 CONDITIONS IN FAVOR OF GOLDEN PHOENIX. The obligations of Golden Phoenix under this Agreement shall be subject to the fulfilment, or the waiver by Golden Phoenix, of the following conditions at or prior to the Closing, each of which is for the exclusive benefit of Golden Phoenix and may be waived by Golden Phoenix at any time, in whole or in part, in its sole discretion without prejudice to any other rights that it may have: (a) Borealis Mining shall have performed and completed in all material respects all of the terms and conditions in this Agreement on its part to be performed or complied with at or before Closing and shall have executed and delivered or caused to have been executed and delivered to Golden Phoenix at the Closing all the documents contemplated in Section 3.6 or elsewhere in this Agreement; (b) Gryphon Gold shall have performed and completed in all material respects all of the terms and conditions in this Agreement on its part to be performed or complied with at or before Closing and shall have delivered or caused to have been delivered to the Escrow Agent at the Closing the Pledged Stock contemplated in Section 3.7 or elsewhere in this Agreement; (c) The representations and warranties of Borealis Mining set forth in this Agreement shall have been true and correct in all material respects at and as of the time of execution of this Agreement except as affected by transactions contemplated or permitted by this Agreement and except to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct in all material respects as of such date; (d) All necessary consents and approvals to the transfer of Golden Phoenix's interest in the Property shall have been received; and (e) No action or proceeding shall be pending or shall have been instituted by any Person to set aside or prohibit in any way the transactions contemplated by this Agreement. 4.2 CONDITIONS IN FAVOR OF BOREALIS MINING. The obligations of Borealis Mining under this Agreement shall be subject to the fulfilment, or the waiver by Borealis Mining, of the following conditions at or prior to the Closing, each of which is for the exclusive benefit of Borealis Mining and may be waived by Borealis Mining at any time, in whole or in part, in its sole discretion without prejudice to any other rights that it may have: (a) Golden Phoenix shall have performed and completed in all material respects all of the terms and conditions in this Agreement on its part to be performed or complied with at or before Closing and shall have executed and delivered or -5-

caused to have been executed and delivered to Borealis Mining at the Closing all the documents contemplated in Section 3.5 or elsewhere in this Agreement; (b) The representations and warranties of Golden Phoenix set forth in this Agreement shall have been true and correct in all material respects at and as of the time of execution of this Agreement except as affected by transactions contemplated or permitted by this Agreement and except to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct in all material respects as of such date; (c) All necessary consents and approvals to the assignment of the Property shall have been received at or before the Closing; and (d) No action or proceeding shall be pending or shall have been instituted by any Person to set aside or prohibit in any way the transactions contemplated by this Agreement. ARTICLE 5 REPRESENTATIONS, WARRANTIES AND COVENANTS 5.1 NEGATIVE COVENANT OF GRYPHON GOLD. Gryphon Gold covenants and agrees that as long as any amount owing to Golden Phoenix is outstanding under this Agreement, Gryphon Gold shall not, without the prior written consent of Golden Phoenix and each of its assignees, which consent may be withheld for any reason assign or permit to be assigned all or any part of the unreleased Pledged Stock except in accordance with this Agreement. 5.2 POSITIVE COVENANT OF BOREALIS MINING. Borealis Mining covenants and agrees that as long as any amount or obligation remains outstanding under this Agreement that it will pay all escrow costs that may arise in connection with this Agreement. 5.3 POSITIVE COVENANT OF GOLDEN PHOENIX. Golden Phoenix covenants and agrees in good faith to cooperate with the perfecting of any right, claim, title or interest relating to the Property including, but not limited to, the execution of additional documents requested by Borealis Mining as may be necessary or appropriate to perfect such right, claim, title or interest. 5.4 REPRESENTATIONS AND WARRANTIES OF BOREALIS MINING. As a material inducement to Golden Phoenix to enter into and complete this Agreement and the transactions contemplated by this Agreement and, acknowledging that Golden Phoenix is entering into this Agreement in reliance upon the representations and warranties of Borealis Mining herein, Borealis Mining represents and warrants to Golden Phoenix as follows: (a) Borealis Mining is a duly incorporated corporation under the laws of the State of Nevada and has the necessary power and authority to own the Property; (b) Borealis Mining has the power, authority and capacity to enter into this Agreement and all other agreements and instruments to be executed pursuant to this Agreement and to carry out its obligations under this Agreement; -6-

(c) The execution and delivery of this Agreement and such other agreements and instruments and the completion of the transactions contemplated by this Agreement have been duly authorized by all necessary action on the part of Borealis Mining and its directors; (d) This Agreement constitutes a valid and binding obligation of Borealis Mining enforceable against Borealis Mining in accordance with its terms; and (e) To the knowledge of Borealis Mining, there are no material claims, actions, proceedings, suits, investigations or reviews pending or commenced in respect of the Property or Borealis Mining. 5.5 REPRESENTATIONS AND WARRANTIES OF GOLDEN PHOENIX. As a material inducement to Borealis Mining to enter into and complete this Agreement and the transactions contemplated by this Agreement and, acknowledging that Borealis Mining is entering into this Agreement in reliance upon the representations and warranties of Golden Phoenix herein, Golden Phoenix represents and warrants to Borealis Mining as follows: (a) Golden Phoenix has good and marketable title to its interest in the Property, subject only to all matters of record as evidenced by the redacted Title Report and the Title Abstract provided to Golden Phoenix by Borealis Mining. Other than this Agreement there is no agreement, option or other right or privilege outstanding in favor of any person for the purchase from Golden Phoenix of any right, privilege or interest in the Property; (b) Golden Phoenix is a duly incorporated corporation under the laws of the State of Minnesota and has the necessary power and authority to own the Property; (c) Golden Phoenix has the power, authority and capacity to enter into this Agreement and all other agreements and instruments to be executed pursuant to this Agreement and to carry out its obligations under this Agreement; (d) The execution and delivery of this Agreement and such other agreements and instruments and the completion of the transactions contemplated by this Agreement have been duly authorized by all necessary action on the part of Golden Phoenix and its directors; (e) This Agreement constitutes a valid and binding obligation of Golden Phoenix enforceable against Golden Phoenix in accordance with its terms; (f) To the knowledge of Golden Phoenix, there are no material claims, actions, proceedings, suits, investigations or reviews pending or commenced in respect of the Property or Golden Phoenix; -7-

(g) to the best of the Golden Phoenix's knowledge, unless previously disclosed to Borealis Mining: (i) the Property and its existing and prior uses comply and have at all times complied with, and Golden Phoenix is not in violation of, and has not violated, in connection with the ownership, use, maintenance or operation of the Property, any applicable federal, state, municipal or local laws, regulations, orders or approvals relating to its operations on the Property and environmental or similar matters; (ii) has operated the Property and has at all times received, handled, used, stored, treated, shipped and disposed of all environmental or similar contaminants in strict compliance with all applicable environmental, health or safety laws, regulations, orders or approvals, and (iii) there are no orders or directions relating to environmental or similar matters requiring any work, repairs, construction or capital expenditures with respect to the Property and the conduct of the business related thereto, nor has Golden Phoenix received any notice of such; (iv) no hazardous or toxic materials, substances, pollutants, contaminants or wastes have been released into the environment, or deposited, discharged, placed or disposed of at, on or near the Property as a result of Golden Phoenix's operations carried out on the Property, nor have any of the above occurred nor has the Property been used at any time by any person as a person as a landfill or waste disposal site; (v) no notices of any violation or apparent violation of any of the matters referred to in this subparagraph (g) relating to the Property or its use have been received by Golden Phoenix, and (vi) there are no writs, injunctions, orders or judgments outstanding, no law suits, claims proceedings or investigations pending or threatened, relating to the use, maintenance or operation of the Property, whether related to environmental or similar matters, or otherwise, nor is there any basis for such law suits, claims, proceedings or investigations being instituted or filed; (h) Golden Phoenix is solvent, as defined by law, and, to the best of its knowledge, no proceedings are pending for and Golden Phoenix is unaware of any basis for the institution of any proceedings placing Golden Phoenix into bankruptcy or subject to any other laws governing the affairs of insolvent persons. 5.6 INDEMNITY. Each party to this Agreement agrees to indemnify each other party and hold it harmless for, from and against all claims, damages, costs and expenses (including reasonable attorneys' fees) attributable, directly or indirectly, to the breach by such indemnifying party of any obligation hereunder or the inaccuracy of any representation or warranty made by -8-

such indemnifying party herein or in any instrument delivered pursuant hereto or in connection with the transactions contemplated hereby. ARTICLE 6 GENERAL PROVISIONS 6.1 BINDING EFFECT. This Agreement is binding upon and shall inure to the benefit of the parties and their respective heirs, personal representatives, administrators, successors and assigns. 6.2 ATTORNEYS' FEES. If any action is brought by either party in respect to its rights under this Agreement, the substantially prevailing party shall be entitled to reasonable attorneys' fees and court costs as determined by the court. 6.3 WAIVERS. No waiver of any of the provisions of this Agreement shall constitute a waiver of any other provision, whether or not similar, nor shall any waiver be a continuing waiver. Except as expressly provided in this Agreement, no waiver shall be binding unless executed in writing by the party making the waiver. Either party may waive any provision of this Agreement intended for its benefit; provided, however, such waiver shall in no way excuse the other party from the performance of any of its other obligations under this Agreement. 6.4 CONSTRUCTION. This Agreement shall be construed according to Nevada law. References in this Agreement to "Articles" and "Sections" are to the Articles and Sections of this Agreement, unless otherwise noted. 6.5 TIME. Time is of the essence of this Agreement. 6.6 NOTICES. Notices shall be in writing and shall be given by personal delivery to a responsible person, by deposit in the United States mail, certified mail, return receipt requested, postage prepaid, by express delivery service, freight prepaid or by facsimile. Notices shall be delivered or addressed to the parties at the addresses or facsimile numbers set forth on the first page of this Agreement or at such other address or facsimile number as a party may designate in writing. The date notice is deemed to have been given, received and become effective shall be the date on which the notice is delivered, if notice is given by personal delivery, or five (5) days following the date of deposit in the mail or with an express delivery service, if the notice is sent through the United States mail or by express delivery service or on the date of receipt if the notice is sent via facsimile. 6.7 NOTICE TO COUNSEL. Notices to Borealis Mining and/or Gryphon Gold, as provided in Section 6.6, shall include a copy to: Snell & Wilmer L.L.P. Att: Lowell Thomas, Esq. One S. Church Ave., Suite 1500 Tucson, AZ 85701-1630 Telephone: (520) 882-1221 Facsimile: (520) 884-1294 -9-

6.8 FURTHER DOCUMENTATION. Each party agrees in good faith to execute such further or additional documents as may be necessary or appropriate to fully carry out the intent and purpose of this Agreement. 6.9 TIME PERIODS. Except as expressly provided for herein, the time for performance of any obligation or taking any action under this Agreement shall be deemed to expire at 6:00 p.m. (Reno, Nevada time) on the last day of the applicable time period provided for herein. If the time for the performance of any obligation or taking any action under this Agreement expires on a Saturday, Sunday or legal holiday, the time for performance or taking such action shall be extended to the next succeeding day which is not a Saturday, Sunday or legal holiday. 6.10 HEADINGS AND COUNTERPARTS. The headings of this Agreement are for purposes of reference only and shall not limit or define the meaning of any provision of this Agreement. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which shall constitute one and the same instrument. 6.11 LEGAL COUNSEL. Each party has had an opportunity to consult with legal counsel regarding this Agreement. Each party has been fully, separately, and independently appraised and advised of their respective legal rights, remedies, privileges and obligations arising out of this Agreement. 6.12 CONFIDENTIALITY. Any press releases or other documents prepared for public dissemination relating to the transactions contemplated herein shall not be disseminated until both Golden Phoenix and Borealis Mining have provided consent to the contents thereof, such consent not to be unreasonably withheld. Upon completion of the transactions contemplated herein, Golden Phoenix shall keep confidential all information it has relating to the Property except that which is otherwise in the public domain or unless Golden Phoenix is compelled to disclose by virtue of law. 6.13 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter contained in this Agreement. All prior and contemporaneous agreements, representations and understandings of the parties, oral or written, are superseded by and merged in this Agreement. No supplement, modification or amendment of this Agreement shall be binding unless in writing and executed by Golden Phoenix, Borealis Mining and Gryphon Gold. The remainder of this page is left intentionally blank.

Signature page to follow. - 10 -

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. GOLDEN PHOENIX MINERALS, INC., a Minnesota corporation
/s/ Michael Fitzsimonds -----------------------------Name: Michael Fitzsimonds -----------------------------Its: President -----------------------------By:

BOREALIS MINING COMPANY, a Nevada corporation
By: /s/ Allen Gordon -----------------------------Name: Allen S. Gordon Its: President

GRYPHON GOLD CORPORATION, a Nevada corporation
/s/ Allen Gordon -----------------------------Name: Allen Gordon -----------------------------Its: President -----------------------------By:

- 11 -

EXHIBIT A PROPERTY DESCRIPTION The Property shall include all rights, privileges and interests in the following: 1. The Acknowledgement of Assignment as described in Exhibit A-1 hereto. 2. The Area of Interest as described in Exhibit A-2 hereto and subject to the terms of Article IX of the Earn-In Agreement. 3. The Earn-In Agreement as described in Exhibit A-3 hereto. 4. The Borealis Mining Lease as described in Exhibit A-4 hereto. 5. The Borealis Claims as described in Exhibit A-5 hereto. 6. All documentation, photos, reports, diagrams, samples, tools, files, containers, fixtures and/or furnishings relating to the Property or its operations, in the possession of Golden Phoenix and/or its advisors, including, but not limited to, engineering reports and files, technical reports and files, contract files, land files, recordings, maps and core drill samples, reverse circulation drill samples, rotary drill samples, shelves to hold samples, portable steel shipping containers and such. - 12 -

EXHIBIT A-1 ACKNOWLEDGEMENT OF ASSIGNMENT That certain Acknowledgement of Assignment dated January 9, 2000, by Richard J. Cavell TTTEE F/T Richard J. Cavell Trust dated 02/23/1994, Hardrock Mining Company, a Nevada corporation, and John W. Whitney, as Lessors, concurring to the assignment of the Borealis Mining Lease by J.D. Welsh & Associates, Inc., a Nevada corporation, to Golden Phoenix as described in Exhibit A-1 hereto a copy of which is attached hereto. - 13 -

EXHIBIT A-2 AREA OF INTEREST The Area of Interest is the same as the Borealis Project Area as described in Exhibit III of the Borealis Mining Lease, a copy of which is attached hereto. - 14 -

EXHIBIT A-3 EARN-IN AGREEMENT That certain Earn-In Agreement dated July 21, 2003, by and between Golden Phoenix and Borealis Mining, a copy of which is attached hereto. - 15 -

EXHIBIT A-4 BOREALIS MINING LEASE That certain Mining Lease dated January 24, 1997, by and between Richard J. Cavell TTTEE F/T Richard J. Cavell Trust dated 02/23/1994, Hardrock Mining Company, a Nevada corporation, and John W. Whitney, as Lessors, and J.D. Welsh & Associates, Inc., a Nevada corporation, as lessee, memorandum of which is recorded as Entry 115828 in Book 169 at page 489 in the official records of Mineral County, Nevada, a copy of which is attached hereto, subject to the Acknowledgement of Assignment by the Lessors, as described in Exhibit A-1. - 16 -

EXHIBIT A-5 BOREALIS CLAIMS The claims described on the following pages attached hereto. - 17 -

EXHIBIT B ASSIGNMENT OF BOREALIS MINING LEASE That Assignment of Borealis Mining Lease in the form attached hereto. - 18 -

EXHIBIT C CONSENT TO ASSIGNMENT OF LEASE That Consent to Assignment of Lease in the form attached hereto. - 19 -

EXHIBIT D ASSIGNMENT OF INTEREST IN PROPERTY That Assignment of Interest in Property in the form attached hereto. - 20 -

FIRST AMENDMENT TO PURCHASE AGREEMENT This First Amendment to Purchase Agreement ("First Amendment") is made by and among Golden Phoenix Minerals, Inc., a Minnesota corporation ("Golden Phoenix"), Borealis Mining Company, a Nevada corporation ("Borealis Mining"), and Gryphon Gold Corporation, a Nevada corporation ("Gryphon Gold") as of January 13, 2005. This Amendment shall amend, supplement and modify that certain purchase agreement among Golden Phoenix, Borealis Mining and Gryphon Gold dated January 10, 2005 (the "Purchase Agreement"). In the event of any conflict between this First Amendment and the Purchase Agreement, this First Amendment shall control. RECITALS A. Golden Phoenix and Borealis Mining entered into the Purchase Agreement for the purchase of that certain property more specifically described in Exhibit A of the Purchase Agreement (the "Property"); and B. Pursuant to the terms of the Purchase Agreement, the closing of the transaction (the "Closing") shall take place at 10:00 a.m. on or before January 18, 2005 (the Closing Date"), at the Tucson offices of Snell & Wilmer LLP; and C. A condition to Closing of Golden Phoenix and Borealis Mining is the delivery of a Consent to Assignment of the Borealis Mining Lease (the "Consent") whereby the owner/lessor of the Property shall consent to the assignment of Golden Phoenix's interest in the Property; and D. The parties have yet to obtain the Consent; and E. Golden Phoenix, Borealis Mining and Gryphon Gold now wish to extend the Closing Date and to amend the Purchase Agreement to reflect such extension to allow the parties to obtain the Consent. AGREEMENT OF THE PARTIES In consideration of the foregoing recitals, which are incorporated herein by this reference, and for other consideration, the receipt of which is hereby acknowledged, the parties hereto hereby amend the Purchase Agreement, and agree, as follows: 1. Extension of Closing Date. The Closing Date, as defined in the Purchase Agreement, is hereby extended to 10:00 a.m. on January 31, 2005, at the Tucson offices of Snell & Wilmer LLP, or such earlier date that the parties obtain a signed original of the Consent signed by the owner/lessor of the Property. 2. Defined Terms. Any capitalized terms herein shall have the meanings, if any, ascribed in the Purchase Agreement.

3. Purchase Agreement in Full Force. Except as provided herein, all original terms and provisions of the Purchase Agreement remain in full force and effect. 4. Counterparts. This Amendment may be executed in counterparts, including by facsimile, with each counterpart being deemed an original. IN WITNESS WHEREOF, this First Amendment is executed by the parties hereto as of date first set forth above. GOLDEN PHOENIX MINERALS, INC., a Minnesota corporation
By: /S/ Michael Fitzsimonds --------------------------------Name: Michael Fitzsimonds Its: President

BOREALIS MINING COMPANY, a Nevada corporation
By: /s/ Allen Gordon --------------------------------Name: Allen S. Gordon Its: President

GRYPHON GOLD CORPORATION, a Nevada corporation
By: /s/ Allen Gordon --------------------------------Name: Allen S. Gordon Its: President

2

EXHIBIT 10.6 AGREEMENT BETWEEN GOLDEN PHOENIX MINERALS, INC. AND BOREALIS MINING COMPANY (BOREALIS PROPERTY, MINERAL COUNTY, NEVADA) THIS AGREEMENT, dated as of July 21, 2003 ("EFFECTIVE DATE"), is between GOLDEN PHOENIX MINERALS, INC., a Minnesota corporation (hereinafter referred to as "GOLDEN PHOENIX"), and BOREALIS MINING COMPANY, a Nevada corporation (hereinafter referred to as "BOREALIS") which is a wholly-owned subsidiary of Gryphon Gold Corporation, a Nevada corporation. FOR AND IN CONSIDERATION OF the payment by Borealis to Golden Phoenix of US$125,000.00, the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: ARTICLE I DEFINITIONS 1.1 Definitions. The following definitions shall apply in this Agreement: (a) "AREA OF INTEREST" means the area described in Exhibit A hereto. (b) "CLAIMS" means the GP Claims and the Leased Claims. (c) "LEASE" means the Mining Lease described in Exhibit B hereto, under which Golden Phoenix is the current and only lessee. (d) "GP CLAIMS" means the unpatented lode mining claims owned by Golden Phoenix described in Exhibit C hereto. (e) "LEASED CLAIMS" means the unpatented mining claims that are subject to the Lease, which claims are described in Exhibit D hereto. (f) "MINING VENTURE AGREEMENT" means the Mining Venture Agreement attached as Exhibit E hereto, which is patterned after the Rocky Mountain Mineral Law Foundation's Exploration, Development and Mine Operating Agreement Model Form 5A. (g) "PROPERTIES" means the Claims, the Lease and any properties in the Area of Interest that become subject to this Agreement.

ARTICLE II GRANT 2.1 Grant. Subject to the terms and conditions of this Agreement, Golden Phoenix hereby grants to Borealis the right to acquire up to an undivided seventy percent (70%) interest in the Properties. 2.2 Permitted Uses and Activities. Subject to the paramount title of the United States in the Claims and applicable federal and state laws and regulations, and subject to the Lease and the terms of this Agreement, Borealis shall have the exclusive right during the term of this Agreement to enter upon the Properties and to explore for, prospect for, develop and produce any and all metals, ores, minerals, mineral substances and materials of all kinds which may be found in, upon, under or within the Properties. Borealis's rights in this regard include, but are not limited to, the following: (a) to construct roads and other improvements upon the surface of the Properties for use by Borealis's personnel and equipment; (b) to locate upon the Properties such structures and improvements as may be required to house Borealis's equipment, supplies and personnel; (c) to conduct exploration upon the Properties by whatever methods and to whatever extent Borealis deems advisable in its sole discretion and to remove from the Properties samples of any and all mineral substances found therein; (d) to conduct exploration, geological, geophysical and geochemical evaluation and testing and assaying of the Properties; (e) to construct facilities and improvements for the development of the Properties and for the production of mineral substances found within the Properties; (f) to develop and produce mineral substances found within the Properties; (g) to use, to the extent necessary or convenient to the exercise of any or all of the rights granted to Borealis herein, any surface and underground water and water rights now existing or subsequently discovered or developed in or upon or appurtenant to the Properties and to use all reciprocal rights which any of the Properties may have with respect to other properties in the area; (h) to use all easements and rights-of-way on or appurtenant to the Properties in the exercise of rights granted to Borealis hereunder; (i) to do all things which are incidental to or which may be useful, desirable or convenient in Borealis's exercise of any or all of the rights granted to Borealis hereunder. -2-

2.3 Operational Authority. Golden Phoenix also grants to Borealis all authority and rights necessary or incident to or for the enjoyment of the rights granted to Borealis by this Agreement, including without limitation authority to apply for all permits, licenses and other approvals deemed necessary or appropriate by Borealis in connection with the conduct of the activities contemplated herein. ARTICLE III GOLDEN PHOENIX'S REPRESENTATIONS AND WARRANTIES; TITLE MATTERS 3.1 Representations and Warranties. Golden Phoenix represents and warrants as follows: (a) Golden Phoenix has full power and authority to enter into this Agreement and to perform the transactions contemplated hereby. This Agreement and the provisions hereof constitute legal and binding obligations of Golden Phoenix enforceable in accordance with their terms. Neither the execution and delivery of this Agreement nor compliance by Golden Phoenix with any of the provisions hereof will conflict with or result in a breach of or default under any of the terms, conditions or provisions of any agreement or instrument to which Golden Phoenix is a party or of any law or governmental or administrative regulation or restriction applicable to it. (b) The interests of Golden Phoenix in the Claims and the Lease, and potentially in other lands included in the Area of Interest, are not subject to any preferential right to purchase, right of first refusal, area of interest provision, or the like, pursuant to which any other person or entity has any rights to acquire an interest therein that is or will be violated or contravened by the terms of this Agreement or the performance thereof. (c) There are no consents under the terms of the Lease, other than consents that have been obtained in writing by Golden Phoenix and provided to Borealis, that are required with respect to the grant of rights or the conveyance of an interest to Borealis as provided herein. (d) There are no actions, suits, claims, proceedings, litigation or investigations pending or, to the best of Golden Phoenix's knowledge, threatened at law or in equity, or in arbitration, or before or by any federal, state, municipal or other governmental instrumentality which relate to this Agreement, or the Lease or any of the Claims, or which could, if continued, adversely affect Golden Phoenix's ability to fulfill the obligations undertaken hereby or Borealis's ability to explore or develop the Claims and the Lease. Golden Phoenix knows of no requirements of federal, state or local law particular to the Claims or the Lease that could materially and adversely affect Borealis's ability to explore or develop the Claims or the Lease. (e) The Lease is valid, in good standing with all previously due payments made, and enforceable in accordance with its terms. There has been no act or omission by Golden Phoenix -3-

which could result by notice or lapse of time in the breach, termination, abandonment, forfeiture, relinquishment or other premature termination of the rights of Golden Phoenix in the Lease. (f) To the best of Golden Phoenix's knowledge, the lessors under the Lease hold good and marketable possessory title to the Leased Claims, subject to paramount title of the United States, free and clear of all defects, liens or encumbrances. To the best of Golden Phoenix's knowledge, the Leased Claims have been properly located and maintained in compliance with applicable state and federal laws. There are no liens or encumbrances relating to the Leased Claims arising by, through or under Golden Phoenix. (g) Golden Phoenix has good and marketable possessory title to the GP Claims, subject to the paramount title of the United States. The GP Claims have been properly located and maintained in compliance with applicable state and federal laws. There are no liens or encumbrances relating to the GP Claims. (h) Golden Phoenix has good and marketable title to the leasehold interest in the Lease as the sole lessee, free from any defects, liens or encumbrances arising by, through or under Golden Phoenix. Golden Phoenix has no knowledge of any claims that conflict with the Claims or of any lands covered by the Claims that are or were not open to location. (i) There are no royalties, fees or monies payable or required to be paid to persons having an interest in the Claims or in the Lease except for the lessors under the Lease. (j) Golden Phoenix has delivered to Borealis all information concerning title to the Properties in Golden Phoenix's possession or control, including, but not limited to, true and correct copies of the Lease and any other contracts relating to the Properties of which Golden Phoenix has knowledge. (k) As of the Effective Date, there are no existing permits or approvals in effect relating to operations and activities on the Properties from any governmental or regulatory entity. (l) Except as set forth on Schedule 3.1(l), attached hereto and made a part hereof, Golden Phoenix has no knowledge or information indicating that: (i) hazardous substances from any source (mining or otherwise) have been released on the Properties; or (ii) any underground or above-ground site of historic or current mining operations on the Properties could cause or constitute a release or threat of release of hazardous substances into the environment, subject, however, to the parties' acknowledgment that prior mining operations have occurred on the Properties and that certain facilities, more particularly described in Exhibit F hereto, still exist on the Properties as a consequence of such operations; or (iii) any part of the Properties has been included or proposed for inclusion on the National Priorities List (40 C.F.R. Section 300 App. B); or -4-

(iv) any part of the Properties has been studied or proposed for study by the Environmental Protection Agency and/or any state regulatory agency; or (v) any site of historic or current mining, milling and/or smelting workings on the Properties is presently in such condition as to potentially raise liability to the past, present or future owner(s) and/or operator(s) of the Properties pursuant to the Comprehensive Environmental Response, Compensation and Liability Act and amending statutes ("CERCLA"); or (vi) any reclamation or cleanup obligations for prior operations on the Properties are unsatisfied. 3.2 Cure of Defects. Borealis, without waiver of any rights or remedies, may at its option, take any action necessary to cure any defects in the title to the Properties without the prior written consent of Golden Phoenix; provided, however, that any such action shall be subject to such restrictions and requirements as exist under the Lease. Golden Phoenix agrees to cooperate with Borealis in any such actions taken and to execute all documents and to take such other action as may be reasonably necessary to assist Borealis but shall not have any obligation to incur costs in so doing. Borealis may charge all reasonable costs and expenses (including attorneys' fees) incurred by Borealis in curing any defect in title to the Properties as Expenditures pursuant to Article IV below. If the United States or any third person attacks the validity of any of the unpatented mining claims included in the Properties, Borealis may, at its option, choose to defend their validity, and in such event Borealis may charge all reasonable costs and expenses (including attorneys' fees) incurred by Borealis in defending the validity of such claims as Expenditures pursuant to Article IV below. Golden Phoenix agrees to give Borealis notice promptly of any such problems as to which it has knowledge. 3.3 Incomplete Title. If Golden Phoenix's title is less than the full undivided title to the Claims and the Lease, Borealis shall have, in addition to such other rights and remedies as it may have, the right to elect to accept such lesser title by giving written notice of such election to Golden Phoenix, in which event all Expenditure requirements set forth in Article IV hereunder shall be reduced to the same proportions thereof as the undivided title actually owned by Golden Phoenix bears to the undivided title warranted herein. If Golden Phoenix's title is less than the full undivided title to some, but not all, of the Claims and the Lease, then the Expenditure requirements shall be reduced on a proportionate acreage basis. ARTICLE IV EXPLORATION AND DEVELOPMENT PROGRAM 4.1 Definition of Expenditures. "EXPENDITURES" referred to herein shall include the following: -5-

(a) all direct costs incurred by Borealis incident to carrying out activities permitted in Article II or elsewhere herein, on or in connection with the Properties, including, but not limited to, expenditures for wages, salaries, equipment, supplies, traveling expenses, legal expenses, photography, geologic mapping and sampling, assays, maintenance of field offices, drilling, trenching, sampling, assaying, conducting geophysical or geochemical surveys, permitting, road building, engineering, planning, financing (and arranging for the same) if such financing is for the benefit of both parties, construction of mining and processing facilities, equipment and parts, exploration, development, mining and processing, project administration, reclamation, payments made to Golden Phoenix pursuant to this Agreement and pursuant to a preceding Agreement in Principle, and property acquisition and maintenance. Property acquisition costs shall include without limitation payments to owners of properties in the Area of Interest that become Properties, payments for other property rights necessary to conduct operations on the Properties, related costs of negotiating, preparing, and completing agreements to acquire property rights or agreements needed to conduct operations thereon, and costs of locating, relocating, amending, or converting claims. Property maintenance costs shall include without limitation all expenditures incurred to preserve the Properties and agreements related to the conduct of operations thereon in good standing, specifically including the performance of assessment work, the payment of claim maintenance fees and the satisfaction of payment and other obligations to the lessors under the Lease or other leases or other agreements affecting the Properties or the conduct of operations thereon. (b) Expenditures shall also include (a) a payroll burden amounting to 22.5% of gross payroll costs to allow for workmens' compensation and unemployment insurance, pensions and other employee benefits and fringe benefits, and (b) an overhead burden amounting to 10% of direct costs (excluding gross payroll costs and work done by independent contractors) to allow for administration, purchasing, accounting, engineering, legal and other services performed for the project and not directly allocated. 4.2 Work Programs. During the term of this Agreement an annual work program will be formulated by a joint development committee comprised of representatives from Borealis and Golden Phoenix. The work programs shall last for one year and shall begin and end on the anniversary of the Effective Date. Borealis will carry out the work programs and provide its own personnel or contractors to do so, but Borealis shall have reasonable access to Golden Phoenix personnel when their expertise would facilitate completion of the work program, on a fully reimbursed basis to Golden Phoenix for the hourly cost of those personnel at normal commercial rates, which costs shall qualify as Expenditures hereunder. Unless the parties agree otherwise, the initial work program will commence on the Effective Date and will focus initially on completing the following activities: evaluation and if deemed appropriate production of the old leach pads (phase 1), further evaluation and if deemed appropriate production of the remaining oxide ores in the district (phase 2), and evaluation and if deemed appropriate production of the deeper, high-grade sulfide mineralization found in numerous areas of the Properties (phase 3). 4.3 Operations. During the term of this Agreement, Borealis shall be solely responsible for conducting the work programs and shall have complete and exclusive control, charge, -6-

supervision and management of all work program activities on or for the benefit of the Properties and of any and all equipment, supplies, machinery or other assets purchased or otherwise acquired for or in connection with such activities. 4.4 Expenditure Requirements for 50% Interest. In order to earn an initial undivided fifty percent (50.0%) right, title and interest in and to the Properties, Borealis must incur a total of five million dollars (US$5,000,000.00) in Expenditures as follows: (a) by expending US$800,000.00 in Expenditures within twelve months from the Effective Date of this Agreement, or by alternatively paying to Golden Phoenix an amount equal to the difference between the Expenditures incurred by Borealis and US$800,000.00; (b) by expending an additional US$1,000,000.00 in Expenditures within twenty-four months from the Effective Date of this Agreement, or by alternatively paying to Golden Phoenix an amount equal to the difference between the Expenditures incurred by Borealis and US$1,800,000.00; (c) by expending an additional US$1,500,000.00 in Expenditures within thirty-six months from the Effective Date of this Agreement, or by alternatively paying to Golden Phoenix an amount equal to the difference between the Expenditures incurred by Borealis and US$3,300,000.00; and (d) by expending an additional US$1,700,000.00 in Expenditures within forty-eight months from the Effective Date of this Agreement, or by alternatively paying to Golden Phoenix an amount equal to the difference between the Expenditures incurred by Borealis and US$5,000,000.00. 4.5 Declining Differential Payments; Carryover of Expenditures. With regard to all differential payments referenced in Section 4.4 above, Golden Phoenix shall have the right to decline payment and instead require Borealis to expend that amount in Expenditures during the next 12 month period (in addition to Expenditures otherwise required during that 12 month period). Any Expenditures in excess of the amounts set forth above will be credited toward the next phase of required Expenditures. 4.6 Expenditures Not Mandatory. The parties agree that Borealis can terminate this Agreement prior to incurring the Expenditures necessary to acquire a 50% interest in the Properties, and thus is not obligated to actually expend any particular amount of Expenditures; however, Borealis shall not earn a 50% interest in the Properties unless it does in fact timely make the Expenditures set forth in Section 4.4 above. 4.7 Vesting of Title to 50% Interest. At such time as Borealis has incurred US$5,000,000.00 in Expenditures as herein provided, Borealis's right to receive a 50% undivided interest pursuant to Section 4.4 shall vest. Borealis will give written notice to Golden Phoenix when its interest has vested (but failure or delay of Borealis to give such notice shall not be a condition to vesting or to any other rights of Borealis hereunder). Golden Phoenix shall, within 15 days after -7-

receiving notice from Borealis that its 50% interest has vested, assign to Borealis an undivided 50% right, title and interest in and to the Properties free of any defects, liens or encumbrances arising by or through Golden Phoenix (the "50% ASSIGNMENT"). 4.8 Release Upon Prior Termination. If this Agreement is terminated prior to Borealis's becoming vested with a 50% interest in the Properties as provided in Section 4.7, Borealis shall execute and deliver to Golden Phoenix a recordable release relinquishing to Golden Phoenix all of Borealis's interest in the Properties free of any defects, liens or encumbrances arising by or through Borealis. 4.9 Option to Acquire Additional 20% Interest. If Borealis earns a 50% interest as provided herein, then Borealis shall have the exclusive and irrevocable option (the "ADDITIONAL INTEREST OPTION") to earn an additional undivided 20% right, title and interest in and to the Properties by delivering to Golden Phoenix a feasibility study analyzing a specific portion the Properties, or alternatively by incurring an additional US$4,000,000.00 in Expenditures on the Properties (or by paying to Golden Phoenix the difference between actual Expenditures incurred and US$4,000,000.00, in which event Golden Phoenix shall have the right to decline such payment and instead require Borealis to expend that amount on development of the Properties during the following 12 month period). The feasibility study, if delivered, shall be a detailed study evaluating the technical and economic feasibility of placing a specific portion of the Properties into commercial production with a mineable reserve containing a threshold of at least 500,000 ounces of gold or gold equivalent, and shall be in a form and of a scope generally acceptable to reputable financial institutions that provide financing to the mining industry. If Borealis prepares the feasibility study, it must be audited and confirmed by either Pincock, Allen & Holt or Behre Dohlber, as determined by Borealis, or by another engineering firm proposed by Borealis and approved by Golden Phoenix. Borealis must fulfill these obligations within 18 months after the Additional Interest Option is exercised in order to earn the additional 20% interest (unless Golden Phoenix has declined payment and elected to require Borealis to expend that amount in additional Expenditures as contemplated above, in which case the 18-month period for fulfilling these obligations will be extended by 12 months). The Additional Interest Option may be exercised at any time within 30 days after Borealis receives the 50% Assignment (the "ADDITIONAL INTEREST OPTION PERIOD"). Borealis may exercise the Additional Interest Option by giving Golden Phoenix written notice thereof in accordance with Section 10.9 below at any time during the Additional Interest Option Period. 4.10 Vesting of Additional 20% Interest. At such time as Borealis has satisfied the requirements of Section 4.9 above, Borealis's right to receive an additional 20% undivided interest in the Properties pursuant to Section 4.9 shall vest. Borealis will give written notice to Golden Phoenix when its additional 20% interest has vested (but failure or delay of Borealis to give such notice shall not be a condition to vesting or to any other rights of Borealis hereunder). Golden Phoenix shall, within 15 days after receiving notice from Borealis that its additional 20% interest has vested, assign to Borealis an additional undivided 20% right, title and interest in and to the Properties free of any defects, liens or encumbrances arising by or through Golden Phoenix. 4.11 Additional Expenditures Not Mandatory. The parties agree that, notwithstanding Borealis's exercise of the Additional Interest Option, Borealis shall not be obligated to prepare or -8-

deliver a feasibility study or to incur any additional Expenditures or make any payments to acquire an additional 20% interest in the Properties; however, Borealis shall not earn an additional 20% interest in the Properties unless it does in fact timely complete the requirements set forth in Section 4.9 above. Any failure by Borealis to earn an additional 20% interest in the Properties shall not affect Borealis's 50% vested interest in the Properties. ARTICLE V JOINT VENTURE 5.1 Joint Venture after 50% Interest Earned. If Borealis earns a 50% interest in the Properties pursuant to Section 4.4 above, Golden Phoenix and Borealis shall thereupon execute the Mining Venture Agreement, which agreement shall thereafter govern the parties' rights and obligations with respect to the Properties except as otherwise provided in this Article V. The parties' initial Participating Interests as specified in Section 6.1 of the Mining Venture Agreement shall be 50% for Borealis and 50% for Golden Phoenix. If Borealis exercises the Additional Interest Option then Golden Phoenix shall not be required to contribute any capital costs to the venture prior to the vesting of Borealis's additional 20% interest, and Golden Phoenix's share of venture revenues, if any, shall be credited against Golden Phoenix's share of operating costs until the vesting of Borealis's additional 20% interest occurs. 5.2 Joint Venture after 50% Interest Earned but 20% Additional Interest Not Earned. If Borealis earns a 50% interest in the Properties and exercises the Additional Interest Option but fails to timely complete the requirements set forth in Section 4.9 above for earning an additional 20% interest in the Properties, then Borealis's Participating Interest in the venture shall remain 50% and Golden Phoenix's Participating Interest in the venture shall remain 50%, and this Agreement shall terminate at the conclusion of the time period allowed in Section 4.9 for completing said requirements. 5.3 Joint Venture after 70% Interest Earned. If Borealis earns a 70% interest in the Properties pursuant to Section 4.9 above, then Borealis's Participating Interest in the venture shall be increased to 70%, Golden Phoenix's Participating Interest in the venture shall be decreased to 30%, and this Agreement shall terminate. ARTICLE VI CORPORATE INVOLVEMENT BY GOLDEN PHOENIX 6.1 Board Participation. Following the execution of this Agreement and for as long as this Agreement remains in effect, Golden Phoenix shall be entitled to provide one person of its choice to serve on the board of directors of Borealis. Golden Phoenix shall identify that person to Borealis in writing and that person shall thereafter be appointed to the board of directors as soon as reasonably possible in accordance with ordinary corporate procedures. Golden Phoenix shall have the right to decline to provide any such board member. -9-

ARTICLE VII OPERATIONS BY BOREALIS 7.1 Claim Maintenance. For as long as this Agreement remains in effect, Borealis shall timely pay the necessary claim maintenance fees for all unpatented mining claims included in the Properties and shall make all related federal and county filings. All such payments shall qualify as Expenditures. 7.2 Lease Maintenance. Borealis shall make all payments due under the Lease while this Agreement is in effect. All such payments shall qualify as Expenditures. Borealis shall comply with all the provisions of the Lease with respect to the conduct of operations on the Properties; provided, however, that in the event of any conflict or inconsistency between this Agreement and the Lease as between Borealis and Golden Phoenix, this Agreement shall govern. 7.3 Amendment, Relocation and Conversion of Claims. Borealis shall have the right, but not the obligation, during the term of this Agreement and without the prior consent of Golden Phoenix, but with prior notice to Golden Phoenix, to amend or relocate the Claims and any other claims included in the Properties. Any such action shall be subject to such restrictions and requirements as exist under the Lease. All expenses incurred by Borealis in connection with such amendments or relocations shall be borne by Borealis, but shall be credited as Expenditures. Borealis shall have the right, but not the obligation, during the term of this Agreement and without the prior consent of Golden Phoenix, but with prior notice to Golden Phoenix, to convert the Claims and any other claims included in the Properties as permitted under any amendment or replacement of the federal mining laws. The rights of Borealis under this Agreement shall extend to all amended locations and relocations of any claims included in the Properties, and to any other interest(s) acquired by Golden Phoenix or Borealis under the federal mining laws and any amendments or replacements thereof by reason of their interest in the Properties. 7.4 Insurance. Prior to the commencement of operations under this Agreement, Borealis shall obtain workmen's compensation insurance, liability insurance (with coverage amounts of not less than $1,000,000.00 for death or bodily injury and not less than $100,000.00 for property damage) and policies of insurance against other risks for which insurance is customarily obtained in similar operations, but not less than any coverage required by the Lease. All such insurance shall be maintained by Borealis at its own expense throughout the duration of this Agreement, but the cost thereof shall qualify as Expenditures. Upon request by Golden Phoenix, Borealis shall furnish to Golden Phoenix evidence that such insurance is being maintained. 7.5 Indemnification. Borealis shall indemnify, defend, and hold harmless Golden Phoenix from and against any cost, loss, expense, claim or liability resulting from work or operations on the Properties by Borealis pursuant to this Agreement (excluding any liability resulting from breach of any warranty or representation of Golden Phoenix), including without limitation liability, claims and causes of action for injury to, or death of, persons, damage to property, liens claimed or arising from work performed or things furnished, and failure to comply, or claims of failure to comply, with applicable governmental laws, regulations, licenses and permits. -10-

7.6 Payment for Materials and Labor. Borealis shall pay for all labor performed upon and material furnished to the Properties by or at the request of Borealis and shall keep the Properties free and clear from any and all liens of mechanics or materialmen in connection with services performed and material supplied at Borealis's request; provided, however, that Borealis shall have the right in good faith to contest the validity of any lien, claim or liability so long as such contest does not jeopardize the Properties or the Lease or create any burden on the interest of Golden Phoenix therein. ARTICLE VIII TERM; TERMINATION 8.1 Term. The term of this Agreement shall commence as of the Effective Date and shall continue for the period of time allowed herein for Borealis to complete the actions set forth in Article IV for earning a 70% interest in the Properties, unless sooner terminated in the manner herein provided. 8.2 Termination by Borealis. Borealis may terminate this Agreement at any time by giving written notice of the same to Golden Phoenix. Borealis may at its election relinquish its interest hereunder in any portion of the Properties by giving written notice of the same to Golden Phoenix, without terminating this Agreement as to the remaining portion of the Properties. 8.3 Default. In the event Golden Phoenix believes Borealis to be in default in the observance or performance of any of Borealis's covenants or obligations hereunder, Golden Phoenix may give written notice of such alleged default, specifying the details of the same. Borealis shall have 60 days following said notice within which to remedy the default described therein, or with respect to a default which cannot be cured by the payment of money, to commence action in good faith to remedy such default. Unless Borealis shall so comply or commence to comply this Agreement may be terminated at the option of Golden Phoenix; provided, however, that in the event Borealis believes that it is not in default, Borealis may give written notice to Golden Phoenix within such 60day period setting forth such fact. If Golden Phoenix gives written notice within 30 days of Borealis's notice that Golden Phoenix rejects Borealis's position, then this Agreement shall not be terminable by Golden Phoenix until there is a final judicial determination by a court of competent jurisdiction that a default exists and shall not be terminated thereafter if Borealis shall satisfy such judgment within 60 days following its entry (or if an appeal of such judgment is taken, within 60 days after its affirmance by the highest court to which such an appeal is made). Failure of Golden Phoenix to give such notice shall constitute agreement by Golden Phoenix that Borealis is not in default. Golden Phoenix shall not be entitled to terminate this Agreement for any default which by its nature it not retroactively curable if Borealis has used its best efforts to cure such a default to the extent practical or if Borealis has paid Golden Phoenix damages for Borealis's default where damages are an appropriate remedy. -11-

8.4 Personal Property. All personal property of Borealis on the Properties shall remain the property of Borealis. Golden Phoenix shall not be responsible for any personal property of Borealis. 8.5 Information and Data. In this Agreement expires or is terminated by the parties without entering into the Mining Venture Agreement, then Borealis shall, within 60 days of such expiration or termination, furnish to Golden Phoenix one set of copies of all available noninterpretive data which Borealis is not prohibited from disclosing under the terms of any agreement, and which was not previously received by Golden Phoenix pertaining to the Properties and developed or prepared by or for Borealis, and shall authorize and permit Golden Phoenix, within 120 days of such expiration or termination, to take possession of any available drill core and cuttings derived from the Properties, whether or not such material is stored on the Properties. Borealis's furnishing of such data, core and cuttings shall be without any representations or warranties, express or implied, as to accuracy, reliability or completeness. Golden Phoenix shall assume all risks stemming from reliance upon such data, core and cuttings by itself and by third parties after disclosure or disposition thereof by Golden Phoenix and shall indemnify and hold harmless Borealis as to any claims made by such third parties. ARTICLE IX AREA OF INTEREST 9.1 Acquired Properties. Any properties or property rights acquired by Borealis or Golden Phoenix or any affiliate of Borealis or Golden Phoenix in the Area of Interest while this Agreement is in effect shall be subject to the terms of this Agreement. Any mining claims that are partially within the Area of Interest shall be considered to be entirely in the Area of Interest. The parties agree to execute such documents as are appropriate to provide record notice that such new properties are subject to this Agreement. In the event that Borealis terminates this Agreement, Borealis shall, upon Golden Phoenix's written request, assign any properties or property rights acquired by Borealis within the Area of Interest to Golden Phoenix, subject to any necessary approvals. If such properties are held under leases or other grants of possessory rights from third parties and lie partially within and partially outside the Area of Interest, only such portion that lies within the Area of Interest shall be assigned to Golden Phoenix unless the properties held under any such lease or other grant are not severable. -12-

ARTICLE X GENERAL PROVISIONS 10.1 Compliance with Laws. Borealis shall conduct all of its operations on the Properties in full compliance with all applicable laws and regulations and permits, including without limitation all laws and regulations and permits related to environmental protection and reclamation. Borealis shall have no obligation to reclaim any disturbances existing prior to the Effective Date or to perform any corrective, remedial or removal actions with regard to any conditions or occurrences not solely and directly attributable to Borealis. 10.2 Confidentiality. The parties hereto shall treat all data, reports, records and information relating to the Properties and this Agreement as confidential ("CONFIDENTIAL INFORMATION"). Confidential Information shall not be released to any person or entity not a party to this Agreement, except to auditors, counsel, engineering and other professional consultants, investment bankers, institutional lenders and broker-dealers designated by the parties, provided that non-party uses of Confidential Information are strictly limited to those purposes necessary for non-party users to perform the function for which they were retained by the parties. Notwithstanding the foregoing, Confidential Information may be disclosed to persons other than those set forth above upon the mutual agreement of the parties or by either party upon providing to the other party (a) a copy of the proposed disclosure not less than 48 hours prior to the planned date of release, and (b) a written determination in good faith by the disclosing party that such disclosure is necessary or desirable in connection with the disclosing party's disclosure obligations under any securities laws, rules or regulations or stock exchange listing agreement or its obligations in connection with existing or proposed credit arrangements. 10.3 Memorandum of Agreement. This Agreement shall not be recorded for, by or on behalf of either party. The parties agree, however, to execute a memorandum of this Agreement of even date herewith, which shall be a form suitable for recording under the state and local laws of Nevada specifying that Borealis's interest in the Properties is subject to the terms and conditions of this Agreement. 10.4 Encumbrances. Each party shall keep the Properties debt free and unencumbered throughout the term of this Agreement unless otherwise mutually agreed. Either party may encumber its contractual interest in this Agreement for project financing purposes, provided that any such encumbrance shall be subject and subordinate to the terms of this Agreement. 10.5 No Restrictions on Other Activities. This Agreement is, and the rights and obligations of the parties are, strictly limited to the Properties, and the parties shall have the free and unrestricted right to independently engage in and receive the full benefits of any and all business ventures of any sort whatsoever, whether or not competitive with the activities undertaken pursuant hereto, without consulting the other or inviting or allowing the other to participate therein. Neither of the parties shall be under any fiduciary or other duty to the other which will prevent it from engaging in or enjoying the benefits of any competing venture or ventures within the general scope of the activities contemplated by this Agreement. -13-

10.6 Access by Golden Phoenix. During the term of this Agreement, Golden Phoenix and its duly authorized agents, employees and representatives, at its and their sole risk and expense, and upon giving to Borealis reasonable notice, shall have access to the Properties to observe Borealis's activities thereon, provided that such access and observation do not unreasonably interfere with or delay the conduct of Borealis's activities upon the Properties. 10.7 Force Majeure. All obligations of Borealis, other than cash payment obligations, and all conditions to the continuation of this Agreement shall be suspended and Borealis shall not be deemed in default or liable for damages or other legal or equitable remedies while, but only as long as, Borealis is prevented from complying with such obligations or conditions in whole or in part by strikes, lockouts, acts of God, explosion, flood, epidemics, unavoidable accidents, uncontrollable delays in transportation, inability to obtain necessary materials or services in the open market, inability to obtain necessary permits or approvals, unusually severe weather, any local, state or federal law, regulation, order, arbitration, administrative or judicial action, or any other matters beyond the reasonable control of Borealis, whether similar to the matters herein specifically enumerated or not; provided, however, that performance shall be resumed within a reasonable time after such cause has been removed. The term of this Agreement shall be extended by the duration of any such suspension. Borealis shall not be required, against its will, to adjust any labor disputes or to question the validity or to refrain from judicially testing the validity of any local, state or federal order, regulation or law. 10.8 No Partnership. This Agreement is not intended and shall not be construed to create a partnership within the meaning of the federal common law or the applicable laws of any state or under the laws of the state in which any party hereto is incorporated, organized or conducting business. The parties expressly agree that neither party shall be responsible for the obligations of the other party, each party being responsible only for its obligations arising hereunder. It is not the purpose or intention of this Agreement to create, and this Agreement should never be construed as creating, a relationship whereby any of the parties shall be held liable for acts, either of omission or commission, of any other party hereto. This Agreement shall not create any fiduciary duty on the part of either party. 10.9 Notices. All notices, payments and other required communications ("NOTICES") by and to the parties shall be in writing and shall be addressed respectively as follows:
If to Borealis Borealis Mining Company 1153 Bergen Parkway, Suite 290 Evergreen, CO 80439-9773 Fax: (303) 679-9589 Golden Phoenix Minerals, Inc. 3595 Airway Drive, Suite 405 Reno, NV 89511 Fax: (775) 853-5010

If to Golden Phoenix

-14-

All Notices shall be given (a) by personal delivery to the party, or (b) by facsimile, with the original sent by certified mail return receipt requested, or (c) by certified mail return receipt requested. All Notices shall be effective and shall be deemed delivered (a) if by personal delivery on the date of delivery if delivered during normal business hours, and, if not delivered during normal business hours, on the next business day following delivery, (b) if by facsimile on the next business day following receipt of the faxed copy, and (c) if solely by certified mail on the next business day after actual receipt. A party may change its address by Notice to the other party. 10.10 Costs and Expenses. Except as otherwise specifically set forth herein, each of the parties shall bear its own expenses in connection with the negotiation, preparation and performance of this Agreement. 10.11 Currency. All monetary references herein are to United States Dollars. 10.12 Governing Law; Jurisdiction and Venue. This Agreement shall be governed by the laws of the State of Nevada. Each of the parties hereby attorns to the exclusive jurisdiction of the courts of the state of Nevada or the federal district court for the District of Nevada, as may be applicable, in respect of any disputes arising hereunder, with venue to be in the state of Nevada. 10.13 Headings. The titles of the Articles and Sections of this Agreement are for the purpose of reference only and shall not in any way affect the interpretation of this Agreement. 10.14 Complete Agreement. This Agreement, together with its Exhibits A, B, C, D and E, represents the entire agreement between the parties hereto and supersedes all prior agreements and understandings concerning its subject matter, including without limitation the Agreement in Principle dated May 8, 2003. This Agreement shall not be amended or modified except by written instrument signed by both parties hereto. This Agreement has been carefully reviewed and negotiated by both parties, and it shall be construed as though both parties drafted it. 10.15 Disputes Not to Interrupt Operations. Any disputes or differences between the parties shall not interrupt performance of this Agreement or continuation of the parties' rights hereunder, and operations on the Properties may continue pending an appropriate resolution of the dispute or difference. 10.16 Perpetuities Clause. In the event that any provision of this Agreement is determined to be in violation of the Rule Against Perpetuities or any related rule relating to the vesting of property interests or restraints upon alienation, it is the intent and desire of the parties hereto that this Agreement shall not be void or voidable, but that the appropriate court shall reform such provision in such a way as to approximate most closely the intent of the parties hereto within the limits permissible under such Rule or related rule. 10.17 Counterparts. This Agreement may be executed in multiple counterparts, which taken together shall constitute one and the same document. -15-

10.18 Faxed Signatures. This Agreement may be executed by facsimile signatures, each of which will be deemed an original for purposes of execution. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. GOLDEN PHOENIX MINERALS, INC., a Minnesota corporation
By: /s/ Michael Fitzsimonds -----------------------------------Name: Michael Fitzsimonds ---------------------------------Title: President ---------------------------------

BOREALIS MINING COMPANY, a Nevada corporation
By: /s/ Allen Gordon -----------------------------------Name: Allen S. Gordon ---------------------------------Title: President ---------------------------------

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EXHIBIT A TO AGREEMENT BETWEEN GOLDEN PHOENIX MINERALS, INC. AND BOREALIS MINING COMPANY (BOREALIS PROPERTY, MINERAL COUNTY, NEVADA) AREA OF INTEREST The Area of Interest is the same as the Borealis Project Area as described in Exhibit III of the Lease. A-1

EXHIBIT B TO AGREEMENT BETWEEN GOLDEN PHOENIX MINERALS, INC. AND BOREALIS MINING COMPANY (BOREALIS PROPERTY, MINERAL COUNTY, NEVADA) LEASE That certain Mining Lease dated January 24, 1997 from Richard J. Cavell TTTEE F/T Richard J. Cavell Trust Dated 2/23/94, Hardrock Mining Company, a Nevada corporation, and John W. Whitney, as lessors, and J.D. Welsh & Associates, Inc., a Nevada corporation, as lessee, a memorandum of which is recorded as Entry 115828 in Book 169 at page 489 in the official records of Mineral County, Nevada. B-1

EXHIBIT C TO AGREEMENT BETWEEN GOLDEN PHOENIX MINERALS, INC. AND BOREALIS MINING COMPANY (BOREALIS PROPERTY, MINERAL COUNTY, NEVADA) GPM & GG CLAIMS The 111 GPM & GG Claims are described on the following three pages. C-1

All those certain unpatented lode mining claims commonly known as the GG and GPM claim groups, situated in Sections 1 & 2. T6N, R28E, MDBM; Sections 4, 5, 6, 7, 8, 9, 10, 11, 15, 16, 17, 20 & 21, T6N, R29E, MDBM; Sections 35 & 36, T7N, R28E, MDBM; and Section 31, T7N, R29E, MDBM, in Mineral County, Nevada. [Not yet filed with BLM or recorded in Mineral County] 111 TOTAL CLAIMS
CLAIM NAME ----GG 1 GG 2 GG 3 GG 4 GG 5 GG 6 GG 7 GG 8 GG 9 GG 10 GG 11 GG 12 GG 13 GG 14 GG 15 GG 16 GG 17 GG 18 GG 19 GG-20 GG-21 GG-22 GG-23 GG-24 GG-25 GG-26 GG-27 GG-28 GG-29 GG 30 GG 31 GG 32 GG 33 GG 34 GG 35 GG 36 GG 37 GG 38 GG 39 GG 40 GG 41 GG 42 GG 43 GG 44 GG 45 GG 46 DATE LOCATED ------5-14-03 5-14-03 5-14-03 5-14-03 5-14-03 5-14-03 5-14-03 5-14-03 5-14-03 5-14-03 5-14-03 5-14-03 5-14-03 5-14-03 5-14-03 5-14-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-17-03 5-16-03 5-16-03 5-16-03 5-16-63 5-16-03 5-16-03 5-16-03 5-16-03 5-17-03 5-17-03 5-17-03 DATE RECORDED-COUNTY --------------DATE RECORDED-BLM -----------BLM NMC SERIAL # --------

BOOK ----

PAGE ----

DOC. # ------

1

CLAIM DATE DATE NAME LOCATED RECORDED-COUNTY ------ ------- --------------GG 47 5-17-03 GG 48 5-17-03 GG 49 5-17-03 GG 50 5-17-03 GG 51 5-17-03 GG 52 5-16-03 GG 53 5-16-03 GG 54 5-16-03 GG 55 5-16-03 GG 56 5-16-03 GG 57 5-16-03 GPM 1 5-15-03 GPM 2 5-15-03 GPM 3 5-15-03 GPM 4 5-15-03 GPM 5 5-15-03 GPM 6 5-15-03 GPM 7 5-15-03 GPM 8 5-15-03 GPM 9 5-15-03 GPM 10 5-15-03 GPM 11 5-15-03 GPM 12 5-15-03 GPM 13 5-15-03 GPM 14 5-15-03 GPM 15 5-15-03 GPM 16 5-15-03 GPM 17 5-15-03 GPM 18 5-15-03 GPM 19 5-15-03 GPM 20 5-15-03 GPM 21 5-15-03 GPM 22 5-15-03 GPM 23 5-15-03 GPM 24 5-15-03 GPM 25 5-18-03 GPM 26 5-18-03 GPM 27 5-18-03 GPM 28 5-18-03 GPM 29 5-18-03 GPM 30 5-18-03 GPM 31 5-18-03 GPM 32 5-18-03 GPM 33 5-18-03 GPM 34 5-18-03 GPM 35 5-18-03 GPM 36 5-18-03 GPM 37 5-18-03 GPM 38 5-18-03 GPM 39 5-18-03 GPM 40 5-18-03 GPM 41 5-18-03 GPM 42 5-18-03 GPM 43 5-18-03 GPM 44 5-18-03

BOOK ----

PAGE ----

DOC. # ------

DATE RECORDED-BLM ------------

BLM NMC SERIAL # --------

2

CLAIM NAME -----GPM 45 GPM 46 GPM 47 GPM 48 GPM 49 GPM 50 GPM 51 GPM 52 GPM 53 GPM 54

DATE LOCATED ------5-18-03 5-18-03 5-18-03 5-18-03 5-18-03 5-18-03 5-18-03 5-18-03 5-18-03 5-18-03

DATE RECORDED-COUNTY ---------------

BOOK ----

PAGE ----

DOC. # ------

DATE RECORDED-BLM ------------

BLM NMC SERIAL # --------

3

EXHIBIT D TO AGREEMENT BETWEEN GOLDEN PHOENIX MINERALS, INC. AND BOREALIS MINING COMPANY (BOREALIS PROPERTY, MINERAL COUNTY, NEVADA) LEASED CLAIMS The 124 Leased Claims are described on the following six pages. D-1

EXHIBIT A All those certain unpatented lode mining claims commonly known as the RAINBOW CABIN and SILVER NIGHT claim groups, situated in Sections 8, 9, 16 and 17, Township 6 North, Range 29 East, Mt. Diablo Base & Meridian, Mineral County, Nevada, more particularly described as follows: 15 TOTAL CLAIMS
DATE LOCATED -------07/01/53 10/15/78 09/01/82 04/16/74 09/01/82 04/16/74 09/01/82 04/16/74 09/01/82 04/16/74 09/01/82 06/27/53 10/15/78 09/01/82 04/16/74 09/01/82 04/16/74 09/01/82 04/16/74 09/01/82 04/16/74 10/15/78 04/16/74 04/16/74 04/16/74 04/16/74 DATE RECORDED COUNTY ------------07/01/53 11/30/78 09/20/82 04/30/74 09/20/82 04/30/74 09/20/82 04/30/74 09/20/82 04/30/74 09/20/82 07/01/53 11/30/78 09/20/82 04/30/74 09/20/82 04/30/74 09/20/82 04/30/74 09/20/82 04/30/74 07/01/53 11/30/78 04/30/74 04/30/74 04/30/74 04/30/74 DOCUMENT NO. -------DATE FILED-BLM --------07/31/78 12/08/78 10/04/82 07/31/78 10/04/82 07/31/78 10/04/82 07/31/78 10/04/82 07/31/78 10/04/82 07/31/78 12/08/78 10/04/82 07/31/78 10/04/82 07/31/78 10/04/82 07/31/78 10/04/82 07/31/78 07/31/78 12/08/78 07/31/78 07/31/78 07/31/78 07/31/78 BLM NMC # -----25426

CLAIM NAME ----------------Rainbow amended relocated amended Rainbow One East amended Rainbow Two East amended Rainbow One West amended Rainbow Two West amended Cabin relocated amended Cabin One East amended Cabin Two East amended Cabin One West amended Cabin Two West Silver Knight relocated Silver Knight One East Silver Knight Two East Silver Knight One West Silver Knight Two West

BOOK ---14 58 60 87 39 87 39 87 39 87 39 87 14 60 87 39 87 39 87 39 87 39 14 60 39 39 39 39

PAGE ------563-564 588 525 323 471 325 472 327 474 329 473 331 562-563 526 333 480 335 475 337 482 339 481 563-564 527 478 479 477 476

36978 59491 20411 59492 20412 59493 20414 59494 20413 59495 36979 59496 20420 59497 20415 59498 20422 59499

25429

25430

25432

25431

25427

25438 25433 25440 25439 25428 25436 25437 25435 25434

36980 20418 20419 20417 20416

EXHIBIT B All those certain unpatented lode mining claims commonly know as the BO claim group, situated in Sections 7, 8, 17, and 18, Township 6 North, Range 29 East, Mt. Diablo Base & Meridian, Mineral County, Nevada, more particularly described as follows: 11 TOTAL CLAIMS
DATE RECORDED COUNTY ------------03/26/80 03/26/80 03/26/80 03/26/80 03/26/80 03/26/80 03/26/80 03/26/80 03/26/80 03/26/80 03/26/80 DOCUMENT NO. -------42687 42688 42690 42691 42692 42693 42694 42696 42700 42701 42902 DATE FILED-BLM --------03/27/80 03/27/80 03/27/30 03/27/80 03/27/80 03/27/80 03/27/80 03/27/80 03/27/80 03/27/80 03/27/80 BLM NMC# -----144623 144624 144626 144627 144628 144629 144630 144632 144636 144637 144838

CLAIM NAME ---------BO #435 BO #436 BO #442 BO #443 BO #444 BO #448 BO #449 BO #466 BO #480 BO #481 BO #848

DATE LOCATED -----------02/01/80 01/31/80 02/01/80 01/31/80 01/31/80 02/01/80 01/31/80 02/01/80 02/01/80 01/30/80 01/31/80

BOOK ---67 67 67 67 67 67 67 67 67 67 67

PAGE ---337 338 340 341 342 343 344 346 350 351 552

The above-listed claims are owned by: Richard J. Cavell c/o Borealis Investment Company 1013 N. Marshall Drive Camano Island, WA 98292 John W. Whitney P.O. Box 20579 Reno, NV 89510

Hardrock Mining Company Carolyn J. Lindsey, President PO Box 156 Mina, NV 89422

EXHIBIT C All those certain unpatented lode mining claims commonly known as the FOX claim group, situated in Sections 8, 9, 10, 15 16 and 17, Township 6 North, Range 29 East, and in Sections 35 and 36, Township 7 North, Range 28 East, ML Diablo Base & Meridian, Mineral County, Nevada, more particularly described as follows: 88 TOTAL CLAIMS
DATE DATE DOC. DATA BLM NMC LOCATED RECORDED-COUNTY BOOK PAGE # RECDED-BLM SERIAL# -------- --------------- ---- ---- ----- ---------- -------03/06/79 61 680 04/10/79 58194 09/01/82 09/20/82 87 315 59487 10/04/82 03/06/79 61 681 04/09/79 57755 03/06/79 61 682 04/09/79 57756 09/01/82 09/20/82 87 317 59488 10/04/82 03/06/79 61 683 04/09/79 57757 03/06/79 61 684 04/09/79 57758 03/06/79 61 685 04/09/79 57759 03/06/79 61 686 04/09/79 57760 03/06/79 61 687 04/09/79 57761 03/06/79 61 688 04/09/79 57762 03/06/79 61 699 04/09/79 57773 03/06/79 61 700 04/09/79 57774 03/06/79 61 701 04/09/79 57775 03/06/79 61 702 04/09/79 57776 03/06/79 61 703 04/09/79 57777 03/06/79 61 704 04/09/79 57778 03/06/79 61 711 04/09/79 57785 09/01/82 09/20/82 87 319 59489 10/04/82 03/06/79 61 712 04/09/79 57786 03/06/79 61 713 04/09/79 57787 03/06/79 61 714 04/09/79 57788 03/06/79 81 715 04/09/79 57789 03/06/79 61 716 04/09/79 57790 03/06/79 61 721 04/09/79 09/06/82 09/20/82 87 321 59490 10/04/82 57795 03/06/79 61 722 04/09/79 57796 03/06/79 61 723 04/09/79 57797 03/06/79 61 725 04/09/79 57799 03/06/79 81 726 04/09/79 57800 03/06/79 61 727 04/09/79 57801 03/06/79 61 728 04/09/79 57802 03/06/79 61 729 04/09/79 57803

CLAIM NAME -------------FOX #1 amended FOX #2 FOX #3 amended FOX #4 FOX #5 FOX #6 FOX #7 FOX #8 FOX #9 FOX #20 FOX #21 FOX #22 FOX #23 FOX #25 FOX #27 FOX #46 amended FOX #47 FOX #48 FOX #49 FOX NO.50 FOX NO.51 FOX NO.56 amended FOX NO.57 FOX NO.58 FOX NO.60 FOX NO.61 FOX NO.62 FOX NO.63 FOX NO.64

FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX FOX

NO.65 NO.66 NO.67 NO.68 NO.69 NO.70 NO.71 NO.72 NO.73 NO.74 NO.75 NO.76 NO.77 NO.78 NO.79 NO.80 NO.81 NO.82 NO.85 NO.86 NO.87 NO.88 NO.89 NO.90 NO.100 NO.101 NO.102 NO.103 NO.115 NO.116 NO.117 NO.143 NO.144 NO.145 NO.146 NO.147 NO.148 NO.149 #244 #245 #246 #247

03/06/79 03/06/79 03/06/79 03/06/79 03/06/79 03/06/79 03/06/79 03/06/79 03/06/79 03/06/79 03/06/79 03/06/79 03/06/79 03/06/79 03/06/79 03/06/79 03/06/79 03/06/79 09/20/78 09/26/78 09/26/78 09/26/78 09/20/78 09/20/78 09/21/78 09/21/78 09/21/78 09/21/78 09/20/78 09/20/78 09/20/78 09/27/78 09/27/78 09/26/78 09/26/78 09/26/78 09/26/78 5/11/03 05/05/79 05/05/79 05/05/79 05/05/79

11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 11/30/78 6/27/03 06/15/79 06/15/79 06/15/79 06/15/79

61 61 61 61 61 61 61 61 61 61 61 61 61 61 61 61 61 61 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60

730 731 732 733 734 735 736 737 738 739 740 741 742 743 744 745 746 747 528 529 530 531 532 533 542 543 544 545 557 558 559 585 586 587 588 589 590

36981 36982 36983 36984 36985 36986 36995 36996 36997 36998 37010 37011 37012 37038 37039 37040 37041 37042 37043 128496 38730 38731 38732 38733

04/09/79 04/09/79 04/09/79 04/09/79 04/09/79 04/09/79 04/09/79 04/09/79 04/09/79 04/09/79 04/09/79 04/09/79 04/09/79 04/09/79 04/09/79 04/09/79 04/09/79 04/09/79 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 12/08/78 6/30/03 06/28/79 06/28/79 06/28/79 06/28/79

57804 57805 57806 57807 57808 57809 57810 57811 57812 57813 57814 57815 57816 57817 57818 57819 57820 57821 44288 44289 44290 44291 44292 44293 44302 44303 44304 44305 44317 44318 44319 44345 44346 44347 44348 44349 44350 844217 71756 71757 71758 71759

62 62 62 62

707 708 709 710

FOX #248 FOX #249 FOX #288 FOX #289 FOX #290 FOX #291 FOX #292 FOX #293 FOX #294 FOX #303 FOX #304 FOX #331 FOX #332 FOX #333 FOX #334 FOX #336 FOX #338

05/05/79 05/05/79 07/25/79 07/25/79 07/25/79 07/25/79 07/25/79 07/25/79 07/25/79 07/27/79 07/27/79 09/01/79 09/01/79 09/01/79 09/01/79 11/14/79 11/14/79

06/15/79 06/15/79 09/19/79 09/19/79 09/19/79 09/19/79 09/19/79 09/19/79 09/19/79 09/19/79 09/19/79 09/19/79 09/19/79 09/19/79 09/19/79 12/07/79 12/07/79

62 62 64 64 64 64 64 64 64 64 64 64 64 64 64 65 65

711 712 455 456 457 458 459 460 461 470 471 498 499 500 501 464 466

38734 38735 40203 40204 40205 40206 40207 40208 40209 40218 40219 40246 40247 40248 40249 41048 41050

06/28/79 06/28/79 10/01/79 10/01/79 10/01/79 10/01/79 10/01/79 10/01/79 10/01/79 10/01/79 10/01/79 10/01/79 10/01/79 10/01/79 10/01/79 12/31/79 12/31/79

71760 71761 99775 99776 99777 99778 99779 99780 99781 99790 99791 99818 99819 99820 99821 135448 135450

The above-listed claims are owned by: Richard J. Cavell c/o Borealis Investment Company 1013 N. Marshall Drive Camano Island, WA 98292 John W. Whitney P.O. Box 20579 Reno, NV 89510

Hardrock Mining Company Carolyn J. Lindsey, President PO Box 156 Mina City, NV 89422

EXHIBIT D All those certain unpatented lode mining claims commonly know as the LIS claim group, situated in Secs. 1, R28E, MDBM, Secs. 7, & 8, T6N, R29E, MDBM, Secs. 36, T7N, R28E, MDBM in Mineral County, Nevada 10 TOTAL CLAIMS
CLAIM NAME -------LIS #86 LIS #87 LIS #88 LIS #89 LIS #90 LIS #91 LIS #96 LIS #98 LIS #100 LIS #197 DATE LOCATED -------02/08/97 02/08/97 02/08/97 02/08/97 02/08/97 02/08/97 02/08/97 02/09/97 02/09/97 2/10/97 DATE RECORDED-COUNTY --------------04/11/97 04/11/97 04/11/97 04/11/97 04/11/97 04/11/97 04/11/97 04/11/97 04/11/97 04/11/97 DATE RECORDED-BLM -----------04/16/97 04/16/97 04/16/97 04/16/97 04/16/97 04/16/97 04/16/97 04/16/97 04/16/97 04/16/97 BLM NMC SERIAL # -------769845 769846 769847 769848 769849 769850 769855 769857 769859 769956

BOOK ---170 170 170 170 170 170 170 170 170 170

PAGE ---173 174 175 176 177 178 183 185 187 284

DOC. # ------116249 116250 116251 116252 116253 116254 116259 116261 116263 116360

The above-listed claims are owned by:
Richard J. Cavell c/o Borealis Investment Company 1013 N. Marshall Drive Camano Island, WA 98292 John W. Whitney P.O. Box 20579 Reno, NV 89510 Hardrock Mining Company Carolyn J. Lindsey, President PO Box 156 Mina, NV 89422

EXHIBIT E TO AGREEMENT BETWEEN GOLDEN PHOENIX MINERALS, INC. AND BOREALIS MINING COMPANY (BOREALIS PROPERTY, MINERAL COUNTY, NEVADA) MINING VENTURE AGREEMENT EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT (Modified Rocky Mountain Mineral Law Foundation Form 5A) TABLE OF CONTENTS
Page ---ARTICLE I 1.1 1.2 ARTICLE II 2.1 2.2 2.3 2.4 2.5 ARTICLE III 3.1 3.2 3.3 3.4 3.5 3.6 3.7 DEFINITIONS AND CROSS-REFERENCES......................... DEFINITIONS.............................................. CROSS-REFERENCES......................................... NAME, PURPOSES AND TERM.................................. GENERAL.................................................. NAME..................................................... PURPOSES................................................. LIMITATION............................................... TERM..................................................... REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS; INDEMNITIES.............................................. REPRESENTATIONS AND WARRANTIES OF BOTH PARTICIPANTS..................................... REPRESENTATIONS AND WARRANTIES OF GOLDEN PHOENIX ........ DISCLOSURES.............................................. RECORD TITLE............................................. LOSS OF TITLE............................................ ROYALTIES, PRODUCTION TAXES AND OTHER PAYMENTS BASED ON PRODUCTION...................................... INDEMNITIES/LIMITATION OF LIABILITY......................

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Page ---ARTICLE IV 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 ARTICLE V 5.1 5.2 5.3 ARTICLE VI 6.1 6.2 6.3 6.4 6.5 6.6 6.7 ARTICLE VII 7.1 7.2 7.3 7.4 7.5 ARTICLE VIII 8.1 8.2 8.3 8.4 RELATIONSHIP OF THE PARTICIPANTS......................... NO PARTNERSHIP........................................... FEDERAL TAX ELECTIONS AND ALLOCATIONS.................... STATE INCOME TAX......................................... TAX RETURNS.............................................. OTHER BUSINESS OPPORTUNITIES............................. WAIVER OF RIGHTS TO PARTITION OR OTHER DIVISION OF ASSETS................................................ TRANSFER OR TERMINATION OF RIGHTS TO PROPERTIES ......... IMPLIED COVENANTS........................................ NO THIRD PARTY BENEFICIARY RIGHTS........................ CONTRIBUTIONS BY PARTICIPANTS............................ PARTICIPANTS' INITIAL CONTRIBUTIONS...................... VALUE OF INITIAL CONTRIBUTIONS........................... ADDITIONAL CONTRIBUTIONS................................. INTERESTS OF PARTICIPANTS................................ INITIAL PARTICIPATING INTERESTS.......................... CHANGES IN PARTICIPATING INTERESTS....................... ELIMINATION OF MINORITY INTEREST......................... CONTINUING LIABILITIES UPON ADJUSTMENTS OF PARTICIPATING INTERESTS............................... DOCUMENTATION OF ADJUSTMENTS TO PARTICIPATING INTERESTS................................................ GRANT OF LIEN AND SECURITY INTEREST...................... SUBORDINATION OF INTERESTS............................... MANAGEMENT COMMITTEE..................................... ORGANIZATION AND COMPOSITION............................. DECISIONS................................................ MEETINGS................................................. ACTION WITHOUT MEETING IN PERSON......................... MATTERS REQUIRING APPROVAL............................... MANAGER.................................................. APPOINTMENT.............................................. POWERS AND DUTIES OF MANAGER............................. STANDARD OF CARE......................................... RESIGNATION; DEEMED OFFER TO RESIGN......................

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Page ---8.5 8.6 8.7 ARTICLE IX 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11 9.12 9.13 ARTICLE X 10.1 10.2 10.3 10.4 10.5 10.6 ARTICLE XI 11.1 11.2 11.3 ARTICLE XII 12.1 12.2 12.3 12.4 PAYMENTS TO MANAGER...................................... TRANSACTIONS WITH AFFILIATES............................. ACTIVITIES DURING DEADLOCK............................... PROGRAMS AND BUDGETS..................................... INITIAL PROGRAM AND BUDGET............................... OPERATIONS PURSUANT TO PROGRAMS AND BUDGETS.............. PRESENTATION OF PROGRAMS AND BUDGETS..................... REVIEW AND ADOPTION OF PROPOSED PROGRAMS AND BUDGETS .... ELECTION TO PARTICIPATE.................................. RECALCULATION OR RESTORATION OF REDUCED INTEREST BASED ON ACTUAL EXPENDITURES............................. PRE-FEASIBILITY STUDY PROGRAM AND BUDGETS................ COMPLETION OF PRE-FEASIBILITY STUDIES AND SELECTION OF APPROVED ALTERNATIVES.................................... PROGRAMS AND BUDGETS FOR FEASIBILITY STUDY............... DEVELOPMENT PROGRAMS AND BUDGETS; PROJECT FINANCING...... EXPANSION OR MODIFICATION PROGRAMS AND BUDGETS........... BUDGET OVERRUNS; PROGRAM CHANGES......................... EMERGENCY OR UNEXPECTED EXPENDITURES..................... ACCOUNTS AND SETTLEMENTS................................. MONTHLY STATEMENTS....................................... CASH CALLS............................................... FAILURE TO MEET CASH CALLS............................... COVER PAYMENT............................................ REMEDIES................................................. AUDITS................................................... DISPOSITION OF PRODUCTION................................ TAKING IN KIND........................................... FAILURE OF PARTICIPANT TO TAKE IN KIND................... HEDGING.................................................. WITHDRAWAL AND TERMINATION............................... TERMINATION BY EXPIRATION OR AGREEMENT................... TERMINATION BY DEADLOCK.................................. WITHDRAWAL............................................... CONTINUING OBLIGATIONS AND ENVIRONMENTAL LIABILITIES.....

E-3

Page ---12.5 12.6 12.7 12.8 ARTICLE XIII 13.1 13.2 13.3 13.4 ARTICLE XIV ARTICLE XV ARTICLE XVI 16.1 16.2 16.3 ARTICLE XVII 17.1 17.2 17.3 ARTICLE XVIII 18.1 18.2 18.3 18.4 18.5 ARTICLE XIX 19.1 19.2 19.3 19.4 19.5 DISPOSITION OF ASSETS ON TERMINATION..................... NON-COMPETE COVENANTS.................................... RIGHT TO DATA AFTER TERMINATION.......................... CONTINUING AUTHORITY..................................... ACQUISITIONS WITHIN AREA OF INTEREST..................... GENERAL.................................................. NOTICE TO NON-ACQUIRING PARTICIPANT...................... OPTION EXERCISED......................................... OPTION NOT EXERCISED..................................... ABANDONMENT AND SURRENDER OF PROPERTIES.................. SUPPLEMENTAL BUSINESS AGREEMENT.......................... TRANSFER OF INTEREST; PREEMPTIVE RIGHT................... GENERAL.................................................. LIMITATIONS ON FREE TRANSFERABILITY...................... PREEMPTIVE RIGHT......................................... DISPUTES................................................. GOVERNING LAW............................................ JURISDICTION AND VENUE................................... DISPUTE RESOLUTION....................................... CONFIDENTIALITY, OWNERSHIP, USE AND DISCLOSURE OF INFORMATION........................................... BUSINESS INFORMATION..................................... PARTICIPANT INFORMATION.................................. PERMITTED DISCLOSURE OF CONFIDENTIAL BUSINESS INFORMATION..................................... DISCLOSURE REQUIRED BY LAW............................... PUBLIC ANNOUNCEMENTS..................................... GENERAL PROVISIONS....................................... NOTICES.................................................. GENDER................................................... CURRENCY................................................. HEADINGS................................................. WAIVER...................................................

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Page ---19.6 19.7 19.8 19.9 19.10 19.11 19.12 MODIFICATION............................................. FORCE MAJEURE............................................ RULE AGAINST PERPETUITIES................................ FURTHER ASSURANCES....................................... ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS................. MEMORANDUM............................................... COUNTERPARTS.............................................

EXHIBIT EXHIBIT EXHIBIT EXHIBIT EXHIBIT EXHIBIT EXHIBIT EXHIBIT EXHIBIT

A B C D E F G H I

ASSETS AND AREA OF INTEREST ACCOUNTING PROCEDURES TAX MATTERS DEFINITIONS NET PROCEEDS CALCULATION INSURANCE INITIAL PROGRAM AND BUDGET PREEMPTIVE RIGHTS EXISTING FACILITIES

E-5

EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT This Agreement is made as of _______________________ ("EFFECTIVE DATE") between GOLDEN PHOENIX MINERALS, INC., a Minnesota corporation ("GOLDEN PHOENIX"), the address of which is 3595 Airway Drive, Suite 405, Reno, NV 89511, and BOREALIS MINING COMPANY, a Nevada corporation ("BOREALIS"), the address of which is 1153 Bergen Parkway, Suite 290, Evergreen, CO 804399773. RECITALS A. Golden Phoenix owns or controls certain properties in Mineral County, State of Nevada, which properties are described in EXHIBIT A and defined in EXHIBIT D. B. Borealis wishes to participate with Golden Phoenix in the exploration, evaluation and if justified the development and mining of mineral resources within the Properties, and Golden Phoenix is willing to grant such rights to Borealis. NOW THEREFORE, in consideration of the covenants and conditions contained herein, Golden Phoenix and Borealis agree as follows: ARTICLE I DEFINITIONS AND CROSS-REFERENCES 1.1 DEFINITIONS. The terms defined in EXHIBIT D and elsewhere shall have the defined meaning wherever used in this Agreement, including in Exhibits. 1.2 CROSS-REFERENCES. References to "EXHIBITS," "ARTICLES," "SECTIONS" and "SUBSECTIONS" refer to Exhibits, Articles, Sections and Subsections of this Agreement. References to "PARAGRAPHS" and "SUBPARAGRAPHS" refer to paragraphs and subparagraphs of the referenced Exhibits. ARTICLE II NAME, PURPOSES AND TERM 2.1 GENERAL. Golden Phoenix and Borealis hereby enter into this Agreement for the purposes hereinafter stated. All of the rights and obligations of the Participants in connection with the Assets or the Area of Interest and all Operations shall be subject to and governed by this Agreement. 2.2 NAME. The Assets shall be managed and operated by the Participants under the name of the BOREALIS JOINT VENTURE. The Manager shall accomplish any registration required by applicable assumed or fictitious name statutes and similar statutes. 2.3 PURPOSES. This Agreement is entered into for the following purposes and for no others, and shall serve as the exclusive means by which each of the Participants accomplishes such purposes: E-6

(a) to conduct Exploration within the Area of Interest, (b) to acquire additional real property and other interests within the Area of Interest, (c) to evaluate the possible Development and Mining of the Properties, and, if justified, to engage in Development and Mining, (d) to engage in Operations on the Properties, (e) to engage in marketing Products, to the extent provided by ARTICLE XI, (f) to complete and satisfy all Environmental Compliance obligations and Continuing Obligations affecting the Properties, and (g) to perform any other activity necessary, appropriate, or incidental to any of the foregoing. 2.4 LIMITATION. Unless the Participants otherwise agree in writing, the Operations shall be limited to the purposes described in SECTION 2.3, and nothing in this Agreement shall be construed to enlarge such purposes or to change the relationships of the Participants as set forth in ARTICLE 4. 2.5 TERM. The term of this Agreement shall be for twenty (20) years from the Effective Date and for so long thereafter as Products are produced from the Properties on a continuous basis, and thereafter until all materials, supplies, equipment and infrastructure have been salvaged and disposed of, any required Environmental Compliance is completed and accepted and the Participants have agreed to a final accounting, unless the Business is earlier terminated as herein provided. For purposes hereof, Products shall be deemed to be produced from the Properties on a "CONTINUOUS BASIS" so long as production in commercial quantities is not halted for more than _________ consecutive years. ARTICLE III REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS; INDEMNITIES 3.1 REPRESENTATIONS AND WARRANTIES OF BOTH PARTICIPANTS. As of the Effective Date, each Participant warrants and represents to the other that: (a) it is a corporation duly organized and in good standing in its state of incorporation and is qualified to do business and is in good standing in those states where necessary in order to carry out the purposes of this Agreement; (b) it has the capacity to enter into and perform this Agreement and all transactions contemplated herein and that all corporate, board of directors, shareholder, surface and E-7

mineral rights owner, lessor, lessee and other actions required to authorize it to enter into and perform this Agreement have been properly taken; (c) it will not breach any other agreement or arrangement by entering into or performing this Agreement; (d) it is not subject to any governmental order, judgment, decree, debarment, sanction or Laws that would preclude the permitting or implementation of Operations under this Agreement; and (e) this Agreement has been duly executed and delivered by it and is valid and binding upon it in accordance with its terms. 3.2 REPRESENTATIONS AND WARRANTIES OF GOLDEN PHOENIX. As of the Effective Date, Golden Phoenix makes the following representations and warranties to Borealis: (a) With respect to those Properties Golden Phoenix owns in fee simple, if any, Golden Phoenix is in exclusive possession of and owns such Properties free and clear of all Encumbrances or defects in title except those specifically identified in PARAGRAPH 1.1 OF EXHIBIT A. (b) With respect to those Properties in which Golden Phoenix holds an interest under leases or other contracts: (i) Golden Phoenix is in exclusive possession of such Properties; (ii) Golden Phoenix has not received any notice of default of any of the terms or provisions of such leases or other contracts; (iii) Golden Phoenix has the authority under such leases or other contracts to perform fully its obligations under this Agreement; (iv) to Golden Phoenix's knowledge, such leases and other contracts are valid and are in good standing; (v) Golden Phoenix has no knowledge of any act or omission or any condition on the Properties which could be considered or construed as a default under any such lease or other contract; and (vi) to Golden Phoenix's knowledge, such Properties are free and clear of all Encumbrances or defects in title except for those specifically identified in PARAGRAPH 1.1 OF EXHIBIT A. (c) Golden Phoenix has delivered to or made available for inspection by Borealis all Existing Data in its possession or control, and true and correct copies of all leases or other contracts relating to the Properties. (d) With respect to unpatented mining claims and millsites located by Golden Phoenix that are included within the Properties, except as provided in PARAGRAPH 1.1 OF EXHIBIT A and subject to the paramount title of the United States: (i) the unpatented mining claims were properly laid out and monumented; (ii) all required location and validation work was properly performed; (iii) location notices and certificates were properly recorded and filed with appropriate governmental agencies; (iv) all assessment work required to hold the unpatented mining claims has been performed and all Governmental Fees have been paid in a manner consistent with that required of the Manager pursuant to SUBSECTION 8.2(K) through the assessment year ending September 1, _____; (v) all affidavits of assessment work, evidence of payment of Governmental Fees, and other filings required to maintain the claims in good standing have been properly and timely recorded or filed with appropriate governmental agencies; (vi) the claims are free and clear of Encumbrances or E-8

defects in title; and (vii) Golden Phoenix has no knowledge of conflicting mining claims. Nothing in this SUBSECTION, however, shall be deemed to be a representation or a warranty that any of the unpatented mining claims contains a valuable mineral deposit. (e) With respect to unpatented mining claims and millsites not located by Golden Phoenix but which are included within the Properties, except as provided in PARAGRAPH 1.1 OF EXHIBIT A and subject to the paramount title of the United States: (i) all assessment work required to hold the unpatented mining claims has been performed and all Governmental Fees have been paid in a manner consistent with that required of the Manager pursuant to SUBSECTION 8.2(K) through the assessment year ending September 1, _____; (ii) all affidavits of assessment work, evidence of payment of Governmental Fees, and other filings required to maintain the claims in good standing have been properly and timely recorded or filed with appropriate governmental agencies; (iii) the claims are free and clear of Encumbrances or defects in title; and (iv) Golden Phoenix has no knowledge of conflicting mining claims. Nothing in this SUBSECTION, however, shall be deemed to be a representation or a warranty that any of the unpatented mining claims contains a valuable discovery of minerals. (f) With respect to the Properties, to Golden Phoenix's knowledge, there are no pending or threatened actions, suits, claims or proceedings, and there have been no previous transactions affecting its interests in the Properties which have not been for fair consideration. (g) Except as to matters otherwise disclosed in writing to Borealis prior to the Effective Date, (i) to Golden Phoenix's knowledge, the conditions existing on or with respect to the Properties and its ownership and operation of the Properties are not in violation of any Laws (including without limitation any Environmental Laws), nor causing or permitting any damage (including Environmental Damage, as defined below) or impairment to the health, safety, or enjoyment of any person at or on the Properties or in the general vicinity of the Properties; (ii) to Golden Phoenix's knowledge, there have been no past violations by it or by any of its predecessors in title of any Environmental Laws or other Laws affecting or pertaining to the Properties, nor any past creation of damage or threatened damage to the air, soil, surface waters, groundwater, flora, fauna, or other natural resources on, about or in the general vicinity of the Properties ("ENVIRONMENTAL DAMAGE"), subject, however, to the parties' acknowledgment that prior mining operations have occurred on the Properties and that certain facilities, more particularly described in EXHIBIT I hereto, still exist on the Properties as a consequence of such operations. (iii) Golden Phoenix has not received inquiry from or notice of a pending investigation from any governmental agency or of any administrative or judicial proceeding concerning the violation of any Laws. The representations and warranties set forth above shall survive the execution and delivery of any documents of Transfer provided under this Agreement. For a representation or warranty made to a Participant's "KNOWLEDGE," the term "knowledge" shall mean E-9

actual knowledge on the part of the officers, employees, and agents of the representing Participant or of facts that would reasonably lead to the indicated conclusions. 3.3 DISCLOSURES. Each of the Participants represents and warrants that it is unaware of any material facts or circumstances that have not been disclosed in this Agreement, which should be disclosed to the other Participant in order to prevent the representations and warranties in this ARTICLE III from being materially misleading. Golden Phoenix has disclosed to Borealis all information it believes to be relevant concerning the Assets and has provided to or made available for inspection by Borealis all such information, but does not make any representation or warranty, express or implied, as to the accuracy or completeness of the information (except as provided in SECTION 3.2) or as to the boundaries or value of the Assets. Each Participant represents to the other that in negotiating and entering into this Agreement it has relied solely on its own appraisals and estimates as to the value of the Assets and upon its own geologic and engineering interpretations related thereto. 3.4 RECORD TITLE. Title to the Assets shall be held by the Participants as co-tenants for the benefit of the Business. 3.5 LOSS OF TITLE. Any failure or loss of title to the Assets, and all costs of defending title, shall be charged to the Business Account, except that all costs and losses arising out of or resulting from breach of the representations and warranties of Golden Phoenix or Borealis as to title shall be charged to Golden Phoenix or Borealis, as the case may be. 3.6 ROYALTIES, PRODUCTION TAXES AND OTHER PAYMENTS BASED ON PRODUCTION. All required payments of production royalties, taxes based on production of Products, and other payments out of production to private parties and governmental entities shall be determined and made by each Participant in proportion to its Participating Interest, and each Participant undertakes to make such payments timely and otherwise in accordance with applicable laws and agreements. If separate payment is not permitted, each Participant shall determine and pay its proportionate share in advance to the Participant obligated to make such payment and such Participant shall timely make such payment. Each Participant shall furnish to the other Participant evidence of timely payment for all such required payments. In the event that either Participant fails to make any such required payment, the other Participant shall have the right to make such payment and shall thereby become subrogated to the rights of such third party; provided, however, that the making of any such payment on behalf of the other Participant shall not constitute acceptance by the paying Participant of any liability to such third party for the underlying obligation. 3.7 INDEMNITIES/LIMITATION OF LIABILITY. (a) Each Participant shall indemnify the other Participant, its directors, officers, employees, agents and attorneys, or Affiliates (collectively "INDEMNIFIED PARTICIPANT") from and against the entire amount of any Material Loss. A "MATERIAL LOSS" shall mean all costs, expenses, damages or liabilities, including attorneys' fees and other costs of litigation (either threatened or pending) arising out of or based on a breach by a Participant ("INDEMNIFYING PARTICIPANT") of any representation, warranty or covenant contained in this Agreement, including without limitation: E-10

(i) any failure by a Participant to determine accurately and make timely payment of its proportionate share of required royalties, production taxes and other payments out of production to third parties as required by SECTION 3.6; (ii) any action taken for or obligation or responsibility assumed on behalf of the other Participant, its directors, officers, employees, agents and attorneys, or Affiliates by a Participant, any of its directors, officers, employees, agents and attorneys, or Affiliates, in violation of SECTION 4.1; (iii) failure of a Participant or its Affiliates to comply with the non-compete or Area of Interest provisions of SECTION 12.6 or ARTICLE XIII; (iv) any Transfer that causes termination of the tax partnership established by SECTION 4.2, against which the transferring Participant shall indemnify the non-transferring Participant as provided in ARTICLE V of EXHIBIT C; and (v) failure of a Participant or its Affiliates to comply with the preemptive right under SECTION 16.3 and EXHIBIT H. A Material Loss shall not be deemed to have occurred until, in the aggregate, an Indemnified Participant incurs losses, costs, damages or liabilities in excess of __________ Dollars ($_____) relating to breaches of warranties, representations and covenants contained in this Agreement. Golden Phoenix's aggregate liability to all Indemnified Participants under this SECTION for breaches of the representations in SUBSECTION 3.2(G) shall not, however, exceed __________ Dollars ($__________). (b) If any claim or demand is asserted against an Indemnified Participant in respect of which such Indemnified Participant may be entitled to indemnification under this Agreement, written notice of such claim or demand shall promptly be given to the Indemnifying Participant. The Indemnifying Participant shall have the right, but not the obligation, by notifying the Indemnified Participant within thirty (30) days after its receipt of the notice of the claim or demand, to assume the entire control of (subject to the right of the Indemnified Participant to participate, at the Indemnified Participant's expense and with counsel of the Indemnified Participant's choice), the defense, compromise, or settlement of the matter, including, at the Indemnifying Participant's expense, employment of counsel of the Indemnifying Participant's choice. Any damages to the assets or business of the Indemnified Participant caused by a failure by the Indemnifying Participant to defend, compromise, or settle a claim or demand in a reasonable and expeditious manner requested by the Indemnified Participant, after the Indemnifying Participant has given notice that it will assume control of the defense, compromise, or settlement of the matter, shall be included in the damages for which the Indemnifying Participant shall be obligated to indemnify the Indemnified Participant. Any settlement or compromise of a matter by the Indemnifying Participant shall include a full release of claims against the Indemnified Participant which has arisen out of the indemnified claim or demand. E-11

ARTICLE IV RELATIONSHIP OF THE PARTICIPANTS 4.1 NO PARTNERSHIP. Nothing contained in this Agreement shall be deemed to constitute either Participant the partner or the venturer of the other, or, except as otherwise herein expressly provided, to constitute either Participant the agent or legal representative of the other, or to create any fiduciary relationship between them. The Participants do not intend to create, and this Agreement shall not be construed to create, any mining, commercial or other partnership or joint venture. Neither Participant, nor any of its directors, officers, employees, agents and attorneys, or Affiliates, shall act for or assume any obligation or responsibility on behalf of the other Participant, except as otherwise expressly provided herein, and any such action or assumption by a Participant's directors, officers, employees, agents and attorneys, or Affiliates shall be a breach by such Participant of this Agreement. The rights, duties, obligations and liabilities of the Participants shall be several and not joint or collective. Each Participant shall be responsible only for its obligations as herein set out and shall be liable only for its share of the costs and expenses as provided herein, and it is the express purpose and intention of the Participants that their ownership of Assets and the rights acquired hereunder shall be as tenants in common. 4.2 FEDERAL TAX ELECTIONS AND ALLOCATIONS. Without changing the effect of SECTION 4.1, the relationship of the Participants shall constitute a tax partnership within the meaning of Section 761(a) of the United States Internal Revenue Code of 1986, as amended. Tax elections and allocations shall be made as set forth in EXHIBIT C. 4.3 STATE INCOME TAX. To the extent permissible under applicable law, the relationship of the Participants shall be treated for state income tax purposes in the same manner as it is for federal income tax purposes. 4.4 TAX RETURNS. After approval of the Management Committee, any tax returns or other required tax forms shall be filed in accordance with EXHIBIT C. 4.5 OTHER BUSINESS OPPORTUNITIES. Except as expressly provided in this Agreement, each Participant shall have the right to engage in and receive full benefits from any independent business activities or operations, whether or not competitive with this Business, without consulting with, or obligation to, the other Participant. The doctrines of "CORPORATE OPPORTUNITY" or "BUSINESS OPPORTUNITY" shall not be applied to this Business nor to any other activity or operation of either Participant. Neither Participant shall have any obligation to the other with respect to any opportunity to acquire any property outside the Area of Interest at any time, or, except as otherwise provided in SECTION 12.6, within the Area of Interest after the termination of the Business. Unless otherwise agreed in writing, neither Participant shall have any obligation to mill, beneficiate or otherwise treat any Products in any facility owned or controlled by such Participant. 4.6 WAIVER OF RIGHTS TO PARTITION OR OTHER DIVISION OF ASSETS. The Participants hereby waive and release all rights of partition, or of sale in lieu thereof, or other division of Assets, including any such rights provided by Law. E-12

4.7 TRANSFER OR TERMINATION OF RIGHTS TO PROPERTIES. Except as otherwise provided in this Agreement, neither Participant shall Transfer all or any part of its interest in the Assets or this Agreement or otherwise permit or cause such interests to terminate. 4.8 IMPLIED COVENANTS. There are no implied covenants contained in this Agreement other than those of good faith and fair dealing. 4.9 NO THIRD PARTY BENEFICIARY RIGHTS. This Agreement shall be construed to benefit the Participants and their respective successors and assigns only, and shall not be construed to create third party beneficiary rights in any other party or in any governmental organization or agency, except to the extent required by Project Financing and as provided in SUBSECTION 3.7(A). ARTICLE V CONTRIBUTIONS BY PARTICIPANTS 5.1 PARTICIPANTS' INITIAL CONTRIBUTIONS. The Participants, as their Initial Contributions, hereby contribute their respective interests in the Properties to the purposes of this Agreement. 5.2 VALUE OF INITIAL CONTRIBUTIONS. Solely for the purposes of SECTIONS 6.3, 8.2(N), 9.5 and 10.5 of this Agreement and PARAGRAPH 4.1(A) OF EXHIBIT C, the agreed value of the Participants' respective Initial Contributions shall be as follows:
Golden Phoenix Borealis $5,000,000.00 $5,000,000.00

5.3 ADDITIONAL CONTRIBUTIONS. The Participants, subject to any election permitted by SUBSECTION 9.5(A), shall be obligated to contribute funds to adopted Programs and Budgets in accordance with their respective Participating Interests. ARTICLE VI INTERESTS OF PARTICIPANTS 6.1 INITIAL PARTICIPATING INTERESTS. The Participants shall have the following initial Participating Interests:
Golden Phoenix Borealis 50% 50%

6.2 CHANGES IN PARTICIPATING INTERESTS. The Participating Interests shall be eliminated or changed as follows: (a) Upon withdrawal or deemed withdrawal as provided in Section 6.3 and Article XII; E-13

(b) Upon an election by either Participant pursuant to SECTION 9.5 to contribute less to an adopted Program and Budget than the percentage equal to its Participating Interest, or to contribute nothing to an adopted Program and Budget; (c) In the event of default by either Participant in making its agreed-upon contribution to an adopted Program and Budget, followed by an election by the other Participant to invoke any of the remedies in SECTION 10.5; (d) Upon Transfer by either Participant of part or all of its Participating Interest in accordance with ARTICLE XVI; or (e) Upon acquisition by either Participant of part or all of the Participating Interest of the other Participant, however arising. 6.3 ELIMINATION OF MINORITY INTEREST. (a) A Reduced Participant whose Recalculated Participating Interest becomes less than ten percent (10%) shall be deemed to have withdrawn from the Business and shall relinquish its entire Participating Interest free and clear of any Encumbrances arising by, through or under the Reduced Participant, except any such Encumbrances listed in PARAGRAPH 1.1 OF EXHIBIT A or to which the Participants have agreed. Such relinquished Participating Interest shall be deemed to have accrued automatically to the other Participant. The Reduced Participant's Capital Account shall be transferred to the remaining Participant. The Reduced Participant shall have the right to receive ten percent (10%) of Net Proceeds, if any, to a maximum amount of seventy percent (70%) of the Reduced Participant's Equity Account balance as of the effective date of the withdrawal. Upon receipt of such amount, and subject to SECTION 6.4, the Reduced Participant shall thereafter have no further right, title, or interest in the Assets or under this Agreement, and the tax partnership established by EXHIBIT C shall dissolve pursuant to PARAGRAPH 4.2 OF EXHIBIT C. In such event, the Reduced Participant shall execute and deliver an appropriate conveyance of all of its right, title and interest in the Assets to the remaining Participant. (b) The relinquishment, withdrawal and entitlements for which this SECTION provides shall be effective as of the effective date of the recalculation under SECTIONS 9.5 or 10.5. However, if the final adjustment provided under SECTION 9.6 for any recalculation under SECTION 9.5 results in a Recalculated Participating Interest of ten percent (10%) or more: (i) the Recalculated Participating Interest shall be deemed, effective retroactively as of the first day of the Program Period, to have automatically revested; (ii) the Reduced Participant shall be reinstated as a Participant, with all of the rights and obligations pertaining thereto; (iii) the right to Net Proceeds under SUBSECTION 6.3(A) shall terminate; and (iv) the Manager, on behalf of the Participants, shall make any necessary reimbursements, reallocations of Products, contributions and other adjustments as provided in SUBSECTION 9.6(D). Similarly, if such final adjustment under SECTION 9.6 results in a Recalculated Participating Interest for either Participant of less than ten percent (10%) for a Program Period as to which the provisional calculation under SECTION 9.5 had not resulted in a Participating Interest of less than ten percent (10%), then such Participant, at its election within thirty (30) days after notice of the final adjustment, may contribute an amount resulting in a revised E-14

final adjustment and resultant Recalculated Participating Interest of ten percent (10%). If no such election is made, such Participant shall be deemed to have withdrawn under the terms of SUBSECTION 6.3(A) as of the beginning of such Program Period, and the Manager, on behalf of the Participants, shall make any necessary reimbursements, reallocations of Products, contributions and other adjustments as provided in SUBSECTION 9.6(D), including of any Net Proceeds to which such Participant may be entitled for such Program Period. 6.4 CONTINUING LIABILITIES UPON ADJUSTMENTS OF PARTICIPATING INTERESTS. Any reduction or elimination of either Participant's Participating Interest under SECTION 6.2 shall not relieve such Participant of its share of any liability, including, without limitation, Continuing Obligations, Environmental Liabilities and Environmental Compliance, whether arising, before or after such reduction or elimination, out of acts or omissions occurring or conditions existing prior to the Effective Date or out of Operations conducted during the term of this Agreement but prior to such reduction or elimination, regardless of when any funds may be expended to satisfy such liability. For purposes of this SECTION, such Participant's share of such liability shall be equal to its Participating Interest at the time the act or omission giving rise to the liability occurred, after first taking into account any reduction, readjustment and restoration of Participating Interests under SECTIONS 6.3, 9.5, 9.6 and 10.5 (or, as to such liability arising out of acts or omissions occurring or conditions existing prior to the Effective Date, equal to such Participant's initial Participating Interest). Should the cumulative cost of satisfying Continuing Obligations be in excess of cumulative amounts accrued or otherwise charged to the Environmental Compliance Fund as described in EXHIBIT B, each of the Participants shall be liable for its proportionate share (i.e., Participating Interest at the time of the act or omission giving rise to such liability occurred), after first taking into account any reduction, readjustment and restoration of Participating Interests under SECTIONS 6.3, 9.5, 9.6 and 10.5, of the cost of satisfying such Continuing Obligations, notwithstanding that either Participant has previously withdrawn from the Business or that its Participating Interest has been reduced or converted to an interest in Net Proceeds pursuant to SUBSECTION 6.3(A). 6.5 DOCUMENTATION OF ADJUSTMENTS TO PARTICIPATING INTERESTS. Adjustments to the Participating Interests need not be evidenced during the term of this Agreement by the execution and recording of appropriate instruments, but each Participant's Participating Interest and related Equity Account balance shall be shown in the accounting records of the Manager, and any adjustments thereto, including any reduction, readjustment, and restoration of Participating Interests under SECTIONS 6.3, 9.5, 9.6 and 10.5, shall be made monthly. However, either Participant, at any time upon the request of the other Participant, shall execute and acknowledge instruments necessary to evidence such adjustments in form sufficient for filing and recording in the jurisdiction where the Properties are located. 6.6 GRANT OF LIEN AND SECURITY INTEREST. (a) Subject to SECTION 6.7, each Participant grants to the other Participant a lien upon and a security interest in its Participating Interest, including all of its right, title and interest in the Assets, whenever acquired or arising, and the proceeds from and accessions to the foregoing. E-15

(b) The liens and security interests granted by SUBSECTION 6.6(A) shall secure every obligation or liability of the Participant granting such lien or security interest created under this Agreement, including the obligation to repay a Cover Payment in accordance with SECTION 10.4. Each Participant hereby agrees to take all action necessary to perfect such lien and security interest and hereby appoints the other Participant its attorney-in-fact to execute, file and record all financing statements and other documents necessary to perfect or maintain such lien and security interest. 6.7 SUBORDINATION OF INTERESTS. Each Participant shall, from time to time, take all necessary actions, including execution of appropriate agreements, to pledge and subordinate its Participating Interest, any liens it may hold which are created under this Agreement other than those created pursuant to SECTION 6.6 hereof, and any other right or interest it holds with respect to the Assets (other than any statutory lien of the Manager) to any secured borrowings for Operations approved by the Management Committee, including any secured borrowings relating to Project Financing, and any modifications or renewals thereof. ARTICLE VII MANAGEMENT COMMITTEE 7.1 ORGANIZATION AND COMPOSITION. The Participants hereby establish a Management Committee to determine overall policies, objectives, procedures, methods and actions under this Agreement. The Management Committee shall consist of three members appointed by Golden Phoenix and three members appointed by Borealis. Each Participant may appoint one or more alternates to act in the absence of a regular member. Any alternate so acting shall be deemed a member. Appointments by a Participant shall be made or changed by notice to the other members. Borealis shall designate one of its members to serve as the chair of the Management Committee. 7.2 DECISIONS. Each Participant, acting through its appointed member(s) in attendance at the meeting, shall have the votes on the Management Committee in proportion to its Participating Interest. Unless otherwise provided in this Agreement, the vote of the Participant with a Participating Interest over fifty percent (50%) shall determine the decisions of the Management Committee. In the case of any tie vote, the vote of Borealis shall determine the decisions of the Management Committee. 7.3 MEETINGS. (a) The Management Committee shall hold regular meetings at least quarterly in Reno, Nevada, or at other agreed places. The Manager shall give thirty (30) days notice to the Participants of such meetings. Additionally, either Participant may call a special meeting upon seven (7) days notice to the other Participant. In case of an emergency, reasonable notice of a special meeting shall suffice. There shall be a quorum if at least one member representing each Participant is present; provided, however, that if a Participant fails to attend two consecutive properly called meetings, then a quorum shall exist at the second meeting if the other Participant is represented by at least one appointed member, and a vote of such Participant shall be considered the vote required for the purposes of the conduct of all business properly noticed even if such vote would otherwise require unanimity. E-16

(b) If business cannot be conducted at a regular or special meeting due to the lack of a quorum, either Participant may call the next meeting upon seven (7) days notice to the other Participant. (c) Each notice of a meeting shall include an itemized agenda prepared by the Manager in the case of a regular meeting or by the Participant calling the meeting in the case of a special meeting, but any matters may be considered if either Participant adds the matter to the agenda at least five (5) days before the meeting or with the consent of the other Participant. The Manager shall prepare minutes of all meetings and shall distribute copies of such minutes to the other Participant within thirty (30) days after the meeting. Either Participant may electronically record the proceedings of a meeting with the consent of the other Participant. The other Participant shall sign and return or object to the minutes prepared by the Manager within thirty (30) days after receipt, and failure to do either shall be deemed acceptance of the minutes as prepared by the Manager. The minutes, when signed or deemed accepted by both Participants, shall be the official record of the decisions made by the Management Committee. Decisions made at a Management Committee meeting shall be implemented in accordance with adopted Programs and Budgets. If a Participant timely objects to minutes proposed by the Manager, the members of the Management Committee shall seek, for a period not to exceed thirty (30) days from receipt by the Manager of notice of the objections, to agree upon minutes acceptable to both Participants. If the Management Committee does not reach agreement on the minutes of the meeting within such thirty (30) day period, the minutes of the meeting as prepared by the Manager together with the other Participant's proposed changes shall collectively constitute the record of the meeting. If personnel employed in Operations are required to attend a Management Committee meeting, reasonable costs incurred in connection with such attendance shall be charged to the Business Account. All other costs shall be paid by the Participants individually. 7.4 ACTION WITHOUT MEETING IN PERSON. In lieu of meetings in person, the Management Committee may conduct meetings by telephone or video conference, so long as minutes of such meetings are prepared in accordance with SUBSECTION 7.3(C). The Management Committee may also take actions in writing signed by all members. 7.5 MATTERS REQUIRING APPROVAL. Except as otherwise delegated to the Manager in SECTION 8.2, the Management Committee shall have exclusive authority to determine all matters related to overall policies, objectives, procedures, methods and actions under this Agreement. ARTICLE VIII MANAGER 8.1 APPOINTMENT. The Participants hereby appoint Borealis as the Manager with overall management responsibility for Operations. Borealis hereby agrees to serve until it resigns as provided in SECTION 8.4. E-17

8.2 POWERS AND DUTIES OF MANAGER. Subject to the terms and provisions of this Agreement, the Manager shall have the following powers and duties, which shall be discharged in accordance with adopted Programs and Budgets. (a) The Manager shall manage, direct and control Operations, and shall prepare and present to the Management Committee proposed Programs and Budgets as provided in ARTICLE IX. (b) The Manager shall implement the decisions of the Management Committee, shall make all expenditures necessary to carry out adopted Programs, and shall promptly advise the Management Committee if it lacks sufficient funds to carry out its responsibilities under this Agreement. (c) The Manager shall use reasonable efforts to: (i) purchase or otherwise acquire all material, supplies, equipment, water, utility and transportation services required for Operations, such purchases and acquisitions to be made to the extent reasonably possible on the best terms available, taking into account all of the circumstances; (ii) obtain such customary warranties and guarantees as are available in connection with such purchases and acquisitions; and (iii) keep the Assets free and clear of all Encumbrances, except any such Encumbrances listed in PARAGRAPH 1.1 OF EXHIBIT A and those existing at the time of, or created concurrent with, the acquisition of such Assets, or mechanic's or materialmen's liens (which shall be contested, released or discharged in a diligent matter) or Encumbrances specifically approved by the Management Committee. (d) The Manager shall conduct such title examinations of the Properties and cure such title defects pertaining to the Properties as may be advisable in its reasonable judgment. (e) The Manager shall: (i) make or arrange for all payments required by leases, licenses, permits, contracts and other agreements related to the Assets; (ii) pay all taxes, assessments and like charges on Operations and Assets except taxes determined or measured by a Participant's sales revenue or net income and taxes, including production taxes, attributable to a Participant's share of Products, and shall otherwise promptly pay and discharge expenses incurred in Operations; provided, however, that if authorized by the Management Committee, the Manager shall have the right to contest (in the courts or otherwise) the validity or amount of any taxes, assessments or charges if the Manager deems them to be unlawful, unjust, unequal or excessive, or to undertake such other steps or proceedings as the Manager may deem reasonably necessary to secure a cancellation, reduction, readjustment or equalization thereof before the Manager shall be required to pay them, but in no event shall the Manager permit or allow title to the Assets to be lost as the result of the nonpayment of any taxes, assessments or like charges; and (iii) do all other acts reasonably necessary to maintain the Assets. (f) The Manager shall: (i) apply for all necessary permits, licenses and approvals; (ii) comply with all Laws; (iii) notify promptly the Management Committee of any allegations of substantial violation thereof; and (iv) prepare and file all reports or notices required for or as a result of Operations. The Manager shall not be in breach of this provision if a violation E-18

has occurred in spite of the Manager's good faith efforts to comply consistent with its standard of care under SECTION 8.3. In the event of any such violation, the Manager shall timely cure or dispose of such violation on behalf of both Participants through performance, payment of fines and penalties, or both, and the cost thereof shall be charged to the Business Account. (g) The Manager shall prosecute and defend, but shall not initiate without consent of the Management Committee, all litigation or administrative proceedings arising out of Operations. The non-managing Participant shall have the right to participate, at its own expense, in such litigation or administrative proceedings. The non-managing Participant shall approve in advance any settlement involving payments, commitments or obligations in excess of Twenty-Five Thousand Dollars ($25,000.00) in cash or value. (h) The Manager shall provide insurance for the benefit of the Participants as provided in EXHIBIT F or as may otherwise be determined from time to time by the Management Committee. (i) The Manager may dispose of Assets, whether by abandonment, surrender, or Transfer in the ordinary course of business, except that Properties may be abandoned or surrendered only as provided in ARTICLE XIV. Without prior authorization from the Management Committee, however, the Manager shall not: (i) dispose of Assets in any one transaction (or in any series of related transactions) having a value in excess of Twenty-Five Thousand Dollars ($25,000.00); (ii) enter into any sales contracts or commitments for Product, except as permitted in SECTION 11.2; (iii) begin a liquidation of the Business; or (iv) dispose of all or a substantial part of the Assets necessary to achieve the purposes of the Business. (j) The Manager shall have the right to carry out its responsibilities hereunder through agents, Affiliates or independent contractors. (k) The Manager shall perform or cause to be performed all assessment and other work, and shall pay all Governmental Fees required by Law in order to maintain the unpatented mining claims, mill sites and tunnel sites included within the Properties. The Manager shall have the right to perform the assessment work required hereunder pursuant to a common plan of exploration and continued actual occupancy of such claims and sites shall not be required. The Manager shall not be liable on account of any determination by any court or governmental agency that the work performed by the Manager does not constitute the required annual assessment work or occupancy for the purposes of preserving or maintaining ownership of the claims, provided that the work done is pursuant to an adopted Program and Budget and is performed in accordance with the Manager's standard of care under SECTION 8.3. The Manager shall timely record with the appropriate county and file with the appropriate United States agency any required affidavits, notices of intent to hold and other documents in proper form attesting to the payment of Governmental Fees, the performance of assessment work or intent to hold the claims and sites, in each case in sufficient detail to reflect compliance with the requirements applicable to each claim and site. The Manager shall not be liable on account of any determination by any court or governmental agency that any such document submitted by the Manager does not comply with applicable requirements, provided that such document is prepared and recorded or filed in accordance with the Manager's standard of care under SECTION 8.3. E-19

(l) If authorized by the Management Committee, the Manager may: (i) locate, amend or relocate any unpatented mining claim or mill site or tunnel site, (ii) locate any fractions resulting from such amendment or relocation, (iii) apply for patents or mining leases or other forms of mineral tenure for any such unpatented claims or sites, (iv) abandon any unpatented mining claims for the purpose of locating mill sites or otherwise acquiring from the United States rights to the ground covered thereby, (v) abandon any unpatented mill sites for the purpose of locating mining claims or otherwise acquiring from the United States rights to the ground covered thereby, (vi) exchange with or convey to the United States any of the Properties for the purpose of acquiring rights to the ground covered thereby or other adjacent ground, and (vii) convert any unpatented claims or mill sites into one or more leases or other forms of mineral tenure pursuant to any Law hereafter enacted. (m) The Manager shall keep and maintain all required accounting and financial records pursuant to the procedures described in EXHIBIT B and in accordance with customary cost accounting practices in the mining industry, and shall ensure appropriate separation of accounts unless otherwise agreed by the Participants. (n) The Manager shall maintain Equity Accounts for each Participant. Each Participant's Equity Account shall be credited with the value of such Participant's contributions under SECTION 5.2 and shall be credited with amounts contributed by such Participant under SECTION 5.3. Each Participant's Equity Account shall be charged with the cash and the fair market value of property distributed to such Participant (net of liabilities assumed by such Participant and liabilities to which such distributed property is subject). Contributions and distributions shall include all cash contributions or distributions plus the agreed value (expressed in dollars) of all in-kind contributions or distributions. Solely for purposes of determining the Equity Account balances of the Participants, the Manager shall reasonably estimate the fair market value of all Products distributed to the Participants, and such estimated value shall be used regardless of the actual amount received by each Participant upon disposition of such Products. (o) The Manager shall keep the Management Committee advised of all Operations by submitting in writing to the members of the Management Committee: (i) monthly progress reports that include statements of expenditures and comparisons of such expenditures to the adopted Budget; (ii) periodic summaries of data acquired; (iii) copies of reports concerning Operations; (iv) a detailed final report within sixty (60) days after completion of each Program and Budget, which shall include comparisons between actual and budgeted expenditures and comparisons between the objectives and results of Programs; and (v) such other reports as any member of the Management Committee may reasonably request. Subject to ARTICLE XVIII, at all reasonable times the Manager shall provide the Management Committee, or other representative of a Participant upon the request of such Participant's member of the Management Committee, access to, and the right to inspect and, at such Participant's cost and expense, copies of the Existing Data and all maps, drill logs and other drilling data, core, pulps, reports, surveys, assays, analyses, production reports, operations, technical, accounting and financial records, and other Business Information, to the extent preserved or kept by the Manager, subject to ARTICLE XVIII. In addition, the Manager shall allow the nonmanaging Participant, at the latter's sole risk, cost and expense, and E-20

subject to reasonable safety regulations, to inspect the Assets and Operations at all reasonable times, so long as the non-managing Participant does not unreasonably interfere with Operations. (p) The Manager shall prepare an Environmental Compliance plan for all Operations consistent with the requirements of any applicable Laws or contractual obligations and shall include in each Program and Budget sufficient funding to implement the Environmental Compliance plan and to satisfy the financial assurance requirements of any applicable Law or contractual obligation pertaining to Environmental Compliance. To the extent practical, the Environmental Compliance plan shall incorporate concurrent reclamation of Properties disturbed by Operations. (q) The Manager shall undertake to perform Continuing Obligations when and as economic and appropriate, whether before or after termination of the Business. The Manager shall have the right to delegate performance of Continuing Obligations to persons having demonstrated skill and experience in relevant disciplines. As part of each Program and Budget submittal, the Manager shall specify in such Program and Budget the measures to be taken for performance of Continuing Obligations and the cost of such measures. The Manager shall keep the other Participant reasonably informed about the Manager's efforts to discharge Continuing Obligations. Authorized representatives of each Participant shall have the right from time to time to enter the Properties to inspect work directed toward satisfaction of Continuing Obligations and audit books, records, and accounts related thereto. (r) The funds that are to be deposited into the Environmental Compliance Fund shall be maintained by the Manager in a separate, interest bearing cash management account, which may include, but is not limited to, money market investments and money market funds, and/or in longer term investments if approved by the Management Committee. Such funds shall be used solely for Environmental Compliance and Continuing Obligations, including the committing of such funds, interests in property, insurance or bond policies, or other security to satisfy Laws regarding financial assurance for the reclamation or restoration of the Properties, and for other Environmental Compliance requirements. (s) If Participating Interests are adjusted in accordance with this Agreement the Manager shall propose from time to time one or more methods for fairly allocating costs for Continuing Obligations. (t) The Manager shall undertake all other activities reasonably necessary to fulfill the foregoing, and to implement the policies, objectives, procedures, methods and actions determined by the Management Committee pursuant to SECTION 7.1. 8.3 STANDARD OF CARE. The Manager shall discharge its duties under SECTION 8.2 and conduct all Operations in a good, workmanlike and efficient manner, in accordance with sound mining and other applicable industry standards and practices, and in accordance with Laws and with the terms and provisions of leases, licenses, permits, contracts and other agreements pertaining to the Assets. The Manager shall not be liable to the other Participant for any act or omission resulting in damage or loss except to the extent caused by or attributable to the Manager's willful misconduct or gross negligence. The Manager shall not be in default of any of its duties E-21

under SECTION 8.2 if its inability or failure to perform results from the failure of the other Participant to perform acts or to contribute amounts required of it by this Agreement. 8.4 RESIGNATION; DEEMED OFFER TO RESIGN. The Manager may resign upon not less than six (6) months' prior notice to the other Participant, in which case the other Participant may elect to become the new Manager by notice to the resigning Participant within sixty (60) days after the notice of resignation. If any of the following shall occur, the Manager shall be deemed to have resigned upon the occurrence of the event described in each of the following Subsections, with the successor Manager to be appointed by the other Participant at a subsequently called meeting of the Management Committee, at which the Manager shall not be entitled to vote. The other Participant may appoint itself or a third party as the Manager. (a) The aggregate Participating Interest of the Manager and its Affiliates becomes less than forty percent (40%); (b) The Manager fails to perform a material obligation imposed upon it under this Agreement and such failure continues for a period of sixty (60) days after notice from the other Participant demanding performance; (c) The Manager fails to pay or contest in good faith its bills and Business debts as such obligations become due; (d) A receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for a substantial part of its assets is appointed and such appointment is neither made ineffective nor discharged within sixty (60) days after the making thereof, or such appointment is consented to, requested by, or acquiesced in by the Manager; (e) The Manager commences a voluntary case under any applicable bankruptcy, insolvency or similar law now or hereafter in effect; or consents to the entry of an order for relief in an involuntary case under any such law or to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar official of any substantial part of its assets; or makes a general assignment for the benefit of creditors; or takes corporate or other action in furtherance of any of the foregoing; or (f) Entry is made against the Manager of a judgment, decree or order for relief affecting its ability to serve as Manager, or a substantial part of its Participating Interest or its other assets by a court of competent jurisdiction in an involuntary case commenced under any applicable bankruptcy, insolvency or other similar law of any jurisdiction now or hereafter in effect. Under SUBSECTIONS (D), (E) or (F) above, the appointment of a successor Manager shall be deemed to predate the event causing a deemed resignation. 8.5 PAYMENTS TO MANAGER. The Manager shall be compensated for its services and reimbursed for its costs hereunder in accordance with EXHIBIT B. E-22

8.6 TRANSACTIONS WITH AFFILIATES. If the Manager engages Affiliates to provide services hereunder, it shall do so on terms no less favorable than would be the case in arm's-length transactions with unrelated persons. 8.7 ACTIVITIES DURING DEADLOCK. If the Management Committee for any reason fails to adopt an Exploration, Pre-Feasibility Study, Feasibility Study or Development Program and Budget, the Manager shall continue Operations at levels sufficient to maintain the Properties. If the Management Committee for any reason fails to adopt an initial Mining Program and Budget or any Expansion or Modification Programs and Budgets, the Manager shall continue Operations at levels sufficient to maintain the then current Operations and Properties. If the Management Committee for any reason fails to adopt Mining Programs and Budgets subsequent to the initial Mining Program and Budget, subject to the contrary direction of the Management Committee and receipt of necessary funds, the Manager shall continue Operations at levels comparable with the last adopted Mining Program and Budget. All of the foregoing shall be subject to the contrary direction of the Management Committee and the receipt of necessary funds. ARTICLE IX PROGRAMS AND BUDGETS 9.1 INITIAL PROGRAM AND BUDGET. The Initial Program and Budget to which both Participants have agreed is hereby adopted and is attached as EXHIBIT G. 9.2 OPERATIONS PURSUANT TO PROGRAMS AND BUDGETS. Except as otherwise provided in SECTION 9.13 and ARTICLE XIII, Operations shall be conducted, expenses shall be incurred, and Assets shall be acquired only pursuant to adopted Programs and Budgets. Every Program and Budget adopted pursuant to this Agreement shall provide for accrual of reasonably anticipated Environmental Compliance expenses for all Operations contemplated under the Program and Budget. 9.3 PRESENTATION OF PROGRAMS AND BUDGETS. Proposed Programs and Budgets shall be prepared by the Manager for a period of one (1) year or any other period as approved by the Management Committee, and shall be submitted to the Management Committee for review and consideration. All proposed Programs and Budgets may include Exploration, Pre-Feasibility Studies, Feasibility Study, Development, Mining and Expansion or Modification Operations components, or any combination thereof, and shall be reviewed and adopted upon a vote of the Management Committee in accordance with SECTIONS 7.2 and 9.4. Each Program and Budget adopted by the Management Committee, regardless of length, shall be reviewed at least once a year at a meeting of the Management Committee. During the period encompassed by any Program and Budget, and at least four (4) months prior to its expiration, a proposed Program and Budget for the succeeding period shall be prepared by the Manager and submitted to the Management Committee for review and consideration. 9.4 REVIEW AND ADOPTION OF PROPOSED PROGRAMS AND BUDGETS. Within thirty (30) days after submission of a proposed Program and Budget, each Participant shall submit in writing to the Management Committee: E-23

(a) Notice that the Participant approves any or all of the components of the proposed Program and Budget; (b) Modifications proposed by the Participant to the components of the proposed Program and Budget; or (c) Notice that the Participant rejects any or all of the components of the proposed Program and Budget. If a Participant fails to give any of the foregoing responses within the allotted time, the failure shall be deemed to be a vote by the Participant for adoption of the Manager's proposed Program and Budget. If a Participant makes a timely submission to the Management Committee pursuant to SUBSECTIONS 9.4(A), (B) or (C), then the Manager working with the other Participant shall seek for a period of time not to exceed twenty (20) days to develop a complete Program and Budget acceptable to both Participants. The Manager shall then call a Management Committee meeting in accordance with SECTION 7.3 for purposes of reviewing and voting upon the proposed Program and Budget. 9.5 ELECTION TO PARTICIPATE. (a) By notice to the Management Committee within twenty (20) days after the final vote adopting a Program and Budget, and notwithstanding its vote concerning adoption of a Program and Budget, a Participant may elect to participate in the approved Program and Budget: (i) in proportion to its respective Participating Interest, (ii) in some lesser amount than its respective Participating Interest, or (iii) not at all. In case of an election under SUBSECTION 9.5(A)(II) or (III), its Participating Interest shall be recalculated as provided in SUBSECTION 9.5(B) below, with dilution effective as of the first day of the Program Period for the adopted Program and Budget. If a Participant fails to so notify the Management Committee of the extent to which it elects to participate, the Participant shall be deemed to have elected to contribute to such Program and Budget in proportion to its respective Participating Interest as of the beginning of the Program Period. (b) If a Participant elects to contribute to an adopted Program and Budget some lesser amount than in proportion to its respective Participating Interest, or not at all, and the other Participant elects to fund all or any portion of the deficiency, the Participating Interest of the Reduced Participant shall be provisionally recalculated as follows: (i) for an election made before Payout, by dividing: (A) the sum of (1) the amount credited to the Reduced Participant's Equity Account with respect to its Initial Contribution under SECTION 5.2, (2) the total of all of the Reduced Participant's contributions under SECTION 5.3, and (3) the amount, if any, the Reduced Participant elects to contribute to the adopted Program and Budget; by (B) the sum of (1), (2) and (3) above for both Participants; and then multiplying the result by one hundred; or E-24

(ii) for an election made after Payout, by reducing its Participating Interest in an amount equal to two times the amount by which it would have been reduced under SUBSECTION 9.5(B)(I) if such election were made before Payout. The Participating Interest of the other Participant shall be increased by the amount of the reduction in the Participating Interest of the Reduced Participant, and if the other Participant elects not to fund the entire deficiency, the Manager shall adjust the Program and Budget to reflect the funds available. (c) Whenever the Participating Interests are recalculated pursuant to this SUBSECTION 9.5, (i) the Equity Accounts of both Participants shall be revised to bear the same ratio to each other as their recalculated Participating Interests; and (ii) the portion of Capital Account attributable to the reduced Participating Interest of the Reduced Participant shall be transferred to the other Participant. 9.6 RECALCULATION OR RESTORATION OF REDUCED INTEREST BASED ON ACTUAL EXPENDITURES. (a) If a Participant makes an election under SUBSECTION 9.5(A)(II) or (III), then within sixty (60) days after the conclusion of such Program and Budget, the Manager shall report the total amount of money expended plus the total obligations incurred by the Manager for such Budget. (b) If the Manager expended or incurred obligations that were more or less than the adopted Budget, the Participating Interests shall be recalculated pursuant to SUBSECTION 9.5(B) by substituting each Participant's actual contribution to the adopted Budget for that Participant's estimated contribution at the time of the Reduced Participant's election under SUBSECTION 9.5(A). (c) If the Manager expended or incurred obligations of less than 80 percent (80%) of the adopted Budget, within thirty (30) days of receiving the Manager's report on expenditures, the Reduced Participant may notify the other Participant of its election to reimburse the other Participant for the difference between any amount contributed by the Reduced Participant to such adopted Program and Budget and the Reduced Participant's proportionate share (at the Reduced Participant's former Participating Interest) of the actual amount expended or incurred for the Program, plus interest on the difference accruing at the rate described in SECTION 10.3 plus three (3) percentage points. The Reduced Participant shall deliver the appropriate amount (including interest) to the other Participant with such notice. Failure of the Reduced Participant to so notify and tender such amount shall result in dilution occurring in accordance with this ARTICLE IX and shall bar the Reduced Participant from its rights under this SUBSECTION 9.6(C) concerning the relevant adopted Program and Budget. (d) All recalculations under this SECTION IX shall be effective as of the first day of the Program Period for the Program and Budget. The Manager, on behalf of both Participants, shall make such reimbursements, reallocations of Products, contributions and other adjustments as are necessary so that, to the extent possible, each Participant will be placed in the E-25

position it would have been in had its Participating Interests as recalculated under this SECTION been in effect throughout the Program Period for such Program and Budget. If the Participants are required to make contributions, reimbursements or other adjustments pursuant to this SECTION, the Manager shall have the right to purchase or sell a Participant's share of Products in the same manner as under SECTION 11.2 and to apply the proceeds of such sale to satisfy that Participant's obligation to make such contributions, reimbursements or adjustments. (e) Whenever the Participating Interests are recalculated pursuant to this SECTION, (i) the Participants' Equity Accounts shall be revised to bear the same ratio to each other as their Recalculated Participating Interests; and (ii) the portion of Capital Account attributable to the reduced Participating Interest of the Reduced Participant shall be transferred to the other Participant. 9.7 PRE-FEASIBILITY STUDY PROGRAM AND BUDGETS. (a) At such time as either Participant is of the good faith and reasonable opinion that economically viable Mining Operations may be possible on the Properties, the Participant may propose to the Management Committee that a Pre-Feasibility Study Program and Budget, or a Program and Budget that includes Pre-Feasibility Studies, be prepared. Such proposal shall be made in writing to the other Participant, shall reference the data upon which the proposing Participant bases its opinion, and shall call a meeting of the Management Committee pursuant to SECTION 7.3. If such proposal is adopted by the Management Committee, the Manager shall prepare or have prepared a Pre-Feasibility Study Program and Budget as approved by the Management Committee and shall submit the same to the Management Committee within sixty (60) days following adoption of the proposal. (b) Pre-Feasibility Studies may be conducted by the Manager, Feasibility Contractors, or both, or may be conducted by the Manager and audited by Feasibility Contractors, as the Management Committee determines. A Pre-Feasibility Study Program shall include the work necessary to prepare and complete the Pre-Feasibility Study approved in the proposal adopted by the Management Committee, which may include some or all of the following: (i) analyses of various alternatives for mining, processing and beneficiation of Products; (ii) analyses of alternative mining, milling, and production rates; (iii) analyses of alternative sites for placement of facilities (i.e., water supply facilities, transport facilities, reagent storage, offices, shops, warehouses, stock yards, explosives storage, handling facilities, housing, public facilities); (iv) analyses of alternatives for waste treatment and handling (including a description of each alternative of the method of tailings disposal and the location of the proposed disposal site); (v) estimates of recoverable proven and probable reserves of Products and of related substances, in terms of technical and economic constraints (extraction and E-26

treatment of Products), including the effect of grade, losses, and impurities, and the estimated mineral composition and content thereof, and review of mining rates commensurate with such reserves; (vi) analyses of environmental impacts of the various alternatives, including an analysis of the permitting, environmental liability and other Environmental Law implications of each alternative, and costs of Environmental Compliance for each alternative; (vii) conduct of appropriate metallurgical tests to determine the efficiency of alternative extraction, recovery and processing techniques, including an estimate of water, power, and reagent consumption requirements; (viii) conduct of hydrology and other studies related to any required dewatering; and (ix) conduct of other studies and analyses approved by the Management Committee. (c) The Manager shall have the discretion to base its and any Feasibility Contractors' Pre-Feasibility Study on the cumulative results of each discipline studied, so that if a particular portion of the work would result in the conclusion that further work based on these results would be unwarranted for a particular alternative, the Manager shall have no obligation to continue expenditures on other Pre-Feasibility Studies related solely to such alternative. 9.8 COMPLETION OF PRE-FEASIBILITY STUDIES AND SELECTION OF APPROVED ALTERNATIVES. As soon as reasonably practical following completion of all Pre-Feasibility Studies required to evaluate fully the alternatives studied pursuant to Pre-Feasibility Programs, the Manager shall prepare a report summarizing all Pre-Feasibility Studies and shall submit the same to the Management Committee. Such report shall incorporate the following: (a) the results of the analyses of the alternatives and other matters evaluated in the conduct of the Pre-Feasibility Programs; (b) reasonable estimates of capital costs for the Development and start-up of the mine, mill and other processing and ancillary facilities required by the Development and Mining alternatives evaluated (based on flowsheets, piping and instrumentation diagrams, and other major engineering diagrams), which cost estimates shall include reasonable estimates of: (i) capitalized pre-stripping expenditures, if an open pit or surface mine is proposed; (ii) expenditures required to purchase, construct and install all machinery, equipment and other facilities and infrastructure (including contingencies) required to bring a mine into commercial production, including an analysis of costs of equipment or supply contracts in lieu of Development costs for each Development and Mining alternative evaluated; E-27

(iii) expenditures required to perform all other related work required to commence commercial production of Products and, if applicable, process Products (including reasonable estimates of working capital requirements); and (iv) all other direct and indirect costs and general and administrative expenses that may be required for a proper evaluation of the Development and Mining alternatives and annual production levels evaluated. The capital cost estimates shall include a schedule of the timing of the estimated capital requirements for each alternative; (c) a reasonable estimate of the annual expenditures required for the first year of Operations after completion of the capital program described in SUBSECTION 9.8(B) for each Development alternative evaluated, and for subsequent years of Operations, including estimates of annual production, processing, administrative, operating and maintenance expenditures, taxes (other than income taxes), working capital requirements, royalty and purchase obligations, equipment leasing or supply contract expenditures, work commitments, Environmental Compliance costs, post-Operations Environmental Compliance and Continuing Obligations funding requirements and all other anticipated costs of such Operations. This analysis shall also include an estimate of the number of employees required to conduct such Operations for each alternative; (d) a review of the nature, extent and rated capacity of the mine, machinery, equipment and other facilities preliminarily estimated to be required for the purpose of producing and marketing Products under each Development and Mining alternative analyzed; (e) an analysis (and sensitivity analyses reasonably requested by either Participant), based on various target rates of return and price assumptions requested by either Participant, of whether it is technically, environmentally, and economically feasible to place a prospective ore body or deposit within the Properties into commercial production for each of the Development and Mining alternatives analyzed (including a discounted cash flow rate of return investment analysis for each alternative and net present value estimate using various discount rates requested by either Participant); and (f) such other information as the Management Committee deems appropriate. Within sixty (60) days after delivery of the Pre-Feasibility Study summary to the Participants, a Management Committee meeting shall be convened for the purposes of reviewing the Pre-Feasibility Study summary and selecting one or more Approved Alternatives, if any. 9.9 PROGRAMS AND BUDGETS FOR FEASIBILITY STUDY. Within sixty (60) days following the selection of an Approved Alternative, the Manager shall submit to the Management Committee a Program and a Budget, which shall include necessary Operations, for the preparation of a Feasibility Study. A Feasibility Study may be prepared by the Manager, Feasibility Contractors, or both, or may be prepared by the Manager and audited by Feasibility Contractors, as the Management Committee determines. E-28

9.10 DEVELOPMENT PROGRAMS AND BUDGETS; PROJECT FINANCING. (a) Unless otherwise determined by the Management Committee, the Manager shall not submit to the Management Committee a Program and Budget including Development of the mine described in a completed Feasibility Study until sixty (60) days following the receipt by Manager of the Feasibility Study. The Program and Budget, which includes Development of the mine described in the completed Feasibility Study, shall be based on the estimated cost of Development described in the Feasibility Study for the Approved Alternative, unless otherwise directed by the Management Committee. (b) Promptly following adoption of the Program and Budget, which includes Development as described in a completed Feasibility Study, but in no event more than ninety (90) days thereafter, the Manager shall submit to the Management Committee a report on material bids received for Development work ("BID REPORT"). If bids described in the Bid Report result in the aggregate cost of Development work exceeding one hundred twenty percent (120%) of the Development cost estimates that formed the basis of the Development component of the adopted Program and Budget, the Program and Budget, which includes relevant Development, shall be deemed to have been resubmitted to the Management Committee based on the aggregate costs as described in the Bid Report on the date of receipt of the Bid Report and shall be reviewed and adopted in accordance with SECTIONS 7.2 and 9.4. (c) If the Management Committee approves the Development of the mine described in a Feasibility Study and also decides to seek Project Financing for such mine, each Participant shall, at its own cost, cooperate in seeking to obtain Project Financing for such mine; provided, however, that all fees, charges and costs (including attorneys and technical consultants fees) paid to the Project Financing lenders shall be borne by the Participants in proportion to their Participating Interests, unless such fees are capitalized as a part of the Project Financing. 9.11 EXPANSION OR MODIFICATION PROGRAMS AND BUDGETS. Any Program and Budget proposed by the Manager involving Expansion or Modification shall be based on a Feasibility Study prepared by the Manager, Feasibility Contractors, or both, or prepared by the Manager and audited by Feasibility Contractors, as the Management Committee determines. The Program and Budget, which include Expansion or Modification, shall be submitted for review and approval by the Management Committee within sixty (60) days following receipt by the Manager of such Feasibility Study. 9.12 BUDGET OVERRUNS; PROGRAM CHANGES. With respect to all adopted Programs and Budgets, the Manager shall immediately notify the Management Committee of any material departure from an adopted Program and Budget. If the Manager exceeds an adopted Budget by more than fifteen percent (15%) in the aggregate, then the excess over fifteen percent (15%), unless directly caused by an emergency or unexpected expenditure made pursuant to SECTION 9.13 or unless otherwise authorized or ratified by the Management Committee, shall be for the sole account of the Manager and such excess shall not be included in the calculations of the Participating Interests nor deemed a contribution under this Agreement. Budget overruns of fifteen percent (15%) or less in the aggregate shall be borne by the Participants in proportion to their respective Participating Interests. E-29

9.13 EMERGENCY OR UNEXPECTED EXPENDITURES. In case of emergency, the Manager may take any reasonable action it deems necessary to protect life or property, to protect the Assets or to comply with Laws. The Manager may make reasonable expenditures on behalf of the Participants for unexpected events that are beyond its reasonable control and that do not result from a breach by it of its standard of care. The Manager shall promptly notify the Participants of the emergency or unexpected expenditure, and the Manager shall be reimbursed for all resulting costs by the Participants in proportion to their respective Participating Interests. ARTICLE X ACCOUNTS AND SETTLEMENTS 10.1 MONTHLY STATEMENTS. The Manager shall submit to the Management Committee monthly statements of account reflecting in reasonable detail the charges and credits to the Business Account during the preceding month. 10.2 CASH CALLS. On the basis of each adopted Program and Budget, the Manager shall submit prior to the last day of each month a billing for estimated cash requirements for the next month. Within ten (10) days after receipt of each billing, or a billing made pursuant to SECTION 9.13 or 12.4, each Participant shall advance its proportionate share of such cash requirements. The Manager shall record all funds received in the Business Account. The Manager shall at all times maintain a cash balance approximately equal to the rate of disbursement for up to sixty (60) days. All funds in excess of immediate cash requirements shall be invested by the Manager for the benefit of the Business in cash management accounts and investments selected at the discretion of the Manager, which accounts may include, but are not limited to, money market investments and money market funds. (a) Following the decision to commence Development or Mining on any of the Properties, the Manager shall give the non-Manager notice of the time and amount of the first cash call. The non-Manager shall have a period of four (4) months from receipt of this notice in which to obtain financing to satisfy its financial obligations under the development and mining plan. If, at the end of that four months, the non-Manager has obtained a letter of commitment from a lender or other financial institution to provide financing for the non-Manager's share of expenses, the non-Manager shall have an additional period of two (2) months in which to secure its financing and meet its cash call obligation. During this period of four or six months, the Manager may proceed with development of the Properties and advance the non-Manager's share of costs. These advances by the Manager, together with interest at an annual rate equal to two (2) percentage points over the Prime Rate, shall become a lien against the non-Manager's share of production. 10.3 FAILURE TO MEET CASH CALLS. A Participant that fails to meet cash calls in the amount and at the times specified in SECTION 10.2 shall be in default, and the amounts of the defaulted cash call shall bear interest from the date due at an annual rate equal to three (3) percentage points over the Prime Rate, but in no event shall the rate of interest exceed the maximum permitted by Law. Such interest shall accrue to the benefit of and be payable to the non-defaulting Participant, but shall not be deemed as amounts contributed by the non-defaulting Participant in the event dilution occurs in accordance with ARTICLE VI. In addition to any other rights and remedies E-30

available to it by Law, the non-defaulting Participant shall have those other rights, remedies, and elections specified in SECTIONS 10.4 and 10.5. 10.4 COVER PAYMENT. If a Participant defaults in making a contribution or cash call required by an adopted Program and Budget, the non-defaulting Participant may, but shall not be obligated to, advance some portion or all of the amount in default on behalf of the defaulting Participant (a "COVER PAYMENT"). Each and every Cover Payment shall constitute a demand loan bearing interest from the date of the advance at the rate provided in SECTION 10.3. If more than one Cover Payment is made, the Cover Payments shall be aggregated and the rights and remedies described herein pertaining to an individual Cover Payment shall apply to the aggregated Cover Payments. The failure to repay such loan upon demand shall be a default. 10.5 REMEDIES. The Participants acknowledge that if either Participant defaults in making a contribution required by ARTICLE V or a cash call, or in repaying a loan, as required under SECTIONS 10.2, 10.3 or 10.4, whether or not a Cover Payment is made, it will be difficult to measure the damages resulting from such default (it being hereby understood and agreed that the Participants have attempted to determine such damages in advance and determined that the calculation of such damages cannot be ascertained with reasonable certainty). Both Participants acknowledge and recognize that the damage to the non-defaulting Participant could be significant. In the event of such default, as reasonable liquidated damages, the non-defaulting Participant may, with respect to any such default not cured within thirty (30) days after notice to the defaulting Participant of such default, elect any of the following remedies by giving notice to the defaulting Participant. Such election may be made with respect to each failure to meet a cash call relating to a Program and Budget, regardless of the frequency of such cash calls, provided such cash calls are made in accordance with SECTION 10.2. (a) The defaulting Participant grants to the non-defaulting Participant a power of sale as to all or any portion of its interest in any Assets or in its Participating Interest that is subject to the lien and security interest granted in SECTION 6.6 (whether or not such lien and security interest has been perfected), upon a default under SECTIONS 10.3 or 10.4. Such power shall be exercised in the manner provided by applicable Law or otherwise in a commercially reasonable manner and upon reasonable notice. If the non-defaulting Participant elects to enforce the lien or security interest pursuant to the terms of this SUBSECTION, the defaulting Participant shall be deemed to have waived any available right of redemption, any required valuation or appraisal of the secured property prior to sale, any available right to stay execution or to require a marshaling of assets, and any required bond in the event a receiver is appointed, and the defaulting Participant shall be liable for any deficiency. (b) The non-defaulting Participant may elect to have the defaulting Participant's Participating Interest diluted or eliminated as follows: (i) For a default occurring before Payout relating to a Program and Budget covering in whole or in part Exploration, Pre-Feasibility Study or Feasibility Study Operations, the Reduced Participant's Participating Interest shall be recalculated by dividing: (X) the sum of (1) the value of the Reduced Participant's Initial Contribution under SECTION 5.2, (2) the total of all of the Reduced Participant's contributions under SECTION 5.3, and (3) the amount, if any, the E-31

Reduced Participant contributed to the adopted Program and Budget with respect to which the default occurred; by (Y) the sum of (1), (2) and (3) above for both Participants; and then multiplying the result by one hundred. For such a default occurring after Payout, the Reduced Participant's Participating Interest shall be reduced in an amount equal to two times the amount by which it would have been reduced if such default had occurred before Payout. For such a default, whether occurring before or after Payout, the Recalculated Participating Interest shall then be further reduced: (A) for a default relating exclusively to an Exploration Program and Budget, by multiplying the Recalculated Participating Interest by the following percentage: 90%; or (B) for a default relating to a Program and Budget covering in whole or in part Pre-Feasibility Study and/or Feasibility Study Operations, by multiplying the Recalculated Participating Interest by the following percentage: 80%. The Participating Interest of the other Participant shall be increased by the amount of the reduction in the Participating Interest of the Reduced Participant, including the further reduction under SUBSECTIONS 10.5(B) (i)(A) or (B). (ii) For a default relating to a Program and Budget covering in whole or in part Development or Mining, at the non-defaulting Participant's election, the defaulting Participant shall be deemed to have withdrawn and to have automatically relinquished its interest in the Assets to the non-defaulting Participant; provided, however, the defaulting Participant shall have the right to receive only from ten percent (10%) of Net Proceeds, if any, and not from any other source, an amount equal to ten percent (10%) of the defaulting Participant's Equity Account balance at the time of such default. Upon receipt of such amount the defaulting Participant shall thereafter have no further right, title or interest in the Assets, but shall remain liable to the extent provided in SECTION 6.4. (iii) Dilution under this SUBSECTION 10.5(B) shall be effective as of the date of the original default, and SECTION 9.6 shall not apply. The amount of any Cover Payment under SECTION 10.4 and interest thereon, or any interest accrued in accordance with SECTION 10.3, shall be deemed to be amounts contributed by the non-defaulting Participant, and not as amounts contributed by the defaulting Participant. (iv) Whenever the Participating Interests are recalculated pursuant to this SUBSECTION 10.5(B), (A) the Equity Accounts of both Participants shall be adjusted to bear the same ratio to each other as their recalculated Participating Interests; and (B) the portion of Capital Account attributable to the reduced Participating Interest of the Reduced Participant shall be transferred to the other Participant. (c) If a Participant has defaulted in meeting a cash call or repaying a loan, and if the non-defaulting Participant has made a Cover Payment, then, in addition to a reduction in the defaulting Participant's Participating Interest effected pursuant to SUBSECTION 10.5(B), the non-defaulting Participant shall have the right, if the indebtedness arising E-32

from a default or Cover Payment is not discharged within forty-five (45) days of the default and upon not less than thirty (30) days advance notice to the defaulting Participant, to elect to purchase all the right, title, and interest, whenever acquired or arising, of the defaulting Participant in the Assets, including but not limited to its Participating Interest or interest in Net Proceeds, together with all proceeds from and accessions of the foregoing (collectively the "DEFAULTING PARTICIPANT'S ENTIRE INTEREST") at a purchase price equal to eighty percent (80%) of the fair market value thereof as determined by a qualified independent appraiser appointed by the non-defaulting Participant. If the defaulting Participant conveys notice of objection to the person so appointed within ten (10) days after receiving notice thereof, then an independent and qualified appraiser shall be appointed by the joint action of the appraiser appointed by the non-defaulting Participant and a qualified independent appraiser appointed by the defaulting Participant; provided, however, that if the defaulting Participant fails to designate a qualified independent appraiser for such purpose within ten (10) days after giving notice of such objection, then the person originally designated by the non-defaulting Participant shall serve as the appraiser; provided further, that if the appraisers appointed by each of the Participants fail to appoint a third qualified independent appraiser within five (5) days after the appointment of the last of them, then an appraiser shall be appointed by a judge of a court of competent jurisdiction in the state in which the Assets are situated upon the application of either Participant. There shall be withheld from the purchase price payable, upon transfer of the Defaulting Participant's Entire Interest, the amount of any Cover Payment under SECTION 10.4 and unpaid interest thereon to the date of such transfer, or any unpaid interest accrued in accordance with SECTION 10.3 to the date of such transfer. Upon payment of such purchase price, the defaulting Participant shall be deemed to have relinquished all of the Defaulting Participant's Entire Interest to the non-defaulting Participant, but shall remain liable to the extent provided in SECTION 6.4. 10.6 AUDITS. (a) Within sixty (60) days after the end of each calendar year, at the request of a Participant, an audit shall be completed by certified public accountants selected by, and independent of, the Manager. The audit shall be conducted in accordance with generally accepted auditing standards and shall cover all books and records maintained by the Manager pursuant to this Agreement, all Assets and Encumbrances, and all transactions and Operations conducted during such calendar year, including production and inventory records and all costs for which the Manager sought reimbursement under this Agreement, together with all other matters customarily included in such audits. All written exceptions to and claims upon the Manager for discrepancies disclosed by such audit shall be made not more than three (3) months after receipt of the audit report, unless either Participant elects to conduct an independent audit pursuant to SUBSECTION 10.6(B) which is ongoing at the end of such three (3) month period, in which case such exceptions and claims may be made within the period provided in SUBSECTION 10.6(B). Failure to make any such exception or claim within such period shall mean the audit is deemed to be correct and binding upon the Participants. The cost of all audits under this SUBSECTION shall be charged to the Business Account. (b) Notwithstanding the annual audit conducted by certified public accountants selected by the Manager, each Participant shall have the right to have an independent audit of all Business books, records and accounts, including all charges to the Business Account. This audit shall review all issues raised by the requesting Participant, with all costs borne by the requesting Participant. The requesting Participant shall give the other Participant thirty (30) days E-33

prior notice of such audit. Any audit conducted on behalf of either Participant shall be made during the Manager's normal business hours and shall not interfere with Operations. Neither Participant shall have the right to audit records and accounts of the Business relating to transactions or Operations more than twenty-four (24) months after the calendar year during which such transactions, or transactions related to such Operations, were charged to the Business Account. All written exceptions to and claims upon the Manager for discrepancies disclosed by such audit shall be made not more than three (3) months after completion and delivery of such audit, or they shall be deemed waived. ARTICLE XI DISPOSITION OF PRODUCTION 11.1 TAKING IN KIND. Each Participant shall take in kind or separately dispose of its share of all Products in proportion to its Participating Interest. Any extra expenditure incurred in the taking in kind or separate disposition by either Participant of its proportionate share of Products shall be borne by such Participant. Nothing in this Agreement shall be construed as providing, directly or indirectly, for any joint or cooperative marketing or selling of Products or permitting the processing of Products owned by any third party at any processing facilities constructed by the Participants pursuant to this Agreement. The Manager shall give notice in advance of the anticipated delivery date upon which Products will be available. 11.2 FAILURE OF PARTICIPANT TO TAKE IN KIND. If a Participant fails to take its proportionate share of Products in kind, the Manager shall have the right, but not the obligation, for a period of time consistent with the minimum needs of the industry, but not to exceed one (1) year from the notice date described in SECTION 11.1, to purchase the Participant's share for its own account or to sell such share as agent for the Participant at not less than the prevailing market price in the area. Subject to the terms of any such contracts of sale then outstanding, during any period that the Manager is purchasing or selling a Participant's share of production, the Participant may elect by notice to the Manager to take in kind. The Manager shall be entitled to deduct from proceeds of any sale by it for the account of a Participant reasonable expenses incurred in such a sale. 11.3 HEDGING. Neither Participant shall have any obligation to account to the other Participant for, nor have any interest or right of participation in any profits or proceeds nor have any obligation to share in any losses from, futures contracts, forward sales, trading in puts, calls, options or any similar hedging, price protection or marketing mechanism employed by a Participant with respect to its proportionate share of any Products produced or to be produced from the Properties. ARTICLE XII WITHDRAWAL AND TERMINATION 12.1 TERMINATION BY EXPIRATION OR AGREEMENT. This Agreement shall terminate as expressly provided herein, unless earlier terminated by written agreement. E-34

12.2 TERMINATION BY DEADLOCK. If the Management Committee fails to adopt a Program and Budget for twelve (12) months after the expiration of the latest adopted Program and Budget, either Participant may elect to terminate the Business by giving sixty (60) days notice of termination to the other Participant. 12.3 WITHDRAWAL. A Participant may elect to withdraw from the Business by giving notice to the other Participant of the effective date of withdrawal, which shall be the later of the end of the then current Program Period or thirty (30) days after the date of the notice. Upon such withdrawal, the Business shall terminate, and the withdrawing Participant shall be deemed to have transferred to the remaining Participant all of its Participating Interest, including all of its interest in the Assets, without cost and free and clear of all Encumbrances arising by, through or under such withdrawing Participant, except those described in PARAGRAPH 1.1 OF EXHIBIT A and those to which both Participants have agreed. The withdrawing Participant shall execute and deliver all instruments as may be necessary in the reasonable judgment of the other Participant to effect the transfer of its interests in the Assets to the other Participant. If within a sixty (60) day period both Participants elect to withdraw, then the Business shall instead be deemed to have been terminated by the consent of the Participants pursuant to SECTION 12.1. 12.4 CONTINUING OBLIGATIONS AND ENVIRONMENTAL LIABILITIES. On termination of the Business under SECTIONS 12.1, 12.2 or 12.3, each Participant shall remain liable for its respective share of liabilities to third persons (whether such arises before or after such withdrawal), including Environmental Liabilities and Continuing Obligations. The withdrawing Participant's share of such liabilities shall be equal to its Participating Interest at the time such liability was incurred, after first taking into account any reduction, readjustment, and restoration of Participating Interests under SECTIONS 6.3, 9.5, 9.6 and 10.5 (or, as to liabilities arising prior to the Effective Date, its initial Participating Interest). 12.5 DISPOSITION OF ASSETS ON TERMINATION. Promptly after termination under SECTIONS 12.1 or 12.2, the Manager shall take all action necessary to wind up the activities of the Business, in accordance with EXHIBIT C. All costs and expenses incurred in connection with the termination of the Business shall be expenses chargeable to the Business Account. 12.6 NON-COMPETE COVENANTS. Neither a Participant that withdraws pursuant to SECTION 12.3, or is deemed to have withdrawn pursuant to SECTIONS 6.3 or 10.5, nor any Affiliate of such a Participant, shall directly or indirectly acquire any interest or right to explore or mine, or both, on any property any part of which is within the Area of Interest for twenty-four (24) months after the effective date of withdrawal. If a withdrawing Participant, or the Affiliate of a withdrawing Participant, breaches this SECTION 12.6, such Participant shall be obligated to offer to convey to the non-withdrawing Participant, without cost, any such property or interest so acquired (or ensure its Affiliate offers to convey the property or interest to the non-withdrawing Participant, if the acquiring party is the withdrawing Participant's Affiliate). Such offer shall be made in writing and can be accepted by the non-withdrawing Participant at any time within ten (10) days after the offer is received by such nonwithdrawing Participant. Failure of a Participant's Affiliate to comply with this SECTION 12.6 shall be a breach by such Participant of this Agreement. E-35

12.7 RIGHT TO DATA AFTER TERMINATION. After termination of the Business pursuant to SECTIONS 12.1 or 12.2, each Participant shall be entitled to make copies of all applicable information acquired hereunder before the effective date of termination not previously furnished to it, but a terminating or withdrawing Participant shall not be entitled to any such copies after any other termination or withdrawal. 12.8 CONTINUING AUTHORITY. On termination of the Business under SECTIONS 12.1, 12.2 or 12.3 or the deemed withdrawal of either Participant pursuant to SECTION 10.5, the Participant which was the Manager prior to such termination or withdrawal (or the other Participant in the event of a withdrawal by the Manager) shall have the power and authority to do all things on behalf of both Participants which are reasonably necessary or convenient to: (a) wind up Operations and (b) complete any transaction and satisfy any obligation, unfinished or unsatisfied, at the time of such termination or withdrawal, if the transaction or obligation arises out of Operations prior to such termination or withdrawal. The Manager shall have the power and authority to grant or receive extensions of time or change the method of payment of an already existing liability or obligation, prosecute and defend actions on behalf of both Participants and the Business, encumber Assets, and take any other reasonable action in any matter with respect to which the former Participants continue to have, or appear or are alleged to have, a common interest or a common liability. ARTICLE XIII ACQUISITIONS WITHIN AREA OF INTEREST 13.1 GENERAL. Any interest or right to acquire any interest in real property or water rights related thereto within the Area of Interest either acquired or proposed to be acquired during the term of this Agreement by or on behalf of either Participant ("ACQUIRING PARTICIPANT") or any Affiliate of such Participant shall be subject to the terms and provisions of this Agreement. Golden Phoenix and Borealis and their respective Affiliates for their separate account shall be free to acquire lands and interests in lands outside the Area of Interest and to locate mining claims outside the Area of Interest. Failure of any Affiliate of either Participant to comply with this ARTICLE XIII shall be a breach by such Participant of this Agreement. 13.2 NOTICE TO NON-ACQUIRING PARTICIPANT. Within thirty (30) days after the acquisition or proposed acquisition, as the case may be, of any interest or the right to acquire any interest in real property or water rights wholly or partially within the Area of Interest (except real property acquired by the Manager pursuant to a Program), the Acquiring Participant shall notify the other Participant of such acquisition by it or its Affiliate; provided further that if the acquisition of any interest or right to acquire any interest pertains to real property or water rights partially within the Area of Interest, then all such real property (i.e., the part within the Area of Interest and the part outside the Area of Interest) shall be subject to this ARTICLE XIII. The Acquiring Participant's notice shall describe in detail the acquisition, the acquiring party if that party is an Affiliate, the lands and minerals covered thereby, any water rights related thereto, the cost thereof, and the reasons why the Acquiring Participant believes that the acquisition (or proposed acquisition) of the interest is in the best interests of the Participants under this Agreement. In addition to such notice, the Acquiring Participant shall make any and all information concerning the relevant interest available for inspection by the other Participant. E-36

13.3 OPTION EXERCISED. Within sixty (60) days after receiving the Acquiring Participant's notice, the other Participant may notify the Acquiring Participant of its election to accept a proportionate interest in the acquired interest equal to its Participating Interest. Promptly upon such notice, the Acquiring Participant shall convey or cause its Affiliate to convey to the Participants, in proportion to their respective Participating Interests, by special warranty deed with title held as described in SECTION 3.4, all of the Acquiring Participant's (or its Affiliate's) interest in such acquired interest, free and clear of all Encumbrances arising by, through or under the Acquiring Participant (or its Affiliate) other than those to which both Participants have agreed. The acquired interests shall become a part of the Properties for all purposes of this Agreement immediately upon such notice. The other Participant shall promptly pay to the Acquiring Participant its proportionate share of the latter's actual out-ofpocket acquisition costs. 13.4 OPTION NOT EXERCISED. If the other Participant does not give such notice within the sixty (60) day period set forth in SECTION 13.3, it shall have no interest in the acquired interests, and the acquired interests shall not be a part of the Assets or continue to be subject to this Agreement. ARTICLE XIV ABANDONMENT AND SURRENDER OF PROPERTIES Either Participant may request the Management Committee to authorize the Manager to surrender or abandon part or all of the Properties. If the Management Committee does not authorize such surrender or abandonment, or authorizes any such surrender or abandonment over the objection of either Participant, the Participant that desires to surrender or abandon shall assign to the objecting Participant, by special warranty deed and without cost to the objecting Participant, all of the abandoning Participant's interest in the Properties sought to be abandoned or surrendered, free and clear of all Encumbrances created by, through or under the abandoning Participant other than those to which both Participants have agreed. Upon the assignment, such properties shall cease to be part of the Properties. The Participant that desires to abandon or surrender shall remain liable for its share (determined by its Participating Interest as of the date of such abandonment, after first taking into account any reduction, readjustment, and restoration of Participating Interests under SECTIONS 6.3, 9.5, 9.6 and 10.5) of any liability with respect to such Properties, including, without limitation, Continuing Obligations, Environmental Liabilities and Environmental Compliance, whether accruing before or after such abandonment, arising out of activities prior to the Effective Date and out of Operations conducted prior to the date of such abandonment, regardless of when any funds may be expended to satisfy such liability. ARTICLE XV SUPPLEMENTAL BUSINESS AGREEMENT At any time during the term of this Agreement, the Management Committee may determine by unanimous vote of both Participants that it is appropriate to segregate the Area of Interest into areas subject to separate Programs and Budgets for purposes of conducting further Exploration, Pre-Feasibility or Feasibility Studies, Development, or Mining. At such time, the Management Committee shall designate which portion of the Properties will comprise an area of interest under a separate business arrangement ("SUPPLEMENTAL BUSINESS"), and the Participants E-37

shall enter into a new agreement ("SUPPLEMENTAL BUSINESS AGREEMENT") for the purpose of further exploring, analyzing, developing, and mining such portion of the Properties. The Supplemental Business Agreement shall be in substantially the same form as this Agreement, with rights and interests of the Participants in the Supplemental Business identical to the rights and interests of the Participants in this Business at the time of the designation, unless otherwise agreed by the Participants, and with the Participants agreeing to new Capital and Equity Accounts and other terms necessary for the Supplemental Business Agreement to comply with the nature and purpose of the designation. Following execution of the Supplemental Business Agreement, this Agreement shall terminate insofar as it affects the Properties covered by the Supplemental Business Agreement. ARTICLE XVI TRANSFER OF INTEREST; PREEMPTIVE RIGHT 16.1 GENERAL. A Participant shall have the right to Transfer to a third party an interest in its Participating Interest, including an interest in this Agreement or the Assets, solely as provided in this ARTICLE XVI. 16.2 LIMITATIONS ON FREE TRANSFERABILITY. Any Transfer by either Participant under SECTION 16.1 shall be subject to the following limitations: (a) Neither Participant shall Transfer any interest in this Agreement or the Assets (including, but not limited to, any royalty, profits, or other interest in the Products) except in conjunction with the Transfer of part or all of its Participating Interest; (b) No transferee of all or any part of a Participant's Participating Interest shall have the rights of a Participant unless and until the transferring Participant has provided to the other Participant notice of the Transfer, and, except as provided in SUBSECTIONS 16.2(G) and 16.2(H), the transferee, as of the effective date of the Transfer, has committed in writing to assume and be bound by this Agreement to the same extent as the transferring Participant; (c) Neither Participant, without the consent of the other Participant, shall make a Transfer that shall violate any Law, or result in the cancellation of any permits, licenses, or other similar authorization; (d) No Transfer permitted by this ARTICLE XVI shall relieve the transferring Participant of its share of any liability, whether accruing before or after such Transfer, which arises out of Operations conducted prior to such Transfer or exists on the Effective Date; (e) Neither Participant, without the consent of the other Participant, shall make a Transfer that shall cause termination of the tax partnership established by SECTION 4.2. If such termination is caused, the transferring Participant shall indemnify the other Participant for, from and against any and all loss, cost, expense, damage, liability or claim therefor arising from the Transfer, including without limitation any increase in taxes, interest and penalties or decrease in credits caused by such termination and any tax on indemnification proceeds received by the Indemnified Participant. E-38

(f) In the event of a Transfer of less than all of a Participating Interest, the transferring Participant and its transferee shall act and be treated as one Participant; provided however, that in order for such Transfer to be effective, the transferring Participant and its transferee must first: (i) agree, as between themselves, that one of them is authorized to act as the sole agent ("AGENT") on their behalf with respect to all matters pertaining to this Agreement and the Business; and (ii) notify the other Participant of the designation of the Agent, and in such notice warrant and represent to other Participant that: (A) the Agent has the sole authority to act on behalf of, and to bind, the transferring Participant and its transferee with respect to all matters pertaining to this Agreement and the Business; (B) the other Participant may rely on all decisions of, notices and other communications from, and failures to respond by, the Agent, as if given (or not given) by the transferring Participant and its transferee; and (C) all decisions of, notices and other communications from, and failures to respond by, the other Participant to the Agent shall be deemed to have been given (or not given) to the transferring Participant and its transferee. The transferring Participant and its transferee may change the Agent (but such replacement must be one of them) by giving notice to the other Participant, which notice must conform to SUBSECTION 16.2(F)(II). (g) If the Transfer is the grant of an Encumbrance in a Participating Interest to secure a loan or other indebtedness of either Participant in a bona fide transaction, other than a transaction approved unanimously by the Management Committee or Project Financing approved by the Management Committee, such Encumbrance shall be granted only in connection with such Participant's financing payment or performance of that Participant's obligations under this Agreement and shall be subject to the terms of this Agreement and the rights and interests of the other Participant hereunder (including without limitation under SECTION 6.7). Any such Encumbrance shall be further subject to the condition that the holder of such Encumbrance ("CHARGEE") first enter into a written agreement with the other Participant in form satisfactory to the other Participant, acting reasonably, binding upon the Chargee, to the effect that: (i) the Chargee shall not enter into possession or institute any proceedings for foreclosure or partition of the encumbering Participant's Participating Interest and that such Encumbrance shall be subject to the provisions of this Agreement; (ii) the Chargee's remedies under the Encumbrance shall be limited to the sale of the whole (but only of the whole) of the encumbering Participant's Participating Interest to the other Participant, or, failing such a sale, at a public auction to be held at E-39

least ninety (90) days after prior notice to the other Participant, such sale to be subject to the purchaser entering into a written agreement with the other Participant whereby such purchaser assumes all obligations of the encumbering Participant under the terms of this Agreement. The price of any preemptive sale to the other Participant shall be the remaining principal amount of the loan plus accrued interest and related expenses, and such preemptive sale shall occur within sixty (60) days of the Chargee's notice to the other Participant of its intent to sell the encumbering Participant's Participating Interest. Failure of a sale to the other Participant to close by the end of such period, unless failure is caused by the encumbering Participant or by the Chargee, shall permit the Chargee to sell the encumbering Participant's Participating Interest at a public sale; and (iii) the charge shall be subordinate to any then-existing debt, including Project Financing previously approved by the Management Committee, encumbering the transferring Participant's Participating Interest; (h) If a sale or other commitment or disposition of Products or proceeds from the sale of Products by either Participant upon distribution to it pursuant to ARTICLE XI creates in a third party a security interest by Encumbrance in Products or proceeds therefrom prior to such distribution, such sales, commitment or disposition shall be subject to the terms and conditions of this Agreement including, without limitation, SECTION 6.7. 16.3 PREEMPTIVE RIGHT. Any Transfer by either Participant under SECTION 16.1 and any Transfer by an Affiliate of Control of either Participant shall be subject to a preemptive right of the other Participant to the extent provided in EXHIBIT H. Failure of a Participant's Affiliate to comply with this ARTICLE XVI and EXHIBIT H shall be a breach by such Participant of this Agreement. ARTICLE XVII DISPUTES 17.1 GOVERNING LAW. Except for matters of title to the Properties or their Transfer, which shall be governed by the law of their situs, this Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada, without regard for any conflict of laws or choice of laws principles that would permit or require the application of the laws of any other jurisdiction. 17.2 JURISDICTION AND VENUE. Each of the Participants hereby attorns to the exclusive jurisdiction of the courts of the state of Nevada or the federal district court for the District of Nevada, as may be applicable, in respect of any disputes arising under this Agreement, with venue to be in the state of Nevada. 17.3 DISPUTE RESOLUTION. All disputes arising under or in connection with this Agreement which cannot be resolved by agreement between the Participants shall be resolved in accordance with applicable Law. If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or substantially prevailing Participant shall be entitled to recover reasonable attorneys' fees and other E-40

costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled. ARTICLE XVIII CONFIDENTIALITY, OWNERSHIP, USE AND DISCLOSURE OF INFORMATION 18.1 BUSINESS INFORMATION. All Business Information shall be owned jointly by the Participants as their Participating Interests are determined pursuant to this Agreement. Both before and after the termination of the Business, all Business Information may be used by either Participant for any purpose, whether or not competitive with the Business, without consulting with, or obligation to, the other Participant. Except as provided in SECTIONS 18.3 and 18.4, or with the prior written consent of the other Participant, each Participant shall keep confidential and not disclose to any third party or the public any portion of the Business Information that constitutes Confidential Information. 18.2 PARTICIPANT INFORMATION. In performing its obligations under this Agreement, neither Participant shall be obligated to disclose any Participant Information. If a Participant elects to disclose Participant Information in performing its obligations under this Agreement, such Participant Information, together with all improvements, enhancements, refinements and incremental additions to such Participant Information that are developed, conceived, originated or obtained by either Participant in performing its obligations under this Agreement ("ENHANCEMENTS"), shall be owned exclusively by the Participant that originally developed, conceived, originated or obtained such Participant Information. Each Participant may use and enjoy the benefits of such Participant Information and Enhancements in the conduct of the Business hereunder, but the Participant that did not originally develop, conceive, originate or obtain such Participant Information may not use such Participant Information and Enhancements for any other purpose. Except as provided in SECTION 18.4, or with the prior written consent of the other Participant, which consent may be withheld in such Participant's sole discretion, each Participant shall keep confidential and not disclose to any third party or the public any portion of Participant Information and Enhancements owned by the other Participant that constitutes Confidential Information. 18.3 PERMITTED DISCLOSURE OF CONFIDENTIAL BUSINESS INFORMATION. Either Participant may disclose Business Information that is Confidential Information: (a) to a Participant's officers, directors, partners, members, employees, Affiliates, shareholders, agents, attorneys, accountants, consultants, contractors, subcontractors or advisors, for the sole purpose of such Participant's performance of its obligations under this Agreement; (b) to any party to whom the disclosing Participant contemplates a Transfer of all or any part of its Participating Interest, for the sole purpose of evaluating the proposed Transfer; (c) to any actual or potential lender, underwriter or investor for the sole purpose of evaluating whether to make a loan to or investment in the disclosing Participant; or (d) to a third party with whom the disclosing Participant contemplates any independent business activity or operation. The Participant disclosing Confidential Information pursuant to this SECTION 18.3 shall disclose such Confidential Information to only those parties who have a bona fide need to have access to such Confidential Information for the purpose for which disclosure to such parties is E-41

permitted under this SECTION 18.3 and who have agreed in writing supplied to, and enforceable by, the other Participant to protect the Confidential Information from further disclosure, to use such Confidential Information solely for such purpose and to otherwise be bound by the provisions of this ARTICLE XVIII. Such writing shall not preclude parties described in SUBSECTION 18.3(B) from discussing and completing a Transfer with the other Participant. The Participant disclosing Confidential Information shall be responsible and liable for any use or disclosure of the Confidential Information by such parties in violation of this Agreement and such other writing. 18.4 DISCLOSURE REQUIRED BY LAW. Notwithstanding anything contained in this ARTICLE XVIII, a Participant may disclose any Confidential Information if, in the opinion of the disclosing Participant's legal counsel: (a) such disclosure is legally required to be made in a judicial, administrative or governmental proceeding pursuant to a valid subpoena or other applicable order; or (b) such disclosure is legally required to be made pursuant to the rules or regulations of a stock exchange or similar trading market applicable to the disclosing Participant. Prior to any disclosure of Confidential Information under this SECTION 18.4, the disclosing Participant shall give the other Participant at least ten (10) days prior written notice (unless less time is permitted by such rules, regulations or proceeding) and, in making such disclosure, the disclosing Participant shall disclose only that portion of Confidential Information required to be disclosed and shall take all reasonable steps to preserve the confidentiality thereof, including, without limitation, obtaining protective orders and supporting the other Participant in intervention in any such proceeding. 18.5 PUBLIC ANNOUNCEMENTS. Prior to making or issuing any press release or other public announcement or disclosure of Business Information that is not Confidential Information, a Participant shall first consult with the other Participant as to the content and timing of such announcement or disclosure, unless in the good faith judgment of such Participant, there is not sufficient time to consult with the other Participant before such announcement or disclosure must be made under applicable Laws; but in such event, the disclosing Participant shall notify the other Participant, as soon as possible, of the pendency of such announcement or disclosure, and it shall notify the other Participant before such announcement or disclosure is made if at all reasonably possible. Any press release or other public announcement or disclosure to be issued by either Participant relating to this Business shall also identify the other Participant. ARTICLE XIX GENERAL PROVISIONS 19.1 NOTICES. All notices, payments and other required or permitted communications ("NOTICES") to either Participant shall be in writing, and shall be addressed respectively as follows:
If to Borealis Borealis Mining Company 1153 Bergen Parkway, Suite 290 Evergreen, CO 80439-9773 Tele: (303) 679-9819 Fax: (303) 679-9589

E-42

If to Golden Phoenix

Golden Phoenix Minerals, Inc. 3595 Airway Drive, Suite 405 Reno, NV 89511 Tele: (775) 853-4919 Fax: (775) 853-5010

All Notices shall be given (a) by personal delivery to the Participant, (b) by electronic communication, capable of producing a printed transmission, (c) by registered or certified mail return receipt requested, or (d) by overnight or other express courier service. All Notices shall be effective and shall be deemed given on the date of receipt at the principal address if received during normal business hours, and, if not received during normal business hours, on the next business day following receipt, or if by electronic communication, on the date of such communication. Either Participant may change its address by Notice to the other Participant. 19.2 GENDER. The singular shall include the plural, and the plural the singular wherever the context so requires, and the masculine, the feminine, and the neuter genders shall be mutually inclusive. 19.3 CURRENCY. All references to "DOLLARS" or "$" herein shall mean lawful currency of the United States of America. 19.4 HEADINGS. The subject headings of the Sections and Subsections of this Agreement and the Paragraphs and Subparagraphs of the Exhibits to this Agreement are included for purposes of convenience only, and shall not affect the construction or interpretation of any of its provisions. 19.5 WAIVER. The failure of either Participant to insist on the strict performance of any provision of this Agreement or to exercise any right, power or remedy upon a breach hereof shall not constitute a waiver of any provision of this Agreement or limit such Participant's right thereafter to enforce any provision or exercise any right. 19.6 MODIFICATION. No modification of this Agreement shall be valid unless made in writing and duly executed by both Participants. 19.7 FORCE MAJEURE. Except for the obligation to make payments when due hereunder, the obligations of a Participant shall be suspended to the extent and for the period that performance is prevented by any cause, whether foreseeable or unforeseeable, beyond its reasonable control, including, without limitation, labor disputes (however arising and whether or not employee demands are reasonable or within the power of the Participant to grant); acts of God; Laws, instructions or requests of any government or governmental entity; judgments or orders of any court; inability to obtain on reasonably acceptable terms any public or private license, permit or other authorization; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or prospective violation of Environmental Laws; action or inaction by any federal, state or local agency that delays or prevents the issuance or granting of any approval or authorization required to conduct Operations beyond the reasonable expectations of the Participant seeking the E-43

approval or authorization; acts of war or conditions arising out of or attributable to war, whether declared or undeclared; riot, civil strife, insurrection or rebellion; fire, explosion, earthquake, storm, flood, sink holes, drought or other adverse weather condition; delay or failure by suppliers or transporters of materials, parts, supplies, services or equipment or by contractors' or subcontractors' shortage of, or inability to obtain, labor, transportation, materials, machinery, equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or facilities; actions by native rights groups, environmental groups, or other similar special interest groups; or any other cause whether similar or dissimilar to the foregoing. The affected Participant shall promptly give notice to the other Participant of the suspension of performance, stating therein the nature of the suspension, the reasons therefor, and the expected duration thereof. The affected Participant shall resume performance as soon as reasonably possible. During the period of suspension the obligations of both Participants to advance funds pursuant to SECTION 10.2 shall be reduced to levels consistent with then current Operations. 19.8 RULE AGAINST PERPETUITIES. The Participants do not intend that there shall be any violation of the Rule Against Perpetuities, the Rule Against Unreasonable Restraints on the Alienation of Property, or any similar rule. Accordingly, if any right or option to acquire any interest in the Properties, in a Participating Interest, in the Assets, or in any real property exists under this Agreement, such right or option must be exercised, if at all, so as to vest such interest within time periods permitted by applicable rules. If, however, any such violation should inadvertently occur, the Participants hereby agree that a court shall reform that provision in such a way as to approximate most closely the intent of the Participants within the limits permissible under such rules. 19.9 FURTHER ASSURANCES. Each of the Participants shall take, from time to time and without additional consideration, such further actions and execute such additional instruments as may be reasonably necessary or convenient to implement and carry out the intent and purpose of this Agreement or as may be reasonably required by lenders in connection with Project Financing. 19.10 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement contains the entire understanding of the Participants and supersedes all prior agreements and understandings between the Participants relating to the subject matter hereof. This Agreement shall be binding upon and inure to the benefit of the respective successors and permitted assigns of the Participants. 19.11 MEMORANDUM. At the time of execution of this Agreement, a Memorandum or short form of this Agreement, or a Financing Statement(s) (to which copies of the Memorandum or short form of this Agreement shall be attached), shall also be executed and acknowledged by both Participants, and delivered to the Manager for recording and filing in those appropriate recording districts and Uniform Commercial Code filing offices as may be necessary to provide constructive notice of this Agreement and the rights and obligations of the Participants hereunder. The Manager shall record and file in the proper recording districts, county recording offices and Uniform Commercial Code filing offices, all such documents delivered to it by the Participants. Unless both Participants agree, this Agreement shall not be recorded. 19.12 COUNTERPARTS. This Agreement may be executed in any number of counterparts, and it shall not be necessary that the signatures of both Participants be contained on E-44

any counterpart. Each counterpart shall be deemed an original, but all counterparts together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. GOLDEN PHOENIX MINERALS, INC., a Minnesota corporation By: Name: Title: BOREALIS MINING COMPANY, a Nevada corporation By: Name: Title: E-45

STATE OF ___________________________) : ss. COUNTY OF __________________________) This instrument was acknowledged before me on this _____ day of ___________________, 20____, by _____________________________________________ as _____________________ of GOLDEN PHOENIX MINERALS, INC., a Minnesota corporation.
---------------------------------------NOTARY PUBLIC, residing in ---------------------------------------My commission expires: ------------------------------------STATE OF ___________________________) : ss. COUNTY OF __________________________)

[seal]

This instrument was acknowledged before me on this _____ day of ___________________, 20____, by _____________________________________________ as _____________________ of BOREALIS MINING COMPANY, a Nevada corporation. [seal] NOTARY PUBLIC, residing in My commission expires: E-46

EXHIBIT A to EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT By and Between GOLDEN PHOENIX MINERALS, INC. and BOREALIS MINING COMPANY ASSETS AND AREA OF INTEREST 1.1 PROPERTIES AND TITLE EXCEPTIONS That certain Mining Lease dated January 24, 1997 from Richard J. Cavell TTTEE F/T Richard J. Cavell Trust Dated 2/23/94, Hardrock Mining Company, a Nevada corporation, and John W. Whitney, as lessors, and J.D. Welsh & Associates, Inc., a Nevada corporation, as lessee, a memorandum of which is recorded as Entry 115828 in Book 169 at page 489 in the official records of Mineral County, Nevada, which Mining Lease presently covers the 124 unpatented mining claims described on the attached six pages labeled Exhibits A through D. The 111 unpatented mining claims described on the attached three pages labeled Exhibit 1. 1.2 AREA OF INTEREST The Area of Interest is the same as the Borealis Project Area as described in Exhibit III of the above described Mining Lease. E-47

EXHIBIT B to EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT By and Between GOLDEN PHOENIX MINERALS, INC. and BOREALIS MINING COMPANY ACCOUNTING PROCEDURES The financing and accounting procedures to be followed by the Manager and the Participants under the Agreement are set forth below. All capitalized terms in these Accounting Procedures shall have the definition attributed to them in the Agreement, unless defined otherwise herein. The purpose of these Accounting Procedures is to establish equitable methods for determining charges and credits applicable to Operations. It is the intent of the Participants that neither of them shall lose or profit by reason of the designation of one of them to exercise the duties and responsibilities of the Manager. The Participants shall meet and in good faith endeavor to agree upon changes deemed necessary to correct any unfairness or inequity. In the event of a conflict between the provisions of these Accounting Procedures and those of the Agreement, the provisions of the Agreement shall control. ARTICLE I GENERAL PROVISIONS 1.1 General Accounting Records. The Manager shall maintain detailed and comprehensive cost accounting records in accordance with these Accounting Procedures, including general ledgers, supporting and subsidiary journals, invoices, checks and other customary documentation, sufficient to provide a record of revenues and expenditures and periodic statements of financial position and the results of Operations for managerial, tax, regulatory or other financial, regulatory, or legal reporting purposes related to the Business. Such records shall be retained for the duration of the period allowed the Participants for audit or the period necessary to comply with tax or other regulatory requirements. The records shall reflect all obligations, advances and credits of the Participants. 1.2 Cash Management Accounts. The Manager shall maintain one or more separate cash management accounts for the payment of all expenses and the deposit of all cash receipts for the Business. 1.3 Statements and Billings. The Manager shall prepare statements and bill the Participants as provided in ARTICLE X of the Agreement. Payment of any such billings by either Participant, including the Manager, shall not prejudice such Participant's right to protest or question the correctness thereof for a period not to exceed twenty-four (24) months following the calendar year during which such billings were received by such Participant. All written exceptions to and E-48

claims upon the Manager for incorrect charges, billings or statements shall be made upon the Manager within such twenty-four (24) month period. The time period permitted for adjustments hereunder shall not apply to adjustments resulting from periodic inventories as provided in PARAGRAPHS 5.1 and 5.2. ARTICLE II CHARGES TO BUSINESS ACCOUNT Subject to the limitations hereinafter set forth, the Manager shall charge the Business Account with the following: 2.1 Property Acquisition Costs, Rentals, Royalties and Other Payments. All property acquisition and holding costs, including Governmental Fees, filing fees, license fees, costs of permits and assessment work, delay rentals, production royalties, including any required advances, and all other payments made by the Manager which are necessary to acquire or maintain title to the Assets. 2.2 Labor and Employee Benefits (a) Salaries and wages of the Manager's employees directly engaged in Operations, including salaries or wages of employees who are temporarily assigned to and directly employed by same. (b) The Manager's cost of holiday, vacation, sickness and disability benefits, and other customary allowances applicable to the salaries and wages chargeable under SUBPARAGRAPH 2.2(A) and PARAGRAPH 2.12. Such costs may be charged on a "when and as paid basis" or by "percentage assessment" on the amount of salaries and wages. If percentage assessment is used, the rate shall be applied to wages or salaries excluding overtime and bonuses. Such rate shall be based on the Manager's cost experience and it shall be periodically adjusted at least annually to ensure that the total of such charges does not exceed the actual cost thereof to the Manager. (c) The Manager's actual cost of established plans for employees' group life insurance, hospitalization, pension, retirement, stock purchase, thrift, bonus (except production or incentive bonus plans under a union contract based on actual rates of production, cost savings and other production factors, and similar non-union bonus plans customary in the industry or necessary to attract competent employees, which bonus payments shall be considered salaries and wages under SUBPARAGRAPH 2.2(A) or PARAGRAPH 2.12 rather than employees' benefit plans) and other benefit plans of a like nature applicable to salaries and wages chargeable under SUBPARAGRAPHS 2.2(A) or PARAGRAPH 2.12, provided that the plans are limited to the extent feasible to those customary in the industry. (d) Cost of assessments imposed by governmental authority that are applicable to salaries and wages chargeable under SUBPARAGRAPH 2.2(A) and PARAGRAPH 2.12, including all penalties except those resulting from the willful misconduct or gross negligence of the Manager. E-49

2.3 Materials, Equipment and Supplies. The cost of materials, equipment and supplies (herein called "Material") purchased from unaffiliated third parties or furnished by either Participant as provided in PARAGRAPH 3.1. The Manager shall purchase or furnish only so much Material as may be required for immediate use in efficient and economical Operations. The Manager shall also maintain inventory levels of Material at reasonable levels to avoid unnecessary accumulation of surplus stock. 2.4 Equipment and Facilities Furnished by Manager. The cost of machinery, equipment and facilities owned by the Manager and used in Operations or used to provide support or utility services to Operations charged at rates commensurate with the actual costs of ownership and operation of such machinery, equipment and facilities. Such rates shall include costs of maintenance, repairs, other operating expenses, insurance, taxes, depreciation and interest at a rate not to exceed Prime Rate plus three percent (3%) per annum. Such rates shall not exceed the average commercial rates currently prevailing in the vicinity of the Operations. 2.5 Transportation. Reasonable transportation costs incurred in connection with the transportation of employees and material necessary for Operations. 2.6 Contract Services and Utilities. The cost of contract services and utilities procured from outside sources, other than services described in PARAGRAPHS 2.9 and 2.13. If contract services are performed by the Manager or an Affiliate thereof, the cost charged to the Business Account shall not be greater than that for which comparable services and utilities are available in the open market within the vicinity of Operations. The cost of professional consultant services procured from outside sources in excess of Twenty-Five Thousand Dollars ($25,000.00) per annum per contract shall not be charged to the Business Account unless approved by the Management Committee. 2.7 Insurance Premiums. Net premiums paid for insurance required to be carried for Operations for the protection of the Participants. When Operations are conducted in an area where the Manager may self-insure for Worker's Compensation and/or Employer's Liability under state law, the Manager may elect to include such risks in its self-insurance program and shall charge its costs of self-insuring such risks to the Business Account provided that such charges shall not exceed published manual rates. 2.8 Damages and Losses. All costs in excess of insurance proceeds necessary to repair or replace damage or losses to any Assets resulting from any cause other than the willful misconduct or gross negligence of the Manager. The Manager shall furnish the Management Committee with written notice of damages or losses as soon as practicable after a report thereof has been received by the Manager. 2.9 Legal and Regulatory Expense. Except as otherwise provided in PARAGRAPH 2.13, all legal and regulatory costs and expenses incurred in or resulting from Operations or necessary to protect or recover the Assets of the Business, including costs of title investigation and title curative services. All attorneys fees and other legal costs to handle, investigate and settle litigation or claims, and amounts paid in settlement of such litigation or claims in excess of TwentyE-50

Five Thousand Dollars ($25,000.00) per annum shall not be charged to the Business Account unless approved by the Management Committee. 2.10 Audit. Cost of annual audits under SUBSECTION 10.6(A). 2.11 Taxes. All taxes, assessments and like charges on Operations and Assets which have been paid by the Manager for the benefit of the Participants. Each Participant is separately responsible for taxes determined or measured by a Participant's sales revenue or net income. 2.12 District and Camp Expense (Field Supervision and Camp Expenses). A pro rata portion of: (i) the salaries and expenses of the Manager's superintendent and other employees serving Operations whose time is not allocated directly to such Operations, and (ii) the costs of maintaining and operating an office and any necessary suboffice, and (iii) all necessary camps, including housing facilities for employees, used for Operations. The expense of those facilities, less any revenue therefrom, shall include depreciation or a fair monthly rental in lieu of depreciation of the investment. The total of such charges for all Properties served by the Manager's employees and facilities shall be apportioned to the Business Account on the basis of a ratio to be approved by the Management Committee. 2.13 Administrative Charge. (a) Each month, the Manager shall charge the Business Account a sum for each phase of Operations as provided below, which shall be a liquidated amount to reimburse the Manager for its home office overhead and general and administrative expenses to conduct each phase of Operations, and which shall be in lieu of any management fee and for taxes based on production of Products: (i) Exploration Phase - _______ percent (_____%) of Allowable Costs up to __________ Dollars ($__________), and _____ percent (_____%) of Allowable Costs over __________ Dollars ($__________). (ii) Development Phase - _______ percent (_____%) of Allowable Costs up to __________ Dollars ($__________), and _____ percent (_____%) of Allowable Costs over __________ Dollars ($__________). (iii) Major Construction Phase - _______ percent (_____%) of Allowable Costs up to __________ Dollars ($__________), and _____ percent (_____%) of Allowable Costs over __________ Dollars ($__________). (iv) Mining Phase - _____ percent (_____%) of Allowable Costs. (b) The term "Allowable Costs" as used in this PARAGRAPH for a particular phase of Operations shall mean all charges to the Business Account excluding: (i) the administrative charge referred to herein; (ii) depreciation, depletion or amortization of tangible or intangible Assets; (iii) amounts charged in accordance with PARAGRAPHS 2.1 and 2.9; and E-51

(iv) marketing costs. The Manager shall attribute such Allowable Costs to a particular phase of Operations by applying the following guidelines: (A) The Exploration Phase shall cover those Operations conducted to ascertain the existence, location, extent or quantity of any deposit of ore or mineral. (B) The Development Phase shall cover those Operations, including Pre-Feasibility and Feasibility Study Operations, conducted to assess a commercially feasible ore body or to extend production of an existing ore body, and to construct or install related fixed Assets. (C) The Major Construction Phase shall include all Operations involved in the construction of a mill, smelter or other ore processing facilities. (D) The Mining Phase shall include all other Operations activities not otherwise covered above, including activities conducted after Mining Operations have ceased. (c) Various phases of Operations may be conducted concurrently, in which event the administrative charge shall be calculated separately for Allowable Costs attributable to each phase. (d) The monthly administration charge determined for each phase of Operations shall be a liquidated amount to reimburse Manager for its home office overhead and general and administrative expenses for its conduct of Operations, and shall be equitably apportioned among all of the properties served during such monthly period on the basis of a ratio approved by the Management Committee. (e) The following is a representative list of items that constitute the Manager's principal business office expenses that are expressly covered by the administrative charge provided in this PARAGRAPH, except to the extent that such items are directly chargeable to the Business Account under other provisions of this ARTICLE II: (i) Administrative supervision, which includes all services rendered by managers, department supervisors, officers and directors of the Manager for Operations. (ii) Accounting, data processing, personnel administration, billing and record keeping in accordance with governmental regulations and the provisions of the Agreement, and preparation of reports; (iii) The services of tax counsel and tax administration employees for all tax matters, including any protests, except any outside professional fees which the Management Committee may approve as a direct charge to the Business Account; (iv) Routine legal services rendered by outside sources and the Manager's legal staff not otherwise charged to the Business Account under PARAGRAPH 2.9, E-52

including property acquisition, attorney management and oversight, and support services provided by Manager's legal staff concerning any litigation; and (v) Rentals and other charges for office and records storage space, telephone service, office equipment and supplies. (f) The Management Committee shall annually review the administrative charges and shall amend the methodology or rates used to determine such charges if they are found to be insufficient or excessive based on the principles that the Manager shall not make a profit or suffer a loss and that it should be fairly and adequately compensated for its costs and expenses. 2.14 Environmental Compliance Fund. Costs of reasonably anticipated Environmental Compliance which, on a Program basis, shall be determined by the Management Committee and shall be based on proportionate contributions in an amount sufficient to establish a fund, which through successive proportionate contributions during the life of the Business, will pay for ongoing Environmental Compliance conducted during Operations and which will aggregate the reasonably anticipated costs of mine closure, post-Operations Environmental Compliance and Continuing Obligations. The Manager shall invest such amounts on behalf of the Participants as provided in SUBSECTION 8.2(R). 2.15 Other Expenditures. Any reasonable direct expenditure, other than expenditures which are covered by the foregoing provisions, incurred by the Manager for the necessary and proper conduct of Operations. ARTICLE III BASIS OF CHARGES TO BUSINESS ACCOUNT 3.1 Purchases. Material purchased and services procured from third parties shall be charged to the Business Account by the Manager at invoiced cost, including applicable transfer taxes, less all discounts taken. If any Material is determined to be defective or is returned to a vendor for any other reason, the Manager shall credit the Business Account when an adjustment is received from the vendor. 3.2 Material Furnished by a Participant for Use in the Business. Any Material furnished by either Participant for use in the Business or distributed to either Participant by the Manager shall be priced on the following basis: (a) New Material: New Material furnished by either Participant shall be priced F.O.B. the nearest reputable supply store or railway receiving point, where like Material is available, at the current replacement cost of the same kind of Material, exclusive of any available cash discounts, at the time it is furnished (herein called "New Price"). E-53

(b) Used Material. (i) Used Material in sound and serviceable condition and suitable for reuse without reconditioning shall be priced as follows: (A) Used Material furnished by either Participant shall be priced at seventy-five percent (75%) of the New Price; (B) Used Material distributed to either Participant shall be priced (i) at seventy-five percent (75%) of the New Price if such Material was originally charged to the Business Account as new Material, or (ii) at sixty-five percent (65%) of the New Price if such Material was originally charged to the Business Account as good used Material at seventy-five percent (75%) of the New Price. (ii) Other used Material that, after reconditioning, will be further serviceable for original function as good secondhand Material, or that is serviceable for original function but not substantially suitable for reconditioning, shall be priced at fifty percent (50%) of New Price. The cost of any reconditioning shall be borne by the transferee. (iii) Bad-Order Material which is no longer usable for its original purpose without excessive repair cost but further usable for some other purpose shall be priced on a basis comparable with items normally used for that purpose. (iv) All other Material, including junk, shall be priced at a value commensurate with its use or at prevailing prices. (c) Obsolete Material. Any Material that is serviceable and usable for its original function, but its condition is not equivalent to that which would justify a price as provided above, shall be priced by the Management Committee. Such price shall be set at a level that will result in a charge to the Business Account equal to the value of the service to be rendered by such Material. 3.3 Premium Prices. Whenever Material is not readily obtainable at published or listed prices because of national emergencies, strikes or other unusual circumstances over which the Manager has no control, the Manager may charge the Business Account for the required Material on the basis of the Manager's direct cost and expenses incurred in procuring such Material and making it suitable for use. The Manager shall give written notice of the proposed charge to the Participants prior to the time when such charge is to be billed, whereupon either Participant shall have the right, by notifying the Manager within ten (10) days of the delivery of the notice from the Manager, to furnish at the usual receiving point all or part of its share of Material suitable for use and acceptable to the Manager. 3.4 Warranty of Material Furnished by the Manager or Participants. Neither Participant warrants any Material furnished beyond any dealer's or manufacturer's warranty and no credits shall be made to the Business Account for defective Material until adjustments are received by the Manager from the dealer, manufacturer or their respective agents. E-54

ARTICLE IV DISPOSAL OF MATERIAL 4.1 Disposition Generally. The Manager shall have no obligation to purchase either Participant's interest in Material. The Management Committee shall determine the disposition of major items of surplus Material, provided the Manager shall have the right to dispose of normal accumulations of junk and scrap Material either by sale or by transfer to the Participants as provided in PARAGRAPH 4.2. 4.2 Distribution to Participants. Any Material to be distributed to the Participants shall be made in proportion to their respective Participating Interests, and corresponding credits shall be made to the Business Account on the basis provided in PARAGRAPH 3.2. 4.3 Sales. Sales of Material to third parties shall be credited to the Business Account at the net amount received. Any damages or claims by the Purchaser shall be charged back to the Business Account if and when paid. ARTICLE V INVENTORIES 5.1 Periodic Inventories, Notice and Representations. At reasonable intervals, inventories shall be taken by the Manager, which shall include all such Material as is ordinarily considered controllable by operators of mining properties, and the expense of conducting such periodic inventories shall be charged to the Business Account. The Manager shall give written notice to the Participants of its intent to take any inventory at least thirty (30) days before such inventory is scheduled to take place. A Participant shall be deemed to have accepted the results of any inventory taken by the Manager if the Participant fails to be represented at such inventory. 5.2 Reconciliation and Adjustment of Inventories. Reconciliation of inventory with charges to the Business Account shall be made, and a list of overages and shortages shall be furnished to the Management Committee within six (6) months after the inventory is taken. Inventory adjustments shall be made by the Manager to the Business Account for overages and shortages, but the Manager shall be held accountable to the Business only for shortages due to lack of reasonable diligence. E-55

EXHIBIT C to EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT By and Between GOLDEN PHOENIX MINERALS, INC. and BOREALIS MINING COMPANY TAX MATTERS ARTICLE I EFFECT OF THIS EXHIBIT This EXHIBIT C shall govern the relationship of the Participants with respect to tax matters and the other matters addressed herein. Except as otherwise indicated, capitalized terms used in this EXHIBIT shall have the meanings given to them in the Agreement. In the event of a conflict between this EXHIBIT and the other provisions of the Agreement, the terms of this EXHIBIT shall control. ARTICLE II TAX MATTERS PARTNER 2.1 Designation of Tax Matters Partner. The Manager is hereby designated the tax matters partner (hereinafter "TMP") as defined in Section 6231(a)(7) of the Internal Revenue Code of 1986 ("the Code") and shall be responsible for, make elections for, and prepare and file any federal and state tax returns or other required tax forms following approval of the Management Committee. In the event of any change in Manager, the Participant serving as Manager at the end of a taxable year shall continue as TMP with respect to all matters concerning such year unless the TMP for that year is required to be changed pursuant to applicable Treasury Regulations. The TMP and the other Participant shall use reasonable best efforts to comply with the responsibilities outlined in this ARTICLE II and in Sections 6221 through 6233 of the Code (including any Treasury regulations promulgated thereunder) and in doing so shall incur no liability to any other party. 2.2 Notice. Each Participant shall furnish the TMP with such information (including information specified in Section 6230(e) of the Code) as it may reasonably request to permit it to provide the Internal Revenue Service with sufficient information to allow proper notice to the Participants in accordance with Section 6223 of the Code. The TMP shall keep each Participant informed of all administrative and judicial proceedings for the adjustment at the partnership level of partnership items in accordance with Section 6223(g) of the Code. 2.3 Inconsistent Treatment of Partnership Item. If an administrative proceeding contemplated under Section 6223 of the Code has begun, and the TMP so requests, each Participant shall notify the TMP of its treatment of any partnership item on its federal income tax return that is inconsistent with the treatment of that item on the partnership return. E-56

2.4 Extensions of Limitation Periods. The TMP shall not enter into any extension of the period of limitations as provided under Section 6229 of the Code without first giving reasonable advance notice to the other Participant of such intended action. 2.5 Requests for Administrative Adjustments. Neither Participant shall file, pursuant to Section 6227 of the Code, a request for an administrative adjustment of partnership items for any partnership taxable year without first notifying the other Participant. If the other Participant agrees with the requested adjustment, the TMP shall file the request for administrative adjustment on behalf of the partnership. If consent is not obtained within thirty (30) days after notice from the proposing Participant, or within the period required to timely file the request for administrative adjustment, if shorter, either Participant, including the TMP, may file that request for administrative adjustment on its own behalf. 2.6 Judicial Proceedings. Either Participant intending to file a petition under Section 6226, 6228 or other sections of the Code with respect to any partnership item, or other tax matters involving the tax partnership, shall notify the other Participant of such intention and the nature of the contemplated proceeding. If the TMP is the Participant intending to file such petition, such notice shall be given within a reasonable time to allow the other Participant to participate in the choosing of the forum in which such petition will be filed. If both Participants do not agree on the appropriate forum, then the appropriate forum shall be decided in accordance with SECTION 7.2. If a deadlock results, the TMP shall choose the forum. If either Participant intends to seek review of any court decision rendered as a result of a proceeding instituted under the preceding part of this PARAGRAPH, such Participant shall notify the other Participant of such intended action. 2.7 Settlements. The TMP shall not bind the other Participant to a settlement agreement without first obtaining the written consent of any such Participant. Either Participant who enters into a settlement agreement for its own account with respect to any partnership items, as defined by Section 6231(a)(3) of the Code, shall notify the other Participant of such settlement agreement and its terms within ninety (90) days from the date of settlement. 2.8 Fees and Expenses. The TMP shall not engage legal counsel, certified public accountants, or others without the prior consent of the Management Committee. Either Participant may engage legal counsel, certified public accountants, or others in its own behalf and at its sole cost and expense. Any reasonable item of expense, including but not limited to fees and expenses for legal counsel, certified public accountants, and others which the TMP incurs (after proper consent by the Management Committee as provided above) in connection with any audit, assessment, litigation, or other proceeding regarding any partnership item, shall constitute proper charges to the Business Account and shall be borne by the Participants as any other item which constitutes a direct charge to the Business Account pursuant to the Agreement. 2.9 Survival. The provisions of the foregoing paragraphs, including but not limited to the obligation to pay fees and expenses contained in PARAGRAPH 2.8, shall survive the termination of the tax partnership or the termination of either Participant's interest in the tax partnership and shall remain binding on the Participants for a period of time necessary to resolve with the Internal Revenue Service or the Department of the Treasury any and all matters regarding the federal income taxation of the tax partnership for the applicable tax year(s). E-57

ARTICLE III TAX ELECTIONS AND ALLOCATIONS 3.1 Tax Partnership Election. It is understood and agreed that the Participants intend to create a partnership for United States federal and state income tax purposes, and, unless otherwise agreed to hereafter by both Participants, neither Participant shall make an election to be, or have the arrangement evidenced hereby, excluded from the application of any provisions of Subchapter K of the Code, or any equivalent state income tax provision. It is understood and agreed that the Participants intend to create a partnership for federal and state income tax purposes only (a "tax partnership"). The Manager shall file with the appropriate office of the Internal Revenue Service a partnership income tax return covering the Operations. The Participants recognize that this Agreement may be subject to state income tax statutes. The Manager shall file with the appropriate offices of the state agencies any required partnership state income tax returns. Each Participant agrees to furnish to the Manager any information it may have relating to Operations as shall be required for proper preparation of such returns. The Manager shall furnish to the other Participant for its review a copy of each proposed income tax return at least two weeks prior to the date the return is filed. 3.2 Tax Elections. The tax partnership shall make the following elections for purposes of all partnership income tax returns: (a) To use the accrual method of accounting. (b) Pursuant to the provisions at Section 706(b)(1) of the Code, to use as its taxable year the year ended ______. In this connection, Golden Phoenix represents that its taxable year is the year ending ______ and Borealis represents that its taxable year is the year ending _____. (c) To deduct currently all development expenses to the extent possible under Section 616 of the Code. (d) Unless the Participants unanimously agree otherwise, to compute the allowance for depreciation in respect of all depreciable Assets using the maximum accelerated tax depreciation method and the shortest life permissible or, at the election of the Manager, using the units of production method of depreciation. (e) To treat advance royalties as deductions from gross income for the year paid or accrued to the extent permitted by law. (f) To adjust the basis of tax partnership property under Section 754 of the Code at the request of either Participant; (g) To amortize over the shortest permissible period all organizational expenditures and business start-up expenses under Sections 195 and 709 of the Code; E-58

Any other election required or permitted to be made by the tax partnership under the Code or any state tax law shall be made as determined by the Management Committee. Each Participant shall elect under Section 617(a) of the Code to deduct currently all exploration expenses. Each Participant reserves the right to capitalize its share of development and/or exploration expenses of the tax partnership in accordance with Section 59(e) of the Code, provided that a Participant's election to capitalize all or any portion of such expenses shall not affect the Participant's Capital Account. 3.3 Allocations to Participants. Allocations for Capital Account purposes shall be in accordance with the following: (a) The Participants recognize the provision for taking production in kind, as provided elsewhere in the Agreement, as each Participant's right to determine a market for the sale of a proportionate share of production subject to SUBPARAGRAPH 3.3(H) below. All items of income, gain, deduction, loss, credit or tax attribute arising from the sale and marketing of such production shall be allocated to the Participant who designated such market. (b) Exploration expenses and development cost deductions shall be allocated among the Participants in accordance with their respective contributions to such expenses and costs. (c) Depreciation and amortization deductions with respect to a depreciable Asset shall be allocated among the Participants in accordance with their respective contributions to the adjusted basis of the Asset which gives rise to the depreciation, amortization or loss deduction. (d) Production and operating cost deductions shall be allocated among the Participants in accordance with their respective contributions to such costs. (e) Deductions for depletion (to the extent of the amount of such deductions that would have been determined for Capital Account purposes if only cost depletion were allowable for federal income tax purposes) shall be allocated to the Participants in accordance with their respective contributions to the adjusted basis of the depletable property. Any remaining depletion deductions shall be allocated to the Participants so that, to the extent possible, the Participants receive the same total amounts of percentage depletion as they would have received if percentage depletion were allocated to the Participants in proportion to their respective shares of the gross income used as the basis for calculating the federal income tax deduction for percentage depletion. (f) Subject to SUBPARAGRAPH 3.3(H) below, gross income on the sale of production shall be allocated in accordance with the Participants' rights to share in the proceeds of such sale. (g) Except as provided in SUBPARAGRAPH 3.3(H) below, gain or loss on the sale of a depreciable or depletable asset shall be allocated so that, to the extent possible, the net E-59

amount reflected in the Participants' Capital Account with respect to such property (taking into account the cost of such property, depreciation, amortization, depletion or other cost recovery deductions and gain or loss) most closely reflects the Participants' Participating Interests. (h) Gains and losses on the sale of all or substantially all the Assets of the tax partnership shall be allocated so that, to the extent possible, the Participants' resulting Capital Account balances are in the same ratio as their Participating Interests at the time of such sale. (i) The Participants acknowledge that expenses and deductions allocable under the preceding provisions of this PARAGRAPH may be required to be capitalized into production under Section 263A of the Code. With respect to such capitalized expenses or deductions, the allocation of gross income on the sale of production shall be adjusted, in any reasonable manner consistently applied by the Manager, so that the same net amount (subject possibly to timing differences) is reflected in the Capital Accounts as if such expenses or deductions were instead deductible and allocated pursuant to the preceding provisions of this PARAGRAPH. (j) All deductions and losses that are not otherwise allocated in this PARAGRAPH shall be allocated among the Participants in accordance with their respective contributions to the costs producing each such deduction or to the adjusted basis of the Asset producing each such loss. (k) Any recapture of exploration expenses under Section 617(b)(1)(A) of the Code, and any disallowance of depletion under Section 617(b)(1)(B) of the Code, shall be borne by the Participants in the same manner as the related exploration expenses were allocated to, or claimed by, them. (l) All other items of income and gain shall be allocated to the Participants in accordance with their Participating Interests. (m) If a reduced Participating Interest is restored pursuant to SECTION 9.6, the Manager shall endeavor to allocate items of income, gain, loss, and deduction (in the same year as the restoration of such Participating Interest or, if necessary, in subsequent years) so as to cause the Capital Account balances of the Participants to be the same as they would have been if the restored Participating Interest had never been reduced. (n) If the Participants' Participating Interests change during any taxable year of the tax partnership, the distributive share of items of income, gain, loss and deduction of each Participant shall be determined in any manner (1) permitted by Section 706 of the Code, and (2) agreed on by both Participants. If the Participants cannot agree on a method, the method shall be determined by the Manager in consultation with the tax partnership's tax advisers, with preference given to the interim closing-of-the-books method except where application of that method would result in undue administrative expense in relationship to the amount of the items to be allocated. (o) "Nonrecourse deductions," as defined by Treas. Reg. Section 1.704-2(b)(1) shall be allocated between the Participants in proportion to their Participating Interests. E-60

3.4 Regulatory Allocations. Notwithstanding the provisions of PARAGRAPH 3.3 to the contrary, the following special allocations shall be given effect for purposes of maintaining the Participants' Capital Accounts. (a) If either Participant unexpectedly receives any adjustments, allocations, or distributions described in Treas. Reg. Section 1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5) or Section 1.704-1(b)(2)(ii)(d)(6), which result in a deficit Capital Account balance, items of income and gain shall be specially allocated to each such Participant in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Capital Account deficit of such Participant as quickly as possible. For the purposes of this PARAGRAPH, each Participant's Capital Account balances shall be increased by the sum of (i) the amount such Participant is obligated to restore pursuant to any provision of the Agreement, and (ii) the amount such Participant is deemed to be obligated to restore pursuant to the penultimate sentences of Treas. Reg. Sections 1.704-2(g)(1) and 1.704-2 (i)(5). (b) The "minimum gain chargeback" and "partner minimum gain chargeback" provisions of Treas. Reg. Sections 1.704-2(f) and 1.704-2(i)(4), respectively, are incorporated herein by reference and shall be given effect. In accordance with Treas. Reg. Section 1.704-2(i)(1), deductions attributable to a "partner nonrecourse liability" shall be allocated to the Participant that bears the economic risk of loss for such liability. (c) If the allocation of deductions to either Participant would cause such Participant to have a deficit Capital Account balance at the end of any taxable year of the tax partnership (after all other allocations provided for in this ARTICLE III have been made and after giving effect to the adjustments described in SUBPARAGRAPH 3.4(A)), such deductions shall instead be allocated to the other Participant. 3.5 Curative Allocations. The allocations set forth in PARAGRAPH 3.4 (the "Regulatory Allocations") are intended to comply with certain requirements of the Treasury Regulations. It is the intent of the Participants that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of income, gain, loss or deduction pursuant to this PARAGRAPH. Therefore, notwithstanding any other provisions of this ARTICLE III (other than the Regulatory Allocations), the Manager shall make such offsetting special allocations of income, gain, loss or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Participant's Capital Account balance is, to the extent possible, equal to the Capital Account balance such Participant would have had if the Regulatory Allocations were not part of this Agreement and all items were allocated pursuant to PARAGRAPH 3.3 without regard to PARAGRAPH 3.4. 3.6 Tax Allocations. Except as otherwise provided in this PARAGRAPH, items of taxable income, deduction, gain and loss shall be allocated in the same manner as the corresponding item is allocated for book purposes under PARAGRAPHS 3.3, 3.4 and 3.5 of the corresponding item determined for Capital Account purposes. E-61

(a) Recapture of tax deductions arising out of a disposition of property shall, to the extent consistent with the allocations for tax purposes of the gain or amount realized giving rise to such recapture, be allocated to the Participants in the same proportions as the recaptured deductions were originally allocated or claimed. (b) To the extent required by Section 704(c) of the Code, income, gain, loss, and deduction with respect to property contributed to the tax partnership by a Participant shall be shared among both Participants so as to take account of the variation between the basis of the property to the tax partnership and its fair market value at the time of contribution. The Participants intend that Section 704(c) shall effect no allocations of tax items that are different from the allocations under PARAGRAPHS 3.3, 3.4 and 3.5 of the corresponding items for Capital Account purposes. However, to the extent that allocations of tax items are required pursuant to Section 704(c) of the Code to be made other than in accordance with the allocations under PARAGRAPHS 3.3, 3.4 and 3.5 of the corresponding items for Capital Account purposes, Section 704(c) shall be applied in accordance with the "traditional method without curative allocations" under Treas. Reg. Section 1.704-3(b). (c) Depletion deductions with respect to contributed property shall be determined without regard to any portion of the property's basis that is attributable to precontribution expenditures by Golden Phoenix that were capitalized under Code Sections 616(b), 59(e) and 291(b). Deductions attributable to precontribution expenditures by Golden Phoenix shall be calculated under such Code Sections as if Golden Phoenix continued to own the depletable property to which such deductions are attributable, and such deductions shall be reported by the tax partnership and shall be allocated solely to Golden Phoenix. (d) The Participants understand the allocations of tax items set forth in this PARAGRAPH, and agree to report consistently with such allocations for federal and state tax purposes. ARTICLE IV CAPITAL ACCOUNTS; LIQUIDATION 4.1 Capital Accounts. (a) A separate Capital Account shall be established and maintained by the TMP for each Participant. Such Capital Account shall be increased by (i) the amount of money contributed by the Participant to the tax partnership, (ii) the fair market value of property contributed by the Participant to the tax partnership (net of liabilities secured by such contributed property that the partnership is considered to assume or take subject to under Code Section 752) and (iii) allocations to the Participant under PARAGRAPHS 3.3, 3.4 and 3.5 of tax partnership income and gain (or items thereof), including income and gain exempt from tax; and shall be decreased by (iv) the amount of money distributed to the Participant by the tax partnership, (v) the fair market value of property distributed to the Participant by the tax partnership (net of liabilities secured by such distributed property and that the Participant is considered to assume or take subject to under Code Section 752), (vi) allocations to the Participant under PARAGRAPHS 3.3, 3.4 and 3.5 of expenditures of the tax partnership not deductible in computing its taxable income and not properly E-62

chargeable to a Capital Account, and (vii) allocations of tax partnership loss and deduction (or items thereof), excluding items described in (vi) above and percentage depletion to the extent it exceeds the adjusted tax basis of the depletable property to which it is attributable. The Participants agree that the net fair market value of the property contributed by Golden Phoenix to the tax partnership pursuant to SECTION 5.2 of the Agreement is $5,000,000.00 if Borealis earned a 50% interest in the Properties, and $3,857,142.86 if Borealis earned a 50% interest in the Properties. (b) In the event that the Capital Accounts of the Participants are computed with reference to the book value of any Asset which differs from the adjusted tax basis of such Asset, then the Capital Accounts shall be adjusted for depreciation, depletion, amortization and gain or loss as computed for book purposes with respect to such Asset in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g). (c) In the event any interest in the tax partnership is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred interest, except as provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(1). (d) In the event property, other than money, is distributed to a Participant, the Capital Accounts of the Participants shall be adjusted to reflect the manner in which the unrealized income, gain, loss and deduction inherent in such property (that has not been reflected in the Capital Accounts previously) would be allocated among the Participants if there was a taxable disposition of such property for the fair market value of such property (taking Section 7701(g) of the Code into account) on the date of distribution. For this purpose the fair market value of the property shall be determined as set forth in PARAGRAPH 4.2(A) below. (e) In the event the Management Committee designates a Supplemental Business Agreement area within the Area of Interest as described in ARTICLE XV of the Agreement, the Management Committee shall appropriately segregate Capital Accounts to reflect that designation and shall make such other modifications to the Agreement as are appropriate to reflect the manner of administering Capital Accounts in accordance with the terms of this EXHIBIT C. (f) Golden Phoenix is contributing to the Agreement certain depletable properties with respect to which Golden Phoenix currently has an adjusted tax basis which may consist in part of depletable expenditures and in part of expenditures capitalized under Code Sections 616(b), 291(b) and/or 59(e). For purposes of maintaining the Capital Accounts, the tax partnership's deductions with respect to contributed property in each year for (i) depletion, (ii) deferred development expenditures under Section 616(b) attributable to pre-contribution expenditures, (iii) amortization under Section 291(b) attributable to pre-contribution expenditures, and (iv) amortization under Section 59(e) attributable to pre-contribution expenditures shall be the amount of the corresponding item determined for tax purposes pursuant to SUBPARAGRAPH 3.6(C) multiplied by the ratio of (A) the book value at which the contributed property is recorded in the Capital Accounts to (B) the adjusted tax basis of the contributed property (including basis resulting from capitalization of pre-contribution development expenditures under Sections 616(b), 291(b), and 59(e)). E-63

(g) The foregoing provisions, and the other provisions of the Agreement relating to the maintenance of Capital Accounts and the allocations of income, gain, loss, deduction and credit, are intended to comply with Treasury Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Regulations. In the event the Management Committee shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order to comply with such Regulations, the Management Committee may make such modification, provided that it is not likely to have a material effect on the amount distributable to either Participant upon liquidation of the tax partnership pursuant to PARAGRAPH 4.2. (h) If the Participants so agree, upon the occurrence of an event described in Treas. Reg. Section 1.704-1(b)(2) (iv)(5), the Capital Accounts shall be restated in accordance with Treas. Reg. Section 1.704-1(b)(2)(iv)(f) to reflect the manner in which unrealized income, gain, loss or deduction inherent in the assets of the tax partnership (that has not been reflected in the Capital Accounts previously) would be allocated among the Participants if there were a taxable disposition of such assets for their fair market values, as determined in accordance with SECTION 4.2(A). For purposes of PARAGRAPH 3.3, a Participant shall be treated as contributing the portion of the book value of any property that is credited to the Participant's Capital Account pursuant to the preceding sentence. Following a revaluation pursuant to this SUBPARAGRAPH 4.1(H), the Participants' shares of depreciation, depletion, amortization and gain or loss, as computed for tax purposes, with respect to property that has been revalued pursuant to this SUBPARAGRAPH 4.1(H) shall be determined in accordance with the principles of Code Section 704(c) as applied pursuant to the final sentence of SUBPARAGRAPH 3.6(B). 4.2 Liquidation. In the event the partnership is "liquidated" within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g) then, notwithstanding any other provision of the Agreement to the contrary, the following steps shall be taken (after taking into account any transfers of Capital Accounts pursuant to SECTION 6.3(A) or 12.3 of the Agreement): (a) The Capital Accounts of the Participants shall be adjusted to reflect any gain or loss which would be realized by the partnership and allocated to the Participants pursuant to the provisions of ARTICLE III OF THIS EXHIBIT C if the Assets had been sold at their fair market value at the time of liquidation. The fair market value of the Assets shall be determined by agreement of both Participants; provided, however, that in the event that the Participants fail to agree on the fair market value of any Asset, its fair market value shall be determined by a nationally recognized independent engineering firm or other qualified independent party approved by both Participants. (b) After making the foregoing adjustments and/or contributions, all remaining Assets shall be distributed to the Participants in accordance with the balances in their Capital Accounts (after taking into account all allocations under ARTICLE III, including SUBPARAGRAPH 3.3(H)). Unless otherwise expressly agreed on by both Participants, each Participant shall receive an undivided interest in each and every Asset determined by the ratio of the amount in each Participant's Capital Account to the total of both of the Participants' Capital Accounts. Assets distributed to the Participants shall be deemed to have a fair market value equal to the value assigned to them pursuant to SUBPARAGRAPH 4.2(A) above. E-64

(c) All distributions to the Participants in respect of their Capital Accounts shall be made in accordance with the time requirements of Treasury Regulation Sections 1.704-1(b)(2)(ii)(b)(2) and (3). 4.3 Deemed Terminations. Notwithstanding the provisions of PARAGRAPH 4.2, if the "liquidation" of the tax partnership results from a deemed termination under Section 708(b)(1)(B) of the Code, then (i) SUBPARAGRAPHS 4.2(A) and (B) shall not apply, (ii) the tax partnership shall be deemed to have distributed its Assets in accordance with the relative Capital Account balances of the Participants as adjusted pursuant to SUBPARAGRAPH 4.2(A), (iii) the Participants shall be deemed for tax purposes to have contributed those Assets to a new partnership pursuant to the terms of this EXHIBIT C, and (iv) the new tax partnership shall continue pursuant to the terms of this Agreement and this EXHIBIT C. ARTICLE V SALE OR ASSIGNMENT The Participants agree that if either one of them makes a sale or assignment of its Participating Interest under this Agreement, such sale or assignment shall be structured so as not to cause a termination under Section 708(b)(1) (B) of the Code. If a Section 708(b)(1)(B) termination is caused, the terminating Participant shall indemnify the non-terminating Participant and save it harmless on an after-tax basis for any increase in taxes, interest, and penalties or decrease in credits to the non-terminating Participant caused by the termination of the tax partnership. E-65

EXHIBIT D to EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT By and Between GOLDEN PHOENIX MINERALS, INC. and BOREALIS MINING COMPANY DEFINITIONS "AFFILIATE" means any person, partnership, limited liability company, joint venture, corporation, or other form of enterprise which Controls, is Controlled by, or is under common Control with a Participant. "AGREEMENT" means this Exploration, Development and Mine Operating Agreement, including all amendments and modifications, and all schedules and exhibits, all of which are incorporated by this reference. "APPROVED ALTERNATIVE" means a Development and Mining alternative selected by the Management Committee from various Development and Mining alternatives analyzed in the Pre-Feasibility Studies. "AREA OF INTEREST" means the area described in PARAGRAPH 1.2 OF EXHIBIT A. "ASSETS" means the Properties, Products, Business Information, and all other real and personal property, tangible and intangible, including existing or after-acquired properties and all contract rights held for the benefit of the Participants hereunder. "BOREALIS" means Borealis Mining Company, a Nevada corporation. "BUDGET" means a detailed estimate of all costs to be incurred and a schedule of cash advances to be made by the Participants with respect to a Program. "BUSINESS" means the contractual relationship of the Participants under this Agreement. "BUSINESS ACCOUNT" means the account maintained by the Manager for the Business in accordance with EXHIBIT B. "BUSINESS INFORMATION" means the terms of this Agreement, and any other agreement relating to the Business, the Existing Data, and all information, data, knowledge and know-how, in whatever form and however communicated (including, without limitation, Confidential Information), developed, conceived, originated or obtained by either Participant in performing its obligations under this Agreement. The term "Business Information" shall not include E-66

any improvements, enhancements, refinements or incremental additions to Participant Information that are developed, conceived, originated or obtained by either Participant in performing its obligations under this Agreement. "CAPITAL ACCOUNT" means the account maintained for each Participant in accordance with EXHIBIT C. "CONFIDENTIAL INFORMATION" means all information, data, knowledge and know-how (including, but not limited to, formulas, patterns, compilations, programs, devices, methods, techniques and processes) that derives independent economic value, actual or potential, as a result of not being generally known to, or readily ascertainable by, third parties and which is the subject of efforts that are reasonable under the circumstances to maintain its secrecy, including without limitation all analyses, interpretations, compilations, studies and evaluations of such information, data, knowledge and know-how generated or prepared by or on behalf of either Participant. "CONTINUING OBLIGATIONS" mean obligations or responsibilities that are reasonably expected to continue or arise after Operations on a particular area of the Properties have ceased or are suspended, such as future monitoring, stabilization, or Environmental Compliance. "CONTROL" used as a verb means, when used with respect to an entity, the ability, directly or indirectly through one or more intermediaries, to direct or cause the direction of the management and policies of such entity through (i) the legal or beneficial ownership of voting securities or membership interests; (ii) the right to appoint managers, directors or corporate management; (iii) contract; (iv) operating agreement; (v) voting trust; or otherwise; and, when used with respect to a person, means the actual or legal ability to control the actions of another, through family relationship, agency, contract or otherwise; and "Control" used as a noun means an interest which gives the holder the ability to exercise any of the foregoing powers. "COVER PAYMENT" shall have the meaning as set forth in SECTION 10.4 of the Agreement. "DEVELOPMENT" means all preparation (other than Exploration) for the removal and recovery of Products, including construction and installation of a mill or any other improvements to be used for the mining, handling, milling, processing, or other beneficiation of Products, and all related Environmental Compliance. "EFFECTIVE DATE" means the date set forth in the preamble to this Agreement. "ENCUMBRANCE" or "ENCUMBRANCES" means mortgages, deeds of trust, security interests, pledges, liens, net profits interests, royalties or overriding royalty interests, other payments out of production, or other burdens of any nature. "ENVIRONMENTAL COMPLIANCE" means actions performed during or after Operations to comply with the requirements of all Environmental Laws or contractual commitments related to reclamation of the Properties or other compliance with Environmental Laws. E-67

"ENVIRONMENTAL LAWS" means Laws aimed at reclamation or restoration of the Properties; abatement of pollution; protection of the environment; protection of wildlife, including endangered species; ensuring public safety from environmental hazards; protection of cultural or historic resources; management, storage or control of hazardous materials and substances; releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances as wastes into the environment, including without limitation, ambient air, surface water and groundwater; and all other Laws relating to the manufacturing, processing, distribution, use, treatment, storage, disposal, handling or transport of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes. "ENVIRONMENTAL LIABILITIES" means any and all claims, actions, causes of action, damages, losses, liabilities, obligations, penalties, judgments, amounts paid in settlement, assessments, costs, disbursements, or expenses (including, without limitation, attorneys' fees and costs, experts' fees and costs, and consultants' fees and costs) of any kind or of any nature whatsoever that are asserted against either Participant, by any person or entity other than the other Participant, alleging liability (including, without limitation, liability for studies, testing or investigatory costs, cleanup costs, response costs, removal costs, remediation costs, containment costs, restoration costs, corrective action costs, closure costs, reclamation costs, natural resource damages, property damages, business losses, personal injuries, penalties or fines) arising out of, based on or resulting from (i) the presence, release, threatened release, discharge or emission into the environment of any hazardous materials or substances existing or arising on, beneath or above the Properties and/or emanating or migrating and/or threatening to emanate or migrate from the Properties to off-site properties; (ii) physical disturbance of the environment; or (iii) the violation or alleged violation of any Environmental Laws. "EQUITY ACCOUNT" means the account maintained for each Participant by the Manager in accordance with SUBSECTION 8.2(N) of the Agreement. "EXISTING DATA" means maps, drill logs and other drilling data, core tests, pulps, reports, surveys, assays, analyses, production reports, operations, technical, accounting and financial records, and other material information developed in operations on the Properties prior to the Effective Date. "EXPANSION" or "MODIFICATION" means (i) a material increase in mining or production capacity; (ii) a material change in the recovery process; or (iii) a material change in waste or tailings disposal methods. An increase or change shall be deemed "material" if it is anticipated to cost more than ____% of original capital costs attributable to the Development of the mining or production capacity, recovery process or waste or tailings disposal facility to be expanded or modified. "EXPLORATION" means all activities directed toward ascertaining the existence, location, quantity, quality or commercial value of deposits of Products, including but not limited to additional drilling required after discovery of potentially commercial mineralization, and including related Environmental Compliance. E-68

"FEASIBILITY CONTRACTORS" means one or more engineering firms approved by the Management Committee for purposes of preparing or auditing any Pre-Feasibility Study or Feasibility Study. "FEASIBILITY STUDY" means a report to be prepared following selection by the Management Committee of one or more Approved Alternatives. The Feasibility Study shall include a review of information presented in any Pre-Feasibility Studies concerning the Approved Alternative(s). The Feasibility Study shall be in a form and of a scope generally acceptable to reputable financial institutions that provide financing to the mining industry. "GOLDEN PHOENIX" means Golden Phoenix Minerals, Inc., a Minnesota corporation. "GOVERNMENTAL FEES" means all location fees, mining claim rental fees, mining claim maintenance payments and similar payments required by Law to locate and hold unpatented mining claims. "INITIAL CONTRIBUTION" means that contribution each Participant has made or agrees to make pursuant to SECTION 5.1 of the Agreement. "LAW" or "LAWS" means all applicable federal, state and local laws (statutory or common), rules, ordinances, regulations, grants, concessions, franchises, licenses, orders, directives, judgments, decrees, and other governmental restrictions, including permits and other similar requirements, whether legislative, municipal, administrative or judicial in nature. "MANAGEMENT COMMITTEE" means the committee established under ARTICLE VII of the Agreement. "MANAGER" means the Participant appointed under ARTICLE VIII of the Agreement to manage Operations, or any successor Manager. "MINING" means the mining, extracting, producing, beneficiating, handling, milling or other processing of Products. "NET PROCEEDS" means certain amounts calculated as provided in EXHIBIT E, which may be payable to a Participant under SUBSECTIONS 6.3(B) or 10.5(B)(II) of the Agreement. "OPERATIONS" means the activities carried out under this Agreement. "PARTICIPANT" means Golden Phoenix or Borealis, or any permitted successor or assign of Golden Phoenix or Borealis under the Agreement. "PARTICIPANT INFORMATION" means all information, data, knowledge and know-how, in whatever form and however communicated (including, without limitation, Confidential Information but excluding the Existing Data), which, as shown by written records, was developed, conceived, originated or obtained by a Participant: (a) prior to entering into this Agreement, or (b) independent of its performance under the terms of this Agreement. E-69

"PARTICIPATING INTEREST" means the percentage interest representing the ownership interest of a Participant in the Assets, and all other rights and obligations arising under this Agreement, as such interest may from time to time be adjusted hereunder. Participating Interests shall be calculated to three decimal places and rounded to two decimal places as follows: Decimals of .005 or more shall be rounded up (e.g., 1.519% rounded to 1.52%); decimals of less than .005 shall be rounded down (e.g., 1.514% rounded to 1.51%). The initial Participating Interests of the Participants are set forth in SECTION 6.1 of the Agreement. "PAYOUT" means the date on which the Equity Account balance of each of the Participants has become zero or a negative number, regardless of whether the Equity Account balance of either or both Participants subsequently becomes a positive number. If one Participant's Equity Account balance becomes zero or a negative number before the other Participant's, "Payout" shall not occur until the date that the other Participant's Equity Account balance first becomes zero or a negative number. "PRE-FEASIBILITY STUDIES" means one or more studies prepared to analyze whether economically viable Mining Operations may be possible on the Properties, as described in SECTION 9.8. "PRIME RATE" means the interest rate quoted and published as "Prime" as published in The Wall Street Journal, under the heading "Money Rate," as the rate may change from day to day. "PRODUCTS" means all ores, minerals and mineral resources produced from the Properties. "PROGRAM" means a description in reasonable detail of Operations to be conducted and objectives to be accomplished by the Manager for a period determined by the Management Committee. "PROGRAM PERIOD" means the time period covered by an adopted Program and Budget. "PROJECT FINANCING" means any financing approved by the Management Committee and obtained by the Participants for the purpose of placing a mineral deposit situated on the Properties into commercial production, but shall not include any such financing obtained individually by either Participant to finance payment or performance of its obligations under the Agreement. "PROPERTIES" means those interests in real property described in PARAGRAPH 1.1 OF EXHIBIT A and all other interests in real property within the Area of Interest that are acquired and held subject to the Agreement. "RECALCULATED PARTICIPATING INTEREST" means the reduced Participating Interest of a Participant as recalculated under SECTIONS 9.5, 9.6 or 10.5 of the Agreement. E-70

"REDUCED PARTICIPANT" means a Participant whose Participating Interest is reduced under SECTIONS 9.5 or 10.5 of the Agreement. "TRANSFER" means, when used as a verb, to sell, grant, assign, create an Encumbrance, pledge or otherwise convey, or dispose of or commit to do any of the foregoing, or to arrange for substitute performance by an Affiliate or third party (except as permitted under SUBSECTION 8.2(J) and SECTION 8.6 of the Agreement), either directly or indirectly; and, when used as a noun, means such a sale, grant, assignment, Encumbrance, pledge or other conveyance or disposition, or such an arrangement. E-71

EXHIBIT E to EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT By and Between GOLDEN PHOENIX MINERALS, INC. and BOREALIS MINING COMPANY NET PROCEEDS CALCULATION 1.1 Income and Expenses. Net Proceeds shall be calculated by deducting from the Gross Revenue (as defined below) realized (or deemed to be realized), such costs and expenses attributable to Exploration, Development, Mining, the marketing of Products and other Operations as would be deductible under generally accepted accounting principles and practices consistently applied, including without limitation: (a) All costs and expenses of replacing, expanding, modifying, altering or changing from time to time the Mining facilities. Costs and expenses of improvements (such as haulage ways or mill facilities) that are also used in connection with workings other than the Properties shall be charged to the Properties only in the proportion that their use in connection with the Properties bears to their total use; (b) Ad valorem real property and unsecured personal property taxes, and all taxes, other than income taxes, applicable to Mining of the Properties, including without limitation all state mining taxes, sales taxes, severance taxes, license fees and governmental levies of a similar nature; (c) Allowance for overhead in accordance with PARAGRAPH 2.13 OF EXHIBIT B; (d) All expenses incurred relative to the sale of Products, including an allowance for commissions at rates which are normal and customary in the industry; (e) All amounts payable to the remaining Participant during Mining pursuant to any applicable operating or similar agreement in force with respect thereto; (f) The actual cost of investment under the Agreement but prior to beginning of Mining, which shall include all expenditures for Exploration and Development of the Properties incurred by the non-withdrawing Participant both prior and subsequent to the withdrawing Participant acquiring a Net Proceeds interest; (g) Interest on monies borrowed or advanced for costs and expenses, but in no event in excess of the maximum permitted by law; (h) An allowance for reasonable working capital and inventory; E-72

(i) Costs of funding the Environmental Compliance Fund as provided in PARAGRAPH 2.14 OF EXHIBIT B; (j) Actual costs of Operations; and (k) Rental, royalty, production, and purchase payments. For purposes hereof, the term "Gross Revenue" shall mean the sum of (i) gross receipts from sale of Products, less any charges for sampling, assaying, or penalties; (ii) gross receipts from the sale or other disposition of Assets; (iii) insurance proceeds; (iv) compensation for expropriation of Assets; and (v) judgment proceeds. Gross receipts for sale of Products shall be determined by multiplying spot prices for Products as quoted by The Wall Street Journal, Reuters, E&MJ, or other reliable source on the date of a sale of Products. It is intended that the remaining Participant shall recoup from Gross Revenue all of its on-going contributions for Exploration, Development, Mining, Expansion and Modification and marketing Products before any Net Proceeds are distributed to any person holding a Net Proceeds interest. No deduction shall be made for income taxes, depreciation, amortization or depletion. If in any year after the beginning of Mining of the Properties an operating loss relative thereto is incurred, the amount thereof shall be considered as and be included with outstanding costs and expenses and carried forward in determining Net Proceeds for subsequent periods. If Products are processed by the remaining Participant, or are sold to an Affiliate of the remaining Participant, then, for purposes of calculating Net Proceeds, such Products shall be deemed conclusively to have been sold at a price equal to fair market value to an arm's length purchaser FOB the concentrator for the Properties, and Net Proceeds relative thereto shall be calculated without reference to any profits or losses attributable to smelting or refining. 1.2 Payment of Net Proceeds. Payments of Net Proceeds shall commence in the calendar quarter following the calendar quarter in which Net Proceeds are first realized, and shall be made forty-five (45) days following the end of each calendar quarter during which Net Proceeds are realized, and shall be subject to adjustment, if required, at the end of each calendar year. The recipient of such Net Proceeds payments shall have the right to audit such payments following receipt of each payment by giving notice to the remaining Participant and by conducting such audit in accordance with SECTION 10.6 of the Agreement. Costs of such an audit shall be borne by the holder of the Net Proceeds interest described herein. 1.3 Definitions. All capitalized words and terms used herein have the same meaning as in the Agreement. E-73

EXHIBIT F to EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT By and Between GOLDEN PHOENIX MINERALS, INC. and BOREALIS MINING COMPANY INSURANCE The Manager shall, at all times while conducting Operations, comply fully with the applicable worker's compensation laws and purchase, or provide protection for the Participants comparable to that provided under standard form insurance policies for the following risk categories: (i) comprehensive public liability and property damage with combined limits of not less than __________ Dollars ($__________) for bodily injury and property damage; (ii) automobile insurance with combined limits of not less than __________ Dollars ($__________); and (iii) adequate and reasonable insurance against risk of fire and other risks ordinarily insured against in similar operations. If the Manager elects to self-insure, it shall charge to the Business Account an amount equal to the premium it would have paid had it secured and maintained a policy or policies of insurance on a competitive bid basis in the amount of such coverage. Each Participant shall self-insure or purchase for its own account such additional insurance as it deems necessary. E-74

EXHIBIT G to EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT By and Between GOLDEN PHOENIX MINERALS, INC. and BOREALIS MINING COMPANY INITIAL PROGRAM AND BUDGET [Prepare and attach at time of execution] E-75

EXHIBIT H to EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT By and Between GOLDEN PHOENIX MINERALS, INC. and BOREALIS MINING COMPANY PREEMPTIVE RIGHTS 1.1 Preemptive Rights. If either Participant intends to Transfer all or any part of its Participating Interest, or an Affiliate of either Participant intends to Transfer Control of such Participant ("Transferring Entity"), such Participant shall promptly notify the other Participant of such intentions. The notice shall state the price and all other pertinent terms and conditions of the intended Transfer, and shall be accompanied by a copy of the offer or the contract for sale. If the consideration for the intended transfer is, in whole or in part, other than monetary, the notice shall describe such consideration and its monetary equivalent (based upon the fair market value of the nonmonetary consideration and stated in terms of cash or currency). The other Participant shall have ninety (90) days from the date such notice is delivered to notify the Transferring Entity (and the Participant if its Affiliate is the Transferring Entity) whether it elects to acquire the offered interest at the same price (or its monetary equivalent in cash or currency) and on the same terms and conditions as set forth in the notice. If it does so elect, the acquisition by the other Participant shall be consummated promptly after notice of such election is delivered; (a) If the other Participant fails to so elect within the period provided for above, the Transferring Entity shall have ninety (90) days following the expiration of such period to consummate the Transfer to a third party at a price and on terms no less favorable to the Transferring Entity than those offered by the Transferring Entity to the other Participant in the aforementioned notice; (b) If the Transferring Entity fails to consummate the Transfer to a third party within the period set forth above, the preemptive right of the other Participant in such offered interest shall be deemed to be revived. Any subsequent proposal to Transfer such interest shall be conducted in accordance with all of the procedures set forth in this PARAGRAPH. 1.2 Exceptions to Preemptive Right. PARAGRAPH 1.1 above shall not apply to the following: (a) Transfer by either Participant of all or any part of its Participating Interest to an Affiliate; (b) Incorporation of either Participant, or corporate consolidation or reorganization of either Participant by which the surviving entity shall possess substantially all of the stock or all of the property rights and interests, and be subject to substantially all of the liabilities and obligations of that Participant; E-76

(c) Corporate merger or amalgamation involving either Participant by which the surviving entity or amalgamated company shall possess all of the stock or all of the property rights and interests, and be subject to substantially all of the liabilities and obligations of that Participant; provided, however, that the value of the merging or amalgamating Participant's interest in the Assets, evidenced by its Capital Account balance (as described in EXHIBIT C), does not exceed ______ percent (____%) of the Net Worth of the surviving entity or amalgamated company; (d) the transfer of Control of either Participant by an Affiliate to such Participant or to another Affiliate; (e) subject to SUBSECTION 16.2(G) of the Agreement, the grant by either Participant of a security interest in its Participating Interest by Encumbrance; (f) the creation by any Affiliate of either Participant of an Encumbrance affecting its Control of such Participant; (g) a sale or other commitment or disposition of Products or proceeds from sale of Products by either Participant upon distribution to it pursuant to ARTICLE XI of the Agreement; or (h) a transfer by an Affiliate of either Participant of Control of such Participant to a third party, provided the value of such Participant's Capital Account balance does not exceed __________ percent (_____%) of the Net Worth of the transferring Affiliate, or does not exceed __________ percent (____%) of the Net Worth of Transferee. For purposes hereof, the term "Net Worth" shall mean the remainder after total liabilities are deducted from total assets. In the case of a corporation, Net Worth includes both capital stock and surplus. In the case of a limited liability company, Net Worth includes member contributions. In the case of a partnership or sole proprietorship, Net Worth includes the original investment plus accumulated and reinvested profits. E-77

EXHIBIT I to EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT By and Between GOLDEN PHOENIX MINERALS, INC. and BOREALIS MINING COMPANY EXISTING FACILITIES Old leach pads. E-78

EXHIBIT F to Agreement between GOLDEN PHOENIX MINERALS, INC. and BOREALIS MINING COMPANY (Borealis Property, Mineral County, Nevada) Existing Facilities Old leach pads F-1

EXHIBIT 10.7 PRIVATE & CONFIDENTIAL Gryphon Gold Corporation Suite 300 - 905 West Pender Street
Vancouver, BC ATTENTION: V6C 1L6 Albert Matter, Director, Chairman Tony Ker, Executive Vice President, Treasurer Thomas Sitar, Chief Financial Officer

RE: INVESTMENT ADVISORY RETAINER Dear Sirs: We understand that Gryphon Gold Corporation (the "Company", "you" or "Gryphon") is interested in engaging Desjardins Securities Inc. ("Desjardins", "we", "our" or "us") as its agent and financial advisor for a transaction designed to enhance the value of and create liquidity in and for the Company and its shareholders (the "Proposed Transaction"). 1. The form of the Proposed Transaction (the "Offering") will be determined by a proposal from Desjardins that is acceptable to the Company, acting reasonably. Based on Desjardins' current understanding of the Company and the state of the equity markets, the most likely form of the Offering will be an initial public offering ("IPO") of securities in Canada, but it may also be a reverse take-over of a publicly listed vehicle or other transaction, depending on Desjardins' judgement as to the best way to increase value and create liquidity for the Company's securities. 2. The issue size for the Offering is expected to be approximately US$15 million, although minimum and maximum size of the Offering will be a mutually acceptable size that is determined by Desjardins and Gryphon before filing of the final prospectus. 3. The securities will be offered pursuant to a prospectus that is qualified in all provinces and territories of Canada, including Quebec. The Offering may also be conducted in the United States by way of a private placement in accordance with applicable laws. 4. The Offering will qualify only the issue of securities from treasury. For greater certainty, the Company will not use the prospectus for the Offering to qualify the sale of securities that were issued prior to the Closing, and the Company acknowledges that Desjardins owes no duty to the Company or to the relevant security holders with respect to all prior issuances of securities by the Company. The terms of the Offering will be subject to Gryphon meeting the minimum listing requirements of the Toronto Stock Exchange (the "TSX") or the TSX Venture Exchange ("TSXV"), completion of technical reports on each material property of the Company in compliance with National Instrument 43-101 and the provisions of a definitive Agency Agreement (the "Agency Agreement") which will include, among other things, the following:

-2(a) completion of due diligence to the satisfaction of Desjardins and their legal counsel; (b) implementing corporate governance provisions in compliance with applicable securities regulatory and stock exchange rules, guidelines and procedures, including as they relate to independence of the board of directors, and such other corporate governance procedures to the satisfaction of Desjardins and the Company, both acting reasonably; (c) the Company agreeing not to issue any special warrants, common shares or financial instruments convertible or exchangeable into common shares of the Company, other than for purposes of employee stock options or to satisfy existing instruments already issued as of the date hereof for a period of 120 days following the closing of the Offering (the "Closing"), without the prior written consent of Desjardins, such consent not to be unreasonably withheld; (d) in addition to the escrow requirements required by applicable regulatory authorities, the Company obtaining lock-up agreements from significant existing shareholders prohibiting the sale of listed securities for a period of up to twelve months following the Closing; and (e) such other terms and conditions as are customary in an Agency Agreement including, but not limited to, industry standard representations, warranties, covenants, conditions and indemnities, and also to include a disaster out clause, market out clause and a material adverse change clause, in each case exercisable prior to Closing. 5. By your acceptance of this letter (the "Agreement"), you hereby appoint Desjardins Securities Inc. and we hereby agree to act as your exclusive agent, financial advisor and consultant in respect of the Proposed Transaction, on the terms and conditions set out herein. 6. RESPONSIBILITIES. In connection with the Offering we will act as agent for the sale of the securities under the Offering on a reasonable best efforts basis and will otherwise provide support and assistance as follows: (a) provide advice as to the size, pricing, timing and structure of the Offering; (b) assist with the preparation of the preliminary prospectus and the final prospectus relating to the Offering; (c) assist with the listing of the securities on the TSX or the TSXV; (d) assist with the marketing of the Offering, including preparation of roadshow presentations and materials;

-3(e) assist in dealings with legal counsel and auditors and in securing regulatory approvals, as required; and (f) provide you with such other financial advisory services in connection with the Offering as you and we agree are appropriate in the circumstances. 7. FEES. In consideration for acting as your agent, financial advisor and consultant hereunder, you agree: (a) To compensate us at the time of Closing of the Offering with: (i) in the case of an IPO, a cash fee equal to 8% of your gross proceeds from the sale of securities pursuant to the Offering (including in connection with the exercise of the Over-Allotment Option) or, if the Offering is not an IPO, a cash fee consistent with our commercial rates which are applicable to a transaction of that kind; and (ii) compensation options entitling us to purchase that number of securities equal to 10% of the total number of securities sold or issued by you pursuant to the Offering (including in connection with the exercise of the OverAllotment Option) exercisable, in whole or in part, at a price equal to the price at which securities are sold by you (or the value at which shares are issued by you) to third parties pursuant to the Offering and having a term expiring twenty-four months from the Closing; (b) notwithstanding any termination of this Agreement, if during the term of this Agreement or within nine months of the termination or expiry of this Agreement you consummate a financing transaction or commence a financing transaction, as evidenced by execution of one or more agreements relating to the financing transaction, that is later consummated, with any person that was introduced to you by Desjardins, you will pay to us full compensation for that transaction consistent with the fees set forth in paragraph (a) hereof and otherwise in accordance with this Agreement. Such compensation applies to all payments applicable to such a financing transaction, including payments made after the date that is nine months from the termination or expiry of this Agreement. For the purposes hereof, a transaction is consummated when the transaction closes (c) if the Offering is not completed due to a decision by Gryphon, for whatever reason, not to proceed, then in addition to the amount to be reimbursed under paragraph 17 Gryphon will forthwith pay to Desjardins a work fee equal to C$100,000; and (d) if the Offering does not proceed and Gryphon completes an Alternative Transaction (as defined below) that commences or is completed during the term of this Agreement or within 12 months of the termination or expiry of this Agreement, Gryphon agrees to pay to Desjardins the following in addition to any

-4amounts required to be reimbursed under paragraph 17 (less any fee paid pursuant to paragraph (c)): (i) if such a transaction occurs prior to the filing of a preliminary prospectus, a payment equal to C$250,000; or (ii) if between the filing of the preliminary prospectus and the filing of a (final) prospectus for the Offering, C$500,000; or (iii) if between the pricing and closing of the Offering, C$750,000, provided, that the fees outlined in this paragraph shall not be payable if (i) Gryphon is obligated to pay the fee contemplated in paragraph (b); or (ii) both the Offering did not proceed as a result of Desjardins determining not to proceed due to adverse market conditions and none of the persons involved in the Alternative Transaction were identified or introduced to Gryphon by the Agents (as defined below). An "Alternative Transaction" means (a) any transaction or series of transactions under which Gryphon receives gross proceeds of more than C$3 million through the issuance of its securities; (b) a transaction or series of transactions which results in a change of control of Gryphon or any material subsidiary of Gryphon, (c) a merger, amalgamation, plan of arrangement, take-over bid, insider bid, issuer bid, reorganization, recapitalization, joint venture, sale or purchase of all or substantially all assets, proxy contest, exchange of assets or securities, extraordinary dividend or other distribution out of the ordinary course of Gryphon's business or any similar material transaction (or series of transactions) involving Gryphon, or (d) a reorganization or change in Gryphon's corporate structure that results in a spin-off of any of Gryphon's major assets; but does not include the private placement initiated in 2004 by the Company in which it has offered to sell units at US$0.65 per unit for gross proceeds of up to US$10 million (the "2004 Private Placement") or a property joint venture or acquisition in the ordinary course of Gryphon's business. If you agree to pay a commission or fee to anyone else, such commission or fee shall be for your account and shall not reduce the amount payable to us under this Agreement. 8. OVER-ALLOTMENT OPTION. Gryphon shall grant to Desjardins an over-allotment option (the "Over-Allotment Option") to cover overallotments, if any, and for market stabilization. The Over-Allotment Option shall entitle Desjardins to purchase additional securities equal to 15% of the total number of securities issued pursuant to the Offering at the price at which securities are issued in the Offering (the "Offering Price") for a period of 30 days following Closing. 9. SYNDICATION. In the event that Desjardins determines a syndicate should be formed to complete the Offering, Desjardins will act as lead manager and sole bookrunner for the Offering. The participation of

-5other members of a syndicate (together with Desjardins, the "Agents") in the Offering will be determined by Desjardins in consultation with Gryphon. 10. NON-IPO OFFERING. In the event that the Offering does not proceed as an IPO, the terms described hereunder as they relate to an IPO, including references to a prospectus, will be deemed to refer to the closest equivalent of such term for the applicable transaction, including a detailed information circular and filing statement in place of prospectus in the case of a reverse takeover. In the event that the Offering does not proceed as an IPO, the parties agree to use good faith efforts to negotiate and deliver such further amendments to this Agreement or incorporate applicable terms into the Agency Agreement as are necessary to provide equivalent treatment to the parties under the nonIPO transaction as would occur with respect to an IPO performed under the terms of this Agreement as they currently exist. 11. ACCESS TO INFORMATION AND MANAGEMENT. You will permit Desjardins and its agents to conduct all due diligence that they deem necessary. You will provide Desjardins and its agents with all corporate, financial and operating information and documentation regarding Gryphon and its subsidiaries as well as access to your senior management, facilities, employees, auditors, legal counsel and consultants which are reasonably necessary and sufficient to allow us to perform our services hereunder. Without restricting the generality of the foregoing, you will provide us with copies of all valuations, appraisals, forecasts and projections relating to Gryphon that are in your possession or that are reasonably obtainable by you. It is anticipated that Gryphon's senior management shall make themselves available as necessary, to participate in the marketing of the Offering by way of responding to investor queries that Desjardins is not able to address. 12. ACCURACY OF INFORMATION. Gryphon with the assistance of the Agents and the advice of their respective legal counsel, will be responsible for the preparation and filing of the preliminary and final prospectus for the Offering. In carrying out our responsibilities hereunder, Desjardins will necessarily rely on information prepared or supplied by you and other sources believed by us to be reliable and will apply reasonable standards of diligence to any work which we perform hereunder in the nature of an assessment or review of data or other information. Desjardins will be entitled to rely on and assumes no obligation to verify the accuracy or completeness of such information and under no circumstances will we be liable to you or any party for any damages arising out of the inaccuracy or incompleteness of any such information. You represent and warrant to us that all information and documentation concerning Gryphon that is provided by you in connection with this engagement will be accurate and complete in all material respects and not misleading and will not omit to state any fact or information which

-6would be material to a financial advisor and consultant performing the services contemplated herein. You will bear sole responsibility for the accuracy and completeness of the information provided to third parties, except for any information relating solely to Desjardins. You represent and warrant that the information so provided to third parties will be accurate and complete in all material respects and not misleading and will not omit to state any fact or information which would be material to parties considering the Proposed Transaction. To the extent that Desjardins assists you with the organization or presentation of any such information, your concurrence will constitute your endorsement of such information, and the organization and presentation thereof as your own and Desjardins assumes no obligation or responsibility relating thereto. 13. MATERIAL CHANGES. You will advise us promptly as you become aware of any material change, actual or contemplated, in the business, affairs or financial condition of Gryphon or in any information provided to us concerning you or the Proposed Transaction from the date at which such information is given. Unless advised otherwise, Desjardins will be entitled to assume that there has been no material change in such information and will be entitled to rely thereon. You will notify us promptly of any notice by any regulatory authority requesting any information, meeting or hearing relating to Gryphon and its affairs or the Proposed Transaction or any other event or state of affairs that may be relevant to us in connection with acting as your agent and financial advisor hereunder. 14. COMPLIANCE WITH LAWS AND USE OF EXPERTS. You will comply with all applicable laws, regulations and policies, whether domestic, foreign, federal, national, provincial, state or otherwise, applicable to the Proposed Transaction. In addition, you will retain, if required by us, legal, accounting and tax advisors experienced in these matters to work with us in effecting the Proposed Transaction. The fees and disbursements of such advisors will be for your account. 15. POTENTIAL INTERESTED PARTIES. In order to co-ordinate our efforts on your behalf, during the period of our engagement pursuant to this Agreement, you will not initiate any discussions regarding any Proposed Transaction, equity or debt financing or issuance of securities (other than with respect to the 2004 Private Placement and the issuance of shares of common stock pursuant to currently outstanding debentures, warrants and options), except in co-operation with or through us. If you receive an inquiry concerning any such transaction, you will promptly inform us of such inquiry so that we can assess such inquiry and assist in any resulting negotiations. All inquiries received by you during the term of this Agreement respecting the Proposed Transaction shall be immediately referred by you to Desjardins.

-716. COUNSEL TO DESJARDINS. We will be entitled to retain external counsel of our choice, experienced in these types of matters and reasonably acceptable to you, to assist us in the discharge of our duties hereunder. 17. EXPENSES AND TAXES. Whether or not the Proposed Transaction herein contemplated shall be completed, Gryphon will be responsible for all of its expenses and all of the expenses of Desjardins incurred in relation to the Proposed Transaction, including, without limitation, all fees and disbursements of legal counsel and all out-of-pocket expenses incurred by us in connection with our engagement hereunder, including, but not limited to, advertising, printing, courier, telecommunications, data searches, travel, entertainment, any other expenses and the fees and disbursements of experts retained by us, together with related Goods & Services Tax ("GST") and applicable provincial taxes. Such reimbursements will be payable upon a request for payment thereof by us whether or not the Proposed Transaction or any other transaction contemplated by this Agreement is completed. All or part of the amounts payable under this Agreement may be subject to GST or applicable provincial tax. We will keep you informed of the scope of our expenses by providing a general budget at the start of the Offering and notifying you when accrued expenses approach 80% of that budget. 18. TERM. This Agreement will be effective as of the date of this Agreement and will continue until the earlier of nine months from the date of this Agreement or completion of the Proposed Transaction. However, your obligations pursuant to Section 7, 8, 17, 18, 19, 20, 23, 24, 25, and 26 hereof will survive the completion of our engagement hereunder, any withdrawal or termination of or decision not to proceed with any Proposed Transaction or the expiry or other termination or purported termination of this Agreement. 19. FUTURE OFFERINGS. Conditional upon the successful completion of the Offering, Gryphon agrees that, for a period of 12 months from the date of Closing, Desjardins shall have a right of first refusal to act as the lead agent of any private placement or public offering for shares or other securities of the Company in Canada or the U.S. or to act as financial advisor for the Company. 20. ADDITIONAL SERVICES. If Desjardins is requested to perform any other services in addition to those described above, the terms and conditions relating to such services will be outlined in a separate letter of agreement and the fees for such services will be in addition to the fees payable hereunder, will be negotiated separately and in good faith and will be consistent with fees paid to investment bankers in North America for similar services.

-821. ANTICIPATED TIMING. It is anticipated that Gryphon's senior management shall make themselves available as necessary, to participate in the marketing of the Offering by way of responding to investor queries that Desjardins is not able to address. Desjardins and Gryphon shall endeavour to close the Proposed Transaction on or before December 15, 2005 assuming this agreement is executed by March 7, 2005 and shall work collaboratively towards achieving this targeted closing date. 22. USE OF DESJARDINS' ADVICE. You acknowledge and agree that all written and oral opinions, advice and materials provided by Desjardins in connection with our engagement hereunder are intended solely for your benefit and for your internal use only in considering the Proposed Transaction and you covenant and agree that no such opinion, advice or material shall be used for any other purpose whatsoever or reproduced, disseminated quoted from or referred to in whole or in part at any time, in any manner or for any purpose, without our prior written consent in each specific instance. Desjardins expressly disclaims any liability or responsibility by reason of any unauthorized use, publication, distribution of or reference to any oral or written opinions or advice or materials provided by us or any unauthorized reference to Desjardins or this engagement. Any advice or opinions given by Desjardins hereunder will be made subject to and will be based upon such assumptions, limitations, qualifications and reservations as we, in our sole judgment, deem necessary or prudent in the circumstances. 23. INDEMNITY. You agree to indemnify and save harmless Desjardins, its affiliates and their respective directors, officers, employees, partners, agents, advisors and shareholders in accordance with Schedule A hereto, which Schedule forms part of this Agreement and the consideration for which is the entering into of this Agreement. Such indemnity (the "Indemnity") shall be in addition to, and not in substitution of, any liability which you or any other person may have to Desjardins or other persons indemnified pursuant to the Indemnity apart from such Indemnity. The Indemnity shall apply to all services contemplated herein, including, without limitation, any "Additional Services" contemplated by Section 20 hereof. 24. CONFIDENTIALITY. Subject to the terms hereof, Desjardins and its affiliates will maintain as confidential all information provided to us by you hereunder and will use such information only for the purposes set out herein and for no competitive or other purposes whatsoever, unless such information: (a) is already in our possession and not subject to any obligation of confidentiality; (b) is or becomes generally available to the public other than as a result of unauthorized disclosure by or through us; (c) is or becomes available to us on a non-confidential basis from you or from a source other than you, any party related to you or your advisors, provided that such source is not known by us to be bound by any obligation of confidentiality; or (d) is required to be disclosed by operation of applicable law or regulatory requirement.

-9Gryphon agrees to maintain the existence and the terms of this Agreement in confidence and shall not make any public disclosure with respect to the Proposed Transaction without the prior written approval of Desjardins, except if such disclosure is required by law and then only after having provided Desjardins with as much prior notice as is possible in the circumstances during which time Desjardins and Gryphon shall discuss in good faith the necessity for and the contents of any proposed disclosure. 25. ADVERTISEMENTS. You agree, if so requested by us, to include a reference to us and our role in any press release or other public communication issued by you with respect to the Proposed Transaction. If the Proposed Transaction is successfully completed, and provided Desjardins is not in breach of any material provision hereof, we shall be permitted to publish, at our own expense, such advertisements or announcements relating to the services provided hereunder in such newspaper or other publications as we consider appropriate. 26. SUCCESSORS AND ASSIGNS. This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and assigns provided that no party may assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. 27. GOVERNING LAW. This Agreement is made pursuant to and shall be construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. You and we hereby submit to the non-exclusive jurisdiction of the courts of the Province of Ontario. 28. COMMITTEE APPROVAL. This entire Agreement is subject to the approval of Desjardins' New Business Committee, which shall review the Agreement. 29. NOTICES. Any notice or other communication required or permitted to be given under this Agreement will be in writing and will be delivered to:
(a) in the case of Gryphon: Attention: Tony Ker Gryphon Gold Corporation Suite 300 - 905 West Pender Street Vancouver, BC V6C 1L6 Fax: (604) 608-3262 (b) in the case of Desjardins: Attention: Teo Dechev Desjardins Securities Inc. 145 King Street West, Suite 2750 Toronto, Ontario M5H 1J8 Fax: 416-861-9992

- 10 The parties may change their respective addresses for notices by notice given in the manner set out above. Any notice or other communication will be in writing, and unless delivered personally to the addressee or to a responsible officer of the addressee, as applicable, will be given by telecopy and will be deemed to have been given when (i) in the case of a notice delivered personally to a responsible officer of the addressee, when so delivered; and (ii) in the case of a notice delivered or given by telecopy, on the first business day following the day on which it is sent. If the foregoing is in accordance with your understanding, please indicate your agreement to the above terms and conditions by signing the enclosed copy of this Agreement and returning the same to us. Yours truly, DESJARDINS SECURITIES INC.
By: /s/ Steven Altmann ___________________________________________ Name: Steven Altmann Title: Vice President

Acknowledged and agreed by us as of the date first written above. GRYPHON GOLD CORPORATION
By: /s/ Tony Ker ____________________________________________ Name: Tony Ker Title: Executive V.P. Treasurer

9th March 2005

SCHEDULE A INDEMNITY In consideration for Desjardins Securities Inc. ("Desjardins") accepting the engagement (the "Engagement") pursuant to the engagement letter (the "Agreement") to which this Schedule A is attached, Gryphon Gold Corporation ("Gryphon") agrees to indemnify and save harmless Desjardins, its affiliates and its respective directors, officers, employees, partners, agents, advisors and shareholders (collectively, the "Indemnified Parties" and individually, an "Indemnified Party") from and against any and all losses, claims, actions, suits, proceedings, damages, liabilities or expenses of whatsoever nature or kind (excluding loss of profits), including the aggregate amount paid in reasonable settlement of any actions, suits, proceedings, investigations or claims and the reasonable fees, disbursements and taxes of their counsel in connection with any action, suit, proceeding, investigation or claim that may be made or threatened against any Indemnified Party or in enforcing this indemnity (collectively, the "Claims") to which an Indemnified Party may become subject or otherwise involved in any capacity insofar as the Claims relate to, are caused by, result from, arise out of or are based upon, directly or indirectly, the Engagement whether performed before or after Gryphon's execution of the Agreement and to reimburse each Indemnified Party forthwith, upon demand, for any legal or other expenses reasonably incurred by such Indemnified Party in connection with any Claim. Gryphon also agrees that no Indemnified Party shall have any liability (either direct or indirect, in contract or tort or otherwise) to Gryphon or any person asserting claims on Gryphon's behalf or in right for or in connection with the Engagement, except to the extent that any losses, expenses, claims, actions, damages or liabilities incurred by Gryphon are determined by a court of competent jurisdiction in a final judgement that has become nonappealable to have resulted from the gross negligence, wilful misconduct or breach of applicable legislation by such Indemnified Party. In the event and to the extent that a court of competent jurisdiction in a final judgement that has become nonappealable determines that an Indemnified Party was grossly negligent or guilty of wilful misconduct in connection with a Claim in respect of which Gryphon has advanced funds to the Indemnified Party pursuant to this indemnity, such Indemnified Party shall reimburse such funds to Gryphon and thereafter this indemnity shall not apply to such Indemnified Party in respect of such Claim. Gryphon agrees to waive any right Gryphon might have of first requiring the Indemnified Party to proceed against or enforce any other right, power, remedy or security or claim payment from any other person before claiming under this indemnity. In case any action, suit, proceeding or claim is brought against an Indemnified Party or an Indemnified Party has received notice of the commencement of any investigation in respect of which indemnity may be sought against Gryphon, the Indemnified Party will give Gryphon, prompt written notice of any such action, suit, proceeding, claim or investigation of which the Indemnified Party has knowledge and Gryphon will undertake the investigation and defence thereof on behalf of the Indemnified Party, including the prompt employment of counsel acceptable to the Indemnified Parties affected and the payment of all expenses. Failure by the Indemnified Party to so notify shall not relieve Gryphon of its obligation of indemnification

-2hereunder unless (and only to the extent that) such failure results in forfeiture by Gryphon of substantive rights or defences. No admission of liability and no settlement, compromise or termination of any action, suit, proceeding, claim, or investigation shall be made without Gryphon's consent and the consent of the Indemnified Parties affected, such consents not to be unreasonably withheld. Notwithstanding that Gryphon will undertake the investigation and defence of any Claim, an Indemnified Party will have the right to employ separate counsel with respect to any Claim and participate in the defence thereof, but the fees and expenses of such counsel will be at the expense of the Indemnified Party unless: (a) employment of such counsel has been authorized in writing by Gryphon; (b) Gryphon has not assumed the defence of the action within a reasonable period of time after receiving notice of the claim; (c) the named parties to any such claim include both Gryphon and the Indemnified Party and the Indemnified Party shall have been advised by counsel to the Indemnified Party that there may be a conflict of interest between Gryphon and the Indemnified Party; or (d) there are one or more defences available to the Indemnified Party which are different from or in addition to those available to Gryphon; in which case such fees and expenses of such counsel to the Indemnified Party will be for Gryphon's account. The rights accorded to the Indemnified Parties hereunder shall be in addition to any rights an Indemnified Party may have at common law or otherwise. If for any reason the foregoing indemnification is unavailable (other than in accordance with the terms hereof) to the Indemnified Parties (or any of them) or is insufficient to hold them harmless, Gryphon will contribute to the amount paid or payable by the Indemnified Parties as a result of such Claims in such proportion as is appropriate to reflect not only the relative benefits received by Gryphon on the one hand and the Indemnified Parties on the other, but also the relative fault of the parties and other equitable considerations which may be relevant. Notwithstanding the foregoing, Gryphon will in any event contribute to the amount paid or payable by the Indemnified Parties as a result of such Claim any amount in excess of the fees actually received by the Indemnified Parties hereunder. Gryphon hereby constitutes Desjardins as trustee for each of the other Indemnified Parties of Gryphon's covenants under this indemnity with respect to such persons and Desjardins agrees to accept such trust and to hold and enforce such covenants on behalf of such persons. Gryphon agrees to reimburse Desjardins monthly for the time spent by Desjardins' personnel in connection with any Claim at their normal per diem rates. Gryphon also agrees that if any action, suit, proceeding or claim shall be brought against, or an investigation commenced in respect of Gryphon and Desjardins and personnel of Desjardins shall be required to testify,

-3participate or respond in respect of or in connection with the Engagement, Desjardins shall have the right to employ its own counsel in connection therewith and Gryphon will reimburse Desjardins monthly for the time spent by its personnel in connection therewith at their normal per diem rates together with such disbursements and reasonable out-of-pocket expenses as may be incurred, including fees and disbursements of Desjardins' counsel.

EXHIBIT 10.8 SERVICE AGREEMENT THIS AGREEMENT is dated for reference the 17th day of May, 2005 BETWEEN: GRYPHON GOLD CORPORATION, having an office at 300 - 905 West Pender St., Vancouver, British Columbia, V6C 1L6 (the "Company") AND: THE KOTTMEIER RESOLUTION GROUP LTD. having an office at Suite 410 - 744 West Hastings St., Vancouver, British Columbia, V6C 1A5 (the "Service Provider") WHEREAS the Company and the Service Provider wish to enter into this Agreement regarding the provision of the Service Provider's services to the Company, THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows: 1. SERVICES 1.1 The Company hereby retains the Service Provider upon the terms and conditions of this Agreement, and the Service Provider hereby accepts such retainer on such terms and conditions. 1.2 The Service Provider shall provide the Company with expertise and assistance in the areas generally described in Schedule "A" to this Agreement. If requested by the Company, the Service Provider shall be a member of the Company's Strategic Advisory Board at the pleasure of the Company. 1.3 The Service Provider shall take direction from and report to the Company's chairman or to such other person as the Company's chairman may direct. The Service Provider shall devote sufficient time and attention to the Company's business as may be required to properly perform his duties hereunder. 1.4 The Service Provider covenants that he shall not do, or fail to do, anything which could be reasonably expected to damage the reputation of the Company, its affiliates or any of its directors, officers, employees, contractors or consultants. 1.5 The Service Provider will ensure that the substantive content of any and all public communications by the Service Provider in respect of the Company will not be released to the public until it has been reviewed and consented to by a senior officer of the Company.

-22. TERM 2.1 The term of this Agreement shall be as stated in Schedule "A". 3. REMUNERATION AND EXPENSES 3.1 The Service Provider's remuneration will be as specified in Schedule "A". 3.2 Subject to the limitations expressed below with respect to prior authorization, the Company shall reimburse the Service Provider for all reasonable expenses incurred by him in furtherance of the Company's business. The Service Provider shall, to the greatest extent possible, submit statements and receipts for all expenses claimed. The Service Provider acknowledges and agrees that the Company's obligation to reimburse those expenses is subject to the following limitations: (a) the Company will only reimburse the Service Provider for those expenses that the Company considers reasonable or to which the Company has granted prior authorization; (b) the Company will not be responsible for, and the Service Provider will be responsible for and pay expenses associated with the provision of office space and general office support services (e.g. staff, utilities, office equipment) that may be required by the Service Provider in connection with rendering the services to the Company; and (c) the Company will not be responsible for, and the Service Provider will be responsible for and will pay all costs of conducting the Service Provider's business, including but not limited to, the expense and responsibility for any applicable insurance or municipal, provincial or federal licenses, permits, taxes or assessments of any kind, and payment of all business and employment taxes including, but not limited to, income taxes, Canada Pension Plan and Employment Insurance Act contributions, and worker's compensation premiums. 4. CONFIDENTIAL INFORMATION 4.1 The Service Provider shall keep all Confidential Information in confidence and not use or allow others to use any Confidential Information except for Company's benefit and, if the Service Provider is a corporation or other entity, the Service Provider shall use its best efforts to ensure that all of its employees, agents, directors and officers who become privy to the Confidential Information are bound by the terms of this section. In this Agreement, "Confidential Information" means all data, processes, formulations, analysis, methodologies and other information which is designated by Company as confidential or which would be reasonably understood to be confidential information based on the substance of the information and the circumstances under which it is conveyed, whether orally or in writing, except for any part of the Confidential Information which: (a) is or becomes publicly available other than as a result of a disclosure by Company; (b) is or becomes available to the Service Provider from a source (other than Company or its representatives) which, to the best of the Service Provider's knowledge after due inquiry, is not prohibited from disclosing such information to the Service Provider by a legal, contractual or fiduciary obligation; or (c) the Service Provider demonstrates was properly in the Service Provider's possession or control at the time of disclosure of that Confidential Information to it by the Company or its representatives.

-34.2 The Service Provider agrees that it shall not, before or after termination or expiry of this Agreement, remove any reports information, property, or any other material belonging to the Company, or any reproductions thereof, without the prior written permission of the Company's chairman. 4.3 The Service Provider acknowledges and agrees that, without prejudice to any and all rights of either party to this Agreement, an injunction may be the only effective remedy to protect a breach of the provisions of this section 4. This section 4 will survive the termination of this Agreement. 5. TERMINATION OF AGREEMENT 5.1 This Agreement may be terminated by the Company with 30 day's advance notice to the Service Provider with full payment of the final 30 days being issued immediately to the Service Provider upon notice of termination. 5.2 The Service Provider may terminate this Agreement upon 30 days' notice to the Company. Upon such an event, the Company will issue full payment of the final 30 days within one week of notice of termination. 5.3 The Service Provider acknowledges and agrees that the Company may, at its option, terminate this Agreement immediately upon written notice to the Service Provider where: (a) the Service Provide has committed a material breach of the provisions of this Agreement, if such breach has not been cured to the Company's satisfaction within 5 days of the Service Provider being notified of such breach by the Company (For greater certainty and without limiting the foregoing, a breach by the Service Provider of any of Section 1.4, 1.5 or 7.1 will be deemed to be a material breach of this Agreement); (b) the Service Provider or any of its directors or officers has been convicted of an indictable criminal offence; or (c) the bankruptcy, insolvency of the Service Provider or if the Service Provider has a receiving order made against it, makes an assignment for the benefit of creditors or takes the benefit of any statute for the time being in force relating to bankrupt or insolvent debtors for the orderly payment of debts. 6. RELATIONSHIP 6.1 The Service Provider is an independent contractor of the Company, and no party to this Agreement will make any representations or statements indicating or suggesting that any joint venture, partnership, or other such relationship exists between the Company and the Service Provider. The Company and the Service Provider will have no authority to assume or create obligations binding upon the other and will not take any action which may have the effect of creating the appearance of having such authority. 7. COMPLIANCE WITH LAWS 7.1 The Service Provider shall comply with all applicable statutes, rules and regulations and the lawful requirements and directions of any governmental authority having jurisdiction with respect to the provision of his services.

-48. MISCELLANEOUS 8.1 The provisions of the schedules attached to this Agreement form an integral part of this Agreement. 8.2 Any notice or other communication given under this Agreement shall be in writing and shall be deemed to have been given if personally delivered to a party hereto at its address appearing on the first page of this Agreement (or to such other address as one party provides to the other in a notice given according to this subsection). All notices and other communications shall be deemed to have been given and received on the first business day following its delivery as aforesaid. 8.3 The provisions of sections 4 of this Agreement shall survive the expiry or earlier termination of this Agreement. 8.4 Each provision of this Agreement is severable. If any provision of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, the illegality, invalidity or unenforceability of that provision will not affect: (a) the legality, validity or enforceability of the remaining provisions of this Agreement, or (b) the legality, validity or enforceability of that provision in any other jurisdiction except that if: (c) on the reasonable construction of this Agreement as a whole, the applicability of the other provision presumes the validity and enforceability of the particular provision, the other provision will be deemed also to be invalid or unenforceable; and (d) as a result of the determination by a court of competent jurisdiction that any part of this Agreement is unenforceable or invalid and, as a result of this Section 8.4, the basic intentions of the parties in this Agreement are entirely frustrated, the parties hereto will use all reasonable efforts to amend, supplement or otherwise vary this Agreement to confirm their mutual intention in entering into this Agreement. 8.5 This Agreement may not be assigned by either party hereto without the prior written consent of the other. This Agreement shall enure to the benefit of and be binding upon the parties and their respective successors and permitted assigns. 8.6 The laws of British Columbia and the laws of Canada applicable therein shall exclusively govern this Agreement. 8.7 This Agreement represents the entire agreement between the parties hereto and their respective principals and supersedes all prior agreements and understandings, whether written or oral, between the parties concerning the Service Provider's provision of services to the Company. This Agreement may not be amended or otherwise modified except by an instrument in writing signed by both parties. 8.8 This Agreement may be executed in counterparts, each of which shall be deemed to be an original and both of which shall constitute one agreement. This Agreement may be delivered by fax.

-5IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first above written notwithstanding its actual date of execution. GRYPHON GOLD CORPORATION
Per: /s/ Albert Matter ---------------------------------------ALBERT MATTER, CHAIRMAN

THE KOTTMEIER RESOLUTION GROUP LTD. Per: Not Legible KARL KOTTMEIER, DIRECTOR

SCHEDULE A DETAILS OF RETAINER The Service Provider shall provide the Company with his expertise and assistance, on a part time basis, in the following areas: INVESTOR RELATIONS (including company information dissemination to interested parties, inquiry responses, assistance with company events, assistance with AGMs, advertising, etc.) In this regard, the Service Provider acknowledges and agrees that it is of principal importance to the Company that the Service Provider initiate contact with and introduce the Company to mining analysts, institutional and retail investors throughout North America and Europe. GENERAL SHAREHOLDER RELATIONS (including responding to shareholder inquiries, proper disclosure, news release & update dissemination, assistance with other disclosure issues, etc.) INVESTOR DATABASE DEVELOPMENT (creation and maintenance of an investor & shareholder database to be used for full, proper and timely disclosure) CORPORATE CONSULTATION (including assistance with internal company matters, news release & reporting issues, possible finance issues, etc.) The term of this Agreement will commence on June 1st, 2005 (the "Start Date") and, subject to the termination provisions of this Agreement, terminate on August 31st, 2006. The Company will pay a monthly fee in advance of services provided of CAD 3,750.00 to the Service Provider (plus 7% Goods and Services tax) for the period June, July & August, 2005, and unless otherwise delayed, CAD 7,500.00 for the period Sept. 2005 to August 31st, 2006.

EXHIBIT 10.9 OFFICE BUILDING LEASE CORUM UNION INVESTORS LLC, A COLORADO LIMITED LIABILITY COMPANY (AS LANDLORD) AND GRYPHON GOLD CORPORATION, A NEVADA CORPORATION (AS TENANT)

OFFICE BUILDING LEASE THIS LEASE is made this 22nd day of June, 2005, by and between CORUM UNION INVESTORS LLC, a Colorado limited liability company ("Landlord") GRYPHON GOLD CORPORATION, a Nevada corporation ("Tenant"). WITNESSETH: 1. DEFINITIONS In addition to other terms which are defined elsewhere in this Lease, the terms defined in the following subparagraphs of this Paragraph 1 shall have the meanings set forth in such subparagraph whenever used in this Lease with the first letter of each word capitalized. A. "BASE OPERATING EXPENSES" shall mean an amount equal to the actual Operating Expenses for the Building Complex for the calendar year 2005. B. "BASE RENT" shall mean annual rental for the Primary Lease Term of One Hundred Twenty-Four Thousand Five Hundred Sixty Dollars ($124,560.00), payable as follows:
TERM ---8-1-05 9-1-05 9-1-06 9-1-07 9-1-08 9-1-09 $ PER SQ. FT. ------------$ 0.00 $17.00 $17.50 $18.00 $18.50 $19.00 SQ. FT. ------1,384 1,384 1,384 1,384 1,384 1,384 MONTHLY RENT -----------$ 0.00 $1,960.67 $2,018.33 $2,076.00 $2,133.67 $2,191.33 ANNUAL RENT ----------$ 0.00 $23,528.04 $24,219.96 $24,912.00 $25,604.04 $26,295.96

to to to to to to

8-31-05 8-31-06 8-31-07 8-31-08 8-31-09 8-31-10

C. "BUILDING" shall mean that certain building and other improvements located at 390 Union Boulevard, Lakewood, Colorado and the real property upon which such building and improvements is located. D. "BUILDING COMPLEX" shall mean the two (2) building complex comprised of the Building and the Other Building, and which is commonly referred to as 300/390 Union. E. "BUILDING STANDARD" shall mean building standard tenant finish items prestocked or in place in the Premises which Landlord normally provides to tenants (e.g., ceiling grid, sprinklers, HVAC and similar items). F. "COMMON AREAS" shall mean those portions of the Building Complex which are made available on a nonexclusive basis for general use in common of tenants, their employees, agents and invitees. Landlord shall have the right from time to time to change the location or Page 2

character of and to make alterations of or additions to the Common Areas, and to repair and reconstruct the Common Areas. G. "LANDLORD'S NOTICE ADDRESS" shall mean 300 Union Boulevard, Suite 200, Lakewood, CO 80228, with a simultaneous copy to Murray Franke Greenhouse List & Lippitt LLP, Attn: Thomas M. List, Esq., Granite Building, Second Floor, 1228 15th Street, Denver, Colorado or such other address as Landlord may from time to time designate. H. "LEASE YEAR" shall mean each twelve (12) month period beginning with the date the Primary Lease Term commences, or any anniversary thereof, and ending on the preceding date one (1) year later. I. "OTHER BUILDING" shall mean that certain building and other improvements located at 300 Union Boulevard, Lakewood, Colorado and the real property upon which such building and improvements is located. J. "PREMISES" shall mean those certain premises located on the third floor of the Building known as Suite 360 comprised of approximately 1,384 rentable square feet as depicted on EXHIBIT A attached hereto. K. "PRIMARY LEASE TERM" The term of the Lease shall commence at 12:01 a.m. on August 1, 2005, or upon the Premises becoming Ready for Occupancy (as defined below), whichever is earlier, and shall terminate at 12:00 midnight on August 31, 2010, or a term of sixty-one (61) months. L. "PROPERTY" shall mean that certain real property on which the Building Complex is situated, located in Lakewood, Colorado and more particularly described on Exhibit B attached hereto. M. "SECURITY DEPOSIT" shall mean the sum of Four Thousand Four Hundred One Dollars and 66/100 ($4,401.66). N. "TENANT'S NOTICE ADDRESS" shall mean 390 Union Boulevard, Suite 360, Lakewood, Colorado 80228. O. "TENANT'S PERMITTED USE" shall mean business office use. P. "TENANT'S PRO RATA SHARE" shall mean Point Eight Three Six Nine Percent (0.8369%). In the event Tenant at any time during the Primary Lease Term, or any extensions thereof, leases additional space in the Building Complex, Tenant's Pro Rata Share shall be recomputed by dividing the total rentable square footage of space then being leased by Tenant (including any additional space) by the Rentable Area and the resulting percentage shall become Tenant's Pro Rata Share. Q. "RENTABLE AREA" shall mean 165,368 square feet which is all rentable space available for lease in the Building Complex. If there is a significant change in the aggregate Page 3

Rentable Area as a result of an addition to the Building Complex, partial destruction thereof, modification to the design of the Building Complex, or similar cause which causes a reduction or increase thereto on a permanent basis, Landlord shall make such adjustment in the computations as shall be necessary to provide for any such change. Tenant agrees that the Rentable Area may be recalculated in the event that the Building Complex and/or the Premises is remeasured. Notwithstanding such remeasurement, Tenant's Pro Rata Share and Base Rent shall not be increased or decreased during the Primary Lease Term. 2. PREMISES In consideration of the payment of rent and the keeping and performance of the covenants and agreements by Tenant, as hereinafter set forth, Landlord hereby leases and demises unto Tenant the Premises and Tenant leases the Premises from Landlord, together with a non-exclusive right, subject to the provisions hereof, to use all appurtenances thereto, including, but not limited to, any plazas, Common Areas, or other areas on the Real Property (described more particularly on EXHIBIT B) designated by Landlord for the exclusive or non-exclusive use of the tenants of the Building. 3. RENT Tenant shall begin to pay the Base Rent on the date which is thirty (30) days after the Primary Lease Term commences and shall continue to pay on the first day of each month thereafter during the term hereof. All rents shall be paid in advance, without notice, set off, abatement, counterclaim, deduction or diminution, at Landlord's Notice Address, or at such place as Landlord from time to time designates in writing. In addition, Tenant shall pay to Landlord Tenant's Pro Rata Share of increases in Operating Expenses as provided herein and such other charges as are required by the terms of this Lease to be paid by Tenant which shall be referred to herein as "Additional Rent." Landlord shall have the same rights as to the Additional Rent as it has in the payment of Base Rent. 4. COMPLETION OR REMODELING OF THE PREMISES A. If the Premises have never been occupied and are not completed as of the date this Lease is entered into and Landlord has agreed to complete the same to any extent or the Premises have previously been occupied, but Landlord has agreed to perform remodeling work thereon, provisions with respect to such completion or remodeling will be set forth in a work letter to be executed between Landlord and Tenant concurrently herewith (the "Work Letter") the form of which is attached hereto as EXHIBIT C. Other than as set forth in the Work Letter, Landlord shall have no obligations for the completion or remodeling of the Premises, and Tenant shall accept the Premises in their "AS IS" condition on the date the Primary Lease Term commences. If Landlord is to complete or remodel the Premises and if the Premises are not "Ready for Occupancy," as hereafter defined, on the date the Primary Lease Term is to begin, Tenant's obligation to pay the Base Rent, its Pro Rata Share of increases in Operating Expenses, and other sums owing hereunder shall not commence until the Premises are Ready for Occupancy, provided, however, from the effective date hereof, other than the payment of rent, this Lease, and all of the covenants, conditions, and agreements herein contained Page 4

shall be in full force and effect. The postponement of Tenant's obligation to pay rent and other sums herein provided to be paid by Tenant for such period prior to the delivery of the Premises to Tenant, Ready for Occupancy, as hereinafter defined, shall be in full settlement of all claims which Tenant might otherwise have by reason of the Premises not being Ready for Occupancy on the date the Primary Lease Term is scheduled to begin Landlord shall use commercially reasonable efforts to have the Premises Ready for Occupancy on or before September 1, 2005. If Tenant takes possession of all or any part of the Premises prior to the date the Premises are Ready for Occupancy for the purpose of conducting its usual business therein, all terms and provisions of this Lease shall apply, including the obligations for the payment of all rent, procurement of required insurance and other amounts owing hereunder. "Ready for Occupancy" as used herein shall mean the date that Landlord shall have substantially completed the Premises or any remodeling work to be performed by Landlord, to the extent agreed to in the Work Letter. The certificate of the architect (or other representative of Landlord) in charge of supervising the completion or remodeling of the Premises shall control conclusively the date upon which the Premises are Ready for Occupancy, and the obligation to pay rent begins as aforesaid. In addition to the above, if Landlord is delayed in delivering the Premises to Tenant due to the failure of a prior occupant to vacate the same, then the obligation for the payment of rent and the commencement of the term hereof shall also be postponed, as hereinabove set forth, and such postponement shall be in full settlement of all claims which Tenant may otherwise have by reason of such delay of delivery. B. If the commencement of the Primary Lease Term is delayed pursuant to subparagraph A above, and such commencement date would occur on other than the first day of the month, the commencement date of the Primary Lease Term shall be further delayed until the first day of the following month and Tenant shall pay proportionate rent at the same monthly rate set forth herein (also in advance) for such partial month. In the event said commencement date is so delayed, the expiration of the term hereof shall be extended so that the Primary Lease Term will continue for the full period set forth in Paragraph 1 hereof. As soon as the Primary Lease Term commences, Landlord and Tenant shall execute an addendum to this Lease, if requested by either party, setting forth the exact date on which the Primary Lease Term commenced and the expiration date of the Primary Lease Term. C. If Tenant desires to take possession prior to the Primary Lease Term, Tenant shall obtain the written consent of Landlord. If Tenant takes possession of the Premises prior to the Primary Lease Term, Tenant shall pay Landlord a pro-rata amount of rent for the period from the date Tenant so takes possession of the Premises to the first day of the Primary Lease Term, calculated on a daily basis, and all provisions of this Lease shall be effective as of the date Tenant so takes possession. All other terms of this Lease, however (including but not limited to the obligations to pay Tenant's Pro Rata Share of Base Operating Expenses and to carry the insurance required in the Lease) shall be in effect during such period. 5. OPERATING EXPENSES A. DEFINITIONS. In addition to terms hereinabove defined, the following terms shall have the following meanings with respect to the provisions of this Lease: Page 5

(1) It is understood and acknowledged by Tenant that Landlord has not made any representation or given Tenant any assurances that the Base Operating Expenses will equal or approximate the actual Operating Expenses for any Lease Year during the Primary Lease Term, or any extension thereof, including the first Lease Year. (2) If the Lease Year is not concurrent with the calendar year, Landlord shall, at any time during the Primary Lease Term, or any extensions thereof, make all adjustments provided for in this Paragraph 5 on a calendar year basis with an appropriate proration for the Lease Year in which such conversion is made and in which the term ends and all references in this Paragraph 5 only to "Lease Year" shall thereafter be deemed to refer to "calendar year." (3) "Operating Expenses" shall mean all operating expenses of any kind or nature which are necessary, ordinary, or customarily incurred in connection with the operation and maintenance of the Building Complex as determined by Landlord on an accrual basis. Operating Expenses shall include, but not be limited to: (a) All real property taxes and assessments levied against the Building Complex by any governmental or quasigovernmental authority. The foregoing shall include any taxes, assessments, surcharges, or service or other fees of a nature not presently in effect which shall hereafter be levied on the Building Complex as a result of the use, ownership or operation of the Building Complex or for any other reason, whether in lieu of or in addition to, any current real estate taxes and assessments; provided, however, any taxes which shall be levied on the rentals of the Building Complex shall be determined as if the Building Complex were Landlord's only property and, provided further, that in no event shall the term "taxes or assessments," as used herein, include any net federal or state income taxes levied or assessed on Landlord, unless such taxes are a specific substitute for real property taxes. Such term shall, however, include gross taxes on rentals. Expenses incurred by Landlord for tax consultants and in contesting the amount or validity of any such taxes or assessments together with any resulting tax or assessment reductions shall be included in such computations (all of the foregoing are collectively referred to herein as the "Taxes"). "Assessment" shall include so-called special assessments, license tax, business license fee, business license tax, commercial rental tax, levy, charge, penalty or tax, imposed by any authority having the direct power to tax, including any city, county, state or federal government, or any school, agricultural, lighting, water, drainage or other improvement or special district thereof, against the Premises, the Building, the Other Building or Building Complex or any legal or equitable interest of Landlord therein. For the purposes of this Lease, any special assessments shall be deemed payable in such number of installments as is permitted by law, whether or not actually so paid. Notwithstanding anything to the contrary contained herein, Tenant shall pay before delinquency any and all taxes, assessments, license taxes and other charges levied, assessed or imposed and which become payable during the Primary Lease Term, or any extensions thereof, upon Tenant's operations at, occupancy of, or conduct of business at the Premises or upon equipment, furniture, appliances, trade fixtures and other personal property of any kind installed or located at the Premises. If Tenant shall install or cause Landlord to install special tenant improvements such as, but not limited to, private elevators, escalators, interior staircases or other fixtures and fittings which caused an increase in the assessed value of the Building Complex, then Tenant shall also pay as Additional Rent all of the taxes reasonably allocable to such extraordinary improvements. If the Page 6

taxing authorities fail to render a separate tax bill with respect to such improvements, Landlord shall allocate a reasonable portion of such taxes on the Building Complex to such improvements. (b) Costs of supplies, including, but not limited to, the cost of relamping all Building Standard tenant lighting as the same may be required from time to time; (c) Costs incurred in connection with obtaining and providing energy for the Building Complex, including, but not limited to, costs of natural gas, electricity, and fuel oils or any other energy sources; (d) Costs of water and sanitary and storm drainage services; (e) Costs of janitorial and security services; (f) Costs of general maintenance and repairs, including costs under HVAC and other mechanical maintenance contracts, and repairs and replacements of equipment used in connection with such maintenance and repair work; (g) Costs of maintenance of landscaping; (h) Insurance premiums, including fire and all-risk coverage, together with loss of rent endorsement; the part of any claim required to be paid under the deductible portion of any insurance policy carried by Landlord in connection with the Building Complex (where Landlord is unable to obtain insurance without such deductible from a major insurance carrier at reasonable rates), public liability insurance; and any other insurance carried by Landlord on the Building Complex or any component parts thereof (all such insurance shall be in such amounts as may be required by any Mortgagee [as defined in subparagraph 25.H hereof] or as Landlord may reasonably determine); (i) Labor costs, including wages and other payments, costs to Landlord of workmen's compensation and disability insurance, payroll taxes, welfare, fringe benefits, and all legal fees and other costs or expenses incurred in resolving any labor dispute; (j) Professional building management fees; (k) Legal, inspection, and other consultation fees (including fees charged by consultants retained by Landlord for services that are designed to produce a reduction in Operating Expenses or to reasonably improve the operation, maintenance or state of repair of the Building Complex) incurred in the ordinary course of operating the Building Complex; and costs incurred by Landlord in engaging experts or other consultants to assist in making the computations required hereunder; (l) The costs of capital improvements and structural repairs and replacements made in or to the Building Complex in order to conform to changes subsequent to the Lease Commencement Date in any applicable laws, ordinances, rules, regulations, or orders of any governmental or quasi-governmental authority having jurisdiction over the Building Complex Page 7

(herein "Required Capital Improvements"); the costs of any capital improvements and structural repairs and replacements designed primarily to reduce Operating Expenses (herein "Cost Savings Improvements"). The expenditures for Required Capital Improvements and Cost Savings Improvements shall be amortized at a market rate of return over the useful life of such capital improvement or structural repair or replacement (as determined by Landlord) provided that the amortized amount of any Cost Savings Improvement shall be limited in any year to the reduction in Operating Expenses as a result thereof. (4) "Operating Expenses" shall not include: (i) costs of work, including painting and decorating and tenant change work, which Landlord performs for any tenant or in any tenant's space in the Building or Other Building other than work of kind and scope which Landlord would be obligated to furnish to all tenants; (ii) costs of repairs or other work occasioned by fire, windstorm or other insured casualty to the extent of insurance proceeds received; (iii) leasing commissions, advertising expenses, and other costs incurred in leasing space in the Building or the Other Building; (iv) costs of repairs or rebuilding necessitated by condemnation; (v) any interest on borrowed money or debt amortization, except as specifically set forth above; (vi) depreciation on the Building and the Other Building; or (vii) any other cost, charge or expense not included in Section 5(A)(3) above. B. If any increase occurs in Operating Expenses during any Lease Year during the Primary Lease Term, or any extension thereof, including the first Lease Year, in excess of the Base Operating Expenses, Tenant shall pay to Landlord Tenant's Pro Rata Share of the amount of such increase. All amounts required to be paid by Tenant as a result of any such increase shall be paid within thirty (30) days following billing therefor by Landlord. In addition to the foregoing, it is agreed that, during each Lease Year beginning with the first month of the second Lease Year and continuing each month thereafter during the Primary Lease Term, or any extension thereof, Tenant shall pay to Landlord, at the same time as the Base Rent is paid, an amount equal to one-twelfth (1/12) of Landlord's estimate (as determined by Landlord) of Tenant's Pro Rata Share of any projected increases in the Operating Expenses for the particular Lease Year in excess of the Base Operating Expenses, with a final adjustment to be made between the parties at a later date for said Lease Year in accordance with the procedures set forth herein. (1) As soon as practicable following the end of each Lease Year during the Primary Lease Term, or any extension thereof, including the first Lease Year, Landlord shall submit to Tenant a statement prepared by a representative of Landlord setting forth the exact amount of Tenant's Pro Rata Share of the increase, if any, of the Operating Expenses for the Lease Year just completed over the Base Operating Expenses. Beginning with said statement for the second Lease Year, it shall also set forth the difference, if any, between Tenant's actual Pro Rata Share of the increase in Operating Expenses for such Lease Year just completed and the estimated amount of Tenant's Pro Rata Share of such increase on the basis of which Tenant's monthly rent was computed for such particular Lease Year. Each such statement shall also set forth the projected increase, if any, in Operating Expenses for the new Lease Year over the Base Operating Expenses and the corresponding increase or decrease in Tenant's monthly rent for such new Lease Year above or below the rental paid by Tenant for the immediately preceding Lease Year computed in accordance with the foregoing provisions; provided, however, in no event will the rental to be paid by Tenant hereunder ever be less than the Base Rent as it is to be adjusted for such Lease Year. Page 8

(2) To the extent that Tenant's Pro Rata Share of the increase in Operating Expenses for the period covered by such statement is different from the estimated amount upon which Tenant paid rent during the Lease Year just completed (or for the first Lease Year reflects an increase over the Base Operating Expenses), Tenant shall pay to Landlord the difference within thirty (30) days following receipt by Tenant of such statement from Landlord or receive a credit on the next months' rental owing hereunder, as the case may be. Until Tenant receives such statement, Tenant's monthly rent for the new Lease Year shall continue to be paid at the rate paid for the particular Lease Year just completed, but Tenant shall commence payment to Landlord of the monthly installments of rent on the basis of said statement beginning on the first day of the month following the month in which Tenant receives such statement. Moreover, Tenant shall pay to Landlord or deduct from the rent, as the case may be, on the date required for the first payment of rent, as adjusted, the difference, if any, between the monthly installments of rent so adjusted for the new Lease Year and the monthly installments of rent actually paid during the new Lease Year. (3) If, during any particular Lease Year, there is a change in the information on which Landlord based the estimate upon which Tenant is then making its estimated rental payments so that such estimate furnished to Tenant is no longer accurate, Landlord shall be permitted to revise such estimate by notifying Tenant and there shall be such adjustments made in the monthly rental on the first day of the month following the serving of such statement on Tenant as shall be necessary by either increasing or decreasing, as the case may be, the amount of monthly rent then being paid by Tenant for the balance of the Lease Year (but in no event shall any such decrease result in a reduction of the rent below the Base Rent and all amounts of Additional Rent, as adjusted for such Lease Year), as well as an appropriate adjustment in cash based upon the amount theretofore paid by Tenant during such particular Lease Year pursuant to the prior estimate. C. Landlord's and Tenant's responsibilities with respect to the Operating Expense adjustment described herein shall survive the expiration or early termination of this Lease or the early termination of Tenant's right to occupy the Premises, and Landlord shall have the right to retain the Security Deposit, or so much thereof as it deems necessary, to secure such payment attributable to the year in which this Lease terminates. If the Lease is in effect for less than a full calendar year during the last Lease Year of the term, Tenant's Pro Rata Share for such partial year shall be calculated by proportionately reducing the Base Operating Expenses to reflect the number of months in such year during which the Lease was in effect (the "Adjusted Base Operating Expenses"). The Adjusted Base Operating Expenses shall then be compared with the actual Operating Expenses for the said partial year to determine the amount, if any, of any increase in the actual Operating Expenses for such partial year over the Adjusted Base Operating Expenses. D. If Tenant shall dispute the amount of an adjustment submitted by Landlord or the proposed estimated increase or decrease on the basis of which Tenant's rent is to be adjusted as provided in subparagraph B above, Tenant shall give Landlord written notice of such dispute within thirty (30) days after Landlord advises Tenant of such adjustment or proposed increase or decrease. If Tenant fails to give Landlord such notice within such time, Tenant shall be deemed to have waived its right to dispute the amounts so determined. If Tenant timely objects, Tenant shall have the right to engage its own certified public accountants ("Tenant's Accountants") for the purpose of verifying the accuracy of the statement complained of or the reasonableness of the estimated increase or decrease. If Tenant's Accountants determine that an error has been made, Landlord and Tenant's Page 9

Accountants shall endeavor to agree upon the matter, failing which the parties shall settle the dispute by judicial action or in such other manner as they agree. All costs incurred by Tenant in obtaining its own accountants shall be paid for by Tenant unless Tenant's Accountants disclose an error, acknowledged by Landlord (or found to have occurred in a judicial action), of more than five percent (5%) in the computation of the total amount of Operating Expenses as set forth in the statement submitted by Landlord which is challenged, in which event Landlord shall pay the reasonable costs incurred by Tenant in obtaining such audit (excluding any charges billed on a contingency fee basis). Notwithstanding the pendency of any dispute over any particular statement, Tenant shall continue to pay Landlord the amount of the adjusted monthly installments of rent determined by Landlord until the adjustment has been determined to be incorrect as aforesaid. A delay by Landlord in submitting any statement contemplated herein for any Lease Year shall not affect the provisions of this Paragraph 5 or constitute a waiver of Landlord's rights as set forth herein for said Lease Year or any subsequent Lease Years during the Primary Lease Term and any extensions thereof. E. Notwithstanding anything contained herein to the contrary, if any lease entered into by Landlord with any tenant in the Building or the Other Building provides for a separate basis of computation for any Operating Expenses with respect to its leased premises, then, to the extent that Landlord determines that an adjustment should be made in making the computations herein provided for, Landlord shall be permitted to modify the computation of Base Operating Expenses, Rentable Area, and Operating Expenses for a particular Lease Year, in order to eliminate or otherwise modify any such expenses which are paid for in whole or in part by such tenant. Furthermore, in making any computations contemplated hereby, Landlord shall also be permitted to make such adjustments and modifications to the provisions of this Paragraph 5 as shall be reasonably necessary to achieve the intention of the parties hereto. F. In the event the Rentable Area is not fully occupied during any particular Lease Year, Landlord may adjust those Operating Expenses which are affected by the occupancy rates for the particular Lease Year, or portion thereof, as the case may be, to reflect an occupancy of not less than ninety-five percent (95%) of all such Rentable Area. 6. SERVICES A. Subject to the provisions of subparagraph D below, Landlord, without charge, except as provided herein, and in accordance with standards from time to time prevailing for the Building agrees: (1) to furnish running water at those points of supply for general use of tenants of the Building; (2) to furnish to public areas of the Building heated or cooled air (as applicable), electrical current, janitorial services, and maintenance to the extent Landlord deems necessary; (3) to furnish during Ordinary Business Hours, as hereinafter defined, such heated or cooled air to the Premises as may, in the judgment of Landlord, be reasonably required for the comfortable use and occupancy of the Premises, provided that the recommendations of Landlord's engineer regarding occupancy and use of the Premises are complied with by Tenant and, with respect to cooled air, provided the same is used only for standard office use; (4) to furnish, subject to availability and capacity of building systems, unfiltered, treated cooling tower water for use in Tenant's packaged HVAC systems, provided that such systems are equipped with Landlord-approved strainers, pumping systems and controls, and that such systems are connected only after approval of Landlord's engineer; (5) to Page 10

provide, during Ordinary Business Hours, the general use of passenger elevators for ingress and egress to and from the Premises (at least one such elevator shall be available at all times, except in the case of emergencies or repair); (6) to provide janitorial services for the Premises (including such window washing of the outside of exterior windows as may, in the judgment of Landlord, be reasonably required), such janitorial services shall be provided after Ordinary Business Hours on Monday through Friday only, except for Legal Holidays; and (7) to cause electric current to be supplied to the Premises for all of Tenant's Standard Electrical Usage, as hereinafter defined. "Tenant's Standard Electrical Usage", as used herein, shall mean and refer to electrical usage for standard lighting and ordinary office usage including desk top office machines based upon 0.00075 KVA (0.75 Watt) per rentable square foot of the Premises. "Ordinary Business Hours", as used herein, shall mean and refer to 6:00 a.m. to 7:00 p.m. Monday through Friday and 8:00 a.m. to 1:00 p.m. on Saturdays, Legal Holidays excepted. "Legal Holidays", as used herein, shall mean New Year's Day, Presidents' Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day, and such other national holidays as may hereafter be established by the United States Government. B. "Excess Usage" shall be defined as any service usage (1) during other than Ordinary Business Hours; or (2) in an amount in excess of Tenant's Standard Electrical Usage; or (3) for "Special Equipment"; or (4) for standard HVAC services during other than Ordinary Business Hours. "Special Equipment", as used herein, shall mean (i) any equipment consuming more than 0.5 kilowatts as rated capacity, (ii) any equipment requiring a voltage other than 120 volts, single phase, or (iii) equipment that requires the use of self-contained HVAC units. Tenant shall reimburse Landlord for reasonable costs incurred by Landlord in providing services for Excess Usage. Such reasonable costs will include Landlord's costs for materials, additional wear and tear on equipment, utilities, and labor (including fringe and overhead costs). Computation of Landlord's cost for providing such services will be made by Landlord's engineer, based on his engineering survey of Tenant's Excess Usage. Tenant shall also reimburse Landlord for all costs of supplementing the Building HVAC System and/or extending or supplementing any electrical service, as Landlord may determine is necessary, as a result of Tenant's Excess Usage. Prior to installation or use by Tenant of any equipment which will result in Excess Usage or operation of the Premises for extended hours on an ongoing basis, Tenant shall notify Landlord of such intended installation or use and obtain Landlord's consent therefor. In addition to the foregoing, Landlord has the right, at Tenant's sole cost and expense, to install a check meter and/or flow meter to assist in determining the cost of Tenant's Excess Usage. If Tenant desires electric current and/or heated or cooled air to the Premises during periods other than Ordinary Business Hours, Landlord will use reasonable efforts to supply the same, but at the expense of Tenant, at Landlord's standard rate as established by it, from time to time, for such services, including additional costs or expenses associated with providing such services, for example, without limitation, additional labor costs. Not less than twenty-four (24) hours prior notice shall be given by Tenant to Landlord of Tenant's desire for such services. C. If Tenant requires janitorial services other than those required to be provided to other tenants of the Building Complex generally, Tenant shall separately pay for such services monthly upon billings by Landlord, or Tenant shall, at Landlord's option, separately contract for such services with the same company furnishing janitorial services to Landlord. Page 11

D. Tenant agrees that Landlord shall not be liable for failure to supply any such heating, air conditioning, elevator, electrical, janitorial, lighting or other services during any period when Landlord uses reasonable diligence to supply such services, or during any period Landlord is required to reduce or curtail such services pursuant to any applicable laws, rules, or regulations, including regulations of any utility now or hereafter in force or effect, it being understood that Landlord may discontinue, reduce, or curtail such services, or any of them (either temporarily or permanently), at such times as it may be necessary by reason of accident, repairs, alterations, improvements, strikes, lockouts, riots, acts of God, terrorism, application of applicable laws, statutes, or rules and regulations or due to any other happening beyond the control of Landlord. In the event of any such interruption, reduction, or discontinuance of Landlord's services (either temporary or permanent), Landlord shall not be liable for damages to person or property as a result thereof, nor shall the occurrence of any such event in any way be construed as an eviction of Tenant; or cause or permit an abatement, reduction or setoff of rent, or operate to release Tenant from any of Tenant's obligations hereunder. E. Tenant agrees to notify promptly the Landlord or its representative of any accidents or defects in the Building Complex of which Tenant becomes aware, including defects in pipes, electric wiring, and HVAC equipment. In addition, Tenant shall provide Landlord with prompt notification of any matter or condition which may cause injury or damage to the Building Complex or any person or property therein. 7. QUIET ENJOYMENT Landlord agrees to warrant and defend Tenant in the quiet enjoyment and possession of the Premises during the term of this Lease so long as Tenant complies with the provisions hereof. 8. DEPOSIT It is agreed that, concurrently with the execution of this Lease, Tenant has deposited with Landlord the Security Deposit together with the second month's Base Rent, the receipt of which is hereby acknowledged, as security for the payment by Tenant of all rent and other amounts herein agreed to be paid and for the faithful performance of all the terms, conditions, and covenants of this Lease. If, at any time during the term of this Lease, Tenant shall be in default in the performance of any provision of this Lease, Landlord shall have the right, but shall not be required, to use said deposit, or so much thereof as necessary, in payment of any rent or other amount in default as aforesaid, in reimbursement of any expense incurred by Landlord, and in payment of any damages incurred by Landlord by reason of Tenant's default. In such event, Tenant shall, on written demand of Landlord, forthwith remit to Landlord a sufficient amount to restore said deposit to an amount equal to: (i) the Base Rent as adjusted in accordance with Paragraph 3 if Tenant's default occurs thereafter, plus the monthly amount of Tenant's Pro Rata Share of increases in Operating Expenses then payable by Tenant pursuant to subparagraph 5.B hereof, times (ii) the number of months' worth of Base Rent represented by the initial deposit. In the event said deposit has not been utilized as aforesaid, said deposit, or as much thereof as has not been utilized for such purposes, shall be refunded to Tenant or to whomever is then the holder of Tenant's interest in this Lease, without Page 12

interest, within sixty (60) days after the termination or expiration of the Lease or surrender and acceptance of the Premises, whichever occurs last. Landlord shall have the right to commingle said deposit with other funds of Landlord without liability for interest at all times during the term of this Lease. Landlord may deliver the funds deposited herein by Tenant to the purchaser of Landlord's interest in the Premises in the event such interest be sold and advise Tenant by regular mail of the name and address of such transferee and, thereupon, Landlord shall be discharged from further liability with respect to such deposit. Tenant agrees that if a Mortgagee (as defined herein) succeeds to Landlord's interest in the Premises by reason of foreclosure or deed in lieu of foreclosure, Tenant shall have no claim against said Mortgagee for the Security Deposit, or any portion thereof, unless such Mortgagee has actually received the same from Landlord. If claims of Landlord exceed said deposit, Tenant shall remain liable for the balance of such claims. Tenant shall not assign or encumber or attempt to assign or encumber the Security Deposit provided for herein, except that Tenant may assign such deposit in the event of a permitted assignment of Tenant's entire interest in this Lease. 9. USE Tenant covenants and agrees to occupy and use the Premises for the Permitted Use and for no other purpose, and to use them in a careful, safe, and proper manner; to pay on demand for any damage to the Premises caused by misuse or abuse thereof by Tenant, Tenant's agents or employees, or of any other person entering upon the Premises under express or implied invitation of Tenant, not to use or permit the Premises to be used for any purposes prohibited by the laws, codes, rules, and regulations of the United States, the State of Colorado, or of any applicable municipality or quasi-governmental entity. Tenant shall not commit waste or suffer or permit waste to be committed or permit any nuisance on or in the Premises. In the event that any officials shall hereafter at anytime contend or declare by notice, violation, order or in any other manner whatsoever that the Premises are used for a purpose which is a violation of any permit, certificate of occupancy, statute, ordinance or other requirement of law applicable to the Building Complex or the Premises, Tenant shall, upon five (5) days written notice from Landlord, immediately discontinue such use of the Premises. Tenant, at its sole expense, shall comply with all laws, orders and regulations of federal, state, county and municipal authorities and with any direction of any public office or officers, pursuant to law which shall impose any violation or duty upon Landlord or Tenant with respect to the Premises, or the use or occupation thereof. Tenant shall not use or suffer or permit any other firm or person to use the Premises for any hazardous purpose or in any manner that will violate, suspend, void, make inoperative or increase the rate of any policies of insurance of any kind at any time carried by Landlord upon the Premises or the Building Complex or the fixtures and property therein. Any increase in the cost of any insurance carried by Landlord attributable to Tenant's activities on the Premises or Tenant's failure to perform and observe Tenant's obligations and covenants hereunder shall be borne by Tenant and payable to Landlord from time to time on demand. 10. ALTERATIONS AND REENTRY BY LANDLORD Page 13

A. Unless otherwise expressly provided herein, Landlord shall not be required to make any improvements or repairs of any kind or character to the Premises during the Primary Lease Term, or any extension thereof, except: (i) such repairs to HVAC, mechanical and electrical systems in the Premises (to the extent such systems are Building Standard) as may be deemed necessary by Landlord for normal maintenance operations of the Building Complex; and (ii) upkeep, maintenance, and repairs to all Common Areas in the Building Complex so long as the need for any such repair is not the result of the negligence or willful misconduct of Tenant, its agents, invitees or employees. B. Tenant covenants and agrees to permit Landlord at any time to enter the Premises to examine and inspect the same, to show the Premises to prospective purchasers, mortgagees or tenants, or, if Landlord so elects, to perform any obligations of Tenant hereunder which Tenant shall fail to perform or to perform such cleaning, maintenance, janitorial services, repairs, additions, or alterations as Landlord may deem necessary or proper for the safety, improvement, or preservation of the Premises or of other portions of the Building Complex or as may be required by governmental authorities through any code, rule, regulation, ordinance, and/or law. Any such reentry shall not constitute an eviction or entitle Tenant to abatement of rent. Furthermore, Landlord shall at all times have the right at Landlord's election to make such alterations or changes in other portions of the Building Complex as Landlord may from time to time deem necessary and desirable as long as such alterations and changes do not unreasonably interfere with Tenant's intended use and occupancy of the Premises. Landlord may use one or more of the street entrances to the Building Complex and such public areas thereof as may be necessary, in Landlord's determination to complete such alterations or changes. 11. ALTERATIONS AND REPAIRS BY TENANT A. Tenant covenants and agrees not to make any alterations in, or additions to, the Premises (subsequent to the work in the Premises performed by Landlord pursuant to the Work Letter), including installation of any equipment or machinery therein which requires modification of or additions to any existing electrical outlet or which would increase Tenant's usage of electricity beyond Tenant's Standard Electrical Usage (all such alterations are referred to herein collectively as "Alterations") without in each such instance first obtaining the written consent of Landlord. Tenant, at its expense, shall pay all engineering and design costs incurred by Landlord attributable to the Alterations and obtain all necessary governmental permits and certificates required for any Alterations to which Landlord has consented, and shall cause such Alterations to be completed in compliance therewith and with all applicable laws and requirements of public authorities and all applicable requirements of Landlord's insurance carriers. All Alterations which Tenant is permitted to make shall be performed in a good and workmanlike manner, using new materials and equipment at least equal in quality to the original installations in the Premises. All repair and maintenance work required to be performed by Tenant pursuant to the provisions of subparagraph B below and any Alterations permitted by Landlord pursuant to the provisions hereof, including, but not limited to, any installations desired by Tenant for Tenant's telegraphic, telephonic or electrical connections, shall be done at Tenant's expense by Landlord's employees or, with Landlord's consent, by persons requested by Tenant and authorized in writing by Landlord, provided, however, if such work is performed by persons who are not employees of Landlord, Tenant shall pay to Landlord, upon receipt of billing therefor, the costs for supervision and control of such persons as Landlord may Page 14

determine to be necessary. If Landlord authorizes persons requested by Tenant to perform such work, prior to the commencement of any such work, on request, Tenant shall deliver to Landlord certificates issued by insurance companies qualified to do business in the State of Colorado, evidencing that workmen's compensation, public liability insurance, and property damage insurance, all in the amounts, with companies and on forms satisfactory to Landlord, are in force and effect and maintained by all contractors and subcontractors engaged by Tenant to perform such work. All such policies shall name Landlord and any Mortgagee, (as defined herein) as an additional insured. Each such certificate shall provide that the same may not be cancelled or modified without ten (10) days prior written notice to Landlord and such Mortgagee. Further, Landlord and such Mortgagee shall have the right to post notices in the Premises in locations which will be visible by parties performing any work on the Premises stating that Landlord is not responsible for the payment for such work and setting forth such other information as Landlord may deem necessary. Alterations, repair, and maintenance work shall be performed in a manner which will not unreasonably interfere with, delay, or impose any additional expense upon Landlord in the maintenance or operation of the Building Complex or upon other tenants use of their premises. B. Tenant shall keep the Premises in as good order, condition, and repair and in an orderly state, as when they were entered upon, loss by fire or other casualty or ordinary wear excepted. Subject to Landlord's obligation to make repairs in the event of certain casualties, as set forth in Paragraph 18 below, Landlord shall have no obligation for the repair or replacement of any portion of the interior of the Premises which is damaged or wears out during the term hereof regardless of the cause therefor, including but not limited to, carpeting, draperies, window coverings, wall coverings, painting or any of Tenant's property or betterments in the Premises. C. All Alterations and permanent fixtures installed in the Premises, including, by way of illustration and not by limitation, all partitions, paneling, carpeting, drapes or other window coverings, and light fixtures (but not including movable office furniture not attached to the Building Complex), shall be deemed a part of the real estate and the property of Landlord and shall remain upon and be surrendered with the Premises as a part thereof without molestation, disturbance, or injury at the end of the Primary Lease Term or any extension thereof, whether by lapse of time or otherwise, or upon the termination of Tenant's right to occupy the Premises. 12. MECHANICS' LIENS Tenant shall pay or cause to be paid all costs for work done by Tenant or caused to be done by Tenant on the Premises (including work performed by Landlord or its contractor at Tenant's request following the commencement of the Primary Lease Term) of a character which will or may result in liens on Landlord's interest therein, and Tenant will keep the Premises free and clear of all mechanics' liens and other liens on account of work done for Tenant or persons claiming under it, excluding any Tenant Finish Work performed by Landlord pursuant to the Work Letter. Tenant hereby agrees to indemnify, defend, and save Landlord harmless of and from all liability, loss, damage, costs, or expenses, including attorneys' fees, on account of any claims of any nature whatsoever including claims or liens of laborers or materialmen or others for work performed or claimed to be performed for or materials or supplies furnished to Tenant or persons claiming under Page 15

Tenant. Should Tenant receive any notice of intent to file a lien, Tenant shall promptly deliver a copy of such notice to Landlord and shall promptly resolve the claim. Should any liens be filed or recorded against the Premises or any action affecting the title thereto be commenced as a result of such work (which term includes the supplying of materials), Tenant shall cause such liens to be removed of record within five (5) days after the filing or recording of such liens. If Tenant desires to contest any claim of lien, Tenant shall furnish to Landlord adequate security of at least one hundred fifty percent (150%) of the amount of the claim, plus estimated costs and interest, or, at Tenant's option, file a bond with the appropriate court and obtain a release of the lien pursuant to Section 38-22-131, C.R.S. If a final judgment establishing the validity or existence of any lien for any amount is entered, Tenant shall pay and satisfy the same at once. If Tenant shall be in default in paying any charge for which a mechanic's lien or suit to foreclose the lien has been recorded or filed and shall not have given Landlord security as aforesaid, Landlord may (but without being required to do so) pay such lien or claim and any costs, and the amount so paid, together with reasonable attorneys' fees incurred in connection therewith, shall be immediately due from Tenant to Landlord. 13. SUBLETTING AND ASSIGNMENT A. Tenant shall not assign this Lease or any interest therein, or sublet all or any part of the Premises, or suffer or permit the Premises or any part thereof to be occupied by others, by operation of law or otherwise, without the prior written consent of Landlord in each instance, which consent, as to any subletting of less than twenty-five percent (25%) of the Premises, will not be unreasonably withheld provided that: (i) Tenant has complied with the provision of subparagraph D below and Landlord has declined to exercise its rights thereunder; (ii) the proposed subtenant or assignee is engaged in a business and the Premises will be used in a manner which is in keeping with the then standards of the Building; (iii) the proposed subtenant or assignee is a reputable party of reasonable financial worth in light of the responsibilities involved and Tenant shall have provided Landlord with reasonable proof thereof; and, (iv) Tenant is not in default hereunder at the time it makes its request for such consent or at the time of the commencement of the proposed sublease or assignment. B. If this Lease or any interest herein is assigned, or if the Premises or any part thereof be sublet or occupied by anybody other than Tenant, with or without the consent of Landlord having first been obtained, Landlord may, after default by Tenant, collect rent from the assignee, subtenant or occupant, and apply the net amount collected to the Base Rent and other sums due hereunder, but no collection shall be deemed a waiver of the provisions of this paragraph, or the acceptance of the assignee, subtenant or occupants as the tenant hereof, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant contained in this Lease. Acceptance of rent by Landlord from anyone other than Tenant shall not be construed as a waiver by Landlord, nor as a release of Tenant, but the same shall be taken to be a payment on account of Tenant. The consent by Landlord to an assignment, subletting or occupancy arrangement shall not relieve Tenant from primary liability hereunder or from the obligation to obtain the express consent in writing of Landlord to any further assignment, subletting or occupancy arrangement. Landlord's consent to any requested sublease or assignment shall not waive Landlord's right to refuse to consent to any other such request. If Tenant collects any rental or other amounts from a subtenant or assignee in excess of Page 16

the Base Rent and Tenant's Pro Rata Share of increases in Operating Expenses, Tenant shall pay the Landlord, as and when Tenant receives the same, all such excess amounts received by Tenant. C. Notwithstanding anything contained hereinabove in this Paragraph 13 to the contrary, in the event Tenant requests Landlord's consent to sublet twenty-five percent (25%) or more of the Premises or to assign twenty-five percent (25%) or more of its interest in this Lease, Landlord shall have the right to: (i) consent to such sublease or Assignment in its sole discretion; (ii) refuse to grant such consent in Landlord's sole discretion; or (iii) refuse to grant such consent and terminate this Lease as to the portion of the Premises with respect to which such consent was requested, provided, however, if Landlord refuses to grant such consent and elects to terminate the Lease as to such portion of the Premises, Tenant shall have the right within fifteen (15) days after notice of Landlord's exercise of its right to terminate to withdraw Tenant's request for such consent and remain in possession of the Premises under the terms and conditions hereof. In the event the Lease is terminated as set forth herein, such termination shall be effective as of the date set forth in a written notice from Landlord to Tenant, which date shall in no event be more than sixty (60) days following such notice. In any event, if any amounts payable by the assignee or subtenant with respect to its occupancy of all or a portion of the Premises are in excess of the amounts payable by Tenant to Landlord hereunder, said amounts shall be immediately due and payable to the Landlord as additional rent. D. Tenant hereby agrees that in the event it desires to sublease all or any portion of the Premises or assign this Lease to any party, in whole or in part, (herein "Assignment"), Tenant shall notify Landlord not less than sixty (60) days prior to the date Tenant desires to sublease such portion of the Premises or assign this Lease ("Tenant's Notice"). Tenant's Notice shall set forth the description of the portion of the Premises to be so sublet or assigned and the terms and conditions on which Tenant desires to sublet the Premises or assign this Lease. Landlord shall have thirty (30) days following receipt of Tenant's Notice within which to exercise Landlord's rights pursuant to subparagraph C above and to notify Tenant of its election ("Landlord's Notice"). If Landlord consents to the proposed subletting or assignment, Tenant shall be free to sublet the portion of the Premises in question or assign the applicable portion of its interest in this Lease to any third party on terms substantially identical to those described in Tenant's Notice, subject to Landlord's consent as set forth in subparagraph A above. If Tenant is unable to sublet said portion of the Premises or assign the applicable portion of its interest in this Lease on said terms and conditions within one hundred twenty (120) days following its original notice to Landlord, Tenant agrees to re-offer the Premises to Landlord in accordance with the provisions hereof prior to leasing or assigning the same to any third party. E. Tenant covenants and agrees that Tenant shall not, and shall not allow any subtenant of Tenant to, enter into any sublease, license, concession or other agreement of use, occupancy or utilization of space in the Premises, which provides for a rental or other payment for such use, occupancy or utilization based in whole or in part on the income (other than gross income or gross receipts to be determined in a manner satisfactory to counsel for Landlord) or profits of any sublessee, licensee, concessionaire or other user or occupant, and further agrees that a breach of this covenant and agreement shall be a material breach of this Lease. The provisions for any such rental in violation of this paragraph shall be void at its inception and Tenant agrees that rent under the Page 17

offending lease, sublease, license, concession or agreement shall be calculated at an amount equal to the fair rental value thereof. F. A sale by Tenant of all or substantially all of its assets or all or substantially all of its stock if Tenant is a publicly traded corporation, a merger of Tenant with another corporation, the transfer of forty-nine percent (49%) or more of the stock in a corporate tenant whose stock is not publicly traded, or transfer of forty-nine percent (49%) or more of the beneficial ownership interests in a tenant which is a partnership shall constitute an assignment hereunder. G. All documents utilized by Tenant to evidence any subletting or assignment to which Landlord has consented shall be subject to prior approval by Landlord or its counsel. Tenant shall pay on demand all of Landlord's costs and expenses, including reasonable attorneys' fees, incurred in determining whether or not to consent to any requested sublease or assignment and in reviewing and approving such documentation. H. Notwithstanding anything to the contrary contained in this Lease, if a trustee in bankruptcy is entitled to assume control over Tenant's rights under this Lease and assigns such rights to any third party, the Base Rent to be paid hereunder by such party shall be increased to the then current Base Rent (if greater than then being paid for the Premises) which Landlord would charge for comparable space in the Building Complex as of the date of such third party's occupancy of the Premises. 14. DAMAGE TO PROPERTY AND INDEMNITY BY TENANT A. Tenant shall neither hold nor attempt to hold Landlord or its agents, members and employees, liable for any injury or damage, either proximate or remote, occurring through or caused by fire, water, steam, or any repairs, alterations, injury, accident, or any other cause to the Premises, to any furniture, fixtures, Tenant improvements, or other personal property of Tenant kept or stored in the Premises, or in other parts of the Building Complex not herein demised, whether by reason of the negligence or default of the owners or occupants thereof or any other person or otherwise and the keeping or storing of all property of Tenant in the Building Complex and/or Premises shall be at the sole risk of Tenant. B. Subject to Paragraph 15.E below, Tenant hereby agrees to indemnify, defend, and save Landlord, its agents, members and employees, harmless of and from all liability, loss, damages, costs, or expenses, including attorneys' fees, on account of injuries to the person or property of Landlord or of any other tenant in the Building Complex or to any other person rightfully in said Building Complex for any purpose whatsoever, where the injuries are caused by the negligence or misconduct of the Tenant, Tenant's agents, servants, or employees or of any other person entering upon the Premises under express or implied invitation of Tenant or where such injuries are the result of the violation of the provisions of this Lease by any of such persons. 15. INSURANCE AND WAIVER OF SUBROGATION Page 18

A. Landlord shall maintain casualty insurance on the shell and core of the Building, Other Building, on the Premises (to the extent of the Building Standard Tenant Finish Work items therein) and the Building Complex, in such amounts, from such companies, and on such terms and conditions, including loss of rental insurance for a period of twelve (12) months, as Landlord deems appropriate, from time to time. Tenant understands that Landlord will not carry insurance of any kind on Tenant's furniture and furnishings or on any fixture or equipment removable by Tenant under the provisions of this Lease or any other improvements installed in the Premises by or for Tenant other than Building Standard, and that Landlord shall not be obligated to repair any damage thereto or replace the same. B. Tenant shall obtain and maintain throughout the term of this Lease "all risk" or "multi-peril" form insurance on and for the full cost of replacement of all of Tenant's property and betterments in the Premises, including, without limitation, all furniture, fixtures, personal property and all tenant finish in excess of Building Standard Tenant Finish Work Items. C. In addition to the above, Tenant shall obtain and maintain throughout the term of this Lease a commercial general liability policy, including protection against death, personal injury and property damage, issued by an insurance company qualified to do business in the State of Colorado, with a single limit of not less than One Million Dollars ($1,000,000.00). D. All policies of insurance required to be carried by Tenant hereunder shall name Landlord as an additional insured. Each such policy shall provide that the same may not be cancelled or modified without at least twenty (20) days' prior written notice to Landlord and any Mortgagee (as defined herein). Tenant shall deliver, upon execution of this Lease, and from time to time as reasonably requested by Landlord thereafter, certificates evidencing that such insurance, as required under this paragraph, is in full force and effect. Failure to deliver said certificates of insurance shall be deemed an Event of Default. The limits of said insurance shall not, under any circumstances, limit the liability of Tenant hereunder. E. Notwithstanding anything to the contrary contained herein Landlord and Tenant hereby mutually waive and release their respective rights of recovery against each other, and their officers, directors, members, agents and employees (but not against other third parties) for (i) any loss on its property capable of being insured against by "all risk" or "multiperil" form insurance coverage whether carried or not; and (ii) all loss, cost, damage or expense arising out of or due to any interruption of business (regardless of the cause therefor), increased or additional costs of operation of business or other costs or expenses whether similar or dissimilar which are capable of being insured against under business interruption insurance whether or not carried. Each party shall apply to their insurers to obtain said waivers and obtain any special endorsements, if required by their insurer to evidence compliance with the aforementioned waiver, and shall bear the cost therefor. 16. SURRENDER AND NOTICE Upon the expiration or other termination of the term of this Lease or the early termination of Tenant's right to occupy the Premises, Tenant shall promptly quit and surrender to Landlord the Premises broom clean, in good order and condition, ordinary wear and tear and loss by fire or other Page 19

casualty excepted unless due to the negligence of Tenant, and Tenant shall remove all of its movable furniture and other effects. In the event Tenant fails to vacate the Premises on a timely basis as required, Tenant shall be responsible to Landlord for all costs incurred by Landlord as a result of such failure, including, but not limited to, any amounts required to be paid to third parties who were to have occupied the Premises. All movable furniture, other effects and Alterations, not so removed shall conclusively be deemed to have been abandoned and may be appropriated, sold, stored, destroyed or otherwise disposed of by Landlord without notice to Tenant or any other person and without obligation to account therefor and Tenant shall pay Landlord all expenses incurred in connection with such property, including, but not limited to, the cost of repairing any damage to the Building Complex, or Premises caused by removal of such property. Tenant's obligation hereunder shall survive the expiration or other termination of this Lease or the early termination of Tenant's right to occupy the Premises. 17. ACCEPTANCE OF PREMISES BY TENANT Subject to substantial compliance by Landlord of the provisions of Exhibit C hereto and subject to the Landlord's contractor's obligation to complete all reasonable punch list items within thirty (30) days after the walk-through inspection or as soon as practicable after such walk-through, taking possession of the Premises by Tenant shall be conclusive evidence as against Tenant that the Premises were in the condition agreed upon between Landlord and Tenant and acknowledgement of satisfactory completion of any fix-up or remodeling, as the case may be, which Landlord has agreed in writing to perform. 18. CASUALTY AND RESTORATION OF PREMISES A. If the Premises or the Building shall be so damaged by fire or other casualty as to render the Premises wholly untenantable and if such damage shall be so great that a competent architect, in good standing, selected by Landlord shall certify in writing to Landlord and Tenant within sixty (60) days of said casualty that the Premises, with the exercise of reasonable diligence, cannot be made fit for occupancy within one hundred eighty (180) working days from the happening thereof, then this Lease shall cease and terminate from the date of the occurrence of such damage and Tenant shall thereupon surrender to Landlord the Premises and all interest therein hereunder and Landlord may reenter and take possession of the Premises and remove Tenant therefrom. Tenant shall pay rent, duly apportioned, up to the time of such termination of this Lease. If, however, the damage shall be such that said architect shall certify within said sixty (60) day period that the Premises can be made tenantable within said one hundred eighty (180) day period, then, except as hereinafter provided, Landlord shall repair the damage so done (to the extent of the Building Standard Tenant Finish Work Items) with all reasonable speed. B. If the Premises shall be slightly damaged by fire or other casualty, but not so as to render the same wholly untenantable or to require a repair period in excess of one hundred eighty (180) days, then Landlord, after receiving notice in writing of the occurrence of the casualty, shall, except as hereafter provided, cause the same to be repaired to the extent of the Building Standard with reasonable promptness. If the estimated repair period as established in accordance with the Page 20

provisions of subparagraph A above exceeds one hundred eighty (180) days, then the provisions of subparagraph A shall control notwithstanding the fact that the Premises are not wholly untenantable. C. In case the Building throughout shall be so damaged, whether by fire or otherwise (though said Premises may not be affected, or if affected, can be repaired within said one hundred eighty (180) days), that, within sixty (60) days after the happening of such damage, Landlord shall decide not to reconstruct or rebuild said Building, then, notwithstanding anything contained herein to the contrary, upon notice in writing to that effect given by Landlord to Tenant within said sixty (60) days, Tenant shall pay the rent, properly apportioned up to the date of the damage, this Lease shall terminate from the date of delivery of said written notice, and both parties hereto shall be freed and discharged of all further obligations hereunder. D. Provided that the casualty is not the fault of Tenant, Tenant's agents, servants, or employees, Tenant's rent shall abate during any such period of repair and restoration, in the same proportion that the part of the Premises rendered untenantable bears to the whole. 19. CONDEMNATION If the entire Premises or substantially all of the Premises or any portion of the Building Complex which shall render the Premises untenantable shall be taken by right of eminent domain or by condemnation or shall be conveyed in lieu of any such taking, then this Lease, at the option of either Landlord or Tenant exercised by either party giving notice to the other of such termination within thirty (30) days after such taking or conveyance, shall forthwith cease and terminate and the rent shall be duly apportioned as of the date of such taking or conveyance. Tenant thereupon shall surrender the Premises and all interest therein under this Lease to Landlord and Landlord may reenter and take possession of the Premises or remove Tenant therefrom. In the event less than all of the Premises shall be taken by such proceeding, Landlord shall promptly repair the Premises as nearly as possible to its condition immediately prior to said taking, unless Landlord elects not to reconstruct or rebuild as described in subparagraph C of Paragraph 18 above. In the event of any such taking or conveyance, Landlord shall receive the entire award or consideration for the portion of the Building Complex so taken. 20. DEFAULT BY TENANT A. Events of Default. Each one of the following events is herein referred to as an "Event of Default": (1) Any failure by Tenant to pay the rent or any other monetary sums required to be paid hereunder within five (5) days from the date such sums are due. (2) Tenant shall vacate or abandon the Premises. Tenant shall be deemed to have vacated the Premises if Tenant has not used the Premises for the permitted use under this Lease for a period of thirty (30) calendar days. Page 21

(3) This Lease or the estate of Tenant hereunder shall be transferred to or shall pass to or devolve upon any other person or party except in the manner set forth in Paragraph 13. (4) This Lease or the Premises or any part thereof shall be taken upon execution or by other process of law directed against Tenant or shall be taken upon or subject to any attachment at the instance of any creditor of or claimant against Tenant and said attachment shall not be discharged or disposed of within fifteen (15) days after the levy thereof. (5) The filing of any petition or the commencement of any case or proceeding by the Tenant under any provision or chapter of the Federal Bankruptcy Act, the Federal Bankruptcy Code, or any other federal or state law relating to insolvency, bankruptcy, or reorganization or the adjudication that the Tenant is insolvent or bankrupt or the entry of an order for relief under the Federal Bankruptcy Code with respect to Tenant. (6) The filing of any petition or the commencement of any case or proceeding described in subparagraph (5) above against the Tenant, unless such petition and all proceedings initiated thereby are dismissed within sixty (60) days from the date of such filing, the filing of an answer by Tenant admitting the allegations of any such petition, the appointment of or taking possession by a custodian, trustee or receiver for all or any assets of the Tenant, unless such appointment is vacated or dismissed within sixty (60) days from the date of such appointment. (7) The insolvency of the Tenant or the execution by the Tenant of an assignment for the benefit of creditors, the convening by Tenant of a meeting of its creditors, or any class thereof, for purposes of effecting a moratorium upon or extension or composition of its debts, or the failure of the Tenant generally to pay its debts as they mature. (8) The admission in writing by Tenant or any partner of Tenant if Tenant is a partnership that he is unable to pay his debts as they mature or he is generally not paying his debts as they mature. (9) Tenant shall fail to accept possession of the Premises or Landlord receives notice or has knowledge that Tenant does not intend to take possession of the Premises on the date the Primary Lease Term is to commence. (10) Tenant shall fail to perform any of the other agreements, terms, covenants, or conditions hereof on Tenant's part to be performed and such non-performance shall continue for a period of ten (10) days after written notice thereof by Landlord to Tenant or, if such performance cannot be reasonably had within such ten (10) day period, Tenant shall not in good faith have commenced such performance within such ten (10) day period and shall not diligently proceed therewith to completion no later than sixty (60) days from the above-written notice. (11) Tenant, if a corporation or partnership, shall dissolve, liquidate or cease to exist. B. Remedies of Landlord. If any one or more Event of Default shall happen, then Landlord shall have the right at Landlord's election, then or at any time thereafter, either: Page 22

(1) (a) Without demand or notice, to reenter and take possession of the Premises or any part thereof and repossess the same as of Landlord's former estate and expel Tenant and those claiming through or under Tenant and remove the effects of both or either, without being deemed guilty of any manner of trespass and without prejudice to any remedies for arrears of rent or preceding breach of covenants or conditions. Should Landlord elect to reenter, as provided in this subparagraph (1), or should Landlord take possession pursuant to legal proceedings or pursuant to any notice provided for by law, Landlord may, from time to time, without terminating this Lease, relet the Premises or any part thereof, either alone or in conjunction with other portions of the Building Complex of which the Premises are a part, in Landlord's or Tenant's name but for the account of Tenant, for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the term of this Lease) and on such conditions and upon such other terms (which may include concessions of free rent and alteration and repair of the Premises) as Landlord, in its absolute discretion, may determine and Landlord may collect and receive the rents therefor. Landlord shall in no way be responsible or liable for any failure to relet the Premises, or any part thereof, or for any failure to collect any rent due upon such reletting. No such reentry or taking possession of the Premises by Landlord shall be construed as an election on Landlord's part to terminate this Lease unless a written notice of such intention be given to Tenant. No notice from Landlord hereunder or under a forcible entry and detainer statute or similar law shall constitute an election by Landlord to terminate this Lease unless such notice specifically so states. Landlord reserves the right following any such reentry and/or reletting to exercise its right to terminate this Lease by giving Tenant such written notice, in which event the Lease will terminate as specified in said notice. (b) If Landlord elects to take possession of the Premises as provided in this subparagraph (1) without terminating the Lease, Tenant shall pay to Landlord (i) the rent and other sums as herein provided, which would be payable hereunder if such repossession had not occurred, less (ii) the net proceeds, if any, of any reletting of the Premises after deducting all of Landlord's expenses incurred in connection with such reletting, including, but without limitation, all repossession costs, brokerage commissions, legal expenses, attorneys' fees, expenses of employees, alteration, remodeling, and repair costs and expenses of preparation for such reletting. If, in connection with any such reletting, the new lease term extends beyond the existing term or the premises covered thereby include other premises not part of the Premises, a fair apportionment of the rent received from such reletting and the expenses incurred in connection therewith, as provided aforesaid, will be made in determining the net proceeds received from such reletting. In addition, in determining the net proceeds from such reletting, any rent concessions will be apportioned over the term of the new lease. Tenant shall pay such amounts to Landlord monthly on the days on which the rent and all other amounts owing hereunder would have been payable if possession had not been retaken and Landlord shall be entitled to receive the same from Tenant on each such day; or (2) To give Tenant written notice of intention to terminate this Lease on the date of such given notice or on any later date specified therein and, on the date specified in such notice, Tenant's right to possession of the Premises shall cease and the Lease shall thereupon be terminated, except as to Tenant's liability hereunder as hereinafter provided, as if the expiration of the term fixed in such notice were the end of the term herein originally demised. In the event this Lease is terminated pursuant to the provisions of this subparagraph (2), Tenant shall remain liable to Landlord Page 23

for damages in an amount equal to the rent and other sums which would have been owing by Tenant hereunder for the balance of the term had this Lease not been terminated less the net proceeds, if any, of any reletting of the Premises by Landlord subsequent to such termination, after deducting all Landlord's expenses in connection with such reletting, including, but without limitation, the expenses enumerated above. Landlord shall be entitled to collect such damages from Tenant monthly on the days on which the rent and other amounts would have been payable hereunder if this Lease had not been terminated and Landlord shall be entitled to receive the same from Tenant on each such day. Alternatively, at the option of Landlord, in the event this Lease is terminated, Landlord shall be entitled to recover forthwith against Tenant as damages for loss of the bargain and not as a penalty an amount equal to the worth at the time of termination of the excess, if any, of the amount of rent reserved in this Lease for the balance of the term hereof over the then Reasonable Rental Value of the Premises for the same period plus all amounts incurred by Landlord in order to obtain possession of the Premises and relet the same, including attorneys' fees, reletting expenses, alterations and repair costs, brokerage commissions and all other like amounts. It is agreed that the "Reasonable Rental Value" shall be the amount of rental which Landlord can obtain as rent for the remaining balance of the term. C. Cumulative Remedies. Suit or suits for the recovery of the rents and other amounts and damages set forth hereinabove may be brought by Landlord, from time to time, at Landlord's election, and nothing herein shall be deemed to require Landlord to await the date whereon this Lease or the term hereof would have expired had there been no such default by Tenant or no such termination, as the case may be. Each right and remedy provided for in this Lease shall be cumulative and shall be in addition to every other right or remedy provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise, including, but not limited to, suits for injunctive relief and specific performance. The exercise or beginning of the exercise by Landlord of any one or more of the rights or remedies provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by Landlord of any or all other rights or remedies provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise. All such rights and remedies shall be considered cumulative and non-exclusive. All costs incurred by Landlord in connection with collecting any rent or other amounts and damages owing by Tenant pursuant to the provisions of this Lease, or to enforce any provision of this Lease, shall also be recoverable by Landlord from Tenant. Further, if an action is brought pursuant to the terms and provisions of the Lease, the prevailing party in such action shall be entitled to recover from the other party any and all reasonable attorneys' fees incurred by such prevailing party in connection with such action. D. No Waiver. No failure by Landlord to insist upon the strict performance of any agreement, term, covenant or condition hereof or to exercise any right or remedy consequent upon a breach thereof and no acceptance of full or partial rent during the continuance of any such breach shall constitute a waiver of any such breach or of such agreement, term, covenant, or condition. No agreement, term, covenant, or condition hereof to be performed or complied with by Tenant and no breach thereof shall be waived, altered, or modified, except by written instrument executed by Landlord. No waiver of any breach shall affect or alter this Lease but each and every agreement, term, covenant, and condition hereof shall continue in full force and effect with respect to any other then existing or subsequent breach thereof. Notwithstanding any termination of this Lease, the same Page 24

shall continue in force and effect as to any provisions which require observance or performance by Landlord or Tenant subsequent to such termination. E. Bankruptcy. Nothing contained in this Paragraph 20 shall limit or prejudice the right of Landlord to prove and obtain as liquidated damages in any bankruptcy, insolvency, receivership, reorganization, or dissolution proceeding an amount equal to the maximum allowed by any statute or rule of law governing such a proceeding and in effect at the time when such damages are to be proved, whether or not such amount be greater, equal to, or less than the amounts recoverable, either as damages or rent, referred to in any of the preceding provisions of this paragraph. Notwithstanding anything contained in this Lease to the contrary, if this Lease is rejected in any bankruptcy action or proceeding filed by or against Tenant, and the effective date of rejection is on or after the date upon which that month's Base Rent and Additional Rent is due and owing, then the Base Rent and Additional Rent owing under this Lease for the month during which the effective date of such rejection occurs shall be due and payable in full and shall not be prorated. Notwithstanding anything contained in this paragraph to the contrary, any such proceeding or action involving bankruptcy, insolvency, reorganization, arrangement, assignment for the benefit of creditors, or appointment of a receiver or trustee, as set forth above, shall be considered to be an Event of Default only when such proceeding, action, or remedy shall be taken or brought by or against the then holder of the leasehold estate under this Lease. Landlord and Tenant understand that notwithstanding certain provisions to the contrary contained herein, a trustee or debtor in possession under the Bankruptcy Code of the United States may have certain rights to assume or assign this Lease. Landlord and Tenant further understand that in any event Landlord is entitled under the Bankruptcy Code to Adequate Assurance (as defined below) of future performance of the terms and provisions of this Lease. For purposes of any such assumption or assignment, the parties hereto agree that the term "Adequate Assurance" shall include at least the following: (1) In order to assure Landlord that the proposed assignee will have the resources with which to pay the rent called for herein, any proposed assignee must have a net worth (as defined in accordance with generally accepted accounting principles consistently applied) at least as great as the net worth of Tenant on the date this Lease became effective. The financial condition and resources of Tenant were a material inducement to Landlord in entering into this Lease. (2) Any proposed assignee of this Lease must assume and agree to be personally bound by the terms, provisions, and covenants of this Lease. F. Late Payment Charge. Any rents or other amounts owing hereunder which are not paid within five (5) days from the date they are due shall thereafter bear interest at the rate of five percentage points over the Prime Rate then being charged by Norwest Bank of Denver or its successor, to its most credit-worthy customers on an unsecured basis for short term loans (the "Prime Rate") or the highest rate permitted by applicable usury law, whichever is lower, until paid. Further, in the event any rents or other amounts owing hereunder are not paid within said five (5) days from the date they are due, Landlord and Tenant agree that Landlord will incur additional administrative expenses, the amount of which will be difficult if not impossible to determine. Accordingly, Tenant shall pay to Landlord an additional, one-time late charge for any such late payment in the amount of five percent (5%) of such payment. Any amounts paid by Landlord to cure any defaults of Tenant hereunder, which Landlord shall have the right but not the obligation to do, shall, if not repaid by Page 25

Tenant within five (5) days of demand by Landlord, thereafter bear interest at the rate of three percentage points over the Prime Rate or the highest rate permitted by applicable usury law, whichever is lower, until paid. G. Waiver of Jury Trial. Tenant hereby waives (to the extent allowed by law) any and all rights to a trial by jury in suit or suits brought to enforce any provision of this Lease or arising out of or concerning the provisions of this Lease. 21. SUBORDINATION AND ATTORNMENT A. This Lease, at Landlord's option, shall be subordinate to any mortgage or deed of trust (now or hereafter placed upon the Building and/or Building Complex, or any portion thereof), including any amendment, modification, or restatement of any of such documents, and to any and all advances made under any mortgage or deed of trust and to all renewals, modifications, consolidations, replacements, and extensions thereof. Tenant agrees that with respect to any of the foregoing documents, no documentation, other than this Lease, shall be required to evidence such subordination. B. If any holder of a mortgage or deed of trust shall elect to have this Lease superior to the lien of the holder's mortgage or deed of trust and shall give written notice thereof to Tenant, this Lease shall be deemed prior to such mortgage or deed of trust, whether this Lease is dated prior or subsequent to the date of said mortgage or deed of trust or the date of recording thereof. C. In confirmation of such subordination or superior position, as the case may be, Tenant agrees to execute such documents as may be required by Landlord or its Mortgagee to evidence the subordination of its interest herein to any of the documents described above, or to evidence that this Lease is prior to the lien of any mortgage or deed of trust, as the case may be, and failing to do so within ten (10) days after written demand, Tenant does hereby make, constitute, and irrevocably appoint Landlord as Tenant's attorney-in-fact and in Tenant's name, place, and stead, to do so. D. Tenant hereby agrees to attorn to all successor owners of the Building and/or Building Complex, whether or not such ownership is acquired as a result of a sale, through foreclosure of a deed of trust or mortgage, or otherwise and agrees to confirm such attornment in writing. 22. HOLDING OVER: TENANCY MONTH-TO-MONTH If, after the expiration of this Lease, Tenant shall remain in possession of the Premises and continue to pay rent, and Landlord shall accept such rent, without any express written agreement as to such holding over, then such holding over shall be deemed and taken to be a holding upon a tenancy from month-to-month, subject to all the terms and conditions hereof on the part of Tenant to be observed and performed and at a monthly rent equivalent to 150% of the monthly installments paid by Tenant immediately prior to such expiration or the current market rental rate for the Premises then being offered by Landlord in the Lakewood, Colorado office market, whichever is greater. All such rent shall be payable in advance on the same day of each calendar month. Such month-toPage 26

month tenancy may be terminated by either party upon ten (10) days' notice prior to the end of any such monthly period. Nothing contained herein shall be construed as obligating Landlord to accept any rental tendered by Tenant after the expiration of the term hereof or as relieving Tenant of its liability pursuant to Paragraph 16. 23. PAYMENTS AFTER TERMINATION No payments of money by Tenant to Landlord after the termination of this Lease or the early termination of Tenant's right to occupy the Premises, in any manner, or after giving of any notice (other than a demand for payment of money) by Landlord to Tenant shall reinstate, continue, or extend the term of this Lease or affect any notice given to Tenant prior to the payment of such money, it being agreed that after the service of notice or the commencement of a suit or other final judgment granting Landlord possession of the Premises, Landlord may receive and collect any sums of rent due or any other sums of money due under the terms of this Lease or otherwise exercise Landlord's rights and remedies hereunder and the payment of such sums of money, whether as rent or otherwise, shall not waive said notice or in any manner affect any pending suit or judgment theretofore obtained. 24. STATEMENT OF PERFORMANCE Tenant agrees at any time and from time to time, upon not less than ten (10) days prior written request by Landlord, to execute, acknowledge, and deliver to Landlord a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and stating the modifications), that there have been no defaults thereunder by Landlord or Tenant (or, if there have been defaults, setting forth the nature thereof), the date to which the rent and other charges have been paid in advance, if any, and such other information as Landlord may request. It is intended that any such statement delivered pursuant to this paragraph may be relied upon by any prospective purchaser of all or any portion of Landlord's interest herein or a holder of any mortgage or deed of trust encumbering the Building and/or Building Complex. Tenant's failure to deliver such statement within such time shall be conclusive upon Tenant that: (i) this Lease is in full force and effect, without modification except as may be represented by Landlord; (ii) there are no uncured defaults in Landlord's performance; and (iii) not more that one (1) month's rent has been paid in advance. Further, upon request, Tenant will supply to Landlord a corporate or partnership resolution, as the case may be, certifying that the party signing said statement of Tenant is properly authorized to do so. 25. MISCELLANEOUS A. Definition of Landlord. The term "Landlord" as used in this Lease, so far as covenants or obligations on the part of Landlord are concerned, shall be limited to mean and include only the owner or owners of the Building at the time in question and, in the event of any transfer or transfers of the title thereto, Landlord herein named (and in the case of any subsequent transfers or conveyances, the then grantor) shall be automatically released, from and after the date of such Page 27

transfer or conveyance, of all liability as respects the performance of any covenants or obligations on the part of Landlord contained in this Lease thereafter to be performed, provided that any funds in the hands of Landlord or the then grantor at the time of such transfer in which Tenant has an interest shall be turned over to the grantee and any amount then due and payable to Tenant by Landlord or the then grantor under any provisions of this Lease shall be paid to Tenant. B. Merger. The termination or mutual cancellation of this Lease shall not work a merger, and such termination or mutual cancellation shall, at the option of Landlord, either terminate all subleases and subtenancies or operate as an assignment to Landlord of any or all such subleases or subtenancies. C. Entrances. The Tenant agrees that, for the purposes of completing or making repairs or alterations in any portion of the Building Complex, Landlord may use one or more of the street entrances, the halls, passageways, and elevators of the Building or Other Building. D. Independent Covenants. This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent and not dependent and Tenant shall not be entitled to any setoff of the rent or other amounts owing hereunder against Landlord if Landlord fails to perform its obligations set forth herein, provided, however, the foregoing shall in no way impair the right of Tenant to commence a separate action against Landlord for any violation by Landlord of the provisions hereof so long as notice is first given to Landlord and any holder of a mortgage or deed of trust covering the Building and/or Building Complex or any portion thereof and an opportunity granted to Landlord and such holder to correct such violation as provided in subparagraph H of this Paragraph 25. E. Severability. If any clause or provision of this Lease is illegal, invalid, or unenforceable under present or future laws effective during the term of this Lease, then and in that event it is the intention of the parties hereto that the remainder of this Lease shall not be affected thereby and it is also the intention of the parties to this Lease and in lieu of each clause or provision of this Lease that is illegal, invalid, or unenforceable there be added as a part of this Lease a clause or provision as similar in terms to such illegal, invalid, or unenforceable clause or provision as may be possible and be legal, valid, and enforceable. F. Captions. The caption of each paragraph is added as a matter of convenience only and shall be considered of no effect in the construction of any provision or provisions of this Lease. G. Successors and Assigns. Except as herein specifically set forth, all terms, conditions, and covenants to be observed and performed by the parties hereto shall be applicable to and binding upon their respective heirs, administrators, executors, and assigns. The terms, conditions, and covenants hereof shall also be considered to be covenants running with the land to the fullest extent permitted by law. H. Landlord Default. In the event of any alleged default on the part of Landlord hereunder, Tenant shall give written notice to Landlord in the manner herein set forth and shall afford Landlord a reasonable opportunity to cure any such default. Notice to Landlord of any such alleged default shall be ineffective unless notice is simultaneously delivered to any holder of a Page 28

Mortgage and/or Trust Deed affecting all or any portion of the Building and/or Building Complex ("Mortgagees"), as hereafter provided. Tenant agrees to give all Mortgagees, by certified mail, return receipt requested, a copy of any notice of default served upon Landlord, provided that prior to such notice Tenant has been notified, in writing (by way of notice of Assignment of Rents and Leases, or otherwise), of the address of such Mortgagees. Tenant further agrees that if Landlord shall have failed to cure such default within the time provided for in this Lease, then the Mortgagees shall have an additional thirty (30) days within which to cure such default or, if such default cannot be cured within that time, then such additional time as may be necessary, if, within such thirty (30) days, any Mortgagee has commenced and is diligently pursuing the remedies necessary to cure such default (including, but not limited to, commencement of foreclosure proceedings, if necessary to effect such cure), in which event this Lease shall not be terminated while such remedies are being so diligently pursued. In no event will Landlord or any Mortgagee be responsible for any consequential damages incurred by Tenant as a result of any default, including, but not limited to, lost profits or interruption of business as a result of any alleged default by Landlord hereunder. I. Tenant Authorization. Tenant and the party executing this Lease on behalf of Tenant represent to Landlord that such party is authorized to do so by requisite action of the board of directors or partners, as the case may be, and agree, upon request, to deliver to Landlord a resolution or similar document or opinion of counsel to that effect. J. Joint and Several Liability. If there are more than one entity or person which or who are the Tenant under this Lease, the obligations imposed upon Tenant under this Lease shall be joint and several. K. Amendment or Modification. No act or thing done by Landlord or Landlord's agents during the term hereof, including, but not limited to, any agreement to accept surrender of the Premises or to amend or modify this Lease, shall be deemed to be binding on Landlord, unless such act or thing shall be by a partner or officer of Landlord, as the case may be, or a party designated in writing by Landlord as so authorized to act. The delivery of keys to Landlord, or Landlord's agents, employees, or officers shall not operate as a termination of this Lease or a surrender of the Premises. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly rent and all other amounts owing, as herein stipulated, shall be deemed to be other than on account of the earliest stipulated rent or other amounts nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such rent or pursue any other remedy available to Landlord. L. Building Security. As part of the services Landlord provides hereunder, Landlord may elect to provide a concierge or security guard for more efficient operation of the Building Complex, and the cost therefor shall be included as an Operating Expense. Landlord is not obligated to provide such services at any time or for any length of time. Tenant expressly acknowledges that Landlord has not represented to Tenant that the Building, the Other Building or the Building Complex are secure buildings or areas and Landlord assumes no duty to Tenant, its agents, employees, invitees or others because Landlord provides such service. Page 29

M. Hazardous Materials. Except for hazardous materials customarily used for normal office purposes, Tenant shall be prohibited from storing, handling, and/or disposing of hazardous substances or environmental pollutants as those terms are defined under federal, state, or local environmental statutes, ordinances, or regulations in or about the Premises and Building Complex. In the event Tenant violates this provision, Tenant shall indemnify and hold Landlord, its officers, directors, members, agents or employees harmless from any and all claims, liabilities, judgments, loss, cost, or damage including clean-up costs, fines, penalties, and attorneys' fees arising from the use, storage and/or disposal of hazardous substances environmental pollutants in or about the Premises and/ or Building Complex. Tenant's liability for all loss, cost, or damage arising from such use, storage, and/or disposal shall survive the expiration or early termination of this Lease or the early termination of Tenant's right to occupy the Premises. N. Control of Building. Landlord shall have the right at any time to change the name of the Building, the Other Building or the Building Complex, to increase the size of the Building Complex by adding additional real property thereto, to construct other buildings or improvements on any portion of the Building Complex or to change the location and/or character of or to make alterations of or additions to the Building Complex. In the event any such additional buildings are constructed or Landlord increases the size of the Building Complex, Landlord and Tenant shall execute an Amendment to Lease which incorporates such modifications, additions, and adjustments to Tenant's Pro Rata Share, if necessary. Tenant shall not use the name of the Building, the Other Building or the Building Complex for any purpose other than as a part of its business address. Any use of such name in the designation of Tenant's business shall constitute a default under this Lease. O. Air, Light or View. Tenant covenants and agrees that no diminution of light, air, or view by any structure that may hereafter be erected (whether or not by Landlord) shall entitle Tenant to any reduction of rent or other charges under this Lease, result in any liability of Landlord to Tenant, or in any way affect this Lease or Tenant's obligations hereunder. P. Limitation of Liability. Notwithstanding anything to the contrary contained in this Lease, the liability of Landlord to Tenant for any default by Landlord under the terms of this Lease shall be limited to the interest of Landlord in the Building and the Property and Tenant agrees to look solely to Landlord's interest in the Building and the Property for the recovery of any judgment against the Landlord, it being intended that Landlord shall not be personally liable for any judgment or deficiency. Q. No Representations by Landlord. Tenant acknowledges and agrees that it has not relied upon any statements, representations, agreements, or warranties by Landlord, its agents or employees, except such as are expressed herein and that no amendment or modification of this Lease shall be valid or binding unless expressed in writing and executed by the parties hereto in the same manner as the execution of this Lease. R. Effectiveness. Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or an option for lease, and it is not effective as a lease or otherwise until execution and delivery by both Landlord and Tenant. Page 30

S. Governing Law. This Lease shall be governed by and interpreted in accordance with the laws of the State of Colorado. T. Force Majeure. Whenever a period of time is herein prescribed for the taking of any action by Landlord, Landlord shall not be liable or responsible for, and there shall be excluded from the computation of such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, terrorism, governmental laws, regulations or restrictions, or any other cause whatsoever beyond the control of Landlord. U. Removal of Cabling. Tenant shall be solely responsible for the cost of installation and maintenance of any high speed cable or fiber optic that Tenant requires in the Premises. Landlord shall provide reasonable access to the Building's electrical lines, feeders, risers, wiring and other machinery to enable Tenant to install high speed cable or fiber optic to serve its intended purpose, if any. All such cabling installed shall be tagged by Tenant at their point of entry into the Building, at the terminal end of the cable and in the riser closet indicating the type of cable, the Tenant's name and the service provided. Tenant shall be responsible for the removal of such cabling and fiber optic at the termination or expiration of the Primary Lease Term or the early termination of the Tenant's right to occupy the Premises. Failure to remove any abandoned or unused cabling at the expiration or termination of the Primary Lease Term or the early termination of Tenant's right to occupy the Premises will be deemed to be a holdover under Paragraph 22 of the Lease. In the event Tenant fails to remove such cabling as set forth herein, Landlord may, but shall not be obligated to, remove such cabling, all at Tenant's sole cost and expense. 26. AUTHORITIES FOR ACTION AND NOTICE A. Except as herein otherwise provided, Landlord may act in any manner provided for herein by and through Landlord's Building Manager or any other person who shall from time to time be designated in writing. B. All notices, demands, statements or communications required or permitted to be given to Landlord hereunder shall be in writing and shall be deemed duly served when deposited in the United States mail, postage prepaid, certified or registered, return receipt requested, addressed to Landlord at Landlord's Notice Address or at the most recent address of which Landlord, has notified Tenant in writing. All notices, demands, statements or communications required to be given to Tenant hereunder shall be in writing and shall be deemed duly served when delivered personally to any officer of Tenant (or a partner of Tenant if Tenant is a partnership or to Tenant individually if Tenant is a sole proprietor) or manager of Tenant whose office is in the Building Complex, when deposited in the United States mail, postage prepaid, certified or registered, return receipt requested, addressed to Tenant at the Premises, or, prior to Tenant's taking possession of the Premises, to the address known to Landlord as Tenant's Notice Address. Notices required hereunder may be given by either an agent or attorney acting on behalf of Landlord. Either party shall have the right to designate in writing, served as above provided, a different address to which notice is to be mailed. The foregoing shall in no event prohibit notice from being given as provided in Rule 4 of Colorado Rules of Civil Procedure as the same may be amended from time to time. Page 31

27. LANDLORD'S RIGHT TO SUBSTITUTE PREMISES Landlord shall have the right at any time, upon giving Tenant not less than fifteen (15) days notice in writing, but in no event more often than once during the Primary Lease Term, to provide and furnish Tenant with space in a similar location on another floor in the Building or Other Building of approximately the same size as the Premises and to remove and place Tenant in such space at Landlord's sole cost and expense, including reimbursing Tenant for its actual costs incurred for moving expenses, stationery and business cards. Landlord shall not be entitled to exercise the foregoing right to substitute Premises if the Premises contain at least an entire floor of the Building. Landlord shall notify Tenant in writing of the proposed substitute space, and Tenant shall have thirty (30) days to notify Landlord in writing if such proposed space is not acceptable. If Tenant so notifies Landlord, Landlord, at its option, shall have the right to cancel and terminate this Lease effective ninety (90) days from the date of expiration of Tenant's thirty (30) day response period or to withdraw its request for Tenant to relocate. If Tenant does not so notify Landlord within such thirty (30) day period, Tenant shall vacate the originally demised Premises and move to the substitute space no later than sixty (60) days from the expiration of Tenant's thirty (30) day response period. If Landlord moves Tenant to such new space, this Lease and each and all of its terms, covenants and conditions shall remain in full force and effect and be deemed applicable to such new space, and such new space shall thereafter be deemed to be the Premises. Failure of the Tenant to relocate as set forth herein shall constitute an Event of Default. 28. LENDER'S APPROVAL This Lease is subject to the approval of the lender furnishing the permanent loan for the Building. If such lender disapproves of this Lease within twenty (20) days after the execution hereof, Landlord shall have the right to cancel this Lease, without any liability whatsoever, by written notice of cancellation given to Tenant within ten (10) days after such disapproval. If no written notice of cancellation is given to Tenant within thirty (30) days of the execution of this Lease, this Lease shall continue in full force and effect. 29. BROKERAGE Tenant hereby represents and warrants that Tenant has not employed any broker in regard to this Lease and that Tenant has no knowledge of any broker being instrumental in bringing about this Lease transaction except Corum Real Estate Group, Inc. which has acted as Landlord's leasing agent and Remax Alliance, Inc., which has acted as Tenant's leasing agent. Tenant shall indemnify Landlord against any expense incurred by Landlord as a result of any claim for brokerage or other commissions made by any other broker, finder, or agent, whether or not meritorious, employed by Tenant or claiming by, through, or under Tenant. Tenant acknowledges that Landlord shall not be liable for any representations by such brokers regarding the Premises, Building, the Other Building, the Building Complex or this lease transaction. Page 32

30. TIME OF ESSENCE Time is of the essence herein and, unless waived by Landlord (which it shall have the right, but not the obligation, to so do), this Lease is contingent upon execution and delivery by Tenant to Landlord no later than 5:00 p.m., June 29, 2005. 31. EXHIBITS All exhibits attached hereto are made a part hereof and incorporated herein by reference. 32. INDUCEMENT RECAPTURE IN EVENT OF DEFAULT Any agreement by Landlord for free or abated rent or other charges applicable to the Premises, or for the giving or paying by Landlord to or for Tenant of any cash or other bonus, inducement or consideration for Tenant's entering into this Lease, including, but not limited to, any tenant finish allowance or broker's commissions, all of which concessions are hereinafter referred to as "Inducement Provisions" shall be deemed conditioned upon Tenant's full and faithful performance of all of the terms, covenants and conditions of this Lease to be performed or observed by Tenant during the term hereof as the same may be extended. Upon the occurrence of a Default (as defined in Paragraph 20) of this Lease by Tenant, any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated, given or paid by Landlord under such an Inducement Provision shall be immediately due and payable by Tenant to Landlord, and recoverable by Landlord, as additional rent due under this Lease, notwithstanding any subsequent cure of said event of default by Tenant. The acceptance by Landlord of rent or the cure of the event of default which initiated the operation of this Paragraph 32 shall not be deemed a waiver by Landlord of the provisions of this Paragraph 32 unless specifically so stated in writing by Landlord at the time of such acceptance. 33. EARLY TERMINATION Tenant shall have a one time right to terminate this Lease effective on September 1, 2008, provided (i) Tenant is not then in default of any of the terms, covenants, conditions, provisions or agreements of the Lease, or any amendments thereto; (ii) Tenant shall have given Landlord written notice of its election to so terminate on or before May 1, 2008 ("Termination Notice"), which termination shall be effective, if given, on September 1, 2008 ("Early Termination Date"); and (iii) within the time frame set forth below, Tenant delivers the Termination Fee (described below) in cash or certified funds to Landlord. If Tenant meets the conditions described above and elects to terminate this Lease, the term of the Lease shall expire and come to an end on the Early Termination Date and Tenant shall surrender the Premises to Landlord in the condition required by the Lease. Failure of the Tenant to give timely notice of its election to terminate this Lease or to pay the Termination Fee as set forth herein shall operate as a waiver of the termination right and this Lease shall continue to be fully enforceable. As consideration for the early termination right, Tenant shall pay a termination fee ("Termination Fee") to Landlord. The Termination Fee shall be (i) all unamortized Tenant Improvement Costs, unamortized free rent and all unamortized brokerage commissions paid by Landlord during the entire term of the Lease, plus (ii) two (2) months of the Page 33

then current monthly Base Rent. Upon written request from Tenant during the third Lease year only, Landlord shall certify the above amounts to Tenant. The amortizations of the Termination Fee shall be on a straight-line basis over five (5) years at a rate of ten percent (10%) per annum with zero salvage value. Tenant shall pay all of the Termination Fee upon delivery of the Termination Notice. The Tenant's obligation to pay the Termination Fee set forth above, as well as other amounts due and owing under the Lease, and any amendments thereto, shall survive the expiration or termination of the Lease or the early termination of Tenant's right to possession under the Lease. On or prior to the Early Termination Date, Tenant will surrender possession of the Premises, to Landlord in accordance with the provisions of the Lease, as if the Early Termination Date were the expiration date of the Lease. Upon the Early Termination Date, both Landlord and Tenant shall be relieved of their obligations under the Lease, except those accruing prior to the Early Termination Date. The early termination rights of the Tenant set forth herein do not apply to any additional space added to the Premises from and after the date hereof unless expressly agreed to by Landlord in writing. The early termination right of the Tenant set forth herein is personal and is not transferable to any permitted assignee or subtenant. IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed the day and year first above written.
TENANT: GRYPHON GOLD CORPORATION a Nevada corporation LANDLORD: CORUM UNION INVESTORS LLC, a Colorado limited liability company

By: /s/ Allen Gordon --------------------------------Name: Allen Gordon Title: President ATTEST:

By: /s/ V. Michael Komppa --------------------------------Name: V. Michael Komppa Its: Manager

By: Illegible --------------------------------Title: ------------------------------

Page 34

EXHIBIT A DEPICTION OF PREMISES [TO BE ATTACHED] Page 35

EXHIBIT B LEGAL DESCRIPTION OF THE REAL PROPERTY Lot 3, 1st Amended Replat of Lot 1, Tract H, Union Square, recorded October 29, 1981 at Reception No. 81079525, County of Jefferson, State of Colorado TOGETHER WITH AND INCLUDING: Lot 1, 1st Amended Replat of Lot 1, Tract H, Union Square, recorded October 29, 1981 at Reception No. 81079525, County of Jefferson, State of Colorado. TOGETHER WITH AND INCLUDING: A perpetual, non-exclusive easement for ingress and egress and parking as more particularly described in Declaration of Reciprocal Parking Easement recorded August 7, 1981 at Reception No. 81057959, ratified by Ratification of Easement recorded December 22, 1983 at Reception No. 83121398 and as amended and restated in Reciprocal Easement and Property Agreement recorded December 27, 1983 at Reception No. 83122395 of the real estate records of the County of Jefferson, State of Colorado. TOGETHER WITH AND INCLUDING: Non-exclusive easement for ingress, egress and parking as more particularly described in Reciprocal Easement of Agreement dated April 11, 1978, recorded May 1, 1978 at Reception No. 78038378, as ratified by Ratification of Reciprocal Easement Agreement dated September 27, 1995, recorded September 29, 1995, at Reception No. F0123047 of the real estate records of the County of Jefferson, State of Colorado. Page 36

EXHIBIT C WORK LETTER June 28, 2005 Re: Premises: Approximately 1,384 rentable square feet of space comprising a portion of the 3rd floor (the "Premises") Tenant agrees to accept the Premises in its "as-is" condition. Tenant is not entitled to any improvements thereto or thereof or to any allowance or credit for improvements thereto or thereof, except as set forth herein. Landlord agrees to act as construction manager for construction of certain tenant improvements and Landlord agrees to deliver the Premises to the Tenant and construct the tenant improvements at its sole cost ("Landlord Work") in reasonable accordance with the plans and specifications approved by Landlord and Tenant dated June 27, 2005 prepared by Waring Associates excluding all alternate items shown in the keyed notes except those alternate items detailed in keyed notes #2 and #4 which shall be included ("Approved Plans and Specifications"). Landlord shall select the contractor to complete the Landlord Work per the Approved Plans and Specifications, and except as set forth herein, shall have no further obligations thereafter with respect to repair or replacement of items in the Premises except as set forth in the Lease. Landlord shall use Building Standard construction materials within the Premises. Tenant may elect to have a windowed door installed in the Conference room in lieu of a solid wood door. All additional costs relating to the windowed door pursuant to this paragraph shall be borne solely by Tenant and will be completed by Landlord's contractor(s) at Tenant's sole cost and expense. Prior to the installation of the windowed door, Landlord will provide Tenant with a cost proposal and specifications for Tenant's review and consideration. Tenant shall have three (3) business days to respond to such proposal and specifications in writing. Unless Landlord receives Tenant's written authorization within such three (3) business day period, the proposal and specifications shall be deemed rejected by Tenant and the Building Standard door shall remain as provided in the Approved Plans and Specifications. Tenant shall pay the incremental costs pursuant to this paragraph, if any, within ten (10) calendar days after receipt of billing from Landlord. If Tenant changes any aspect of the Approved Plans and Specifications, the increased cost of the Landlord Work will be solely at Tenant's cost. Tenant will not be entitled to any reduction in the cost for the Premises as a result of its changes or other savings that Landlord may effect. Prior to the date Landlord delivers the Premises, Tenant will conduct a walk-through inspection of the Premises with Landlord and prepare a punch list of items needing additional work by Landlord. Other than the items specified in the punch list, by taking possession of the Premises, Tenant will be deemed to have accepted the Premises in their condition on the date of delivery of possession and to have acknowledged that Landlord has completed the Landlord Work as required by this Work Letter and that there are no items needing additional work or repair. The punch list will not include any damage to the Premises caused by Tenant's move-in or early access, if permitted. Page 37

Damage caused by Tenant will be repaired or corrected by Landlord at Tenant's expense. Tenant acknowledges that neither Landlord nor its agents or employees have made any representations or warranties as to the suitability or fitness of the Premises for the conduct of Tenant's business or for any other purpose, nor has Landlord or its agents or employees agreed to undertake any alterations or construct any tenant improvements to the Premises except as expressly provided in this Lease and this Work Letter. If Tenant fails to submit a punch list to Landlord prior to the Commencement Date, it will be deemed that there are no items needing additional work or repair. Landlord's contractor will complete all reasonable punch list items within thirty (30) days after the walk-through inspection or as soon as practicable after such walk-through. Notwithstanding any provision contained herein to the contrary, all cabling and moving expenses shall be at the sole cost of Tenant. Landlord agrees to use all commercially reasonable efforts to cause the Landlord Work to be substantially completed prior to the Commencement Date other than punch list items which shall be corrected within thirty (30) days thereafter. All tenant improvements shall be performed by Landlord during regular business hours. Page 38

EXHIBIT D RULES AND REGULATIONS A. The following rules and regulations shall be and are hereby made a part of the Lease and Tenant agrees that Tenant's employees and agents or any others permitted by Tenant to occupy or enter the Premises will at all times abide by said rules and regulations, to wit: (1) OBSTRUCTION. The sidewalks, entries, passages, corridors, stairways and elevators of the Building complex shall not be obstructed by Tenant or Tenant's agents or employees or used for any purpose other than ingress and egress to and from the Premises, it being understood and agreed that such access may be obtained only via the elevators in the lobby of the Building. (2) DELIVERIES. Furniture, equipment, or supplies will be moved in or out of the Building only upon the elevator designated by Landlord only during such hours and in such manner as may be prescribed by Landlord and then only after forty-eight (48) hours' notice delivered to the Building Manager. Failure in doing so may result in further delay of such move. The Landlord shall have the right to approve or disapprove the movers or moving company employed by Tenant and Tenant shall cause said movers to use only the loading facilities and elevator designated by Landlord. In the event Tenant's movers damage the elevator or any part of the Building, Tenant shall forthwith pay to Landlord the amount required to repair said damage. (3) HEAVY ARTICLES. No safe or article, the weight of which may constitute a hazard or damage to the Building or the Building's equipment, shall be moved into the Premises. Safes and other equipment, the weight of which is not excessive, shall be moved into, from, or about the Building only during such hours and in such manner as shall be prescribed by Landlord and Landlord shall have the right to designate the location of such articles in the Premises. Tenant shall not place any live load exceeding forty (40) pounds per square foot on the floor of the Building, or in any way deface the Building or any part thereof. Tenant understands that they will be fully liable for any damages to the Building or losses sustained by landlord by reason of any overloading by Tenant. (4) CHAIR PADS. During the entire term of this Lease, Tenant shall, at Tenant's expense, install and maintain under each and every caster chair a chair pad to protect the carpeting. (5) SIGNAGE. No sign, advertisement, or notice shall be inscribed, painted, or affixed on any part of the inside or outside of the Building unless of such color, size, and style and in such place upon or in the Building as shall be first designated by Landlord in writing but there shall be no obligation or duty on Landlord to allow any sign, advertisement or notice to be inscribed, painted, or affixed on any part of the inside or outside of the Building. Tenant shall be allowed one line on a Building directory in a conspicuous place to be provided by Landlord. Any necessary revision in the directory will be made by Landlord at Tenant's expense within a reasonable time after notice from Tenant of the change making the revision necessary. Landlord shall also provide one suite identification sign adjacent to the main entry door of the Premises in Landlord's standard form. No furniture shall be placed in front of the Building or in any lobby or corridor of the Building (whether included wholly within the Premises, or otherwise), without the prior written consent of Page 39

Landlord. Landlord shall have the right to remove all non-permitted signs and furniture, without notice to Tenant, at the expense of Tenant. (6) HAZARDOUS OPERATIONS AND ITEMS. Tenant shall not install or operate any steam or gas engine or boiler or carry on any mechanical business in the Premises. The use of oil, gas, or inflammable liquids for heating, lighting, or any other purpose is expressly prohibited. Explosives or other articles deemed extra hazardous shall not be brought into the Building. Tenant shall not do or permit anything to be done in the Premises or bring or keep anything therein which would in any way increase the rate of fire insurance on the Building or on property kept therein, constitute a nuisance or waste, obstruct or interfere with the rights of other tenants or in any way injure or annoy them, or conflict with the laws relating to fire or with any regulations of the fire department, fire insurance underwriters, or with any insurance policy upon the Building or any part thereof, or conflict with any of the rules or ordinances of the Department of Health of the City and County where the Building is located. (7) MAINTENANCE. Tenant shall not employ any person or persons other than the janitor of Landlord for the purpose of cleaning or taking care of the Premises, without the prior written consent of Landlord. Landlord shall be in no way responsible to Tenant for any loss of property from the Premises, however occurring, or for any damage done to Tenant's furniture or equipment by the janitor or any of the janitor's staff or by any other person or persons whomsoever. The janitor of the Building may at all times keep a passkey and other agents of Landlord shall at all times be allowed admittance to the Premises. Landlord shall have the right to control and operate the public portions of the Building, and the public facilities, and heating and air conditioning, as well as facilities furnished for the common use of the tenants, in such manner as it deems best for the benefit of the tenants generally. (8) USE OF WATER FIXTURES. Water closets and other water fixtures shall not be used for any purpose other than that for which they were intended and any damage resulting to them from misuse on the part of Tenant or Tenant's agents or employees shall be paid for by Tenant. No person shall waste water by tying back or wedging the faucets or in any other manner. (9) ANIMALS AND NOISE. No animals shall be allowed in the offices, halls, corridors, and elevators in the Building. No person shall disturb the occupants of the Building or adjoining buildings or premises by the use of any radio, sound equipment, or musical instrument or by the making of loud or improper noises. (10) BICYCLES. Bicycles or other vehicles shall not be permitted in the offices, halls, corridors, and elevators in the Building nor shall any obstruction of sidewalks or entrances of the Building be permitted. (11) EXTERIOR. Tenant shall not allow anything to be placed on the outside of the Building, nor shall anything be thrown by Tenant or Tenant's agents or employees out of the windows or doors or down the corridors, elevator shafts, or ventilating ducts or shafts of the Building. Tenant, except in case of fire or other emergency, shall not open any outside window. Page 40

(12) LOCKS. No additional lock or locks shall be placed by Tenant on any door in the Building, unless written consent of Landlord shall first have been obtained. Two keys to the Premises and the toilet rooms, if locked by Landlord, will be furnished by Landlord and neither Tenant nor Tenant's agents or employees shall have any duplicate keys made. Landlord shall supply Tenant with such additional keys as Tenant may require at Tenant's sole cost and expense. At the termination of this tenancy, Tenant shall promptly return to Landlord all keys to offices, toilet rooms, or vaults. Tenant shall see that the windows and doors of the Premises are closed and securely locked before leaving the Building. Tenant must observe strict care and caution that all water faucets or other apparatus are entirely shut off before Tenant and Tenant's employees leave the Building and that lights and electrical equipment shall likewise be carefully shut off when feasible, so as to prevent waste or damage. Tenant shall be responsible for all injuries sustained by other tenants and occupants of the Building, and Landlord as a result of Tenant's failure to exercise said due care. Tenant shall exercise due care in protecting the Premises from theft, robbery or pilferage. (13) WINDOWS. Tenant shall not place anything or allow anything to be placed near the glass of any window, door, partition or wall which may appear unsightly from outside the Premises. No window shades, blinds, screens, draperies or other window coverings will be attached or detached by Tenant without Landlord's prior written consent. Tenant agrees to abide by Landlord's rules with respect to maintaining uniform curtains, draperies and linings, or blinds at all windows and hallways. (14) TELEPHONE. If any Tenant desires telegraphic, telephonic, or other electric connections, Landlord or Landlord's agents will direct the electricians as to where and how the wires may be introduced. Without such directions, no boring or cutting for wires will be permitted. Any such installation and connection shall be made at Tenant's expense. (15) PAINTING AND DECORATING. Any painting or decorating, as may be agreed to be done by and at the expense of Landlord, shall be done during regular weekday working hours. Should Tenant desire such work on Saturdays, Sundays, legal holidays, or outside of regulation working hours, Tenant shall pay for the extra cost thereof. (16) DEFACING OF PREMISES. Except as permitted by Landlord, Tenant shall not mark upon, paint signs upon, cut, drill into, drive nails or screws into, or in any way deface the walls, ceilings, partitions, or floors of the Premises or of the Building and any defacement, damage, or injury caused by Tenant or Tenant's agents or employees shall be paid for by Tenant. (17) ENTRY. Landlord shall at all times have the right, by Landlord's officers or agents, to enter the Premises and show the same to persons wishing to lease them. (18) TRASH. Tenant shall not allow anything to be placed on the outside of the Building, nor shall be thrown by Tenant out of the windows or doors or down the corridors, elevators shaft or ventilating ducts or shafts of the Building. All trash shall be placed in receptacles provided by Tenant on the Premises or in any receptacles provided by Landlord for the Building. (19) SOLICITATION; FOOD AND BEVERAGES. Landlord reserves the right to restrict, control or prohibit canvassing, soliciting and peddling within the Building. Tenant shall not grant Page 41

any concessions, licenses or permission for the sale or taking order for food or services or merchandise on the Premises, nor install or permit the installation or use of any machinery or equipment for dispensing goods or foods or beverages in the Building, except beverage machines intended for the use only by Tenant's employees, nor permit the preparation, serving, distribution or delivery of food or beverages in the Premises, except for the warming of pre-prepared food by Tenant's employees in microwave ovens, without the approval of Landlord and in compliance with arrangements prescribed by Landlord. Only persons approved by Landlord shall be permitted to serve, distribute, or deliver food and beverages within the Building, or to use the elevators or public areas of the Building for that purpose. (20) BREACH. Landlord shall not be liable to Tenant for violation of any said Rules and Regulations or the breach of any covenant or condition in any Lease by any tenant in the Building. The failure of the Landlord to seek redress for violation of, or insist upon the strict performance of any covenants or conditions of this Lease or any of the Rules and Regulations set forth above or hereafter adopted by Landlord, shall not prevent a subsequent act, which would have originally constituted a violation, from having all the force and effect of an original violation. The receipt by Landlord of rent with knowledge of breach of any covenant of this Lease or breach of these Rules and Regulations shall not be deemed a waiver of such breach. The failure of Landlord to enforce any of these Rules and Regulations as set forth above or hereafter adopted against Tenant and/or any other tenant in the Building, shall not be deemed a waiver of any such Rules and Regulations. (21) AMENDMENT. Tenant agrees that Landlord may amend, modify, delete, or add new and additional rules and regulations of the use and care of the Premises and the Building Complex. Tenant agrees to comply with all such rules and regulations upon notice to Tenant from Landlord thereof. In the event of any breach of any of the rules and regulations herein set forth or any amendments, modifications, or additions thereto, Landlord shall have all remedies in this Lease provided for in the Event of Default by Tenant. Page 42

EXHIBIT E PARKING A. Tenant shall have the right to use up to three (3) unassigned covered parking spaces (the "Unassigned Spaces") in the parking structure, the number of which shall be at Tenant's sole election, and two (2) uncovered spaces in a surface parking area constructed on the real property described in Exhibit B to this Lease on the terms and conditions contained herein. The rights of Tenant to the Unassigned Spaces as granted by Landlord shall be referred to as the "Parking Privileges." B. Tenant's right to the Parking Privileges shall commence at the commencement of the Primary Lease Term or on the date Tenant takes possession of the Premises for the purpose of conducting its usual business therein and shall continue for the term of the Lease unless sooner terminated or extended, or unless Tenant fails to timely pay the Fee as set forth below. The Parking Privileges shall automatically terminate upon the expiration or earlier termination of the Primary Lease Term or any extensions thereof or upon the termination of Tenant's right to possession of the Premises. C. Tenant shall pay to Landlord a parking fee for the Unassigned Spaces (the "Fee") in an amount equal to the monthly charge per parking space established by Landlord from time to time multiplied by the number of Unassigned Spaces to which Tenant is then entitled. The current monthly charge per covered parking space is Twenty-Five Dollars ($25.00). Notwithstanding the foregoing, there shall be no charge for the covered parking spaces for the first twelve (12) months of the Primary Lease Term. There is no current charge for uncovered parking spaces. Landlord shall be entitled to increase or decrease the charge per parking space from time to time upon not less than one month's written notice to Tenant of such increase or decrease. All payments of the Fee shall be made in advance, without notice or set off, at Landlord's Notice Address, or at such place as Landlord from time to time designates in writing. Tenant shall pay the Fee on the first day of the Primary Lease Term and on the first day of each succeeding calendar month during the Primary Lease Term or any extension thereof. If Tenant takes occupancy of the Premises on a day other than the first day of a calendar month, the Fee for the fractional month shall be prorated on a daily basis and shall be paid on the date Tenant takes occupancy of the Premises. If Tenant fails to pay the Fee in a timely manner, Landlord, at its election, may cancel Tenant's right to use the number of Unassigned Spaces for which Tenant has failed to pay and shall notify Tenant of such cancellation. If the Parking Privileges, or a portion thereof, are cancelled, Tenant shall remain liable to Landlord for all Fees and other sums accrued and unpaid hereunder to the date of such cancellation. The Fee for the Unassigned Spaces shall be due and payable in full each month regardless of whether Tenant actually uses all or only a portion of the Unassigned Spaces allocated for Tenant each month. D. Landlord shall have the right at any time to change the arrangement or location of or to regulate the use of Unassigned Spaces without incurring any liability to Tenant or entitling Tenant to any abatement of the Fee. Among other things, Landlord shall be entitled to assign designated areas of the parking structure and surface lot for use by particular persons or groups of persons and Tenant shall refrain from parking in such spaces. Tenant acknowledges that the Unassigned Spaces will not be individually designated or reserved for use by Tenant and that Tenant will use the Page 43

Unassigned Spaces in the parking structure and surface lot in common with all persons to whom or which Landlord grants the right to use the parking structure and surface lot. E. In addition to the Rules and Regulations set forth in Exhibit D to the Lease, the use of the Unassigned Spaces is subject to the following rules: 1. Tenant shall designate use of the Unassigned Spaces to specific individuals employed by Tenant ("Designated Users"), but Tenant shall remain responsible for payment of the Fee and all other obligations hereunder. Within five (5) business days after Landlord's request, Tenant agrees to provide Landlord with a listing of all vehicles of Designated Users, including names of vehicle owners, vehicle models, colors, and license plate numbers, and Tenant shall provide Landlord with revised listing promptly after any change to the listing. Tenant shall deliver to Tenant's Designated Users parking decals provided by Landlord which decals shall at all times be displayed prominently on the vehicles of Designated Users. Landlord shall have the right to directly ban any Designated User from further use of any of the parking spaces for violation of the rules for the use of Unassigned Spaces. 2. Tenant and Designated Users shall park only in parking spaces and not on ramps, corridors, approaches, or other areas designated as "no parking" areas. 3. Tenant and Designated Users shall observe the special hours of opening, closing, and non-use of the parking structure and the surface lot when closings are necessitated for repairs, cleaning, and rehabilitations. Should any repair or rehabilitation result in Tenant not being provided the Unassigned Spaces in the parking structure, surface lot, or designated alternate parking facility, the abatement of Tenant's obligation to pay the Fee during the period the same are unavailable shall constitute Tenant's sole remedy in the event of such unavailability. 4. Tenant and Designated Users shall use the Unassigned Spaces only for automobile parking. 5. Tenant and Designated Users shall observe all posted vehicle height limitations. 6. Tenant and Designated Users shall not allow unauthorized vehicles to use the Unassigned Spaces and, except for emergencies, shall not repair nor authorize service to vehicles parked in the parking structure or in the surface parking area. F. If any portion of the parking structure or the surface lot shall be damaged by fire or other casualty or shall be taken by right of eminent domain or by condemnation or shall be conveyed in lieu of any such taking, then the Parking Privileges shall automatically cease and terminate and the Fee and all other sums payable hereunder shall be duly apportioned to the date of such casualty, taking, or conveyance. Tenant thereupon shall surrender to Landlord the Unassigned Spaces and all interest therein, and Landlord may re-enter and take possession of the Unassigned Spaces. G. Tenant shall not be permitted to assign the Unassigned Spaces or any interest herein or permit the Unassigned Spaces or any part thereof to be used by others without the prior written Page 44

consent of Landlord, which consent may be granted or withheld in Landlord's sole discretion. Notwithstanding the foregoing, if a proposed assignee or user is a permitted assignee, sublessee, or occupant under the terms of this Lease, Landlord's consent as to such assignment or sublease shall be deemed consent to the assignment of the Unassigned Spaces. Tenant shall remain primarily liable for the performance of the obligations of the Tenant hereunder notwithstanding any assignment or occupancy arrangement permitted or consented to by Landlord. H. Neither Landlord nor its agents or employees shall be liable for any damage, fire, theft or loss to vehicles or other properties or injuries to persons occurring in the parking structure or service parking area or arising out of the use of the Unassigned Spaces whether caused by theft, collision, moving vehicle, explosion or any other activity of occurrence in such parking areas. Tenant and/or its Designated Users of the Spaces assume the risk of such loss or damage and shall indemnify, defend and hold Landlord, its agents and employees harmless from and against any and all claims and damages incurred by Landlord, its agents and employees arising from Tenant's or its Designated Users' use of the parking areas or the Unassigned Spaces, including all costs, attorneys' fees, expenses and liability arising out of any such claim or action. Tenant, at Landlord's request, shall obtain a written agreement from each Designated User agreeing to the terms of this Exhibit E and Landlord's rules for operation of the parking areas. If Tenant shall fail to obtain such agreement and deliver it to Landlord, Tenant shall assume all obligations set forth in this Exhibit E or Landlord's rules for such Designated User. Page 45

INDEX TO OFFICE BUILDING LEASE CORUM UNION INVESTORS LLC, A COLORADO LIMITED LIABILITY COMPANY (AS LANDLORD) AND GRYPHON GOLD CORPORATION, A NEVADA CORPORATION (as Tenant)
PARAGRAPH TITLE --------------1. DEFINITIONS................................................................. 2. 3. 4. 5. 6. 7. 8. 9. PREMISES.................................................................... RENT........................................................................ COMPLETION OR REMODELING OF THE PREMISES.................................... OPERATING EXPENSES.......................................................... SERVICES.................................................................... QUIET ENJOYMENT............................................................. DEPOSIT..................................................................... USE......................................................................... PAGE ---2 4 4 4 5 10 12 12 13 14 14 16 16 18 19

10. ALTERATIONS AND REENTRY BY LANDLORD......................................... 11. ALTERATIONS AND REPAIRS BY TENANT........................................... 12. MECHANICS' LIENS............................................................ 13. SUBLETTING AND ASSIGNMENT................................................... 14. DAMAGE TO PROPERTY AND INDEMNITY BY TENANT.................................. 15. INSURANCE AND WAIVER OF SUBROGATION.........................................

i

16. SURRENDER AND NOTICE........................................................ 17. ACCEPTANCE OF PREMISES BY TENANT............................................ 18. CASUALTY AND RESTORATION OF PREMISES........................................ 19. CONDEMNATION................................................................ 20. DEFAULT BY TENANT........................................................... 21. SUBORDINATION AND ATTORNMENT................................................ 22. HOLDING OVER: TENANCY MONTH-TO-MONTH........................................ 23. PAYMENTS AFTER TERMINATION.................................................. 24. STATEMENT OF PERFORMANCE.................................................... 25. MISCELLANEOUS............................................................... 26. AUTHORITIES FOR ACTION AND NOTICE........................................... 27. LANDLORD'S RIGHT TO SUBSTITUTE PREMISES..................................... 28. LENDER'S APPROVAL........................................................... 29. BROKERAGE................................................................... 30. TIME OF ESSENCE............................................................. 31. EXHIBITS.................................................................... 32. INDUCEMENT RECAPTURE IN EVENT OF DEFAULT.................................... 33. EARLY TERMINATION...........................................................

20 20 20 21 22 26 27 27 27 28 32 32 33 33 33 33 33 34

EXHIBIT A DEPICTION OF PREMISES EXHIBIT B LEGAL DESCRIPTION OF THE REAL PROPERTY EXHIBIT C WORK LETTER EXHIBIT D RULES AND REGULATIONS EXHIBIT E PARKING ii

EXHIBIT 10.10 EXECUTIVE COMPENSATION AGREEMENT This Agreement is made as of October 1, 2003 between Gryphon Gold Corporation, a Nevada corporation having an office at 1153 Bergen Parkway, Suite M290 Evergreen, Colorado USA 80439 (the "Company") and Allen Gordon doing business as Evergreen Mineral Ventures LLC, a single member Colorado limited corporation of Evergreen, Colorado, USA ("the "Contractor"). THIS AGREEMENT WITNESSES: 1. Definitions - In this Agreement, the following terms shall have the meanings ascribed below: (a) "Base Capital Stock" means the securities of the Company ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors of the Company. (b) "Base Compensation" means the Contractor's base annual compensation as set out in Section 3 of this Agreement. (c) "Board" means the board of directors of the Company. (d) "Cause" means: (i) a willful act or omission by the Contractor that constitutes misconduct or fraud and which is injurious to the Company; or (ii) a conviction of, or a plea of guilty or no contest to, a felony or an indictable offence; provided that no act or omission by the Contractor shall be considered willful unless committed without good faith and without a reasonable belief that the act or omission was in the Company's best interest. (e) "Change of Control" means: (i) a change in the composition of the Board, as a result of which fewer than one-half of the incumbent directors are directors who had been directors of the Company 12 months prior to such change, with the exception of any such change in the composition of the Board made with the approval of the Board as it was constituted immediately prior to such change; or (ii) the acquisition or aggregation of securities by any Person pursuant to which such Person is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding Base Capital Stock, except that any change in the relative beneficial ownership of the Company's securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such Person's ownership of securities shall be disregarded until such Person increases in any manner, directly or indirectly, his, her or its beneficial ownership of any securities of the Company. (f) "Continuation Period" means the period commencing on the date when the termination of the Contractor's employment is effective and ending on the date twelve (12) months after such date. (g) "Disability" means any disability with respect to the Contractor pursuant to which the Contractor becomes eligible to receive long term disability benefits under the Company's long term disability insurance plan or, if there is no such plan, under any federal, provincial or other governmental long term disability plan.

2 (h) "Contractor Benefit Plans" means such medical, dental, eye care, disability, life and other health insurance benefit plans maintained, in whole or in part, by the Company on behalf of Contractors generally or executive Contractors over a certain grade level. (i) "Contractor Option Plans" means such stock option, stock appreciation rights, restricted stock, phantom stock or similar plans or agreements maintained, in whole or in part, by the Company on behalf of either Contractors generally or executive Contractors over a certain level. (j) "Executive Compensation Programs" means, any compensation programs maintained, in whole or in part, by the Company on behalf of executive Contractors over a certain level, including without limitation bonus or incentive programs tied to the performance of the Company. Executive Compensation will be administered by the Compensation committee which will have at least one non management Director on the committee. (k) "Good Reason" means a material reduction in the authority or responsibility of the Contractor, one or more reductions, in the cumulative amount of 5 percent or more, in the Base Compensation of the Contractor or any notification to the Contractor that his or her principal place of work will be relocated by a distance of 80 kilometers or more. (l) "Person" means any individual, partnership, unincorporated organization or association, trust, body corporate, government or government agency or authority, trustee, executor, administrator or other legal representative or other legal entity whatsoever. (m) "Term" means the time period from the effective date of this Agreement until the employment of the Contractor is terminated pursuant to Section 8. 2. Duties and Scope of Employment - The Company agrees to employ the Contractor as its President and Director for the Term. The Contractor shall report to the Company's Board of Directors. During the Term, the Contractor shall devote his or her full business efforts and time to the Company and its affiliates and subsidiaries. The Contractor shall not render services to any other for profit corporation or entity without the knowledge of the Company. Nothing in this Agreement shall preclude the Contractor from engaging in appropriate professional, educational, civic, charitable or religious activities or from devoting a reasonable amount of time to private investments that do not interfere or conflict with his or her responsibilities to the Company. 3. Base Compensation - During the Term, the Company agrees to pay the Contractor as compensation for services a base compensation of $US120,000 per annum or such higher amount as the Company may determine from time to time. The Contractor's Base Compensation of $US120,000 annually shall be payable monthly at $US10,000 per month. Should the Companies compensation committee determine management should receive an increase in the base compensation then the base rate would be adjusted. SIGNING BONUS A signing bonus of $60,000 will be awarded for agreeing to stay on as executive management through the financing and development of the property through the years 2003 and 2004 and for recognition of finding, negotiating and securing the Borealis Property 4. Contractor Benefits - During the Term, the Contractor shall be eligible for all Contractor Benefit Plans, Contractor Option Plans and Executive Compensation Programs, subject in each case to the generally applicable terms and conditions of the plan or program in question and to the determinations of any person(s) or committee administering such plan or program. 5. Business Expenses - During the Term, the Contractor shall be authorized to incur necessary and reasonable travel, entertainment and other business expenses in connection with the Contractor's duties as an

3 Contractor of the Company. The Company shall reimburse the Contractor for such expenses upon presentation of an itemized account and appropriate supporting documentation, all in accordance with the Company's generally applicable policies. 6. Change of Control - If a Change of Control occurs during the Term, then the Contractor shall become fully vested in all awards heretofore or hereafter granted to the Contractor under all Contractor Option Plans and Executive Compensation Programs, regardless of any provision in such plans or agreements that do not provide for full vesting. 7. Term of Employment - The Company agrees to continue the Contractor's employment, and the Contractor agrees to remain in the employment of the Company, from the effective date hereof until the date when the Contractor's employment terminates pursuant to Section 8 (Termination of Employment) below. 8. Termination of Employment - Subject to Section 9 (Rights Upon Termination) of this Agreement, the employment of the Contractor may be terminated as follows: (a) upon death, without any requirement for notice; (b) for Cause, such termination to be effective forthwith upon written notice by the Company to the Contractor; (c) due to Disability, such termination to be effective thirty (30) days after written notice to the Contractor, provided that in the event the Contractor resumes performance of substantially all duties prior to the expiration of the thirty (30) day notice period, the notice of termination shall automatically be deemed to have been revoked; or (d) for any reason other than death, Cause or Disability, such termination to be effective thirty (30) days after written notice by the Company to the Contractor or by the Contractor to the Company. 9. Rights Upon Termination - Upon the termination of the Contractor's employment pursuant to Section 8 (Termination of Employment) of this Agreement, the Contractor shall be entitled to the following compensation, benefits and reimbursements: (a) Basic Entitlements - For the period preceding the effective date of the termination as set out in Section 8 (Termination of Employment) of this Agreement, the Contractor shall be entitled to the compensation, benefits and reimbursements described in Sections 3 (Base Compensation), 4 (Contractor Benefits) and 5 (Business Expenses). (b) Termination or Deemed Termination Upon a Change in Control - If, within twelve (12) months after the occurrence of a Change of Control, either: (i) the Contractor voluntarily resigns his or her employment; or (ii) the Company terminates the Contractor's employment for any reason other than Cause or Disability; then the Contractor shall be entitled to the following payments and benefits: (iii) an amount equal to the Base Compensation, payable in one lump sum within five (5) business days from the termination of the Contractor's employment unless the Company and the Contractor agree otherwise in writing;

4 (iv) an amount equal to any bonus earned under any Executive Compensation Programs in the year in which the Change of Control occurred, payable in one lump sum within five (5) business days from the termination of the Contractor's employment unless the Company and the Contractor agree otherwise in writing; and (v) during the Continuation Period, the Contractor (and, where applicable, the Contractor's dependents) shall be entitled to continue participation in all Contractor Benefit Plans maintained by the Company, including without limitation life, disability and health insurance programs, as if the Contractor were still an Contractor of the Company. Where applicable, the Contractor's salary for purposes of such plans shall be deemed to be equal to the Base Compensation and to the extent that the Company finds it impossible to cover the Contractor under its Contractor Benefit Plans during the Continuation Period, the Company shall provide the Contractor with individual policies which offer at least the same level of coverage and which impose not more than the same costs on the Contractor. The foregoing notwithstanding, in the event the Contractor becomes eligible for comparable coverage to that set out in the Contractor Benefit Plans in connection with new employment during the Continuation Period, the coverage provided by the Company under this Paragraph (v) shall terminate immediately. (c) Involuntary Termination Without Cause - If the Company terminates the Contractor's employment for any reason other than Cause, Disability or death and Subsection 9(b) does not apply, then the Contractor shall be entitled to the following payments and benefits: (i) the payment described in Paragraph 9(b)(iii) and (ii) the benefits described in Paragraph 9(b)(v) for the Continuation Period, provided that the Continuation Period shall be twelve (12) months in the event the Company terminates the Contractor's employment for bona fide performance-related reasons (as determined by the Board ) and provided further that the Company shall not be required to grant any new awards to the Contractor. (d) Termination Due to Death - If, during the Term, the Contractor's employment is terminated as a result of the death of the Contractor, then to the extent possible the Company shall maintain coverage for the Contractor's dependents under the Contractor Benefit Plans maintained by the Company, including without limitation health insurance programs, for a period of six (6) months as if the Contractor were still an Contractor of the Company. The foregoing notwithstanding, in the event the Contractor's dependents become or are eligible for comparable coverage to that set out in the Contractor Benefit Plans, the coverage provided by the Company under this Subsection (d) shall terminate immediately. (e) Subject to applicable legislation, the payments provided for in this Section 9 shall fully discharge all responsibilities of the Company to the Contractor upon the termination of the employment of the Contractor pursuant to Section 8 (Termination of Employment). In the case of Subsections 9(b) and (c) above, the Contractor shall not be required to mitigate the amount of any payment contemplated thereby (whether by seeking new employment or in any other manner) and, except as expressly provided in Paragraph 9(b)(v) and the corresponding provision in Subsections 9(c) (d), no payment or entitlement under this Section 9 shall be reduced by earnings that the Contractor may receive from any other source. 10. Non-Competition - The Contractor agrees with the Company not to, at any time during the Term and for a period of 1 year thereafter, either directly, indirectly, individually, in partnership, jointly or in conjunction with any Person or as principal, agent, shareholder, officer, Contractor or in any other manner whatsoever, solicit or endeavor to entice away from the Company any Contractor or agent of the Company. Notwithstanding the foregoing, the Company acknowledges and agrees that the Contractor is entitled to accept positions on the Board of Directors and Advisory Boards of other companies so long as such companies are not

5 competitors of the Company and the performance of duties on behalf of such companies does not adversely impact on or affect the Contractor's functioning as an Contractor of the Company. 11. Miscellaneous Provisions - The following miscellaneous provisions shall apply to this Agreement: (a) Company's Successors - The Company shall require any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets, by an agreement in substance and form satisfactory to the Contractor, to assume this Agreement and to agree expressly to perform this Agreement in the same manner and to the same extent as the Company would be required to perform it in the absence of a succession. The Company's failure to obtain such agreement prior to the effectiveness of a succession shall be a breach of this Agreement and shall entitle the Contractor to all of the compensation, benefits and reimbursements to which he or she would have been entitled hereunder if the Company had involuntarily terminated his or her employment without Cause immediately after such succession becomes effective. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which executes and delivers the assumption agreement described in this Subsection 11(a) or which becomes bound by this Agreement by operation of law. (b) No Assignment - The rights of any person to payments or benefits under this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including without limitation by bankruptcy, garnishment, attachment or other creditor's process, and any action in violation of this Subsection 11(b) shall be void. (c) Notice - Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by registered or certified mail, return receipt requested and postage prepaid. In the case of the Contractor, mailed notices shall be addressed to the Contractor at the most recent home address provided by the Contractor to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its President. (d) Waiver - No provision of this Agreement shall be modified, waived or discharged (including without limitation the notice periods set out in Section 8) unless the modification, waiver or discharge is agreed to in writing and signed by the Contractor and by an authorized officer of the Company (other than the Contractor). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (e) Whole Agreement - This Agreement (together with any additional agreements relating to non-competition, confidentiality and inventions, stock options and Company plans and programs relating to Contractors) constitutes the entire agreement between the parties, there being no other agreements, representations or understandings (oral or written, express or implied) which are not expressly set forth herein. This Agreement supersedes all prior written agreements between the Contractor and the Company. (f) No Setoff; Withholding Taxes - With the exception of taxes and other legally required deductions, Contractor contributions to benefit and other plans and other deductions approved in writing by the Contractor, the Company shall have no right of setoff or counterclaim, with respect to any claim, debt or obligation, against any payments to the Contractor under this Agreement. (g) Severability - The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

6 (h) Choice of Law - The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Colorado and the parties attorney to the courts of Colorado USA. (i) Arbitration - Except as otherwise provided in this Agreement, any controversy or claim arising out of or relating to this Agreement, or the breach of this Agreement, shall be finally settled by arbitration in Colorado, USA in accordance with the Commercial Arbitration Act of Colorado, USA. (j) Contractor's Successors - This Agreement and all rights of the Contractor hereunder shall enure to the benefit of and be binding on the Contractor's heirs and legal personal representatives. IN WITNESS WHEREOF each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written. Gryphon Gold Corporation
/s/ Donald Ranta ----------------------------------Donald Ranta Chairman Compensation Committee / Director

/s/ Allen Gordon ----------------------------------Name: Allen Gordon - President

ENTITLEMENT MATRIX
Events ------------------------------------------------1. Change of Control of the Company Entitlement ---------------------------------------------------Contractor becomes fully vested in all awards grante Option Plans. Contractor Option Plans are differenti Compensation Plans. Contractor is entitled to all compensation, benefits the period to the effective date of the termination. Contractor is entitled to: a) the compensation, benefits and reimbursements d Paragraph 2 above; a severance payment equal to 12 months pay; an amount equal to the prior year's bonus under Compensation Programs; and all benefits under any Contractor Benefit Plans unless similar benefits are obtained under new

2.

Termination for Cause

3.

Termination or Deemed Termination Upon a Change in Control (entitlement occurs if, within 12 months from the Change of Control, either Contractor voluntarily resigns or the Contractor is terminated)

b) c)

d)

4.

Termination For Any Reason Other Than Cause Where Termination Does Not Constitute a Termination or Deemed Termination Upon a Change in Control

Contractor is entitled to: a) the compensation, benefits and reimbursements d Paragraph 3(a), (b) and (d) above; and vesting under Contractor Option Plans for a per reduced to 6 months if the termination is for p reasons.

b)

5.

Death

Contractor's survivors are entitled to: a) the compensation, benefits and reimbursements d Paragraph 2 above; and coverage for dependents under the Contractor Be for the shorter of 6 months or replacement of t coverage.

b)

EXHIBIT 10.11 ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Assignment ") is made and entered as of the 1st day of January, 2005 (the "Effective Date"), by and between GRYPHON GOLD CORPORATION., a Nevada corporation ("Gryphon"), EVERGREEN MINERAL VENTURES LLC, a single member Colorado limited company ("Assignor ") and ALLEN GORDON, a Colorado resident ("Gordon"). W I T N E S S E T H: WHEREAS, Assignor has agreed to assign its benefits and obligations under an Executive Compensation Agreement ("Agreement") dated as of October 1, 2003 between Gryphon and Assignor and Gordon has agreed to assume the benefits and obligations of Assignor under the Agreement as of the Effective Date. The Agreement is attached as Exhibit A hereto. WHEREAS, Gryphon consents to the Assignment by Assignor and the assumption by Gordon of the Agreement referred to herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Gryphon, Assignor and Gordon hereby agrees as follows: 1. Assignment. Subject to the terms of this Assignment, Assignor hereby assigns, conveys and transfers to Gordon, his successors and assigns, Assignor's title, interest, privilege, benefit and remedies in the Agreement. 2. Acceptance and Assumption. Upon execution of this Assignment, and at all times thereafter, Gordon accepts the assignment, and assumes and agrees to keep, perform and be bound by all of the terms, covenants, conditions and obligations which are required to be performed by Gordon under the Agreement. 3. Consent. Gryphon hereby consents to the assignment of the Agreement by Assignor to Gordon and Gryphon and Gordon acknowledge, confirm and agree that there shall be no lapse in any benefits contained in the Agreement and Gordon shall personally be entitled to all benefits under the Agreement as if Gordon originally executed the Agreement as of October 1, 2003. 4. Other Acts. The parties agree to sign all documents or instruments and do all acts as may be reasonably necessary or desirable to carry out the intent of this Assignment. 5. Indemnity. 5.1 Indemnity by Assignor. Assignor agrees to indemnify and hold Gordon harmless from any loss, liability or expense (including reasonable attorney fees) arising out of or related to the performance of Assignor's obligations under the Agreement and this Assignment. 5.2 Indemnity by Gordon. Gordon agrees to indemnify and hold Assignor

harmless from any loss, liability or expense (including reasonable attorney fees) arising out of or related to the performance of Assignor's obligations under the Agreement and this Assignment. 6. Miscellaneous Provisions. 6.1 No Oral Modifications. This Assignment may not be amended or modified except in writing executed by all parties hereto. 6.2 Binding Effect. This Assignment shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns, and no other party shall be a beneficiary hereunder. 6.3 Attorneys' Fees. In the event a suit, action, arbitration, or other proceeding of any nature whatsoever, including, without limitation, any proceeding under the U.S. Bankruptcy Code, is instituted, or the services of an attorney are retained, to interpret or enforce any provision of this Assignment or with respect to any dispute relating to this Assignment, the prevailing party shall be entitled to recover from the losing party its reasonable attorneys', paralegals', accountants', and other experts' fees and all other fees, costs, and expenses actually incurred and reasonably necessary in connection therewith. In the event of suit, action, arbitration, or other proceeding, the amount thereof shall be determined by the judge or arbitrator, shall include fees and expenses incurred on any appeal or review, and shall be in addition to all other amounts provided by law. As used herein, the term "attorneys' fees" means attorneys' fees whether or not litigation ensues and if litigation ensues whether incurred at trial, on appeal, on discretionary review or otherwise. 6.4 Severability. The invalidity, illegality or unenforceability of any provision of this Assignment shall not affect the enforceability of any other provision of this Assignment, all of which shall remain in full force and effect. 6.5 Non-Waiver. No delay or failure by any party to exercise any right hereunder, and no partial or single exercise of any such right, shall constitute a waiver of that or any other right, unless otherwise expressly provided herein. 6.6 Laws. This Assignment shall be interpreted and construed in accordance with laws of the State of Arizona. 6.7 Counterparts. This Assignment may be executed by any number of counterparts and each such counterpart shall be deemed to be an original, but all of which, when taken together, shall constitute one agreement. [Signature page follows.]

IN WITNESS WHEREOF, Gordon, Assignor and Gryphon have caused this Assignment to be duly executed as of and on the date first above written. EVERGREEN MINERAL VENTURES LLC
/s/ Allen Gordon ----------------------------------Name: Allen Gordon ----------------------------------Title: President ----------------------------------By:

GRYPHON GOLD CORPORATION By: Illegible Name: Title: ALLEN GORDON, IN HIS PERSONAL CAPACITY
/s/ Allen Gordon -----------------------------------------

EXHIBIT A Executive Compensation Agreement

EXHIBIT 10.12 EXECUTIVE COMPENSATION AGREEMENT This Agreement is made as of October 1, 2003 between Gryphon Gold Corporation, a Nevada corporation having an office at 1153 Bergen Parkway, Suite M290 Evergreen, Colorado USA 80439 (the "Company") and Albert Matter, of Vancouver, British Columbia, Canada ("the "Contractor"). THIS AGREEMENT WITNESSES: 1. Definitions - In this Agreement, the following terms shall have the meanings ascribed below: (a) "Base Capital Stock" means the securities of the Company ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors of the Company. (b) "Base Compensation" means the Contractor's base annual compensation as set out in Section 3 of this Agreement. (c) "Board" means the board of directors of the Company. (d) "Cause" means: (i) a willful act or omission by the Contractor that constitutes misconduct or fraud and which is injurious to the Company; or (ii) a conviction of, or a plea of guilty or no contest to an indictable offence; provided that no act or omission by the Contractor shall be considered willful unless committed without good faith and without a reasonable belief that the act or omission was in the Company's best interest. (e) "Change of Control" means: (i) a change in the composition of the Board, as a result of which fewer than one-half of the incumbent directors are directors who had been directors of the Company 12 months prior to such change, with the exception of any such change in the composition of the Board made with the approval of the Board as it was constituted immediately prior to such change; or (ii) the acquisition or aggregation of securities by any Person pursuant to which such Person is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding Base Capital Stock, except that any change in the relative beneficial ownership of the Company's securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such Person's ownership of securities shall be disregarded until such Person increases in any manner, directly or indirectly, his, her or its beneficial ownership of any securities of the Company. (f) "Continuation Period" means the period commencing on the date when the termination of the Contractor's employment is effective and ending on the date twelve (12) months after such date. (g) "Disability" means any disability with respect to the Contractor pursuant to which the Contractor becomes eligible to receive long term disability benefits under the Company's long term disability insurance plan or, if there is no such plan, under any federal, provincial or other governmental long term disability plan.

2 (h) "Contractor Benefit Plans" means such medical, dental, eye care, disability, life and other health insurance benefit plans maintained, in whole or in part, by the Company on behalf of Contractors generally or executive Contractors over a certain grade level. (i) "Contractor Option Plans" means such stock option, stock appreciation rights, restricted stock, phantom stock or similar plans or agreements maintained, in whole or in part, by the Company on behalf of either Contractors generally or executive Contractors over a certain level. (j) "Executive Compensation Programs" means, , any compensation programs maintained, in whole or in part, by the Company on behalf of executive Contractors over a certain level, including without limitation bonus or incentive programs tied to the performance of the Company. Executive Compensation will be administered by the Compensation committee which will have at least one non management Director on the committee. (k) "Good Reason" means a material reduction in the authority or responsibility of the Contractor, one or more reductions, in the cumulative amount of 5 percent or more, in the Base Compensation of the Contractor or any notification to the Contractor that his or her principal place of work will be relocated by a distance of 80 kilometers or more. (l) "Person" means any individual, partnership, unincorporated organization or association, trust, body corporate, government or government agency or authority, trustee, executor, administrator or other legal representative or other legal entity whatsoever. (m) "Term" means the time period from the effective date of this Agreement until the employment of the Contractor is terminated pursuant to Section 8. 2. Duties and Scope of Employment - The Company agrees to employ the Contractor as its Chairman and Director for the Term. The Contractor shall report to the Company's Board of Directors. During the Term, the Contractor shall devote his or her full business efforts and time to the Company and its affiliates and subsidiaries. The Contractor shall not render services to any other for profit corporation or entity without the knowledge of the Company. Nothing in this Agreement shall preclude the Contractor from engaging in appropriate professional, educational, civic, charitable or religious activities or from devoting a reasonable amount of time to private investments that do not interfere or conflict with his or her responsibilities to the Company. 3. Base Compensation - During the Term, the Company agrees to pay the Contractor as compensation for services a base compensation of $US120,000 per annum or such higher amount as the Company may determine from time to time. The Contractor's Base Compensation of $US120,000 annually shall be payable monthly at $US10,000 per month. Should the Companies compensation committee determine management should receive an increase in the base compensation then the base rate would be adjusted. SIGNING BONUS A signing bonus of $60,000 will be awarded for agreeing to stay on as executive management through the financing and development of the property through the years 2003 and 2004 and for recognition of finding, negotiating and securing the Borealis Property 4. Contractor Benefits - During the Term, the Contractor shall be eligible for all Contractor Benefit Plans, Contractor Option Plans and Executive Compensation Programs, subject in each case to the generally applicable terms and conditions of the plan or program in question and to the determinations of any person(s) or committee administering such plan or program. 5. Business Expenses - During the Term, the Contractor shall be authorized to incur necessary and reasonable travel, entertainment and other business expenses in connection with the Contractor's duties as an Contractor of the Company. The Company shall reimburse the Contractor for such expenses upon presentation

3 of an itemized account and appropriate supporting documentation, all in accordance with the Company's generally applicable policies. 6. Change of Control - If a Change of Control occurs during the Term, then the Contractor shall become fully vested in all awards heretofore or hereafter granted to the Contractor under all Contractor Option Plans and Executive Compensation Programs, regardless of any provision in such plans or agreements that do not provide for full vesting. 7. Term of Employment - The Company agrees to continue the Contractor's employment, and the Contractor agrees to remain in the employment of the Company, from the effective date hereof until the date when the Contractor's employment terminates pursuant to Section 8 (Termination of Employment) below. 8. Termination of Employment - Subject to Section 9 (Rights Upon Termination) of this Agreement, the employment of the Contractor may be terminated as follows: (a) upon death, without any requirement for notice; (b) for Cause, such termination to be effective forthwith upon written notice by the Company to the Contractor; (c) due to Disability, such termination to be effective thirty (30) days after written notice to the Contractor, provided that in the event the Contractor resumes performance of substantially all duties prior to the expiration of the thirty (30) day notice period, the notice of termination shall automatically be deemed to have been revoked; or (d) for any reason other than death, Cause or Disability, such termination to be effective thirty (30) days after written notice by the Company to the Contractor or by the Contractor to the Company. 9. Rights Upon Termination - Upon the termination of the Contractor's employment pursuant to Section 8 (Termination of Employment) of this Agreement, the Contractor shall be entitled to the following compensation, benefits and reimbursements: (a) Basic Entitlements - For the period preceding the effective date of the termination as set out in Section 8 (Termination of Employment) of this Agreement, the Contractor shall be entitled to the compensation, benefits and reimbursements described in Sections 3 (Base Compensation), 4 (Contractor Benefits) and 5 (Business Expenses). (b) Termination or Deemed Termination Upon a Change in Control - If, within twelve (12) months after the occurrence of a Change of Control, either: (i) the Contractor voluntarily resigns his or her employment; or (ii) the Company terminates the Contractor's employment for any reason other than Cause or Disability; then the Contractor shall be entitled to the following payments and benefits: (iii) an amount equal to the Base Compensation, payable in one lump sum within five (5) business days from the termination of the Contractor's employment unless the Company and the Contractor agree otherwise in writing; (iv) an amount equal to any bonus earned under any Executive Compensation Programs in the year in which the Change of Control occurred, payable in one lump sum within five (5) business days from

4 the termination of the Contractor's employment unless the Company and the Contractor agree otherwise in writing; and (v) during the Continuation Period, the Contractor (and, where applicable, the Contractor's dependents) shall be entitled to continue participation in all Contractor Benefit Plans maintained by the Company, including without limitation life, disability and health insurance programs, as if the Contractor were still an Contractor of the Company. Where applicable, the Contractor's salary for purposes of such plans shall be deemed to be equal to the Base Compensation and to the extent that the Company finds it impossible to cover the Contractor under its Contractor Benefit Plans during the Continuation Period, the Company shall provide the Contractor with individual policies which offer at least the same level of coverage and which impose not more than the same costs on the Contractor. The foregoing notwithstanding, in the event the Contractor becomes eligible for comparable coverage to that set out in the Contractor Benefit Plans in connection with new employment during the Continuation Period, the coverage provided by the Company under this Paragraph (v) shall terminate immediately. (c) Involuntary Termination Without Cause - If the Company terminates the Contractor's employment for any reason other than Cause, Disability or death and Subsection 9(b) does not apply, then the Contractor shall be entitled to the following payments and benefits: (i) the payment described in Paragraph 9(b)(iii) and (ii) the benefits described in Paragraph 9(b)(v) for the Continuation Period, provided that the Continuation Period shall be twelve (12) months in the event the Company terminates the Contractor's employment for bona fide performance - related reasons (as determined by the Board ) and provided further that the Company shall not be required to grant any new awards to the Contractor. (d) Termination Due to Death - If, during the Term, the Contractor's employment is terminated as a result of the death of the Contractor, then to the extent possible the Company shall maintain coverage for the Contractor's dependents under the Contractor Benefit Plans maintained by the Company, including without limitation health insurance programs, for a period of six (6) months as if the Contractor were still an Contractor of the Company. The foregoing notwithstanding, in the event the Contractor's dependents become or are eligible for comparable coverage to that set out in the Contractor Benefit Plans, the coverage provided by the Company under this Subsection (d) shall terminate immediately. (e) Subject to applicable legislation, the payments provided for in this Section 9 shall fully discharge all responsibilities of the Company to the Contractor upon the termination of the employment of the Contractor pursuant to Section 8 (Termination of Employment). In the case of Subsections 9(b) and (c) above, the Contractor shall not be required to mitigate the amount of any payment contemplated thereby (whether by seeking new employment or in any other manner) and, except as expressly provided in Paragraph 9(b)(v) and the corresponding provision in Subsections 9(c) (d), no payment or entitlement under this Section 9 shall be reduced by earnings that the Contractor may receive from any other source. 10. Non-Competition - The Contractor agrees with the Company not to, at any time during the Term and for a period of 1 year thereafter, either directly, indirectly, individually, in partnership, jointly or in conjunction with any Person or as principal, agent, shareholder, officer, Contractor or in any other manner whatsoever, solicit or endeavor to entice away from the Company any Contractor or agent of the Company. Notwithstanding the foregoing, the Company acknowledges and agrees that the Contractor is entitled to accept positions on the Board of Directors and Advisory Boards of other companies so long as such companies are not competitors of the Company and the performance of duties on behalf of such companies does not adversely impact on or affect the Contractor's functioning as an Contractor of the Company.

5 11. Miscellaneous Provisions - The following miscellaneous provisions shall apply to this Agreement: (a) Company's Successors - The Company shall require any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets, by an agreement in substance and form satisfactory to the Contractor, to assume this Agreement and to agree expressly to perform this Agreement in the same manner and to the same extent as the Company would be required to perform it in the absence of a succession. The Company's failure to obtain such agreement prior to the effectiveness of a succession shall be a breach of this Agreement and shall entitle the Contractor to all of the compensation, benefits and reimbursements to which he or she would have been entitled hereunder if the Company had involuntarily terminated his or her employment without Cause immediately after such succession becomes effective. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which executes and delivers the assumption agreement described in this Subsection 11(a) or which becomes bound by this Agreement by operation of law. (b) No Assignment - The rights of any person to payments or benefits under this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including without limitation by bankruptcy, garnishment, attachment or other creditor's process, and any action in violation of this Subsection 11(b) shall be void. (c) Notice - Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by registered or certified mail, return receipt requested and postage prepaid. In the case of the Contractor, mailed notices shall be addressed to the Contractor at the most recent home address provided by the Contractor to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its President. (d) Waiver - No provision of this Agreement shall be modified, waived or discharged (including without limitation the notice periods set out in Section 8) unless the modification, waiver or discharge is agreed to in writing and signed by the Contractor and by an authorized officer of the Company (other than the Contractor). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (e) Whole Agreement - This Agreement (together with any additional agreements relating to non-competition, confidentiality and inventions, stock options and Company plans and programs relating to Contractors) constitutes the entire agreement between the parties, there being no other agreements, representations or understandings (oral or written, express or implied) which are not expressly set forth herein. This Agreement supersedes all prior written agreements between the Contractor and the Company. (f) No Setoff; Withholding Taxes - With the exception of taxes and other legally required deductions, Contractor contributions to benefit and other plans and other deductions approved in writing by the Contractor, the Company shall have no right of setoff or counterclaim, with respect to any claim, debt or obligation, against any payments to the Contractor under this Agreement. (g) Severability - The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (h) Choice of Law - The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the British Columbia and the parties attorney to the courts of B.C.

6 (i) Arbitration - Except as otherwise provided in this Agreement, any controversy or claim arising out of or relating to this Agreement, or the breach of this Agreement, shall be finally settled by arbitration in Vancouver, B.C. in accordance with the Commercial Arbitration Act of British Columbia. (j) Contractor's Successors - This Agreement and all rights of the Contractor hereunder shall enure to the benefit of and be binding on the Contractor's heirs and legal personal representatives. IN WITNESS WHEREOF each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written. Gryphon Gold Corporation
/s/ Donald Ranta __________________________________________ Donald Ranta /s/ Albert Matter ________________________________ Name: Albert Matter Chairman

Chairman Compensation Committee / Director

ENTITLEMENT MATRIX
Events -------------------------------------------1. Change of Control of the Company Entitlement -----------------------------------------------------Contractor becomes fully vested in all awards granted under all Contractor Option Plans. Contractor Option Plans are differentiated from Executive Compensation Plans. Contractor is entitled to all compensation, benefits and reimbursements for the period to the effective date of the termination. Contractor is entitled to: a) the compensation, benefits and reimbursements described in Paragraph 2 above; a severance payment equal to 12 months pay; an amount equal to the prior year's bonus under any Executive Compensation Programs; and all benefits under any Contractor Benefit Plans for 12 months, unless similar benefits are obtained under new employment.

2.

Termination for Cause

3.

Termination or Deemed Termination Upon a Change in Control (entitlement occurs if, within 12 months from the Change of Control, either Contractor voluntarily resigns or the Contractor is terminated)

b) c)

d)

4.

Termination For Any Reason Other Than Cause Where Termination Does Not Constitute a Termination or Deemed Termination Upon a Change in Control

Contractor is entitled to: a) the compensation, benefits and reimbursements described in Paragraph 3(a), (b) and (d) above; and Vesting under Contractor Option Plans for a period of 12 months, reduced to 6 months if the termination is for performance related reasons.

b)

5.

Death

Contractor's survivors are entitled to: a) the compensation, benefits and reimbursements described in Paragraph 2 above; and coverage for dependents under the Contractor Benefit Plans for the shorter of 6 months or replacement of the benefit coverage.

b)

EXHIBIT 10.13 EXECUTIVE COMPENSATION AGREEMENT This Agreement is made as of February 1, 2004 between Gryphon Gold Corporation, a Nevada corporation having an office at 1153 Bergen Parkway, Suite M290 Evergreen, Colorado USA 80439 (the "Company") and Tony Ker, of West Vancouver, British Columbia, Canada ("the "Contractor"). THIS AGREEMENT WITNESSES: 1. Definitions - In this Agreement, the following terms shall have the meanings ascribed below: (a) "Base Capital Stock" means the securities of the Company ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors of the Company. (b) "Base Compensation" means the Contractor's base annual compensation as set out in Section 3 of this Agreement. (c) "Board" means the board of directors of the Company. (d) "Cause" means: (i) a willful act or omission by the Contractor that constitutes misconduct or fraud and which is injurious to the Company; or (ii) a conviction of, or a plea of guilty or no contest to an indictable offence; provided that no act or omission by the Contractor shall be considered willful unless committed without good faith and without a reasonable belief that the act or omission was in the Company's best interest. (e) "Change of Control" means: (i) a change in the composition of the Board, as a result of which fewer than one-half of the incumbent directors are directors who had been directors of the Company 12 months prior to such change, with the exception of any such change in the composition of the Board made with the approval of the Board as it was constituted immediately prior to such change; or (ii) the acquisition or aggregation of securities by any Person pursuant to which such Person is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding Base Capital Stock, except that any change in the relative beneficial ownership of the Company's securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such Person's ownership of securities shall be disregarded until such Person increases in any manner, directly or indirectly, his, her or its beneficial ownership of any securities of the Company. (f) "Continuation Period" means the period commencing on the date when the termination of the Contractor's employment is effective and ending on the date twelve (12) months after such date. (g) "Disability" means any disability with respect to the Contractor pursuant to which the Contractor becomes eligible to receive long term disability benefits under the Company's long term disability insurance plan or, if there is no such plan, under any federal, provincial or other governmental long term disability plan.

2 (h) "Contractor Benefit Plans" means such medical, dental, eye care, disability, life and other health insurance benefit plans maintained, in whole or in part, by the Company on behalf of Contractors generally or executive Contractors over a certain grade level. (i) "Contractor Option Plans" means such stock option, stock appreciation rights, restricted stock, phantom stock or similar plans or agreements maintained, in whole or in part, by the Company on behalf of either Contractors generally or executive Contractors over a certain level. (j) "Executive Compensation Programs" means, any compensation programs maintained, in whole or in part, by the Company on behalf of executive Contractors over a certain level, including without limitation bonus or incentive programs tied to the performance of the Company. Executive Compensation will be administered by the Compensation committee which will have at least one non management Director on the committee. (k) "Good Reason" means a material reduction in the authority or responsibility of the Contractor, one or more reductions, in the cumulative amount of 5 percent or more, in the Base Compensation of the Contractor or any notification to the Contractor that his or her principal place of work will be relocated by a distance of 80 kilometers or more. (l) "Person" means any individual, partnership, unincorporated organization or association, trust, body corporate, government or government agency or authority, trustee, executor, administrator or other legal representative or other legal entity whatsoever. (m) "Term" means the time period from the effective date of this Agreement until the employment of the Contractor is terminated pursuant to Section 8. 2. Duties and Scope of Employment - The Company agrees to employ the Contractor as its Treasurer / Secretary for the Term. The Contractor shall report to the Company's President. During the Term, the Contractor shall devote his or her full business efforts and time to the Company and its affiliates and subsidiaries. The Contractor shall not render services to any other for profit corporation or entity without the knowledge of the Company. Nothing in this Agreement shall preclude the Contractor from engaging in appropriate professional, educational, civic, charitable or religious activities or from devoting a reasonable amount of time to private investments that do not interfere or conflict with his or her responsibilities to the Company. 3. Base Compensation - During the Term, the Company agrees to pay the Contractor as compensation for services a base compensation of $US120,000 per annum or such higher amount as the Company may determine from time to time. The Contractor's Base Compensation of $US120,000 annually shall be payable monthly at $US10,000 per month. Should the Companies compensation committee determine management should receive an increase in the base compensation then the base rate would be adjusted. 4. Contractor Benefits - During the Term, the Contractor shall be eligible for all Contractor Benefit Plans, Contractor Option Plans and Executive Compensation Programs, subject in each case to the generally applicable terms and conditions of the plan or program in question and to the determinations of any person(s) or committee administering such plan or program. 5. Business Expenses - During the Term, the Contractor shall be authorized to incur necessary and reasonable travel, entertainment and other business expenses in connection with the Contractor's duties as an Contractor of the Company. The Company shall reimburse the Contractor for such expenses upon presentation of an itemized account and appropriate supporting documentation, all in accordance with the Company's generally applicable policies.

3 6. Change of Control - If a Change of Control occurs during the Term, then the Contractor shall become fully vested in all awards heretofore or hereafter granted to the Contractor under all Contractor Option Plans and Executive Compensation Programs, regardless of any provision in such plans or agreements that do not provide for full vesting. 7. Term of Employment - The Company agrees to continue the Contractor's employment, and the Contractor agrees to remain in the employment of the Company, from the effective date hereof until the date when the Contractor's employment terminates pursuant to Section 8 (Termination of Employment) below. 8. Termination of Employment - Subject to Section 9 (Rights Upon Termination) of this Agreement, the employment of the Contractor may be terminated as follows: (a) upon death, without any requirement for notice; (b) for Cause, such termination to be effective forthwith upon written notice by the Company to the Contractor; (c) due to Disability, such termination to be effective thirty (30) days after written notice to the Contractor, provided that in the event the Contractor resumes performance of substantially all duties prior to the expiration of the thirty (30) day notice period, the notice of termination shall automatically be deemed to have been revoked; or (d) for any reason other than death, Cause or Disability, such termination to be effective thirty (30) days after written notice by the Company to the Contractor or by the Contractor to the Company. 9. Rights Upon Termination - Upon the termination of the Contractor's employment pursuant to Section 8 (Termination of Employment) of this Agreement, the Contractor shall be entitled to the following compensation, benefits and reimbursements: (a) Basic Entitlements - For the period preceding the effective date of the termination as set out in Section 8 (Termination of Employment) of this Agreement, the Contractor shall be entitled to the compensation, benefits and reimbursements described in Sections 3 (Base Compensation), 4 (Contractor Benefits) and 5 (Business Expenses). (b) Termination or Deemed Termination Upon a Change in Control - If, within twelve (12) months after the occurrence of a Change of Control, either: (i) the Contractor voluntarily resigns his or her employment; or (ii) the Company terminates the Contractor's employment for any reason other than Cause or Disability; then the Contractor shall be entitled to the following payments and benefits: (iii) an amount equal to the Base Compensation, payable in one lump sum within five (5) business days from the termination of the Contractor's employment unless the Company and the Contractor agree otherwise in writing; (iv) an amount equal to any bonus earned under any Executive Compensation Programs in the year in which the Change of Control occurred, payable in one lump sum within five (5) business days from the termination of the Contractor's employment unless the Company and the Contractor agree otherwise in writing; and

4 (v) during the Continuation Period, the Contractor (and, where applicable, the Contractor's dependents) shall be entitled to continue participation in all Contractor Benefit Plans maintained by the Company, including without limitation life, disability and health insurance programs, as if the Contractor were still an Contractor of the Company. Where applicable, the Contractor's salary for purposes of such plans shall be deemed to be equal to the Base Compensation and to the extent that the Company finds it impossible to cover the Contractor under its Contractor Benefit Plans during the Continuation Period, the Company shall provide the Contractor with individual policies which offer at least the same level of coverage and which impose not more than the same costs on the Contractor. The foregoing notwithstanding, in the event the Contractor becomes eligible for comparable coverage to that set out in the Contractor Benefit Plans in connection with new employment during the Continuation Period, the coverage provided by the Company under this Paragraph (v) shall terminate immediately. (c) Involuntary Termination Without Cause - If the Company terminates the Contractor's employment for any reason other than Cause, Disability or death and Subsection 9(b) does not apply, then the Contractor shall be entitled to the following payments and benefits: (i) the payment described in Paragraph 9(b)(iii) and (ii) the benefits described in Paragraph 9(b)(v) for the Continuation Period, provided that the Continuation Period shall be twelve (12) months in the event the Company terminates the Contractor's employment for bona fide performance-related reasons (as determined by the Board ) and provided further that the Company shall not be required to grant any new awards to the Contractor. (d) Termination Due to Death - If, during the Term, the Contractor's employment is terminated as a result of the death of the Contractor, then to the extent possible the Company shall maintain coverage for the Contractor's dependents under the Contractor Benefit Plans maintained by the Company, including without limitation health insurance programs, for a period of six (6) months as if the Contractor were still an Contractor of the Company. The foregoing notwithstanding, in the event the Contractor's dependents become or are eligible for comparable coverage to that set out in the Contractor Benefit Plans, the coverage provided by the Company under this Subsection (d) shall terminate immediately. (e) Subject to applicable legislation, the payments provided for in this Section 9 shall fully discharge all responsibilities of the Company to the Contractor upon the termination of the employment of the Contractor pursuant to Section 8 (Termination of Employment). In the case of Subsections 9(b) and (c) above, the Contractor shall not be required to mitigate the amount of any payment contemplated thereby (whether by seeking new employment or in any other manner) and, except as expressly provided in Paragraph 9(b)(v) and the corresponding provision in Subsections 9(c) (d), no payment or entitlement under this Section 9 shall be reduced by earnings that the Contractor may receive from any other source. 10. Non-Competition - The Contractor agrees with the Company not to, at any time during the Term and for a period of 1 year thereafter, either directly, indirectly, individually, in partnership, jointly or in conjunction with any Person or as principal, agent, shareholder, officer, Contractor or in any other manner whatsoever, solicit or endeavor to entice away from the Company any Contractor or agent of the Company. Notwithstanding the foregoing, the Company acknowledges and agrees that the Contractor is entitled to accept positions on the Board of Directors and Advisory Boards of other companies so long as such companies are not competitors of the Company and the performance of duties on behalf of such companies does not adversely impact on or affect the Contractor's functioning as an Contractor of the Company. 11. Miscellaneous Provisions - The following miscellaneous provisions shall apply to this Agreement:

5 (a) Company's Successors - The Company shall require any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets, by an agreement in substance and form satisfactory to the Contractor, to assume this Agreement and to agree expressly to perform this Agreement in the same manner and to the same extent as the Company would be required to perform it in the absence of a succession. The Company's failure to obtain such agreement prior to the effectiveness of a succession shall be a breach of this Agreement and shall entitle the Contractor to all of the compensation, benefits and reimbursements to which he or she would have been entitled hereunder if the Company had involuntarily terminated his or her employment without Cause immediately after such succession becomes effective. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which executes and delivers the assumption agreement described in this Subsection 11(a) or which becomes bound by this Agreement by operation of law. (b) No Assignment - The rights of any person to payments or benefits under this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including without limitation by bankruptcy, garnishment, attachment or other creditor's process, and any action in violation of this Subsection 11(b) shall be void. (c) Notice - Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by registered or certified mail, return receipt requested and postage prepaid. In the case of the Contractor, mailed notices shall be addressed to the Contractor at the most recent home address provided by the Contractor to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its President. (d) Waiver - No provision of this Agreement shall be modified, waived or discharged (including without limitation the notice periods set out in Section 8) unless the modification, waiver or discharge is agreed to in writing and signed by the Contractor and by an authorized officer of the Company (other than the Contractor). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (e) Whole Agreement - This Agreement (together with any additional agreements relating to non-competition, confidentiality and inventions, stock options and Company plans and programs relating to Contractors) constitutes the entire agreement between the parties, there being no other agreements, representations or understandings (oral or written, express or implied) which are not expressly set forth herein. This Agreement supersedes all prior written agreements between the Contractor and the Company. (f) No Setoff; Withholding Taxes - With the exception of taxes and other legally required deductions, Contractor contributions to benefit and other plans and other deductions approved in writing by the Contractor, the Company shall have no right of setoff or counterclaim, with respect to any claim, debt or obligation, against any payments to the Contractor under this Agreement. (g) Severability - The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (h) Choice of Law - The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the British Columbia and the parties attorney to the courts of B.C. (i) Arbitration - Except as otherwise provided in this Agreement, any controversy or claim arising out of or relating to this Agreement, or the breach of this Agreement, shall be finally settled by arbitration in Vancouver, B.C. in accordance with the Commercial Arbitration Act of British Columbia.

6 (j) Contractor's Successors - This Agreement and all rights of the Contractor hereunder shall enure to the benefit of and be binding on the Contractor's heirs and legal personal representatives. IN WITNESS WHEREOF each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written. Gryphon Gold Corporation
/s/ Donald Ranta ----------------------------------Donald Ranta Chairman Compensation Committee / Director /s/ Tony Ker -----------------------------------Name: Tony Ker - Treasurer Secretary

ENTITLEMENT MATRIX
Events ------------------------------------------------1. Change of Control of the Company Entitlement ---------------------------------------------------Contractor becomes fully vested in all awards grante Option Plans. Contractor Option Plans are differenti Compensation Plans. Contractor is entitled to all compensation, benefits the period to the effective date of the termination. Contractor is entitled to: a) the compensation, benefits and reimbursements de Paragraph 2 above; a severance payment equal to 12 months pay; an amount equal to the prior year's bonus under Compensation Programs; and all benefits under any Contractor Benefit Plans unless similar benefits are obtained under new e

2.

Termination for Cause

3.

Termination or Deemed Termination Upon a Change in Control (entitlement occurs if, within 12 months from the Change of Control, either Contractor voluntarily resigns or the Contractor is terminated)

b) c)

d)

4.

Termination For Any Reason Other Than Cause Where Termination Does Not Constitute a Termination or Deemed Termination Upon a Change in Control

Contractor is entitled to: a) the compensation, benefits and reimbursements de Paragraph 3(a), (b) and (d) above; and Vesting under Contractor Option Plans for a peri reduced to 6 months if the termination is for pe reasons.

b)

5.

Death

Contractor's survivors are entitled to: a) the compensation, benefits and reimbursements de Paragraph 2 above; and coverage for dependents under the Contractor Ben shorter of 6 months or replacement of the benefi

b)

EXHIBIT 10.14 EXECUTIVE COMPENSATION AGREEMENT This Agreement is made as of November 1, 2004 between Gryphon Gold Corporation, a Nevada corporation having an office at 1153 Bergen Parkway, Suite M290 Evergreen, Colorado USA 80439 (the "Company") and Thomas Sitar, of Vancouver British Columbia, Canada (the "Contractor" or "Mr. Sitar"). THIS AGREEMENT WITNESSES: 1. Definitions - In this Agreement, the following terms shall have the meanings ascribed below: (a) "Base Capital Stock" means the securities of the Company ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors of the Company. (b) "Base Compensation" means the Contractor's base annual compensation as set out in Section 3 of this Agreement. (c) "Board" means the board of directors of the Company. (d) "Cause" means: (i) a willful act or omission by the Contractor that constitutes misconduct or fraud and which is injurious to the Company; or (ii) a conviction of, or a plea of guilty or no contest to an indictable offence; provided that no act or omission by the Contractor shall be considered willful unless committed without good faith and without a reasonable belief that the act or omission was in the Company's best interest. (e) "Change of Control" means: (i) a change in the composition of the Board, as a result of which fewer than one-half of the incumbent directors are directors who had been directors of the Company 12 months prior to such change, with the exception of any such change in the composition of the Board made with the approval of the Board as it was constituted immediately prior to such change; or (ii) the acquisition or aggregation of securities by any Person pursuant to which such Person is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding Base Capital Stock, except that any change in the relative beneficial ownership of the Company's securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such Person's ownership of securities shall be disregarded until such Person increases in any manner, directly or indirectly, his, her or its beneficial ownership of any securities of the Company. (f) "Continuation Period" means the period commencing on the date when the termination of the Contractor's employment is effective and ending on the date twelve (12) months after such date. (g) "Disability" means any disability with respect to the Contractor pursuant to which the Contractor becomes eligible to receive long term disability benefits under the Company's long term disability insurance plan or, if there is no such plan, under any federal, provincial or other governmental long term disability plan.

2 (h) "Contractor Benefit Plans" means such medical, dental, eye care, disability, life and other health insurance benefit plans maintained, in whole or in part, by the Company on behalf of Contractors generally or executive Contractors over a certain grade level. (i) "Contractor Option Plans" means such stock option, stock appreciation rights, restricted stock, phantom stock or similar plans or agreements maintained, in whole or in part, by the Company on behalf of either Contractors generally or executive Contractors over a certain level. (j) "Executive Compensation Programs" means, any compensation programs maintained, in whole or in part, by the Company on behalf of executive Contractors over a certain level, including without limitation bonus or incentive programs tied to the performance of the Company. Executive Compensation Programs will be administered by the Compensation committee which will have at least one non management Director on the committee. (k) "Good Reason" means a material reduction in the authority or responsibility of the Contractor, one or more reductions, in the cumulative amount of 5 percent or more, in the Base Compensation of the Contractor or any notification to the Contractor that his or her principal place of work will be relocated by a distance of 80 kilometers or more. (l) "Person" means any individual, partnership, unincorporated organization or association, trust, body corporate, government or government agency or authority, trustee, executor, administrator or other legal representative or other legal entity whatsoever. (m) "Term" means the time period from the effective date of this Agreement until the employment of the Contractor is terminated pursuant to Section 8. 2. Duties and Scope of Employment - The Company agrees to employ the Contractor as its Chief Financial Officer (CFO) for the Term. The Contractor shall report to the Company's Chief Executive Officer (CEO). During the Term, the Contractor shall devote his or her full business efforts and time to the Company and its affiliates and subsidiaries. The Contractor shall not render services to any other for profit corporation or entity without the knowledge of the Company. Nothing in this Agreement shall preclude the Contractor from engaging in appropriate professional, educational, civic, charitable or religious activities or from devoting a reasonable amount of time to private investments that do not interfere or conflict with his or her responsibilities to the Company. 3. Base Compensation - During the Term, the Company agrees to pay the Contractor as compensation for services a base compensation of $US120,000 per annum or such higher amount as the Company may determine from time to time. The Contractor's Base Compensation of $US120,000 annually shall be payable monthly at $US10,000 per month. Should the Companies compensation committee determine management should receive an increase in the base compensation then the base rate would be adjusted. 4. (a) Signing arrangements and benefits - On signing of this agreement Mr. Sitar will: >> Purchase 200,000 common stock shares in the company at the price of $US0.35 per share for a total price of $US70,000. >> Sign a promissory note for $US105,000 less any accrued fees to-date, for the purchase of 300,000 shares in the company at the price of $US0.35 per share. The note will carry an interest cost of 2% per annum and be repayable within two years. Until such time as the balance outstanding under the promissory note is repaid, 50% of Mr. Sitar's monthly Base Compensation and 75% of any bonus declared will be applied against the outstanding balance. >> As CFO Mr. Sitar will receive the same benefits, compensation and option grants as Directors of the company are entitled to. (b) Contractor Benefits - During the Term, the Contractor shall be eligible for all Contractor Benefit Plans, Contractor Option Plans and Executive Compensation Programs, subject in each case to the generally

3 applicable terms and conditions of the plan or program in question and to the determinations of any person(s) or committee administering such plan or program. 5. Business Expenses - During the Term, the Contractor shall be authorized to incur necessary and reasonable travel, entertainment and other business expenses in connection with the Contractor's duties as a Contractor of the Company. The Company shall reimburse the Contractor for such expenses upon presentation of an itemized account and appropriate supporting documentation, all in accordance with the Company's generally applicable policies. 6. Change of Control - If a Change of Control occurs during the Term, then the Contractor shall become fully vested in all awards heretofore or hereafter granted to the Contractor under all Contractor Option Plans and Executive Compensation Programs, regardless of any provision in such plans or agreements that do not provide for full vesting. 7. Term of Employment - The Company agrees to continue the Contractor's employment, and the Contractor agrees to remain in the employment of the Company, from the effective date hereof until the date when the Contractor's employment terminates pursuant to Section 8 (Termination of Employment) below. 8. Termination of Employment - Subject to Section 9 (Rights Upon Termination) of this Agreement, the employment of the Contractor may be terminated as follows: (a) upon death, without any requirement for notice; (b) for Cause, such termination to be effective forthwith upon written notice by the Company to the Contractor; (c) due to Disability, such termination to be effective thirty (30) days after written notice to the Contractor, provided that in the event the Contractor resumes performance of substantially all duties prior to the expiration of the thirty (30) day notice period, the notice of termination shall automatically be deemed to have been revoked; or (d) for any reason other than death, Cause or Disability, such termination to be effective thirty (30) days after written notice by the Company to the Contractor or by the Contractor to the Company. 9. Rights Upon Termination - Upon the termination of the Contractor's employment pursuant to Section 8 (Termination of Employment) of this Agreement, the Contractor shall be entitled to the following compensation, benefits and reimbursements: (a) Basic Entitlements - For the period preceding the effective date of the termination as set out in Section 8 (Termination of Employment) of this Agreement, the Contractor shall be entitled to the compensation, benefits and reimbursements described in Sections 3 (Base Compensation), 4 (Contractor Benefits) and 5 (Business Expenses). (b) Termination or Deemed Termination Upon a Change in Control - If, within twelve (12) months after the occurrence of a Change of Control, either: (i) the Contractor voluntarily resigns his or her employment; or (ii) the Company terminates the Contractor's employment for any reason other than Cause or Disability;

4 then the Contractor shall be entitled to the following payments and benefits: (iii) an amount equal to the Base Compensation, payable in one lump sum within five (5) business days from the termination of the Contractor's employment unless the Company and the Contractor agree otherwise in writing; (iv) an amount equal to any bonus earned under any Executive Compensation Programs in the year in which the Change of Control occurred, payable in one lump sum within five (5) business days from the termination of the Contractor's employment unless the Company and the Contractor agree otherwise in writing; and (v) during the Continuation Period, the Contractor (and, where applicable, the Contractor's dependents) shall be entitled to continue participation in all Contractor Benefit Plans maintained by the Company, including without limitation life, disability and health insurance programs, as if the Contractor were still an Contractor of the Company. Where applicable, the Contractor's salary for purposes of such plans shall be deemed to be equal to the Base Compensation and to the extent that the Company finds it impossible to cover the Contractor under its Contractor Benefit Plans during the Continuation Period, the Company shall provide the Contractor with individual policies which offer at least the same level of coverage and which impose not more than the same costs on the Contractor. The foregoing notwithstanding, in the event the Contractor becomes eligible for comparable coverage to that set out in the Contractor Benefit Plans in connection with new employment during the Continuation Period, the coverage provided by the Company under this Paragraph (v) shall terminate immediately. (c) Involuntary Termination Without Cause - If the Company terminates the Contractor's employment for any reason other than Cause, Disability or death and Subsection 9(b) does not apply, then the Contractor shall be entitled to the following payments and benefits: (i) the payment described in Paragraph 9(b)(iii) and (ii) the benefits described in Paragraph 9(b)(v) for the Continuation Period, provided that the Continuation Period shall be twelve (12) months in the event the Company terminates the Contractor's employment for bona fide performance-related reasons (as determined by the Board ) and provided further that the Company shall not be required to grant any new awards to the Contractor. (d) Termination Due to Death - If, during the Term, the Contractor's employment is terminated as a result of the death of the Contractor, then to the extent possible the Company shall maintain coverage for the Contractor's dependents under the Contractor Benefit Plans maintained by the Company, including without limitation health insurance programs, for a period of six (6) months as if the Contractor were still an Contractor of the Company. The foregoing notwithstanding, in the event the Contractor's dependents become or are eligible for comparable coverage to that set out in the Contractor Benefit Plans, the coverage provided by the Company under this Subsection (d) shall terminate immediately. (e) Subject to applicable legislation, the payments provided for in this Section 9 shall fully discharge all responsibilities of the Company to the Contractor upon the termination of the employment of the Contractor pursuant to Section 8 (Termination of Employment). In the case of Subsections 9(b) and (c) above, the Contractor shall not be required to mitigate the amount of any payment contemplated thereby (whether by seeking new employment or in any other manner) and, except as expressly provided in Paragraph 9(b)(v) and the corresponding provision in Subsections 9(c) (d), no payment or entitlement under this Section 9 shall be reduced by earnings that the Contractor may receive from any other source.

5 10. Non-Competition (a) The Contractor agrees with the Company not to, at any time during the Term and for a period of 1 year thereafter, either directly, indirectly, individually, in partnership, jointly or in conjunction with any Person or as principal, agent, shareholder, officer, Contractor or in any other manner whatsoever, solicit or endeavor to entice away from the Company any other Contractor, employee or agent of the Company. (b) The Company acknowledges and agrees that the Contractor is entitled to accept positions on the Board of Directors and Advisory Boards of other companies so long as such companies are not competitors of the Company and the performance of duties on behalf of such companies does not adversely impact on or affect the Contractor's functioning as an Contractor of the Company. 11. Miscellaneous Provisions - The following miscellaneous provisions shall apply to this Agreement: (a) Company's Successors - The Company shall require any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets, by an agreement in substance and form satisfactory to the Contractor, to assume this Agreement and to agree expressly to perform this Agreement in the same manner and to the same extent as the Company would be required to perform it in the absence of a succession. The Company's failure to obtain such agreement prior to the effectiveness of a succession shall be a breach of this Agreement and shall entitle the Contractor to all of the compensation, benefits and reimbursements to which he or she would have been entitled hereunder if the Company had involuntarily terminated his or her employment without Cause immediately after such succession becomes effective. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which executes and delivers the assumption agreement described in this Subsection 11(a) or which becomes bound by this Agreement by operation of law. (b) No Assignment - The rights of any person to payments or benefits under this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including without limitation by bankruptcy, garnishment, attachment or other creditor's process, and any action in violation of this Subsection 11(b) shall be void. (c) Notice - Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by registered or certified mail, return receipt requested and postage prepaid. In the case of the Contractor, mailed notices shall be addressed to the Contractor at the most recent home address provided by the Contractor to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its President. (d) Waiver - No provision of this Agreement shall be modified, waived or discharged (including without limitation the notice periods set out in Section 8) unless the modification, waiver or discharge is agreed to in writing and signed by the Contractor and by an authorized officer of the Company (other than the Contractor). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (e) Whole Agreement - This Agreement (together with any additional agreements relating to non-competition, confidentiality and inventions, stock options and Company plans and programs relating to Contractors) constitutes the entire agreement between the parties, there being no other agreements, representations or understandings (oral or written, express or implied) which are not expressly set forth herein. This Agreement supersedes all prior written agreements between the Contractor and the Company. (f) No Setoff; Withholding Taxes - With the exception of taxes and other legally required deductions, Contractor contributions to benefit and other plans and other deductions approved in writing by the Contractor,

6 the Company shall have no right of setoff or counterclaim, with respect to any claim, debt or obligation, against any payments to the Contractor under this Agreement. (g) Severability - The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (h) Choice of Law - The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the British Columbia and the parties attorney to the courts of B.C. (i) Arbitration - Except as otherwise provided in this Agreement, any controversy or claim arising out of or relating to this Agreement, or the breach of this Agreement, shall be finally settled by arbitration in Vancouver, B.C. in accordance with the Commercial Arbitration Act of British Columbia. (j) Contractor's Successors - This Agreement and all rights of the Contractor hereunder shall enure to the benefit of and be binding on the Contractor's heirs and legal personal representatives. IN WITNESS WHEREOF each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.
Gryphon Gold Corporation /s/ Albert Matter -------------------------------Albert Matter Chairman Gryphon Gold Corporation /s/ Thomas Sitar -------------------------------------------Name: Thomas Sitar - Chief Financial Officer Home Address: 4613 West 8th Avenue Vancouver, BC V6R 2A6

ENTITLEMENT MATRIX
Events ------------------------------------------------1. Change of Control of the Company Entitlement ---------------------------------------------------Contractor becomes fully vested in all awards grante Option Plans. Contractor Option Plans are differenti Compensation Plans. Contractor is entitled to all compensation, benefits for the period to the effective date of the terminat Contractor is entitled to: a) the compensation, benefits and reimbursements de Paragraph 2 above; a severance payment equal to 12 months pay; an amount equal to the prior year's bonus under Compensation Programs; and all benefits under any Contractor Benefit Plans similar benefits are obtained under new employme

2.

Termination for Cause

3.

Termination or Deemed Termination Upon a Change in Control (entitlement occurs if, within 12 months from the Change of Control, either Contractor voluntarily resigns or the Contractor is terminated)

b) c)

d)

4.

Termination For Any Reason Other Than Cause Where Termination Does Not Constitute a Termination or Deemed Termination Upon a Change in Control

Contractor is entitled to: a) the compensation, benefits and reimbursements de Paragraph 3(a), (b) and (d) above; and Vesting under Contractor Option Plans for a peri reduced to 6 months if the termination is for pe reasons.

b)

5.

Death

Contractor's survivors are entitled to: a) the compensation, benefits and reimbursements de Paragraph 2 above; and coverage for dependents under the Contractor Ben shorter of 6 months or replacement of the benefi

b)

EXHIBIT 10.15 EXECUTIVE COMPENSATION AGREEMENT This Agreement is made as of 1 June, 2005 between Gryphon Gold Corporation, a Nevada corporation having an office at 1153 Bergen Parkway, Suite M290 Evergreen, Colorado USA 80439 (the "Company") and DONALD E. RANTA, of Golden, Colorado, USA ("the "Contractor"). THIS AGREEMENT WITNESSES: 1. Definitions - In this Agreement, the following terms shall have the meanings ascribed below: (a) "Base Capital Stock" means the securities of the Company ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors of the Company. (b) "Base Compensation" means the Contractor's base annual compensation as set out in Section 3 of this Agreement. (c) "Board" means the board of directors of the Company. (d) "Cause" means: (i) a willful act or omission by the Contractor that constitutes misconduct or fraud and which is injurious to the Company; or (ii) a conviction of, or a plea of guilty or no contest to an indictable offence; provided that no act or omission by the Contractor shall be considered willful unless committed without good faith and without a reasonable belief that the act or omission was in the Company's best interest. (e) "Change of Control" means: (i) a change in the composition of the Board, as a result of which fewer than one-half of the incumbent directors are directors who had been directors of the Company 12 months prior to such change, with the exception of any such change in the composition of the Board made with the approval of the Board as it was constituted immediately prior to such change; or (ii) the acquisition or aggregation of securities by any Person pursuant to which such Person is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding Base Capital Stock, except that any change in the relative beneficial ownership of the Company's securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such Person's ownership of securities shall be disregarded until such Person increases in any manner, directly or indirectly, his, her or its beneficial ownership of any securities of the Company. (f) "Continuation Period" means the period commencing on the date when the termination of the Contractor's employment is effective and ending on the date twelve (12) months after such date. (g) "Disability" means any disability with respect to the Contractor pursuant to which the Contractor becomes eligible to receive long term disability benefits under the Company's long term disability insurance plan or, if there is no such plan, under any federal, provincial or other governmental long term disability plan.

2 (h) "Contractor Benefit Plans" means such medical, dental, eye care, disability, life and other health insurance benefit plans maintained, in whole or in part, by the Company on behalf of Contractors generally or executive Contractors over a certain grade level. (i) "Contractor Option Plans" means such stock option, stock appreciation rights, restricted stock, phantom stock or similar plans or agreements maintained, in whole or in part, by the Company on behalf of either Contractors generally or executive Contractors over a certain level. (j) "Executive Compensation Programs" means, , any compensation programs maintained, in whole or in part, by the Company on behalf of executive Contractors over a certain level, including without limitation bonus or incentive programs tied to the performance of the Company. Executive Compensation will be administered by the Compensation committee which will have at least one non management Director on the committee. (k) "Good Reason" means a material reduction in the authority or responsibility of the Contractor, one or more reductions, in the cumulative amount of 5 percent or more, in the Base Compensation of the Contractor or any notification to the Contractor that his or her principal place of work will be relocated by a distance of 80 kilometers or more. (l) "Person" means any individual, partnership, unincorporated organization or association, trust, body corporate, government or government agency or authority, trustee, executor, administrator or other legal representative or other legal entity whatsoever. (m) "Term" means the time period from the effective date of this Agreement until the employment of the Contractor is terminated pursuant to Section 8. 2. Duties and Scope of Employment - The Company agrees to employ the Contractor as its Vice President of Exploration for the Term. The Contractor shall report to the Company's President. During the Term, the Contractor shall devote his business efforts to the Company and its affiliates and subsidiaries. The Contractor shall not render services to any other for profit corporation or entity without the knowledge of the Company. Nothing in this Agreement shall preclude the Contractor from engaging in appropriate professional, educational, civic, charitable or religious activities or from devoting a reasonable amount of time to private investments that do not interfere or conflict with his or her responsibilities to the Company. 3. Base Compensation - Base Compensation for the purpose of this agreement is deemed to be $US120, 000 per annum. During the Term, the Company agrees to pay the Contractor as compensation for services a per diem rate of $US500 per day or such higher amount as the Company may determine from time to time. The Contractor's Compensation of shall be payable monthly based on invoiced billings to a maximum of $US10, 000 per month. Should the Companies compensation committee determine management should receive an increase in the base compensation then the base rate would be adjusted. 4. Contractor Benefits - During the Term, the Contractor shall be eligible for all Contractor Benefit Plans, Contractor Option Plans and Executive Compensation Programs, subject in each case to the generally applicable terms and conditions of the plan or program in question and to the determinations of any person(s) or committee administering such plan or program. 5. Business Expenses - During the Term, the Contractor shall be authorized to incur necessary and reasonable travel, entertainment and other business expenses in connection with the Contractor's duties as a Contractor of the Company. The Company shall reimburse the Contractor for such expenses upon presentation

3 of an itemized account and appropriate supporting documentation, all in accordance with the Company's generally applicable policies. 6. Change of Control - If a Change of Control occurs during the Term, then the Contractor shall become fully vested in all awards heretofore or hereafter granted to the Contractor under all Contractor Option Plans and Executive Compensation Programs, regardless of any provision in such plans or agreements that do not provide for full vesting. 7. Term of Employment - The Company agrees to continue the Contractor's employment, and the Contractor agrees to remain in the employment of the Company, from the effective date hereof until the date when the Contractor's employment terminates pursuant to Section 8 (Termination of Employment) below. 8. Termination of Employment - Subject to Section 9 (Rights Upon Termination) of this Agreement, the employment of the Contractor may be terminated as follows: (a) upon death, without any requirement for notice; (b) for Cause, such termination to be effective forthwith upon written notice by the Company to the Contractor; (c) due to Disability, such termination to be effective thirty (30) days after written notice to the Contractor, provided that in the event the Contractor resumes performance of substantially all duties prior to the expiration of the thirty (30) day notice period, the notice of termination shall automatically be deemed to have been revoked; or (d) for any reason other than death, Cause or Disability, such termination to be effective thirty (30) days after written notice by the Company to the Contractor or by the Contractor to the Company. 9. Rights Upon Termination - Upon the termination of the Contractor's employment pursuant to Section 8 (Termination of Employment) of this Agreement, the Contractor shall be entitled to the following compensation, benefits and reimbursements: (a) Basic Entitlements - For the period preceding the effective date of the termination as set out in Section 8 (Termination of Employment) of this Agreement, the Contractor shall be entitled to the compensation, benefits and reimbursements described in Sections 3 (Base Compensation), 4 (Contractor Benefits) and 5 (Business Expenses). (b) Termination or Deemed Termination Upon a Change in Control - If, within twelve (12) months after the occurrence of a Change of Control, either: (i) the Contractor voluntarily resigns his or her employment; or (ii) the Company terminates the Contractor's employment for any reason other than Cause or Disability; then the Contractor shall be entitled to the following payments and benefits: (iii) an amount equal to the Base Compensation, payable in one lump sum within five (5) business days from the termination of the Contractor's employment unless the Company and the Contractor agree otherwise in writing;

4 (iv) an amount equal to any bonus earned under any Executive Compensation Programs in the year in which the Change of Control occurred, payable in one lump sum within five (5) business days from the termination of the Contractor's employment unless the Company and the Contractor agree otherwise in writing; and (v) during the Continuation Period, the Contractor (and, where applicable, the Contractor's dependents) shall be entitled to continue participation in all Contractor Benefit Plans maintained by the Company, including without limitation life, disability and health insurance programs, as if the Contractor were still an Contractor of the Company. Where applicable, the Contractor's salary for purposes of such plans shall be deemed to be equal to the Base Compensation and to the extent that the Company finds it impossible to cover the Contractor under its Contractor Benefit Plans during the Continuation Period, the Company shall provide the Contractor with individual policies which offer at least the same level of coverage and which impose not more than the same costs on the Contractor. The foregoing notwithstanding, in the event the Contractor becomes eligible for comparable coverage to that set out in the Contractor Benefit Plans in connection with new employment during the Continuation Period, the coverage provided by the Company under this Paragraph (v) shall terminate immediately. (c) Involuntary Termination Without Cause - If the Company terminates the Contractor's employment for any reason other than Cause, Disability or death and Subsection 9(b) does not apply, then the Contractor shall be entitled to the following payments and benefits: (i) the payment described in Paragraph 9(b)(iii) and (ii) the benefits described in Paragraph 9(b)(v) for the Continuation Period, provided that the Continuation Period shall be twelve (12) months in the event the Company terminates the Contractor's employment for bona fide performance - related reasons (as determined by the Board ) and provided further that the Company shall not be required to grant any new awards to the Contractor. (d) Termination Due to Death - If, during the Term, the Contractor's employment is terminated as a result of the death of the Contractor, then to the extent possible the Company shall maintain coverage for the Contractor's dependents under the Contractor Benefit Plans maintained by the Company, including without limitation health insurance programs, for a period of six (6) months as if the Contractor were still an Contractor of the Company. The foregoing notwithstanding, in the event the Contractor's dependents become or are eligible for comparable coverage to that set out in the Contractor Benefit Plans, the coverage provided by the Company under this Subsection (d) shall terminate immediately. (e) Subject to applicable legislation, the payments provided for in this Section 9 shall fully discharge all responsibilities of the Company to the Contractor upon the termination of the employment of the Contractor pursuant to Section 8 (Termination of Employment). In the case of Subsections 9(b) and (c) above, the Contractor shall not be required to mitigate the amount of any payment contemplated thereby (whether by seeking new employment or in any other manner) and, except as expressly provided in Paragraph 9(b)(v) and the corresponding provision in Subsections 9(c) (d), no payment or entitlement under this Section 9 shall be reduced by earnings that the Contractor may receive from any other source. 10. Non-Competition - The Contractor agrees with the Company not to, at any time during the Term and for a period of 1 year thereafter, either directly, indirectly, individually, in partnership, jointly or in conjunction with any Person or as principal, agent, shareholder, officer, Contractor or in any other manner whatsoever, solicit or endeavor to entice away from the Company any Contractor or agent of the Company.

5 Notwithstanding the foregoing, the Company acknowledges and agrees that the Contractor is entitled to accept positions on the Board of Directors and Advisory Boards of other companies so long as such companies are not competitors of the Company and the performance of duties on behalf of such companies does not adversely impact on or affect the Contractor's functioning as an Contractor of the Company. 11. Miscellaneous Provisions - The following miscellaneous provisions shall apply to this Agreement: (a) Company's Successors - The Company shall require any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets, by an agreement in substance and form satisfactory to the Contractor, to assume this Agreement and to agree expressly to perform this Agreement in the same manner and to the same extent as the Company would be required to perform it in the absence of a succession. The Company's failure to obtain such agreement prior to the effectiveness of a succession shall be a breach of this Agreement and shall entitle the Contractor to all of the compensation, benefits and reimbursements to which he or she would have been entitled hereunder if the Company had involuntarily terminated his or her employment without Cause immediately after such succession becomes effective. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which executes and delivers the assumption agreement described in this Subsection 11(a) or which becomes bound by this Agreement by operation of law. (b) No Assignment - The rights of any person to payments or benefits under this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including without limitation by bankruptcy, garnishment, attachment or other creditor's process, and any action in violation of this Subsection 11(b) shall be void. (c) Notice - Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by registered or certified mail, return receipt requested and postage prepaid. In the case of the Contractor, mailed notices shall be addressed to the Contractor at the most recent home address provided by the Contractor to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its President. (d) Waiver - No provision of this Agreement shall be modified, waived or discharged (including without limitation the notice periods set out in Section 8) unless the modification, waiver or discharge is agreed to in writing and signed by the Contractor and by an authorized officer of the Company (other than the Contractor). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (e) Whole Agreement - This Agreement (together with any additional agreements relating to non-competition, confidentiality and inventions, stock options and Company plans and programs relating to Contractors) constitutes the entire agreement between the parties, there being no other agreements, representations or understandings (oral or written, express or implied) which are not expressly set forth herein. This Agreement supersedes all prior written agreements between the Contractor and the Company. (f) No Setoff; Withholding Taxes - With the exception of taxes and other legally required deductions, Contractor contributions to benefit and other plans and other deductions approved in writing by the Contractor, the Company shall have no right of setoff or counterclaim, with respect to any claim, debt or obligation, against any payments to the Contractor under this Agreement.

6 (g) Severability - The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (h) Choice of Law - The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Colorado and the parties attorney to the courts of Colorado USA. (i) Arbitration - Except as otherwise provided in this Agreement, any controversy or claim arising out of or relating to this Agreement, or the breach of this Agreement, shall be finally settled by arbitration in Colorado, USA in accordance with the Commercial Arbitration Act of Colorado, USA. (j) Contractor's Successors - This Agreement and all rights of the Contractor hereunder shall enure to the benefit of and be binding on the Contractor's heirs and legal personal representatives. IN WITNESS WHEREOF each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.
Gryphon Gold Corporation /s/ Allen Gordon _____________________________________ Allen Gordon - President / Director /s/ Donald Ranta ____________________________________ Name: Donald E. Ranta Vice President of Exploration

ENTITLEMENT MATRIX
Events -----------------------------------------1. Change of Control of the Company Entitlement -----------------------------------------------------Contractor becomes fully vested in all awards granted under all Contractor Option Plans. Contractor Option Plans are differentiated from Executive Compensation Plans. Contractor is entitled to all compensation, benefits and reimbursements for the period to the effective date of the termination. Contractor is entitled to: a) the compensation, benefits and reimbursements described in Paragraph 2 above; a severance payment equal to 12 months pay; an amount equal to the prior year's bonus under any Executive Compensation Programs; and all benefits under any Contractor Benefit Plans for 12 months, unless similar benefits are obtained under new employment.

2.

Termination for Cause

3.

Termination or Deemed Termination Upon a Change in Control (entitlement occurs if, within 12 months from the Change of Control, either Contractor voluntarily resigns or the Contractor is terminated)

b) c)

d)

4.

Termination For Any Reason Other Than Cause Where Termination Does Not Constitute a Termination or Deemed Termination Upon a Change in Control

Contractor is entitled to: a) the compensation, benefits and reimbursements described in Paragraph 3(a), (b) and (d) above; and Vesting under Contractor Option Plans for a period of 12 months, reduced to 6 months if the termination is for performance related reasons.

b)

5.

Death

Contractor's survivors are entitled to: a) the compensation, benefits and reimbursements described in Paragraph 2 above; and coverage for dependents under the Contractor Benefit Plans for the shorter of 6 months or replacement of the benefit coverage.

b)

EXHIBIT 10.16 GRYPHON GOLD CORPORATION 2004 STOCK INCENTIVE PLAN

. . .
ARTICLE 1 1.1 ARTICLE 2 2.1 2.2 ARTICLE 3 3.1 ARTICLE 4 4.1 4.2 4.3 4.4 ARTICLE 5 5.1 5.2 5.3 ARTICLE 6 6.1 6.2 ARTICLE 7 7.1 7.2 ARTICLE 8 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 ARTICLE 9 9.1 9.2 9.3 9.4 9.5 ARTICLE 10 10.1 10.2 ARTICLE 11 11.1 11.2 11.3 PURPOSE.............................................. GENERAL EFFECTIVE and EXPIRATION DATE........................ EFFECTIVE DATE EXPIRATION DATE DEFINITIONS AND CONSTRUCTION......................... DEFINITIONS ADMINISTRATION....................................... COMMITTEE ACTION BY THE COMMITTEE AUTHORITY OF COMMITTEE DECISIONS BINDING SHARES SUBJECT TO THE PLAN........................... NUMBER OF SHARES LAPSED OR ASSUMED AWARDS STOCK DISTRIBUTED ELIGIBILITY AND PARTICIPATION........................ ELIGIBILITY ACTUAL PARTICIPATION STOCK OPTIONS........................................ GENERAL INCENTIVE STOCK OPTIONS PROVISIONS APPLICABLE TO AWARDS...................... STAND-ALONE AND TANDEM AWARDS EXCHANGE PROVISIONS TERM OF AWARD FORM OF PAYMENT FOR AWARDS LIMITS ON TRANSFER BENEFICIARIES STOCK CERTIFICATES ACCELERATION UPON A CHANGE OF CONTROL ADDITIONAL TSX VENTURE EXCHANGE TERMS ADDITIONAL TSX EXCHANGE TERMS CHANGES IN CAPITAL STRUCTURE......................... SHARES AVAILABLE FOR GRANT OUTSTANDING AWARDS - INCREASE OR DECREASE IN ISSUED SHARES WITHOUT CONSIDERATION OUTSTANDING AWARDS - CERTAIN MERGERS OUTSTANDING AWARDS - OTHER CHANGES NO OTHER RIGHTS AMENDMENT, MODIFICATION, AND TERMINATION............. AMENDMENT, MODIFICATION, AND TERMINATION AWARDS PREVIOUSLY GRANTED GENERAL PROVISIONS................................... NO RIGHTS TO AWARDS NO STOCKHOLDERS RIGHTS WITHHOLDING 1 1

1 4

5

6

6

8

12

13

13

1

11.4 11.5 11.6 11.7 11.8 11.9 11.10 11.11 11.12 11.13

NO RIGHT TO EMPLOYMENT OR SERVICES UNFUNDED STATUS OF AWARDS INDEMNIFICATION RELATIONSHIP TO OTHER BENEFITS EXPENSES TITLES AND HEADINGS FRACTIONAL SHARES SECURITIES LAW COMPLIANCE GOVERNMENT AND OTHER REGULATIONS GOVERNING LAW

2

GRYPHON GOLD CORPORATION 2004 STOCK INCENTIVE PLAN ARTICLE 1 PURPOSE 1.1 GENERAL. The purpose of the Gryphon Gold Corporation 2004 Stock Incentive Plan (the "Plan") is to promote the success and enhance the value of Gryphon Gold Corporation (the "Issuer") by linking the personal interests of the members of the Board, employees, officers, executives, and consultants or independent contractors, to those of Issuer stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Issuer stockholders. The Plan is further intended to provide flexibility to the Issuer in its ability to motivate, attract, and retain the services of members of the Board, employees, officers, executives of, and consultants or independent contractors providing services to, the Issuer upon whose judgment, interest, and special effort the successful conduct of the Issuer's operation is largely dependent. ARTICLE 2 EFFECTIVE AND EXPIRATION DATE 2.1 EFFECTIVE DATE. The Plan is effective as of the date the Plan is approved by the Issuer's Board of Directors (the "Effective Date"). 2.2 EXPIRATION DATE. The Plan will expire on, and no Award may be granted pursuant to the Plan after, the tenth anniversary of the Effective Date. Any Awards that are outstanding on the tenth anniversary of the Effective Date shall remain in force according to the terms of the Plan and the Award Agreement. ARTICLE 3 DEFINITIONS AND CONSTRUCTION 3.1 DEFINITIONS. The following words and phrases shall have the following meanings: (a) "AWARD" means any Option granted to a Participant pursuant to the Plan. (b) "AWARD AGREEMENT" means any written agreement, contract, or other instrument or document evidencing an Award. (c) "BOARD" means the Board of Directors of the Issuer. (d) "CAUSE" means (except as otherwise provided in an Award Agreement) the occurrence of any of the following events: (1) the Participant's willful and continued failure to substantially perform the Participant's duties with the Issuer or its affiliates (other than any such failure resulting from the Participant's incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Participant by the Issuer which specifically identifies the manner in which the Issuer believes that the Participant has not substantially performed his duties; 3

(2) the conviction of the Participant of, or an entering of a guilty plea or a plea of no contest by the Participant, to a felony or of a misdemeanor involving moral turpitude; (3) the willful violation by Participant of any material provision of this Agreement or an Award Agreement; or (4) the willful engaging by the Participant in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Issuer. For purposes of this definition, no act or failure to act on the part of the Participant shall be considered "willful" unless it is done, or omitted to be done, intentionally by the Participant in bad faith. Any act, or failure to act, based on authority given pursuant to a resolution duly adopted by the Board or the written advice of counsel to the Issuer or its affiliates will be conclusively presumed to be done, or omitted to be done, by the Participant in good faith and in the best interests of the Issuer and its affiliates. (e) "CHANGE OF CONTROL" means the occurrence of any one of the following events: (1) any consolidation or merger of the Issuer (including, without limitation, a triangular merger) where the shareholders of the Issuer, immediately prior to the consolidation or merger, would not immediately after the consolidation or merger, beneficially own, directly or indirectly, shares representing in the aggregate more than fifty percent (50%) of the combined voting power of all the outstanding securities of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any); (2) the Issuer sells, leases or exchanges (in one or a series of transactions) all or substantially all of its assets to any other person or entity; (3) the shareholders approve a plan to dissolve and liquidate the Issuer; (4) any "person," as such term is used in Section 13(d) of the Exchange Act (other than the Issuer, any employee benefit plan of the Issuer or any entity organized, appointed or established by the Issuer for or pursuant to the terms of any such plan), together with all "affiliates" and "associates" (as such terms are defined in Rule 12B-2 under the Exchange Act or any successor provision) of such person, shall become the "beneficial owner" or "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act or any successor provision, directly or indirectly, of securities of the Issuer representing in the aggregate (A) in the event the Issuer is not a "Reporting Issuer" (meaning a Issuer that is subject to the reporting requirements of the Exchange Act and has registered shares of a class of equity securities pursuant to Section 12(g) or 12(b) of the Exchange Act) fifty percent (50%) or more or (B) in the event the Issuer is a Reporting Issuer, twenty percent (20%) or more of either (1) the then outstanding shares of common Stock of the Issuer or (2) the combined voting power of all then outstanding securities of the Issuer having the right under ordinary circumstances to vote in an election of the Board of Directors of the Issuer including pursuant to a consolidation or merger of the Issuer to which clause (iii) does not apply; or 4

(5) individuals who, as of the date hereof, constitute the entire Board of Directors of the Issuer (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board of Directors (hereinafter referred to as a "Board Change"), provided that any individual becoming a director subsequent to the date hereof whose election or nomination for election was approved by a vote of at least a majority of the then Incumbent Directors shall be, for purposes of this provision, considered as though such individual were an Incumbent Director. Notwithstanding the foregoing, the following transactions shall not constitute a "Change of Control": (1) the closing of the Issuer's first public offering pursuant to an effective registration statement filed under the Exchange Act, with the TSX Exchange or TSX Venture Exchange or (2) any transaction the sole purpose of which is to change the state of incorporation of the Issuer or to create a holding company that will be owned in substantially the same proportions by the persons who held the Issuer's securities immediately before such transaction. In the event that the Issuer becomes listed with the TSX Venture Exchange the following definition of "Change of Control" shall apply for purposes of compliance therewith notwithstanding the application of the aforementioned definition to the extent not inconsistent with TSX Venture Exchange requirements: "Change of Control" includes situations where after giving effect to the contemplated transaction and as a result of such action transaction: (i) any one person holds a sufficient number of voting shares of the Issuer or Resulting Issuer to affect materially the control of the Issuer or Resulting Issuer, or (ii) any combination of persons, acting in concern by virtue of an agreement, arrangement, commitment of understanding, hold in total a sufficient number of voting shares of the Issuer or Resulting Issuer to affect materially the control of the Issuer or Resulting Issuer, where such person or combination of persons did not previously hold a sufficient number of voting shares to affect materially the control of the Issuer or Resulting Issuer. In the absence of evidence to the contrary, any person or combination of persons acting in concert by virtue of an agreement, commitment or understanding, holding more than 20% of the voting shares of the Issuer or Resulting Issuer is deemed to materially affect the control of the Issuer or Resulting Issuer. (f) "CODE" means the United States Internal Revenue Code of 1986, as amended. (g) "COMMITTEE" means the committee of the Board described in Article 4. (h) "CONSULTANT" means, in relation to the Issuer, an individual or Consultant Company, other than an employee or a Director of the Issuer, that (a) is engaged to provide on a ongoing bona fide basis, consulting, technical, management or other services to the Issuer or to an affiliate or Subsidiary, other than services provided in relation to a distribution; (b) provides the services under a written contract between the Issuer or the affiliate and the 5

individual or the Consultant Company; (c) in the reasonable opinion of the Issuer, spends or will spend a significant amount of time and attention on the affairs and business; and (d) has a relationship with the Issuer or an affiliate of the Issuer that enables the individual to be knowledgeable about the business and affairs of the Issuer. (i) "CONSULTANT COMPANY" means for an individual consultant, a company or partnership of which the individual is an employee, shareholder or partner. (j) "DISABILITY" means the Participant's total and permanent disability. The Participant shall be considered to be totally and permanently disabled hereunder if for reasons involving mental or physical illness or physical injury, the Participant is unable to, or fails to, perform his duties hereunder for a period of one hundred eighty (180) consecutive calendar days or for periods aggregating two hundred seventy (270) days or more in any twelve (12) consecutive month period. A physician chosen by the Issuer and reasonably satisfactory to the Participant (or his legal representative) shall make the Disability determination. The cost of such examination shall be borne by the Issuer. The Participant shall submit to such examination upon the Issuer's request. Notwithstanding the foregoing, if (or when) the Issuer sponsors a long-term disability plan for its employees, a Participant shall be considered to be totally and permanently disabled hereunder if such Participant is eligible for (and is receiving) benefits under such long-term disability plan. (k) "DISCOUNTED MARKET PRICE" means the Market Price less a discount, which shall not exceed the amount set forth below, subject to a minimum price of CDN $0.10. Closing price discount is (i) twenty-five percent (25%) for a closing price up to CDN $0.50, (ii) twenty percent (20%) for a closing price between CDN $0.51 to $2.00, and (iii) fifteen percent (15%) for a closing price above CDN $2.00. (l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. (m) "FAIR MARKET VALUE" means, as of any given date, the fair market value of Stock on a particular date determined by such methods or procedures as may be established from time to time by the Committee and as determined by the Board in good faith. If at such time the Issuer is listed on the TSX Venture Exchange then the definition of Fair Market Value shall have ascribed to it the meaning of "Discounted Market Price" and "Market Price" as set forth in Sections 3.1(k) and 3.1(r), respectively. If at such time the Issuer is listed on the TSX Exchange then the definition of Fair Market Value shall have ascribed to it the meaning of the volume-weighted average trading price for five (5) days prior to the time of Award. (n) "INCENTIVE STOCK OPTION" means an Option that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto. (o) "INSIDER" if used in relation to an Issuer, means: (a) a director or senior officer of the Issuer, (b) a director or senior officer of a company that is an Insider or subsidiary of the Issuer, (c) a Person that beneficially owns or controls, directly or indirectly, voting shares of Stock carrying more than 10% of the voting rights attached to all outstanding voting shares of Stock of the Issuer, or (d) the Issuer itself if it holds any of its own securities. 6

(p) "INVESTOR RELATIONS ACTIVITIES" means any activities, by or on behalf of an Issuer or shareholder of the Issuer, that promote or reasonably could be expected to promote the purchase or sale of securities of the Issuer, but does include: (i) the dissemination of information provided, or records prepared, in the ordinary course of business of the Issuer (1) to promote the sale of products or services of the Issuer, or (2) to raise public awareness of the Issuer, that cannot reasonably be considered to promote the purchase or sale of securities of the Issuer; (ii) activities or communications necessary to comply with the requirements of (1) applicable securities laws, or (2) TSX Venture Exchange or TSX Exchange requirements or the by-laws, rules or other regulatory instruments of any other self regulatory body or exchange having jurisdiction over the Issuer; (iii) communications by a publisher of, or writer for, a newspaper, magazine or business or financial publication, that is of general and regular paid circulation, districuted only to subscribers to it for vluae or to purchasers of it, if (1) the communication is only through the newspaper, magazine or publication, and (2) the publisher or writer receives no commission or other consideration other than for acting in the capacity of publisher or writer; or (iv) activities or communications that may be otherwise specified by the TSX Exchange, TSX Venture Exchange or other regulator body. (q) "LISTED SHARE" means a share or other security that is listed on the TSX Exchange or TSX Venture Exchange. (r) "MARKET PRICE" subject to the exceptions noted below, means the last closing price of the Issuer's Listed Shares before either the issuance of the news release or the filing of the Price Reservation Form (Form 4N) required to fix the price at which the securities are to be issued or deemed to be issued (the "Notice of the Transaction"). (i) Consolidation Exception. The Market Price is to be adjusted for any share consolidation or split. If the notice of the transaction is within 5 days following a consolidation of the Issuer's share capital, the minimum price per share will be the greater of the Market Price, adjusted for any share consolidation or split, or CDN $0.10; (ii) Material Information Exception. If the Issuer announces Material Information regarding the affairs of the Issuer after providing notice of the transaction and if the Exchange determines that a party to the transaction should reasonably have been aware of that pending Material Information, then the Market Price will be at least equal to the closing price of the Listed Shares on the Trading Day after the day on which that Material Information was announced; (iii) Price Interference Exception. If the Exchange determines that the closing price is not a fair reflection of the market for the Listed Shares and the Listed Shares appear to have been high-closed or low-closed, then the Exchange will determine the Market Price to be used; 7

(iv) Suspension Exception. If the Issuer is suspended from trading or has for any reason not traded for an extended period of time, the Exchange may determine the deemed Market Price to be used; or (v) Minimum Price Exception. The Exchange will not generally permit Listed Shares to be issued from treasury at a price less than CDN $0.10 nor will the Exchange generally permit any securities convertible into Listed Shares to be issued with an effective conversion price of less than CDN $0.10 per Listed Share. (s) "NON-QUALIFIED STOCK OPTION" means an Option that is not intended to be an Incentive Stock Option. (t) "OPTION" means a right granted to a Participant pursuant to Article 7 of the Plan to purchase Stock at a specified price during specified time periods. An Option may be either an Incentive Stock Option or a NonQualified Stock Option. (u) "PARTICIPANT" means a person who, as a member of the Board, employee, officer, or executive of, and consultants or independent contractors providing services to, the Issuer or any Subsidiary, has been granted an Award pursuant to the Plan. (v) "PLAN" means this Gryphon Gold Corporation 2004 Stock Incentive Plan, as it may be amended from time to time. (w) "STOCK" means the common stock of the Issuer and such other securities of the Issuer that may be substituted for Stock pursuant to Article 9. (x) "SUBSIDIARY" means any corporation or other entity of which a majority of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Issuer. (y) "TSX EXCHANGE" means the Toronto Stock Exchange. (z) "TSX VENTURE EXCHANGE" means the TSX Venture Exchange. (aa) "VOLUME WEIGHTED AVERAGE TRADING PRICE" means the volume weighted average trading price of one share of Stock on the TSX, calculated by dividing the total value by the total volume of shares of Stock traded for the relevant period. ARTICLE 4 ADMINISTRATION 4.1 COMMITTEE. The Plan shall be administered by the Board or a committee of the Board. References to the Committee shall refer to the Board if the Board does not appoint a Committee. 4.2 ACTION BY THE COMMITTEE. A majority of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by a majority of the Committee in lieu of a meeting, shall be deemed the acts of the Committee. Each member of the Committee is entitled 8

to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Issuer or any Subsidiary, the Issuer's independent certified public accountants, or any executive compensation consultant or other professional retained by the Issuer to assist in the administration of the Plan. 4.3 AUTHORITY OF COMMITTEE. Subject to any specific designation in the Plan, the Committee has the exclusive power, authority and discretion to: (a) Designate Participants to receive Awards; (b) Determine the type or types of Awards to be granted to each Participant; (c) Determine the number of Awards to be granted and the number of shares of Stock to which an Award will relate; (d) Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, or purchase price, any reload provision, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Committee in its sole discretion determines; (e) Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Stock, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered; (f) Prescribe the form of each Award Agreement, which need not be identical for each Participant; (g) Decide all other matters that must be determined in connection with an Award; (h) Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan; (i) Interpret the terms of, and any matter arising pursuant to, the Plan or any Award Agreement; and (j) Make all other decisions and determinations that may be required pursuant to the Plan or as the Committee deems necessary or advisable to administer the Plan. 4.4 DECISIONS BINDING. The Committee's interpretation of the Plan, any Awards granted pursuant to the Plan, any Award Agreement and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties. 9

ARTICLE 5 SHARES SUBJECT TO THE PLAN 5.1 NUMBER OF SHARES. Subject to adjustment provided in Article 9, the aggregate number of shares of Stock reserved and available for grant pursuant to the Plan shall be three million stock options (3,000,000). 5.2 LAPSED OR ASSUMED AWARDS. To the extent that an Award terminates, expires, or lapses for any reason, any shares of Stock subject to the Award will again be available for the grant of an Award pursuant to the Plan. Additionally, any shares of stock tendered or withheld to satisfy the exercise price or tax withholding obligation pursuant to any Award shall again be available for the grant of an Award pursuant to the Plan. To the extent permitted by applicable law or any exchange rule, shares of Stock issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of combination by the Issuer or any Subsidiary shall not be counted against shares of Stock available for grant pursuant to this Plan. 5.3 STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open market. ARTICLE 6 ELIGIBILITY AND PARTICIPATION 6.1 ELIGIBILITY. (a) GENERAL. Persons eligible to participate in this Plan include all members of the Board, employees, officers, and executives of, and consultants and independent contractors providing services to, the Issuer or a Subsidiary, as determined by the Committee. (b) FOREIGN PARTICIPANTS. In order to assure the viability of Awards granted to Participants employed in or of foreign countries, the Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom. Moreover, the Committee may approve such supplements to, or amendments, restatements, or alternative versions of, the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements, amendments, restatements, or alternative versions shall increase the share limitations contained in Section 5.1 of the Plan. 6.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the Committee may, from time to time, select from among all eligible individuals, those to whom Awards shall be granted and shall determine the nature and amount of each Award. No individual shall have any right to be granted an Award pursuant to this Plan. 10

ARTICLE 7 STOCK OPTIONS 7.1 GENERAL. The Committee is authorized to grant Options to Participants on the following terms and conditions: (a) EXERCISE PRICE. Subject to paragraph 7.2(a) the exercise price per share of Stock pursuant to an Option shall be determined by the Committee and set forth in the Award Agreement provided that if the Stock is listed for trading on the TSX Venture Exchange or the TSX Exchange the exercise price for any Option may not be less than the Fair Market Value as of the date of grant. (b) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the time or times at which an Option may be exercised in whole or in part provided that the term of any Option granted under the Plan shall not exceed ten years. The Committee shall also determine the performance or other conditions, if any, that must be satisfied before all or part of an Option may be exercised. Unless otherwise provided in an Award Agreement, an Option will lapse immediately if a Participant's employment or service is terminated for Cause. (c) PAYMENT. The Committee shall determine the methods by which the exercise price of an Option may be paid, the form of payment, including, without limitation, cash, promissory note, shares of Stock held for longer than six months (through actual tender or by attestation), or other property acceptable to the Committee (including broker-assisted "cashless exercise" arrangements), and the methods by which shares of Stock shall be delivered or deemed to be delivered to Participants. (d) EVIDENCE OF GRANT. All Options shall be evidenced by a written Award Agreement between the Issuer and the Participant. The Award Agreement shall include such additional provisions as may be specified by the Committee. 7.2 INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be granted only to employees and the terms of any Incentive Stock Options granted pursuant to the Plan must comply with the following additional provisions of this Section 7.2: (a) EXERCISE PRICE. The exercise price per share of Stock shall be set by the Committee, provided that the exercise price for any Incentive Stock Option may not be less than the Fair Market Value as of the date of the grant. (b) EXERCISE. In no event may any Incentive Stock Option be exercisable for more than ten years from the date of its grant. (c) LAPSE OF OPTION. An Incentive Stock Option shall lapse pursuant to the following circumstances. (1) The Incentive Stock Option shall lapse ten years from the date it is granted, unless an earlier time is set in the Award Agreement. 11

(2) The Incentive Stock Option shall lapse upon termination of employment for Cause or for any other reason other than the Participant's death or Disability, unless otherwise provided in the Award Agreement. (3) If the Participant terminates employment on account of Disability or death before the Option lapses pursuant to paragraph (1) or (2) above, the Incentive Stock Option shall lapse, unless it is previously exercised, on the earlier of (A) the scheduled termination date of the Option; or (B) 12 months after the date of the Participant's termination of employment on account of Disability or death. Upon the Participant's Disability or death, any Incentive Stock Options exercisable at the Participant's Disability or death may be exercised by the Participant's legal representative or representatives, by the person or persons entitled to do so pursuant to the Participant's last will and testament, or, if the Participant fails to make testamentary disposition of such Incentive Stock Option or dies intestate, by the person or persons entitled to receive the Incentive Stock Option pursuant to the applicable laws of descent and distribution. (d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market Value (determined as of the time an Award is made) of all shares of Stock with respect to which Incentive Stock Options are first exercisable by a Participant in any calendar year may not exceed $100,000.00 or such other limitation as imposed by Section 422(d) of the Code, or any successor provision. To the extent that Incentive Stock Options are first exercisable by a Participant in excess of such limitation, the excess shall be considered Non-Qualified Stock Options. (e) TEN PERCENT OWNERS. An Incentive Stock Option shall be granted to any individual who, at the date of grant, owns stock possessing more than ten percent of the total combined voting power of all classes of Stock of the Issuer only if such Option is granted at a price that is not less than 110% of Fair Market Value on the date of grant and the Option is exercisable for no more than five years from the date of grant. (f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an Incentive Stock Option may be made pursuant to this Plan after the tenth anniversary of the Effective Date. (g) RIGHT TO EXERCISE. During a Participant's lifetime, an Incentive Stock Option may be exercised only by the Participant. ARTICLE 8 PROVISIONS APPLICABLE TO AWARDS 8.1 STAND-ALONE AND TANDEM AWARDS. Awards granted pursuant to the Plan may, in the discretion of the Committee, be granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards. 8.2 EXCHANGE PROVISIONS. The Committee may at any time offer to exchange or buy out any previously granted Award for a payment in cash, Stock, or another 12

Award, based on the terms and conditions the Committee determines and communicates to the Participant at the time the offer is made, provided that the Committee may not reduce the exercise price of any previously-granted Option without shareholder approval. 8.3 TERM OF AWARD. The term of each Award shall be for the period as determined by the Committee, provided that in no event shall the term of any Option exceed a period of ten years from the date of its grant. 8.4 FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and any applicable law or Award Agreement, payments or transfers to be made by the Issuer or a Subsidiary on the grant or exercise of an Award may be made in such forms as the Committee determines at or after the time of grant, including, without limitation, cash, promissory note, Stock held for more than six months, other Awards, or other property (including brokerassisted "cashless exercise" arrangements), or any combination, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case determined in accordance with rules adopted by, and at the discretion of, the Committee. 8.5 LIMITS ON TRANSFER. Limitations and restrictions on transferability of any right or interest of a Participant in any Award are set forth in that certain Investor Rights Agreement, dated as of May 1, 2003, and such limitations and restrictions shall expire on the terms contained therein. Subsequent to the expiration of the Investor Rights Agreement, no right or interest of a Participant in any Award may be pledged, encumbered, or hypothecated to or in favor of any party other than the Issuer or a Subsidiary, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Issuer or a Subsidiary. Except as otherwise provided by the Committee, no Award shall be assigned, transferred, or otherwise disposed of by a Participant other than by will or the laws of descent and distribution. 8.6 BENEFICIARIES. Notwithstanding Section 8.5, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant's death. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If the Participant is married and resides in a community property state, a designation of a person other than the Participant's spouse as his beneficiary with respect to more than 50% of the Participant's interest in the Award shall not be effective without the prior written consent of the Participant's spouse. If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant's will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Committee. 8.7 STOCK CERTIFICATES. Notwithstanding anything herein to the contrary, the Issuer shall not be required to issue or deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award, unless and until the Board has determined, with advice of counsel, that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any 13

exchange on which the shares of Stock are listed or traded. All Stock certificates delivered pursuant to the Plan are subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with Federal, state, or foreign jurisdiction, securities or other laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Stock is listed, quoted, or traded. The Committee may place legends on any Stock certificate to reference restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the Board may require that a Participant make such reasonable covenants, agreements, and representations as the Board, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements. 8.8 ACCELERATION UPON A CHANGE OF CONTROL. Unless otherwise provided in a Participant's Award Agreement, if a Change of Control occurs, the Committee shall have the discretion to cause all outstanding Awards to become fully exercisable and all restrictions on outstanding Awards to lapse. To the extent that this provision causes Incentive Stock Options to exceed the dollar limitation set forth in Section 7.2(d), the excess Options shall be deemed to be Non-Qualified Stock Options. Upon, or in anticipation of, such an event, the Committee may cause every Award outstanding hereunder to terminate at a specific time in the future and shall give each Participant the right to exercise Awards during a period of time as the Committee, in its sole and absolute discretion, shall determine. 8.9 ADDITIONAL TSX VENTURE EXCHANGE TERMS. In the event Issuer becomes listed on the TSX Venture Exchange then the following terms and conditions shall apply to the grant of an Award in addition to those contained herein: (a) No more than five percent (5%) of the issued shares of the Issuer may be reserved in respect of Options and other compensation arrangements granted to any one individual in any twelve (12) month period (unless Issuer is a Tier 1 Issuer, as that term is defined by the TSX Venture Exchange, and has obtained disinterested shareholder approval); (b) No more than ten percent (10%) of the issued shares of the Issuer may be reserved for issuance in respect of Options and other share compensation arrangements of the Issuer granted to Insiders (unless the Issuer has obtained disinterested shareholder approval in accordance with the requirements of the TSX Venture Exchange). (c) Options and rights granted under any other share compensation arrangements of the Issuer representing more than ten (10%) of the issued shares of the Issuer may not be granted to Insiders within a 12 month period (unless the Issuer has obtained disinterested shareholder approval in accordance with the requirements of the TSX Venture Exchange. (d) The exercise price of options granted to Insiders may not be reduced unless the Issuer has obtained disinterested shareholder approval in respect thereof in accordance with the requirements of the TSX Venture Exchange in addition to any other approvals which may be required pursuant to the terms of the Plan. (e) No more than two percent (2%) of the issued shares of the Issuer may be granted to any one Consultant in any twelve (12) month period; 14

(f) No more than an aggregate of two percent (2%) of the issued shares of the Issuer may be granted to an employee conducting Investor Relations Activities in any twelve (12) month period; (g) For Awards granted to employees, Consultants or management level Issuer employees, the Issuer represents that the Participant is a bona fide employee, consultant or management level Issuer employee, as the case may be; (h) Awards to Consultants performing Investor Relations Activities must vest in stages over twelve (12) months with no more than twenty-five percent (25%) of the options vesting in any three (3) month period; and (i) In addition to the general requirements listed above, the following terms and conditions apply to Awards by the Issuer as a Tier 2 Issuer, as that term is defined by the TSX Venture Exchange: (1) Awards to a Participant who is a director, employee, Consultant or management level Issuer employee must expire within ninety (90) days after the Participant ceases to be in at least one of those categories; and (2) Awards to a Participant who is engaged in Investor Relations Activities must expire within thirty (30) days after the Participant ceases to be employed to provide Investor Relations Activities. 8.10 ADDITIONAL TSX EXCHANGE TERMS. In the event the Issuer becomes listed on the TSX Exchange then the following terms and conditions shall apply to an Award in addition to those contained herein, as applicable: a. Awards are non-assignable; b. The exercise price must not be lower than the market price (without discount) of the shares on the TSX Exchange at the time of Award; and c. The number of shares reserved for issuance to any one person pursuant to. The number of shares of the Issuer issued to Insiders during any twelve month period pursuant to Options or other rights granted under share compensation arrangements of the Issuer may not exceed ten percent (10%) of the issued shares of Stock of the Issuer (unless the Issuer has obtained disinterested shareholder approval in accordance with the requirements of the TSX). d. No more than ten percent (10%) of the issued shares of Stock of the Issuer may be reserved for issuance in respect of Options and other share compensation arrangements of the Issuer granted to Insiders (unless the Issuer has obtained disinterested shareholder approval in accordance with the requirements of the TSX) options must not exceed 5% of the outstanding issue. 15

ARTICLE 9 CHANGES IN CAPITAL STRUCTURE 9.1 SHARES AVAILABLE FOR GRANT. In the event of any change in the number of shares of Stock outstanding by reason of any stock dividend or split, recapitalization, merger, consolidation, combination or exchange of shares or similar corporate change, the maximum aggregate number of shares of Stock with respect to which the Committee may grant Awards, the number of shares of Stock subject to any Award, and any numeric limitation expressed in the Plan shall be appropriately adjusted by the Committee. 9.2 OUTSTANDING AWARDS - INCREASE OR DECREASE IN ISSUED SHARES WITHOUT CONSIDERATION. Subject to any required action by the stockholders of the Issuer, in the event of any increase or decrease in the number of issued shares of Stock resulting from a subdivision or consolidation of shares of Stock or the payment of a stock dividend (but only on the shares of Stock), or any other increase or decrease in the number of such shares effected without receipt or payment of consideration by the Issuer, the Committee shall proportionally adjust the number of shares of Stock subject to each outstanding Award and the exercise price per share of Stock of each such Award. 9.3 OUTSTANDING AWARDS - CERTAIN MERGERS. Subject to any required action by the stockholders of the Issuer, in the event that the Issuer shall be the surviving corporation in any merger or consolidation (except a merger or consolidation as a result of which the holders of shares of Stock receive securities of another corporation), each Award outstanding on the date of such merger or consolidation shall pertain to and apply to the securities that a holder of the number of shares of Stock subject to such Award would have received in such merger or consolidation. 9.4 OUTSTANDING AWARDS - OTHER CHANGES. In the event of any other change in the capitalization of the Issuer or corporate change other than those specifically referred to in Article 11, the Committee may, in its absolute discretion, make such adjustments in the number and class of shares subject to Awards outstanding on the date on which such change occurs and in the per share exercise price of each Award as the Committee may consider appropriate to prevent dilution or enlargement of rights. 9.5 NO OTHER RIGHTS. Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger, or consolidation of the Issuer or any other corporation. Except as expressly provided in the Plan, no issuance by the Issuer of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject to an Award or the exercise price of any Award. 16

ARTICLE 10 AMENDMENT, MODIFICATION, AND TERMINATION 10.1 AMENDMENT, MODIFICATION, AND TERMINATION. With the approval of the Board, at any time and from time to time, the Committee may terminate, amend or modify the Plan; provided, however, that to the extent necessary and desirable to comply with any applicable law, regulation, or stock exchange rule, the Issuer shall obtain stockholder approval of any Plan amendment in such a manner and to such a degree as required. 10.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted pursuant to the Plan without the prior written consent of the Participant. ARTICLE 11 GENERAL PROVISIONS 11.1 NO RIGHTS TO AWARDS. No Participant, employee, or other person shall have any claim to be granted any Award pursuant to the Plan, and neither the Issuer nor the Committee is obligated to treat Participants, employees, and other persons uniformly. 11.2 NO STOCKHOLDERS RIGHTS. No Award gives the Participant any of the rights of a stockholder of the Issuer unless and until shares of Stock are in fact issued to such person in connection with such Award. 11.3 WITHHOLDING. The Issuer or any Subsidiary shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Issuer, an amount sufficient to satisfy foreign, Federal, state, and local taxes (including the Participant's FICA obligation) required by law to be withheld with respect to any taxable event concerning a Participant arising as a result of this Plan. With the Committee's consent, a Participant may elect to (a) have the Issuer withhold from those shares of Stock that would otherwise be received upon the exercise of any Option, a number of shares having a Fair Market Value equal to the minimum statutory amount necessary to satisfy the Issuer's applicable federal, state, local or foreign income and employment tax withholding obligations with respect to such Participant, or (b) tender previously-owned shares of Stock held by the Participant for six months or longer to satisfy the Issuer's applicable federal, state, local, or foreign income and employment tax withholding obligations with respect to the Participant. 11.4 NO RIGHT TO EMPLOYMENT OR SERVICES. Nothing in the Plan or any Award Agreement shall interfere with or limit in any way the right of the Issuer or any Subsidiary to terminate any Participant's employment or services at any time, nor confer upon any Participant any right to continue in the employ or service of the Issuer or any Subsidiary. 11.5 UNFUNDED STATUS OF AWARDS. The Plan is intended to be an "unfunded" plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Issuer or any Subsidiary. 17

11.6 INDEMNIFICATION. To the extent allowable pursuant to applicable law, each member of the Committee or of the Board shall be indemnified and held harmless by the Issuer from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her provided he or she gives the Issuer an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Issuer's Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Issuer may have to indemnify them or hold them harmless. 11.7 RELATIONSHIP TO OTHER BENEFITS. No payment pursuant to the Plan shall be taken into account in determining any benefits pursuant to any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Issuer or any Subsidiary. 11.8 EXPENSES. The expenses of administering the Plan shall be borne by the Issuer and its Subsidiaries. 11.9 TITLES AND HEADINGS. The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. 11.10 FRACTIONAL SHARES. No fractional shares of Stock shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional shares or whether such fractional shares shall be eliminated by rounding up or down as appropriate. 11.11 SECURITIES LAW COMPLIANCE. With respect to any person who is, on the relevant date, obligated to file reports pursuant to Section 16 of the Exchange Act, transactions pursuant to this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors pursuant to the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be void to the extent permitted by law and voidable as deemed advisable by the Committee. 11.12 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Issuer to make payment of awards in Stock or otherwise shall be subject to all applicable laws, rules, and regulations, and to such approvals by government agencies as may be required. The Issuer shall be under no obligation to register pursuant to the Securities Act of 1933, as amended, any of the shares of Stock paid pursuant to the Plan. If the shares paid pursuant to the Plan may in certain circumstances be exempt from registration pursuant to the Securities Act of 1933, as amended, the Issuer may restrict the transfer of such shares in such manner as it deems advisable to ensure the availability of any such exemption. 18

11.13 GOVERNING LAW. To the extent not preempted by Federal law, the TSX Exchange, the TSX Venture Exchange (if applicable), the Plan and all Award Agreements shall be governed in all respects, whether as to validity, construction, capacity, performance, or otherwise, by the laws of the State of Nevada, without giving effect to choice of law rules. 19

EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the reference to our firm under the caption "Experts" and to the use of our report dated June 29, 2005 (except as to note 11 which is as of August 17, 2005) in the Registration Statement and related Prospectus of Gryphon Gold Corporation dated August 17, 2005 for the registration of Units, each consisting of one Common Share and one-half of one non-transferable Class A Warrant.
/s/ Ernst & Young LLP Vancouver, Canada August 17, 2005

Exhibit 23.3 [ORE LOGO] Ore Reserves Engineering Alan C. Noble, P.E. Principal Engineer Consent of Expert To: Gryphon Gold Corporation I, Alan C. Noble, do hereby consent to the filing of the written disclosure of the technical report titled Technical Report on the Mineral Resources of the Borealis Gold Project located in Mineral County Nevada and dated May 23, 2005 (the "Technical Report") and any extracts from or a summary of the Technical Report in the Registration Statement on Form SB-2 dated August 17, 2005 (the "Registration") of Gryphon Gold Corporation, and to the filing of the Technical Report with United States Securities and Exchange Commission. I also consent to the use of my name in the Registration Statement. Dated this 16th day of August, 2005.
/s/Alan C. Noble -----------------------------------Alan C. Noble

303-237-8271 (Office) 12254 Applewood Knolls Drive 303-237-4533 (FAX) Lakewood, Colorado 80215 303-238-2821 (Res.)

EXHIBIT 23.4 CONSENT OF EXPERT To: Gryphon Gold Corporation I, Qingping Deng, do hereby consent to the filing of the written disclosure of the technical report titled Preliminary Scoping Study of Project Development for the Borealis Gold Project, Nevada, USA dated June 7, 2004 (the "Technical Report") and any extracts from or a summary of the Technical Report in the Registration Statement on Form SB-2 dated August 17, 2005 (the "Registration") of Gryphon Gold Corporation, and to the filing of the Technical Report with United States Securities and Exchange Commission. I also consent to the use of my name in the Registration Statement. Dated this 16th day of August, 2005.
/s/ Qingping Deng ---------------------------------Qingping Deng

EXHIBIT 99.1 GRYPHON GOLD CORPORATION CANADIAN NI 43-101 TECHNICAL REPORT ON THE MINERAL RESOURCES OF THE BOREALIS GOLD PROJECT LOCATED IN MINERAL COUNTY, NEVADA, USA LATITUDE 38 DEGREES 23' NORTH LONGITUDE 118 DEGREES 46' WEST MAY 23, 2005 PREPARED BY ALAN C. NOBLE, P.E. ORE RESERVES ENGINEERING LAKEWOOD, COLORADO 303-237-8271 IN ASSOCIATION WITH KNIGHT PIESOLD AND CO. CONSULTING GEOTECHNICAL AND ENVIRONMENTAL ENGINEERS DENVER, COLORADO 303-629-8788 SAMUEL ENGINEERING, INC CONSULTING PROCESS ENGINEERS ENGLEWOOD, COLORADO 303-714-4841 AND ROGER C. STEININGER, PHD, CPG CONSULTING CHIEF GEOLOGIST GRYPHON GOLD CORPORATION RENO, NEVADA 775-742-6333 (ORE LOGO) ORE RESERVES ENGINEERING May 23, 2005

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TABLE OF CONTENTS
PAGE ---1 1 2 2 3 3 3 4 5 8 8 9 10 11 13 14 14 14 15 15 15 16 18 18 18 18 20 20 21 22 24 24 25 25 26 28 29 31 31 32 33 33 33 36 36 38 38 38 38 39 39 40

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EXECUTIVE SUMMARY................................................. 1.1 Principal Contributors to this Technical Report............ 1.2 Location................................................... 1.3 Ownership.................................................. 1.4 Access and Infrastructure.................................. 1.5 History.................................................... 1.6 Geology and Mineralization................................. 1.7 Drill-hole Database........................................ 1.8 Mineral Resources.......................................... 1.9 Other Important Considerations............................. 1.9.1 Permit Acquisition and Fundamental Environmental Permitting Considerations.......... 1.9.2 Historical Mining and Metallurgical Operations... 1.10 Conclusions and Recommendations............................ INTRODUCTION AND TERMS OF REFERENCE............................... DISCLAIMER........................................................ PROPERTY DESCRIPTION AND LOCATION................................. 4.1 Location................................................... 4.2 Study Area Boundaries...................................... 4.3 Property Description and Ownership......................... 4.3.1 General Property Description..................... 4.3.2 Ownership, Purchase Agreement, and Mining Lease.. 4.3.3 Royalty.......................................... ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY................................................... 5.1 Access..................................................... 5.2 Climate and Physiography................................... 5.3 Existing Site Conditions, Infrastructure and Available Services......................................... HISTORY........................................................... 6.1 History of the District.................................... 6.2 Past Production............................................ 6.3 Previous Mineral Resource Estimates........................ 6.3.1 In-Situ Mineral Resources at Jamies Ridge, Cerro Duro, and Purdy Peak....................... 6.3.3 In-Situ Mineral Resources at Boundary Ridge...... GEOLOGIC SETTING.................................................. 7.1 Regional Geology........................................... 7.2 Local Geology.............................................. 7.2.1 Miocene and Younger Igneous and Sedimentary Rocks................................ 7.2.2 Structure........................................ DEPOSIT TYPE...................................................... 8.1 Hydrothermal Gold Deposits................................. 8.2 Gold in Alluvium........................................... MINERALIZATION.................................................... 9.1 Oxide Gold Mineralization.................................. 9.2 Sulfide Gold Mineralization................................ EXPLORATION....................................................... 10.1 Geophysics................................................. 10.2 Expansion of Known Mineral resource Areas.................. 10.2.1 East Ridge / Gold View........................... 10.2.2 Northeast Ridge.................................. 10.2.3 Freedom Flats.................................... 10.2.4 Borealis Near-surface Expansion.................. 10.2.5 Other Known Mineral resource Areas............... 10.3 Borealis Extension.........................................

(ORE LOGO) ORE RESERVES ENGINEERING page i May 23, 2005

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10.4 Graben Deposit............................................. 10.5 North Graben Target........................................ 10.6 Sunset Wash Target......................................... 10.7 Lucky Boy Target........................................... DRILLING.......................................................... 11.1 Drilling of Existing Heaps and Dumps--Spring 2004.......... 11.2 Drill-hole Database........................................ SAMPLING METHOD AND APPROACH...................................... 12.1 General.................................................... 12.2 Freedom Flats Example...................................... 12.3 Sampling of Existing Heaps and Dumps--Spring 2004.......... 12.4 Drill-hole Database for Resource Model..................... SAMPLE PREPARATION, ANALYSIS AND SECURITY......................... 13.1 Previous Mining Operations and Exploration................. 13.1.1 Analyses and Quality Control..................... 13.1.2 Security......................................... 13.2 Heap and Dump Drilling and Sampling Program--Spring 2004... 13.2.1 Sampling, Analysis and Quality Control........... 13.2.2 Security......................................... DATA VERIFICATION................................................. 14.1 Historical Drill Hole Data................................. 14.2 Semi-Quantitative Check Sampling........................... ADJACENT PROPERTIES............................................... MINERAL PROCESSING AND METALLURGICAL TESTING...................... 16.1 Historical Operations Since 1980........................... 16.2 Summary of Past Metallurgical Testing...................... 16.3 Metallurgical Testing of Existing Heaps and Dumps--2004.... 16.3.1 Heap 1 Test Results.............................. 16.3.2 Heap 3 Test Results.............................. 16.3.3 Borealis Dump Test Results....................... 16.3.4 Screen Analysis.................................. 16.4 Bulk Density and Tonnage Factor............................ 16.5 Heap Leach Processing Alternatives......................... 16.5.1 Heap Leach + Gravity............................. 16.5.2 Heap Leach + Gravity (Screen-out Low grade)...... MINERAL RESOURCE ESTIMATE......................................... 17.1 General Statement.......................................... 17.2 Mineral Resource Model..................................... 17.2.1 Resource Block Model Size and Location........... 17.2.2 Drill-Hole Data.................................. 17.2.3 Compositing...................................... 17.2.4 Topographic Data and Models...................... 17.2.5 Geologic Model for the Thickness of the QAL and TCV Formations............................... 17.2.6 Model of the Depth of Oxidation and Partial Oxidation........................................ 17.2.7 Grade Zone Models and Basic Statistics........... 17.2.8 Variograms....................................... 17.2.9 Grade Estimation................................. 17.2.10 Comparison of Mineral Resource Estimates to Previous Production.............................. 17.2.11 Mineral Resource Classification.................. 17.2.12 Summary of Model Results......................... 17.3 Mineral Resources from Existing Heaps and Stockpiles....... 17.3.1 Existing Heap and Dump Resource Estimate......... 17.3.2 Resource Classification in the Existing Heaps and Dumps........................................ OTHER RELEVANT DATA AND INFORMATION............................... 18.1 Permit Acquisition and Fundamental Environmental Permitting Considerations.................................. 18.1.1 Permitting Process Overview...................... 18.1.1.1 Environmental Inventories...............

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(ORE LOGO) ORE RESERVES ENGINEERING page ii May 23, 2005

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18.1.1.2 Permitting Requirements................. 18.2 Other Information.......................................... INTERPRETATION AND CONCLUSIONS.................................... 19.1 Geology.................................................... 19.2 Geophysics................................................. 19.3 Gold Deposits.............................................. 19.4 Mineral Resources.......................................... 19.5 Mining..................................................... 19.6 District Exploration....................................... RECOMMENDATIONS................................................... REFERENCES........................................................ DATE.............................................................. CERTIFICATE OF AUTHOR............................................. ILLUSTRATIONS.....................................................

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APPENDIX A: PHASE 1 DRILLING-SAMPLING-TESTING PROGRAM DATA SUMMARY APPENDIX B: MINERAL RESOURCE MODEL DETAILED STATISTICS AND GEOSTATISTICS (ORE LOGO) ORE RESERVES ENGINEERING page iii May 23, 2005

LIST OF FIGURES AND PLATES
PAGE ---2 11 14 19 26 27 29 35 37 38 40 42 43 53 61 63 64 70 71 72 81 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126

Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure

1.1 2.1 4.1 5.1 7.1 7.2 7.3 9.1 10.1 10.2 10.3 10.4 10.5 15.1

Figure 17.1 Figure 17.2 Figure 17.3 Figure 17.4 Figure 17.5 Figure 17.6 Figure 17.7 Plate Plate Plate Plate Plate Plate Plate Plate Plate Plate Plate 1 2 3 4 5 6 7 8 9 10 11

Plate 12 Plate 13 Plate 14 Plate 15 Plate 16

Location map of the Borealis project................................. Mineral deposits and prospects of the Borealis property.............. Location map of the Borealis project................................. Photograph of Borealis district. View to the east, with Freedom Flats pit in the foreground.......................................... Walker Lane gold deposits............................................ Geologic map of the Borealis project area............................ Stratigraphic section in the Borealis District....................... Typical alteration patterns within and around the Borealis district gold deposits........................................................ 1989 Echo Bay aeromagnetic survey.................................... Selected resistivity anomalies of the Borealis district.............. Schematic cross-section of the Borealis Extension deposit area....... Schematic cross-section of the Graben deposit area................... North Graben target exploration model................................ Location of Borealis property and other important nearby gold mining properties in the Walker Lane and the Aurora-Borealis cross trend.... Map showing the northeast and southwest model boundaries with deposit areas and grade thickness............................................ Drill-hole collar locations in the southwest model................... Drill-hole collar locations in the northeast model................... Examples of the grade zones on four benches of the Graben and Freedom Flats deposits....................................................... Cumulative frequency plots and histograms for the grade zones in the Graben deposit....................................................... Cumulative frequency plots and histograms for the grade zones in the Freedom Flats deposit................................................ Example of the relationship between drill hole spacing and kriging variance (East Ridge, 7380-bench).................................... Proposed project layout.............................................. Borealis property claim map.......................................... Process flow sheet alternative A..................................... Process flowsheet alternative B...................................... Contour plot on bench midlines original topography southwest model... Contour plot on bench midlines mined topography southwest model...... Contour plot on bench midlines Current topography southwest model.... Contour plot on bench midlines original topography northeast model... Contour plot on bench midlines mined topography northeast model...... Contour plot on bench midlines current topography northeast model.... Contour plot on bench midlines thickness of QAL unit southwest model................................................................ Contour plot on bench midlines thickness of QAL + TCV southwest model................................................................ Contour plot on bench midlines thickness of oxidized material southwest model...................................................... Contour plot on bench midlines thickness of partially oxidized material southwest model............................................. Contour plot on bench midlines depth of oxidation northeast model.... Contour plot on bench midlines depth of partial oxidation northeast model................................................................

(ORE LOGO) ORE RESERVES ENGINEERING page iv May 23, 2005

LIST OF TABLES
PAGE ---6 7 8 8 21 23 24 25 40 49 50 50 51 52 56 57 60 62 66 67 69 74 75 77 78 79 80

Table 1.1 Table 1.2 Table 1.3 Table Table Table Table 1.4 6.1 6.2 6.3

Table 6.4 Table 10.1 Table 13.1 Table 13.2 Table 13.3 Table Table Table Table 13.4 14.1 16.1 16.2

Table 17.1 Table 17.2 Table 17.3 Table 17.4 Table 17.5 Table 17.6 Table 17.7 Table 17.8 Table 17.9 Table 17.10 Table 17.11 Table 17.12

Table 17.13 Table 17.14

Table 17.15

Table 17.16 Table 17.17 Table 17.18 Table 17.19 Table 17.20 Table 17.21 Table 17.22

Summary of Measured Plus Indicated Mineral Resources................. Summary of Inferred Mineral Resource................................. Summary of Measured Plus Indicated Resource in Existing Heaps and Dumps................................................................ Summary of Inferred Mineral Resources in Existing Heaps and Dumps.... Reported past Borealis production, 1981-1990......................... Comparison of historical post-mining resource estimates.............. Historical Mineral Resource Estimate of the Jamies Ridge, Cerro Duro, and Purdy Peak Deposits (Golden Phoenix Minerals Inc., 2000)......... Historical Mineral Resource Estimate of the Boundary Ridge Zone (Whitney and Whitney, 1999).......................................... Significant gold intercepts in the Bullion Ridge resource area....... Analytical results of bulk sample from road cut mid-way between top and bottom of Heap 2................................................. Summary of analytical results from standard used in quality control program, accepted value 0.019 opt Au................................. Summary of assay analyses for the same sample by American Assay Lab. And ALS Chemex....................................................... Comparison of Heap 1 assay results with previous sampling program.... Results of selective check sampling.................................. Alteration and grade for bulk density samples........................ Bulk densities for Borealis, East Ridge, and Northeast Ridge deposits............................................................. Block model dimensions and location parameters....................... Summary of drill-hole sample statistics for drill-holes intersecting the mineralized zones................................................ Geologic formation model............................................. Geologic oxidation state model....................................... Summary of Nearest-Neighbor gold grade basic statistics by grade zone................................................................. Variogram summary.................................................... Composite selection parameters and capping parameters by deposit and grade zone........................................................... Search and weighting parameters for inverse distance estimation...... Comparison of inverse distance and nearest neighbor estimates by deposit and grade zone............................................... Comparison of mined-out portions of resource model reported to production........................................................... Summary of extrapolation limits and minimum grid for each deposit.... Borealis Project April 2005 mineral resource estimate summary of measured and indicated mineral resource - combined oxide and sulfides............................................................. Borealis Project April 2005 mineral resource estimate summary of measured and indicated mineral resource - oxidized material.......... Borealis Project April 2005 mineral resource estimate summary of measured and indicated mineral resource - partially oxidized material............................................................. Borealis Project April 2005 mineral resource estimate summary of measured and indicated mineral resource - predominantly sulfide material............................................................. Borealis Project April 2005 mineral resource estimate summary of Inferred mineral resource - combined oxide and sulfide material...... Borealis Project April 2005 mineral resource estimate summary of Inferred mineral resource - oxidized material........................ Borealis Project April 2005 mineral resource estimate summary of Inferred mineral resource - partially oxidized material.............. Borealis Project April 2005 mineral resource estimate summary of Inferred mineral resource - predominantly sulfide material........... Heap name correlation chart.......................................... Summary of Measured and Indicated Resources in heaps and dumps....... Summary of inferred mineral resources in heaps and dumps.............

82 83

84

85 86 86 86 87 87 88 89

(ORE LOGO) ORE RESERVES ENGINEERING page v May 23, 2005

1.0 EXECUTIVE SUMMARY Gryphon Gold Corporation is progressing with technical work at its 100%-owned Borealis Gold property in Mineral County Nevada in anticipation of a mine start-up in 2006. The Company is focused on engineering, permit acquisition, expansion of the land position, environmental reviews and infill drilling to enhance the resource categorization. Current engineering, results from permit negotiations, and updated mineral resource estimates will serve as the basis for a final/bankable feasibility study that is scheduled to be completed before the end of 2005. The purpose of this report is to update the resource model based on an enhanced geologic interpretation derived from additional data acquired and analyzed during 2004 by Company geologists and engineers; and to report on technical activities to date. The newly developed and updated resource model lies within the study area, which falls within the core area disturbed by previous mining activities; and where operating permit acquisition and other development and field activities are currently taking place. The deposits within the boundaries of the study area are the principal focus of this report. Other known deposits are located outside the limits of the study area, where phased development and permitting activities have not yet started. As an important part of this on-going work, a new resource model for several deposits within the limits of the study area was developed and is compliant with NI 43-101 standards. These gold deposits include the West Alluvial Deposit, Borealis, Crocodile Ridge, Deep Ore Flats (also known as Polaris), East Ridge, Freedom Flats, Gold View, Graben, Middle Ridge, and Northeast Ridge. An updated resource estimate was also completed which includes material containing gold in the heaps and dumps which are located within the boundaries of the study area. Known gold deposits outside the boundaries of the study area with historical resource estimates include Cerro Duro, Jaimes Ridge, Purdy Peak, and Boundary Ridge Zone. The outlying deposits listed are all located on mining claims now controlled (100%) by Gryphon Gold. The historical estimates are based on calculations which were completed prior to the promulgation of the guidelines of NI 43-101; and have not been reviewed and verified by this study and should not be relied upon. These estimates are discussed further in Section 6.3 Previous Mineral Resource Estimates. The total measured plus indicated resource including insitu and previously mined material in heaps and dumps, effective as of the date of this report, within the boundaries of the study area is 44.7 million tons with an average grade of 0.028opt, containing about 1.25 million ounces of gold. There is also an estimated inferred resource in the study area of 34.4 million tons with an average grade of 0.021opt, containing about 0.73 million ounces of gold.(1) Historical mineral resource estimates for known gold deposits outside the study area, on lands controlled by Gryphon Gold indicate an additional total of 5.2 million tons with an average grade of 0.027opt, containing about 0.14 million ounces of gold.(2) 1.1 PRINCIPAL CONTRIBUTORS TO THIS TECHNICAL REPORT Alan C. Noble, P.E., a Qualified Person for the purpose of Canadian NI 43-101, Standards of Disclosure for Mineral Projects, Principal Engineer of Ore Reserves Engineering, of Lakewood, Colorado has been engaged by Gryphon Gold Corporation to complete the required resource modeling and perform as the principal author this technical report. Input from additional sources including Knight Piesold and Company regarding environmental, permitting, and metallurgical issues; Samuel Engineering Inc, in regard to preliminary process design and flowsheet development; and Roger Steininger Ph. D., C.P.G., Consulting Chief Geologist in regard to geology, sampling, exploration and mineral resource estimates; have all been included in this report. (1) Cutoff assumptions are detailed in the body of the report, and range from 0.005 opt to 0.010 opt depending on the specific physical characteristics of each deposit. The results shown above are partially diluted mineral resources with allowance made for surface mining with conventional equipment on a 20 ft mining bench (dilution for underground mining if warranted, may be more or less than these estimates); metallurgical recoveries have not been applied. (2) Same qualifying note as above.

(ORE LOGO) ORE RESERVES ENGINEERING page 1 May 23, 2005

1.2 LOCATION The Borealis gold property is located in western Nevada, approximately 12 miles southwest of the town of Hawthorne in the Walker Lane mineral belt and 12 miles northeast of the California border. Hawthorne is 133 highway miles southeast of Reno and 314 highway miles northwest of Las Vegas. (MAP-GRAPHIC OMITTED) (Gryphon Gold 2005) FIGURE 1.1 LOCATION MAP OF THE BOREALIS PROJECT. The project area is located in:
T6N, T7N, T6N, T7N, R28E R28E R29E R29E Sections Sections Sections Sections 1-4, 11, and 12 25 - 27 and 33 - 36 2-24, and 27 - 29 30-32

Mount Diablo Meridian, Mineral County Nevada. The approximate center of the principal study area is at longitude 118 degrees 45' 34" North and latitude 38 degrees 22' 55" West. 1.3 OWNERSHIP As of the date of this report, the Borealis gold property consists of 748 contiguous unpatented lode mining claims of approximately 20 acres each for a total of about 14,960 acres plus one millsite claim. The Borealis property is controlled by Gryphon Gold Corporation, through its wholly owned subsidiary, Borealis Mining Company. Gryphon Gold has located 624 claims in addition to the 122 claims in the heart of the property which are owned by the Borealis Partnership (comprised of underlying property owners Richard Cavell, John Whitney, and Hardrock Mining Company). On January 31, 2005, through a Purchase Agreement, Borealis Mining Company acquired a 100% lease hold interest in the core claims previously held by Golden Phoenix Minerals. Inc., and eliminated all earn-in requirements in a previous joint venture between Borealis Mining Company and Golden Phoenix Minerals, Inc. A portion of the claims controlling the Borealis gold mineral resource are subject to a siding scale NSR royalty paid to the Borealis Partnership. The royalty is based on the price of gold, with the NSR equal to the price of gold (ORE LOGO) ORE RESERVES ENGINEERING page 2 May 23, 2005

divided by 100 expressed as a percentage. Monthly payments in 2005 of $8,614.00 are made to the underlying property owners prior to the time when gold is being produced and the NSR is applicable. 1.4 ACCESS AND INFRASTRUCTURE Access to the property is gained from the Lucky Boy Pass gravel road located about 2 miles south of Hawthorne from State Highway 359. The Borealis project site had been reclaimed to early 1990's standards. No buildings or power lines remain on the surface although a major electrical trunk line exists about 2 miles from the property. The nearest available services for both mine development and mine operations are in the small town of Hawthorne, located about 16 road miles to the northeast of the project area via a wide, well-maintained gravel road. Hawthorne has substantial housing, adequate fuel supplies and a sufficient infrastructure available to take care of basic needs. For other goods and services, sources in Reno could supply any material required for the development project or mine operations. 1.5 HISTORY The original Ramona district, now known as the Borealis Mining District, produced less than 1,000 ounces of gold prior to 1981. In 1978 the Borealis gold resource was discovered by Houston International Minerals Company. Successive owners, including Tenneco Minerals and Echo Bay Mines Ltd., operated the property until it closed in late 1990. Total of past production from the Borealis project by surface mining was approximately 10.7 million tons of ore averaging 0.059 ounces per ton (opt Au) gold. In 1992 Santa Fe Pacific Mining, Inc. entered into a joint venture with Echo Bay Mines Ltd to explore for highgrade gold sulfide ores. Their work included data compilation and reverse circulation and core drilling of 32 deep holes. Santa Fe had success in identifying new sulfide-zone gold mineralization, but terminated the joint venture because of budget constraints. Echo Bay terminated its lease agreement with the Borealis Partnership in 1996, two years after completion of reclamation. In late 1996, J. D. Welsh & Associates, Inc. leased the property from the Borealis Partnership. J. D. Welsh had previously performed contract reclamation work for Echo Bay and was responsible for monitoring the drain down of the leach heaps. During this time, he had recognized the excellent remaining gold potential, and upon signing the lease, immediately joint ventured the project with Cambior Exploration (USA), Inc. Cambior performed a major compilation program and in 1998 followed up by drilling 10 holes with some success in extending the Graben deposit (5 holes) and in identifying new sulfide-zone gold mineralization (5 holes). They terminated the joint venture in late 1998 because of severe budget constraints within Cambior. During the Cambior joint venture period, Golden Phoenix Minerals, Inc. agreed to buy Welsh's lease rights for cash and stock. In 2000, Golden Phoenix completed the 100 percent purchase of the lease rights and assumed full control of the property. During the purchase period, Golden Phoenix researched the records, updated the drill-hole digital database, and calculated a new mineral resource estimate. In 2003, Golden Phoenix entered into a joint venture to develop the Borealis property with Borealis Mining Company, a wholly owned subsidiary of Gryphon Gold Corporation. In January 2005, Borealis Mining Company acquired Golden Phoenix's residual interest to control 100% of the property. 1.6 GEOLOGY AND MINERALIZATION Gold mineralization at Borealis is hosted by Miocene andesite flows, laharic breccias, and volcaniclastic tuffs, which generally strike northeasterly and dip shallowly to the northwest. Underlying the Tertiary volcanics, and locally in fault contact, is Cretaceous granodiorite with inclusions of older metamorphic rocks. Pediment gravels (Quaternary alluvium or "QAL") and older alluvium (the Tertiary Coal Valley formation or "TCV") cover the (ORE LOGO) ORE RESERVES ENGINEERING page 3 May 23, 2005

altered-mineralized volcanic rocks at lower elevations along the mountain front and overlie some of the best exploration targets. Structures are dominantly northeast-striking faults with steep northwest dips, and generally west-northwest striking faults with steep southerly dips. Both of these fault systems lie on regional trends of known mineralized systems; thus Borealis appears to be at a major intersection of mineralized trends. An exception to this is the north-northeast striking structure controlling mineralization in the Graben zone. A number of pre-mineral faults in the district may have been conduits for hydrothermal mineralization, which followed fault planes or formed pods or pipe-like zones. Emplacement mechanisms of the gold mineralization included explosive brecciation followed by pervasive silification and sulfide/precious metal introduction. It is likely that the high-grade deposits may have been initially localized along the intersections of small second order faults with the major feeder structures. All of the deposits have exceptional continuity along strike. The pipe-like Freedom Flats deposit, and other deposit configurations, probably formed through this mechanism. At Freedom Flats for example, the low grade portion of the deposit is lenticular in plan and an elongated and continuous zone of mineralization down-dip. Within the low-grade shell is a more pipe-like zone of high-grade mineralization that has an approximate oval shape in plan and a long vertical axis. The surface "footprint" of the high-grade zones is rather small (as shown at Freedom Flats) and they can be easily missed with patterns of widely spaced drill holes. Once a higher-grade deposit is suspected, fences of drill holes with 50-ft spacing may have to be used, and especially angle-hole drilling. Most deposits mined in the district, including the Borealis, have a generally flatter tabular shape, and they may have formed parallel to, and within, permeable portions of gently dipping volcanic flows or lahars, and along contact zones between lithologies. Beneath the Borealis pit, additional flat-lying gold zones of the Borealis Extension and another deeper zone are found. Steeply dipping high-grade feeder structures have been identified within many of these deposits and extend below the limit of drilling. Alteration and mineralization most closely associated with ore-grade material are vuggy silica and pyrite, often in breccia. Outward from the central vuggy silica zone is kaolinite-quartz-pyrite, followed by kaolinite-pyrite, and a broad propylitic halo. Advanced argillic alteration with alunite may have overprinted kaolinite-bearing zones. During its emplacement, finely disseminated gold found in the Borealis mineralizing system was enclosed in pyrite and through natural oxidation, this gold was released in oxidized portions of the deposit and made available to extraction by cyanidation. Limited evidence suggests coarse gold exists. Gold still bound in pyrite or pyrite-silica is not easily recovered by a simple cyanide heap leach operation. 1.7 DRILL-HOLE DATABASE The drill-hole database used for the main Borealis project study area contains 1,747 drill holes with a total drilled length of 510,712 ft (Table 17.2), including 1,626 which intersected gold mineralization. These holes were drilled by different operators on the property. Drill-hole types include diamond core holes, reverse circulation (RC) holes and rotary holes. Only a few core holes have down-hole survey information. Mineralized zones covered by these drill holes include the Freedom Flats, Graben, Borealis, Polaris, East Ridge and Northeast Ridge. Except for Graben all have been partially mined by previous operators of the project; the Borealis and Deep Ore Flats (also known as Polaris) pits have been back-filled with waste from the Freedom Flats pit. There are an additional 487 drill holes with a total drilled length of 103,562 ft scattered throughout the property, but with most in the Cerro Duro, Jaimes Ridge, and Purdy Peak area, approximately three miles distance westnorthwest of the current in-situ mineral resource modeling area, but these three have not been included in this resource study. The total existing drilling for the entire Borealis project, therefore, is 2,234 holes with a total drilled length of 614,274 ft. Drill-hole sampling length is generally 5 ft for the RC holes, but it varies for the core holes based on geological intervals. Sampling length is up to 25 ft for some of the early rotary holes. Gold assays in parts per billion (ppb) and

(ORE LOGO) ORE RESERVES ENGINEERING page 4 May 23, 2005

ounces per ton (opt) are provided for most of the sampling intervals. Silver assays in parts per million (ppm) and opt are also provided for some of the sampling intervals. The database of pre-existing drill holes was updated and verified by Golden Phoenix. Gryphon Gold has completed drilling of the five Borealis heaps and parts of the Freedom Flats and Borealis dumps in May 2004. Thirty-two holes totaling 2,478.5 ft were drilled. No drill holes into in-place mineral resource zones were completed in this program. 1.8 MINERAL RESOURCES An updated mineral resource estimate for the main Borealis study area was prepared by Alan C. Noble, P.E. of Ore Reserves Engineering ("O.R.E."). Although this estimate uses the same drill hole data, there are several improvements to the previous models that are believed to improve the quality of the estimates, as follows: 1. Models were prepared from the drill hole geologic logs for the thickness of the QAL and TCV units, which overly the mineralized deposits and are generally barren. These important units were not previously modeled; 2. Models were prepared for the depth of oxidation and the depth of mixed oxides + sulfides based on drill hole logging data. The depth of oxidation was assumed to be at the bottom of the mined-out pits in the previous models; 3. Grade zones have been prepared in much more detail and several smaller zones that were missed in the previous model were included. In addition, the grade zones are believed to conform better to the current geological understanding of the deposits than the previous estimates; and 4. An additional zone of gold mineralization was recognized near the bottom of the QAL unit that is alluvial in nature and appears to consist of placer gold and or rock fragments weathered from the Northeast Ridge and Borealis Deposits. Deposits included in this mineral resource estimate located within the study area (which corresponds with the area in the process of being permitted for future mining operations) are the Graben Deposit, Freedom Flats Deposit, Borealis Deposit (including Borealis Extension), Crocodile Ridge Deposit, Deep Ore Flats Deposit (aka Polaris Deposit), East Ridge Deposit, Gold View Deposit, Northeast Ridge Deposit, and West Alluvial Deposit. Shown in Tables 1.1, 1.2, 1.3, and 1.4 are summaries of mineral resources. Additional supporting information can be found in tables located in Section 17.0 Mineral Resource Estimate. (ORE LOGO) ORE RESERVES ENGINEERING page 5 May 23, 2005

TABLE 1.1. SUMMARY OF MEASURED PLUS INDICATED MINERAL RESOURCE ESTIMATES (NOT INCLUDING EXISTING HEAPS AND DUMPS)
MEASURED -----------------------------CONTAINED CUTOFF TONS GRADE GOLD RESOURCE ZONE (OPT) (X 1000) (OPT) (OZ X 1000) --------------------------------------AREAS MODELED AND ESTIMATED IN THIS STUDY ALLUVIUM Oxide 0.005 ---Partially Oxidized ---Predominantly Sulfide --------------------All Material --------------------BOREALIS Oxide 0.010 1,067 0.047 50.1 Partially Oxidized 0.010 24 0.019 0.5 Predominantly Sulfide 0.010 1,490 0.030 45.0 -----------------All Material 2,581 0.037 95.6 -----------------CROCODILE RIDGE Oxide 0.010 139 0.013 1.8 Partially Oxidized 0.010 16 0.013 0.2 Predominantly Sulfide 0.010 20 0.015 0.3 -----------------All Material 175 0.013 2.4 -----------------EAST RIDGE Oxide 0.010 1,211 0.017 20.5 Partially Oxidized 0.010 2,093 0.017 35.8 Predominantly Sulfide 0.010 4,072 0.016 66.0 -----------------All Material 7,376 0.017 122.2 -----------------FREEDOM FLATS Oxide 0.010 261 0.043 11.3 Partially Oxidized 0.010 169 0.059 10.0 Predominantly Sulfide 0.010 1,507 0.054 81.7 -----------------All Material 1,937 0.053 103.0 -----------------GRABEN Oxide ---Partially Oxidized ---Predominantly Sulfide 0.010 2,412 0.047 113.3 -----------------All Material 2,412 0.047 113.3 -----------------MIDDLE RIDGE Oxide 0.010 812 0.013 10.7 Partially Oxidized 0.010 428 0.014 5.9 Predominantly Sulfide 0.010 165 0.014 2.2 -----------------All Material 1,405 0.013 18.9 -----------------NORTHEAST RIDGE Oxide 0.010 501 0.017 8.6 Partially Oxidized 0.010 1,468 0.019 27.6 Predominantly Sulfide 0.010 1,041 0.017 17.7 -----------------All Material 3,010 0.018 53.9 -----------------DEEP ORE FLATS (POLARIS) Oxide 0.010 813 0.021 17.1 Partially Oxidized 0.010 372 0.023 8.4 Predominantly Sulfide 0.010 319 0.018 5.7 -----------------All Material 1,504 0.021 31.1 -----------------OUTSIDE ZONES Oxide ---Partially Oxidized ---INDICATED -----------------------------CONTAINED TONS GRADE GOLD (X 1000) (OPT) (OZ X 1000) -----------------------T (X ---

806 -------806 -----184 14 1,174 -----1,372 -----269 18 67 -----354 -----654 1,195 877 -----2,726 -----183 9 841 -----1,033 -------8,230 -----8,230 -----379 285 28 -----692 -----365 1,303 503 -----2,171 -----409 182 340 -----931 --------

0.009 ------0.009 ----0.031 0.025 0.033 ----0.033 ----0.012 0.012 0.013 ----0.012 ----0.018 0.018 0.018 ----0.018 ----0.024 0.050 0.031 ----0.030 ------0.050 ----0.050 ----0.014 0.015 0.014 ----0.014 ----0.018 0.019 0.017 ----0.018 ----0.021 0.022 0.018 ----0.020 -------

6.9 ------6.9 ----5.7 0.4 38.9 ----44.9 ----3.2 0.2 0.9 ----4.2 ----11.6 21.3 16.0 ----48.9 ----4.4 0.4 26.2 ----31.0 ------414.2 ----414.2 ----5.3 4.1 0.4 ----9.8 ----6.4 24.5 8.6 ----39.4 ----8.6 3.9 6.0 ----18.5 -------

--1 2 -3 --

--1 3 4 -10 --

2 -2 --

10 -10 -1

-2 --

2 1 -5 -1

-2 --

Predominantly Sulfide ----All Material -----

-------------

-----------

-----------

-------------

-----------

-----------

---

TOTAL OF AREAS MODELED AND ESTIMATED IN THIS STUDY Oxide 4,804 0.025 Partially Oxidized 4,570 0.019 Predominantly Sulfide 11,026 0.030 -------------All Material 20,400 0.026 --------------

120.2 88.4 331.9 ----540.4 -----

3,249 3,006 12,060 -----18,315 ------

0.016 0.018 0.042 ----0.034 -----

52.1 54.9 510.9 ----617.9 -----

8 7 23 -38 --

(ORE LOGO) ORE RESERVES ENGINEERING page 6 May 23, 2005

TABLE 1.2. SUMMARY OF INFERRED MINERAL RESOURCES (NOT INCLUDING EXISTING HEAPS AND DUMPS)
INFERRED -----------------------------CONTAINED CUTOFF TONS GRADE GOLD RESOURCE ZONE (OPT) (X 1000) (OPT) (OZ X 1000) --------------------------------------AREAS MODELED AND ESTIMATED IN THIS STUDY ALLUVIUM Oxide 0.005 688 0.007 4.8 Partially Oxidized ---Predominantly Sulfide --------------------All Material 688 0.007 4.8 -----------------BOREALIS Oxide 0.010 411 0.014 5.6 Partially Oxidized 0.010 2 0.034 0.1 Predominantly Sulfide 0.010 902 0.029 26.2 -----------------All Material 1,315 0.024 31.9 -----------------CROCODILE RIDGE Oxide 0.010 117 0.011 1.3 Partially Oxidized 0.010 1 0.011 0.0 Predominantly Sulfide 0.010 116 0.012 1.4 -----------------All Material 234 0.012 2.7 -----------------EAST RIDGE Oxide 0.010 494 0.016 8.0 Partially Oxidized 0.010 882 0.016 14.1 Predominantly Sulfide 0.010 1,978 0.016 31.6 -----------------All Material 3,354 0.016 53.7 -----------------FREEDOM FLATS Oxide 0.010 2 0.035 0.1 Partially Oxidized 0.010 ---Predominantly Sulfide 0.010 198 0.024 4.8 -----------------All Material 200 0.024 4.8 -----------------GRABEN Oxide ---Partially Oxidized ---Predominantly Sulfide 0.010 9,376 0.038 354.1 -----------------All Material 9,376 0.038 354.1 -----------------MIDDLE RIDGE Oxide 0.010 330 0.013 4.2 Partially Oxidized 0.010 141 0.013 1.8 Predominantly Sulfide 0.010 126 0.014 1.7 -----------------All Material 597 0.013 7.7 -----------------NORTHEAST RIDGE Oxide 0.010 120 0.015 1.8 Partially Oxidized 0.010 164 0.019 3.1 Predominantly Sulfide 0.010 490 0.017 8.5 -----------------All Material 774 0.017 13.5 -----------------DEEP ORE FLATS (POLARIS) Oxide 0.010 21 0.017 0.3 Partially Oxidized 0.010 18 0.026 0.5 Predominantly Sulfide 0.010 14 0.019 0.3 -----------------All Material 53 0.020 1.1

----OUTSIDE ZONES Oxide Partially Oxidized Predominantly Sulfide ----All Material -----

-----421 28 2,766 -----3,215 ------

----0.016 0.017 0.019 ----0.018 -----

----6.8 0.5 51.6 ----58.9 -----

TOTAL OF AREAS MODELED AND ESTIMATED IN THIS STUDY Oxide 2,604 0.013 Partially Oxidized 1,236 0.016 Predominantly Sulfide 15,966 0.030 -------------All Material 19,806 0.027 --------------

32.9 20.1 480.2 ----533.2 -----

Cutoff assumptions are detailed in the body of the report, and range from 0.005 opt to 0.10 opt depending on the specific physical characteristics of each deposit. The results shown above are partially diluted mineral resources with allowance made for surface mining with conventional equipment on a 20 ft mining bench (dilution for (ORE LOGO) ORE RESERVES ENGINEERING page 7 May 23, 2005

underground mining if warranted, may be more or less than these estimates); metallurgical recoveries have not been applied. During 2004 Gryphon Gold drilled and sampled the five heaps and portions of the Freedom Flats and Borealis waste dumps. Previously, J.D. Welsh & Associates, Inc. drilled Heap 1 (Welsh, 1996). Assays from these programs are the basis for resource estimates of the gold-bearing above ground material in the Borealis area. Resources estimated in the heaps and stockpiled materials, within the boundaries of the study area include: TABLE 1.3. SUMMARY OF MEASURED AND INDICATED MINERAL RESOURCE ESTIMATES IN EXISTING HEAPS AND DUMPS.
MEASURED -----------------------------CONTAINED TONS GRADE GOLD (X 1000) (OPT) (OZ X 1000) ---------------------4,879 ------4,879 ----0.015 ------0.015 ----75.4 -----75.4 ---INDICATED -----------------------------CONTAINED TONS GRADE GOLD (X 1000) (OPT) (OZ X 1000) ---------------------1,100 ------1,100 ----0.014 ------0.014 ----15.5 -----15.5 -----T (X --5

RESOURCE ZONE ------------HEAPS & DUMPS Oxide Partially Oxidized Predominantly Sulfide All Material

CUTOFF (OPT) -----0.008

-----------

5 -

TABLE 1.4. SUMMARY OF INFERRED MINERAL RESOURCES IN EXISTING HEAPS AND DUMPS
INFERRED -----------------------------CONTAINED TONS GRADE GOLD (X 1000) (OPT) (OZ X 1000) ---------------------14,578 -------14,578 -----0.013 ------0.013 ----195.9 ------195.9 -----

RESOURCE ZONE ------------HEAPS & DUMPS Oxide Partially Oxidized Predominantly Sulfide All Material

CUTOFF (OPT) -----0.008

-----------

Other additional known mineral deposits at Jaimes Ridge, Cerro Duro, Boundary Ridge Zone and Purdy Peak lie outside the study area and have not been incorporated in the updated mineral resource estimate. These deposits are within the boundaries of mining claims controlled by Gryphon Gold. Based on preexisting estimates (Whitney and Whitney, Inc., 1999 and Golden Phoenix Minerals Inc., 2000), which were not calculated pursuant to the current guidelines of NI 43-101, there is additional unmined mineralized material totaling about 5,223,000 tons with an average grade of 0.027 opt, containing 143,000 ounces of gold. The estimates of additional mineralized material in the outlying deposits have been completed to generally accepted mining industry standards, and were reported by the groups completing the estimates, but have not been reviewed and verified in this study and should not be relied upon. 1.9 OTHER IMPORTANT CONSIDERATIONS 1.9.1 PERMIT ACQUISITION AND FUNDAMENTAL ENVIRONMENTAL PERMITTING CONSIDERATIONS Gryphon Gold Corporation has initiated a program to accelerate the acquisition of the required principal environmental operating permits. Technical work on the Borealis Gold Project is progressing including environmental reviews, preliminary engineering, and permit acquisition efforts in anticipation of a possible mine

start-up in 2006. For reference, the site plan included in Plan of Operations submitted to the US Forest Service is shown in Plate 4. (ORE LOGO) ORE RESERVES ENGINEERING page 8 May 23, 2005

1.9.2 HISTORICAL MINING AND METALLURGICAL OPERATIONS The historical mining operations processed both a run-of-mine (ROM) ore and an ore that was crushed to a nominal 1 1/2-inch product as the primary feed material that was placed on the heap for leaching. The fines fraction was agglomerated with cement, mixed with the coarse fraction, and leached with sodium cyanide solution. Gold mineralization is finely disseminated and/or partially bonded with pyrite, and although there are very little ore mineralogy data available, historical operating reports suggest that some coarse gold may exist. Gold that is bound in pyrite or pyrite-silica is not easily recovered by simple heap leach cyanidation, however gold recovery in oxide ores is reported to average about 80% for the ore treated. There are no reports of carbonaceous refractory components within the old heap or dump materials. The previous mine operators employed a Merrill Crowe circuit to enhance ease of silver recovery, followed by a retort to remove mercury. Laboratory testing subsequent to mine shut down in 1990 indicates that gold recoveries of 55 to 80 percent can be expected from remaining oxide material by heap leaching. Sulfide material responds to conventional flotation concentration and cyanidation of oxidized concentrates. In the laboratory testing, chemical oxidation and bioxidation treatment of the sulfide material yield a high level of oxidation and correspondingly high gold recoveries after cyanidation of the oxidized material. It is suggested that air sparging may be a suitable oxidation method for sulfide material. 1.10 CONCLUSIONS AND RECOMMENDATIONS The Borealis property hosts multiple types of gold deposits which provide several mine development options, or sequences of options. This situation allows Gryphon Gold increased business flexibility and reduced risks. Additional information is required to optimize the cost effective progression of the Project towards becoming a viable mining operation. As a result of this updated mineral resource estimation and further analysis of the multifaceted set of technical attributes of the Borealis district, a number of issues have been identified. The following recommendations are made with the objective to answer the most critical questions first and further advance Borealis towards possible mine production as warranted by the prevailing business climate. Included recommendations are as follows: 1. DATABASE ENHANCEMENT. Continuation of the compilation and enhancement of the geologic database in the area of known deposits plus additional re-logging of remaining old drill cuttings and core samples are recommended to better establish the geologic and grade zoning boundaries. 2. FURTHER RESOURCE EXPANSION AND DEFINITION. A drilling program is recommended to expand the mineral resource base, to advance the mineral resources into higher categories, and to provide the necessary detail required for engineering and mine planning. Drilling programs adjacent to, between, and beneath the existing pits are expected to expand the known oxide gold deposits and will support final mine design. Drilling along the known trends aided by geophysical surveys could result in new oxide deposits being found, especially in shallow covered areas. An initial focus on oxide deposits should be made within the permitted exploration area and should benefit the project in the short-term more than finding additional sulfide mineral resources. 3. METALLURGICAL TESTING. A systematic metallurgical testing program is recommended on the goldbearing samples collected from planned drilling. Bottle roll tests and column leach tests should be conducted to determine the leachability of the potentially surface mineable mineral resources added to the mineral inventory. Comprehensive sampling and testing should be implemented to properly characterize the sulfide materials which may be encountered during drilling. Metallurgical testing of the sulfide and mixed oxide/sulfide materials should include flotation testing and pre-oxidation test work. The flotation test work should investigate two options. The first should be to produce the maximum recovery for feed to an oxidation and leaching circuit. The second should be to produce a shippable, saleable concentrate. Additional test work should focus on a) optimizing metal recovery and concentrate grade, b) minimizing final concentrate weight, and c) defining a cost effective process to oxidize sulfide flotation concentrates or whole ore.
(ORE LOGO) ORE RESERVES ENGINEERING May 23, 2005 page 9

4.

ACQUISITION OF OPERATING PERMITS. Continuation of the permitting program is recommended to allow for timely mine development if warranted. The program should continue to define and alleviate

potential environmental related issues and concerns and ensure that the oxidized gold mineral resources can be mined efficiently by open pit and leached in heaps. 5. FEASIBILITY STUDY. Upon completion of the drilling and metallurgical testwork programs, a new mineral resource model, mineable reserve estimate, and a full feasibility study are recommended in preparation for mine development. The feasibility study should integrate all newly generated information including, but not limited to, such items as operating permit constraints if any, deposit geometry, waste characterization, infrastructure requirements and resource (manpower, equipment, consumable supplies, etc.) availability. 6. GEOPHYSICAL SURVEYS. In preparation for an expanded exploration program within the disturbed area where exploration permits have been granted, additional geophysical surveys are recommended to confirm drill targets and to identify and locate new targets. Geophysical surveys should be conducted over two basin-type areas: the one south of Freedom Flats-Borealis-Deep Ore Flats (including Opal Hill), and the one north of Borealis-Crocodile Ridge-East Ridge. Both areas are in topographic lows and have good potential for oxidized gold systems under shallow cover. In addition with an indication that the North Graben target may have bedrock under shallow cover (200-300 ft), a program of ground magnetics and ground IP should be considered to better define the target area. If North Graben is under shallow cover and bedrock is topographically higher than previously anticipated, then oxidation may be deeper and there is a chance for a potentially large, open-pitable oxide deposit. Where geologic and geophysical indications are favorable, drilling of the targets should begin as soon as possible. 7. DISTRICT SCALE EXPLORATION. An additional expanded exploration program outside of the permitted area and throughout the district is recommended following, or concurrent with, the exploration within the permitted area. Both oxide and sulfide deposits are anticipated to be found. A program of ground magnetics and ground IP should be considered to better define the Sunset Wash and Lucky Boy targets and then drilling should begin as soon as possible. Gradient IP surveys should be conducted elsewhere in the district where other aeromagnetic anomalies are found in pediment areas without any supporting IP data. 8. DISTRICT RECONNAISSANCE AND DATA COMPILATION. At this point the numerous other exploration targets in the district seem to have lesser priorities than those outlined above. Typically in any large district, such as Borealis, a large discovery is made in areas that were not obviously high priority targets. Therefore, an initial program of data compilation, drill chip re-logging, field examinations, geochemistry, follow-up geophysics, and drill planning should be undertaken for each of these lower priority exploration targets. This work should be brought to the drill plan stage so that initial drilling can be undertaken as time and money are available. (ORE LOGO) ORE RESERVES ENGINEERING page 10 May 23, 2005

2.0 INTRODUCTION AND TERMS OF REFERENCE Gryphon Gold Corporation (referred to as "Gryphon Gold" or the "Company" in this report) is progressing with technical work at its 100%-owned Borealis Gold property in Mineral County Nevada in anticipation of a mine start-up in 2006. The Company is focused on engineering, permit acquisition, expansion of the land position, environmental reviews and infill drilling to enhance the resource categorization. Current engineering, results from permit negotiations, and updated mineral resource estimates will serve as the basis for a final/bankable feasibility study that is scheduled to be completed before the end of 2005. The purpose of this report is to update the resource model based on an enhanced geologic interpretation based on additional data acquired and analyzed during 2004 by Company geologists and engineers; and to report on technical activities to date. The newly developed and updated resource model lies within a defined study area, which falls within the core area disturbed by previous mining activities; and where operating permit acquisition and other development and field activities are currently taking place. The deposits within the boundaries of the study area are the principal focus of this report. Other known deposits are located outside the limits of the study area, where phased development and permitting activities have not yet started. As an important part of this work, new resource models were developed for several in-place gold deposits located within the boundaries of the study area and include the following deposits: West Alluvial Deposit, Borealis, Crocodile Ridge, Deep Ore Flats (also known as Polaris), East Ridge, Freedom Flats, Gold View, Graben, Middle Ridge and Northeast Ridge. Resource estimates for deposits outside the study area, but on claims controlled by Gryphon Gold, rely on historical estimates based on calculations which were completed prior to the promulgation of the guidelines of NI 43-101; and have not been reviewed by this study. These estimates are discussed further in Section 6.3 Previous Mineral Resource Estimates. Known gold deposits outside of the study area include Cerro Duro, Jaimes Ridge, Purdy Peak, and Boundary Ridge Zone (MAP-GRAPHIC OMITTED) (based on information from Echo Bay Mines, circa 1989, modified by Gryphon Gold 2005) FIGURE 2.1 MINERAL DEPOSITS AND PROSPECTS OF THE BOREALIS PROPERTY. (ORE LOGO) ORE RESERVES ENGINEERING page 11 May 23, 2005

Names of other deposits and exploration targets are shown in Figure 2.1 which can be used as a reference to the geographic location and place names used in this report. Some of the most important exploration targets are reviewed in section 10.0 Exploration. Ore Reserves Engineering ("O.R.E."), working closely with Gryphon Gold and its other consultants, has prepared new resource models and compiled this technical report on Borealis. Alan C. Noble, P.E. is the Principal Engineer of O.R.E. and is the Qualified Person for the purpose of Canadian NI 43-101, Standards of Disclosure for Mineral Projects for this technical report. Mr. Noble performed the mineral resource estimation and is the primary author of this technical report. Mr. Noble visited the Borealis property on February 24, 2005 and again on May 12, 2005 for the duration of one day in each instance; observed the district geologic setting, existing site conditions, and reviewed selective core and reverse circulation drill sample intercepts of the mineralization. Other technical experts, and Qualified Persons, who have contributed to this study under the general direction of the principal author of this report are: Ms. Barbara A. Filas, P.E., C.E.M., a Qualified Person for the purpose of Canadian NI 43-101, Standards of Disclosure for Mineral Projects, President and Mining/Environmental Engineer, Knight Piesold and Co.: environmental evaluations and permit acquisition; Mr. Jaye T. Pickarts, P.E., a Qualified Person for the purpose of Canadian NI 43-101, Standards of Disclosure for Mineral Projects, Senior Metallurgical Engineer, Knight Piesold and Co.: metallurgical and process flowsheet development; Dr. Roger C. Steininger, Ph.D., C.P.G. (AIPG), a Qualified Person for the purpose of Canadian NI 43-101, Standards of Disclosure for Mineral Projects, Consulting Chief Geologist for Gryphon Gold: mine geology. Dr. Steininger is not independent of Gryphon Gold. Technical support has been provided by additional associates of these listed firms and individuals. Samuel Engineering has assisted Knight Piesold in the ongoing permit acquisition activities and has provided additional expertise in process development and metallurgical flowsheet planning. Gryphon Gold has provided staff support and assistance by drafting certain figures incorporated in the report (as credited below each illustration); and aiding in the final assembly of the report. This mineral resource study has considered existing information contained in Gryphon Gold files. This information consists of several thousand pages of documents and data gathered during more than 20 years of exploration, development, mining, and post-mining reclamation activities at Borealis, and includes exploration results, geophysical surveys, mineralogical results, geologic interpretations, metallurgical testing, design engineering, operating results, technical correspondence and scientific publications. Gryphon Gold has converted this information to electronic form to allow for ease of search and recovery. This report utilizes this archival information provided by Gryphon Gold. The database has not been independently verified by O.R.E. at this time. As the Borealis project advances, certain additional information will be gathered which will allow for further verification of historical results, confirmation of the proposed technical concepts, further engineering and planning, and optimization of the possible mine re-development. O.R.E. frequently undertakes minerals property studies. O.R.E is familiar with the mineral resource/reserve definitions and disclosure requirements of NI 43-101, to which the mineral resource classification in this report conform. Neither O.R.E nor any of its principals involved in this project have any direct pecuniary or contingent interests of any kind in Gryphon Gold or its mining properties. O.R.E. is to receive a fee for its work based on time expended, expenses incurred, and the firm's fee schedule. The units commonly used in the United States, dry short tons of 2,000 pounds (tons), troy ounces per short ton (opt), miles, feet, etc. are the major units used in this report. Where metric units are used, such is noted. (ORE LOGO) ORE RESERVES ENGINEERING page 12 May 23, 2005

3.0 DISCLAIMER The opinions expressed in this report are based on the available information and geologic interpretations as supplied by Gryphon Gold Corporation and other third party sources, and which were available at the time of this report. Ore Reserves Engineering has exercised all due care in reviewing the supplied information and believes that the basic assumptions are factual and correct and the interpretations are reasonable. Assumptions, conditions, and qualifications are as set forth in the body of this report. Although O.R.E. has independently analyzed some of the data, the accuracy of the results and conclusions from the review rely on the accuracy of the supplied data. O.R.E. has relied on the supplied information and has no reason to believe that any material facts have been withheld, or that a more detailed analysis may reveal additional material information. O.R.E. did not undertake a program of independent sampling, drilling, or assaying. The information in section 4.2, Property Description and Ownership, has been provided by Gryphon Gold. This information has not been independently reviewed by O.R.E.; however, it is supported by a title report by Gryphon Gold's attorney Parr Waddoups Brown Gee & Loveless dated May 3, 2005. Estimates of mineral resources are inherently forward-looking statements subject to error. Although resource estimates require a high degree of assurance in the underlying data when the estimates are made, unforeseen events and uncontrollable factors can have significant adverse or positive impacts on the estimates. Actual results will inherently differ from estimates. The unforeseen events and uncontrollable factors include: geologic uncertainties including inherent sample variability, metal price fluctuations, variations in mining and processing parameters, and adverse changes in environmental or mining laws and regulations. The timing and effects of variances from estimated values cannot be accurately predicted. (ORE LOGO) ORE RESERVES ENGINEERING page 13 May 23, 2005

4.0 PROPERTY DESCRIPTION AND LOCATION 4.1 LOCATION The Borealis property gold resource is located in southwest Nevada, approximately 16 road miles southwest of the town of Hawthorne in the Walker Lane mineral belt and 12 miles northeast of the California border. Hawthorne is 133 highway miles southeast of Reno and 314 highway miles northwest of Las Vegas. The project area is located in:
T6N, T7N, T6N, T7N, R28E R28E R29E R 29E Sections Sections Sections Sections 1-4, 11, and 12 25 - 27 and 33 - 36 2-24, and 27 - 29 30-32

Mount Diablo Meridian, Mineral County Nevada. The approximate center of the property is at longitude 118 degrees 45' 34" North and latitude 38 degrees 22' 55" West. Figure 4.1 shows the location and access of the Borealis project. (LOCATION MAP-GRAPHIC OMITTED) (Gryphon Gold 2005) FIGURE 4.1 LOCATION MAP OF THE BOREALIS PROJECT. 4.2 STUDY AREA BOUNDARIES The defined study area falls within the boundary of the approximately 460 acre area where operating permit acquisition and other development activities and field activities are currently taking place. The study area is wholly within the boundaries of mining claims controlled by Gryphon Gold and is coincident with the core area disturbed by previous mining operations described in Section 18.1 Permit Acquisition and Fundamental Environmental Permitting Considerations (Plate 1). Several known gold deposits are located within the boundaries of the study area including, but not limited to the following: West Alluvial Deposit, Borealis, Crocodile Ridge, Deep Ore Flats (also known as Polaris), East Ridge, Freedom Flats, Gold View, Graben, Middle Ridge and Northeast Ridge. Other known deposits occur outside the study area, still on mining claims controlled by Gryphon Gold. These additional gold deposits, outside of the study area, which have been subject to historical resource estimates include Cerro Duro, Jaimes Ridge, Purdy Peak, and Boundary Ridge Zone (ORE LOGO) ORE RESERVES ENGINEERING page 14 May 23, 2005

4.3 PROPERTY DESCRIPTION AND OWNERSHIP 4.3.1 GENERAL PROPERTY DESCRIPTION As of the date of this report, the Borealis property is comprised of 747 unpatented mining claims (Plate 2) of approximately 20 acres each, totaling about 14,900 acres and one unpatented millsite claim of about 5 acres. Gryphon Gold Corporation staked 625 of the total number of claims subsequent to entering an option and earnin agreement with Golden Phoenix Minerals, Inc. Gryphon Gold Corporation is either the direct owner (625 claims) or the 100% leaseholder of the claims (122 that cover the property ("the claims"). A review of federal and county land records relating to the property was done by Parr Waddoups Brown Gee and Loveless, attorneys at law, and Roger Gash, who is a Certified Professional Landman and Nevada Commissioned Abstractor, in 2003, with subsequent updates in 2004 and January and May 2005. The review began with the 1996 conveyance of the property out of Echo Bay. The review of the claims did not go all the way back to the original location dates for the various claims (some of which dated back to 1953); because with Echo Bay's prior operations on the property without challenge, Gryphon Gold was comfortable with the assumption that ownership up through Echo Bay was without significant problems. The lands on which the claims are located were open to mineral location at the time of claim staking. There are no apparent conflicts with any privately owned land. There are some overlaps with surface improvements, such as a power line right-of-way and stock watering facilities, but those improvements do not prevent the location of mining claims. There are some minor conflicts due to slight overlap between the claims and some competitorowned RAM claims, primarily in Sections 7, 18, and 19, T6N R29E. In some cases the claims are senior and would control the ground in conflict, and in some cases the opposite is true. However all conflicts appear to be limited to the edges of adjoining claims and thus are likely insignificant. All of the claims are shown on the Bureau of Land Management ("BLM") records as being in good standing. 4.3.2 OWNERSHIP, PURCHASE AGREEMENT, AND MINING LEASE Of the total of 747 unpatented mining claims, there are 625 contiguous lode claims in the project area that are held directly by Gryphon Gold Corporation. The remaining 122 core claims are owned by John W. Whitney, Hardrock Mining Company, and Richard J. Cavell which have pooled their claim holding interest into a simple Nevada mining partnership which does business as the Borealis Partnership. The 122 core claims are leased from the Partnership as described later in this section. Ownership of the claims is vested as follows: Rainbow group, BO group, and Fox group: John W. Whitney, Hardrock Mining Company, a Nevada corporation ("HMC"), and Richard J. Cavell; LIS group: John W. Whitney and Richard J. Cavell as trustee for the Richard J. Cavell Trust dated February 23, 1994; GPM group and GG group: Gryphon Gold Corporation, a Nevada corporation; BOR group: Gryphon Gold Corporation, a Nevada corporation BMC group, ABC group, GLEN group, and Foxy group: Gryphon Gold Corporation, a Nevada corporation One of the claims is a millsite claim (BORMS #1) owned by Gryphon Gold. To be valid, millsites must be located on non-mineral ground, and physically occupied for milling purposes. This is unlike a mining claim which must be located on ground containing a valuable mineral and can be held without actual mining. Nevertheless, it is the industry custom to locate a millsite claim in the area of a processing facility before occupation and use begins, which is the case with BORMS #1. (ORE LOGO) ORE RESERVES ENGINEERING page 15 May 23, 2005

Surface access and rights to disturb the surface for mining purposes is conveyed to the owner of the claims by the US General Mining Law. Sufficient surface area exists within the claim block for potential future mine and metallurgical processing facilities. The mining claims require maintenance payments and related documents to be filed annually to keep the claims from terminating by operation of law. The current annual maintenance payments are made to the Bureau of Land Management in the amount of $125.00; and to Mineral County in the amount of $12.50 for each claim. The various claim groups have been staked over a period ranging from 1953 to the present. Generally, and to the best of the author's knowledge, the claims have been surveyed in a accordance with requirements of the General Mining Law by the locator of the claims, who was likely not a registered land surveyor, for developing a map of each claim, or group of claims which was, in turn utilized for the purpose of establishing registration of the claims. This is consistent with commonly accepted practices in the U.S. mining industry for locating and maintaining unpatented mining claims. By agreement dated January 10, 2005 between Gryphon Gold's subsidiary Borealis Mining Company and Golden Phoenix, the Corporation, through Borealis Mining, consolidated its interest in the Borealis Property by acquiring the remaining interest held by Golden Phoenix in the Borealis Property for $1,400,000 (the "Purchase Agreement"). The parties previously entered into an agreement dated July 21, 2003 whereby Borealis Mining acquired an option to earn up to a seventy percent (70%) joint venture interest (the "Joint Venture") in the Borealis Property (the "Option and Joint Venture Agreement"). Pursuant to the terms of the Option and Joint Venture Agreement, Borealis Mining would have earned a fifty percent (50%) interest in the Borealis Property by incurring qualified expenditures on the Borealis Property or in lieu of the qualifying expenditures by making payments to Golden Phoenix in the aggregate of $5,000,000, or a combination thereof, during the first four years of the Option and Joint Venture Agreement. The additional 20% interest could have been earned by producing a qualifying feasibility study for the Borealis Property. Golden Phoenix assigned its remaining interest in the Borealis Property to Borealis Mining by agreement dated January 10, 2005. Gryphon Gold paid to Golden Phoenix $400,000 upon closing of the Purchase Agreement on January 31, 2005 (the "Closing") with additional payments due to Golden Phoenix as follows: (a) $250,000 payable 91 days from Closing; (b) $250,000 payable 182 days from Closing; (c) $250,000 payable 273 days from Closing; and (d) $250,000 payable 354 days from Closing. Gryphon Gold guaranteed Borealis Mining's payment obligations to Golden Phoenix by depositing as security fifteen percent (15%) of the issued shares of Borealis Mining's shares into escrow. As each quarterly payment of $250,000 is made by the Corporation, a pro rata portion of the escrowed shares shall be released to the Corporation. The original core group of claims was, and is, subject to a Mining Lease dated January 24, 1997 (the "Mining Lease") from the claim owners to J. D. Welsh & Associates, Inc., a Nevada corporation. The Mining Lease contains an area of interest provision, which still applies, such that any new mining claims acquired by the owners within the area of interest shall automatically become subject to the Mining Lease. Any claims that are partially within the area of interest are deemed to be entirely within the area of interest. In accordance with the terms of the Purchase Agreement, Gryphon Gold, through Borealis Mining, acquired a 100% interest in a lease of the Borealis Property with Richard J. Cavell TTTEE F/T Richard J. Cavell Trust dated 02/23/1994, Hardrock Mining Company, a Nevada corporation, and John W. Whitney, as Lessors (the "Borealis Mining Lease"). 4.3.3 ROYALTY Pursuant to the Borealis Mining Lease, a portion of the Borealis Property which includes the 122 original core claims is subject to a net smelter return ("NSR") royalty which is computed as being the average monthly price of gold divided by 100 with the result expressed as a percentage. The initial mining operations will be located on the 122 claims in the core group. The NSR cash value is determined by applying the resulting percentage to the price of gold. For example, using an assumed average monthly price of gold of $350 the NSR royalty would be 3.5% per ounce (net of refinery charges), which would translate into a cash cost of slightly less then $12.50 per ounce produced in that month (i.e. $350 divided by 100 = 3.5%), 3.5% of $350 is $12.25 per ounce less refining charges.

(ORE LOGO) ORE RESERVES ENGINEERING page 16 May 23, 2005

As described in the terms of the Borealis Mining Lease, the Borealis property is currently subject to advance monthly royalty payments of approximately $8,614.00 per month. These advance royalty payments are subject to adjustments in the Consumer Price Index. The Borealis Mining Lease expires in 2009 but is extendible year to year thereafter so long as any mining activity which continues on the Borealis Property. Any commercial production from adjacent areas to the Borealis Property will be subject to a 2% net smelter return royalty. (ORE LOGO) ORE RESERVES ENGINEERING page 17 May 23, 2005

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY 5.1 ACCESS Access to the property is gained from the Lucky Boy Pass gravel road located about 2 miles south of Hawthorne from State Highway 359 (Figure 4.1). Hawthorne is about 133 highway miles southeast of Reno. The Borealis Property is about 16 road miles from Hawthorne. 5.2 CLIMATE AND PHYSIOGRAPHY The elevation on the property ranges from 7,200 ft to 8,200 ft above sea level. Topography ranges from moderate and hilly terrain with rocky knolls and peaks, to steep and mountainous terrain in the higher elevations This relatively high elevation produces moderate summers with high temperatures in the 90 degrees F range. Winters can be cold and windy with temperatures dropping to 0 degrees F. Average annual precipitation is approximately 10 inches, part of which occurs as up to 60 inches of snowfall. Historically in the 1980's, the mine operated throughout the year with only limited weather related interruptions. The vegetation throughout the project area is categorized into six main community types: pinyon / juniper woodland, sagebrush, ephemeral drainages and areas disturbed by mining and reclaimed. Predominate species include pinyon pine, Utah juniper, greasewood, a variety of sagebrush species, crested wheat grass and fourwing saltbush (JBR Environmental Consultants, 2004) 5.3 EXISTING SITE CONDITIONS, INFRASTRUCTURE AND AVAILABLE SERVICES The Borealis project site (Figure 5.1) has been reclaimed to early 1990's standards, before new, more modern state regulations were promulgated. The pits and the project boundary are fenced for public safety. Currently, access to the pits and leach heap areas is gained through a locked gate. No buildings or power lines located on the surface remain, although a major electrical transmission line exists about 2 miles from the property. All currently existing roads in the project area are two-track roads with most located on the old haul roads that have been reclaimed. Water for the historical mining operations was supplied from a well field in a topographically isolated basin located approximately 5 miles south of the planned mine site. The nearest available services for both mine development work and mine operations are in the small town of Hawthorne, located about 16 miles to the east of the project area via a wide, well-maintained gravel road. Hawthorne has substantial housing available, adequate fuel supplies and sufficient infrastructure to take care of basic needs. For other services, Reno is located about 133 highway miles to the northwest. Sources in Reno could supply any material required for the development or mine operations (ORE LOGO) ORE RESERVES ENGINEERING page 18 May 23, 2005

(GRAPHIC OMITTED) (Echo Bay Mines, circa 1991; modified by Gryphon Gold, 2004) FIGURE 5.1 PHOTOGRAPH OF BOREALIS DISTRICT. VIEW TO THE EAST, WITH FREEDOM FLATS PIT IN THE FOREGROUND. THE PHOTOGRAPH SHOWS THE SITE AS IT WAS CIRCA 1991. (ORE LOGO) ORE RESERVES ENGINEERING page 19 May 23, 2005

6.0 HISTORY 6.1 HISTORY OF THE DISTRICT The original Ramona mining district, now known as the Borealis mining district, produced less than 1,000 ounces of gold prior to 1981. In 1978 the Borealis gold deposit was discovered by S. W. Ivosevic (1979), a geologist working for Houston International Minerals Company (a subsidiary of Houston Oil and Minerals Corporation). The property was acquired from the Whitney Partnership, which later became the Borealis Partnership, following Houston's examination of the submitted property. Initial discovery of ore-grade gold mineralization in the Borealis district and subsequent rapid development resulted in production beginning in October 1981 as an open pit mining and heap leaching operation. Tenneco Minerals acquired the assets of Houston International Minerals in late 1981, and continued production from the Borealis mine. Subsequently, several other gold deposits were discovered and mined by open pit methods along the generally northeast-striking Borealis trend, and also several small deposits were discovered further to the west in the Cerro Duro area. Tenneco's exploration in early 1986 discovered the Freedom Flats deposit beneath thin alluvial cover on the pediment southwest of the Borealis mine. In October 1986 Echo Bay Mines acquired the assets of Tenneco Minerals. With the completion of mining of the readily available oxide ore in the Freedom Flats deposit and other deposits in the district, active mining was terminated in January 1990, and leaching operations ended in late 1990. Echo Bay left behind a number of oxidized and sulfide-bearing gold mineral resources. All eight open pit operations are reported to have produced 10.7 million tons of ore averaging 0.059 ounces of gold per ton (opt Au) (Golden Phoenix Minerals, 2000). Gold recovered from the material placed on heaps was approximately 500,000 ounces, plus an estimated 1.5 million ounces of silver. Echo Bay chose to close the mine instead of continuing development of the remaining mineral resources, because of impending new environmental closure regulations and the desire to focus on their McCoy/Cove gold-silver deposits south of Battle Mountain. Reclamation of the closed mine began immediately and continued for several years in order to meet the deadline for the lessrestrictive regulations. Echo Bay decided not to continue with its own exploration, and the property was farmed out as a joint venture in 1990-91 to Billiton Minerals, which drilled 28 reverse circulation (RC) exploration holes on outlying targets for a total of 8,120 ft. Billiton quickly dropped the property with no retained interest. Their exit was attributed to change in management direction and restructuring. Then Santa Fe Pacific Mining, Inc. entered into a joint venture with Echo Bay in 1992-93 (Kortemeier, 1993), compiled data, constructed a digital drill-hole database and drilled 32 deep RC and deep core holes, including a number of holes into the Graben deposit. Santa Fe Pacific had success in identifying new sulfide-zone gold mineralization, but terminated the joint venture because of reduced exploration budgets. Echo Bay completed all reclamation requirements in 1994, showcased the reclamation, and then terminated its lease agreement with the Borealis Partnership in 1996. In 1996 J.D. Welsh & Associates, Inc. negotiated an option-to-lease agreement for the Borealis property from the Borealis Partnership. J.D. Welsh performed contract reclamation work for Echo Bay and was responsible for monitoring the drain down of the leach heaps. During this time Welsh recognized the excellent remaining gold potential, and upon signing the lease, immediately joint ventured the project with Cambior Exploration U.S.A., Inc. Cambior performed a major data compilation program and several gradient IP surveys. In 1998 the company drilled 10 holes which succeeded in extending the Graben deposit and in identifying new zones of gold mineralization near Sunset Wash. Cambior terminated the joint venture in late 1998 because of severe budget constraints. During the Cambior joint venture period, in late 1997, Golden Phoenix Minerals entered an agreement to purchase a portion of J.D. Welsh's interest in the property. J.D. Welsh sold his remaining interest in the property to a third party, which in turn sold it to Golden Phoenix Minerals, so that the company controlled 100% interest in the lease beginning in 2000 (Golden Phoenix Minerals, 2000). Golden Phoenix personnel reviewed project data, compiled and constructed a digital drill-hole database (previously not in a computer based resource modeling input form), compiled exploration information and developed concepts, maintained the property during the years of low gold prices, and developed new mineral resource estimates for the entire property. In July 2003 the Borealis property was joint-ventured by Golden Phoenix Minerals with Borealis Mining Company ("BMC") which is a wholly owned subsidiary of Gryphon Gold Corporation.. BMC, the operator of the joint venture originally controlled the property through an option agreement with Golden Phoenix Minerals,

Inc., (ORE LOGO) ORE RESERVES ENGINEERING page 20 May 23, 2005

whereby BMC could earn a 70% joint venture interest in the property. BMC had the right to acquire its interest in the Borealis property with a combination of qualified expenditures on work programs, and/or making payments to Golden Phoenix, and/or delivering a feasibility study over a period of five and a half years beginning July 2003. In January 2005 BMC purchased 100 % interest in the lease agreement and Golden Phoenix surrendered its interest in the property. BMC and Gryphon Gold have expended a considerable effort consolidating the available historical data and flat files since acquiring an interest in the property. Files were located in the offices of Whitney and Whitney, Inc. (consultants to the Borealis Partnership) and Golden Phoenix Minerals Inc., both in Reno. General information and data included, but are not limited to, a variety of historical production records, geologic reports, environmental reports, geophysical and geochemical surveys, historical land and legal documents and drill-hole assay data. It is estimated that in excess of 150,000 pages of information has been located. This knowledge base has been scanned, and converted into a searchable electronic form. The electronic database has formed the basis of re-interpretation of the district geologic setting, and helped to form the foundation for a new understanding of the district's potential. Ownership of the information passed from Golden Phoenix Minerals, Inc. to Gryphon Gold at the time Gryphon Gold acquired the remaining 30% interest from its JV partner. 6.2 PAST PRODUCTION In the Borealis project area, several gold deposits have been defined by drilling and some have been only partially mined. Reports on past production vary. The past gold production from pits at Borealis, as reported by recent operating companies at Borealis, is tabulated in Table 6.1. The total of past gold production was approximately 10.6 million tons of ore averaging 0.057 ounces per ton (opt) gold, although a report published in 1991 by Echo Bay Mines (Eng, 1991) indicated that 10.7 million tons of ore averaging 0.059 opt Au (635,000 oz) was mined through 1989. Mine production resulting from limited operations in 1990 is not included in either figure. Although no complete historical silver production records still exist at this time, the average silver content of ore mined from all eight pits appears in the range of five ounces of silver for each ounce of gold. It is likely that about 1.5 million ounces of silver was shipped from the property in the dore bullion. TABLE 6.1 REPORTED PAST BOREALIS PRODUCTION, 1981-1990
CRUSHED AND AGGLOMERATED ORE ---------------Borealis Freedom Flats Jaime's/Cerro Duro/Purdy East Ridge Gold View TOTAL RUN OF MINE ORE East Ridge Polaris (Deep Ore Flats) Gold View Northeast Ridge TOTAL GRAND TOTAL 2,605,000 250,000 396,000 3,000,000 ---------6,251,000 ========== 10,596,800 ========== 0.021 0.038 0.009 0.025 ----0.023 ===== 0.057 ===== 54,700 9,500 3,500 75,000 ------142,700 ======= 607,060 ======= GRADE (OPT AU) -------0.103 0.153 0.108 0.059 0.047 ----0.107 =====

TONS ---------1,488,900 1,280,000 517,900 795,000 264,000 ---------4,345,800 ==========

CONTAINED GOLD (OZ) ------------------153,360 195,800 55,900 46,900 12,400 ------464,360 =======

Note: Eng (1991) reports that the material mined contained a total of 635,000 ounces of gold. (ORE LOGO) ORE RESERVES ENGINEERING page 21 May 23, 2005

6.3 PREVIOUS MINERAL RESOURCE ESTIMATES Since the termination of mining by Echo Bay Mines in 1990, several companies have made estimates of the Borealis district mineral resources. Santa Fe Pacific and Cambior Exploration attempted estimates on selected portions of the property. Comprehensive estimates of all remaining mineral resources were made first by John Whitney in 1996, Whitney and Whitney, Inc. in 1999(3), Golden Phoenix Minerals, Inc. in 2000, and Behre Dolbear and Company, Inc.(4) in 2004. Whitney and Whitney (1999) estimated a total of 42,778,000 tons averaging 0.036 opt Au for a total of about 1,551,000 oz Au, including 199,000 oz Au in the heaps and stockpiles/dumps. The comprehensive estimates compiled data from several previous operators of the mine and estimated other mineral resources manually. Included in the Whitney and Whitney estimate is a mineral resource identified outside the model limits of this study near the area of Deep Ore Flats which contains mineralized material estimated in the range of 8,000,000 tons with an average grade of 0.030 opt (approximately 240,000 ounces). The data supporting this estimate has not been validated nor is the estimate to a NI 43-101 standard, and therefore not included in the resource inventory tabulated in this report. Golden Phoenix Minerals (2000) completed a thorough compilation and review of the drill-hole database and then estimated the mineral resources, primarily by manual methods with computer assistance and Inverse Distance Weighting (ID3) interpolation, but they did not include resources in the heaps and stockpiles. The Golden Phoenix estimate utilizes mining industry acceptable estimating techniques and parameters, but was not completed at the time of the estimate to NI 43-101 standards. As reported by Golden Phoenix (2000) in their US public disclosure documents, Behre Dolbear and Company reviewed the estimate and found it to be satisfactory. Gryphon Gold later commissioned Behre Dolbear to develop a technical report titled A Preliminary Scoping Study of Project Development, Borealis Gold Project, Nevada, which was completed in May 2004 An integral part of the study was mineral resources and potentially mineable resources estimation. Resources were calculated by the Inverse Distance Weighting method (ID3) for Freedom Flats and Graben, by the three-pass ID2 method for Polaris (Deep Ore Flats), and by the three-pass ordinary kriging method for Borealis, East Ridge/Gold View, and Northeast Ridge. The resource estimate in this study was certified to NI 43-101 criteria by the author (who is a Qualified Person), but was not submitted for regulatory agency review because Gryphon Gold was a private Nevada company at the time of report completion. Additionally, this estimate does not reflect the increased level of geologic understanding that has been incorporated into the current model described in this technical report. (3) Whitney and Whitney Inc., is a well established, Reno, Nevada based management consulting firm offering business technical and management services to the minerals resource industry, assistance in the development of mining legislation taxation and investment policies and technical auditing of operations and mining reserves. (4) Behre Dolbear and Company, Inc. is one of the oldest, continually operating mineral industry engineering and consulting firms in the world. The company specializes in performing studies and consulting for a wide range of businesses with interests in the minerals industry. (ORE LOGO) ORE RESERVES ENGINEERING page 22 May 23, 2005

TABLE 6.2. COMPARISON OF HISTORICAL POST MINING RESOURCE ESTIMATES.
MEASURED + INDICATED ---------------------ktons opt k oz -------------IN SITU RESOURCES Whitney & Whitney Inc. Golden Phoenix Minerals, Inc. Behre Dolbear & Company, Inc. RESOURCE IN HEAPS AND DUMPS Whitney & Whitney Golden Phoenix Minerals Behre Dolbear 25,038 33,399 14,822 0.054 0.044 0.040 1,351 1,455 594

17,750 ---

0.011 ---

199 ---

INFERRED ---------------------ktons opt k oz -------------IN SITU RESOURCES Whitney & Whitney Inc. Golden Phoenix Minerals, Inc. Behre Dolbear & Company, Inc. RESOURCE IN HEAPS AND DUMPS Whitney & Whitney Golden Phoenix Minerals Behre Dolbear 2,700 -12,125 0.022 -0.048 60 -583

--16,312

--0.019

--304

Notes: 1. All estimates include resource estimates from Borealis, Freedom Flats Polaris, East Ridge, Cerro Duro, Jamies Ridge and Purdy Peak and immediately 1 adjacent contiguous resource zones. 2. Resource estimates by Whitney and Whitney, Inc. and Golden Phoenix Minerals, Inc. are not reported to current NI 43-101 standards. 3. Behre Dolbear and Company (2004) has certified that their resource estimate is compliant with NI 43-101 standards, but the report has has not been 3 submitted for regulatory agency review 4. Cutoff grades are not reported for Whitney and Whitney estimate, Golden Phoenix estimate cutoff is .008 opt, and Behre Dolbear cutoff is 0.010 opt. Metallurgical recovery is not applied. (ORE LOGO) ORE RESERVES ENGINEERING page 23 May 23, 2005

6.3.1 IN-SITU MINERAL RESOURCES AT JAMIES RIDGE, CERRO DURO, AND PURDY PEAK Several known gold deposits have been identified within the boundaries of the Borealis property holdings which are not located within the current study area boundary. The Jamies Ridge, Cerro Duro and Purdy Peak deposits are located about three miles northwest of the current study area, and they are also part of the entire Borealis project mining claim holdings. Mining has taken place at Cerro Duro and Jamies Ridge in the 1980's by Echo Bay Mines Ltd and its predecessor companies. The insitu mineral resource estimates are extracted from historical records (Golden Phoenix, 2000) show the resource remaining in this area after mining has been completed. The tonnage and grade shown in Table 6.3, and has been estimated by Golden Phoenix Minerals (2000), but was completed prior to promulgation of NI 43-101 criteria. The calculation is reported to have been completed by the then current industry standard resource calculation methodology. This estimate has not been calculated to current NI43-101 standards, nor has it been verified for this study, and should not be relied upon. TABLE 6.3. HISTORICAL MINERAL RESOURCE ESTIMATE OF THE JAMIES RIDGE, CERRO DURO AND PURDY PEAK DEPOSTIS (GOLDEN PHOENIX MINERALS, INC., 2000)
CONTAINED OZ GOLD (1000'S) --------52 31 --83

RESOURCE CLASS -------Indicated Indicated Total

RESOURCEZONE ---------------Jamies Ridge and Cerro Duro Purdy's Peak

CUTOFF (OPT) ------------not available not available

TONS (1000'S) -------1,499 1,024 ----2,523

GRADE (OPT) ----0.035 0.030 ----0.033

Note: This estimate is not to NI43-101 standard and was not reviewed or audited for this report. 6.3.2 IN-SITU MINERAL RESOURCES AT BOUNDARY RIDGE The Boundary Ridge zone is located about three miles to the southeast of the Borealis and East Ridge resource areas. No recent commercially scaled mining has taken place in this area. New mining claims in this area have been located within the past six to eight months by Gryphon Gold. Previously the Boundary Ridge zone was not fully covered by the core group of mining claims controlled by Gryphon Gold. Geologic mapping and sampling and more than 70 drill holes have been completed in this general area by previous operators. No new resource models have been constructed for this area in this study. A Boundary Ridge zone inferred resource estimate has been completed by Whitney and Whitney (1999) as shown in Table 6.4,. This estimate has not been calculated to current NI43-101 standards, nor has it been verified for this study, and should not be relied upon. TABLE 6.4. HISTORICAL MINERAL RESOURCE ESTIMATE OF THE BOUNDARY RIDGE ZONE (WHITNEY AND WHITNEY, 1999)
CONTAINED OZ GOLD (1000'S) --------60

RESOURCE CLASS -------Inferred

RESOURCE ZONE ------------------Boundary Ridge Zone

CUTOFF (OPT) ------------not available

TONS (1000'S) -------2,700

GRADE (OPT) ----0.022

Note: This estimate is not to NI43-101 standard and was not reviewed or audited for this report. (ORE LOGO) ORE RESERVES ENGINEERING page 24 May 23, 2005

7.0 GEOLOGIC SETTING This section has been compiled in association with Gryphon Gold's geologic staff, which includes a "Qualified Person" for the purpose of NI 43-101, Standards of Disclosure for Mineral Projects, Roger C. Steininger, PhD, CPG (AIPG), and Consulting Chief Geologist. 7.1 REGIONAL GEOLOGY The Borealis mining district lies within the northwest-trending Walker Lane mineral belt of the western Basin and Range province, which hosts numerous gold and silver deposits as shown in Figure 7.1. The Walker Lane structural zone is characterized by regional-scale strike-slip faults, although none of these are known specifically in the Borealis district. Mesozoic metamorphic rocks in the region are intruded by Cretaceous granitic plutons. In the Wassuk range the Mesozoic basement is principally granodiorite with metamorphic rock inclusions (Eng, 1991). Overlying these rocks are minor occurrences of Tertiary rhyolitic tuffs and more extensive andesite flows. Near some fault zones, the granitic basement rocks exposed in the eastern part of the district are locally weakly altered and limonite stained. The oldest exposed Tertiary rocks are rhyolitic tuffs in small isolated outcrops which may be erosional remnants of a more extensive unit. The rhyolitic tuffs may be correlative with regionally extensive Oligocene rhyolitic ignimbrites found in the Yerington area to the north and within the northern Wassuk Range. On the west side of the Wassuk Range, a thick sequence of older Miocene andesitic volcanic rocks unconformably overlies and is in fault contact with the granitic and metamorphic rocks, which generally occur east of the Borealis district. The age of the andesites is poorly constrained due to limited regional dating, but an age of 19 to 15 Ma is suggested ("Ma" refers to million years before present). In the Aurora district, 10 miles southwest of Borealis, andesitic agglomerates and flows dated at 15.4 to 13.5 Ma overlie Mesozoic basement rocks and host gold-silver mineralization. Based on these data, the andesites in the Borealis region can be considered as 19 to 13.5 Ma. Rocks of the Miocene Wassuk Group locally overlie older andesites and underlie much of Fletcher Valley, which is a late Tertiary structural basin located west of the district. The Wassuk Group is up to 8,200 ft thick near its type locality, but much thinner in the Borealis district where its Coal Valley member is found. Much of the Wassuk Group sedimentary rocks in the Borealis area appear to have been removed by erosion. The Wassuk Group consists of a sequence of interbedded fluviolacustrine, andesitic sedimentary rocks with less abundant andesitic lava flows near its base, and it ranges in age from 13 to 8 Ma. Pliocene and Quaternary fanglomerates and pediment gravels overlie the Wassuk Group, or the older andesites where the Wassuk Group is missing, and thicken in the direction of Fletcher Basin. The Borealis district lies within the northeast-trending Bodie-Aurora-Borealis mineral belt; the Aurora district with 1.9 million ounces of past gold production lies 10 miles southwest of Borealis and the Bodie district with 1.5 million ounces of gold production lies 19 miles southwest in California (Silberman and Chesterman, 1991). All three mining districts are hosted by Miocene volcanics. The intersection of northwesterly and west-northwesterly trending Walker Lane structures with the northeasterly trending structures of the Aurora-Borealis zone probably provided the structural preparation conducive to extensive hydrothermal alteration and mineralization at Borealis. Additional information on these adjacent districts is provided in Section 15.0 of this report. (ORE LOGO) ORE RESERVES ENGINEERING page 25 May 23, 2005

(GRAPHIC OMITTED) (source: Gryphon Gold Corp.) FIGURE 7.1. WALKER LANE GOLD AND SILVER DEPOSITS 7.2 LOCAL GEOLOGY The Borealis district mineralization is hosted by upper and lower Miocene andesite flows, laharic breccias, and volcaniclastic tuffs, which exceed 1000 to 1200 ft in thickness, strike northeasterly, and dip shallowly to the northwest (Figure 7.2). The andesite is internally subdivided into upper and lower volcanic packages which are laterally extensive and constitute the predominant bedrock in the district. These packages host most of the gold ore deposits. The most favorable host horizon is the upper andesite and the contact zone between the two andesite packages. An overlying upper tuff is limited in aerial extent due to erosion (Eng, 1991). All of these units are cut by steeply dipping northeast-trending faults that probably provided conduits for mineralizing hydrothermal fluids in the principal mineralized trends. Pediment gravels cover the altered-mineralized volcanic rocks at lower elevations along the range front and overlie many of the best exploration targets. Wide-spaced drilling indicates that the majority of the altered-mineralized area is covered by pediment gravels over a seven-mile long zone in the southern and southwestern parts of the district. Much of this area has received only minor testing with systematic multidisciplinary exploration. (ORE LOGO) ORE RESERVES ENGINEERING page 26 May 23, 2005

(MAP-GRAPHIC OMITTED) (source Echo Bay Mines, circa 1989, modified to reflect new property boundaries by Gryphon Gold 2005) FIGURE 7.2. GEOLOGIC MAP OF THE BOREALIS PROJECT AREA. (ORE LOGO) ORE RESERVES ENGINEERING page 27 May 23, 2005

7.2.1 MIOCENE AND YOUNGER ROCKS The lower andesite is the oldest volcanostratigraphic unit and is composed predominantly of andesitic flow breccias, with less abundant lava flows and minor lahars. The unit is often mottled, ranging from light gray-green to purple-brown. The rocks typically are weakly porphyritic, containing phenocrysts of small feldspars and minor hornblende and biotite. Flow breccias consist of andesite clasts in the weakly altered groundmass of feldspar and clay minerals. These features cause the unit to be poorly indurated and incompetent. The lower andesite exceeds 500 ft in thickness and lies unconformably on, or is in fault contact with, Mesozoic basement rocks. The lower andesite is not a favorable host rock, and only minor gold production has been derived from it. The upper andesite unit is composed of green-gray, weakly to moderately porphyritic andesite lava flows that are more indurated and massive than those of the underlying lower andesite. These lavas contain 10 to 25 percent phenocrysts of feldspar with less abundant phenocrysts of biotite, hornblende, and pyroxene. This unit is as much as 300 ft thick in the Freedom Flats deposit, and it hosts ore in each of the deposits of the district. Overlying the andesite units is the upper tuff. This unit consists of a complex interbedded sequence of volcaniclastic sedimentary rocks, lava flows of intermediate to mafic composition, and less abundant tuffs. The upper tuff is host to some of the gold mineralization in the Freedom Flats and Borealis deposits. Overlying the upper tuff is the post-mineralization Wassuk Group, including the clastic sediments of the Coal Valley Formation (TCV), consists of weakly cemented gravel, sandstone to conglomerate, and ash units, all of which appear to be locally derived. Lying above the Wassuk Group are Pliocene and Quaternary pediment gravels (QAL). The older gravel contains abundant clasts of opaline and chalcedonic silica. The younger gravel contains clasts of unaltered and propylitized andesitic country rocks with less abundant clasts of silicified rock. Intrusive rocks found in the Borealis area are difficult to recognize due to intense alteration of both the host rocks and intrusive rocks. In the Freedom Flats pit, fine- to medium-grained intrusive biotite andesite porphyry was identified and contains up to 40 percent phenocrysts. This intrusive may be related to the igneous heat engine that drove the gold-bearing hydrothermal system in the Borealis district. Figure 7.3 shows the volcanostratigraphic section at Borealis.
(ORE LOGO) ORE RESERVES ENGINEERING May 23, 2005 page 28

(GRAPHIC OMITTED) (Source: Gryphon Gold Corp., based on information from Cambior Exploration, 1998)

Note: DOF = Deep Ore Flats, NER = Northeast Ridge, GV = Gold View, ER = East Ridge, JR = Jaimes Ridge, FF = Freedom Flats, G = Graben, B = Borealis, CD = Cerro Duro FIGURE 7.3 STRATIGRAPHIC SECTION IN THE BOREALIS DISTRICT 7.2.3 STRUCTURE Structures in the district are dominantly northeast-striking normal faults with steep northwest dips, and generally west-northwest-striking range-front faults with steep southerly dips. A pattern of northeast-trending horsts and grabens occur in the district, according to Eng (1991). Both of the fault systems lie in regional trends of known mineralized systems, and Borealis appears to be at a major intersection of these mineralized trends. A number of the pre-mineral faults of both orientations in the district may have been conduits for higher-grade hydrothermal mineralization, which often followed the planes of the faults and formed high-grade pods. Movement along most of the faults in the Borealis district appears to be normal, although some faults also display a strike-slip component of movement. In the mined part of the district, rocks are mostly down dropped on the northwest side of northeast-trending faults, which is part of a graben. The Graben deposit appears to be controlled by a northnortheast trending structure dipping steeply to the east, and no other structures of this orientation have been identified All these major faults have acted as conduits for hydrothermal fluids or loci for development of mineralized hydrothermal breccias and silicification. Emplacement mechanisms of the ore deposits included hydrothermal brecciation concurrent with, and followed by, pervasive silicification and sulfide/precious metal introduction within or adjacent to feeder structures. It is likely that some deposits, such as the high-grade pod in the Freedom Flats deposit, may have been initially localized along the intersections of small second order faults with the major feeder structures. In plan view these high-grade pods are relatively small and diligent effort is required to locate and define them. (ORE LOGO) ORE RESERVES ENGINEERING page 29 May 23, 2005

In addition to high-grade pods, much of the Borealis district gold mineralization is contained in flat-lying tabular deposits extending outward from the feeder structures. Control of the flatter deposits is probably volcanostratigraphy with more permeable units or contact zones providing the permeability for mineralizing fluids. In the western part of the Borealis district where the Cerro Duro and Jaimes Ridge deposits are found, structures are predominantly west-northwest-trending normal faults including some that separate Mesozoic granites from the Miocene volcanic rocks. These faults are responsible for localizing some of the mineralization in this part of the district along with northeast-trending faults. Post-mineral movement of a series of the west-northwest-trending, range-front faults suggest a progressive down dropping of the southern blocks toward the valley floor. Speculation on the occurrence of a volcanotectonic depression or a caldera in the Borealis district is tentatively supported by aeromagnetic anomalies that form two or more circular patterns beneath the pediment. Surface geology features are not definitive in identifying these structures however, and confirmation of the volcanic structures will depend on the results of drill holes that will explore the pediment area. Post-mineral faulting is common and needs to be identified accurately, especially where ore-grade material is terminated or offset by faulting. Post-mineral faulting may be oriented: 1) west-northwesterly paralleling the range front, 2) northeasterly paralleling the other dominant regional and district faulting, and possibly 3) northerly, by reactivating pre-mineral structures that likely controlled Graben mineralization. Post-mineral faulting has displaced portions of several of the previously mined deposits. (ORE LOGO) ORE RESERVES ENGINEERING page 30 May 23, 2005

8.0 DEPOSIT TYPE This section has been compiled in association with Gryphon Gold's geologic staff, which includes a "Qualified Person" for the purpose of NI 43-101, Standards of Disclosure for Mineral Projects, Roger C. Steininger, PhD, CPG (AIPG), and Consulting Chief Geologist. 8.1 HYDROTHERMAL GOLD DEPOSITS The Borealis hydrothermal system is recognized as a high-sulfidation type system generally with high-grade gold occurring along steeply dipping structures and lower grade gold both surrounding the high-grade and commonly controlled by volcanic stratigraphy in relatively flat-lying zones. Gold deposits with minor silver are hosted by Miocene andesitic flows, laharic breccias, and volcaniclastic tuffs, which all strike northeasterly and dip shallowly to the northwest. Pediment gravels cover the altered-mineralized volcanic rocks at lower elevations along the mountain front and there is potential for discovery of more blind deposits, similar to the Graben deposit. The Borealis hydrothermal system is defined as high-sulfidation (acid sulfate) based on the following features: presence of advanced argillic alteration with alunite deep in the system; presence of large bodies of opaline silica; presence of many zones of acid leaching with feldspar phenocrysts removed leaving "vuggy" silica rock; presence of minor amounts of enargite; lack of adularia; and high iron-sulfide content, principally pyrite with minor marcasite. Structures controlling ore deposits are both northeast-striking faults and generally west-northwest-striking faults. Steeply dipping faults in the district may have been feeders for high-grade gold deposits. High-grade zones were likely formed by more than one episode of hydrothermal, possibly explosive, brecciation and silification with accompanying metallic minerals deposition. The vertical high-grade zones in the Freedom Flats deposit probably formed through this mechanism along a northeast-trending structure. The Graben system appears to be localized along an elongate north-northeast-trending structural zone containing two or more high-grade gold pods or shoots that plunge steeply (45-60 degrees) to the east. Hydrothermal brecciation and pervasive silicification are also common to the Graben system. The Graben deposit is somewhat different than other deposits in the district. Both the low-grade gold zone and hydrothermal brecciation are more extensive. Within the low-grade gold aureole are at least three apparently separate high-grade gold zones although resource modeling combines two of the three. Resource modeling also identifies continuity of the moderate to high-grade zone for 2,000 ft in length and from 50 to 200 ft wide. There is less well developed and extensive "vuggy" silica zones. Additionally, the apparent structural control has a north-northeasterly orientation which is unusual in the district. Due to extensive gravel cover in the pediment environment, additional blind deposits such as the Graben deposit are expected to be discovered as exploration progresses beneath the alluvial cover. Other gold deposits in the district have similar alteration features, but may have been developed by less explosive events. In these other systems, gold-bearing mineralizing fluids migrated upward along fault zones at the intersection of favorable lithologic horizons where the gold-bearing fluids moved laterally and deposited lowergrade mineralization. This process created gold deposits that have a flat-lying orientation and appear to be lenticular in section. The original Borealis deposit and the lower-grade portions of the Graben deposit are examples. The Graben deposit has components of both styles. The surface "footprints" of the high-grade pods or pipes found to date are rather small and they can be easily missed with patterns of too widely spaced geophysical surveys and drill holes. Once a higher-grade zone is suspected, fences of drill holes with a 50-ft spacing may be required, but even this spacing may not be adequate to accurately define the high grade within the zones. Tony Eng (1991) describes the underestimation of grades in the Freedom Flats deposit due to the drill holes missing small very high-grade pods (>0.5 opt Au) of mineralization and to possible loss of fines during drilling. Two aspects not covered by Eng, but ones that have become extremely important are the orientation of drill holes with respect to controls of the mineralized zones and the inferred presence of a coarse gold component. Because much of the high-grade gold occurs along steeply dipping structures, the mineralized zones can best be defined by angle drill holes oriented approximately normal to the dip of the controlling features. Most of the drilling on the property, including the Graben deposit, is vertical, and therefore did not adequately sample the steep higher-grade zones. Drill-hole orientation has compounded the underestimation of grades within the district. The coarse gold component can best be captured with very careful

sampling of drill cuttings and core, collecting large samples, and special assaying techniques. (ORE LOGO) ORE RESERVES ENGINEERING page 31 May 23, 2005

Most deposits mined in the district, including the Borealis, have a generally flatter tabular shape, and they may have formed parallel to, and within, permeable portions of gently dipping volcanic flows or lahars, and along contact zones between lithologies. Beneath and along the northwest margin of the Borealis pit, additional flat-lying gold zones of the Borealis Extension and another deeper zone are found. Steeply dipping high-grade feeder structures have been identified within the original Borealis deposit and extend beneath the pit. Similarly other steeply dipping high-grade feeder structures have been identified within other deposits and can be projected below the limit of drilling. Substantial drilling is required to define the extent of these mineralized zones. The core of the area in and proximal to the Graben deposit is characterized by a complex hydrothermal breccia that hosts most of the gold mineralization, and extends vertically and laterally beyond the limits of the deposit. The form of the breccia is imperfectly known, but there are indications that it has steeply dipping roots and flares near its top into a subhorizontal zone that may be controlled by lithology or contact zones. Several varieties of breccia are present, many of which may be variations of the same event. Two units seem to have consistent cross-cutting relationships in several core holes; therefore at least two periods of brecciation are present. The younger unit is light gray and it intrudes the older black breccia. The light-gray breccia contains about 40% clasts that are matrix supported. Typically, the clasts are from a few millimeters to a few centimeters across in an extremely finegrained light-gray siliceous matrix. The majority of the clasts contain 100% texture destructive secondary silicification. In a few areas clasts of moderately silicified and weakly argillized welded tuff(?) and siltstone(?) occur. This breccia commonly contains 1-5% pyrite, most of which is in the matrix. The younger black breccia contains a variety of sub-textures that will be described together as part of this breccia, but it is recognized that some, or all, of these could be separate brecciation events. Black breccia contains 40 to 60% clasts up to 10 centimeters across in a dense siliceous matrix. Clasts are matrix supported and consist primarily of dark gray to black highly siliceous material of unknown origin, with lesser amounts of silicified andesite, welded tuff, and massive iron sulfide clots. In places the unit is extremely black and sooty, as if there is an organic component or, alternatively, very fine-grained sulfides. Several of the drill holes pass from the breccia into altered andesite. The contact zone is characterized by a gradational decrease in brecciation into unbrecciated silicified andesite over a few feet. There is also a corresponding decrease in the amount of silicification into argillized andesite. Two of the more common textures within the black breccia are zones of banded matrix with few, if any, clasts and areas of vuggy textures. The banded zones typically occur with the banding at high-angles to the core axis. The areas of vuggy texture appear similar to other areas of "acid leaching" on the property. Generally, the cavities are lined with quartz and pyrite. All of the breccias are cut by at least two periods of quartz veins, the oldest of which are white quartz up to 10 mm wide, and the younger are dark quartzpyrite veins that are up to 5 mm wide and cut the white quartz veins. Pyrite and minor marcasite are concentrated in the matrix where clots of >50% iron sulfides are common. Generally, the matrix contains 5 to 25% iron sulfides while the clasts contain 1 to 5% iron sulfides. The only feature within the breccia that seems to correlate with high grades of gold mineralization is the abundance of quartz veining of either type. While all of the breccias contain iron sulfides, not all breccias contain gold. 8.2 GOLD IN ALLUVIUM Several drill holes to the west of Freedom Flats and Borealis encountered gold within the alluvium. These holes trace a gold-bearing zone that in plan appears to outline a paleochannel of a stream or gently sloping hillside that may have had its origin in the eroding Borealis deposit. The zone is at least 2,500 feet long, up to 500 feet wide, and several tens up to 100 feet thick. An initial estimate of the average grade of this zone is about 0.005 opt Au. At this point it is unknown if this is a true placer deposit, an alluvial deposit of broken ore, or some combination of both. Additional drilling and beneficiation tests are needed to determine if an economic gold deposit exists. (ORE LOGO) ORE RESERVES ENGINEERING page 32 May 23, 2005

9.0 MINERALIZATION This section has been compiled in association with Gryphon Gold's geologic staff, which includes a "Qualified Person" for the purpose of NI 43-101, Standards of Disclosure for Mineral Projects, Roger C. Steininger, PhD, CPG (AIPG), and Consulting Chief Geologist. Alteration and mineralization most closely associated with ore-grade material are vuggy fine-grained silica, iron sulfides, and quartz veining, and hydrothermal brecciation is also common. Alteration patterns grade outward from the central vuggy silica zone into kaolinite-quartz-pyrite, which grades outward into kaolinite-pyrite, and then to outermost propylitic halo with minor pyrite. Advanced argillic alteration with alunite may have overprinted the kaolinite-bearing zones. The silver to gold ratio generally averages between 3:1 and 5:1 in each of the deposits, and silver commonly forms a discontinuous halo around, and overlaps, the central gold mineralization. Even more importantly, the gold mineralization in the identified deposits is surrounded by a halo of much lower grade gold mineralization, generally above 0.002 opt. Arsenic and antimony are strongly anomalous in a broad envelope around the gold deposits. Recent fieldwork has identified an early stage of chalcedonic silica alteration with pyrite containing elevated trace elements such as arsenic, antimony, and mercury, but it is largely devoid of, but probably related to, precious metals mineralization. Recognition of this early, barren silica alteration is important so that it can be avoided when locating and optimizing drilling programs, although blind gold-bearing systems could occur beneath, or near, barren silica. Post mineral faulting is common, and needs to be identified accurately, especially where ore-grade mineralization is displaced or terminated by faulting. Finely disseminated gold found in the Borealis mineralized system was initially enclosed within pyrite. In some portions of the deposits, through natural oxidation, the pyrite was oxidized to limonite and the gold was released; thus gold was made available to extraction by cyanidation. Limited evidence suggests coarse gold exists, probably in the high-grade zones. Honea (1988, 1993) has noted coarse gold up to 29 microns in polished sections of samples from Northeast Ridge and the Graben, and Strachen (1981) reported visible gold ranging from 2 microns to 25 microns from samples taken from the Borealis pit area. Gold still bound in pyrite or pyritesilica is not easily recovered by a simple cyanide heap leach operation, and some type of milling operation would be anticipated. 9.1 OXIDE GOLD MINERALIZATION Oxide deposits in the district have goethite, hematite, and jarosite as the supergene oxidation products after iron sulfides, and the limonite type depends primarily on original sulfide mineralogy and abundance. Iron oxide minerals occur as thin fracture coatings, fillings, earthy masses, as well as disseminations throughout the rock, according to Eng (1991). "Barite occurs as both fine- and coarse-grained crystals, and frequently lines voids and coats iron oxide minerals. These textures indicate that barite is very late in the paragenetic sequence. Alunite is very fine grained and has been identified only by x-ray and petrographic work," according to Eng (1991). At least part of the alunite is supergene in origin. Grains of free gold are occasionally found in oxidized high-grade rock samples. Depth of oxidation is variable throughout the district and is dependent on alteration type, structure, and rock type. Oxidation ranges from approximately 250 ft in argillic and propylitic altered rocks to over 600 ft in silicified rocks that are also fractured. A transition zone from oxides to sulfides with depth is common with a mixing of oxide and sulfide minerals. Except for the Graben deposit, all of the known gold deposits are at least partially oxidized. Typically the upper portion of a deposit is totally oxidized and the lower portions unoxidized. In places, such as the Ridge deposits, there is an extensive transition zone of partially oxidized sulfide bearing gold mineralization. Oxidation has been observed to at least 1,000 ft below the surface. Therefore, there is reason to believe that if additional gold deposits are found under gravel cover, some portion of them may be oxidized. 9.2 SULFIDE GOLD MINERALIZATION Sulfide deposits in the district are mostly contained within quartz-pyrite alteration with the sulfides consisting mostly of pyrite with minor marcasite, and lesser arsenopyrite and cinnabar. Many trace minerals of copper, antimony, arsenic, mercury, and silver have also been identified. Pyrite content ranges from 5 to 20 volume

percent with local areas of nearly massive sulfides in the quartz-pyrite zone and it occurs with grain sizes up to 1mm. (ORE LOGO) ORE RESERVES ENGINEERING page 33 May 23, 2005

Euhedral pyrite grains are commonly rimmed and partially replaced with a later stage of anhedral pyrite overgrowths (Eng, 1991). Study of this phenomenon in other epithermal districts in Nevada has shown that gold occurs only in the late overgrowths. The Graben deposit is the best example found to date of the size and quality of sulfide deposits within the district. In addition sulfide mineral resources occur in the bottoms of most of the pits, but the most significant mineral resource in a pit environment is found beneath the Freedom Flats pit. Potential targets below most pits would include the feeder structures, many of which would be expected to have high-grade sulfide gold mineralization. Within the lower-grade zone of gold mineralization in the Graben deposit there are at least two or three zones or pods of high-grade gold, based on a 0.100 opt Au cutoff . The shape and extent of each is imperfectly known, and two may actually be one pod. These pods plunge 45 degrees to 600 degrees to the east-southeast, are traceable for at least 400 ft down plunge, and are part of a zone of intermediate to high-grade that is continuous throughout the length of known Graben mineralization. Some of the holes intercepting the Graben have spectacular grades and thickness reminiscent of the long vertical intercepts in the Freedom Flats deposit. Examples of these intercepts include the following drill-holes: FF-50 with 60 ft averaging 0.232 opt Au; FF-173 with 55 ft averaging 0.512 opt Au; FF-223 with 20 ft averaging 0.470 opt Au and 75 ft averaging 0.241 opt Au; FF 229 with 110 ft averaging 0.856 opt Au. Drilling of the Graben deposit has defined a total mineral resource of approximately 20 million tons with an average grade of 0.044 opt Au containing about 880,000 ounces of gold within the deposit, using a 0.01 opt cutoff grade, as stated in this report. The high-grade zones within the Graben deposit are estimated to contain 780,000 tons of measured and indicated resource and 220,000 tons of inferred resource with an average grade of 0.29 opt gold. While the larger deposit is a target for additional exploration, the higher-grade zones represent an attractive deposit for development at most gold prices. If the geophysical anomalies along the northern extension of the zone reflect additional mineralization, the deposit will be substantially larger, probably including additional high-grade mineralization. Hydrothermal alteration displays systematic patterns within and around the Graben's gold mineralization (Figure 9.1) and other deposits in the district (for example - Freedom Flats). Based on observations from re-logging drill core and sample cuttings taken from the Coal Valley Formation above the mineralized zone in the Graben,, there is abundant opal and hematite that probably represents the upper portion and the last stage of the hydrothermal system. This changes downward into an argillic zone that contains some alunite in the inner portion of the zone. The base of the argillic zone, above mineralization, is commonly the base of the oxidized zone, suggesting that at least a portion of the clay minerals may be supergene. Below the limit of oxidization, within areas of gold mineralization, silicification is the most common alteration type. Drill holes at the margin of the deposit commonly intersect sulfide-bearing argillic alteration. The lack of silicification above the oxide boundary and argillization below the limit of oxidization indicates that at least a portion of the argillic alteration is hypogene. The upper portions of the silicified zone are commonly dense chalcedonic quartz with pyrite. Toward the center of the silicified zone quartz becomes grainy and in places is gray spongy or vuggy silica typical of "acid leached" alteration. As noted above, the Graben deposit has a large subhorizontal low-grade zone surrounding steeply dipping highgrade zones. Whereas gold is mostly restricted to the breccia, not all of the breccia is gold bearing. Most of the pyrite occurs as disseminations in silicified rock, which is mostly in the hydrothermal breccia. Minor amounts of iron sulfide occur in veins and on rims of clasts. Iron sulfides extend beyond gold mineralization. Ore microscopy has identified only a few grains of free gold, generally <1 mm across (Bloomstein, 1992). Most of the gold in the sulfide zone is reported to be contained within pyrite grains. (ORE LOGO) ORE RESERVES ENGINEERING page 34 May 23, 2005

(GRAPHIC OMITTED) (Source: Echo Bay Mines, circa 1989) FIGURE 9.1. TYPICAL ALTERATION PATTERNS WITHIN AND AROUND THE BOREALIS DISTRICT GOLD DEPOSITS. (ORE LOGO) ORE RESERVES ENGINEERING page 35 May 23, 2005

10.0 EXPLORATION This section has been compiled in association with Gryphon Gold's geologic staff, which includes a "Qualified Person" for the purpose of NI 43-101, Standards of Disclosure for Mineral Projects, Roger C. Steininger, PhD, CPG (AIPG), and Consulting Chief Geologist. Discovery potential in the Borealis district includes oxidized gold mineralization adjacent to existing pits, new oxide gold deposits at shallow depth within the large land position, gold associated with sulfide minerals below and adjacent to the existing pits, in possible feeder zones below surface mined ore, deeper gold-bearing sulfide mineralization elsewhere on the property, particularly at the high-grade Graben deposit, and along its apparent projection to the north and also in other targets such as Sunset Wash and Lucky Boy. Both oxidized and sulfidebearing gold deposits exhibit lithologic and structural controls for the locations and morphologies of the gold deposits. The most significant mineral resource exploration and expansion targets, in the opinions of the authors, as now identified by Gryphon Gold, include the following (in order of relative confidence of discovery potential): The Ridge Deposits (including East Ridge / Gold View, Northeast Ridge) Freedom Flats Borealis Near-Surface Expansion Borealis Extension Deep Ore Flats Graben North Graben Sunset Wash Lucky Boy All except for Sunset Wash and Lucky Boy are included (or partially included, as is the case for North Graben) within the boundaries of the area previously disturbed by mining and the study area. In addition, several other identified resource areas are open for further discovery on the claims now controlled by Gryphon Gold. These target areas have known or projected mineralization and coincident geophysical signatures, and extend under alluvial cover in pediment areas in the southern and southwestern portion of the property. Alluvial gravel covers the altered-mineralized volcanic rocks at lower elevations along the mountain front and overlies some of the best exploration targets. 10.1 GEOPHYSICS Many geophysical surveys have been conducted in the Borealis district since 1978, including the following: ground magnetics, VLF, induced polarization (IP)/resistivity, seismic, CSAMT, helicopter magnetics and EM, escan, and gradient IP/resistivity. In addition, regional magnetics and gravity maps and information are available through governmental sources. Geophysical data most useful in exploration programs have been IP (chargeability), aeromagnetics, and, to a lesser degree, resistivity. Resistivity was used successfully in the early exploration of the district to track favorable trends of silica alteration. In addition to projections of known alteration and mineralization trends into or within pediment environments, geophysics is being used to define and prioritize the pediment targets. In particular, aeromagnetic lows (Figure 10.1) and induced polarization (chargeability highs) data identify the most favorable covered targets and help site drill holes, especially where magnetics and IP show coincident anomalies. Resistivity data is also used with emphasis on resistivity highs reflecting extensive silicification. Other geophysical methods will be used where appropriate, possibly including ground magnetics, CSAMT, e-scan, VLF, electromagnetics, gravity, and seismic. Each of these methods provides information that may be used in determining the subsurface geologic conditions and how and where to test exploration targets. (ORE LOGO) ORE RESERVES ENGINEERING page 36 May 23, 2005

(GRAPHIC OMITTED) (Source: Echo Bay Mines 1989) FIGURE 10.1. 1989 ECHO BAY AEROMAGNETIC SURVEY. Joseph R. Anzman, consulting geophysicist, is in the process of re-interpreting the historic geophysical data within the Borealis district with emphasis on the mine area. His initial focus is on resistivity anomalies from both ground and airborne surveys. The initial interpretation of resistivity data identifies several northeast-trending zones of high resistivity that correspond to the silicification associated with known gold deposits, and outlines several anomalies that might be related to undiscovered gold deposits. Figure 10.2 displays the general trends of these resistivity highs and their relationship to the several gold deposits. Between the gold deposits, alteration continues and commonly contains traces to significant amounts of gold. The easternmost anomalous resistivity zone is along the northeast-trending Boundary Ridge-Bullion Ridge gold and alteration trend, including the Boundary Ridge and Bullion Ridge zone resources. As noted in other sections of this report, this trend contains several drill holes with significant gold intercepts and excellent exploration potential. The central anomalous resistivity zone, which separates into two subparallel anomalies toward the southwest, includes most of the mined deposits in the Borealis trend. The Graben deposit has a distinctive resistivity signature that trends northerly rather than following the other trends. The anomalous resistivity zone to the northwest of and parallel to the Borealis trend extends from the North Graben target northeasterly through the process area into Wiggle Knob and terminates at the Back Side prospect. Several very widely spaced holes up to 250 feet deep were drilled along this trend on surface rock exposures and geochemical anomalies. Many of the holes contain at least traces of gold, argillic alteration, and some low-temperature silicification. In many holes alteration increases with depth, and oxidization in several holes extends to at least 250 feet. Using the Borealis and Boundary Ridge-trend analogies, the alteration and traces of gold detected along this trend may be indications of areas between gold deposits. More drilling is needed to determine if mineable oxide and sulfide gold deposits occur along the trend. (ORE LOGO) ORE RESERVES ENGINEERING page 37 May 23, 2005

(GRAPHIC OMITTED) (Source: J. Anzman and Gryphon Gold, 2005) FIGURE 10.2. SELECTED RESISTIVITY ANOMALIES OF THE BOREALIS DISTRICT. 10.2 EXPANSION OF KNOWN RESOURCE AREAS Several prospective resource expansion areas have been identified with existing drill holes and are found adjacent to pits that have been mined since 1981. These zones may be turned into mineral resources with additional drilling, sampling and testing. 10.2.1 EAST RIDGE / GOLD VIEW Initial drilling is planned to better define and extend the horizontal limits of the known gold mineralization along the south and east flanks of the deposit. In addition, the feeder zone to the East Ridge deposit has never been drill tested. This zone lies either underneath the current pit or to the south and originates from a major fault zone bringing up basement granite. 10.2.2 NORTHEAST RIDGE Additional drilling is planned to better define and extend the limits of the gold mineralization around the pit, especially the southeast flank, for mining purposes. As with East Ridge, the feeder zone to the Northeast Ridge deposit has never been drill tested. This untested zone lies either underneath the current pit or to the south originating from a major fault zone. 10.2.3 FREEDOM FLATS The silicified brecciated pipe-like structure under the current Freedom Flats mineral resource has been inadequately drill tested. Several deeper holes have intercepted gold mineralization another 500 ft below the current pit bottom. Limited drill evidence, structural reconstruction of geology, and an aeromagnetic anomaly in the pit area suggests that a second brecciated pipe-like structure may exist a short distance to the south of the pit bottom. Additional drilling is warranted to define the limits of the southwest edge of the deposit and the edges of the mineralized pipe-like feature found in the bottom of the pit. These holes will be from 200 to 300 ft deep, and deeper targets will be tested in later programs. (ORE LOGO) ORE RESERVES ENGINEERING page 38 May 23, 2005

10.2.4 BOREALIS NEAR-SURFACE EXPANSION Additional drilling is planned to better define the limits of the mineralization along edges of the old Borealis pit for mining purposes. These planned holes will be 100 to 200 ft deep. Another target is indicated where the Borealis deposit is cut on the northwest side by the extension of the Freedom Flats fault and a portion of the deposit may be in this down-dropped block. 10.2.5 OTHER KNOWN MINERAL RESOURCE AREAS DEEP ORE FLATS (ALSO KNOWN AS POLARIS) Additional drilling is needed to better define the limits of the mineralization along the edges and along trend of the existing pit at Deep Ore Flats. CROCODILE RIDGE This silicified zone is a northeast extension of the Borealis deposit. Several holes have intercepted low-grade gold mineralization. There may be two parallel silicified zones in this area, one along the ridge crest and one on the northwest slope of the ridge beneath alluvial cover. Additional drilling is warranted to determine the size of the gold resource. GOLD VIEW TO NORTHEAST RIDGE (MIDDLE RIDGE) This silicified zone is an extension of the Gold View deposit to the northeast and extending to the Northeast Ridge deposit. CERRO DURO The Cerro Duro deposit is localized along the major Cerro Duro fault zone and is a brecciated pipe-like feature. Additional deeper drilling into the root zone of this pipe-like feature is required and new drilling should be done to identify other blind mineralized structures that may also be localized along this fault. This drilling will likely be part of a later program when exploration is expanded outside the previously mined and disturbed area. JAIME'S RIDGE Several holes drilled to the west of the Jaime's Ridge deposit identified some low-grade gold mineralization along splays of the major Cerro Duro fault system. Additional drilling should be conducted to determine if mineable reserves could be found in the area as part of a later program. PURDY PEAK The Purdy Peak gold mineralization needs to be further drilled with deeper holes and offset holes as part of a later program. The area lies at the juncture of two faults along trend with the Cerro Duro fault system. BULLION RIDGE/BOUNDARY RIDGE The northeast-trending alteration zone extending along Boundary Ridge into Bullion Ridge (Figure 2.1) contains intense silicification that is surrounded by argillization, with abundant anomalous gold. Widely spaced shallow holes have tested several of the alteration/anomalous gold zones defining mineral resources, but more exploration is needed to determine the total potential of the area. At Boundary/Bullion an historic mineral resource estimate of 2.7 million tons with an average grade of 0.022 opt Au has been defined and reported by Whitney and Whitney in 1999. The estimate was not prepared for Gryphon Gold but a prior owner; no specific critera for qualifying the resource estimates was referenced in the report, and the estimate is not compliant with NI 43-101 standards. It has not been reviewed or verified by the author. Table 10.1 summarizes some of the more attractive drill-hole gold intercepts in the area. This oxide mineral resource is not closed by drilling in most directions; additional geological investigations and drilling are needed to adequately define and expand the mineral resource. (ORE LOGO) ORE RESERVES ENGINEERING page 39 May 23, 2005

The altered and mineralized area known as Boundary Ridge contains several drill holes with anomalous gold, including BR-2 with 100 feet (starting at the surface) that averages 0.029 opt Au. Additional drilling is needed to determine the extent of the gold mineral resource present. The alteration and mineralization extends under alluvial cover to the southwest in the Boundary Flats area. Limited drilling has failed to trace the mineralization on the pediment. TABLE 10.1 SIGNIFICANT GOLD INTERCEPTS IN THE BULLION RIDGE MINERAL RESOURCE AREA.
DRILL HOLE ---------BUR 005 BUR 008 BUR 022 BUR 047 BUR 049 INTERCEPT --------20 feet 105 feet 20 feet 130 feet 65 feet GRADE -----------0.022 opt Au 0.020 opt Au 0.096 opt Au 0.030 opt Au 0.058 opt Au

10.3 BOREALIS EXTENSION The Borealis Extension deposit occurs at shallow to intermediate depth beneath the northern and western parts of the former Borealis pit. Most of the mineralization begins at 110 to 375 ft below the surface. Generally the top of this target occurs at or slightly below the 7,000-ft elevation, according to Whitney (2004). The primary target is defined by 16 contiguous drill holes that have potential ore-grade intercepts and that penetrate beneath the 7,000-ft elevation (Figure 10.3). Thickness of low-grade mineralized intercepts ranges from 15 to 560 ft with nine holes having from 155 to 560 ft of +0.01 opt Au; average thickness of the zone is 236 ft. Grades have been divided into sub-zones of 0.01-0.03 opt, which averages 0.018 opt Au, and of +0.03 opt, which averages 0.084 opt Au. (GRAPHIC OMITTED) (Source: R.C. Steininger and Gryphon Gold Corp., 2005) FIGURE 10.3. SCHEMATIC CROSS-SECTION OF THE BOREALIS EXTENSION DEPOSIT AREA. (ORE LOGO) ORE RESERVES ENGINEERING page 40 May 23, 2005

The consistent elevation at the top of the lower mineralized zone has led John Whitney (2004) to postulate that "gold-bearing waters may have pooled within an elevation range for an extended period during which gold deposition occurred." Preliminary explanations, based on limited information, for geologic grade control of this relatively horizontal mineralized zone may be: 1) a flat-lying permeable volcanic unit such as laharic breccia as a favorable host or 2) a boiling zone having a well-defined top, perhaps partly confined by a relatively impermeable volcanic cap. With each of these three possible models, a feeder structure having higher-grade mineralization would be expected to occur within and below the overall mineral body and the feeder would be the likely source of gold-bearing hydrothermal fluid emanations. Projection among the contiguous well-mineralized holes of the Borealis Extension zone suggests an inferred mineral resource elongate to the northeast, and limited to the northwest and southeast by poorly mineralized holes. This zone of mineralization is open in several directions, and there is sufficient additional potential for more mineralization. Three water well holes along projection to the northeast have similar mineralized intercepts, strongly suggesting the zone continues in that direction. The most important question to be answered is whether this lower mineralized zone is confined to the Borealis deposit area, or might it be much broader in scope and representative of a much larger tonnage. In addition, grade zoning has indicated another deeper flat-lying zone of gold mineralization beneath the Borealis Extension deposit. Two areas of drilling are recommended to test the Borealis Expansion and Borealis Extension deposits. Nine 200-ft holes are planned to define and expand the margin of the Borealis deposit in the area where the new Borealis pit is planned. Two or more of these holes would be extended to 600 ft and two additional deeper holes are proposed to test the extent and grade of the Borealis Extension deposit. The deeper zone of mineralization beneath the Extension will not be tested in the currently planned drilling program. 10.4 GRABEN DEPOSIT The Graben deposit is currently defined with approximately 36 RC holes and 19 core holes. Drilling has defined a zone of gold mineralization, using an 0.01 opt Au boundary, that extends at least more than 2,000 ft in a northsouth direction and between 200 and 750 ft east-west, and up to 300 ft thick (Figure 10.4). The top of the deposit is from 500 to 650 ft below the surface. Near its southern margin the axis of the deposit is within 800 ft of the Freedom Flats deposit and along one portion of the southeastern margin low-grade mineralization may connect with the Freedom Flats mineralization through an east-west trending splay of the N50 degrees E Zone. Drilling data appears to confirm mineralization at the southern margin of the deposit is closed off. Along the western margin a suspected post-mineralization fault may have down-dropped the deposit and apparently serves as an effect western boundary to mineralization and brings TCV in contact with the Graben zone.. Much of the eastern margin has not been defined by drilling. To the north mineralization remains open. An airborne magnetic survey and a gradient IP survey reveal anomalies along the northern extension of the Graben zone, suggesting that the deposit continues in that direction. (ORE LOGO) ORE RESERVES ENGINEERING page 41 May 23, 2005

(GRAPHIC OMITTED) (Source: Echo Bay Mines, circa 1989; modified Gryphon Gold, 2005) FIGURE 10.4. SCHEMATIC CROSS-SECTION OF THE GRABEN DEPOSIT AREA Within the flat-lying lower-grade zone of gold mineralization there are at two or three steeper zones of high-grade gold, based on a 0.10 opt Au cutoff, and the zone is continuous at a slightly lower cutoff grade. The shape and extent of each shoot is imperfectly known and at least two may more accurately be one larger zone. These shoots plunge 450 to 600 to the east-southeast and are traceable for at least 400 ft down plunge. Typically, the horizontal dimensions are 50-100 ft in an east-west direction and up to 400 ft along strike. Some of these holes have very high grades and thickness reminiscent of the long vertical intercepts in the Freedom Flats deposit. There may also be additional high-grade shoots that have been missed by the current drilling. The Graben deposit has the potential for discovery of additional mineralized material to the north, where it is open. Mineralization is completely covered by post-mineralization alluvium and occurs as a near horizontal "tabular" lower-grade zone along a north-northeast-trending zone. Further drilling is needed to fully define the deposit's actual shape, tonnage, and grade, and to demonstrate the grade continuity within the higher-grade zones. It is probable that additional higher-grade zones will be discovered as drilling progresses. The Graben zone projects along trend to the north-northeast into an area with a broad aeromagnetic/IP anomaly (North Graben Target) which provides the greatest potential for discovery of large tonnages of high-grade reserves. 10.5 NORTH GRABEN TARGET The North Graben prospect is defined by the projection of known mineralization, coincident with a large intense aeromagnetic low and a broad chargeability (IP) high (Figure 10.4). Only one hole has been drilled, but not completed, into the southern margin of the North Graben prospect, about 1,400 ft north of the most northerly significant Graben mineralization. While this hole failed to reach its target depth, alteration typical of the margin of the Graben deposit was encountered. This blind untested target lies on trend of the north-northeast-elongate Graben mineralized zone. Cambior completed a gradient array IP survey in 1998 covering the area from the Freedom Flats pit to the North Graben prospect, which has a broad chargeability high. Earlier (1989) Echo Bay had completed a district-wide helicopter magnetic/electromagnetic survey, which identified a large intense "bullseye" type aeromagnetic low in the North Graben area. This coincident magnetic low/chargeability high is now interpreted as being caused by an intensive and extensive hydrothermal alteration-mineralization system, and, based on the size and intensity of the magnetic low, it possibly could be the largest system in the district. The model for this interpretation is the Freedom Flats deposit, which is expressed geophysically by an intense bulls-eye aeromagnetic low and projection of a chargeability high. The Freedom Flats deposit has the highest gold grade (ORE LOGO) ORE RESERVES ENGINEERING page 42 May 23, 2005

and is the strongest hydrothermal system mined to date in the district. Freedom Flats has a pronounced irregular elongate shape with the principal axis vertical. The bulls-eye magnetic low is interpreted to reflect the pervasive vertical replacement of magnetic minerals, mostly magnetite, by pyrite in and around the high-grade feeder structure. Andesitic host rocks originally contained substantial amounts of magnetite, and where andesite is weakly altered (propylitized) in a halo surrounding the Freedom Flats deposit, some of the magnetite is preserved, thus providing a relative magnetic high surrounding the bulls-eye low. (GRAPHIC OMITTED) (Source: Gryphon Gold, 2005) FIGURE 10.5. NORTH GRABEN TARGET EXPLORATION MODEL. Cambior's (Benedict and Lloyd, 1998) gradient IP survey identifies a deep-source broad chargeability anomaly that extends northerly from the northern margin of the Freedom Flats deposit, covers only part of the Graben zone and most of the North Graben area, and extends to the limit of the surveyed area (Figure 10.4). This anomaly is interpreted to be caused by high-sulfide mineralization. The North Graben prospect thus represents the possible extension of known mineralization of the Graben zone, or alternatively it may be another system potentially with more intense, deeper alteration and stronger mineralization localized along the same northnortheast-trending structural zone. One angle hole (BC 98005) was drilled by Cambior (Benedict and Lloyd) in 1998 to test the southernmost portion of the North Graben target chargeability anomaly, and it was well south of a large aeromagnetic low. The upper 725 ft (ORE LOGO) ORE RESERVES ENGINEERING page 43 May 23, 2005

of this hole contained post-mineral gravel and sediments and relatively unaltered andesitic volcanics, before intersecting altered and mineralized andesite near its terminus. The pre-mineral andesite flows contain alteration ranging from propylitic to chalcedonic silica down the hole. Hole 98005 was lost at a depth of 780 ft due to hole caving. Although no significant gold mineralization was encountered in the hole, alteration was most intense at the bottom. Hydrothermal alteration noted in samples from the hole fits better with patterns found at the margin of a Graben-type deposit. 10.6 SUNSET WASH TARGET The Sunset Wash prospect consists of a gravel-covered pediment underlain by extensive hydrothermal alteration in the western portion of the Borealis district. Sixteen holes drilled by Echo Bay Mines indicate that intense alteration occurs within a loosely defined west-southwest belt that extends westerly from the Jaime's Ridge/Cerro Duro deposits. At the western limit of the west-southwest belt, Cambior's IP survey and drilling results can be interpreted to indicate that the alteration system projects toward the southeast into the pediment along a mineralized northwest-oriented fault. The principal Sunset Wash drill target is defined by the structural projection, a bulls-eye aeromagnetic low, and a coincident chargeability (IP) high beneath an area of alluvium. This target area provides the best opportunity for discovery of a gold deposit in the western part of the Borealis district. Cambior conducted a gradient array induced polarization (IP) survey over the Sunset Wash area effectively outlining a 1,000 by 5,000 ft chargeability anomaly. The anomaly corresponds exceptionally well to alteration and sulfide mineralization identified by Echo Bay's drill-hole results. Two structures appear to be mapped by the chargeability anomaly; one is a 5,000-ft long west-southwest-trending structure and the other is a smaller, northwest-trending structure that cuts off the W-SW structure at its western limit. Alteration types and intensity identified by the drilling, combined with the strong IP chargeability high and the aeromagnetic low, strongly suggest that the robust hydrothermal system at Sunset Wash is analogous to the mineralized systems at Graben and Freedom Flats. Geologic observations based on mapping and drill hole logging indicate that both the Freedom Flats and the Graben deposits are localized along a favorable horizon near the contact between the upper and lower volcanic units. This same contact zone appears to underlie the Sunset Wash pediment at a shallow depth. The target concept suggests that mineralization should favor zones where mineralizing structures crosscut the upper and lower volcanic contact. Cambior drilled three holes to test portions of the Sunset Wash geophysical anomaly and to offset other preexisting drill holes with significant alteration. Each of the three holes was drilled vertically to maximize the depths tested. The three holes were collared in the upper volcanic unit, but only one crossed the contact. The westernmost of Cambior's three holes encountered the most encouraging alteration and best gold mineralization suggesting that drill-hole BC98003 is near the most prospective area. This drill-hole intercepted altered rock from bedrock surface to total depth, including an extremely thick zone of chalcedonic replacement in the lower two-thirds of the hole. The altered zone contains intermittent quartz-pyrite alteration that hosts low-level gold mineralization up to 0.51 ppm Au. Fracture-controlled orpiment and realgar are abundant within the oxide zone as are pyrite (+10%) and arsenopyrite deeper in the hole. The dominance of chalcedonic silica and the relative lack of quartz replacement alteration in hole 3 suggest that the strongest portion of the hydrothermal system was not tested. Hole 3 was drilled near the intersection between the west-southwest-trending Sunset Wash IP anomaly, which has been tested by most of the 16 holes, and a northwest-trending IP anomaly, which has not been tested. Projection of the northwest-oriented anomaly to the southeast into the pediment shows a coincident bulls-eye aeromagnetic low and a chargeability high in an area untested by any drill holes. 10.7 LUCKY BOY TARGET Another target area similar to North Graben and Sunset Wash is the Lucky Boy area, which may be in a shallower pediment environment in the central portion of the district near the range front. Drill holes in the periphery have thick zones of silification and traces of gold mineralization. Echo Bay's aeromagnetic map shows another bulls-eye magnetic low and Cambior's IP map shows a coincident chargeability high in the area of the silicification. Additional compilation work is in progress. (ORE LOGO) ORE RESERVES ENGINEERING page 44 May 23, 2005

11.0 DRILLING 11.1 DRILLING OF EXISTING HEAPS AND DUMPS--SPRING 2004 Drilling of the five Borealis heaps and parts of the Freedom Flats and Borealis dumps was completed in May 2004. This program consisted of 32 holes totaling 2,478.5 ft. Table A-1 (Appendix A) outlines the holes that were drilled. Dump holes were drilled deep enough to penetrate the soil horizon below the dump, while holes on the heaps were drilled to an estimated 10-15 ft above the heap's liner. None of these latter holes penetrated the heap liners. Not all of the permitted holes were drilled during this phase of the program. Rather, a few holes were drilled on each heap and dump to obtain an initial and representative view of grade distribution. 11.2 HISTORICAL DRILL-HOLE DATABASE The drill-hole database used for the main Borealis project study area contains 1,747 drill holes with a total drilled length of 510,712 ft (Table 17.2), including 1,626 which intersected gold mineralization. These holes were drilled by different operators on the property. Drill-hole types include diamond core holes, reverse circulation (RC) holes and rotary holes. Only a few core holes have down-hole survey information. Mineralized zones covered by these drill holes include the Freedom Flats, Graben, Borealis, Polaris, East Ridge and Northeast Ridge. Except for Graben all have been partially mined by previous operators of the project; the Borealis and Deep Ore Flats (also known as Polaris) pits have been back-filled with waste from the Freedom Flats pit. There are an additional 487 drill holes with a total drilled length of 103,562 ft scattered throughout the district, and mostly in the Cerro Duro, Jamie's Ridge, and Purdy Peak area, at approximately three miles distant northwest of the main Borealis mine area. The total existing drilling for the entire Borealis project, therefore, is 2,234 holes with a total drilled length of 614,274 ft. Drill hole sampling length is generally 5 ft for the RC holes, but varies for the core holes based on geological intervals. Sampling length is up to 25 ft for some of the early rotary holes. Gold assays in parts per billion (ppb) and troy ounces per short ton (opt) are provided for most of the sampling intervals. Silver assays in parts per million (ppm) and opt are also provided for some of the sampling intervals. Silver grade was not modeled in this study. (ORE LOGO) ORE RESERVES ENGINEERING page 45 May 23, 2005

12.0 SAMPLING METHOD AND APPROACH 12.1 GENERAL The following includes information from research of historical records conducted by Gryphon Gold and is included for general reference. The Borealis Mine operated from 1981 through 1990 producing 10.7 million tons of ore averaging 0.059 ounces of gold per ton from seven open pits. The mined ore contained 635,000 ounces of gold (Eng, 1991) of which approximately 500,000 ounces (475,000 oz through 1989) of gold were recovered through a heap leach operation. This historic production can be considered a bulk sample of the deposits validating the database that was used for feasibility studies and construction decisions through the 1980s. With over 2,200 drill holes in the database that was compiled over a 20-year period by major companies, the amount of information on the project is extensive. It is primarily these data that have been used in this study as the foundation of the current mineral resource estimate. The bulk of the data was collected beginning in 1978, the year of discovery of the initial oregrade mineralization, and was continuously collected through the final year of full production. Subsequent explorers through the 1990s added to the database. Specific detailed information on sampling methods and approaches by the various mine operators has not been found in the historic information; however, a report by John T. Boyd Co. (1981) noted that the "drilling, sampling and analytical procedures as well as assay checks were reviewed by Dames and Moore and reported as acceptable by industry standards." In addition, information in reports, monthly reports and memos give some clues to the sampling methods and approaches. The early work describes between 7 and 9 percent of all samples being re-assayed, with higher grade intervals re-assayed most frequently with approximately 20 percent of these intervals assayed again (Ivosevic, 1979). Also, there are many references to "assay checks" in the drill-hole data with comparisons of assays of the same pulps and also of assays of different splits from the same sample intervals. Results of these comparisons generally were reported to be reasonably close. High-grade intervals often showed more variability in their assays. Santa Fe Pacific (1994) performed check assays on their drilling and found 23 percent variability in the high-grade assays. Their geologist reported, "rather than reflecting relative differences in the labs, I believe the difference is due to the inherent variability in the core. Perhaps we would have been better served to take the entire remaining core [for the check assay material] instead of sawing it in half again (resulting in a 1/4 split)." Echo Bay Mines did some quality checks on their drill cuttings sampling and assaying methods as part of their evaluation of the property prior to and following its purchase from Tenneco Minerals, which indicated that the original assays were reliable and representative. During their exploration and development programs they also drilled a number of core holes twins of reverse circulation rotary drill holes to compare assay results in the same areas. Echo Bay concluded that the vast bulk of drilling, which was RC rotary, probably undervalued the gold mineralization, especially in higher grade zones. Anecdotal information from former Echo Bay management indicates that the mine consistently gave better results in terms of higher grade and better recovery of gold than planned or expected. 12.2 FREEDOM FLATS EXAMPLE The principal orebody discovered by Echo Bay Mines was the Freedom Flats deposit. The exploration, geology, and mineralization of the Freedom Flats gold deposit are described by Eng (1991). He reports that in Echo Bay's reconciliation of the Freedom Flats reserves, "actual mine production exceeded the original model reserve in grade and contained ounces by about 30 percent." In order to explain this discrepancy, he states, "due to the narrow linear trend of the mineralization, the deposit was drilled-out on 50 ft centers along fences 100 ft apart. In-fill drilling was conducted between fences on 50-70 ft centers where thick, high-grade mineralization was intersected. Holes were drilled around the perimeter of the deposit on 100 ft centers to close-off all mineralization. A total of 99 [reverse-circulation] rotary holes were drilled in the main deposit area totaling 56,000 ft. All holes were drilled vertically. Due to the presence of abundant clay, most holes were drilled with water and foam injection; samples were collected using Jones splitters. In addition to rotary drilling, four HQ core holes totaling 2,687 ft were drilled primarily to obtain material for column leach metallurgical testing. Although continuous assays were not available for most of the core holes due to metallurgical sampling, the results of limited assaying suggested that the rotary holes underestimated the gold grades. The most likely cause for this

discrepancy was the loss of fines during (ORE LOGO) ORE RESERVES ENGINEERING page 46 May 23, 2005

wet drilling." Later in his report he states that the discrepancy also may be due in part to the small size of many of the higher-grade (+0.5 opt Au) ore pods, which were not intersected in close-spaced (50 ft) drilling. Two other possible explanations not mentioned by Echo Bay are the probability of coarse gold particles not being adequately sampled or assayed and the predominantly vertical drilling patterns in steeply dipping to vertical mineralized zones. The presence of coarse gold and its effect on assay variability may have been overlooked by previous operators of the Borealis Mine. Coarse gold has been reported in the district from small-scale placer operations and also by Houston Oil and Minerals Company geologists who found visible gold in the surface outcrops of old prospect pits and other minor workings along highly mineralized structures in the district. In addition mineralogical reports on the higher-grade mineralized samples mention free gold ranging from 2 microns to 29 microns from the Northeast Ridge and Borealis deposits (Honea 1988 and Strachen 1981). 12.3 SAMPLING OF EXISTING HEAPS AND DUMPS - SPRING 2004 An exploration program was undertaken in spring 2004 to confirm the amount and grade of gold-bearing rock that exists on heaps and dumps. The exploration work provided ore samples for metallurgical testwork, to define the geotechnical conditions, to obtain sufficient samples to demonstrate the geotechnical characteristics for design purposes in the waste characterization database, and to install baseline groundwater monitoring systems. As part of this program, a sonic drill rig was used to drill exploratory holes on the five previously leached heaps as well as the Freedom Flats and Borealis Pits waste dumps. A total of 30 holes were drilled with samples collected and composited for each hole. Visual observations of the samples obtained during the sonic drilling program indicate the previously leached ore on Heap 1 and Heap 2 contained more fines, with a clay-like texture, than coarse rock. Conversely, and as expected, the Heap 3 leach material, which was run-of-mine and the Borealis waste dump contain more coarse rock. If the gold values remaining in the previously leached material on the various leach heaps are associated with the coarse fraction and/or are bound by pyrite and/or silica, then additional gold recovery may be achieved by screening and gravity separation or by leaching a finer material. A thorough description of the sampling method, sample preparation, analytical techniques, and security procedures is found below in section 13.2. 12.4 DRILL-HOLE DATABASE FOR MINERAL RESOURCE MODEL The database used for the computer generated resource model portion of this study consists of 1,604 drill holes with a total footage of 447,860 ft and 82,756 assayed intervals. Many of the high-grade intervals were assayed more than once to check and confirm the actual grades, so the total number of assays exceeds 82,756. The average depth of holes is 275 ft but the bulk of the holes are less than 200 ft with a limited number of holes in selective locations extending 1,000-2,000 ft to test deeper mineralization. The average assayed interval was slightly larger than 5 ft, with the bulk of the samples representing 5-ft intervals. The first drilling was completed by Houston Oil and Minerals, which is the discoverer of the original Borealis deposit and the developer of the mine. Tenneco Minerals acquired Houston Oil and Minerals and continued operating the mine and drilling for new deposits. Echo Bay Mines acquired Tenneco Minerals in 1986 and continued all operations and drilling until the mine was shut down in 1990. Throughout the 1990's Billiton Minerals (28 drill holes), Santa Fe Pacific Mining (32 drill holes), J.D. Welsh & Associates (11 shallow drill holes in a heap), and Cambior Exploration (10 drill holes) continued exploring and evaluating the property thus adding to the database. Many more holes exist across the property than were used in this study. Santa Fe compiled the initial version of the computer database of drill holes with subsequent companies contributing to it. Golden Phoenix thoroughly checked the accuracy and completeness of the database by individually checking each of the 2,234 holes' survey and assay data line by line with the original survey and assay sheets, and revising the database where necessary. Of the total, 1,604 holes were used for this study in areas of the principal mineral deposits. No holes were excluded from the database utilized in this study.

(ORE LOGO) ORE RESERVES ENGINEERING page 47 May 23, 2005

13.0 SAMPLE PREPARATION, ANALYSIS AND SECURITY 13.1 PREVIOUS MINING OPERATIONS AND EXPLORATION The following includes information from research of historical records conducted by Gryphon Gold and is included for general reference. Houston Oil and Minerals, Tenneco, and Echo Bay Mines are reported to have used standard sample preparation and analytical techniques in their exploration and evaluation efforts, but detailed descriptions of the procedures have not been found. The fact that a successful mine was developed producing about 500,000 ounces of gold indicates that their techniques of sampling, sample preparation, analysis, and security produced results that were representative, reliable, and are not unreasonable, although some questions remain, particularly with regard to the assaying of samples with potential coarse gold. Most of the drill-hole assaying was accomplished by major laboratories that were in existence at the time of the drilling programs. Various labs including Monitor Geochemical, Union Assaying, Barringer, Chemex, BondarClegg, Metallurgical Laboratories, Cone Geochemical, the Borealis Mine lab, and others were involved in the assaying at different phases of the exploration and mining activity. 13.1.1 ANALYSES AND QUALITY CONTROL Early work on the property appeared to rely on assay standards that were supplied by the laboratories doing the assaying. However, Echo Bay Mines (1986) reported using seven internal quality control standards for their Borealis Mine drill-hole assaying program. The seven standards ranged in gold concentrations from 170 ppb to 0.37 opt. Assay labs involved in the round robin standards analyses were Cone Geochemical, Chemex, and the Borealis Mine lab, and the precision of the three labs was excellent (+/- 1 to 8%) for the higher gold grades (0.154-0.373 opt); acceptable (+/- 3 to 14%) for the lower grades (0.029-0.037 opt); and fair (+/- 4 to 20%) for the geochemical anomaly grades (0.009 opt to 170 ppb). These data provide an initial estimation of the precision and accuracy of gold analyses of Borealis mineralization. The repeatability of assays suggests that coarse gold was not a problem for these samples, or that the samples were so small that potential coarse gold was missed entirely. It has been the author's experience that when coarse gold is present it may not introduce sampling variability until the sample weight is over 500 grams. During 1986 Echo Bay instructed Chemex (1986) to analyze duplicate samples for five selected drill holes. A comparison was made of (a) 1/2 assay-ton fire assay with a gravimetric finish versus (b) 1/2 assay-ton fire assay with an atomic absorption finish versus (c) hot cyanide leach of a 10-gram sample. The 1/2 assay-ton fire assay gravimetric and the 1/2 assay-ton fire assay - AA gave essentially the same results. However the hot cyanide leach gave results that were 5-11percent higher in one comparison and significantly lower in another, prompting Chemex to conclude that cyanide leach assaying was not appropriate for Borealis samples. The great majority of the assays in the database are based on fire assays. 13.1.2 SECURITY Nothing is known of the sample security arrangements made by the previous operators, but since the mines each produced the amounts of gold predicted or higher, we can assume the security was adequate and it is unlikely that sample security was a problem. The same assumption is true for most of the subsequent explorers of the property--Billiton, Santa Fe Pacific, and Cambior--which were all substantial companies and probably used sound procedures. 13.2 HEAP AND DUMP DRILLING AND SAMPLING PROGRAM - SPRING 2004 Boart Longyear was contracted to drill holes with a sonic rig since this equipment would retrieve a core-like sample. All work completed during this program was under the supervision of Dr. R. Steininger, Chief Consulting Geologist for Gryphon Gold, and a Qualified Person under the terms of NI43-101. Not only could a good assay sample be obtained with this approach, but also the collected material should be representative of size distribution of material in the heaps and dumps. The initial two holes were drilled with 4in. bits, but it became obvious that larger rocks were being pushed out of the way. Drilling then proceeded with a

6in. (ORE LOGO) ORE RESERVES ENGINEERING page 48 May 23, 2005

bit which appeared to capture more of the larger rock, producing a more representative size distribution sample. All drill holes were drilled vertical, and samples represent "true thickness" of the dump or heap material. 13.2.1 SAMPLING, ANALYSIS AND QUALITY CONTROL Sampling intervals were originally designed to be every 10 ft, but were contingent upon drilling conditions. During drilling sample intervals were subject to when the sample tube was extracted from the hole. Individual runs varied from 1 to 3 ft, which were then combined to produce a sample with an interval length as close to 10 ft as practicable (the combination was completed at American Assay Labs). Combined intervals varied from 9 ft to 11 ft, except at the bottom of a hole where the interval was as short as 4 ft. When the sample tube was extracted from the hole, the sample was immediately slid into a plastic sleeve that was sealed and marked with the drill hole number and footage interval. These plastic sample sleeves were not reopened until they reached the analytical lab. All of the drill procedures and handover to the analytical lab was monitored by an independent geologist hired through Geotemps Inc. The contract field geologist also maintained lithology logs for each drill hole. A non-blind standard was added as the last sample of each hole, which was obvious to the lab since the standard was in a pulp bag, although the lab did not know the gold value of the standard. All samples were submitted to American Assays Labs of Sparks, Nevada. At the lab each of the individual samples were combined into an analytical sample that approximated 10 ft intervals as outline above, as per instructions from the geologist. Each analytical sample was split in a rotary splitter with a one-fifth of the sample removed for assay and the remaining four-fifths retained for metallurgical testing. Each analytical split was weighed, dried and weighed again. The difference between the two weights represents the amount of water in the original sample. Each dried sample was crushed to one-quarter inch passing and a 300 to 500 gram sample was riffled off for assay. The remaining sample was retained at the lab. Each assay sample was pulverized and assayed for gold and silver by one assay ton fire assay, and a two hour 200 gram cyanide shake assay for dissolvable gold. Two additional samplings were undertaken on Heap 2. Twelve samples were collected along the new road cut and one "bulk" sample was collected from a backhoe cut made during reclamation. The road cut samples were collected as rock chips over 10 ft intervals. Each sample was about 5 pounds of material that was collected to represent the size distribution of the material in the cut. Six of the samples were from the south side mid-point along the heap and six from near the east base. Each sample was assayed by American Assay Labs using one assay ton fire assay for gold and silver. The average grade of the 12 samples is 0.009 opt Au, which compares favorably with the average grade of the three holes drilled into the heap, which is 0.008 opt Au. About 20 pounds of representative material was collected from the backhoe trench. At American Assay Labs one-quarter of the sample was split out and assayed by one assay ton fire assay for gold and silver. This sample contains 0.008 opt Au, which corresponds with the average value for the heap as determined by drilling. The remaining three-quarters of the sample was sieved into four size fractions and assayed in the same manner as noted above. The results are displayed in Table 13.1, which indicates that the gold grade in the <2" material is significantly higher than in the larger material. TABLE 13.1 ANALYTICAL RESULTS OF BULK SAMPLE FROM ROAD CUT MID-WAY BETWEEN TOP AND BOTTOM OF HEAP 2.
GOLD GRADE (OPT-AU) ---------0.008 0.010 0.014 0.010 0.007 SILVER GRADE (OPT-AG) -----------0.102 0.095 0.131 0.066 0.029

TYPE ---Bulk <1/2" material 1/2" to 1" material 1"-2" material >2" material

As part of the quality control program standards were submitted to American Assay Labs (AAL) with each drill hole, several assayed pulps and two standards were submitted to ALS Chemex, and three of the duplicates and two

(ORE LOGO) ORE RESERVES ENGINEERING page 49 May 23, 2005

standards were submitted to ActLabs-Skyline. Their results of the analyses of the standards and duplicates are shown in Tables 13.2 and 13.3. All of the data shows good precision and accuracy except for Chemex's analyses of the standard. Based on this information, the analyses from American Assay are considered reliable. TABLE 13.2. SUMMARY OF ANALYTICAL RESULTS FROM STANDARD USED IN QUALITY CONTROL PROGRAM, ACCEPTED VALUE 0.019 OPT AU.
NUMBER OF VALUES AND AVERAGE GOLD VALUE ----------------------31 samples/0.017 opt Au 3 samples/0.017 opt Au 2 samples/0.022 opt Au 2 samples/0.019 opt Au VARIATION FROM ACCEPTED VALUE (OPT AU) ----------------------0.002 0.002 0.003 None

ANALYTICAL LAB -------------American Assay Labs American Assay Labs repeats ALS Chemex Skyline Labs

TABLE 13.3. SUMMARY OF ASSAY ANALYSES FOR THE SAME SAMPLE BY AMERICAN ASSAY LAB. AND ALS CHEMEX.
AMERICAN ASSAY LAB. ------------------0.022 opt Au 0.003 opt Au 0.012 opt Au 0.002 opt Au <0.001 opt Au 0.004 opt Au 0.013 opt Au 0.008 opt Au 0.005 opt Au 0.025 opt Au 0.023 opt Au 0.014 opt Au 0.008 opt Au 0.005 opt Au 0.018 opt Au 0.008 opt Au ALS CHEMEX ------------0.023 opt Au 0.002 opt Au 0.008 opt Au <0.001 opt Au 0.007 opt Au <0.001 opt Au 0.011 opt Au 0.009 opt Au 0.010 opt Au 0.024 opt Au 0.026 opt Au 0.012 opt Au 0.013 opt Au 0.005 opt Au 0.017 opt Au 0.010 opt Au DIFFERENCE ---------0.001 0.001 0.004 0.002 0.007 0.004 0.002 0.001 0.005 0.001 0.003 0.002 0.005 0.000 0.001 0.002

The average difference in analytical results from assays on the same pulps is less than 0.001 opt Au, and the standard deviation of the differences is 0.003 opt Au, which is extremely close and within the level of accuracy of the assaying method. The last piece of data that supports the reliability of the new results is the comparison with Welsh's original drilling of Heap 1 (Table 13.4). The bulk of the information indicates that sampling of the heaps and dumps were representative and those samples were accurately assayed. (ORE LOGO) ORE RESERVES ENGINEERING page 50 May 23, 2005

TABLE 13.4. COMPARISON OF HEAP 1 ASSAY RESULTS WITH PREVIOUS SAMPLING PROGRAM.
GRADE OPT AU -----0.028 0.023 0.020 0.017 NEARBY WELSH DRILL HOLE -----------------H-10 H-11 H-5 H-6

BMC HOLE -------BOR-11 BOR-13 BOR-16 BOR-17

AU OPT -----0.033 0.026 0.020 0.014

13.2.2 SECURITY All samples were collected in plastic sample bags, sealed, and securely stored until picked up by the transport arranged under the authority of American Assay Laboratories. American Assay maintained control of all samples from the pickup at Borealis until analytical work was completed. It is the opinion of Dr. Steininger, a Qualified Person under the terms of NI 43-101, who supervised this drilling and sampling program, that the security procedures were adequate and properly implemented during the program. (ORE LOGO) ORE RESERVES ENGINEERING page 51 May 23, 2005

14.0 DATA VERIFICATION 14.1 HISTORICAL DRILL HOLE DATA The following includes information from research of historical records conducted Gryphon Gold and is included for general reference. The drill-hole database was verified by Golden Phoenix (2004, personal communication) during an 8-month intensive effort by reviewing every one of the 2,417 drill holes and over 125,047 assays on original sheets and comparing them line by line with the database and ensuring that only accurate information was in the database. Where several valid assays were found for a single interval they were averaged to determine the grade used in the database. Drill hole collar location surveys on original sheets were also compared to the database information and improved where necessary. Down-hole survey information on original sheets for the deeper holes were also reviewed and compared with the database to ensure its accuracy. Information presented above describes the limitations imposed by the lack of certain historical records on verification of the data. Based on operating results, and historical descriptions it appears that the sampling, sample preparation, assaying, and security of samples were conducted in a industry acceptable manner for the time period in which the samples were collected and processed, and it is the author's opinion that the assays are suitable for resource estimation. 14.2 SEMI-QUANTITATIVE CHECK SAMPLING As part of the evaluation of Borealis, several samples have been collected (under the general overview of Gryphon Gold geologists) from selected areas on the property to generally validate original sample assays and identify possible mineral resource areas. Samples include an eighteen foot interval of core, one pit wall rock chip sample, and two spoil pile samples from Heap 1 drill holes. Table 14.1 summarizes the gold assay results from this sampling. The samples were not collected to be representative of the material, but only to give an indication of the original assays were "within the ballpark." The core sample was from the remaining sawed half and was resawed to produce a quarter sample of the original drill core, from within a higher-grade zone of the Graben deposit. There is no way to verify if all of the original sawed half of the core remained in the core-box when Gryphon Gold Corporation obtained the newly sampled material. The pit sample was from the southeast margin of the East Ridge pit, at the pit floor over a 15 foot horizontal interval at coordinates 374,586E, 4,249,990N, and 7,425 feet elevation. The material was oxidized and silicified andesite. Samples were collected from the spoil pile from holes BOR 11 and 13 on Heap 1. All sample preparation and assays were preformed by American Assay Labs. While none of these new samples represent a statistical valid test of previous assays, they do indicate that the data used in developing knowledge of the property is generally reasonable and is within the appropriate gold grade range. The average value for the core interval is slightly lower that the original assay, but given that the new sample was about one-quarter of the original sample, within a higher-grade gold zone, variations are to be expected. The new assays support the contention that the interval is within the high-grade gold zone of the Graben deposit. The sample from the East Ridge pit wall supports the contention that economic gold grades do exist at the pit margin. The results from the holes in the heaps are comparable to original assays, given that the new samples are not a systematic sample, totally representative of the material drilled. TABLE 14.1. RESULTS OF SELECTIVE CHECK SAMPLING AT BOREALIS.
ORIGINAL/HISTORICAL ASSAY VALUE ------------------------0.201 opt Au 0.030 opt Au 0.023 opt Au

LOCATION -------CBO023 597-615' East Ridge pit wall BOR11 heap 1 BOR 13 heap 1

RECENT ASSAY VALUE -----------------0.162 opt Au 0.018 opt Au 0.026 opt Au 0.019 opt Au

(ORE LOGO) ORE RESERVES ENGINEERING page 52 May 23, 2005

15.0 ADJACENT PROPERTIES The nearest mining property to the Borealis gold mineral resource area is the Esmeralda project (formerly the Aurora Mine) owned and recently operated by Metallic Ventures (Figure 15.1). The Esmeralda project lies 10 miles southwest of Borealis. The Aurora district has had historical production of approximately 1.9 million ounces of gold and more than 2.4 million ounces of silver from as many as 30 veins. Remaining mineral resources reported by Metallic Ventures Gold in early 2003 were 1.3 million ounces of gold. The mineralized system is a low-sulfidation type with gold and minor silver in banded quartz-adularia-sericite veins hosted by Tertiary volcanics. The Bodie district is further southwest, 19 miles from Borealis, along the same trend and has a reported 1.5 million ounces of gold and nearly 7.3 million ounces of silver of past production from a series of veins in Tertiary andesite host rocks. The remaining mineral resources were reported at approximately 1.9 million ounces of gold in 1991. The Bodie, Aurora, Borealis, and other minor districts are aligned along a northeast-southwest trend of mineralized districts commonly referred to as the Aurora-Borealis trend. (GRAPHIC OMITTED) (Source: Gryphon Gold, 2005) Notes: Bodie District: Past production 1.5 million ounces gold and 7.3 million ounces silver (Buchanan, 1981). Remaining mineral resource 1.9 million ounces gold (last reported by Galactic Resources in 1991). Aurora District: Past production 1.9 million ounces gold and 2.4 million ounces silver

(Vanderburg 1937) Remaining mineral resource 1.3 million ounces gold (last reported by Metallic Ventures Gold Inc in their 2004 annual report). Borealis (Ramona) District: Past production 0.6 million ounces gold FIGURE 15.1 LOCATION OF BOREALIS PROPERTY AND OTHER IMPORTANT NEARBY GOLD MINING PROPERTIES IN THE WALKER LANE AND AURORA-BOREALIS CROSS TREND (The author of this report has been unable to verify the information noted above under figure 15.1. THIS INFORMATION IS NOT NECESSARILY INDICATIVE OF THE MINERALIZATION ON THE BOREALIS PROPERTY. The references to mineral resources are historical, and for general reference purposes only and may not be compliant with specific NI43-101 guidelines) (ORE LOGO) ORE RESERVES ENGINEERING page 53 May 23, 2005

16.0 MINERAL PROCESSING AND METALLURGICAL TESTING This section has been compiled in association with Gryphon Gold's consulting metallurgist, Jaye T. Pickarts, P.E., a Qualified Person for the purpose of Canadian NI 43-101, Standards of Disclosure for Mineral Projects, and Senior Metallurgical Engineer, Knight Piesold and Company. Samuel Engineering, Inc., a process design and construction management consulting group has contributed supporting information regarding preliminary metallurgical flowsheet concepts. 16.1 HISTORICAL OPERATIONS SINCE 1980 Houston Oil and Minerals started production at the Borealis Mine in late 1981 and quickly sold their assets to Tenneco Minerals, which was subsequently acquired by Echo Bay Minerals in late 1986. Echo Bay operated the mine through 1989 and shut down operations in late 1990. The historical mining operations processed both a run-of-mine (ROM) ore and an ore that was crushed to a nominal 1 1/2-inch product as the primary feed material that was placed on the heap for leaching. The fines fraction was agglomerated with 10 pounds of cement per ton of ore, mixed with the coarse fraction, and leached with 0.5 pounds per ton of sodium cyanide solution. Gold mineralization is finely disseminated and/or partially bonded with pyrite, and although there are very little ore mineralogy data available, historical operating reports suggest that some coarse gold may exist. Gold that is bound in pyrite or pyrite-silica is not easily recovered by simple heap leach cyanidation, however gold recovery in oxide ore is reported to be about 80%. There are no reports of carbonaceous refractory components within the old heap or dump materials. The previous mine operators employed a Merrill Crowe circuit to enhance ease of silver recovery, followed by a retort to remove mercury. 16.2 SUMMARY OF PAST METALLURGICAL TESTING Washington Group International, Inc. was requested to review the past metallurgical testing of the Borealis Mine as part of the initial evaluation of the property. The review considered both the historical metallurgical testwork results and the historical operating records of the mine available located in the archival files (Washington Group, 2003). General findings are summarized below. Silver recovery is very low in all samples tested with the exception of the single oxide interval of Freedom Flats ore, which yielded 87 percent silver recovery from a 1.0 opt silver head. Very little data was available with respect to silver, as it was typically not tracked. Operating reports indicated that actual recoveries in the process plant were in the range of 10 percent for silver. The degree of oxidation of sulfide minerals has a significant impact on the amenability of the samples to direct cyanidation. Leaching is likely dependent on the degree of oxidation; the higher the head grade, the more sulfide must be oxidized for precious metal liberation. Chemical or bacterial oxidation of sulfide ore minerals greatly improves cyanide leaching performance and gold recovery. In the laboratory, nitric acid digestion followed by washing and neutralization prior to cyanidation was very effective yielding 90+ percent recovery of both gold and silver. Biooxidation testwork was reported to yield approximately 85 percent sulfide oxidation, and associated cyanide leach recoveries of gold in excess of 90 percent. Limited scoping level laboratory testing indicates sulfide ore minerals are amenable to concentration by conventional flotation methods. Although flotation testing was not aimed at obtaining high concentrate values, data indicate that approximately 35 to 40 percent of the feed to the rougher concentrate was required to achieve more than 80 percent gold recovery. Regrinding of the rougher concentrate would likely improve the concentrate grade. No work was found which investigated optimization of reagents for selectivity. Leaching of sulfide concentrates requires oxidation of the sulfide minerals for liberation of precious metals. There are various means, which could include: 1) atmospheric pre-aeration stage prior to leaching - air sparging, 2) oxygen enriched air sparging at atmospheric pressures, 3) atmospheric chemical oxidation, 4) bio-oxidation and 5) pressure oxidation. Leaching of flotation tailings would also be considered and will depend on the grade and composition of the rougher tailings. Comprehensive sampling and testing should be implemented to properly characterize the sulfide materials.

Metallurgical testing of the sulfide and mixed sulfide materials should include flotation testing and pre-oxidation test (ORE LOGO) ORE RESERVES ENGINEERING page 54 May 23, 2005

work. The flotation test work should investigate two options. The first option should be to produce the maximum recovery for feed to an oxidation and leaching circuit. The second option should be to produce a shippable, saleable concentrate. Additional test work should focus on 1) optimizing metal recovery and concentrate grade, 2) minimizing final concentrate weight, and 3) defining a cost effective process to oxidize sulfide flotation concentrates or whole ore. 16.3 METALLURGICAL TESTING OF EXISTING HEAPS AND DUMPS - 2004 In 2004, a metallurgical test program was developed for the drill samples taken from existing heap leached material and dumps. No samples were taken or testwork completed on mineralized material that is still in place adjacent to existing mine workings. This work focused on determining the gold amenability to cyanidation and the effect of particle size on gold recovery. The assay and metallurgical work was conducted in Sparks, Nevada, by American Assay Laboratory and McClelland Laboratory, respectively. The sample composites were made by combining a split of each interval from each hole into a hole composite. Each hole was then fire assayed for gold and silver. In addition, a cyanide shake test using a pulverized 200-gram sample was conducted on each hole composite. A summary of these data is shown in Appendix A. Assay results indicate good gold content in leach Heap 1 and Heap 3 and in half of the Borealis Dump. Shake leach results for Heap 1, Heap 3, and the Borealis Dump were also encouraging with gold recoveries averaging about 84 percent, 82 percent, and 100 percent, respectively. Since leach Heap 1 and Heap 3 and the Borealis Dump showed the most encouraging results, this material was subjected to additional metallurgical testing in this program. Bottle roll leach testing was conducted on samples from these three locations. Bore hole composite samples were split, and duplicate bottle roll tests were conducted at material sized to P80, 1 1/2, 1, 3/4, and 1/2 inch. Triplicate head assays were run on the composite sample, and each test had a 72-hour cyanide leach, triplicate tail assays, and the cyanide concentration maintained at 1.0 g/l. A summary of these data is shown in Appendix A, and complete laboratory data sheets have been included in the appendix. 16.3.1 HEAP 1 TEST RESULTS Nine bottle roll leach tests were conducted on the composite made from the Heap 1 material. The indicated bottle roll gold recovery ranges from 37.5 percent to 44.4 percent with an average of 40.8 percent. However, there is a wide variation in both the fire assay head and tail analyses, indicating either the potential presence of a coarse gold fraction or poor assay technique. Recalculating the Heap 1 recovery using the highest head assay and the lowest tail assay from the metallurgical samples yields an adjusted average recovery of 56.8 percent. Conversely, the lowest head assay and highest tail assay yields an adjusted recovery of only 5 percent, further evidence of a potential coarse gold fraction. 16.3.2 HEAP 3 TEST RESULTS Nine bottle roll leach tests were also conducted on the Heap 3 material. The indicated bottle roll leach recovery ranges from 45.5 percent to 54.9 percent with an average of 50 percent. The Heap 3 head sample fire assays are substantially lower than the calculated head, which uses the tail fire assay and the solution assay. This assay variation may again be related to a coarse gold fraction or poor assay technique. It is difficult to determine the actual reason for this assay variation without a complete mineralogical study, but the wide variation in the head and tail assay, regardless of the feed size, suggests that there may be a coarse and slowly leachable gold fraction present. However, since the Heap 1 and Heap 3 material had been previously leached, it seems reasonable to assume that the finer, more oxidized gold would have been recovered, leaving a slow leaching, coarse gold fraction. 16.3.3 BOREALIS DUMP TEST RESULTS Only eight bottle roll leach tests were conducted on the samples from the northeast half of the Borealis Dump, which had the better head assays. These bottle results indicate a gold recovery range from 61.9 percent to 81.0 percent with an average of 72 percent. These data also did not have the assay variation that was evident in the

Heap 1 and Heap 3 material. (ORE LOGO) ORE RESERVES ENGINEERING page 55 May 23, 2005

16.3.4 SCREEN ANALYSIS To help determine if a coarse gold fraction was present, an additional bottle roll leach testing series was conducted that included a head screen and leached tail screen analyses. These data are shown in Appendix A. Although the composite gold recoveries were similar to the previous test results, the same assay variation was evident. The only samples available to use in this testwork had already been crushed to a nominal 1/2-inch size. Nonetheless, these data do provide a good indication of the gold distribution for these samples. The highest gold assay, a plus 1/2-inch size fraction of 0.031 opt, was reported in the Heap 1 head. This size fraction also contained about 28 percent of the total gold content for Heap 1. Looking further into the Heap 1 data, the gold distribution shows that 51 percent of the gold is contained in the coarse-size fraction (plus 1/4inch), which represents about 35 percent of the ore. The cyanide gold recovery at this size fraction is 55 percent. In addition, the Heap 1 fines fraction (minus 35 mesh) contains only 15 percent of the gold that is contained in about 33 percent of the volume. The gold recovery in this fines fraction is about 40 percent. The remaining gold value is contained in the middling fraction (minus 1/4-inch plus 35 mesh) and appears to have a constant tail of about 0.016 opt, indicating the potential presence of coarse or pyrite-silica-bound gold. The Heap 3 data are somewhat different. The coarse fraction (plus 1/4-inch) contains 41 percent of the gold and 61 percent of the total volume, only 20 percent of which is recoverable by cyanidation. The fines fraction (minus 35 mesh) represents about 8 percent of the volume, yet it contains 37 percent of the gold, 92 percent of which is recoverable by cyanidation. The middling fraction (minus 1/4-inch plus 35 mesh) contains 22 percent of the gold at a cyanide recovery of about 38 percent. Reagent consumption for the test series is also shown in Appendix A, Table A-3. There appears to be more of a correlation between the consumption and material type than the particle size or gold content. Heap 3 material had the highest cyanide and moderate lime consumption while the Borealis Dump material had the highest lime consumption and low cyanide consumption. This indicates that some transitional partially oxidized material may have been mined during the previous operations. 16.4 BULK DENSITY AND TONNAGE FACTOR Eight core samples from the Graben deposit were collected for bulk density measurements. Samples were collected to be representative of alteration types and grades within the deposit. Table 16.1 summarizes the alteration characteristics and grade ranges for each sample. Bulk density measurements were performed by McClelland Laboratories, Inc. (Sparks, Nevada) using the standard water displacement method. Bulk density results are displayed in Table 16.1. A weighted average Tonnage Factor, considering alteration and grade, is 12.24 ft(3)/ton for the entire Graben deposit. Within in the greater than 0.10 opt Au zone the density averages 11.69 ft(3)/ton and within the lower grade zone (0.01 to 0.10 opt Au) the density is 12.52 ft(3)/ton. TABLE 16.1. ALTERATION AND GRADE FOR BULK DENSITY SAMPLES.
SAMPLE -----CBO2@729 CBO6@784 CBO23@658 CBO24@585 CBO28@722 CBO31@638 CBO32@660 BC982@1000 ALTERATION TYPE --------------------------------------------------Strong silicification and pyrite, with quartz veins Strong silicification and moderate pyrite Strong silicification and pyrite, with quartz veins Strong silicification and pyrite Strong silicification and moderate pyrite Moderate silicification and pyrite Strong silicification and pyrite, with quartz veins Strong silicification and moderate pyrite GRADE --------------->0.25 opt Au 0.0X opt Au >0.25 opt Au 0.10-0.25 opt Au >0.25 opt Au >0.25 opt Au 0.10-0.25 opt Au 0.0X opt Au SPECIFIC GRAVITY -------2.72 2.63 2.68 3.12 2.44 2.69 2.60 2.49 TONNAGE (FT(3) -------11. 12. 11. 10. 13. 11. 12. 12.

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Other tonnage factor data are available in the historic database. The tonnage factor for the mined portion of Freedom Flats is reported to be 16.4 ft(3)/ton (Eng, 1991). Specific gravity measurement for Borealis, East Ridge, and Northeast Ridge deposits are summarized in Hoegberg (2000). These are converted to tonnage factors as outlined in Table 16.2. The tonnage factor used for most deposits in the previous mineral resource estimate (Behre Dolbear, 2004) was 13.5 ft(3)/ton, except for Freedom Flats and Graben low-grade which was 13 ft(3)/ton, and Graben high-grade (>0.10 opt Au) was 12 ft(3)/ton. TABLE 16.2. BULK DENSITIES FOR BOREALIS, EAST RIDGE, AND NORTHEAST RIDGE DEPOSITS.
DEPOSIT ------Borealis East Ridge Northeast Ridge AVERAGE TONNAGE FACTOR (FT(3)/TON) ---------------------------------12.1 12.5 12.2 TONNAGE FACTOR RANGE (FT(3)/TON) -------------------------------11.6-12.5 11.7-13.4 11.8-12.8

As would be expected, materials with the lower tonnage factors are the most silicified and commonly contain sulfides. The lighter tonnage factors are for material that is more argillized and oxidized. 16.5 HEAP LEACH PROCESSING ALTERNATIVES It is often difficult to develop correlations and draw conclusions when evaluating ore with lower gold tenor as is found in the existing heaps and dumps. However, these metallurgical data do provide several clear options for improving or upgrading the gold recovery. This metallurgical discussion is based solely on the assay and screen analysis results from these metallurgical samples. The Borealis Dump has more coarse rock than Heap 1 or Heap 3, and the rock appears to be more durable. In addition, the Borealis Dump rock has a lower gold grade and higher recovery which, when combined with the higher rock content, makes it ideal for use as a drain layer on the Heap. Any recoverable fines component that will be screened out while separating the coarse rock may be used as a protective layer on the Heap or agglomerated with the Heap 1 or Heap 3 material. 16.5.1 HEAP LEACH + GRAVITY Once laboratory testwork demonstrates the technical viability of producing a gravity concentrate, one option might be to process all of the material from Heap 1 and Heap 3, which would include separating the minus 1/4inch fraction prior to a gravity circuit by wet screening and then slurry agglomerating the fines onto the gravity circuit tail (remaining coarse fraction after the gravity separation). The plus 1/4-inch fraction would then be resized to remove the plus 1/2-inch material and processed in a gravity circuit to remove any coarse gold. A gravity circuit could potentially recover an additional 15 percent to 20 percent of the coarse gold. The weighted average split (52 percent) of the finer-size fraction represents about 3.1 million tons with a weighted average gold grade of 0.015 opt and an indicated gold recovery of 56 percent. A conceptual process flowsheet is shown on Plate 2. The final combined heap leach feed material for this option (the gravity tail plus the fines fraction) would contain approximately 5.4 million tons with a weighted average gold grade of 0.013 opt and an indicated gold recovery of 50.3 percent. Although this option utilizes all of the Heap 1 and Heap 3 material, the gold grade and recovery from the heap leach may not be optimal. The fines fraction (minus 1/4-inch) from Heap 1 and the coarse fraction from Heap 3 have both a lower gold content and recovery, thus reducing the overall leach Heap grade and recovery. 16.5.2 HEAP LEACH + GRAVITY (SCREEN-OUT THE LOW GRADE) Another process option would screen out these lower grade-size fractions (minus 1/4-inch from Heap 1 and the plus 1/4-inch from Heap 3) and process only the material with a higher grade and recovery. This process would wet screen out the plus 1/4-inch material from Heap 1, which would then be resized and screened to remove the plus 1/2-inch fraction. The resized minus 1/2-inch fraction would then be processed in a gravity circuit to remove any coarse gold. A gravity circuit could potentially recover an additional 15 percent to 20 percent of the coarse

gold. The (ORE LOGO) ORE RESERVES ENGINEERING page 57 May 23, 2005

minus 1/2-inch fraction has a gold head grade of 0.031 opt and an indicated leach recovery of 55.4 percent and thus would be processed in the heap leach Heap. Conversely, the minus 1/4-inch material would be screened out from Heap 3 and processed in the heap leach Heap. This material has a gold head grade of 0.018 opt and an indicated leach recovery of 72.1 percent. The combined heap leach material for this option (the plus 1/2-inch fraction from Heap 1 and the minus 1/4-inch fraction from Heap 3) would have a gold head grade of 0.22 opt and a recovery of 67.3 percent. A conceptual process flowsheet is shown on Plate 3. The lower-grade material that was screened out of Heap 1 and Heap 3 notionally would be stockpiled and could potentially be used in the construction of the protective layer and/or drain layer on the leach Heap. Other flowsheet iterations could be and probably should be explored with additional and more detailed metallurgical testwork. Blending the Heap 1 and Heap 3 materials with other mined pit ores is also a viable option. This secondary leach ore could also be used as "fill in" production during waste mining periods or equipment maintenance shutdown. (ORE LOGO) ORE RESERVES ENGINEERING page 58 May 23, 2005

17.0 MINERAL RESOURCE ESTIMATES 17.1 GENERAL STATEMENT An updated mineral resource estimate for the main Borealis study area was prepared by Alan C. Noble, P.E. of Ore Reserves Engineering. The study area encompasses the core of the BMC holdings and the principal gold deposits with known mineral resources. Although this estimate uses the same drill-hole data, there are several improvements to the previous model (Behre-Dolbear, 2004) that are believed to improve the quality of the estimates, as follows: 1. Models were prepared from the drill hole geologic logs for the thickness of the QAL and TCV units, which overly the mineralized deposits and are generally barren. These important units were not previously modeled; 2. Models were prepared for the depth of oxidation and the depth of mixed oxides + sulfides based on drill hole logging data. The depth of oxidation was assumed to be at the bottom of the mined-out pits in the previous model by Behre-Dolbear; 3. Grade zones have been prepared in much more detail and several smaller zones that were missed in the previous model were included. In addition, the grade zones are believed to conform better to the current geological understanding of the deposits than the previous estimates; and 4. An additional zone of gold mineralization was recognized near the bottom of the QAL unit that is alluvial in nature and appears to consist of placer gold and or rock fragments weathered from the Northeast Ridge and Borealis Deposits. Deposits included in this mineral resource estimate are the Graben Deposit, Freedom Flats Deposit, Borealis Deposit (including Borealis Extension), Crocodile Ridge Deposit, Deep Ore Flats Deposit (aka Polaris Deposit), East Ridge Deposit, Gold View Deposit, Northeast Ridge Deposit, and West Alluvial Deposit. Other known mineralization at Boundary Ridge Zone, Jaime's Ridge, Cerro Duro, and Purdy Peak is outside the study area and is not included in the updated resource model. However, historical resource estimates completed by Whitney and Whitney Inc. (1999) and Golden Phoenix Mineral Inc. (2000) are summarized to allow for a complete mineral resource inventory of known deposits. It should be noted that the resource estimates for these outlying deposits do not conform to current NI 43-101 standards. 17.2 MINERAL RESOURCE MODEL 17.2.1 RESOURCE BLOCK MODEL SIZE AND LOCATION Two three-dimensional block models were used to estimate the gold resource. Each of these models used 20x20x20 foot blocks and was rotated so that model north was N50 degrees E. The models overlap slightly to more easily maintain continuity across model boundaries, as shown in Figure 17.1. Model size and location parameters are summarized in Table 17.1. (ORE LOGO) ORE RESERVES ENGINEERING page 59 May 23, 2005

TABLE 17.1. BLOCK MODEL DIMENSIONS AND LOCATION PARAMETERS
Southwest Model Northeast Model ----------------------------------------------------------------East North Elevation East North Elevation (Columns) (Rows) (Levels) (Columns) (Rows) (Levels) ------------------------------------------------44200.00 22000.00 5800.00 51208.91 24226.03 7000.00 20 feet 20 feet 20 feet 20 feet 20 feet 20 feet 310 360 88 170 480 72 6200 feet 7200 feet 1440 feet 3400 feet 9600 feet 1440 feet Model North is rotated 50 degrees clockwise from true north.

Origin Block Size Number Blocks Total Length Rotation

Note: Model origin is located at the lower, left corner of the block at the lower left corner of the model. The coordinates of the origin are specified before rotation to the local grid system. The coordinates shown above are equal to the Borealis grid coordinate less (400,000East and 1,300,000North). (ORE LOGO) ORE RESERVES ENGINEERING page 60 May 23, 2005

(GRAPHIC OMITTED) (Source: A. Noble, Ore Reserves Engineering 2005) FIGURE 17.1. MAP SHOWING THE NORTHEAST AND SOUTHWEST MODEL BOUNDARIES WITH DEPOSIT AREAS AND GOLD GRADE THICKNESS. (ORE LOGO) ORE RESERVES ENGINEERING page 61 May 23, 2005

17.2.2 DRILL-HOLE DATA Drill-hole data were provided by Gryphon Gold, as previously discussed in Section 11.2. Three comma delimited ASCI files containing collar, down-hole survey, and assay data were reformatted and combined into a single data file that was read into the MicroModel resource estimation system. The data were used as provided except that assays in ppb Au were converted to opt Au and milliounce per ton gold. As shown in Table 17.2, there are 1,626 total drill holes in the model areas, most of