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REPUBLIC OF LIBERIA)


MONTSERRADO COUNTY)




















MINERAL EXPLORATION AGREEMENT


BETWEEN


THE REPUBLIC OF LIBERIA





AND


LIBERTY GOLD AND DIAMOND MINING INC.


THIS MINERAL EXPLORATION AGREEMENT is entered mio by ana


between the REPUBLIC OF LIBERIA, through its Government representea


by the Deputy Minister for Operations of the Ministry of Lands. Mines &


Energy (hereinafter referred to as the 'Government')


AND


LIBERTY GOLD AND DIAMOND MINING INC., a corporation existing ana


doing business under the laws of Liberia represented by Lon Lmdstrom its


Chief Executive Officer (hereinafter referred to as the "Operator-), hereby








WITNESSETH:


WHEREAS title to Minerals within the territory of the Republic of Liberia is


vested in the Republic of Liberia (the Republic) and all rights related to the


exploration for and exploitation of such minerals pertain exclusively to the


Republic, and


WHEREAS the Ministry of Lands. Mines & Energy through the Minister ol


Lands. Mines & Energy is by law charged with the responsibility of


administering the mineral laws of the Republic ana m that process to ensure


the efficient development of the mining industry, and


WHEREAS, the Operator has successfully completed a program of


reconnaissance work of the selected areas, and


WHEREAS the Government is determined to accelerate the development of


the mining industry of Liberia, and therefore desires to promote the


Development of minerals which may exist in exploration areas for the


economic and social benefit of Liberia and recognizes that a large capital


expenditure is necessary to ensure that such minerals are economically and


efficiently developed, and


WHEREAS. Government agrees to grant the Operator such mineral rights


and privileges in consideration of the undertaking by the Operator to make


annual payments, and to pay rents, royalties and other fees hereinafter


prescribed and to perform and observe the terms and conditions of this


agreement;


NOW, THEREFORE, for and in consideration of the premises, the mutual


promises exchanged between the parties hereto (the Parties), terms and


conditions herein contained, the Parties hereto mutually agree as follows

















2


 1.0 DEFINITIONS





Unless the context shall otherwise clearly indicate, the following terms


wherever used in this Agreement shall have the respective meanings


set forth below:


1.1 Affiliate: Means a Person that controls, is controlled by or is under


common control with the Operator For purposes of this section, control


means the possession, directly or indirectly, by one person of more than


fifty percent (50%) of the equity of or the voting power in another person


1.2 Associated Minerals: The term -Associated Minerals" means any


mineral, metal element or precious or semi-precious stone(s) other than


Gold which is found, discovered, mined, removed, extracted or otherwise


produced as an incident to the Operator's activities in exploiting a Gold


Deposit or Deposits.


1.3 Centre: tho term ‘Centre* means the International Centre for Settlement


of Investment Disputes established under the auspices of the


International Bank for Reconstruction and Development


1.4 Convention the term ‘Convention’ means the Convention on the


Settlement of Investment Disputes between States and Nationals of


Other Stutes opened to signature at Washington, DC, United States of


America on March 18. 1965


1.5 Effective Date The term "Effective Date" means the date provided in


Section 26. on which this Agreement shall become effective


1.6 Exploration Area The term "Exploration Area” means at any particular


time the area or areas then designated in accordance with Section 3.2.


but only during the Exploration Period


1.7 Explore bon Period The term "Exploration Period" means the penod


described m Section 2 1


1.8 Gold Deposit The term "Gold Deposit" means a deposit whose


predominate economic value, as determined by the result of exploratory


drilling is attributabie to the Gold contained therein and which is of such


character as to permit the economic production thereof


1.9 Government The term "Government" includes all of the branches


divisions, instrumentalities and agencies of the Government of the


Republic of Liberia.














3


1.10 Infrastructure The term "infrastructure" means assets of the following


types


(a) Immovable transportation and communication facilities (including


roads bridges railroads airports, landing stnps and landing pads


for aircraft, hangars and other airport facilities garages, channels


tramways. pipelines and radio. telephone telegraph


telecommunications, and electronic or other forms of


communications facilities),


(D) Immovable port facilities (including docks harbors piers, jetties


breakwaters, terminal facilities and warehouses and load*>g and


unloading facilities).


(c) Immovable power, water and sewerage facilities (including electrical


generating plants and transmission hnes. dams, water drams, water


supply systems and Systems for disposing of tailings, plant waste


and sewage);


(d) Immovable public welfare facilities (including schools hospitals and


public halls);


(e) Miscellaneous immovable facilities used primarily m connection with


the operation of other facilities (including offices, machine shops


foundries, repair shops and warehouses); and.


(f) Movable facilities and equipment affixed to and used as an integral


part of the immovable facilities described in paragraphs (a) through


(e).


1.11 Operations and Activities The term "Operation* and Activities' means


the exploration, mining and management operations of LIBERTY GOLD


AND DIAMOND MINING INC


1.12 Operator The term ‘Operator* means LIBERTY GOLD AND DIAMOND


MINING INC.


1.13 Plant and Equipment The term “Plant and Equipment" means the


following assets (other than infrastructure) used for Operations and


Activities


(a) Movable and vnmovabte facilities and equipment to mine crush,


sluice, dredge, wash, screen, dry. beneficiate. and otherwise


explore for or produce Gold and/or Associated Minerals.


(b) Movable and immovable facilities and equipment used primarily n


connection with the operation of the foregoing (including offices


machine shops, foundries, repair shops and warehouses);





4


(c) Movable and immovable facilities and equipment for the


maintenance of personnel (including dwellings, stores mess halls


and recreational facilities); and


(d) Movable facilities and equipment used in connection with any of the


infrastructure


1.14 Produce The term "Produce” as used m reference to Gold. Associated


Minerals or any other mineral deposit shall include drill, develop, extract,


stnp. mme. sluice dredge, process (including benefkaate concentrate or


otherwise treat), stockpile, transport, load sell and export for the


account of the operator


1.15 Production The term "Production" as used in reference to Gold


Associated Minerals or any other minerals, shall mean the commercial


exploitation of Minerals found in the Exploration Area and all activities in


respect of or incidental thereto, including the design, construction


installation, fabrication, operation, maintenance, drilling, development,


extraction, stopping, mining, sluicing, dredging, processing (including


benefioation concentration or other treatment). stockpiling


transportation, loading sale and exportation by the Operator








2.0 TERM OF THE AGREEMENT


2.1 The term of this Agreement shall commence on the Effective Date and


shall expire at the earlier of (a) such hme as the Operator shall have


completed exploration activities, or (b) three (3) years after the


Lffective Date, with an extension of another (2) years at the option o'


the Operator plus any period of renewal to which the Government may


agree.





3.0 EXPLORATION RIGHTS:


3.1 Grant of Exploration Rights On the terms and conditions herein


provided the Government hereby grants to the operator, during the


penod hereinafter defined, commencing with the Effective Date plus


any extension of such period to which the Government may agree


(referred to herein as the "Exploration Period") the exdusrve right to


explore for Gold, Diamonds Associated Minerals and any other


mineral deposit (except iron ore) in the Exploration Area

















5


3.2 Exploration Area





(a) The Exploration areas shall lie in Gbarpolu County and


Rivercess County Area, as identified on the attached map. with


metes and bounds or coordinates attached hereto as Appendix


"A".


(b) The Operator shall commence exploration as soon as possible


after the Effective Date but not later than 180 days after the


Effective Date


(c) At the end of the Exploration Period, the Exploration Area shall


cease to exist


3.3 Surrondor of Exploration Aroa Unless the Minister and the Oporatoi


otherwise agree:


(a) At or before the end of the initial term ol the Exploration Period


the Operator shall surrender a minimum of fifty percent (50%) of


the Original exploration area.


(b) At or before the end ol the extension of the Exploration Period thr-


Operator shall surrender the remainder of the Exploration Area


and. upon such surrender, the Exploration License shah


automatically terminate


(c) Notwithstanding paragraphs 3.3 (b) above, if the Operator wishes


to retain all of. or any part of. the Exploration area upon expiry of


the exploration period it shall have the right to do so by applying


for a mineral development agreement over the area


3.4 Minimum Expenditures


(a) Commencing no later than six (6) months after the Effective Date,


the Operator shall diligently and without interruption explore for


gold, associated minerals and any other mineral deposit within.the


Exploration Area; and should the Operator fail to so comply in


accordance with the provisions of this section, then this


Agreement shall be liable to cancellation.


(b) During the Exploration Period, the Operator shall expend not less


than Two United States Dollars (US$2.00) per acre during each


calendar year as Exploration Costs, the latter being defined to


comprise all of the Operator s managenal and corporate costs


related to exploration








0


 4.0 Pilot Mining Rights





The Operator, in addition to exploration, is hereby also granted the


right to produce gold, associated minerals and any other mineral under


a pilot mining plan to be approved by the Minister of Lands, Mines and


Energy.





5.0 Mineral Development Agreement


During or by the expiry of the Exploration Period, the Operator may


apply for a Mineral Development Agreement This agreement shaH be


concluded in accordance with the Minerals and Mining Laws and


Regulations of Liberia








6.0 INCIDENTAL RIGHTS


6.1 Grant of Rights Subject to the terms and conditions herein provided


and solely for the purposes incidental to the exercise of the rights


granted to the Operator under Sections 3 and 4 of this Agreement the


Government hereby grants to the Operator the right withm the


Exploration Areas


(a) To acquire, build, and construct Infrastructure. Plant and


Equipment, and other facilities, and to maintain and operate the


same:


(b) To remove, extract and use, solely for its own exploration


purpose, free of tax or other charge or fee imposed by llie


Government, any water, gravel, sand, clay, stone and limber


(except protected fauna and flora); provided however, that where


any land, villages, houses, person, or watering places for animals


have been supplied water by right through custom the Operator


shall not deprive them of a constant and reasonably supply of


usable water, nor shall the Operator, without the Government's


consent, interfere with any water or other rights enjoyed by


anyone under any agreement with the Government


6.2 Reservation of Rights: The Government reserves the right, on


reasonable notice to and after consultation with, the Operator, to


construct roads, highways, raflroads. telegraph and telephone kies and


other kies of communication within the Exploration Area

















7


6.3 Condemnation If the use of any privately owned o* occupied property


within the Exploration Area is reasonably required for the conduct of


operations hereunder and the Operator is unable to come to an


agreement with the owner or occupant of such property for such use


the Operator may request I he Government, which request shall not be


unreasonably denied, to exercise its right of eminent domain with


respect to such property The Operator shall reimburse the


Government lor any compensation paid or payable to the private owner


or occupant as a result of the Government s exercise of such right








7.0 INFRASTRUCTURE


7.1 Construction by Operator The Operator shall, at its own cost,


undertake the construction, installation and improvement of all or any


part of the infrastructure All such Infrastructure shall be maintained


and operated by the Operator in a reasonably good manner


7.2 The Government warrants not to exercise its rights to expropriate land


in the Exploration Area if such expropriation shall in any way hinder the


development of the Operation and Activities


8.0 CONDUCT OF OPERATIONS


8.1 Best Exploration Practices The Operator shall conduct aU of its


operations hereunder using appropriate modem and effective Plant


and Equipment. Infrastructure, materials and methods Such


operations shall be conducted in a proper and workmanlike manner


with due diligence, efficiency and economy, in accordance with the


laws of Liberia and with the best mining and engineering practices


used by efficient operators in similar operations, elsewhere in the


world.








8.2 Maximum Economic Operation


(a) The Operator shall use its best efforts to produce Gold and


associated minerals from each Pilot Mining Area and at the


maximum capacity of each Production Area consistent with the


optimum economic development of all Production Areas


Production shall no! be restricted to high grades of Gold and other


minerals, to the neglect of lower grades











8


 (b) The Operator shall use its best efforts to sell Gold and any


Associated Minerals produced at the maximum prices possible in


the light of the prevailing international market prices and


conditions, and in accordance with good competitive business


practices generally accepted at the time The Operator hereby


undertakes to sell at least 95% of all Gold or Associated Minerals


within forty- five (45) days after their production Notwithstanding


the foregoing, with the prior approval of the Government the


Operator shall have the right to delay the sale of a greater


proportion of the Gold, and/or Associated Minerals produced


beyond the said forty five (45) day period, upon such terms and


conditions as the parties may agree








9.0 HEALTH AND SAFETY


The Operator shall install, maintain and use modern health and safety


devices and shall practice modern health and safety procedures and


precautions (including, regular safety training instruction for its


employees) as are in accordance with the best exploration and mining


engineering practices, and acceptable labor safety standard In this


respect, the Operator shall comply with health and safety rules,


regulations, and Laws of the Government








10.0 EMPLOYMENT. TRAINING AND SECONDMENT


10.1 Employment of Liberians The Operator shall not employ foreign


unskilled labor To the maximum extent feasible, the Operator shall


employ Liberian citizens at all levels


10.2 Training of Liberians The Operator shall provide on a continuing


basis for the training of its Ubenan employees order to qualify them


for skilled, technical administrative and managerial positions


10.3 At least two (2) professionals (mining engmeers/geotogists) from


the Ministry shall be seconded to the Operator's operations at the


expense of the Operator.








11.0 CONSERVATION


11.1 The Operator shall encourage economic and social development


during the term of his operation and shall provide for meetings on «•


regular basis between representatives of the Operator and the local


communities for the purposes of considering and making


recommendations to the Operator and to the Government with respect



to matters of community interest, such that it shall not hinder the


Operator's work


11.2 Natural Resources The Operator shall take preventive corrective


and/or restorative measures to ensure that all streams and water


bodies within or bordering Liberia all dry land surfaces, and the


atmosphere be protected from pokution. contamination or damage


resulting from operations hereunder, as per Section 7 0 hereof and


that any existing pollution, contamination and damage of or to such


water bodies, land surfaces, and atmosphere resulting from operations


hereunder be rectified, and that the terrain, m general be restored to


and left in a usable state for purposes which are economically or


socially desirable.





12.0 ADEQUATE CAPITAL AND STOCK OWNERSHIP


The Operator shall provide all capital necessary for the economic and


profitable exploration for Gold and Associated Minerals and the


production of these Minerals under this Agreement In this connection


the Operator shall at all times maintain a reasonable and prudent


capital structure








13.0 TAXATION


13.1 In General The Operator shall be liable to all taxes fees duties,


excises, and other charges imposed by Liberian Laws of general


application, except as may be otherwise provided by other laws and


administrative regulations granting exemptions from customs duties


and excise taxes


13.2 INCOME TAX The Operator shall be subject to Liberian Income lax


Law of General Application, except that notwithstanding any provisions


of such laws, the rate of tax applicable to all the taxable income of the


Operator shall be thirty percent (30%).





14.0 ROYALTIES


14.1 Gold The Operation shall pay to the Government a royalty in respect


of all gold discovered dunng exploration and produced under pilot


mining The amount of such royalty shall be 3% of the selling prices


f o b Monrovia for the Gold and Diamond The royalty shall be paid


within thirty days of export














I0


14.2 Associated Minerals and otter Mineral Deposit* The Operator


shall also pay to the Government a Royalty In respect of any


Associated Minerals or any other mineral, as defined In Section 1.2


produced hereunder and shipped or otherwise disposed of by the


Operator The amount of said royalty shall be negotiated and agreed


upon by the parties


15.0 Exploration Fees and SURFACE RENTAL








15-1 The Operator shall make an annual payment of Five Thousand


United States Dollars (US$5,000 00) for this grant or renewal of *w


Exploration License


15.2 The Operator shall make annual lump turn rental payments of


US$40,000.00 to the Government tor an unsurrendered portions erf the


Exploration Area in the test two years and Eighteen US Cents (US$0 18) per


acre thereafter The Operator shall also make a payment of Three United


States Dollars (US$3.00) per acre tor ail areas operated under pilot mining.


15.3 The first payment for the exploration license fee and surface


rental shall be made In accordance with a plan to be mutually agreed between


foe parties Subsequent payments shall be made within forty (30) days after


each subsequent anniversary of the Effective Date











16.1 Availability of Records The Operator shall maintain at its


principal office in Liberia, or at such other office as foe Government


may approve


(a) Copies of all maps, geological, mining, or other earth science


reports and mineral analysis (together with all field data which


supports such reports or data), production records, marketing


report and any other data obtained or complied by the Operator


as a result mining Operations and Activities All Information, data


and material specified in this paragraph shall be in a form


suitable for reproduction, use or processing as foe case may


be. The Operator shall have the right to temporarily remove


such samples and other data from such location and (on prior


notice to foe Government) from Liberia for for purpose of study


and evaluation



















11
(b) The Operator shall Keep the Government fully informed of all


Operations and Activities, wherever conducted, and of its plans in


respect thereof The Government shall have the right to monitor


exploration and pilot mining operations and Activities from tune to


time and a reasonable numbei of Government personnel may.


upon prior notice to the Operator, at reasonable times and subiect


to compliance with the Operator's security requirements, attend


and inspect Mining Operations and Activities conducted In Liberia


(c) Within thirty (30) days after the end of each calendar quarter, the


Operator shall provide the Government with a report on all


Operations and Activities for that calendar quarter including


Minerals recovered and sold Within ninety (90) days after the end


of each Financial Year, the Operator shall furnish the Government


with a report on all Mining Operations for that Financial Year,


including Minerals recovered and sold


16.3 Reports The Operator shall submit such reports to the Government, in


such form, in such detail, and at such time, as may be required by law,


or as the Government may otherwise require with respect to


exploration, production, employment and training, marketing and such


other matters as may be related to the conduct of operations


hereunder.


16.4 Inspection: The Government may. upon reasonable notification to the


Operator, inspect the books and records of the Operator and any ail


facilities and area related to the Operator's operation as provided


hereunder. The Operator shall make its appropriate employee available 

to render assistance with respect to any such inspection


16.5 Confidentiality of Operator's Reports The Government shall treat all

information supplied by the Operator hereunder as confidential and


shall not reveal such information to a third party without the prior


written consent of the Operator, which consent shall not be


unreasonably withheld


Financial information about the Operator shall however be treated us


confidential for a period of one (1) year, commencing as of the date of


submission of such information The Government may nevertheless


use any such information received from the Operator for the purpose of


preparing and publishing general records or statistics on natural


resources or other conditions Liberia. and in connect on with any


dispute between the Government and the Operator











12


17.0 NON-ASSIGN ABILITY





This Agreement and any interest therein may not be transferred or


assigned, or mortgaged, pledged or otherwise encumbered, tn whole or


in part, without the Governments poor written approval unless to an


affiliate However, any request to joint-venture any rights to a third


party, will be fully allowed and any assignment that is legally required


to protect the interest of the joint venture partner will be accepted








18.0 FORCE MAJEURE


18.1 Except as provided in this Section, failure on the part of the Operator to


comply with any of the conditions hereof (except the obligation to make


payment of monies to the Government) shall not be grounds for


cancellation or give the Government any claim for damages insofar as


such failure arises from force majeure, if the Operator has taken all


appropriate precautions, due care and reasonable alternative


measures with the objective of avoiding such failure and of carrying out


its obligations hereunder. 


The Operator shall take all reasonable measures to cure such failure


and to fulfill the terms and conditions hereof with a minimum of delay


The Operator shall notify the Government within fourteen (14) days of


an event of force majeure affecting its ability to fulfill! the terms and


conditions hereof or any event, which may endanger the natural


resources of Liberia and similarly notify the Government of efforts


being made to rest normal conditions within twenty-four (24) hours


thereof For purpose of this Section 17. force majeure includes an act


of God. war. insurrection, civil commotion, earthquake, storm, flood or                 

any other extraordinary event which the Operator could not reasonably


be expected to prevent or control, hut shall not include any event


caused by a failure to observe the best mining and engineering


practices or by the negligence of the Operator or any of its employees


or contractors. If; as a consequence of force majeure. operations


hereunder remain in substantially total suspension for an uninterrupted


period of more than six months, the duration of the term of this


Agreement shall be extended by the time of such suspensions


18.2 Except as hereinafter provided, the Ume for the performance of any


obligation (except the obligation to make payment of money) of the


Operator under or arising out of this Agreement, which performance is


hindered, prevented or delayed by force majeure. as well as any other


time periods and dates set forth in this Agreement, shall be extended


by the period of delay, but not longer than the continuance thereof and


such additional period as may be reasonable in the circumstances, and


the Operator shall not be liable in damages or otherwise to the other


nor shall any action, claim or demand be taken or made against the


Operator by reason solely of such delay in the performance of such


obligation


18.3 The Operator shall use all reasonable diligence to remove the cause of


the force majeure as quickly as practicable after notice of the same


shafl have come to its attention save and except that this provision


shall not. m and of itself requ*e the Operator to settle any strike


lockout, ban "go slow" activity, stoppage restraint of labor or other


similar ("Industrial Dispute*).








19.0 SURRENDER OF OPERATOR S RIGHT


During the Exploration Period, the Operator may surrender by not loss


than sixty (60) days notice to the Government, all its rights hereunder


in respect of all or any part of the Exploration Area, and the Operator


shall be relieved of all obligations In respect of area so surrendered


except those obligations that may have accrued prior to the Effective


Date of. or arising out of or related to the surrender








20.0 SECTION 24: FINANCIAL REPORTING AND CURRENCY


24.1 Accounting. AM of the Operator's accounting under this Agreement


shall be in Dollars and all amounts paid or received and obligations


incurred or transactions earned out. in currency that is legal tender m


the Republic or in any Foreign Currency other than Dollars shall be


converted to Dollars in accordance with and pursuant to generally


accepted accounting principles in the United Kingdom Canada or


internationally accepted (except to the extent inconsistent with the


terms of this Agreement) based upon the Prevailing Market Rate of


Exchange of Dollars and any such currency at the date of the


applicable transaction

















14


24.2 Exchange Control. The Operator shaH at all times have the right


without restriction, directly or indirectly, of the Government, to obtasi


hold, deal with and disburse funds in such manner, currencies and


places as it chooses Without prejudice to the generality of the


foregoing, the Operator shall have the unrestricted and unencumbered


right to sell and receive payment for Minerals in any currency, including


the currency m which the Minerals are sold, and all proceeds therefrom


may be deposited *1 bank accounts outside of the Republic and held


there or remitted therefrom to anywhere m the world m any currency.


Notwithstanding the foregoing, the Operator shaH maintain at least one


bank account with a bank or financial institution in the Republic. The


Operator shall also have the right to acquire from, and sell to. any


Person currency that s legal tender in the Republic at the Prevailing


Market Rate of Exchange Additionally, any and an transactions


between the Government and the Operator dealing with or referring to


currency that is legal tender m the Republic will be converted to Dollars


at the Prevailing Market Rate of Exchange on the date of such


transaction. Currency gains or losses for purposes of Section 20 shall


be determined by reference to the Prevailing Market Rate of Exchange


24.3 Currency of Payment Payment of the Operator’s direct obligations to


the Government for Taxes and Duties payable under Sections 20. 21.


22 and 23 of this Agreement shall be in Dollars unless the Parties


otherwise agree Any obligation originally stated in currency that is


legal tender in the Republic, or in any currency other than Dollars, wtf


be converted to Dollars at the Prevailing Market Rate of Excf inge on


the date such obligation is paid, or shall fall due. whichever is earlier


However, the Operator shall make payments of sums it collects or


behalf of the Government, including, but not limited to taxes withheld


from the salaries or wages of the employees of the Operator, and any


other sums payable to other Persons from which a portion is required


by Law to be withheld or retained by the Operator on behalf of the


Government, in the currency vi which such salaries or wages or such


other sums are collected The Operator shall have the right to make all


other payments whether to the Government or to other Persons in


currency that is legal tender in the Republic


24.4 Right to Remit and Receive Payments. The Operator shaH have the


right to remit and receive in Doflars all payments of divdends. interest


principal and other property payable items arising from, as a result of


or related to Operations, and to do so free of Taxes and Duties on such


remittances or receipts, and without penalties, any required total or


partial surrender, exchange or confiscation of such Dollars or other


direct or indirect restrictions on such remittances or receipts











15


24.5 Audit





a The Operator shall cause its books of accounts to be audited


within three (3) months, or such longer period of time as the


Minister may approve, after the close of each Financial or Fiscal


Year by an internationally recognized independent auditor


selected by the Operator and satisfactory to the Government and


a copy of the annual financial statement duly certified by said


auditor shall be furnished to the Government within twenty (20)


days after its receipt by the Operator The foregoing shall not, in


any way, imply acceptance of any such audit or certification by the


Government, or preclude the Government from auditing such


books of accounts but at the Government’s expense


b The foregoing shall not in any way imply acceptance of any such





audit or certification by the Government or preclude the


Government from auditing such books of accounts at its own


expense and as provided under Law, provided that the


Government shall provide the Operator with a copy of any such


audit within forty five (45) days of receipt However, once either


the Government or the Operator has audited any book of


accounts, the financial statement thus audited shall be considered


acceptable and the audit results binding and conclusive as to its





findings, unless a Party shall have indicated to the contrary within


ninety (90) days after its receipt of a copy of the audited financial


statement





c. If the Operator has. pursuant to this Agreement, underpaid its


liability for Taxes and Duties, the Government may. subject to the


Revenue and Finance Law. assess interest and penalties but not


to exceed the London Interbank Offering Rate (LIBOR) existing at


the time of such assessment, plus one (1) percentage point


multiplied by the amount underpaid If LIBOR should cease to be


reported, then the rate to be applied shall be another agreed


substitute rate If the Operator has overpaid its liability for Taxes


and Duties then, at its option, it may elect either to be reimbursed


by the Government or to apply such overpayment against future


Taxes and Duties


d In case a review of records or books outside of the Republic is





required, the Operator will cooperate to provide the Government


with copies of the information, books and records needed to


complete the audit If the Government nonetheless deems it


necessary for any part of such audit to be performed outside of


the Republic, the cost of associated travel wiM be borne by the


Government





16


 SECTION 25: INCIDENTAL RIGHTS





25.1 Grant of Rights Subject to the terms and conditions herein provided


and solely for the purposes incidental to the exercise of the rights


granted to the Operator under Sections 3 and 4 of this Agreement, the


Government hereby grants to the Operator the right, within the


Exploration Areas:


(a) To acquire, build, and construct Infrastructure. Plant ano


Equipment, and other facilities and to maintain and operate the


same


(b) To remove, extract and use, solely for its own exploration


purpose, free of tax or other charge or fee imposed by the


Government, any water, gravel, sand, clay, stone and timber


(except for protected species, insofar as they do not interfere with


or hinder Operations); provided however, that where any land,


villages, houses, person, or watering places for animals have


been supplied water by right through custom, the Operator shall


not deprive them of a constant and reasonably supply of usable


water, nor shall the Operator, without the Government's consent,


interfere with any water or other rights enjoyed by anyone under


any agreement with the Government The Government will


provide information to the Operator of any such agreements


affecting the Exploration Area upon the Operator's request


25.2 Imports. The Operator shall be entitled to import and use in respect of


Operations, and subsequently export, any and an machinery,


equipment consumable items, fuels, explosives and any other thing


whatsoever reasonably requved with respect to Operations and m


accordance with the terms of this Agreement, provided, howover. that


the Operator shall not re-export fuels and explosives surplus to


requirements if such surplus can be sold at competitive international


prices within the Republic The Operator shall at all time comply with


Law regarding the safe use. sale, disposal and security of explosives


25.3 Taxes on Rosale. The Operator may sell, in the Republic, all imported


items that are no longer needed for Operations However, if such


imports were exempted from Taxes and Duties, the Operator shall fulfill


all formalities required in connection with the payment by the purchaser


of all Taxes and Duties on the depreciated value of the imports


imposed on such sales by Law

















17


SECTION 26: ASSIGNMENT AND ENCUMBRANCE





26.1 Right of Alignment The Operator shall have the right to assign or


otherwise dispose of all or part of its interest under this Agreement v. th


the prior written consent of the Government (which consent shall not be


unreasonably withheld) provided, however, that such consent shall not


be required in the case of an assignment or other disposition to an


Affiliate in which latter event the Operator shall not be relieved of its


obligations under this Agreement other than to the extent fulfilled by Uie


Affiliate


26.2 Right to Encumbor. The Operator shall have the right to mortgage,


charge or otherwise encumbor all or part of its interest under this


Agreement for the purpose of raising, from one or more Affiliates or


third parties, financing for its obligations under this Agreement but any


power of sale arising under any such mortgage, charge or other


encumbrance shall only be exercised with the prior written consent of


the Minister, which consent shall not be unreasonably withheld


26.3 Notice of Assignment or Encumbranco. The Operator shall


promptly give Notice to the Minister of any assignment, mortgage


charge or other disposition or encumbrance pursuant to this Section


26








SECTION 27: TERMINATION


27.1 Termination by the Operator. Dunng the Exploration Period, the


Operator may surrender by not less than sixty (60) days notice to the


Government, all its rights hereunder in respect of all or any part of the


Exploration Area, and the Operator shall be relieved of all obligations in


respect of area so surrendered except those obligations that may have


accrued poor to the Effective Date of. or arising out of or related to the


surrender,


27.2 Termination by the Government. Subject to the provisions of


Section 29. the Government shall have the right to terminate this


Agreement if any of the following events (hereinafter called "Events of


Default") shall occur and be contnung


a) where the Operator shall fart to make any of the payments


described si this Agreement on the due payment date and suen


default is not cured within thirty (30) days after notice by the


Government (or within such longer period as may be specified in


said notice).








IK


b) where the Operator shaM materially tail to comply with its


obligations or any other conditions under this Agreement and such


failure shall have a materially adverse effect on the Government


and is not cured within ninety (90) days after notice by the


Government or within such period as may be specified in said


notice;


c) where the Operator shall (i) voluntanly dissolve, liquidate or wind


up its affairs, or make an assignment of all or substantially all of its


assets for the benefit of creditors other than an assignment made


to secure Indebtedness Incurred in the ordinary course of


business, (II) file a petition or application to any tribunal for the


appointment of a trustee or receiver for all or any substantial part


of the Operator s assets, (m) commence any proceedings for its


bankruptcy, reorganization. arrangement, insolvency or


readjustment of debt under the laws of any jurisdiction, whether


now or hereafter in effect, or if any such petition or application is


filed, or any such proceedings are commenced against it shall


indicate its approval thereof, consent thereto or acquiescence


therein, or (iv) if any order is entered appointing any such trustee


or receiver, or adjudicating the Operator bankrupt or insolvent, 01


approving the petition in any such proceedings, and provided that


the Operator shall fail to tako corrective measure(s) to have such


order removed or lifted within sixty (60) days


d where the Operator shall fad to carry out Exploration as required


by Section 5 1. cease Exploration for a period of twelve (12)


consecutive months or cease Production with respect to all


Production Areas for a period of twenty four (24) consecutive


months unless such failure or cessation is consented to by the


Government or is caused by a state of force ma/eure in particular


relating to security issues preventing safe access to the


Exploration or Production Areas


27.3 Opportunity to Cure. In the case of an alleged Event of Default


described in Section 27.2, the Government, before taking any further


action, shall provide Notice to the Operator of the alleged occurrence of


such Event of Default and of the Government s views m that regard


and shall offer the Operator a fair opportunity to consult with the


Government to resolve the matter If, after a reasonable period of time


of consultation, the Government is of the reasonable opinion that the


matter cannot be resolved by further consultation, fhe Government may


then send to the Operator Notice of the Government’s intention to


terminate this Agreement If the Event of Default is not cured within


sixty (60) days after said Notice, or within such longer penod as may


be necessary to allow a reasonable period of time to effect such cure,


then this Agreement shall be terminated


|9


 27.4 Disputes Regarding Events of Default. Notwithstanding the


provisions of Sections 27.2 and 27.3. if the Operator disputes whether


there has been an Event of Default described in Section 27.2 and


within sixty (60) days after receipt by the Operator of the Government %


Notice of its intention to terminate refers such dispute to arbitration in


accordance with Section 29. then termination of this Agreement shall


not take effect until the finality of. and in accordance with, an arbitration


award upholding the Government s right to terminate.





SECTION 29: ARBITRATION


29.1 Submission to Arbitration. Any dispute between the Government


and the Operator arising out of. in relation to or in connection with this


Agreement or its formation, or the validity, interpretation, performance


termination, enforceability or breach of this Agreement (including any


dispute concerning whether the Government or the Operator has


violated or is in breach of this Agreement or of any Law affecting the


rights, obligations or duties of any Party under this Agreement), for


which resolution by submission to an export is not specifically provided


elsewhere in this Agreement shall be exclusively and finally settled by


binding arbitration pursuant to the Convention in accordance with the


rules of the Centre in effect on the Effective Date except to the extent


m conflict with the Section 29 which shall prevail in that event The


Parties agree that the Agreement and the Operator's Operations


pursuant thereto constitute an "investment" by reason of the


expenditure of a considerable amount of money in the Republic and


that for purposes of Arbcte 25(1) of the Convention, any depute subject


to the Section 29 is a legal dispute ansmg directly out of an


investment Either of the Parties to such depute may institute


arbitration proceedings by giving Notice to the other Party and Notice


to the Secretary General of the Centre including in each a statement of


the esues m depute


29.2 Nationality for Purposes of Arbitration. The Operator e


incorporated in Lfcena and notwithstanding the incorporation m the


Republic of any of the Operator s successors or assignees, or of any of


its other Affiliates, all such entities shall be treated tor purposes of


arbitration under this Section 29 as nationals of the United States of


America for purposes of the Convention and of this Agreement, except


that the Operator and any other such entity may. alternatively elect to


bo treated instead as a national of any other state of which, under the


Convention, international law or the law of such state, it is a national














20


29.3 Arbitrator* Any arbitral tribunal constituted pursuant to the


Agreement shall consist of one (1) arbitrator to be appointed by the


Government, one (1) arbitrator to be appointed by Operator and one


(1) arbitrator, who shall be the president of the tribunal and shall be a


citizen neither of the Republic nor of the United States of America (or of


any other state of which a Party is a national under Section 29.2). to be


appointed by the Secretary-General of the Centre No such arbitrator


shall have an interest in the matters in dispute


29.4 Roferoe. At the request of a Party, any matter otherwise subject to


arbitration under this Agreement shall instead be referred for resolution


to a single referee to be appointed by the Secretary-General of the


Centre, or of any successor entity as provided for by Section 29 10


below, except for any dispute arising out of or related to Sections 3. 4


5. 6. 20. 21. 23. 24. 27. 29. 31 and 33 and Sections 18.7. 18 8 and


18.9 of this Agreement which must be referred to arbitrators appointed


pursuant to Section 29.3 above unless the Parties jointly agree that any


such dispute is not material, in which event it may be referred to the


referee for decision at the option of either party The decision of the


referee shall be rendered pursuant to Section 29 6 of this Agreement


(except as regards the requirement for a decision by majority vote) ana


shall be final and binding unless appealed by any Party to arbitrators


appointed as provided in this Section 29.3. who shall examine the


reforoe's decision only as to manifest error of law, findings of fact that


are not supported by any credible evidence, and abuse of authority


misconduct or other unauthorized act by the referee


29.5 Venue. Arbitration proceedings conducted pursuant to this Agreement


shall be held in Washington. D C or such other place as the Parlies


may agree and shall be conducted *i the English language The costs


of the proceedings shall be assessed and borne m such manner as the


arbitral tribunal shal decide Ary procedural issues that cannot be


determined under the arbitral rules of the Centre shall be determmea


pursuant to applicable law as set forth m Section 33 below


29.6 Award The arbitrators shaM. by majority vote, render a written


decision stating the reasons for their award within three (3) months


after any hearing conducted has been concluded Any monetary


award shall be assessed and payable in Dollars (determined at the


Prevailing Market Rate of Exchange as of the date of the award if the


award involved an obligation expressed in any currency other than


Dollars) through a bank designated by the recipient, and in the case of


an award to the Operator, shall be oxempt from any Taxes and Duties


imposed by Government Each Party shall bear its own costs and


attorney fees








21


Neither Party shall have any liability for either consequential damages


(except for purposes of set off) or exemplary or punitive damages, but


interest at a rate not to exceed the London Inter-bank Offering Rate


(LIBOR) existing at the time of such award, plus one (1) percentage


point, multiplied by the amount of the award, shall be assessed from


the date of any monetary award until its satisfaction If LIBOR should


cease to be reported, then the rate to bo applied shall be another


substitute rate agreed to by a majority of the arbitrators. In any case,


the liability of the Operator shall be limited to the not book value of its


investment in the Republic at the time of the award If the decision of


the arbitral tribunal is adverse to the Operator, then the arbitral tribunal


may, in its discretion, specify a reasonable period of grace to cure any


defect or default on the part of the Operator, provided that such penod


of grace shall not exceed one hundred eighty (180) days for the making


of any payment required by such award.


29.7 Waiver of Sovereign Immunity. The Government hereby irrevocably


waives all claims of immunity from the Arbitrators' jurisdiction, and from


the enforcement of any arbitral award rendered by a tribunal


constituted pursuant to this Agreement including immunity from service


of process and immunity from the jurisdiction of any court situated in


any state, country or nation.


29.8 Reservabon of Rights. The right to refer a da*n or dispute to


arbitration hereunder shal not be affected by the fact that a claimant or


respondent has received full or partial compensation from another


Person for a loss or injury that is the object of the claim or dispute, and


any such other Person may partiapate in such proceedings by nght of


subrogation


29.9 Nature of Award. The Parties agree that the arbmal award of any


arbitral tribunal constituted pursuant to this Agreement may contain


such orders (including orders for specific performance other equitable


relief or monetary damages) in respect of or affecting any of the Parties


(and any loss or damage suffered by any of them) as such arbitral


tribunal determines to be appropriate in the circumstances The


Parties, subject to their respective obligations contained elsewhere in


this Agreement. shad take all such actions as are necessary to give full


and complete effect to the award which in accordance with its terms


shad be binding upon and enforceable against them























22


29.10 Successor*. The consent to the jurisdiction of the Centre as set forth


in this Section 29 shall equally bind any successor of or successors-m-


interest to either Party to this Agreement Should the Centre be


replaced by. or its functions be substantially conferred upon 01 be


transferred to, any new international body of a similar type and


competence, the Parties shall have the right to submit any dispute to


such body for settlement by arbitration in accordance with the


foregoing provisions of this Section 29








23.0 NOTICES


(a) All notices, requests, reports, approvals, consents, designations


or other communications (collectively referred to herein as


“communications'’) required by. provided for. in, or relative to this


Agreement shall be in writing All communications shall be


delivered, In case of the Government to:


Tho Minister of Lands, Minos & Energy


Ministry of Lands, Minos & Energy


P.O. Box 10-9024


1000 Monrovia 10, Liboria


And in the case of the Operator to


The President


LIBERTY GOLD AND DIAMOND MINING INC.


Monrovia, Liberia


or such other address as may be designated m writing by the


Operator





A delivery of a communication shall be deemed effective only


when mailed, postage prepaid and return receipt requested


telefaxed; or. hand-delivered and receipt


(b) Nothing in this Section shall be deemed to relieve the Operator


from filing any report, return or other communication required by


Liberian Laws of general application at the time and m the manner


therein prescribed.




















23


24.0 NONWAIVER





The failure of either parly at any time to require performance by the


other party of any provisions hereunder shall in no way affect the right


of that party thereafter to enforce the same, or shall it effect the party's


light to enforce any of the other provisions of this Agreement, nor shall


the waiver by either party of the breach of any provisions hereof be


taken or held to be a waiver of any subsequent breach of such


provision or as a wavier of the provision itself.


25.0 AFFIRMATIONS


25.1 The Operator shall, during the term of this Agreement and for such


period thereafter as may be reasonable, continue to have corporate


existence as well as all corporate rights, powers, purposes and duties


set forth and described in this Agreement, and in its Articles of


Incorporation and By-Laws, as the same may from time-to-time be


amended in accordance with their terms


25.2 The ownership of any Mineral shall pass from the Government to the


Operator ut the time that the Mineral in the Exploration Area is


excavated by the Operator


25.3 Subject to the obligations of the Operator and the Government


elsewhere contained m this Agreement, the Operator shall ensure that


it complies with the Agreement


25.4 The Government and Operator shall each be the beneficiary of the


rights granted to it under th«s Agreement No other person shall have


any rights under this Agreement unless a Party or unless otherwise


specifically provided m this Agreement


25.5 Each Party shall execute such documents and do such further things


as may be necessary to give full and complete effect to the provisions


of this Agreement.


26.0 EFFECTIVE DATE: This Agreement shall become effective and be


binding on the Parties when executed by them




















24


IN WITNESS WHEREOF the Parses have executed this Agreement through


their respective duty authorized representatives, on the day. month and year


indicated below


Signed In ___originals on the day of A. D. 2005











IN PRESENCE OF FOR THE GOVERNMENT OF THE


REPUBLIC OFLIBERIA:



































FOR THE OPERATOR








7?7^*





CHIEF EXECUTIVE OFFICER


LIBERTY GOLD AND DIAMOND


MINING INC.












































25


Mineral and Exploration Area for Liberty Gold and Diamond Mining Inc., Gbarplou





















































































































































---i-1 * i-1-1--- ------1-1-1---


330000 340000 350000 360000 370000 360000 390000 400000


Mineral and Exploration Area for Liberty Gold and Diamond Mining Inc., Rivercess








*20000 *30000 -woooo 450000 460000 420000 48owo























































































































610000








 UTM Coordinates of the Mineral and Exploration Area for Liberty Gold





and Diamond Mining Inc., Rivercess





Point Easting Northing


0 420000 650000


1 455000 650000


2 455000 625000


3 460000 625000


4 460000 620000


5 450000 620000


6 450000 615000


7 460000 615000


8 460000 610000


9 455000 610000


10 455000 600000


11 450000 600000


12 450000 610000


13 430000 610000


14 430000 625000


15 435000 625000


16 435000 635000


17 420000 635000


18 420000 640000


19 425000 640000


20 425000 645000


21 ' 420055 I 645000


0 420000 650000





Area = 1150 So Km


 UTM Coordinates of the Mineral and Exploration Area for Liberty Gold





and Diamond Mining Inc., Gbarpolu County





Point Easting Northing


0 330000 790000 -1


1 350000 7900DC


2 350000 800000


3 360000 800000


4 360000 820000


5 370000 820000


6 370000 810000


7 400000 810000


8 400000 800000


9 370000 800000


10 370000 790000


11 360000 790000


12 360000 780000


13 330000 780000


0 330000 790000





Area = 1000 Sq Km