10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10–K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 1–08733

NORD RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)

Delaware	85–0212139
(State or other jurisdiction of incorporation or	(IRS Employer Identification No.)
organization)
1 West Wetmore Road, Suite 203
Tucson, Arizona	85705
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (520) 292–0266

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, par value $0.01 per share
(Title of class)

Indicate by check mark if the registrant is a well–known seasoned issuer, as defined in Rule 405 of the Securities Act.
[   ] Yes    [X]  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act
[   ] Yes    [X] No

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. [X] Yes    [   ] No

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S–K is not contained herein,
and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10–K or any amendment to this Form 10–K. [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non–accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company”
in Rule 12b–2 of the Exchange Act.

Large accelerated filer [   ]		Accelerated filer                   [   ]
Non–accelerated filer  [   ]	(do not check if a smaller reporting company)	Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act).
[   ] Yes    [X]  No

The aggregate market value of the registrant’s common stock held by non–affiliates of the registrant as of June 30, 2008,
computed by reference to the price at which such stock was last sold on the OTC Bulletin Board ($0.78 per share) on that date,
was approximately $43,792,815.

The registrant had 69,572,587 shares of common stock outstanding as of March 15, 2009.

NORD RESOURCES CORPORATION
Form 10–K

ITEM 1.      BUSINESS	2
ITEM 1A.   RISK FACTORS	4
ITEM 1B.   UNRESOLVED STAFF COMMENTS	16
ITEM 2.      PROPERTIES	16
JOHNSON CAMP PROPERTY	16
OTHER PROPERTIES	36
ITEM 3.      LEGAL PROCEEDINGS	37
ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	38
ITEM 5.      MARKET FOR COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	39
RECENT SALES OF UNREGISTERED SECURITIES	42
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	43
ITEM 6.      SELECTED FINANCIAL DATA	43
ITEM 7.      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	43
OVERVIEW OF OUR BUSINESS	43
OUR PLAN OF OPERATIONS	44
RECENTLY ISSUED ACCOUNTING GUIDANCE	58
ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	60
ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	60
ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE	60
ITEM 9A.   CONTROLS AND PROCEDURES	60
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES	60
INTERNAL CONTROL OVER FINANCIAL REPORTING	60
MANAGEMENT REPORT ON ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING	61
INHERENT LIMITATION OF THE EFFECTIVENESS OF INTERNAL CONTROL	61
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING	61
ITEM 9A(T). CONTROLS AND PROCEDURES	61
ITEM 9B.   OTHER INFORMATION	61
ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	61
DIRECTORS AND EXECUTIVE OFFICERS	61
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT	67
CODE OF ETHICS	67
ITEM 11.    EXECUTIVE COMPENSATION	68
SUMMARY COMPENSATION TABLE	68
OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2008	69
EQUITY COMPENSATION PLANS	70
COMPENSATION OF DIRECTORS	70

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE–IN–CONTROL ARRANGEMENTS	72
ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	78
ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	81
WHERE YOU CAN FIND MORE INFORMATION	81
GLOSSARY OF TECHNICAL TERMS	81
ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES	85
AUDIT FEES	85
AUDIT RELATED FEES	85
TAX FEES	85
ALL OTHER FEES	86
AUDIT COMMITTEE PRE–APPROVAL OF AUDIT AND PERMISSIBLE NON–AUDIT SERVICES OF INDEPENDENT AUDITORS	86
ITEM 15.    EXHIBITS	86
SIGNATURES

- ii -

FORWARD–LOOKING STATEMENTS

The information in this annual report contains forward–looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward–looking statements involve risks and uncertainties, including statements regarding our capital needs, business plans and expectations. Such forward–looking statements involve risks and uncertainties regarding the market price of copper, availability of funds, government regulations, common share prices, operating costs, capital costs, outcomes of ore reserve development and other factors. Forward–looking statements are made, without limitation, in relation to operating plans, property exploration and development, availability of funds, environmental reclamation, operating costs and permit acquisition. Any statements contained herein that are not statements of historical facts may be deemed to be forward–looking statements. In some cases, you can identify forward–looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology.

Forward–looking statements in this annual report include, but are not limited to, statements with respect to the following:

• the timing and possible outcome of pending regulatory and permitting matters;
• the parameters and design of our planned mining facilities on the Johnson Camp Mine;
• our future financial or operating performances and our projects;
• the estimation of mineral reserves and mineralized material;
• the timing of exploration, development and production activities and estimated future production, if any;
• estimates related to costs of production, capital, operating and exploration expenditures;
• requirements for additional capital;
• government regulation of mining operations, environmental risks, reclamation and rehabilitation expenses;
• title disputes or claims;
• limitations of insurance coverage; and
• the future price of copper or other metals.

These forward–looking statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including, the risks and uncertainties outlined under the sections titled “Risk Factors”, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. If one or more of these risks or uncertainties materialize, or our underlying assumptions prove incorrect, our actual results may vary materially from those expressed or implied by our forward–looking statements anticipated, believed, estimated or expected.

We note, in particular, that the Johnson Camp Mine has no recent operating history upon which to base estimates of future cash flows and operating costs. These and other estimates or projections (including our expectations with respect to annual copper production from our planned operations at the Johnson Camp Mine) are, to a large extent, based upon the interpretation of geological data obtained from drill holes and other sampling techniques performed in accordance with industry standards by third parties, the methodologies and results of which we have assumed are reasonable and accurate, which results form the basis for, and constitute a fundamental variable in, the feasibility study and technical report completed by Bikerman Engineering & Technology Associates which we have relied on. The sampling data produced by third parties and amounts of metallurgical testing are less extensive than normal and our expected copper recovery rates at the Johnson Camp Mine significantly exceed historical experience at the Johnson Camp property. There is no assurance that we will be able to meet these expectations and projections at

1

an operational level. For further information, you should carefully read and consider the section of this annual report entitled “Risk Factors” beginning on page 4.

We caution readers not to place undue reliance on any such forward–looking statements, which speak only to a state of affairs as of the date made. We disclaim any obligation subsequently to revise any forward–looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. We qualify all the forward–looking statements contained in this annual report by the foregoing cautionary statements.

PART I

ITEM 1.            BUSINESS

Overview

We are a copper mining company and our principal asset is the Johnson Camp property located in Arizona. The Johnson Camp property includes the Johnson Camp Mine, an integrated open pit copper mine and a production facility that uses the solvent extraction, electrowinning (SX–EW) process. The Johnson Camp Mine includes two existing open pits, namely the Burro and the Copper Chief bulk mining pits. As described in more detail below, we have recently commenced production of copper from new ore.

Development of Our Business

We acquired the Johnson Camp Mine from Arimetco, Inc. pursuant to a Sales and Purchase Agreement that had been assigned to us in June 1999 by Summo USA Corporation, the original purchaser, following the completion of certain due diligence work by Summo. Although Arimetco had ceased mining on the property in 1997, we, like Arimetco before us, continued production of copper from ore that had been mined and placed on leach pads, and from 1999 to 2003 we (through our then subsidiary Nord Copper Company) produced approximately 4,490,045 pounds of copper cathode.

In August 2003, we placed the Johnson Camp Mine on a care and maintenance program due to weak market conditions for copper at that time. In June 2007 when conditions improved, we began the process of reactivating the Johnson Camp Mine.

In September 2007, Bikerman Engineering & Technology Associates, Inc. completed a technical report for us entitled, “Johnson Camp Mine Project, Feasibility Study, Cochise County, Arizona, USA, Technical Report” (the “Technical Report”), and prepared in accordance with National Instrument 43–101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators (as required for us to comply with provincial securities laws in Canada that are applicable to our Company).

In January 2008 we commenced copper cathode production from leaching old dumps, and during 2008 we produced approximately 2.9 million pounds of copper from residual leaching.

In February 2008, we entered into a long term cathode sales agreement with Red Kite Master Fund Limited for 100% of the copper cathode production from the Johnson Camp Mine. The agreement runs through December 31, 2012 with renewable extensions by mutual agreement of both parties. Pursuant to the agreement, Red Kite accepts delivery of the cathodes at the Johnson Camp Mine, and pricing is based on the average monthly COMEX price for high–grade copper.

2

In order for us to resume full mining operations, we were required to complete certain steps outlined in the mine development schedule contained in the updated feasibility study forming part of the Technical Report. The mine development schedule required, among other things, that we reline an existing solution pond, construct three new lined solution ponds, prepare a new stand-alone lined leach pad facility, and that we complete the installation of a two-stage crushing circuit. The mine development schedule also contemplated the rehabilitation of the on-site SX-EW plant, and a modest expansion of the plant’s electrowinning section.

In August 2008, we received the Air Quality permit necessary to enable us to complete the construction related to the reactivation of the Johnson Camp Mine.

We commenced mining of new ore upon completion of the reactivation work in January 2009, and we commenced production of copper from new ore in February 2009. We anticipate reaching our currently planned full copper production rate of 25 million pounds of copper per annum in the spring of 2009.

In November 2008, we received a scoping study completed by an independent, internationally–recognized firm of mining engineers and consultants that found that we can potentially increase our production to an estimated rate of 40 million pounds of copper per year from our current plan of 25 million pounds of copper per year with an additional capital investment of approximately $19 million. We plan to conduct an updated feasibility study as a first step in assessing whether we should pursue this increase in our planned production. We believe that we will have sufficient cash flow from operations to commission the required updated feasibility study, but we will require additional financing if we decide to make the required capital investments to increase production. Upon completion of the updated feasibility study, which we anticipate will take six months from the date that it begins, our board of directors will analyze the results to determine whether it is in the best interests of o ur Company to pursue this initiative, taking into account, among other things, the availability of required financing (which cannot be assured).

Financing Activities

On June 5, 2007, we completed an unregistered private placement offering of 30,666,700 special warrants for aggregate proceeds of approximately $23,000,000 (net proceeds of approximately $21,300,000).

In June 2008, we entered into an Amended and Restated Credit Agreement with Nedbank Limited, as administrative agent and lead arranger, which provided for a $25 million secured term loan credit facility. All of the funds available under such facility have been used by us to finance the construction, start–up and operation of mining and metal operations at the Johnson Camp Mine. As of December 31, 2008, we had drawn down the entire $25 million of the credit facility.

In March 2009:

• our credit agreement with Nedbank was amended and restated to provide for, among other things, the deferral of certain principal and interest payments until December 31, 2012 and March 31, 2013; and
• we sold a 2.5% royalty on the mineral production sold from the existing mineral rights at the Johnson Camp Mine for net proceeds of approximately $4,950,000.

Other Operations

The Johnson Camp property includes decorative and structural stone operations, which produce landscape and aggregate rock from the overburden piles at the Johnson Camp Mine. Until January 31, 2009 we leased the landscape and aggregate rock operations to a third party in exchange for sliding scale royalties.

3

Effective February 1, 2009, we commenced managing the landscape rock operation; the aggregate rock operation continues to be leased to a third party.

We do not believe that the landscape and aggregate rock operations will be material to our financial results of operation.

Incorporation and Principal Business Offices

We were formed under the laws of the State of Delaware on January 18, 1971. Our principal business offices are located at 1 West Wetmore Road, Suite 203, Tucson, Arizona 85705, and our telephone number is (520) 292–0266.

ITEM 1A.         RISK FACTORS

Much of the information included in this annual report includes or is based upon estimates, projections or other “forward looking statements”. Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions, or other future performance suggested herein. We undertake no obligation to update forward looking statements to reflect events or circumstances occurring after the date of such statements.

Such estimates, projections or other “forward looking statements” involve various risks and uncertainties as outlined below. We caution readers of this annual report that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other “forward looking statements”. In evaluating us, our business and any investment in our business, readers should carefully consider the following factors.

Risks Related to Our Company

We have a history of losses, and our future profitability will depend on the successful operation of the Johnson Camp Mine, which cannot be assured.

We have a history of losses, and expect to incur losses in the future until we have reached full mining operations and production levels at the Johnson Camp Mine.

We have a history of losses and expect to incur losses in the future. We had net losses of $5,038,374 for the year ended December 31, 2008. As of December 31, 2008, we had a working capital deficiency of $2,849,660. This deficiency includes current liabilities of $7,239,821 representing the current portions of our long-term debt, the current portion of interest rate swap contracts, accrued interest and capitalized leases and current assets of $9,604,405 representing the current portion of the derivative cash flow hedge contracts.

We have successfully reactivated the Johnson Camp Mine and are now in the start-up phase of development. We commenced production of copper from residual leaching in January 2008, mining of new ore in January 2009, and production of copper from new ore in February 2009. However, we cannot provide any assurance that we will ramp up to full production or have successful mining and processing operations on the Johnson Camp property in the future.

4

We are dependent upon the success of the Johnson Camp Mine as a source of future revenue and profits, if any. Even if we should be successful in achieving our planned full copper production rate of 25 million pounds of copper per annum, an interruption in operations of the Johnson Camp Mine may have a material adverse effect on our business.

The start-up of the Johnson Camp Mine and development of new mining operations on the Johnson Camp property will continue to require the commitment of substantial resources.

The start-up of the Johnson Camp Mine and the development of new mining operations on the Johnson Camp property have required and will continue to require the commitment of substantial resources for operating expenses and capital expenditures. We incurred approximately $36,000,000 in capital costs in the reactivation of the mine, related primarily to the rehabilitation of the solution ponds, refurbishment and a modest expansion of our SX-EW copper production facility, installation of our primary stage crusher, the purchase and installation of two secondary stage crushers, an agglomerator and conveying equipment, and other project-related items.

We estimate we will incur a further $5 million in capital costs in the next three years, primarily for the expansion of our existing leach pad capacity. We also expect to incur expenses in connection with our plans to commission an updated feasibility study and further exploratory drilling on the Johnson Camp property.

The actual amounts and timing of expenditures will depend in part on the progress of our planned development and exploration activities, the results of consultants’ analyses and recommendations (which will likely include the development of a new mine plan and the need for additional permit applications), the rate at which operating losses are incurred, the execution of any joint venture agreements or similar arrangements with strategic partners, and other factors, many of which are beyond our control. In addition, any delay in our planned ramp up to full production may cause an increase in costs for us and could have a material adverse effect on our financial condition or results of operations.

Unforeseen conditions may affect our mining and processing efficiency, and we may not be able to execute the leaching operation as planned if we do not maintain proper control of ore grade.

The parameters used in estimating mining and processing efficiency are typically based on testing and experience with previous operations. Various unforeseen conditions can occur that may materially affect the estimates. In particular, unless proper care is taken to ensure that proper ore grade control is employed and that other necessary steps are taken, we may not be able to achieve production forecasts as planned. In addition, our projected production is based on anticipated copper recoveries at the Johnson Camp Mine that are in excess of historical experience, which may result in an overestimation of our mining and processing efficiency if our actual production does not meet our projected production.

We may never achieve our production estimates since they are dependent on a number of assumptions and factors beyond our control.

We have prepared estimates of future copper production. We cannot be certain that we will ever achieve our production estimates. Our production estimates depend on, among other things: the accuracy of our reserve estimates; the accuracy of assumptions regarding ore grades and recovery rates; ground conditions and physical characteristics of the mineralization, such as hardness and the presence or absence of particular metallurgical characteristics; the accuracy of estimated rates and costs of mining and processing; and our ability to obtain and maintain all necessary permits at all levels of development and production. We are processing the copper mineralization using SX–EW technology. These techniques may not be as efficient or economical as we project. Our actual production may vary from our estimates if any of these assumptions prove to be incorrect and we may never achieve profitability.

5

A major increase in our input costs, such as those related to acid, electricity, fuel and supplies, may have an adverse effect on our financial condition.

Our operations are affected by the cost of commodities and goods such as electrical power, sulfuric acid, fuel and supplies. The Technical Report includes an economic analysis of the Johnson Camp Mine based on the mine plan, capital and operating cost estimates current as of the second quarter of 2007. Management prepares its cost and production guidance and other forecasts based on its review of current and estimated future costs. A major increase in any of these costs may have an adverse impact on our financial condition. For example, we expect that sulfuric acid and energy, including electricity and diesel fuel, will represent a significant portion of production costs at our operations, and if the costs increase, we could be negatively affected.

Shortages of sulfuric acid, electricity and fuel, may have an adverse effect on our financial condition.

Sulfuric acid supply for SX–EW projects in the southwestern U.S. is produced primarily as a smelter byproduct at smelters in the southwest U.S. and in Mexico. We have an agreement in place for a broker of acid to supply us with sulfuric acid through the end of 2009. However, we cannot be assured that the broker will be able to provide us with an adequate supply of sulfuric acid without interruptions and we continue to remain subject to market fluctuations in the price and supply of sulfuric acid.

Continuation of our mining production is dependent on the availability of a sufficient water supply to support our mining operations.

Our mining operations require water for mining, ore processing and related support facilities. Production at the Johnson Camp Mine is dependent on continuous maintenance of our water rights. Under Arizona law groundwater outside an active management area may be withdrawn and used for reasonable and beneficial use. The character of the water right - that is groundwater versus surface water - may at some point become at issue and may be subject to adjudication to the extent certain water is determined to be surface water. We are not subject to any such adjudication claims at this time. However, we cannot predict our potential involvement in or the outcome of any adjudication proceedings which may occur impacting our water rights and uses.

Production water for the Johnson Camp Mine is currently supplied from two of three wells located on the Johnson Camp property and from a well located on private land adjacent to our property. We anticipate that it will be necessary to drill another well on our property in order to expand our leaching operation. In addition, although three of the four wells have been upgraded since 1999, further upgrades may have to be undertaken.

The loss of some or all water rights, in whole or in part, or shortages of water to which we have rights could require us to curtail or shut down mining production and could prevent us from pursuing expansion opportunities.

Our estimates of reserves are inherently subject to error, particularly since we have no recent operating history on which to base such estimates. Our actual results may differ due to unforeseen events and uncontrollable factors that can have significant adverse impacts.

The Johnson Camp Mine has no recent operating history upon which to base estimates of proven and probable ore reserves and estimates of future cash operating costs. Such estimates are, to a large extent, based upon the interpretation of geological data obtained from drill holes and other sampling techniques performed by third parties, the methodologies and results of which we have assumed - but cannot be assured - are reasonable and accurate. In addition, Bikerman Engineering & Technology Associates derived its estimates of cash operating costs at the Johnson Camp Mine from information provided by our

6

Company. Such information and certain other factors, including anticipated tonnage and grades of ore to be mined and processed, the configuration of the ore body, expected recovery rates of the mineral from the ore, comparable facility and equipment operating costs current as of the second quarter of 2007, and anticipated climatic conditions, form the basis for, and constitute fundamental variables in, the Technical Report. Actual cash operating costs and economic returns based upon development of proven and probable ore reserves may differ significantly from those originally estimated. Until reserves are actually mined and processed, the quantity of reserves must be considered as estimates only.

Our estimates of reserves are based in large part on sampling data produced by third parties and on amounts of metallurgical testing that are less extensive than normal. In addition, our expected copper recovery rates at the Johnson Camp Mine exceed historical experience at the property. There is no assurance that we will be able to meet these expectations and projections at an operational level.

Our expectations with respect to copper recovery rates exceed historical experience at the Johnson Camp Mine since we plan to crush the ore to a smaller size with the expectation of higher copper recoveries. In addition, our projections of copper recovery are based on amounts of metallurgical testing that are less extensive than are commonly used in the industry for evaluating copper oxide deposits. Furthermore, our estimates of ore reserves reflect consumption projections for sulfuric acid and other consumable items that were developed using a limited number of samples taken by the former operators of the mine on the Johnson Camp property that may not be representative of the characteristics of the copper deposits. There is no assurance that we will be able to meet these expectations and projections at an operational level.

Copper recovery rates for approximately 15% of our estimated total reserves may be less than optimal due to the presence of copper sulfide mineralization below the elevation of 4,560 feet.

Copper sulfide minerals are not as amenable to heap leach recovery techniques as are copper oxides. Since copper sulfide mineralization is evident below an approximate elevation of 4,560 feet in both the Burro and Copper Chief pits of the Johnson Camp Mine, we caution that copper recovery rates for ore anticipated to be mined below that elevation (approximately 15% of estimated total ore reserves) may be inhibited. In addition, although the column test on the sample of Abrigo ore (a type of copper bearing host rock at the Johnson Camp Mine) taken from an approximate elevation of 4,620 feet that contained 4.49% sulfides exhibiting good copper recoveries, the leaching of copper from ore mined at this depth may be less than optimal.

We have evaluated the commercial viability of the Johnson Camp Mine based on an estimate of ore reserves that is premised on a geologic resource model and estimate previously prepared that was based largely on drilling, sampling and assay data that had been developed by Cyprus Mines Corporation, Arimetco Inc. and Summo U.S.A. Corporation, the accuracy of which cannot be assured.

We have evaluated the commercial viability of the Johnson Camp Mine based on an estimate of ore reserves contained in the feasibility study. The resource model and estimate previously prepared and used as the basis for the feasibility study is based largely on drilling, sampling and assay data that had been developed by the previous operators of the Johnson Camp Mine, Cyprus and Arimetco, and by Summo. The validity of the estimates assumes the accuracy of the underlying drill hole electronic database.

We and Bikerman Engineering & Technology Associates have conducted limited additional due diligence, such as reviews of historical project geological drill logs and assay certificates, but no additional drilling. Complete accuracy of the drill hole electronic database cannot be assured.

Cyprus, Arimetco and Summo used different approaches to drilling, sampling and assay analysis, with the result that their respective results may not be comparable and thereby increase the risk of an overestimation of ore reserves.

7

Cyprus Mines Corporation (which owned the Johnson Camp property until 1989, operating under the name Cyprus Johnson Copper Company), Arimetco and Summo used different approaches to drilling, sampling and assay analysis that may not be comparable to each other. In particular, the soluble copper assay techniques used by Arimetco for ore grade estimation are not directly comparable to the soluble copper assay techniques used by Cyprus. The use of two incomparable approaches by Cyprus and Arimetco may have led to inconsistencies in or the skewing of the data underlying our estimates, thereby increasing the risk of an overestimation of ore reserves at the Johnson Camp Mine, as well as increasing the risk of a material inaccuracy in the feasibility study.

Limited sampling work has been performed at the Johnson Camp Mine, and Bikerman Engineering & Technology Associates concluded that it is therefore not possible at this time to verify the entire drill hole electronic database used for the current resource model and ore reserve estimates. Bikerman Engineering & Technology Associates has largely assumed the reasonableness and accuracy of the drilling, sampling and assay methodologies and data which constitute a fundamental variable input in the feasibility study.

Bikerman Engineering & Technology Associates reviewed the results of limited sampling work undertaken at the Johnson Camp Mine in 2006 by another engineering company. Bikerman Engineering & Technology Associates has concluded that it is not possible for it to verify the entire original drill hole electronic database used for the current mineral resource model and ore reserve estimates. Consequently, Bikerman Engineering & Technology Associates and we have largely assumed the reasonableness and accuracy of the drilling, sampling and assay methodologies and data. Accordingly, there is a risk that results may vary if additional sampling work were undertaken. This, in turn, could adversely impact the current mineral resource model and ore reserve estimates, as well as increase the risk of a material inaccuracy in the feasibility study.

Our estimate of ore reserves at the Johnson Camp Mine is based on total copper assays rather than on acid soluble copper assays and our expectations with respect to copper recovery are based on results of metallurgical testing that may not be duplicated in larger scale tests under onsite conditions or during production. As a result, there is a risk that we may have over–estimated the amount of recoverable copper.

Our estimate of ore reserves at the Johnson Camp Mine is based on total copper assays rather than soluble copper assays. A reserve estimate based on total copper is an indirect measurement of copper recovery through leaching. There can be no assurance that metallurgical recoveries in small scale laboratory tests will be duplicated in larger scale tests under onsite conditions or during production. Accordingly, there is a risk that we may have over–estimated the amount of recoverable copper.

We will require additional permits and renewals of permits to reactivate the Johnson Camp Mine, the availability of which cannot be assured.

Although we have secured a number of permits for the restart and operation of the Johnson Camp Mine, we still need to obtain certain additional permits, including an aquifer protection permit. In addition, certain permits will require applications for renewal from time to time during the life of the project and certain permits may be suspended or require additional applications in the event of a significant or substantial change to the Johnson Camp Mine operations or prolonged inactivity. To the extent other approvals are required and not obtained, we may: (i) be prohibited from continuing mining and/or processing operations; (ii) forced to reduce the scale of or all of our mining operations; or (iii) be prohibited or restricted from proceeding with planned exploration or development of mineral properties. For example, we are currently producing copper under an ADEQ Compliance Order. However, we anticipate that we will be required to immediately halt all of our operations at the Johnson Camp Mine if our application for an aquifer protection permit is denied.

8

We have incurred substantial debt and have granted a security interest in our assets. If we are unable to repay our loans when they become due, the lenders would be entitled to realize upon their security by taking control of all or a portion of our assets.

We are a party to an Amended and Restated Credit Agreement dated as of March 31, 2009 with Nedbank Limited, as the administrative agent and lead arranger, which provided a $25,000,000 secured term loan credit facility used by our Company to finance the reactivation of the Johnson Camp Mine. We have delivered a deed of trust, a collateral account agreement and certain other security agreements that grant to the lenders a first priority lien encumbering all of the real and personal property associated with the Johnson Camp property, including all patented mining claims, fee lands and unpatented mining claims in which we have an interest. The lenders would be entitled to realize upon their security interests and seize our assets if we were to be unable to repay or refinance the loans as they become due. In addition, pursuant to the terms of the Credit Agreement, we are required to meet specified financial tests any time that any loan proceeds remain outstanding under the Credit Agreement.

Any failure to comply with the restrictions of the Credit Agreement, or under any other credit facilities or agreements governing our indebtedness, may result in an event of default. Such default may allow our creditors to accelerate the related debt. Our assets and cash flow may not be sufficient to fully repay borrowings under our debt instruments that are accelerated upon an event of default.

If we are unable to repay, refinance or restructure our indebtedness or amend the covenants contained in our Credit Agreement at maturity or in the event of a default, the lenders could terminate their commitments under our agreement, declare all borrowings outstanding (together with accrued interest and other fees) immediately due and payable and institute foreclosure proceedings against the security. Any such actions could force us into bankruptcy or liquidation.

We may require additional financing to complete the ramp up of operations at the Johnson Camp Mine, the availability of which cannot be assured.

We may require additional financing to complete the ramp up of operations at Johnson Camp Mine. We also expect to incur a further $5 million in capital costs in the next three years, primarily for the expansion of our existing leach pad capacity. We also expect to incur expenses in connection with our plans to commission an updated feasibility study and further exploratory drilling on the Johnson Camp property. Our estimated capital costs and operating expenses may change with our actual experience as our mine plan is implemented. We cannot guarantee that we will be able to obtain any additional financing on commercially reasonable terms or at all. If we fail to obtain the necessary financing when needed, we may not be able to execute our mine plan and we may again be forced to place the Johnson Camp Mine on care and maintenance status.

Our indebtedness, as well as the current global recession, disruption in financial markets and lower copper prices generally, could, among other things, impede our access to capital or increase our cost of capital, which would have an adverse effect on our ability to fund our working capital and other capital requirements.

As of December 31, 2008, the outstanding principal and unpaid interest amount of our debt was approximately $25,995,407. The widely reported domestic and global recession, the associated low copper prices, and the unprecedented levels of disruption and continuing illiquidity in the credit markets have had an adverse effect on our operating results and financial condition, and if sustained or worsened such adverse effects could continue or worsen. Disruptions in the credit and financial markets have adversely affected financial institutions, inhibited lending and limited access to capital and credit for many companies, including ours. These disruptions have made it difficult for us to obtain, or increase our cost of obtaining, capital and financing for our operations and have limited our flexibility to plan for, or

9

react to, changes in our business and the markets in which we operate. If these conditions persist or worsen, they could, among other things, make it difficult for us to finance our working capital requirements and service our existing debt.

If future financing is not available to us when required, as a result of limited access to the credit markets or otherwise, or is not available on acceptable terms, we may not have sufficient working capital for our exploration, development and production programs. We may also be unable to take advantage of business opportunities or respond to competitive pressures. Any of these circumstances could have an adverse effect on our operating results and financial condition.

Title to the Johnson Camp property may be subject to other claims.

Although we believe we have exercised commercially reasonable due diligence with respect to determining title to the properties that we own or in which we hold an interest, we cannot guarantee that title to these properties will not be challenged or impugned. The Johnson Camp property may be subject to prior unrecorded agreements or transfers or to native land claims and title may be affected by undetected defects. There may be valid challenges to the title of the Johnson Camp property which, if successful, could impair development and/or operations.

The Johnson Camp property consists of 59 patented lode mining claims, 102 unpatented lode mining claims and 617 acres of fee simple lands. The copper processing facilities and the Copper Chief and Burro bulk mining pits that serve as focal points for our mine plan are located on the patented mining claims or fee simple parcels. However, we may in the future mine areas that are on unpatented mining claims. Unpatented mining claims are unique property interests, and are generally considered to be subject to greater title risk than other real property interests because the validity of unpatented mining claims is often uncertain. This uncertainty arises, in part, out of the complex federal and state laws and regulations under the United States General Mining Law, including the requirement of a proper physical discovery of a valuable lode mineral within the boundaries of each claim and proper compliance with physical staking requirements. Also, unpatented mining claims are always subject to possible challenges by third parties or validity contests by the federal government. The validity of an unpatented mining or mill site claim, in terms of both its location and its maintenance, is dependent on strict compliance with a complex body of United States federal and state statutory and decisional law. In addition, there are few public records that definitively determine the issues of validity and ownership of unpatented mining claims.

We do not insure against all risks, and we may be unable to obtain or maintain insurance to cover the risks associated with our operations at economically feasible premiums. Losses from an uninsured event may cause us to incur significant costs that could have a material adverse effect upon our financial condition.

Our insurance will not cover all the potential risks associated with the operations of a mining company. We may also be unable to obtain or maintain insurance to cover these risks at economically feasible premiums. Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. Moreover, we expect that insurance against risks such as environmental pollution or other hazards as a result of exploration and production may be prohibitively expensive to obtain for a company of our size and financial means. We might also become subject to liability for pollution or other hazards for which insurance may not be available or for which we may elect not to insure against because of premium costs or other reasons. Losses from these events may cause us to incur significant costs that could have a material adverse effect upon our financial condition and results of operations.

10

We compete with larger, better capitalized competitors in the mining industry. This may impair our ability to maintain or acquire attractive mining properties, and thereby adversely affect our financial condition.

The mining industry is competitive in all of its phases. We face strong competition from other mining companies in connection with the acquisition of properties producing, or capable of producing, base and precious metals. Many of these companies have greater financial resources, operational experience and technical capabilities than us. As a result of this competition, we may be unable to maintain or acquire attractive mining properties on terms we consider acceptable or at all. Consequently, our revenues, operations and financial condition could be materially adversely affected.

We are dependent on our key personnel, and the loss of any such personnel could adversely affect our Company.

Our success depends on our key executives and on certain operating personnel at the Johnson Camp Mine. We face intense competition for qualified personnel, and the loss of the services of one or more of such key personnel could have a material adverse effect on our business or operations. Our ability to manage administration, production, exploration and development activities, and hence our success, will depend in large part on the efforts of these individuals. We cannot be certain that we will be able to retain such personnel or attract a high caliber of personnel in the future.

In order to be successful during start-up and into production, we will have to expand and maintain our workforce. We may not be successful in recruiting the necessary personnel, or in managing the new challenges that we will face with any significant growth.

Our mining operations require that we maintain a workforce at the Johnson Camp Mine of approximately 80 employees as well as various contractors. This requirement places substantial demands on our Company and our management. Our ability to assimilate new personnel will be critical to our performance. We will be required to train, motivate and manage our employees. We will also have to adopt and implement new systems in all aspects of our operations. We have no assurance that we will be able to recruit the personnel required to execute our programs or to manage these changes successfully.

The actual costs of reclamation are uncertain, and any additional amounts that we are required to spend on reclamation may have a material adverse effect on our financial condition.

The costs of reclamation included in the feasibility study are estimates only and may not represent the actual amounts which will be required to complete all reclamation activity. It is not possible to determine the exact amount that will be required, and the amount that we will be required to spend could be materially different than current estimates. Reclamation bonds or other forms of financial assurance represent only a portion of the total amount of money that will be spent on reclamation over the life of the Johnson Camp Mine operation. Any additional amounts required to be spent on reclamation may have a material adverse affect on our financial condition and results of operations.

Our directors and officers may have conflicts of interest.

Some of our directors and officers serve currently, and have served in the past, as officers and directors for other companies engaged in natural resource exploration and development, and may also serve as directors and/or officers of other companies involved in natural resource exploration and development in the future. We do not believe that any of our directors and officers currently has any conflicts of interest of this nature.

11

New legislation, including the Sarbanes–Oxley Act of 2002, may make it difficult for us to retain or attract officers and directors.

We may be unable to attract and retain qualified officers, directors and members of committees of the board of directors required to provide for our effective management as a result of the recent and currently proposed changes in the rules and regulations that govern publicly–held companies. The Sarbanes–Oxley Act of 2002 has resulted in a series of rules and regulations by the United States Securities and Exchange Commission, or the SEC, that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes, together with the risks associated with our business, may deter qualified individuals from accepting these roles.

There are inherent limitations in all control systems, and misstatements due to error or fraud may occur and not be detected.

We are now subject to the ongoing internal control provisions of Section 404 of the Sarbanes–Oxley Act of 2002. These provisions provide for the identification of material weaknesses in internal controls over financial reporting, which is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal controls and disclosure controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints and the benefit of controls must be relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, in our Company have been detected. These inherent limitations include the realities that judgments in decision–making can be faulty and that breakdowns can occur because of simple errors or mistakes. Further, controls can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may be inadequate because of changes in conditions, such as growth of the company or increased transaction volume, or the degree of compliance with the policies or procedures may deteriorate. Because of inherent limitations in a cost–effective control system, misstatements due to error or fraud may occur and not be detected.

In addition, discovery and disclosure of a material weakness, by definition, could have a material adverse impact on our financial statements. If we are unable to assert that our internal control over financial reporting is effective (or if our auditors are unable to express an opinion on the effectiveness of our internal controls beginning with the year ending December 31, 2009), this could discourage certain customers or suppliers from doing business with us, cause downgrades in our debt ratings leading to higher borrowing costs and affect how our stock trades. This could in turn negatively affect our ability to access public debt or equity markets for capital. Further, such an occurrence could make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage and/or to incur substantially higher costs to obtain the same or similar coverage. It could also make it more difficult for us to attract and retain qualified personnel to serve on our board of directors, on committees of our board of directors, or as executive officers.

Our officers and directors, and three shareholders holding 10% or more of our common stock, hold a significant amount of our issued and outstanding stock which may limit non–affiliated stockholders to influence corporate matters.

12

Our officers and directors as a group beneficially own approximately 25.6% of our issued and outstanding common stock (assuming non-exercise of certain outstanding options, warrants and other rights to acquire shares of our common stock). In addition, we have three shareholders who, according to reports filed by them under the Securities Exchange Act of 1934, as amended, beneficially own 17.5%, 14.1% and 12.3%, respectively, of our issued and outstanding common stock (assuming non-exercise of certain outstanding options, warrants and other rights to acquire shares of our common stock held by persons other than the relevant officer, director or 10% shareholder). This may limit the ability of our non-affiliated stockholders to influence corporate matters.

Future sales of our common stock may depress our stock price thereby decreasing the value of your investment.

The market price of our common stock could decline as a result of sales of substantial amounts of our common stock in the public market, or the perception that these sales could occur. In addition, these factors could make it more difficult for us to raise funds through future offerings of common stock.

The securities markets in the United States and Canada have experienced a high level of price and volume volatility recently, and the market price of our securities have also experienced wide fluctuations. There can be no assurance that continual fluctuations in our share price will not occur.

Recently, the securities markets in the United States and Canada have experienced a high level of price and volume volatility, and the market price of securities of many companies, including ours, has experienced wide fluctuations in price which have not necessarily been related to operating performance, underlying asset values or prospects. There can be no assurance that fluctuations in our share price will not continue to occur during the foreseeable future.

If we fail to obtain a listing on an established stock exchange, you may be subject to U.S. federal income tax on the disposition of your securities.

We believe that we currently are a “United States real property holding corporation” under Section 897(c) of the Internal Revenue Code, referred to as a USRPHC, and that there is a substantial likelihood that we will continue to be a USRPHC. Generally, gain recognized by a Non–U.S. Holder on the sale or other taxable disposition of common stock should be subject to U.S. federal income tax on a net income basis at normal graduated U.S. federal income tax rates if we qualify as a USRPHC at any time during the 5–year period ending on the date of the sale or other taxable disposition of the common stock (or the Non–US. Holder’s holding period for the common stock, if shorter). Under an exception to these rules, if the common stock is “regularly traded on an established securities market,” the common stock should be treated as stock of a USRPHC only with respect to a Non–U.S. Holder that held (directly or under certain constructive ownership rules) more than 5% of the common stock during the 5–year period ending on the date of the sale or other taxable disposition of the common stock (or the Non–US. Holder’s holding period for the common stock, if shorter). There can be no assurances that the common stock will be “regularly traded on an established securities market”.

We have not obtained a tax opinion to the effect that there has not been a change of control either during the time preceding the completion of our unregistered special warrant offering in September 2007, or immediately following conversion of the special warrants into the underlying shares of common stock and warrants. If a change in control is deemed to have occurred, our Company may not be able to fully utilize our net operating loss carry forwards.

At December 31, 2008, our Company had federal and state net operating loss carry forwards of approximately $92,700,000 and $17,400,000, respectively. A review by our tax advisors indicated that, as of December 31, 2007, we had not been subject to a change of control for the purposes of section 382

13

of the Internal Revenue Code. However, we have not obtained a formal tax opinion to that effect. If any change of control is deemed to have occurred – for example, either during the time preceding the completion of our unregistered special warrant offering in September 2007, or immediately following conversion of the special warrants into the underlying shares of common stock and warrants – or if a change of control occurs at any time in the future, our Company’s ability to fully utilize its net operating loss carry forwards in computing its taxable income will be limited to an annual maximum of the value of our Company just prior to the change in control multiplied by the long term tax exempt rate.

Broker–dealers may be discouraged from effecting transactions in our common shares because they are considered a penny stock and are subject to the penny stock rules. This could severely limit the market liquidity of the shares.

Our common stock currently constitutes “penny stock”. Subject to certain exceptions, for the purposes relevant to us, “penny stock” includes any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share. Rules 15g–1 through 15g–9 promulgated under the United States Securities Exchange Act of 1934, as amended, impose sales practice and disclosure requirements on certain brokers–dealers who engage in certain transactions involving a “penny stock.” In particular, a broker–dealer selling penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse), must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker–dealer or the transaction is otherwise exempt. A broker–dealer is also required to disclose commissions payable to the broker–dealer and the registered representative and current quotations for the securities. Finally, a broker–dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer’s account and information with respect to the limited market in penny stocks.

The additional sales practice and disclosure requirements imposed upon broker–dealers may discourage broker–dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.

In the event that an investment in our shares is for the purpose of deriving dividend income or in expectation of an increase in market price of our shares from the declaration and payment of dividends, the investment will be compromised because we do not intend to pay dividends.

We have never paid a dividend to our shareholders and we intend to retain our cash for the continued development of our business. In addition, pursuant to the terms of our Credit Agreement with Nedbank, we are restricted from paying dividends or making distributions on shares of our common stock. Accordingly, we do not intend to pay cash dividends on our common stock in the foreseeable future. As a result, a return on investment will be solely determined by the ability to sell the shares in the secondary market.

Risks Related to Our Industry

The feasibility of our mine plan is based on certain assumptions about the sustainability of the current price of copper. We may be adversely affected by fluctuations in copper prices.

Copper prices fluctuate widely and are affected by numerous factors beyond our control such as interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand (including that related to housing), and the political and economic conditions of copper producing countries throughout the world. The aggregate effect of these factors on copper price is impossible to predict. Because mining operations are conducted over a

14

number of years, it may be prudent to continue mining for some periods during which cash flows are temporarily negative for a variety of reasons, including a belief that the low price is temporary and/or the greater expense incurred in closing an operation permanently. The value and price of our common shares, our financial results, and our exploration, development and production activities may be significantly adversely affected by declines in the price of copper and other metals.

In addition to adversely affecting our share price, financial condition and exploration, development and mining activities, declining metal prices can impact operations by requiring a reassessment of reserve estimates and the commercial feasibility of a particular project. Significant decreases in actual or expected copper prices may mean that a mineral resource which was previously classified as a “reserve” will be uneconomical to produce and may have to be restated as a resource. Even if the project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause substantial delays in development or may interrupt operations, if any, until the reassessment can be completed.

Our operations will involve the exploration, development and production of copper and other metals, with the attendant risks of damage to or loss of life or property and legal liability.

Our operations will be subject to all the hazards and risks normally encountered in the exploration, development and production of copper and other base or precious metals, including unusual and unexpected geologic formations, seismic activity, pit–wall failures, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and legal liability.

Government regulation impacting the mining industry may adversely affect our business and planned operations.

Our mining, processing, development and mineral exploration activities, if any, are subject to various laws governing prospecting, mining, development, production, taxes, labor standards and occupational health, mine safety, toxic substances, land use, water use, land claims of local people and other matters. New rules and regulations may be enacted or existing rules and regulations may be applied in such a manner as to limit or curtail our exploration, production or development. Amendments to current laws and regulations governing operations and activities of exploration, development mining and milling or more stringent implementation of these laws could have a material adverse effect on our business and financial condition and cause increases in exploration expenses, capital expenditures or production costs or reduction in levels of production (assuming we achieve production) or require abandonment or delays in development of new mining properties.

Certain groups opposed to mining may interfere with our efforts to reactive the Johnson Camp Mine.

In North America there are organizations opposed to mining, particularly to open pit mines such as the Johnson Camp Mine. Although we intend to comply with all environmental laws and permitting obligations in conducting our business, there is still the possibility that those opposed to the operation of the Johnson Camp Mine will attempt to interfere with the operation of the Johnson Camp Mine, whether by legal process, regulatory process or otherwise. Such interference could have an impact on our ability to operate the Johnson Camp Mine in the manner that is most efficient or appropriate, or at all, and any such impact would have a material adverse effect on our financial condition and results of operations.

Our operations are subject to environmental risks and environmental regulation. Our failure to manage such risks or comply with such regulation will potentially expose us to significant liability.

15

All phases of our operations are subject to federal, state and local environmental regulation. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner that we anticipate will require stricter standards and enforcement, increased fines and penalties for non–compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. Future changes in environmental regulation may adversely affect our operations, if any. Environmental hazards may exist on the Johnson Camp property or on properties that we hold or may acquire in the future that are unknown to us at present and that have been caused by previous or existing owners or operators of the properties.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions there under including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations or in the exploration or development of mineral properties may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Our failure to contain or adequately deal with hazardous materials may expose us to significant liability for which we are not insured.

Production, if any, at the Johnson Camp Mine will involve the use of hazardous materials. Should these materials leak or otherwise be discharged from their containment systems, we may become subject to liability for hazards or cleanup work that we are not insured against.

ITEM 1B.         UNRESOLVED STAFF COMMENTS

We are a smaller reporting company as defined by Rule 12b–2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 2.            PROPERTIES

A glossary of Technical Terms appears at page 82.

Johnson Camp Property

Technical Report

Unless stated otherwise, information of a technical or scientific nature related to the Johnson Camp property is summarized or extracted from the Technical Report. The Technical Report is also referred to as a feasibility study in this annual report. Management’s plans, expectations and forecasts related to our Johnson Camp property are based on assumptions, qualifications and procedures which are set out only in the full Technical Report. The Technical Report was filed electronically on November 13, 2007, on the System for Electronic Document Analysis and Retrieval (commonly, known as “SEDAR”), and is publicly available on the Internet at www.sedar.com, under our Company’s profile.

16

Description and Location

We currently have one development property, the Johnson Camp property, which is located in Cochise County, approximately 65 miles (105 kilometers) east of Tucson, in Cochise County, Arizona, one mile north of the Johnson Road exit off of Interstate Highway 10 between the towns of Benson and Willcox in all or parts of Sections 22, 23, 24, 25, 26, 27, 35 and 36, Township 15 South, Range 22 West. (See Figure 1: Location Map).

The Johnson Camp project currently includes: two open pits; one waste dump; three heap leach pads; a crushing, agglomeration and conveying system; a SX–EW processing plant; and ancillary facilities. The Burro Pit is larger than the Copper Chief Pit and contains 60% of the project reserves. The Burro Pit is located east of the SX–EW process plant. The Copper Chief Pit is located approximately 2,000 feet northwest of the Burro Pit.

The existing heap leach pads are located west of the open pits. The leach pads are divided into two major sections with solution collection facilities downstream of the first pad and downstream of pads two and three. A new leach pad is planned for future use and is anticipated to be located north of the Burro Pit and northeast of the Copper Chief Pit. The mine waste dump is located immediately to the east of the Burro Pit.

17

Figure 1: Location Map

18

Titles

The Johnson Camp property consists of 59 patented lode mining claims, 102 unpatented lode mining claims and 617 acres of fee simple lands. (See Figure 2: Johnson Camp Land Status Map). The patented claims comprise approximately 871 acres and the unpatented claims comprise approximately 1,604 acres. Thus, the Johnson Camp property covers approximately 3,092 acres. All of the claims are contiguous, and some of the unpatented mining claims overlap. We keep the unpatented mining claims in good standing by paying fees of $13,250 per year to the United States Federal Government. We keep the fee simple and patented claims in good standing by paying property taxes and claims filing fees of approximately $35,000 per year. The copper processing facilities and the Copper Chief and Burro open pits that serve as focal points for our mine plan are located on the patented mining claims or the fee simple lands.

We are the owner of the Johnson Camp property and the owner or holder of the claims. We are allowed to mine, develop and explore the Johnson Camp property, subject to the required operating permits and approvals, and in compliance with applicable federal, state and local laws, regulations and ordinances. We believe that all of our claims are in good standing.

Our patented mining claims give us title to the patented lands and no further assessment work must be done; however, taxes must be paid. We have full mineral rights and surface rights on the patented lands. Unpatented mining claims give us the exclusive right to possess the ground (surface rights) covered by the claim, as well as the right to develop and exploit valuable minerals contained within the claim, so long as the claim is properly located and validly maintained. Unpatented mining claims however, may be challenged by third parties and the United States government. (See “Risk Factors – Risks Related to Our Company”).

19

Figure 2: Johnson Camp Land Status Map

Accessibility, Climate, Local Resources, Infrastructure and Physiography

Access to the Johnson Camp property is via Interstate Highway 10 and by gravel road. Due to its location just one mile north of Interstate Highway 10, the Johnson Camp property provides excellent access for transportation and delivery of bulk supplies and shipment of copper cathodes.

The Johnson Camp Mine is located on the eastern slope of the Little Dragoon Mountains. The average elevation of the property is approximately 5,000 feet above sea level. The climate of the region is arid, with hot summers and cool winters. Freezing is rare at the site. Historically, the Johnson Camp Mine was operated throughout the year with only limited weather interruptions.

Vegetation on the property is typical of the upper Sonoran Desert and includes bunchgrasses and cacti. Higher elevations support live oak and juniper, with dense stands of pinyon pine common on north–facing slopes.

The existing facilities include the SX-EW processing plant, an administrative and engineering office and warehouse, laboratory, truck shop, core storage building, plant mechanical shop, and various used vehicles, pumps and other equipment. The newly constructed crushing, conveying and stacking system include the following: One 42x65 inch gyratory crusher, conveyors feeding a 40,000 ton (10,000 ton live) coarse ore stockpile, three feeders and a conveyor that feeds two 6x20-foot screens, conveyor feeding a 100-ton surge bin, two conveyors feeding two H6800 hydrocone secondary crushers, conveyor feeding a 40,000 ton fine ore stockpile, three feeders and a conveyor feeding a 10x35-foot agglomerator, an approximate 3,000 foot overland conveyor feeding a stacking system that includes twenty-one 100-

20

foot grasshopper conveyors and a 150-foot radial tele-stacker. The SX-EW processing plant was refurbished and expanded to handle solution from the new crushed and stacked ore and is comprised of a solvent extraction plant, an electrowinning tank house, a tank farm and four solution storage ponds. The solvent extraction plant consists of four extraction mixer-settlers and two strip mixer-settlers, and has a capacity of 2,500 to 5,000 gallons per minute depending if the circuit is in a series or parallel configuration. The electrowinning tank house consists of 88 electrowinning cells that can produce up to 25 million pounds per year. The tank farm, located in front of the tank house, is used for intermediate storage of electrolyte. The four solution storage ponds have a total capacity of approximately 18 million gallons. A new automated cathode stripping machine has been installed to strip copper cathodes from the stainless steel blanks.

The plant also includes a new cell house crane, a new boiler and associated heat exchanger, a new set of electrolyte filters, a clay filter press, and an upgrade to the transformer/rectifier new pumper-mixers, and a sulfuric acid storage tank.

There are several access rights of way and three water wells which are located on the Johnson Camp property and one well on private land where we have access and water rights. Potential water well sites have been identified on our land near Section 19 and will be drilled if additional water is required.

Commercial electrical power and telephone lines remain in place and operational. The Johnson Camp property receives electrical power from Sulphur Springs Valley Electric Cooperative (SSVEC). We are in discussions with SSVEC to negotiate a new long term power contract. Power is received at two substations owned by us that can handle the additional power loads required for the expanded operations. Our workforce at the Johnson Camp Mine is approximately 70 employees. We utilize contractors under our supervision for mining, drilling, blasting and hauling the mined material. We manage all other activities at the Johnson Camp Mine. We believe that there are sufficient skilled operating, maintenance, and technical personnel available that can be employed for the Johnson Camp Mine.

Geological Setting and Mineralization

The Johnson Camp property is located along the east fold of the Little Dragoon Mountains in southeastern Arizona. The rocks exposed on the Johnson Camp property range from the pinal schist that is located at the western end of the Johnson Camp property to the escabrosa limestone that is located at the eastern end of the Johnson Camp property, all of which contain some quartz monzonite porphyry. Large disseminated copper deposits occur in several rock formations at the Johnson Camp Mine. In the region of the Burro and Copper Chief open pits, the copper–bearing rocks dip moderately to the northeast and consist of sedimentary rocks that have been intruded by two diabase dikes.

The main copper bearing host rock units at the Johnson Camp Mine are the Abrigo, Bolsa Quartzite, Pioneer Shale, and the Diabase formations. The Diabase formation is positioned at the base of the copper bearing rock units, overlain by the Bolsa Quartzite, and the lower and middle Abrigo formations. In the Burro pit, oxide copper is located primarily on bedding planes as veins and replacements and along various fractures. In the Copper Chief pit, located approximately 1,500 feet to the north of the Burro pit, oxide copper occurs as disseminations in the Diabase formation and along fractures within the Diabase and in the Bolsa Quartzite units. Other bulk–mineable copper exploration targets lie along trend from both the Copper Chief and Burro deposits.

The style of mineralization and the type of alteration recently mapped on the northern lower benches of the Burro pit suggest the possible presence beneath the property of a mineralized porphyry–type deposit. In addition to the alteration evidence, a prominent magnetic low anomaly is present between the Burro pit and Copper Chief deposit supporting the possible presence of a porphyry–type deposit at depth. Porphyry

21

copper deposits are typically very large, low grade and require processing by recovery processes much different than those planned for the Johnson Camp Mine.

The following cross section diagram illustrates the relative positions, and the geologic and mineralized nature of the various formations in the Burro pit.

Figure 3: Burro Pit Area

The following cross section diagram illustrates the relative positions, and the geologic and mineralized nature of the various formations in the Copper Chief pit.

22

Figure 4: Copper Chief Deposit

Historic Copper Production

From 1975 to 1986, Cyprus mined approximately 15,000,000 tons of ore grading approximately 0.6 percent total copper from the Burro pit. In addition, approximately 12,000,000 tons of waste rock was produced. All ore placed on the heaps was run–of–mine (that is, not crushed). In total, approximately 107,000,000 pounds of cathode copper were produced by SX–EW methods.

Cyprus used a variety of analytical techniques to determine acid soluble copper grades during its operation of the Johnson Camp property and the copper grades for ore placed for leach were reported as acid soluble copper. Recovery of copper by Cyprus totaled 80 percent of the acid soluble copper grade placed on the leach pads. After the closure, Cyprus dismantled the SX–EW plant and moved the plant to another mine. Cyprus continued to maintain ownership of the Johnson Camp property until 1989, when it sold its holdings in the district to Arimetco.

In mid–1990, Arimetco constructed a new SX–EW plant on the Johnson Camp property, and rehabilitated the leach systems on the existing Cyprus pads and the collection, raffinate, and plant feed ponds. Arimetco resumed mining in the Burro pit in 1991, and made further improvements to the facility between 1993 and 1996. Arimetco began limited open pit mining from the Copper Chief deposit in 1996, and continued mining in both the Burro and Copper Chief deposits until 1997 when production was terminated. Ore placed on the heaps from 1991 through 1995 was run–of–mine (not crushed).

23

In 1996, based on metallurgical testing it conducted, Arimetco added a crushing plant to reduce the particle size of ore placed on the heaps in an effort to improve recoveries. The metallurgical test work indicated improved recoveries from crushed ore. We believe that the initial results from leaching of crushed ore placed on a new liner system installed by Arimetco were an increase in leach solution copper grade and an improvement in recoveries to the point where they matched the metallurgical test work performed on certain ore at a similar crush size. However, crushed ore represented less than 25 percent of the total ore that Arimetco had under leach. According to the Technical Report these operating results, along with the column leach test results, clearly support the need to crush the ore to obtain reasonable recoveries under heap leach conditions.

Production by Arimetco between 1991 and 1997 for the Burro and Copper Chief pits totaled approximately 16,000,000 tons of ore grading approximately 0.35 percent total copper and 12,000,000 tons of waste, primarily from the Burro pit, producing approximately 50,000,000 pounds of cathode copper. Arimetco achieved recoveries of approximately 43 percent of the total copper grade from mostly uncrushed ore placed on the heaps. Arimetco ceased mining operations in mid–1997.

The acid soluble copper assay techniques used by Arimetco for ore grade estimation are not directly comparable to the acid soluble copper assay techniques used by Cyprus. Arimetco recoveries were calculated based on total copper assays. The use of two different assay techniques by Cyprus and Arimetco could have led to inconsistencies in or the skewing of the data underlying our estimates, thereby increasing the risk of an overestimation of ore reserves at Johnson Camp Mine. (See “Risk Factors – Risks Related to Our Company”).

Reserves

A summary of the Johnson Camp proven and probable reserves are presented in the table below. Further details about the reserves on the Johnson Camp property can be found in the Technical Report.

Johnson Camp Mine
Summary of Proven and Probable Reserves
		Reserves
Description	Tons		Copper	Recoverable Copper
	(thousands)	Grade (% Cu)	(millions of lbs)	(millions of lbs)
Proven Reserves	54,977	0.338	319	245
Probable Reserves	18,410	0.327	173	129
Total	73,387	0.335	492	374

Notes:

• The ore reserves were estimated in accordance with Industry Guide 7 of the Securities and Exchange Commission (sometimes referred to in this annual report as the “SEC”) and CIM Guidelines.
• The actual tonnage and grade of reserves are generally expected to be within 90–95% of the estimate for proven reserves, and 70–80% for probable reserves.
• Reserves are based on a copper price of $1.50/lb and on total copper assays. Bikerman Engineering & Technology Associates used a copper price of $1.50/lb.
• Reserves are based on operating costs estimated as of the second quarter of 2007.
• The internal cutoff grade used in the reserve analysis was 0.063 – 0.069 percent total copper (depending on rock type). All inferred resource blocks were treated as waste, regardless of their estimated copper grade

Other Mineralized Material

In addition to the above mentioned reserves, mineralized material is contained in the Burro and Copper Chief deposits at the Johnson Camp property and was estimated using the guidelines established in, and is

24

compliant with, Canadian NI 43–101 standards. In addition, there are numerous other prospects of mineralized material that remain to be explored and tested.

Drilling

Initial Drill Hole Database

The initial drill hole database for the Johnson Camp Mine consists of a total of 293 drill holes totaling 90,418 feet. Of these, 142 drill holes are contained in the Burro pit area and 151 drill holes are contained within the Copper Chief pit area. This database includes 12 confirmation diamond drill holes in the Burro and Copper Chief pit areas totaling 5,793 feet that were completed by Summo in 1998.

From October 1999 to January 2000 we conducted four exploration drilling programs using reverse circulation drilling in areas of the Johnson Camp property other than the Burro and Copper Chief deposit areas. Forty–three holes were drilled in the North area (above the Copper Chief), 17 holes were drilled in the Keystone area about one–half mile south of the Burro pit, a deep hole was drilled in the area between the Burro pit and the Copper Chief pit, and three condemnation holes were drilled in the area of our planned future leach pad and plant. Although certain drill results achieved in these four exploration drilling programs were encouraging, we found no copper mineralization that could be classified as reserves as a result of these programs.

Further Exploratory Drilling

In January 2008, we completed the first phase of preliminary exploratory drilling around the periphery of the existing boundaries of the Burro and Copper Chief pits. Twenty-five vertical reverse-circulation drill holes were completed adjacent to and to the south of the Burro Pit and in the Copper Chief deposit area on the Johnson Camp property. All of the related sample preparation and assays were performed utilizing industry standard analytical models by Arizona Assayers Inc., a laboratory independent to our company and doing business in Tucson, Arizona, as Skyline Assayers & Laboratories. A sample quality assurance/quality check program was followed, which called for the regular insertion of independent standards, blanks and duplicate samples.

The newer drill results, when combined with a previous drill hole, S-13, indicate the continuation of copper mineralization from the current south edge of the Burro Pit approximately 1,000 feet further to the south. The drill results also indicate that the copper mineralization in this area is hosted in the same rock units as at the Burro Pit. The drilling at Copper Chief increases the drill hole density within the current planned pit in the north area of the deposit and also expands copper mineralization to the northwest and southeast of the planned pit boundaries.

These drill results will be incorporated into a new block model for both the Burro and Copper Chief pits in 2009 and, depending on the economic conditions, be considered in determining if additional drilling is warranted.

Projected Copper Production from Existing Leach Pads

In 1999, we conducted a limited drilling program to evaluate actual copper content of the existing heaps. The drilling program was conducted to provide an estimate of the copper values in the heaps, but cannot be considered a definitive measure. Based on estimated heap tonnages, there are approximately 75,000,000 pounds of acid soluble copper remaining in the heaps, and, in 2008, we recovered approximately 2,900,000 pounds of copper from residual leaching.

25

Mining Operations

Based on the Technical Report, we expect the Johnson Camp Mine to produce approximately 25 million pounds of copper per year, for an anticipated mine life of 16 years.

Copper production is originating from both an active leach program of newly mined ore and the residual leaching of the existing leach dumps. Once sufficient new ore is placed on the existing pads, leaching for residual copper will be completed.

The operating plan for the crushed ore is as follows: The ore is crushed to a P-80 of one inch (80% is less than one inch) and sulfuric acid is added to the ore in the agglomerator, where the leaching kinetics begin. The ore is stacked on existing leach pads at a height of 20 feet and a raffinate solution is applied at varying application rates and leached for 150 days. Once the new material has been placed on the large, existing pads and leached for 150 days, a second 20-foot lift is placed on the pads. Based on our stacking plan, the existing leach pads have sufficient surface area for more than two years at which time a new leach pad and pond will be constructed.

Use of Total Copper Assays

For the reasons discussed below, our estimate of ore reserves at the Johnson Camp Mine is based on total copper assays and recoveries rather than soluble copper assays and recoveries.

Total copper values were available for both the Copper Chief and Burro deposits. However, only 39 percent of the Copper Chief assay intervals also had acid soluble copper values, and the available data on acid soluble copper was incomplete for all samples. In addition, the database of acid soluble copper values for the Burro deposit reflects two different analytical techniques: (a) a conventional acid soluble method used by Cyprus for 94 of the holes included in the drill hole database; and (b) a more aggressive methodology used by Arimetco for the other 48 drill holes included in the database for the purpose of estimating the ultimate recoveries that may be experienced in the heaps at the Johnson Camp Mine. In summary, total copper assays were the only common denominator for all drill hole assays included in the drill hole database. As a result, only a total copper grade resource model was constructed for both deposits. A reserve estimate based on total copper is an indirect measurement of the amount of copper that is metallurgically available for recovery. Accordingly, there is a risk that we may have overestimated the amount of recoverable copper. (See “Risk Factors – Risks Related to Our Company”).

Data Verification

Four different major categories or levels of data verification have been completed at Johnson Camp Mine by Cyprus Copper, Arimetco, Summo, and others in evaluating the geological, drill hole, and assay database. Each major category or level of data verification provides a measure of confidence in the database. Bikerman Engineering & Technology Associates has concluded that taken in aggregate, all four categories provide corroboration and thus a higher degree of confidence in the data. The categories include: individual inter–company verifications; intra–company verifications; third party reviews; and reconciliations.

Inter–Company Verifications

Cyprus conducted drilling and assaying with both internal and external check assay procedures for data verification. Cyprus had samples assayed at more than one external lab for both total copper and acid–soluble copper. Those external labs were reputable commercial analytical labs commonly employed by the mining and exploration industry at the time. A quality assurance quality control, or QA/QC, procedure was also in place whereby Cyprus composited sample pulps and re–submitted the composite for assay as

26

a comparison with the average of individual assays. In addition, Cyprus did bottle roll tests on core samples to provide an additional analysis for comparison. Bikerman Engineering & Technology Associates has concluded that, while these procedures were not done for every hole and every sample, they were done in sufficient amount to detect either errors in the analytical process or high variability in assays as a result of the geology and no significant or consistent variances were noted.

The majority of the drill holes in the resource database are core holes drilled by Cyprus. Arimetco drilled with core and by reverse circulation methods. Although Arimetco did not have the same quantity of internal or external check assays as Cyprus, Arimetco made extensive use of an independent, reputable commercial lab that is still in business today. In addition, Bikerman Engineering & Technology Associates has concluded that the Arimetco basic data, drill logs and assays sheets were done in sufficient quality typical of industry activity at the time (1990’s).

In summary, Bikerman Engineering & Technology Associates has concluded that both Cyprus and Arimetco conducted standard documented copper analyses in–house and with external labs, had some degree of QA/QC procedures in place and detected no significant problems with repeatability or accuracy of copper assays.

Intra–Company Verifications

The Johnson Camp Mine was operated by Cyprus and Arimetco and evaluated by Summo prior to our Company’s ownership of the Johnson Camp property. Arimetco conducted drilling and assaying that confirmed the work of Cyprus, and Summo conducted mapping, drilling and assaying that confirmed the work of Cyprus and Arimetco. Bikerman Engineering & Technology Associates has concluded that it is a very compelling verification procedure when a second and third company does confirmation drilling and assaying, with different drilling techniques and analytical labs, and the data is correlative.

Summo drilled four holes in the Burro pit and nine in the Copper Chief pit as reverse circulation drill holes. Bikerman Engineering & Technology Associates examined the assay sheets and drill hole logs for a randomly selected Summo drill hole in the Burro pit and for adjacent drill holes by Cyprus and determined that the assay values in all three holes had the same general range of copper values, in the same lithological units, and while not intended as true twin–holes, each drill hole generally verifies the others.

Third Party Reviews

Various third party independent reviews have been conducted on the Johnson Camp property. For example, in 1999, Summo commissioned an engineering firm to complete a feasibility study for the Johnson Camp property. In 2000, we commissioned an engineering firm to complete a feasibility study and in 2005 we requested an updated feasibility study and technical report for the Johnson Camp property. In the opinion of Bikerman Engineering & Technology Associates, these firms are known as reputable consulting/engineering companies providing audits, resource/reserve estimations and feasibility level evaluations to the mining industry. Bikerman Engineering & Technology Associates has reviewed these reports and concluded that there are no serious data verification issues and that these reports are reasonable. Bikerman Engineering & Technology Associates found few database errors and omissions and acceptable limits of error.

The Summo commissioned feasibility study examined the drill hole database, geology, assays, bulk density measurements, QA/QC procedures and completed various block model–to–drill hole comparisons, and reconciliations of the model with historical productions. The Summo commissioned feasibility study verified the block model grades of their resource estimate against the Arimetco drill hole database. Bikerman Engineering & Technology Associates has reviewed the Summo commissioned feasibility study and concluded that this work verifies that the constructed resource block model, is

27

representative of the data base and that the examination by the engineering company and the prior operators verifies the database.

Independent sampling of remaining core to compare with historical assays was attempted, however a large portion of the split core from Cyrus drilling is no longer available and assays for samples that have been archived for over 20 years are not a good comparison with the originally fresh core samples. However, Bikerman Engineering & Technology Associates has concluded that of the limited number of samples collected, individual sample variances occur, but globally the grades do not differ much.

Reconciliations

As the drill hole database is the foundation of the resource and reserve estimates, Bikerman Engineering & Technology Associates has concluded that the most significant verification of the drill hole database is the comparison of its derived block model with the production of mined material. This is accomplished by a reconciliation of the drill hole determined block model tonnage and grade against the blast–hole determined tonnage and grade. The results of reconciliations indicate the model generally replicated or slightly underestimated grade for similar tonnages.

The feasibility study commissioned by Summo compared total historical production with the block model and found both tonnage and grade to be within 0.8% of the combined Cyprus and Arimetco production. Bikerman Engineering & Technology Associates has concluded that this is a close correlation between the historical production and the database–derived block model.

Additional Third Party Review

A third party consulting firm observed, and Bikerman Engineering & Technology Associates concurred, that the basic information upon which verification relies is available for the Johnson Camp Property, including: pre–mine and post–mine mapping; drill hole geological logs; copies of daily drill reports; drill core sampling procedures (Cyprus); original or copies of original assay certificates from commercial analytical labs and the Cyprus Johnson Camp Mine lab; documented sample preparation and analytical procedures; standard analytical procedures used by laboratories, several vintages of geological maps, rock density procedures by an independent laboratory; blast hole pattern assay maps; production records as truck counts to leach dumps; actual production records (from blast holes) versus forecast production (from the deposit model); pre–feasibility and feasibility reports; current availability of geological personnel who actually performed some of the work; and a limited library of core samples and sample pulps.

In 2006, we commissioned a third party consultant to review the applicability of the drill hole data base. Bikerman Engineering & Technology Associates reviewed the verification work done by the consultant and concurs with the conclusions of the consultant. In April 2006, the consultant visited the Johnson Camp Mine and prepared a spreadsheet summary listing all available drill hole data. The consultant tabulated the rotary, reverse circulation and core drilling done on the Burro and Copper Chief deposits.

In May 2006, the consultant visited our Company’s offices in Tucson, Arizona for the purpose of completing an exhaustive audit of the Copper Chief and Burro Pit deposit electronic database. The consultant verified geologic drill hole logs for the model and verified assay certificates to the electronic database. Bikerman Engineering & Technology Associates considers the results of the verification to be quite positive. For example, the consultant checked, and confirmed approximately 40% of the Copper Chief electronic database and found two typographical errors, and he checked approximately 20% of the Burro Pit electronic data base and found one omission.

With the exception of two shallow drilling programs by Cyprus and Arimetco all the assay certificates for all the data in the electronic database have been located. Additionally, geologic logs for over 95% of the

28

drilling completed in the resource areas have been located and were reviewed by Bikerman Engineering & Technology Associates.

In summary, all four levels of data verification have shown only minor database errors. Bikerman Engineering & Technology Associates have concluded that the minor database errors are within acceptable levels and have no reason to believe that the Johnson Camp resource database does not accurately reflect the drill logs.

Metallurgical Test Work

Metallurgical testing was completed in two programs. The first was authorized by Arimetco in May 1995 and was completed at an independent laboratory. The two ore samples that were subjected to testing were collected at the Johnson Camp Mine by Arimetco personnel and consisted of, respectively, approximately 2,000 pounds of run–of–mine schist/shale ore and 8,500 pounds of run–of–mine diabase ore. Seven column tests were used to evaluate the influence of crush size on copper extraction and each ore was tested at a nominal crush size of three inches and a nominal crush size of one inch. The results of the tests showed that when leached for 60 days, crushing the ore significantly increased the copper extraction for both sizes of crushed ore. The ore was still leaching copper when the test program was stopped at 60 days.

The second test program was authorized by Summo in August 1998 and was completed at another independent laboratory. Summo personnel collected the bulk ore samples from the Burro and Copper Chief pits. The locations of the bulk samples were based on preliminary channel sampling. The rock types chosen for sampling from the Burro pit included Lower Abrigo Formation, Bolsa Quartzite and two types of diabase ore. Only a bulk sample of oxidized diabase was obtainable to represent the Copper Chief ore, but a study of polished mineralogical sections prepared from core and/or reverse circulation drill cuttings indicated that the diabase samples taken from the Burro pit were representative of the diabase material contained in the Copper Chief deposit.

Copper mineralogy varies within the deposits. In the Burro pit, approximately 76% of the total estimated ore reserve tonnage is located above a depth of 4,560 feet in a zone dominated by the copper oxide minerals chrysocolla and malachite. Some native copper has been observed disseminated throughout this range. In addition to copper oxide mineralization, copper sulfide mineralization is evident below an elevation of 4,600 feet “in a mixed zone”. Sulfide minerals, which typically convert to oxides on exposure to oxygen, are not as amenable to heap leach copper recovery techniques as oxides. Accordingly, we believe that approximately 24% of the ore reserve in the Burro pit could exhibit reduced copper recovery due to the presence of copper sulfide mineralization.

In the Copper Chief pit, the oxide copper mineralization is similar to that of the Burro pit. The entire Copper Chief pit ore reserve is located above the 4,560 elevation in the zone dominated by the copper oxide minerals chrysocolla and malachite. We do not expect that the recovery of copper from this deposit will be materially affected by sulfide mineralization.

In summary, for the total project, approximately 85% of the ore reserves are located above the 4,560 elevation in the zone dominated by the copper oxide minerals chrysocolla and malachite. Approximately 15% of the total ore reserves could exhibit reduced copper recovery due to the presence of copper sulfide mineralization.

The bulk samples for the Summo metallurgical testing were taken from several areas of the Burro and Copper Chief pits, with all sample locations above the 4,560 foot elevation in the zone dominated by the copper oxide minerals chrysocolla and malachite. The assay results for the Abrigo formation sample taken from an elevation of 4,620 feet, however, indicated a sulfide content of 4.49%. This suggests that the leaching of copper from ore mined at this elevation may be less than optimal.

29

The Summo test work initially consisted of five columns, each containing 135 kilograms (approximately 298 pounds) of ore, taken from five ore samples of approximately 1,000 pounds each. Some problems were encountered with the first five columns, however, so an additional six columns were prepared and tested. All column tests were conducted at a nominal crush size of one inch based on the results from the Arimetco program, except one which was done at a nominal crush size of ½ inch.

The forecasted recoveries of copper that were reviewed by Bikerman Engineering & Technology Associates in preparing their technical report are based on the column tests and are dependent on the crushing of the ore to a nominal size of one inch. The Arimetco test program indicated the importance of this parameter. Cyprus operated the Johnson Camp Mine for a run–of–mine operation whereby non–crushed ore was placed on the leach pads. Arimetco also ran the Johnson Camp Mine as a run–of–mine operation until late 1995 at which time it began crushing the ore to approximately 3 inches. Our current copper recovery estimates provide for extracting 74 to 81 percent of the total copper content of the ore mined, depending on ore type and with crushing to a nominal size of one inch.

According to Cyprus’ records, it achieved copper extraction of up to 80 percent of the acid soluble copper from uncrushed, run–of–mine material. However, the Arimetco operation, which leached new run–of–mine ore, old Cyprus run–of–mine ore, and 4,300,000 tons of ore reported to have been crushed to a nominal size of three inches, achieved copper recovery (from 1991 through 1998) of 43 percent of total copper. Arimetco’s records do not distinguish between copper extracted from old Cyprus material, new run–of–mine ore, and new crushed ore.

In preparing its technical report, Bikerman Engineering & Technology Associates reviewed the metallurgical test work and concurred with the metallurgical recovery estimates. As indicated above, however, the increase in projected copper recovery rates over the historic copper recovery rates is premised on ensuring that the ore is crushed to a nominal size of one inch prior to being placed on the leach pads. This is consistent with Arimetco’s initial results from leaching of crushed ore placed on a new liner system – namely, an increase in leach solution copper grade and an improvement in recoveries to the point where they matched the metallurgical test work performed on certain ore at a similar crush size.

In summary, our expectations with respect to copper recovery rates significantly exceed historical experience at the Johnson Camp Mine, as we plan to crush the ore to a smaller size with the view to increasing leaching efficiency. We believe that our expectations are reasonable, given our view that Cyprus and Arimetco placed uncrushed or improperly crushed ore on the leach pads, which resulted in differing recovery projections and rates. However, there can be no assurance that we will be able to meet these expectations and projections at an operational level. (See “Risk Factors – Risks Related to Our Company”).

We caution that copper recovery rates for ore anticipated to be mined below the 4,560 foot elevation (approximately 15% of estimated total ore reserves) may be inhibited due to the presence of copper sulfide mineralization. In addition, although the column test on the sample of Abrigo ore which contained 4.49% sulfides exhibited good copper recoveries (as shown in the table below under the subheading “Recovery Curves”), the leaching of copper from ore mined below this elevation may be less than optimal.

Royalty Obligations

Copper metal produced from Johnson Camp Mine is subject to a $0.02 per pound royalty payable to Arimetco when copper prices are in excess of $1.00 per pound. The royalty is capped at an aggregate of $1,000,000. As of December 31, 2008, our Company has paid approximately $58,000 under this commitment.

30

On March 31, 2009, we sold a 2.5% royalty on the mineral production sold from the existing mineral rights at Johnson Camp to International Royalty Corporation, acting through its subsidiary, IRC Nevada Inc., for net proceeds of approximately $4,950,000.

United States Mining and Environmental Laws

Arizona State Mining Laws

Mining in the State of Arizona is subject to federal, state and local laws. Three types of these laws are of particular importance to the Johnson Camp property: those affecting land ownership and mining rights; those regulating mining operations; and those dealing with the environment. The Johnson Camp current mining operations are located on private land including both patented mining claims and fee simple lands.

Our exploration activities in the United States are subject to regulation by governmental agencies under various mining and environmental laws. The nature and scope of regulation depends on a variety of factors, including the type of activities being conducted, the ownership status of land on which the operations are located, the nature of the resources affected, the states in which the operations are located, the delegation of federal air and water–pollution control and other programs to state agencies, and the structure and organization of state and local permitting agencies. We evaluate our projects in light of the cost and impact of current regulations on the proposed activity, and evaluate new laws and regulations as they develop to determine the impact on, and changes necessary to, our operations.

The Johnson Camp property also includes unpatented claims. The rights of mineral claimants on federal lands are governed by both the Mining Law of 1872 and the mining claim location requirements of Arizona law. Under federal mining law, a mining claim may be patented and conveyed from the United States into fee ownership. An unpatented mining claim is a right of possession in the claimant to develop and mine federal lands and minerals owned by the United States. Mining claims are located in accordance with both state and federal law, which require notice by monumenting and registration with the county recorder; an annual affidavit showing monies spent on labor or improvements is required to maintain the claim. Congress has placed a moratorium on the processing of mineral patent applications filed after 1994.

Generally, compliance with environmental and related mining health and safety laws and regulations, including the federal Mine Safety and Health Act, requires us to obtain permits issued by regulatory agencies and to file various reports, keep records of our operations and respond to governmental inspections. Some permits require periodic renewal or review of their conditions and may be subject to a public review process during which opposition to our proposed operations may be encountered.

U.S. Federal and State Environmental Law

Our past and future activities in the United States may cause us to be subject to liability under various federal and state laws for the protection of the environment.

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA), imposes strict, joint, and several liability on parties associated with releases or threats of releases of hazardous substances. Liable parties include, among others, the current owners and operators of facilities at which hazardous substances were disposed or released into the environment and past owners and operators of properties who owned such properties at the time of such disposal or release. This liability could include response costs for removing or remediating the release and damages to natural resources. Arizona’s analogue to CERCLA, is the Water Quality Assurance Revolving Fund (WQARF) statute.

Under the Resource Conservation and Recovery Act (RCRA) and related state laws, including the Arizona Hazardous Waste Management Act (HWMA), the generation, transport, treatment, storage, and disposal

31

of hazardous or solid wastes associated with certain mining–related activities are highly regulated. Administration of the federal RCRA programs was delegated to Arizona and is handled through the HWMA. RCRA and HWMA costs may also include corrective action or clean–up costs. Failure to comply can create a fineable condition.

Mining operations may produce air emissions, including fugitive dust and other air pollutants, from stationary equipment, such as crushers and storage facilities, and from mobile sources such as trucks and heavy construction equipment. All of these sources are subject to review, monitoring, permitting, and/or control requirements under the federal Clean Air Act and related state air quality laws. The substantive requirements of the Clean Air Act, including permitting and enforcement of standards are administered by Arizona and certain counties depending upon the size and nature of sources of air emissions. Air quality permitting rules may impose limitations on our production levels or create additional capital expenditures in order to comply with the permitting conditions and regulated emissions. In August 2008, we received an air quality permit from ADEQ which permitted us to resume construction at the Johnson Camp Mine and in January 2009 we commenced mining and crushing new ore.

Under the federal Clean Water Act and delegated state water–quality programs, point–source discharges into “Waters of the United States” are regulated by the National Pollution Discharge Elimination System (NPDES) program. Section 404 of the Clean Water Act regulates the discharge of dredge and fill materials into “Waters of the United States,” including wetlands. Storm water discharges also are regulated and permitted under the storm water program. All of those programs impose permitting and other requirements on our operations. Arizona has been delegated authority under the federal NPDES permitting program. We maintain an active Storm Water Pollution Prevention Plan onsite and are in the process of having it renewed. In addition, certain proposed activities (increased heap leach pad capacity, new ponds and waste dump facilities) indicated potential assessment for applicability of a U.S. Army Corps of Engineers section 404 Dredge & Fill Permit. We are evaluating this circumstance.

We have also adopted a Spill Prevention Control and Counter Measures Plan.

The federal Pollution Prevention Act of 1990, that implements the Community–Right–To–Know portions of CERCLA, from time–to–time may require us to file annual toxic chemical release forms. This is dependent on the amount and character of the materials we will have and use at the facility.

The National Environmental Policy Act (NEPA) requires an assessment of the environmental impacts of “major” federal actions. The “federal action” requirement can be satisfied if the project involves federal land or if the federal government provides financing or permitting approvals. NEPA does not establish any substantive standards. It merely requires the analysis of any potential impact. The scope of the assessment process depends on the size of the project. An Environmental Assessment (EA) may be adequate for smaller projects which are found to have no significant impacts. An Environmental Impact Statement (EIS), which is much more detailed and broader in scope than an EA, is required for larger projects with significant impacts. NEPA compliance requirements for any of our proposed projects, such as federal approval of a mine plan involving more than five acres per year on unpatented mining claims, could result in additional costs or delays. There is no current Arizona law or state procedure comparable to the federal NEPA and the EA/EIS process. Although all current mine facilities on the Johnson Camp property are situated on private land, future exploration on the Johnson Camp property and our other properties may involve unpatented mining claims.

The Endangered Species Act (ESA) is administered by the U.S. Department of Interior’s U.S. Fish and Wildlife Service. The purpose of the ESA is to conserve and recover listed endangered and threatened species of flora and fauna and their habitat. Under the ESA, “endangered” means that a species is in danger of extinction throughout all or a significant portion of its range. “Threatened” means that a species is likely to become endangered within the foreseeable future. Under the ESA, it is unlawful to “take” a listed species, which can include harassing or harming members of such species or significantly

32

modifying their habitat. Arizona has similar laws protecting wildlife and native plants. We conduct wildlife and plant inventories as required as part of the environmental assessment process prior to initiating exploration projects.

Under Arizona’s Aquifer Protection Permit Program facilities that “discharge”, including certain mining operations, are required to obtain an Aquifer Protection Permit (“APP”). An APP application is currently pending review at the Arizona Department of Environmental Quality for the Johnson Camp Mine.

The Johnson Camp property has undergone mining activities for a period of over 125 years. We acquired the Johnson Camp property from Arimetco subject to a number of conditions that constituted aquifer protection law violations and compliance measures. Accordingly, in connection with the acquisition, Consent Order P–139–99 was entered with the ADEQ in June 1999. We agreed to upgrade and improve certain of the facilities and complete certain remediation activities at the Johnson Camp property by September 2000. On January 3, 2001, Consent Order P–401–01 was entered with the ADEQ which replaced Consent Order P–139–99. Consent Order P–401–01 allowed the Johnson Camp Mine to continue to operate and to make improvements to the facility with the view to bringing it into compliance with current Arizona statutes.

On September 7, 2002, the ADEQ issued Compliance Order APP–1 14–02. That order required the following:

• the Johnson Camp Mine be brought into compliance with Arizona’s aquifer protection laws;

• a Stipulated Judgment and Stipulated Judgment Entry Agreement be entered with the ADEQ which provided for civil penalties in the amount of $4,325,000 as a consequence of violation of Consent Order #P401-1 and the aquifer protection laws, subject to the agreement by the ADEQ that it would not file for entry of the judgment unless Compliance Order APP–1 14– 02 was violated and the violation was not cured on a timely basis, or unless we became the subject of a bankruptcy, insolvency or receivership proceeding prior to achieving compliance with Compliance Order APP–1 14–02; and

• an Escrow Agreement be entered with the ADEQ requiring a $1,500,000 deposit by our Company into an escrow account to be used solely to pay for the direct costs of bringing the Johnson Camp Mine into compliance with Compliance Order APP–1 14–02 and the aquifer protection laws.

In response to Compliance Order APP–1 14–02, we applied the $1,500,000 in escrowed funds to environmental remediation activities at the Johnson Camp Mine and to the preparation and filing of an Aquifer Protection Permit application with the ADEQ in June 2003.

The ADEQ responded to the aquifer protection permit application by letter dated September 2, 2003 which identified a comprehensive list of specific deficiencies. A partial response was submitted on September 28, 2006, however certain financial assurances required by the ADEQ could not be provided at that time. In reply, the ADEQ issued an Administrative Review Notice dated May 18, 2007 which included, among other things, lack of the required financial assurances as a deficiency. We submitted a response on July 2, 2007, but were unable to provide certain financial assurances in a form acceptable to the ADEQ. On July 6, 2007, a notice of violation was issued citing the failure to provide the required financial assurances. On August 1, 2007, the outstanding financial assurances were submitted to the ADEQ, and, on August 10, 2007, a formal response to the notice of violation including documentation evidencing submission of financial assurances was filed.

On August 15, 2007, the ADEQ declared that all components necessary for the Aquifer Protection Permit application were received by the ADEQ, at which time the ADEQ commenced its substantive technical

33

review process. Since then, the ADEQ has made subsequent requests for information and we have made additional submissions in response. The most recent request for information is dated March 5, 2009 requesting a response within 45 days. We are currently evaluating the request.

During this permitting process we are allowed to produce copper from the Johnson Camp Mine while we continue to comply with the mandates of Compliance Order APP–1 14–02.

In addition, the ADEQ issued a Notice of Violation dated June 26, 2008 concerning alleged violations of the APP Program and indicating that certain violations constituted non–compliance with the Compliance Order APP–1 14–02. We timely responded to the Notice of Violation by submittal dated August 7, 2008, indicating that no such violations occurred. In addition, we performed certain remedial type actions with respect to various areas referenced in the ADEQ’s Notice of Violation. The ADEQ responded, indicating that it was not completely satisfied with our Company’s position and response. The parties conferred and we submitted additional information dated January 15, 2009 in accordance with the parties’ discussions. The ADEQ has not responded in writing to the January 15, 2009 submittal.

We are committed to materially complying with all requirements under applicable environmental laws and regulations. These laws and regulations are continually changing and, as a general matter, are becoming more restrictive. Our policy is to conduct our business in a manner that safeguards public health and mitigates the environmental effects of our business activities. To comply with these laws and regulations, we have made, and in the future may be required to make, capital and operating expenditures.

U.S. Federal and State Reclamation Requirements

We are subject to mine plan and land reclamation requirements under the Federal Land Policy and Management Act and/or the Arizona Mined Land Reclamation provisions, which are implemented through permits and operations and reclamation plans that apply to exploration and mining activities. These requirements mandate reclamation of disturbed areas and require the posting of bonds or other financial assurance in an amount sufficient to satisfy expected reclamation costs. If reclamation obligations are not met, the designated agency could draw on these bonds and letters of credit to fund expenditures for reclamation requirements.

Reclamation requirements generally include stabilizing, contouring, and re–vegetating disturbed lands, controlling drainage from portals and waste rock dumps, removing roads and structures, neutralizing or removing process solutions, monitoring groundwater at the mining site, and maintaining visual aesthetics. We believe that we are currently in substantial compliance with and are committed to maintaining all of our financial assurance and reclamation obligations pursuant to our permits and applicable laws.

Our Reclamation and Closure Plan

The previous owner of the Johnson Camp property, Arimetco Inc., had no reclamation or closure plans, nor is there a bond outstanding to perform reclamation and closure activities. We submitted our reclamation and mine closure plan to the Arizona State Mine Inspectors Office in July 2007 which plan contemplates reclaiming all mining disturbances occurring after 1987 to a level that will support the designated post–mining land use. Open pit mines are excluded from reclamation requirements; however, waste dumps, tailing piles, leach facilities, process water ponds, site buildings and roadways will require closure and reclamation.

Components of our reclamation plan and closure plan include four separate post mining land use objectives based on public safety, existing and historic land uses, climate, soil quantity and quality, and economic feasibility. These include: rangeland; future mineral exploration and development; storm water

34

management and processing waste rock materials for sale as landscape material, riprap and railroad ballast to contractors and the public.

Our closure plan includes measures to be taken to prevent discharges of pollutants from the facility after operations cease, the methods that we will use to secure the facility, and any other measures needed to protect groundwater resources, including post–closure monitoring and maintenance as needed. Mine closure costs from existing and future impacts of the contemplated operations have been estimated to total $1,850,000. The financial projection assumes a salvage value of the mining, process and service equipment of $2,512,000, a value in excess of the estimated mine closure cost.

Status of Permits – Summary

The development, operation, closure and reclamation of mining projects in the United States requires numerous notifications, permits, authorizations and public agency decisions. This section does not attempt to exhaustively identify all of the permits and authorizations that need to be obtained, but instead focuses on those that are considered to be the main permits that are on the critical path for project startup. These are summarized in the table below:

Permit	Status
Compliance Order	Currently allows copper production from site. Compliance with this order requires material compliance with its contents and the issuance of the Aquifer Protection Permit.
Air Quality Permit	In August 2008, an air quality permit was issued from the ADEQ which permitted construction and further mining and crushing operations at the Johnson Camp Mine.
Hazardous Material Transport and Storage	None Required. Material Safety Data Sheets are maintained on property.
Explosives Storage and Use	Mining Contractor is responsible for use and storage of explosives and is permitted accordingly.
Weights and Measures	Site is licensed by the Arizona Department of Weights and Measures for the weighing of cathode copper for shipment and sale.
Aquifer Protection Permit (APP)	Application is currently under technical review by ADEQ.
Storm Water National Pollutant Discharge Elimination System	Permit number AZR05B377 issued on March 7, 2001. A Storm Water Pollution Prevention Plan has been fully developed and was revised and updated in December 2008.
Water Supply	4 existing wells are permitted: Moore Mine (#36–66376), Republic Mine (#36–66377), Black Prince Mine (#36–66378) and Section 19 Well (#36–66379). Nord is currently working with its engineering consultant and ADEQ for approval of an on–site drinking water system.
	Reclamation and Mine Closure Plan Reclamation and Mine Closure Plan with adequate financial assurances was submitted to the Arizona State Mine Inspectors Office in July 2007. The Plan is under review.

35

Landscape and Aggregate Rock Operation

The Johnson Camp property includes decorative and structural stone operations, which produce landscape and aggregate rock from the overburden piles at the Johnson Camp Mine. Until January 31, 2009, we leased the landscape rock operation to JC Rock, LLC and the aggregate rock operation to Texas Canyon Rock & Sand Inc. in exchange for sliding scale royalties. Effective February 1, 2009, we commenced managing the landscape rock operation although the landscape rock is processed by a third party; the aggregate rock operation continues to be leased to Texas Canyon Rock & Sand.

The rock currently being sold for landscaping purposes is bolsa quartzite, and is known in the market as Coronado Brown. We caused Cochise Aggregates and Materials, Inc. to certify “Coronado Brown Landscape Rock” as a trade name in the State of Arizona on July 15, 2005. We do not believe that the landscape and aggregate rock operations will be material to our financial results of operation.

OTHER PROPERTIES

In addition to the Johnson Camp property, we have an option to acquire an interest in the Texas Arizona claim, an exploration stage project that we do not consider to be material to our overall operations at this time. As described in more detail below, we also held options to acquire interests in the Coyote Springs and Mimbres properties. We elected to allow our option on the Coyote Springs property to expire unexercised in accordance with its terms in January 2009, and to terminate our rights under the Mimbres option in January 2008.

Texas Arizona Mines Project

In July 2004, we entered into an option agreement with an individual named Shirley Bailey to acquire a 100% interest in four unpatented mining claims for a polymetallic exploration target in Cochise County, Arizona, known as the Texas Arizona Mine. We paid $980 to acquire the option in 2004 and an additional $10,000 in 2008 to exercise the option. The claims are located in the Johnson Mining District approximately three miles from the Johnson Camp Mine.

Coyote Springs

In January 2004, our Company acquired an exclusive option from Thornwell Rogers, South Branch Resources, LLC, and MRPGEO, LLC (“Coyote Option Agreement”) to purchase the leasehold rights and mining claims located in the Safford mining district in Graham County, Arizona, commonly known as “Coyote Springs”, consisting of two State of Arizona mineral exploration leases and 52 unpatented mining claims. The Coyote Springs property is a porphyry copper–gold exploration target with exposed, surface copper oxides and considerable potential for deeper copper sulfides.

The Coyote Springs option gave us the right to acquire the Coyote Springs project in exchange for (i) the issuance of certain shares of our Company’s common stock, as described below, to Thornwell Rogers, South Branch Resources, LLC, and MRPGEO, LLC in their respective capacities as the Coyote Springs owners; (ii) at the election of the Coyote Springs owners, the issuance of either 149,994 shares of common stock or $165,000 cash in the aggregate, or a combination of shares and cash, to be paid in three annual installments of $50,010, $54,990 and $60,000 beginning in January 2006; (iii) the issuance of 99,999 stock options in each of January 2004 and 2006, and the issuance of 106,674 stock options in 2008; and (iv) in January 2009, at the election of the Coyote Springs owners, payment of $1,600,005 cash or the equivalent value in shares of common stock (based on market price at the time). The stock options issued prior to 2008 have an exercise price 15% below the value of our Company’s common stock on the date of grant and are to expire 36 months following their respective grant dates. In order to comply with

36

TSX rules, the number of stock options granted subsequent to January 2008 was grossed up in lieu of the 15% discount.

Pursuant to an amended agreement dated January 27, 2006, the Coyote Springs owners agreed to accept an aggregate of $21,000 in cash and an aggregate of 83,844 shares of our common stock valued at $29,010, in full satisfaction of the $50,010 payment due in 2006. We also issued 99,999 stock options to the Coyote Springs owners with an effective grant date of January 28, 2006 and an exercise price of $0.47 per share. In January 2007, we paid an additional $18,330 and issued 33,332 shares of our common stock valued at $36,665 in conjunction with the Coyote Springs option. In January 2008, we paid an additional $60,000 in conjunction with the Coyote Spring Option and issued 106,674 stock options to the Coyote Springs owners. Each stock option entitles the holder to purchase one share of common stock in the capital of our Company at an exercise price of $1.00 per share until 5:00 pm (Tucson time) on January 24, 2011.

In December 2008, we elected to allow our option to acquire an interest in the Coyote Springs property to expire unexercised in accordance with its terms in January 2009. As of December 31, 2008, the total consideration paid under the Coyote Springs option was valued at $400,836, including the value of all stock options and shares of common stock issued. We have recorded a charge to other expense in the amount of $400,836 to reflect the write off of our investment in this property.

Mimbres

In June 2004, our Company acquired an exclusive option from Thornwell Rogers, South Branch Resources, LLC and MRPGEO, LLC to purchase the leasehold rights and mining claims for a porphyry copper exploration target commonly known as the Mimbres property, located near Silver City, New Mexico. The Mimbres property consists of 4.6 square miles of New Mexico state mineral leases and 45 unpatented mining.

In January 2008, we elected to terminate the option agreement. Consequently, we have recorded a charge to other expenses in the amount of $6,002 to reflect the write off of our investment in this property.

ITEM 3.            LEGAL PROCEEDINGS

Other than as set forth below, we know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. The outcome of open unresolved legal proceedings is presently indeterminable. Any settlement resulting from resolution of these contingencies will be accounted for in the period of settlement. We do not believe the potential outcome from any legal proceedings that remain unresolved will significantly impact our financial position, results of operations or cash flows.

Arizona Department of Environmental Quality (ADEQ) Compliance Order and Stipulated Judgment

As previously disclosed in prior annual reports on Form 10–KSB, the ADEQ issued a Compliance Order on September 7, 2002, requiring our Company to bring the Johnson Camp Mine into compliance with Arizona’s aquifer protection laws. Pursuant to the Compliance Order, we entered into a stipulated judgment with the ADEQ which assessed civil penalties against us in the amount of $4,325,000. The stipulated judgment can only be entered should a default notice issued pursuant to the Compliance Order not be cured within 60 days after notice is received. The Compliance Order further provides that any future violations of Arizona’s aquifer protection laws would subject us to additional civil penalties, including the entry of the stipulated judgment and the assessment of the civil penalties described in the

37

stipulated judgment. See the discussion in Item 2, under the heading “Properties - United States Mining and Environmental Laws: U.S. Federal and State Environmental Law,” for additional information regarding status of the Compliance Order.

Patent Infringement Lawsuit

In January 2009, a lawsuit was filed by Corrosion IP Corp. and CTI Southwest, LLC against our Company alleging that certain containers for corrosive materials purchased by us from Novenco Consultants Limited infringe on three patents held by the plaintiffs, and further alleging that we have infringed on a copyrighted drawing owned by the plaintiffs. We have filed an answer denying all liability and have also filed a Third Party Complaint against Novenco. Prior to our purchase of the containers from Novenco, Novenco assured us that the containers did not infringe on any patents held by others and provided our Company with an indemnification agreement whereby Novenco agreed to indemnify our Company from any damages that might arise from a claim of patent infringement. We believe that the containers do not infringe on any patents held by the plaintiffs. We also believe that, in any event, Novenco will be held responsible for any possible damages. We are mitigating our risks associated with the litigation by assembling proof that the plaintiffs’ allegations are false and further through the Third Party Complaint against Novenco. We believe that if the plaintiffs are successful, the resulting award of damages against us, if any, will not be material to the financial condition of our Company.

ITEM 4.            SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The annual meeting of stockholders of our Company was held on October 15, 2008 at 10:00 a.m. (Tucson Time). At the annual meeting, the stockholders adopted resolutions:

1. To elect Ronald A. Hirsch, John T. Perry, Stephen D. Seymour, Douglas P. Hamilton, John F. Cook and T. Sean Harvey to our board of directors. The votes cast for or withheld in respect of each nominee were as follows:

	For	Withheld
Ronald A. Hirsch	39,675,049	1,435,534
John T. Perry	39,961,655	1,148,928
Stephen D. Seymour	39,677,173	1,433,410
Douglas P. Hamilton	39,709,323	1,401,260
John F. Cook	39,994,678	1,115,905
T. Sean Harvey	39,994,905	1,115,678

2. To ratify the selection of Mayer Hoffman McCann P.C. as our Company’s independent registered public accounting firm for the year ending December 31, 2008. The votes cast for or against this proposal, and the number of abstentions, were as follows:

For	Against	Abstain
40,122,061	926,718	61,802

3. To approve the amendments to the Company’s 2006 Stock Incentive Plan as requested by the Toronto Stock Exchange in the form presented at the Annual Meeting, which form incorporates the amendments set forth in Schedule C to the Proxy Statement:

38

For	Against	Abstain
28,660,037	1,412,263	10,968

PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock was traded on the New York Stock Exchange from September 1985 until November 18, 1999. Thereafter, it was traded on the Over–The–Counter Bulletin Board until May 31, 2001 and Pink OTC Markets Inc. (formerly, Pink Sheets, LLC) until March 4, 2008. Our common stock commenced trading on the Toronto Stock Exchange, in Canadian dollars, under the symbol “NRD” on January 21, 2008, and on the OTC Bulletin Board under the symbol “NRDS” on March 5, 2008. The following table sets forth, for the calendar periods indicated, the high and low closing sale price of our common stock on the Pink Sheets LLC (now the Pink OTC Markets Inc.), the TSX and the OTC Bulletin Board. The prices relating to the OTC markets reflect inter–dealer prices, without retail mark–up, markdown or commission and may not represent actual transactions.

Pink OTC Markets Inc.
(formerly Pink Sheets, LLC)

	2007	2006
1st Quarter	$0.60 – 1.18	$0.26 – 0.64
2nd Quarter	0.65 – 0.85	0.51 – 1.22
3rd Quarter	0.72 – 1.47	0.72 – 0.95
4th Quarter	0.90–1.40	0.70 – 1.23

OTC Bulletin Board

	2008
1st Quarter (1)	$0.80 – 0.96
2nd Quarter	0.66 – 0.95
3rd Quarter	0.28 – 0.80
4th Quarter	0.08 – 0.59
(1) Since March 5, 2008

Toronto Stock Exchange

	2008
1st Quarter(1)	CDN$0.67 – 1.15
2nd Quarter	0.70 – 1.00
3rd Quarter	0.36 – 0.88
4th Quarter	0.06 – 0.61
(1) Since January 21, 2008

Holders

The number of record holders of our common stock, $0.01 par value, as of March 15, 2009 was 2,056.

39

Dividends

We have not, since the date of our incorporation, declared or paid any dividends on our common shares. In addition, pursuant to the terms of our Amended and Restated Credit Agreement with Nedbank, we are restricted from paying dividends or making distributions on shares of our common stock. Therefore, we anticipate that we will retain future earnings and other cash resources for the operation and development of our business for the foreseeable future. The payment of dividends in the future will depend on our earnings, if any, and our financial condition and such other factors as our board of directors considers appropriate.

Equity Compensation Plans

We have adopted a stock incentive plan (which includes a subpart governing deferred stock units in lieu of the DSU Plan) (the “2006 Stock Incentive Plan”) which was approved by our stockholders at our Annual General Meeting held on October 18, 2006. Amendments to the 2006 Stock Incentive Plan were approved by our stockholders at our Annual General Meeting held on October 15, 2008. The amendments have been incorporated into an Amended and Restated 2006 Stock Incentive Plan (the “Amended and Restated 2006 Stock Incentive Plan”) which has been filed with the SEC.

A total of 6,000,000 shares of common stock have been reserved for issuance under all awards that may be granted under the Amended and Restated 2006 Stock Incentive Plan. “Eligible Participants” who are entitled to participate in the Amended and Restated 2006 Stock Incentive Plan consist of employees, directors and consultants of (a) our Company or (b) any of the following entities: (i) any “parent corporation” as defined in section 424(e) of the Internal Revenue Code of 1986, as amended (the “Code”); (ii) any “subsidiary corporation” as defined in section 424(f) of the Code; or (iii) any business, corporation, partnership, limited liability company or other entity in which our Company, a parent corporation or a subsidiary corporation holds a substantial ownership interest, directly or indirectly.

The Amended and Restated 2006 Stock Incentive Plan provides for the granting to Eligible Participants of such incentive awards (each, an “Award”) as the administrator of the Amended and Restated 2006 Stock Incentive Plan (the “Administrator”) may from time to time approve. The Amended and Restated 2006 Stock Incentive Plan includes the following provisions:

(a)	the Administrator will be a Committee of the Board of Directors of our Company appointed to act in such capacity, or otherwise, the Board of Directors itself;
(b)	each Award will be subject to a separate award agreement (an “Award Agreement”) to be executed by our Company and the Grantee, which shall specify the term of the Award; and
(c)	subject to applicable laws, including the rules of any applicable stock exchange or national market system, the Administrator will be authorized to grant any type of Award to an Eligible Participant (9a “Grantee”) that is not inconsistent with the provisions of the plan, and the specific terms and provisions of which are set forth in an Award Agreement, and that by its terms involves or may involve the issuance of: (i) shares of common stock, (ii) a stock option, (iii) a stock appreciation right entitling the Grantee to acquire such number of shares of common stock or such cash compensation as will be determined by reference to any appreciation in the value of our Company’s common stock, (iv) restricted stock issuable for such consideration (if any) and subject to such restrictions as may be established by the Administrator, (v) unrestricted stock issuable for such consideration (if any) on such terms and conditions as may be established by the Administrator, (vi) restricted stock units, subject to such restrictions as may be imposed by the Administrator, and represented by notional accounts maintained in the respective names of the Grantees that are valued solely by reference to shares of common stock of our Company and payable only in shares after the restrictions have lapsed, (vii) deferred stock units issuable to eligible directors in lieu of certain eligible remuneration otherwise payable in shares of common stock, subject to settlement in accordance with the terms and conditions of the Award and represented by notional accounts maintained in the respective names of the Grantees, (viii) dividend equivalent

40

rights, which are rights entitling the Grantee to receive credits for dividends that would be paid if the recipient had held a specified number of shares of common stock, (ix) any other security with the value derived from the value of our Company’s common stock, or (x) any combination of the foregoing.

Any Award that is subject to a restriction will become fully exercisable only as set forth in the applicable Award Agreement. Nevertheless, the Amended and Restated 2006 Stock Incentive Plan provides the Administrator with the sole discretion, at any time, to declare any or all Awards to be fully or partially vested and exercisable, provided that the Administrator does not have the authority to accelerate or postpone the timing of payment or settlement with respect to Awards subject to Section 409A of the Code in a manner that would cause the Awards to be subject to certain related interest and penalty provisions. The Administrator may discriminate among Eligible Participants or among Awards in exercising such discretion.

The Amended and Restated 2006 Stock Incentive Plan has specific provisions which apply to grants of Awards intended to qualify as “performance–based compensation”, as defined under section 162(m) of the Code, to any employees who are “covered employees” for the purposes of section 162(m)(3) of the Code.

Under the Amended and Restated 2006 Stock Incentive Plan, stock options may be granted as either incentive stock options under section 422 of the Code and the related regulations, or as non–incentive stock options under section 83 of the Code. As of December 31, 2008, we have granted a total of 4,510,000 non–qualified stock options and 200,000 incentive stock options under the Amended and Restated 2006 Stock Incentive Plan. In addition, 200,000 previously issued non–qualified stock options have been cancelled.

We have also granted non–qualified stock options under individual compensation arrangements, which have been authorized by our board of directors. Such options have been granted outside of, and are therefore not subject to, the Amended and Restated 2006 Stock Incentive Plan.

To date, certain equity–based fees have been paid to our non–executive directors in the form of awards issued pursuant to our Company’s Amended and Restated 2006 Stock Incentive Plan. The non–executive directors have limited rights, exercisable within applicable time limits, to elect to have any percentage of such awards, and any percentage of cash fees, payable in deferred stock units. Each of our non–executive directors exercised such rights in respect of the equity–based fees payable to him for services rendered during the year ended December 31, 2008.

The following table provides a summary of the number of stock options and deferred stock units outstanding as at December 31, 2008.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	5,181,237 (1)	0.53	684,325
Equity compensation plans not approved by security holders(2)	0	0.00	N/A
Total(3)	5,181,237 (1)	0.53	684,325

41

Notes:

(1)	Includes 4,710,000 shares of common stock reserved for issuance in connection with stock options granted under the 2006 Stock Incentive Plan, and 471,237 shares of common stock reserved for issuance in connection with deferred stock units granted to our Company’s non–executive directors under the 2006 Stock Incentive Plan. A total of 166,667 deferred stock units were not issued until January, 2009, but are included in this table as they were issued to our non–executive directors in respect of services rendered during the quarter ended December 31, 2008. Does not include 44,411 common shares issued during 2008, and 90,027 shares issued during 2007, pursuant to the conversion of deferred stock units.
(2)	Amount does not include 1,840,002 stock options with an exercise price of $0.75 per share issued to agents as compensation in connection with our unregistered special warrants offering in June 2007, and stock options in the amounts of 99,999 with an exercise price of $0.47 per share and 106,674 with an exercise price of $1.00 issued pursuant to our option agreement in respect of the Coyote Springs property.
(3)	Includes certain options granted to executive officers pursuant to employment agreements described in more detail under the caption “Employment Contracts and Termination of Employment and Change–In–Control Arrangements.”
(4)	The deferred stock units are disregarded for purposes of calculating the weighted average exercise price of outstanding options.

Recent Sales of Unregistered Securities

We have reported sales of securities without registration under the Securities Act of 1933 during our fiscal year ended December 31, 2008 on the following quarterly reports on Form 10–Q, as filed with the Securities and Exchange Commission.

Report	Date of Filing with SEC
Annual Report on Form 10–KSB for the year ended December 31, 2007	March 26, 2008
Quarterly Report on Form 10–Q for the quarterly period ended March 31, 2008	May 14, 2008
Quarterly Report on Form 10–Q for the quarterly period ended June 30, 2008	August 14, 2008
Quarterly Report on Form 10–Q for the quarterly period ended September 30, 2008	November 14, 2008

During the year ended December 31, 2008, we issued the following securities without registration under the Securities Act of 1933 which have not been reported on the Annual Report on Form 10–KSB and the Quarterly Reports on Form 10–Q described above:

To date, certain equity–based fees have been paid to our non–executive directors in the form of awards issued pursuant to our Company’s Amended and Restated 2006 Stock Incentive Plan. The non–executive directors have limited rights, exercisable within applicable time limits, to elect to have any percentage of such awards, and any percentage of cash fees, payable in deferred stock units. Each of our non–executive directors has exercised such rights in respect of the equity–based fees payable to him for services rendered during the year ended December 31, 2008. Our non–executive directors earned the following additional deferred stock units during the quarter ended December 31, 2008: John Cook, the Chairman of

42

the Compensation Committee, earned 41,667 deferred stock units; Douglas Hamilton, the Chairman of our Audit Committee, earned 51,282 deferred stock units; Stephen Seymour, the Chairman of our Corporate Governance and Nominating Committee earned 41,667 deferred stock units; and T. Sean Harvey earned 32,051 deferred stock units. We issued these securities to the directors, each of whom is an accredited investor, in January 2008, relying on Section 4(2) of the Securities Act of 1933, as amended.

During the quarterly period ended December 31, 2008, we issued 1,810,000 stock options with an exercise price $0.09 and a value of $95,994 to employees and member of the Board of Directors of our Company. We issued these securities relying on Section 4(2) of the Securities Act of 1933, as amended.

During the quarterly period ended December 31, 2008, warrants to purchase 560,000 shares of our Company’s common stock were exercised. Each of the warrants had an exercise price of $0.25 per share. We issued these shares of common stock to two warrant holders, as accredited investors, relying on Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

We did not purchase any of our shares of common stock or other securities during the year ended December 31, 2008.

ITEM 6.            SELECTED FINANCIAL DATA

We are a smaller reporting company as defined by Rule 12b–2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition, changes in financial condition and results of operations for the years ended December 31, 2008 and 2007 should be read in conjunction with our most recent audited consolidated financial statements for the years ended December 31, 2008 and 2007, which are included in this annual report, and the related notes to the financial statements. This discussion contains forward–looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward–looking statements as a result of many factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this annual report.

Overview of Our Business

We are a copper mining company and our principal asset is the Johnson Camp property located in Arizona. The Johnson Camp property includes the Johnson Camp Mine and a production facility that uses the solvent extraction, electrowinning (SX–EW) process. The Johnson Camp Mine is an existing open pit copper mine; it includes two pits, namely the Burro and the Copper Chief bulk mining pits. We have recently commenced production of copper from new ore.

The Johnson Camp property includes decorative and structural stone operations, which produce landscape and aggregate rock from the overburden piles at the Johnson Camp Mine. Until January 31, 2009 we leased the landscape and aggregate rock operations to a third party in exchange for sliding scale royalties. Effective February 1, 2009, we commenced managing the landscape rock operation; the aggregate rock operation continues to be leased to a third party.

43

Our Plan of Operations

Overview

We had placed the Johnson Camp Mine on a care and maintenance program in August 2003 due to weak market conditions for copper at that time. In June 2007 when conditions improved, we began the process of reactivating the Johnson Camp Mine.

In January 2008 we commenced copper cathode production from leaching old dumps, and during 2008 we produced approximately 2.9 million pounds of copper from residual leaching.

In August 2008, we received the Air Quality permit necessary to enable us to complete the reactivation of the Johnson Camp Mine. We commenced mining of new ore upon completion of the reactivation work in January 2009, and we commenced production of copper from new ore in February 2009. We anticipate reaching our currently planned full copper production rate of 25 million pounds of copper per annum in the spring of 2009.

In February 2008, we entered into a long term cathode sales agreement with Red Kite Master Fund Limited for 100% of the copper cathode production from the Johnson Camp Mine. The agreement runs through December 31, 2012 with renewable extensions by mutual agreement of both parties. Pursuant to the agreement, Red Kite accepts delivery of the cathodes at the Johnson Camp Mine, and pricing is based on the average monthly COMEX price for high–grade copper.

In November 2008 we received a scoping study completed by an independent, internationally–recognized firm of mining engineers and consultants that found that we can potentially increase our production to an estimated rate of 40 million pounds of copper per year from our current plan of 25 million pounds of copper per year with an additional capital investment of approximately $19 million. We plan to conduct an updated feasibility study as a first step in assessing whether we should pursue this increase in our planned production. We believe that we will have sufficient cash flow from operations to commission the required updated feasibility study, but we will require additional financing if we decide to make the required capital investments to increase production. Upon completion of the updated feasibility study, which we anticipate will take six months from the date that it begins, our board of directors will analyze the results to determine whether it is in the best interests of our Company to pursue this initiative, taking into account, among other things, the availability of required financing (which cannot be assured).

Our business and our ability to realize our business objectives and implement our operating plan is subject to a number of additional risks and uncertainties, including those discussed under the heading “Risk Factors”.

Estimated Capital Costs

The initial capital costs to complete the reactivation of the Johnson Camp Mine were approximately $36 million. Such costs related primarily to: (a) the rehabilitation of solution ponds; (b) refurbishment and a modest expansion of the SW-EX copper production facility; (c) the installation of our primary stage crusher, and the purchase and installation of two secondary stage crushers, an agglomerator and conveying equipment; and (d) other project-related items.

We estimate we will incur a further $5 million in capital costs in the next three years, primarily for the expansion of our existing leach pad capacity. These cost figures do not include estimated reclamation bonding requirements, and do not account for inflation, interest and other financing costs.

44

Liquidity and Financial Resources

Our Company’s continuation as a going concern is dependent upon our ability to generate sufficient cash flow to meet our obligations on a timely basis to complete the production ramp up of the Johnson Camp Mine, to produce copper at a level where we can become profitable, to pay off existing debt and provide sufficient funds for general corporate purposes, all of which is uncertain. Our consolidated financial statements contain additional note disclosures to this effect, and the consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Cash and Working Capital

The following table sets forth our cash and working capital as of December 31, 2008 and 2007:

		As of			As of
		December			December
		31, 2008			31, 2007
Cash reserves	$	4,465,245	(1)	$	3,368,910	(2)
Working capital surplus
(deficiency)	$	(2,849,660	)(3)	$	710,914	(4)

Notes:

(1)	Excludes $1,533,662 in restricted cash being held in a Debt Service Reserve Account in conjunction with the close-out of a portion of our Company’s hedge contracts and $686,476 being held in conjunction with two letters of credit. The $1,533,662 was reclassified to unrestricted cash in March of 2009.
(2)	Excludes $3,000,000 in restricted cash being held in a Debt Service Reserve Account in conjunction with our $25 million secured term loan credit facility with Nedbank Limited and $686,476 being held in conjunction with two letters of credit. The $3,000,000 was reclassified to unrestricted cash during 2008.
(3)	Includes $6,674,662 in current portion long-term debt and capital lease obligations. In March 2009, our Company entered into an Amended and Restated Credit Agreement which, among other things, deferred the payment of $3,333,333 in current portion of long-term debt until 2012.
(4)	Includes $325,751 in current portion long-term debt and capital lease obligations

Special Warrant Financing

We completed an offering of 30,666,700 special warrants on June 5, 2007. The special warrants were offered and sold at a price of $0.75 per special warrant, for aggregate gross proceeds of $23,000,025. Our net proceeds after payment of the costs of the offering, including agents’ commissions, were $21,334,368. Following completion of the offering, we applied a portion of the proceeds to fully repay the $5,000,000 secured bridge loan to Nedbank Limited. We also paid a total of $3,035,474 to certain officers and directors in satisfaction of various accrued and outstanding amounts payable to them including repayment of the $564,812 outstanding amount under the $600,000 revolving credit facility, $315,000 associated with the TMD settlement, repayment of the 50% portion of the related party convertible notes as stipulated in the related debt agreement, as amended, and $2,023,633 in accrued and outstanding consulting fees, salaries, bonuses and fees to certain senior officers and directors which had been accrued over the four years up to December 31, 2007.

Credit Agreement with Nedbank Limited, as Lead Arranger

45

We also entered into a Credit Agreement dated as of June 28, 2007 with Nedbank Limited, as administrative agent and lead arranger, which provided for a $25 million secured term loan credit facility. The Credit Agreement was amended and restated as of June 30, 2008, and provided for a series of term loans to be funded from time to time by a syndicate of lenders in response to draw-down requests by our Company, with the aggregate amount of all term loans being $25 million. As of December 31, 2008, all of the $25,000,000 had been drawn down on the loan. Proceeds from the loan have been used to fund the purchase and installation of equipment associated with the reactivation of the Johnson Camp Mine.

In March 2009, we agreed to amend and restate our $25 million credit agreement with Nedbank. Although payments of principal and interest on the loan are required to be made on the last business day of March, June, September, and December in each year, starting with the last business day of September 2009 and ending on the last business day of March 2013, the payments scheduled to be paid on March 31 and June 30, 2009 (the “Deferred Payments”) have been deferred until December 31, 2012 and March 31, 2013, respectively. The loan now bears interest at an annual rate equal to LIBOR for the interest period in effect plus a margin of 6.06%. The margin will be reduced by 1.75% if we prepay the deferred payments, and will be reduced by an additional 0.5% upon completion of the Johnson Camp Mine, as defined in the amended and restated credit agreement, which is currently scheduled for October 2009.

Under the amended and restated credit agreement, we may sell certain copper price hedging instruments that we currently hold under copper price hedging agreements maturing on October 1, 2010 or later, if the net proceeds to our Company will be more than $2.2 million. If we elect to do so, we will be required to set aside $2.2 million in a segregated account to fund our debt service obligations under the credit facility. The existing loan will then be separated into two tranches, whereby the first tranche will be equal to the aggregate principal amount then outstanding minus $2.2 million, which will be the principal amount of the second tranche. The second tranche will be subject to an interest rate of LIBOR plus 5.00% per annum and scheduled for repayment on March 31, 2013. However, if we prepay the Deferred Payments, the second tranche will be amortized in equal portions over the number of quarters remaining until March 31, 2013.

Sale of a Royalty

On March 31, 2009, our Company sold to International Royalty Corporation, acting through its subsidiary IRC Nevada Inc., a 2.5% net smelter royalty on the mineral production sold from the existing mineral rights at Johnson Camp. The net proceeds of the sale are approximately $4,950,000. The royalty is payable in cash on a quarterly basis.

Results of Operations – Years Ended December 31, 2008 and 2007

The following table sets forth our consolidated loss from operations during the fiscal years ended December 31, 2008 and 2007.

Consolidated Loss From Operations

		Year Ended December 31
		2008		2007
Net sales	$	8,115,820	$	–
Costs applicable to sales (exclusive of depreciation, depletion and amortization		8,795,628		–

46

shown separately below)
General and administrative expenses		3,701,083			6,135,527
Write–down of inventory to net realizable value		530,964			–
Depreciation, depletion and amortization		251,487			123,768
Loss from operations	$	(5,123,342	)	$	(6,259,295	)

Net Sales

We commenced commercial production from residual leaching on February 1, 2008. One hundred percent of the copper cathode production from the Johnson Camp Mine was sold to Red Kite Master Fund Limited under the previously described off-take agreement. During 2008, we recorded revenues of $8,115,820 from the sale of 2,842,890 pounds of copper cathode, all of which was produced from residual leaching. Revenues earned from the sale of 58,723 pounds of copper cathode produced from residual leaching prior to the commencement of commercial production in the amount of $209,907 were credited to development costs.

We did not have any sales during 2007 due to the fact that the Johnson Camp Mine was on a care and maintenance program during that year.

Costs Applicable to Sales

Cost applicable to sales represents the costs incurred in converting the ore present in existing leach pads into salable copper cathodes. The conversion process includes leaching of stockpiles, solvent extraction and electrowinning. Costs include labor, supplies, energy, site overhead costs and other necessary costs associated with the extraction and processing of ore. However, the cost applicable to sales excludes depreciation, depletion and amortization, and the write-down of inventory to net realizable value.

We incurred $8,795,628 of costs applicable to sales from the commencement of commercial production (February 1, 2008) through December 31, 2008. Operating costs incurred from December 1, 2007 through January 31, 2008 in the amount of $572,765 (net of pre commercial revenue) were capitalized and are being amortized over the expected life of production of copper cathodes from existing heaps.

Our primary cost associated with residual leaching is sulfuric acid which amounted to approximately $4.1 million for the year ended December 31, 2008. During 2008, we were subject to significant price volatility in the sulfuric acid market as prices rose from a low of approximately $150 per ton delivered in the first quarter of 2008 to a high of almost $300 per ton delivered in the fourth quarter of 2008. Prices have subsequently decreased significantly and are now in the $100 per ton delivered range as of the first quarter 2009.

Write–down of Inventory to Net Realizable Value

As a result of the decline in copper prices in the fourth quarter of 2008 and the impact of higher operating costs on inventory balances during 2008, our Company recorded charges totaling $530,964 to reduce the carrying value of copper and chemical inventories to net realizable value.

General and Administrative Expenses

Our general and administrative expenses decreased to $3,701,083 during 2008 as compared to $6,135,527 in 2007. The higher general and administrative expenses in 2007 reflected, in part, $1,079,120 related to drilling expenditures incurred at Coyote Springs and Johnson Camp Mine, and $818,305 in legal, accounting and registration fees related to our special warrant offering. In addition, there was a $328,000 decrease in employee and director compensation during 2008. This decrease in general and

47

administrative expenses between 2007 and 2008 was partially offset by a $194,326 increase related to the listing of our common stock on the Toronto Stock Exchange in January 2008.

Depreciation, Depletion and Amortization

Our depreciation and amortization expense increased by $127,719 in 2008, as compared to 2007, due to additional purchases of property and equipment associated with the restart of Johnson Camp being placed in service during 2008.

Other Income (Expense)

The following table sets forth our other income and expenses during the fiscal years ended December 31, 2008 and 2007:

		Year Ended December 31
		2008			2007
Other income (expense)
Interest expense	$	(408,202	)	$	(577,171	)
Other expenses		(406,838	)		–
Legal settlement		–			3,617,166
Miscellaneous income		900,008			707,119
Total other income (expense)	$	84,968		$	3,747,114

The following discussion highlights some of the more significant items included in the foregoing table.

Interest

Interest expense is attributable to interest that we pay on loans that we have obtained to fund our business operations, amortization of debt issuance costs on loans previously secured and the non-cash interest expense of $125,137 resulting from our Company electing to extend the exercise period on 818,590 warrants held by Nedbank by six months. These warrants expired unexercised in November 2008. During 2008, we capitalized 100% of the interest costs incurred on the Nedbank project financing commitment, in the amount of $995,407.

During the years ended December 31, 2008 and 2007, we incurred $408,202 and $577,171, respectively, in total interest expense, as follows:

		Year Ended December 31
		2008		2007
Amortization of debt issuance costs	$	239,772	$	180,652
Accretion on modification of warrants		125,137		–
Interest on notes payable		–		396,519
Other interest expenses		43,293		–
Total	$	408,202	$	577,171

Other Expenses

Other expenses during 2008 are comprised of the $400,836 and the $6,002 expenses to write–off the carrying amounts of the Coyote Springs and Mimbres speculative mineral property projects that were abandoned during the year. We do not consider either of these projects to have been material to our overall operations.

48

Legal Settlement

In March, 2007, we entered into a settlement agreement with Platinum Diversified Mining, Inc. and its subsidiaries (collectively, the “PDM Parties”) in connection with the agreement and plan of merger between our Company and the PDM Parties dated October 23, 2006. The settlement agreement sets forth the terms and conditions of the settlement of the dispute and disagreements arising between us and the PDM Parties from the failure of the Merger to close. The PDM Parties paid our $3,617,166 during the year ended December 31, 2007.

Miscellaneous Income

Sources of miscellaneous income for the year ended December 31, 2008 were:

• Royalty income from landscape aggregate business of $237,043;
• Interest income of $126,017;
• Realized gain on ineffective copper hedges of $521,577; and
• Other income of $15,371.

Sources of miscellaneous income for the year ended December 31, 2007 were:

• Royalty income from landscape aggregate business of $402,624;
• Interest income of $276,643; and
• Other income of $27,852.

Net Loss

The following table reflects our net loss for the years ended December 31, 2008 and 2007, after taking into account the amounts recognized as other income or expenses.

		Year Ended December 31
		2008			2007
Loss from operations	$	(5,123,342	)	$	(6,259,295	)
Other income (expense)		84,968			3,747,114
Provision for income taxes		–			–
Net Loss	$	(5,038,374	)	$	(2,512,181	)

We recorded a net loss of $5,038,374 for the year ended December 31, 2008 as compared to a net loss of $2,512,181 for the year ended December 31, 2007. The decrease in net loss between these periods is primarily related to:

• The $3,617,166 gain during 2007 from PDM settlement agreement, as discussed above; and
• Negative gross margins from the sale of copper cathode from residual leaching operations which began on February 1, 2008.

The increase in net loss was partially offset by a decrease in general and administrative costs, as discussed above.

Cash Flows From Operating Activities

Our cash flows from operating activities during 2008 and 2007 were ($4,262,344) and ($3,702,010), respectively. Our cash flows from operating activities for 2008 include an increase in inventory of $741,155 as a result of the reactivation of the Johnson Camp Mine. Our cash flows from operating

49

activities during 2007 include a decrease in accrued expenses of $1,925,424 primarily for the payment of obligations that became due upon the completion of our special warrant financing.

Cash Flows From Investing Activities

Our cash flows from investing activities during 2008 were ($15,357,645) due primarily to $18,355,185 in construction costs related to the reactivation of the Johnson Camp Mine. This amount was offset in part by the decrease in restricted cash and marketable securities in the amount of $1,466,338 and the proceeds from the sale of cash flow hedges in the amount of $1,531,202. These proceeds were classified as restricted cash as of December 31, 2008 and reclassified to unrestricted cash in March 2009.

Our cash flows from investing activities during 2007 were ($13,783,865) due primarily to capital expenditures of $10,097,389 related to the restart of Johnson Camp and an increase in restricted cash of $3,686,476. Under the Amended and Restated Credit Agreement with Nedbank Limited dated June 28, 2007, our Company was required to maintain a balance of the greater of (a) $3,000,000 or an amount equal to obligations scheduled to become due during the period of the next two consecutive fiscal quarters. Our Company maintained a balance of $3,000,000 as of December 31, 2007. During 2008, this requirement was clarified and we now believe that we are not required to maintain a Debt Services Reserve Balance until we are in the financial position to do so. In addition, our Company purchased two certificates of deposit totaling $686,476 which are held as collateral on two letters of credit for various purposes, including environmental reclamation and other general corporate purposes.

Cash Flows From Financing Activities

Our cash flows from financing activities during 2008 were $20,716,324 compared to $19,846,950 for the same period in 2007.

During 2008, we drew down $20,000,000 from our $25,000,000 secured term loan credit facility with Nedbank. Proceeds from the loan were used to purchase and install equipment, and to purchase supplies, associated with the reactivation of the Johnson Camp Mine. As of December 31, 2008, our Company was fully drawn down on the facility. Interest on the term loan credit facility in the amount of $995,407 is being accrued and will be added to the principal balance of the credit facility when our Company begins to make payments in September, 2009. In addition, during 2008, we entered into a lease agreement for the purchase of equipment valued at $79,310, which has been accounted for as a non–cash transaction for purposes of the consolidated statement of cash flows, and we made principal payments on this and other capitalized leases of $35,676.

During 2008, warrant holders exercised 2,540,000 warrants with exercise prices ranging between $0.25 and $0.50 into 2,540,000 shares of our Company’s common stock resulting in proceeds to our Company of $702,000. In addition, one option holder exercised 250,000 options with an exercise price of $0.20 into 250,000 shares of our Company’s common stock, resulting in proceeds to our Company of $50,000.

During 2007, we received a $100,000 loan from Auramet which was added to the then outstanding principal under our $5,000,000 secured bridge loan facility with Nedbank, and we incurred $75,000 in debt issuance costs associated with the extensions of the Nedbank bridge loan, resulting in $25,000 in proceeds to our Company. During 2007, we repaid the $5,000,000 in outstanding principal under this facility.

During 2007, we completed the special warrant offering for gross proceeds of $23,000,025 of which $1,665,657 was used to pay the direct offering expenses incurred as a result of the special warrant financing. We then used $5,714,114 of those proceeds to repay our debt which consisted of the Nedbank bridge loan, the revolving credit facility, the convertible notes and an equipment loan. In December 2007,

50

the special warrants were converted for no additional consideration into the underlying shares of common stock and warrants. A total of 15,333,350 warrants were issued upon conversion of the special warrants. Each warrant entitles the holder to purchase one share of common stock until September 5, 2012 at a price of $1.10 per share. The warrants are governed by the terms of a warrant indenture between our Company and Computershare Trust Company of Canada, as the warrant agent. These warrants remain outstanding as of December 31, 2008.

In connection with the special warrants offering our Company entered into an agency agreement whereby we paid a cash commission of 6% of the gross proceeds realized from the sale of the special warrants to the agents and issued 1,840,002 stock options to the agents entitling them to acquire one share of common stock of our Company at any time within the subsequent 24 month period at an exercise price of $0.75. For financial reporting purposes, the stock options have been valued at $513,436.

During 2007, we drew down $5,025,000 from our $25,000,000 secured term loan credit facility with Nedbank. Proceeds from the loan were used to purchase supplies and equipment associated with the reactivation of the Johnson Camp Mine. During 2007, we incurred $1,222,673 in debt issuance costs ($1,197,673 of which was incurred in connection with the Nedbank Credit Agreement).

During 2007, warrant holders exercised 931,589 warrants with exercise prices ranging between $0.35 and $0.56 into 931,589 shares of our Company’s common stock resulting in proceeds to our Company of $443,119.

During 2007, we made principal payments capitalized on our lease of $18,750.

Critical Accounting Policies And Estimates

Our consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

We believe that our critical accounting policies and estimates include the accounting for inventories, marketable securities and long–lived assets, valuation of derivatives, stock options and warrants, income taxes, reclamation costs, and accounting for legal contingencies.

Basis of Presentation

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our Company be unable to continue as a going concern. Such adjustments could be material. Our Company’s continuation as a going concern is dependent upon its ability to meet its obligations under its Credit Agreement with Nedbank and to produce copper to sell at a level where our

51

Company becomes profitable. Our Company’s continued existence is dependent upon its ability to achieve its operating plan. If management cannot achieve its operating plan because of sales shortfalls, reduction in copper prices, or other unfavorable events, our Company may find it necessary to dispose of assets, or undertake other actions as may be appropriate.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of our Company and its wholly owned subsidiary, Cochise Aggregates and Materials, Inc. (“Cochise”). Cochise was set up to produce and market landscape rock products and aggregates derived from the Johnson Camp Mine overburden piles. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of our Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires our Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to mineral reserves of the Johnson Camp Mine that are the basis for future cash flow estimates; reclamation obligations; asset impairment (including long–lived assets and investments); valuation allowances for deferred tax assets; disclosures and reserves for contingencies and litigation; and the fair value and accounting treatment of financial instruments. Our Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, our Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.

Restricted Cash and Marketable Securities

As required by the Credit Agreement with Nedbank Limited (“Nedbank”) dated June 28, 2007 (the “Credit Agreement”), our Company is required to maintain a balance of the greater of (a) $3,000,000 or an amount equal to obligations scheduled to become due during the period of the next two consecutive fiscal quarters. During 2008, this requirement was clarified and our Company now believes that it is not required to maintain the Debt Service Reserve Balance until is in the financial position to fund such an account. The balance at December 31, 2008, reflects proceeds received from the close–out of a portion of our Company’s hedge position. This amount was reclassified to unrestricted cash in the first quarter of 2009. Our Company maintained balances of $1,533,662 and $3,000,000 at December 31, 2008 and 2007, respectively.

Marketable securities at December 31, 2008 and 2007, consist of certificates of deposit which are considered held-to-maturity securities and are stated at amortized cost on the consolidated balance sheet. The certificates of deposit have an original maturity of 14 months, expire in December 2009 and carry a stated interest rate of 3.05% per annum. All marketable securities are defined as held-to-maturity securities, trading securities, or available-for-sale securities under SFAS No. 115 “Accounting for Certain Investments in Debt and Equity Securities”. Management determines the appropriate classification of our Company’s investments in marketable debt and equity securities at the time of each purchase and reevaluates such determination at each balance sheet date. Securities that are bought with the intent and ability to be held to maturity are classified as held-to-maturity securities. Held-to-maturity securities are

52

carried at amortized cost on the consolidated balance sheet until sold. Securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and unrealized gains and losses are included in earnings. Debt securities, for which our Company does not have the intent or ability to hold to maturity, and equity securities are classified as available for sale. Available-for-sale securities are carried at fair value, with unrealized gains and losses, net of tax, reported as a separate component of stockholders’ equity. The cost of investments sold is determined on the specific identification or the first-in, first-out method.

Accounts Receivable

Our Company grants credit to all qualified customers and generally requires no collateral. Accounts receivable are carried at cost less an allowance for losses, if an allowance is deemed necessary. Our Company does not accrue finance or interest charges. On a periodic basis, our Company evaluates its accounts receivable and determines the requirement for an allowance for losses, based upon history of past write–offs, collections and current credit conditions. A receivable is written off when it is determined that all reasonable collection efforts have been exhausted and the potential for recovery is considered remote. Management determined that no allowance for losses was required as of December 31, 2008 and 2007.

Revenue Recognition

Our Company recognizes revenue from the sale of products, and related costs of products sold, where persuasive evidence of an arrangement exists, delivery has occurred, the seller’s price is fixed or determinable and collectability is reasonably assured. This generally occurs when the customer receives the product or at the time title passes to the customer. Sales incentives and returns are estimated and recognized at the date of shipment based upon historical activity and current agreements with customers. Our Company evaluates these estimates on a regular basis and revises them as necessary.

Inventories

As described below, costs that are incurred in or benefit the productive process are accumulated as stockpiles, ore on leach pads and inventories and classified as “inventories” on the consolidated balance sheet. Inventories are carried at the lower of average cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on current and long–term metals prices, less the estimated costs to complete production and bring the product to sale. Write–downs of inventories, resulting from net realizable value impairments, are reported as a component of costs applicable to sales. The current portion of inventories is determined based on the expected amounts to be processed within the next 12 months. Inventories not expected to be processed within the next 12 months are classified as long–term. The major classifications of inventories are as follows:

Stockpiles

Stockpiles represent ore that has been mined and is available for further processing. Stockpiles are measured by estimating the number of tons added and removed from the stockpile, the number of contained pounds (based on assay data) and the estimated metallurgical recovery rates (based on the expected processing method). Stockpile ore tonnages are verified by periodic surveys. Costs are allocated to stockpiles based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the ore, including applicable overhead, depreciation, depletion and amortization relating to mining operations, and removed at each stockpile’s average cost per recoverable unit.

Ore on Leach Pads

53

The recovery of copper from certain copper oxide ores is achieved through the heap leaching process. Under this method, oxide ore is placed on leach pads where it is treated with a chemical solution, which dissolves the copper contained in the ore. The resulting “pregnant” solution is further processed in a plant where the copper is recovered. Costs are added to ore on leach pads based on current mining costs, including applicable depreciation, depletion and amortization relating to mining operations. Costs are removed from ore on leach pads as pounds are recovered based on the average cost per estimated recoverable pound of copper on the leach pad.

The estimates of recoverable copper on the leach pads are calculated from the quantities of ore placed on the leach pads (measured tons added to the leach pads), the grade of ore placed on the leach pads (based on assay data) and a recovery percentage (based on ore type). In general, leach pads recover approximately 77% of the recoverable pounds in the first year of leaching, declining each year thereafter until the leaching process is complete.

Although the quantities of recoverable copper placed on the leach pads are reconciled by comparing the grades of ore placed on pads to the quantities of copper actually recovered (metallurgical balancing), the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is constantly monitored and estimates are refined based on actual results over time. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write–downs to net realizable value are accounted for on a prospective basis.

In Process Inventory

In process inventories represent materials that are currently in the process of being converted to a saleable product. Our Company utilizes a solvent extraction electrowinning process to extract the copper from the ore. In–process material is measured based on assays of the material fed into the process and the projected recoveries of the respective plants. In process inventories are valued at the average cost of the material fed into the process attributable to the source material coming from the mines, stockpiles and/or leach pads plus the in process conversion costs, including applicable depreciation relating to the process facilities incurred to that point in the process.

Finished Goods Inventory

Finished goods represent salable copper cathodes. Finished goods are valued at the weighted–average cost of source material or net realizable value.

Materials and Supplies

Materials and supplies are valued at the lower of average cost or net realizable value. Cost includes applicable taxes and freight.

Derivative and Hedging Activities

In connection with the Credit Agreement with Nedbank, our Company is required to maintain a hedging program with respect to a specified percentage of copper output from the Johnson Camp Mine. Under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, these contracts are carried on the consolidated balance sheet at their fair value. As these contracts have been designated as cash flow hedges, the changes to their fair value are currently reflected in accumulated other comprehensive income (loss) in the Statement of Equity. As of December 31, 2008, the carrying value of the derivative asset was $19,154,102, and the increase in fair value was recorded in accumulated other comprehensive income (loss) on the consolidated balance sheet. As of December 31, 2007, the carrying value of the derivative liability was $9,183,428, and the reduction in fair value was recorded in accumulated other comprehensive income (loss) on the consolidated balance sheet.

54

During 2008, our Company entered into certain contracts expiring between 2009 and 2012, to hedge the interest rate risk exposure on its $25 million Nedbank Credit Facility. Under the interest rate swap contract terms, our Company receives the three month United States Dollar London Interbank Offered Rate (“LIBOR”)and pays a fixed–rate of 2.48% interest. The program requires no cash margins, collateral or other security from our Company. Under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, these contracts are carried on the consolidated balance sheet at their fair value. As these contracts were also designated as cash flow hedges, changes to the fair value of these contracts are reflected in accumulated other comprehensive income (loss). A reduction in fair value of the interest rate swap occurred during the year ended December 31, 2008 in the amount of $437,084 and was recorded in accumulated other comprehensive income (loss) i n the consolidated balance sheet as of December 31, 2008.

Fair Value Accounting

In September 2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of SFAS 157 were adopted January 1, 2008. In February 2008, the FASB staff issued FSP No. 157-2 “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”). FSP FAS 157-2 delayed the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We will adopt those provisions of SFAS 157 that relate to nonfinancial assets and liabilities on January 1, 2009 and are currently evaluating the impact of this statement on our Company’s consolidated financial statements and related disclosure.

In October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP 157-3”), which clarifies the application of SFAS 157 in an inactive market. The intent of this FSP is to provide guidance on how the fair value of a financial asset is to be determined when the market for that financial asset is inactive. FSP 157-3 states that determining fair value in an inactive market depends on the facts and circumstances, requires the use of significant judgment and in some cases, observable inputs may require significant adjustment based on unobservable data. Regardless of the valuation technique used, an entity must include appropriate risk adjustments that market participants would make for nonperformance and liquidity risks when determining fair value of an asset in an inactive market. FSP FAS 157-3 was effective upon issuance. The provisions of FSP 157-3 did not have a material impact on the Company.

SFAS 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under SFAS 157 are described below:

Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2	Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

55

The following table sets forth our Company’s financial assets and liabilities within the consolidated balance sheet as of December 31, 2008 measured at fair value by level within the fair value hierarchy. As required by SFAS 157, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

		Total		Level 1		Level 2		Level 3
Assets:
Derivative contracts – copper cash flow hedges, net	$	19,154,102			$	19,154,102
Liabilities:
Derivative contract – interest rate swap contract	$	(437,084	)		$	(437,084	)

Our Company’s derivative instruments, copper cash flow hedges and interest rate swap contracts are valued using pricing models and our Company generally uses similar models to value similar instruments. Where possible, our Company verifies the values produced by its pricing models to market prices. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility, and correlations of such inputs. Our Company’s derivatives generally trade in liquid markets, and as such, model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.

Shipping and Handling Costs

Our Company includes shipping and handling costs related to the transport of finished goods in operating expenses.

Debt Issuance Costs

Debt issuance costs are amortized over the life of the related loan as interest expense. During 2007 and 2006, our Company incurred debt issuance costs of $1,297,673 and $161,065 respectively, related to the issuance of promissory notes, bridge loans and the project financing facility. During 2005, debt issuance costs of $100,000 were incurred in connection with an extension of a bridge loan with Nedbank in the total principal amount of $5,000,000. The bridge loan was repaid in 2007 and the associated debt issuance costs were fully amortized in 2007. The remaining debt issuance costs of $1,197,673, incurred in conjunction with the project financing facility, are being amortized over the term of the loans using the straight–line method, which approximates the effective interest method. Accumulated amortization of debt issuance costs was $1,659,369 and $1,419,597 at December 31, 2008 and 2007, respectively. Unamortized debt issuance costs were $877,249 at December 31, 2008.

Property and Equipment

Property and equipment are stated at cost. Mineral exploration costs are expensed as incurred. Equipment is depreciated using the straight–line method over the estimated useful lives of the assets which range from three to seven years. Mineral properties are amortized over the life of the mine using the units of production method. Buildings and mining equipment are depreciated over the shorter of their estimated useful lives, or over the life of the mine using the units of production method.

56

Long–Lived Assets

Our Company reviews and evaluates our long–lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An impairment loss is measured as the amount by which the asset carrying value exceeds its fair value. Fair value is generally determined using valuation techniques such as estimated future cash flows. An impairment is considered to exist if total estimated future cash flows on an undiscounted basis are less than the carrying amount of the asset. An impairment loss is measured and recorded based on discounted estimated future cash flows. Future cash flows for the Johnson Camp Mine include estimates of recoverable pounds of copper, copper prices (considering current and historical prices, price trends and related factors), production rates and costs, capital and reclamation costs as appropriate, all based upon life–of–mine engineering plans and feasibility studies. Assumptions underlying future cash flow estimates are subject to risks and uncertainties. No impairment losses were recorded during the years ended December 31, 2008 and 2007.

Reclamation Costs

Reclamation costs are allocated to expense over the life of the related assets and are adjusted for changes resulting from the passage of time and revisions to either the timing or amount of the original present value estimate. The asset retirement obligation is based on when the spending for an existing environmental disturbance and activity to date will occur. Our Company reviews its asset retirement obligation, on an annual basis, unless a triggering event occurs that requires a more frequent evaluation. The asset retirement obligation at the mine site is accounted for in accordance with SFAS No. 143, “Accounting for Asset Retirement Obligations.”

Stock Based Compensation

Our Company accounts for its awards of stock based compensation under the fair value recognition provisions of SFAS No. 123(R), “Share–Based Payment,” using the modified prospective application method. Our Company has granted incentive and non–qualified stock options to its employees and directors under the terms of its 2006 Stock Incentive Plan. Our Company has also granted non–qualified, non–plan stock options, which have been authorized by our Company’s board of directors. Stock options are generally granted at an exercise price equal to or greater than the quoted market price on the date of grant.

Net Loss per Share of Common Stock

Basic earnings (loss) per common share are computed by dividing the net loss by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share is calculated based on the weighted average number of common shares outstanding adjusted for the dilutive effect, if any, of stock options, warrants and other dilutive securities. Outstanding options, warrants and other dilutive securities to purchase 23,395,025 and 26,687,156 shares of common stock for the years ended December 31, 2008 and 2007, respectively, are not included in the computation of diluted loss per share as the effect of the assumed exercise of these options, warrants and other securities would be anti–dilutive.

Income Taxes

Our Company uses the liability method to account for income taxes. Under the liability method, deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the financial statements. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense consists of the income tax payable or refundable for the current period and the change during the period in net deferred tax assets and liabilities.

57

Accumulated Other Comprehensive Income (Loss)

In addition to net income (loss), accumulated other comprehensive income (loss) includes all changes in equity during a period, including the effective portion of changes in fair value of derivative instruments that qualify as cash flow hedges and cumulative unrecognized changes in fair value of marketable securities classified as available–for–sale or other investments, except those resulting from investments by and distributions to owners.

Recently Issued Accounting Guidance

Fair Value Measurements. In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement does not require any new fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. However, in February 2008, FASB Staff Position (“FSP”) 157–2, “Effective Date of FASB Statement 157”, was issued. FSP 157–2 applies to nonfinancial assets and nonfinancial liabilities, and defers the effective date of SFAS No. 157 for nonfinancial assets and liabilities to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope of the FSP. Accordingly, our Company adopted SFAS No. 157 as it relates to financial assets and liabilities beginning January 1, 2008. The adoption of this Statement did not have a material impact on our Company’s consolidated financial statements.

Fair Value Option for Financial Assets and Liabilities. In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Liabilities – Including an amendment of FASB No. 115,” which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Our Company adopted SFAS No. 159 effective January 1, 2008. Our Company did not elect to measure any additional financial instruments at fair value that are not required to be measured at fair value. Accordingly, the adoption of this Statement did not have a material impact on our Company’s consolidated financial statements.

Expected Term for “Plain Vanilla” Share Options. In December 2007, the SEC issued SAB 110 which was issued to express the understanding that the use of a “simplified” method, as discussed in SAB 107, in developing an estimate of the expected term of “plain vanilla” share options in accordance with FASB No. 123 would be acceptable beyond December 31, 2007. Our Company adopted this standard beginning January 2008. The adoption of SAB 110 did not have a material impact on our Company’s consolidated financial statements.

Noncontrolling Interests in Consolidated Financial Statements. In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51.” SFAS No. 160 requires that ownership interests in subsidiaries held by parties other than the parent be clearly identified, labeled and presented in the consolidated statement of financial position within equity, but separate from the parent equity. It also requires that the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income. This statement also establishes a single method of accounting for changes in a parent’s ownership position interest in a subsidiary that do not result in deconsolidation. The statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated and that disclosures be expanded in the consolidated financial statements that clearly identify and distinguish between the interests of the parent’s owners and the interests of the noncontrolling owners of a subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Our Company plans to adopt this standard beginning January 2009 and our Company does not anticipate it will have a material impact on its consolidated financial statements.

58

Business Combinations. In December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations.” SFAS 141 (Revised 2007) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141 (Revised) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Our Company expects SFAS 141 (Revised 2007) will have an impact on our Company’s consolidated financial statements when effective, but the nature and magnitude of the specific effects will depend upon the nature, terms and size of the acquisitions our Company consummates, if any, after the effective date.

Disclosures About Derivative Instruments and Hedging Activities. In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities.” SFAS No. 161 establishes, among other things, the disclosure requirements for derivative instruments and for hedging activities. The objective of this statement is to enhance the understanding of: (1) how and why an entity uses derivative instruments; (2) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations; and (3) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit–risk–related contingent features in derivative agreements. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Our Company plans to adopt this standard beginning January 2009 and we are currently evaluating the potential impact of adopting this statement on our derivative instrument disclosures.

The Hierarchy of Generally Accepted Accounting Principles. In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements for nongovernmental entities that are present in conformity with generally accepted accounting principles (GAAP) in the United States. SFAS No. 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Our Company plans to adopt this standard in January 2009 and does not believe it will have a material impact on our Company’s consolidated financial statements.

Determining the Fair Value of a Financial Asset when the Market for That Asset is Not Active. In October 2008, FSP 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active”, was issued. FSP 157-3 clarifies the application of SFAS No. 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. This FSP applies to financial assets within the scope of accounting pronouncements that require or permit fair value measurements in accordance with SFAS No. 157. Accordingly, our Company adopted this standard beginning January 2008, and it did not have a material impact on its consolidated financial statements.

Off–Balance Sheet Arrangements

We have no off–balance sheet arrangements.

59

ITEM 7A.         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b–2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 8.            FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our audited consolidated financial statements as of December 31, 2008 and 2007 and for the each of the two years in the period ended December 31, 2008, and the related notes to the financial statements, are filed as part of this annual report beginning on page F–1 below, and are incorporated by reference in this Item 8.

ITEM 9.            CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE

None.

ITEM 9A.          CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by our Company is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Our President and Chief Executive Officer, John Perry, and our Chief Financial Officer, Wayne Morrison, are responsible for establishing and maintaining disclosure controls and procedures for our Company.

Our management has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2008 (under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer), pursuant to Rule 13a–15(b) promulgated under the Securities Exchange Act of 1934, as amended. As part of such evaluation, management considered the matters discussed below relating to internal control over financial reporting. Based on this evaluation, our Company’s Chief Executive Officer and Chief Financial Officer have concluded that our Company’s disclosure controls and procedures were effective as of December 31, 2008.

Internal Control over Financial Reporting

The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the registrant’s principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and

60

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant’s assets that could have a material effect on the financial statements.

Management Report on Assessment of Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a–15(f) Securities Exchange Act of 1934, as amended. Management (under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer), assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making this assessment, management used the framework set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under this framework, our management concluded that our internal control was effective as of December 31, 2008.

This annual report does not include an attestation report of our Company’s registered public accounting firm regarding internal control over financial reporting. Our management’s report was not subject to attestation by our Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only the management’s report in this annual report.

Inherent Limitation of the Effectiveness of Internal Control

Our internal control system is designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.

Changes in Internal Control Over Financial Reporting

During the year ended December 31, 2008, there was no change in our internal control over financial reporting or in other factors that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9A(T).   CONTROLS AND PROCEDURES

Not applicable.

ITEM 9B.          OTHER INFORMATION

Not applicable.

PART III

ITEM 10.          DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

The following table and information that follows sets forth the names and positions of our directors and executive officers:

61

Name and Municipality of Residence	Age	Current Office with Nord Resources Corporation	Director Since
Ronald A. Hirsch(1) Laguna Beach, CA	65	Director and Chairman	September 7, 2000
John T. Perry(2) Tucson, AZ	42	Director, President and Chief Executive Officer	June 11, 2007
Stephen D. Seymour Baltimore, MD	67	Director	October 15, 2003
T. Sean Harvey Port Carling, ON, Canada	49	Director	June 11, 2007
Douglas P. Hamilton North Chatham, MA	67	Director	February 15, 2006
John F. Cook Roslin, ON, Canada	69	Director	February 15, 2006
Randy L. Davenport(3) Carefree, AZ	53	Vice–President and Chief Operating Officer	N/A
Wayne M. Morrison(4) Tucson, AZ	51	Vice–President, Secretary and Chief Financial Officer	N/A

Notes

(1)	Mr. Hirsch also held the position of Chief Executive Officer of our Company until February 15, 2006.
(2)	Mr. Perry was appointed as Chief Executive Officer and President of our Company effective April 23, 2007. Mr. Perry has served as our Company’s Senior Vice President and Chief Financial Officer from April 1, 2005 to January 8, 2008, and as our Company’s Secretary and Treasurer since September 2005 to January 8, 2008.
(3)	Mr. Davenport replaced Erland A. Anderson as our Vice–President and Chief Operating Officer on January 12, 2009.
(4)	Mr. Morrison was appointed Vice President, Secretary and Chief Financial Officer on January 8, 2008.

The following is a description of the business background of the directors, director nominees and executive officers of our Company.

Ronald A. Hirsch – Mr. Hirsch has been a director of our Company since September 7, 2000 and Chairman since October 20, 2003. He was also Chief Executive Officer from October 20, 2003 until February 15, 2006. Mr. Hirsch has over 30 years experience in the investment and corporate finance community. From January 2000 to October 2003, he was the President of Hirsch Enterprises, a private investment firm based in Laguna Beach, California. Until 1997, Mr. Hirsch was Senior Vice President – Investments with Lehman Brothers in New York where he was employed for 20 years and previous to that was with Dean Witter for five years. He holds a bachelors degree in economics from Michigan State University and pursued advanced studies in Finance at New York University.

John T. Perry – Mr. Perry has been a director of our Company since June 11, 2007 and President and Chief Executive Officer since April 23, 2007. Mr. Perry was appointed as our Senior Vice President and Chief Financial Officer on April 1, 2005 and Secretary and Treasurer in September 2005 and acted as such until January 2008. Mr. Perry has over 17 years (1989 to present) of mining and metals industry experience. Before joining our Company, Mr. Perry was Vice President, Director with CB Richard Ellis, International Mining and Metals Group from December 2003 to August 2005. Prior to that, he held various positions with BHP Billiton Base Metals and BHP Copper Inc., including Vice President Finance with BHP Billiton Base Metals from August 2002 to November 2003, President, BHP Copper, Inc. from August 1999 to August 2002, and Vice President Finance and Administration for BHP Copper, Inc. He is

62

a Certified Public Accountant and holds an undergraduate degree in Accounting and Finance as well as an MBA from the University of Arizona. He is also a director of Homeland Uranium Incorporated.

Stephen D. Seymour – Mr. Seymour was appointed a director of our Company on October 15, 2003. He has over 30 years experience in sales, marketing and finance. Mr. Seymour has owned and been employed by Rockland Investments since 1986. He spent 15 years with Westinghouse Broadcasting where he was head of all television sales and marketing and a member of the board of the Broadcasting Division. Since 1980, he has specialized in leveraged buy outs, turnaround situations and under managed and undercapitalized ventures. Mr. Seymour holds an undergraduate degree from Rutgers University and an MBA from Columbia University.

Douglas P. Hamilton – Mr. Hamilton has been a director of our Company since February 15, 2006. He has over 30 years of experience in operations and finance in the power generation, automotive and aerospace industries. Mr. Hamilton has been retired since 1997. Prior to his retirement, he was Senior Vice President – Finance and Chief Financial Officer of Barnes Group Inc. (1996–1997) and Vice President – Finance and Control of U.S. Power Generation Businesses for Asea Brown Boveri, Inc. (1993–1996). Prior to that, he held various executive and management positions at United Technologies, Corporation and Ingersoll–Rand Company. Mr. Hamilton holds an AB degree in Engineering Science from Dartmouth College and an MBA in accounting from Columbia University.

John F. Cook – Mr. Cook has been a director of our Company since February 15, 2006. Mr. Cook is the President of Tormin Resources Limited, a private company providing consulting services to the mining industry. He holds a Bachelor of Engineering (Mining), C. Eng UK, and P. Eng Ontario, and brings to Nord more than 40 years of experience in the operations and management of mining companies. Mr. Cook’s positions included Senior Mining and Managing Consultant, RTZ Consultants Ltd. (1974–78), Associate and Principal, Golder Associates Ltd. (1978–83), Senior Project Manager, General Manager, and Vice President Engineering, Lac Minerals Ltd. (1983–90), Vice President Operations, Goldcorp Inc. (1990–94), and Navan Resources Plc, Operations Director (1994–96). Currently, Mr. Cook serves as the Chairman of Premier Gold Mines Limited and the President of San Anton Resources Corporation. He is also a director of Anaconda Mining Inc., GLR Resources Inc., Uranium City Resources Inc., MBMI Resources Inc. and Homeland Uranium Inc.

T. Sean Harvey – Mr. Harvey was appointed as a director of our Company on June 11, 2007. He is a co–founder and, since January 2004, has served as the Non–Executive Chairman of Andina Minerals, Inc., a Toronto–based exploration–stage mining company listed on the TSX Venture Exchange. Mr. Harvey also served as the President, Chief Executive Officer and a director of Orvana Minerals Corp. (April 2005 – May 2006), a mining company listed on the Toronto Stock Exchange, and as the President, Chief Executive Officer and a director of Atlantico Gold Inc. (May 2003 – January 2004), a private company that acquired the Amapari gold project in Brazil in 2003, and that was subsequently acquired by Wheaton River Minerals Ltd. Prior to that, Mr. Harvey served as: the President, Chief Executive Officer, Chief Operating Officer and a director of TVX Gold Inc. (April 2001 – January 2003), a mining company listed on the Toronto and New York Stock Exchanges; a financial consultant to the EBX Group of Companies based in Rio de Janeiro (April 2000 – March 2001); a Director at Deutsche Bank Securities Limited (August 1998 – March 2000) in Toronto, where he was a member of the Investment Banking Group and the Global Mining and Metals team; a Director at Nesbitt Burns Inc. (Burns Fry Ltd.) (February 1990 – July 1998) in Toronto, where he was a member of the Investment Banking Group; a Financial Analyst at IBM Canada Limited (February 1989 – February 1990); and an Assistant Manager, CIBC (March 1988 – February 1989). Mr. Harvey holds an Honors Bachelor of Arts degree (Economics and Geography) and a Master of Arts degree (Economics) from Carleton University, a Bachelor of Laws degree from the University of Western Ontario and an MBA from the University of Toronto. He is also a member of the Law Society of Upper Canada.

63

Randy Davenport – Mr. Davenport was appointed Vice President and Chief Operating Officer on January 12, 2009. Prior to joining our Company, Mr. Davenport held the position of Vice President, Resource Development, Freeport–McMorRan Copper & Gold Inc. from 2007 to 2008. In addition, he had previously held a number of senior positions during two decades with Phelps Dodge Corporation, then the world’s second–largest copper producer, which was acquired by Freeport–McMorRan in 2007. In his career at Phelps Dodge, Mr. Davenport’s responsibilities included managing large copper mining operations, overseeing major mining construction projects, several feasibility and scoping studies, and directing the expansion of established operations and the start–up of green–field projects and acquisitions. Mr. Davenport’s career at Phelps Dodge also included five years as President of Sociedad Minera Cerro Verde, a Peruvian company majority owne d and operated by Phelps Dodge and based in Arequipa, Peru, with a fully integrated open pit mining and solvent extraction electrowinning facility, the same process that our Company is using at its Johnson Camp Mine. Mr. Davenport earned a Bachelor of Science degree in Mining Engineering from the University of Idaho, and has served in the U.S. Marine Corps and the Army National Guard.

Wayne M. Morrison – Mr. Morrison was appointed Vice President and Chief Financial Officer on January 8, 2008. Prior to that, he served as our Controller from December 3, 2007 to January 8, 2008. Prior to joining our Company, Mr. Morrison was Vice President, Finance and Administration of AmpliMed Corp., a privately–held biotech company, from March 2005 until December 2007. From February 2002 to October 2004, Mr. Morrison held the position of Vice President and Chief Financial Officer of Fastrac 24/7, a privately–held information processing company, and from October 1997 to January 2002, he was President of Par One Golf Ventures, a privately–held golf promotion company. Mr. Morrison’s experience also includes past employment as a Certified Public Accountant with PricewaterhouseCoopers for four years. He earned a Bachelor of Science Degree in Accounting from the University of Delaware and an MBA from the Kenan–Flagler Business School of the University of North Carolina.

Term of Office

All of our directors hold office until the next annual general meeting of the shareholders or until their successors are elected and qualified. Our officers are appointed by our board of directors and hold office until their earlier death, retirement, resignation or removal.

Significant Employees

There are no significant employees other than our executive officers.

Family Relationships

There are currently no family relationships between any of the members of our board of directors or our executive officers.

Board Independence

The board of directors determined that Douglas P. Hamilton, John F. Cook, Stephen Seymour and T. Sean Harvey each qualify as independent directors under the listing standards of the NYSE Alternext US Exchange. Our former director, Mr. Wade Nesmith, was also determined to be independent under these standards during his service on the board of directors until his resignation in March of 2007.

In determining Mr. Stephen Seymour’s independence, the board of directors considered certain loans and advances that Mr. Seymour had previously made to our Company and which we have repaid. For further

64

details on these transactions, please refer to the section entitled “Certain Relationships and Related Transactions,” under the headings “TMD Acquisition”, “Revolving Line of Credit” and “Convertible Promissory Notes”. The board of directors determined that since these transactions relate to the repayment of outstanding loans or advances made by Mr. Seymour to or on behalf of our Company, that such transactions were not compensatory in nature and do not interfere with Mr. Seymour’s ability to exercise independent judgment.

Committees of the Board of Directors

Our board of directors currently has three committees: an Audit Committee, a Compensation Committee and a Corporate Governance and Nominating Committee. These Committees were established in February 2006.

The information below sets out the current members of each of our Company’s board committees and summarizes the functions of each of the committees.

Audit Committee

Our Audit Committee has been structured to comply with Rule 10A–3 under the Securities Exchange Act of 1934, as amended. Our Audit Committee is comprised of Douglas P. Hamilton, John F. Cook, and T. Sean Harvey. Douglas P. Hamilton is the Chairman of the Audit Committee and our board of directors has determined that he satisfies the criteria for an audit committee financial expert under Item 407(d)(5) of Regulation S–K of the rules of the Securities and Exchange Commission. Each Audit Committee member is able to read and understand fundamental financial statements, including our consolidated balance sheet, consolidated statement of operations and consolidated statement of cash flows.

The Audit Committee meets with management and our external auditors to review matters affecting our financial reporting, the system of internal accounting and financial controls and procedures and the audit procedures and audit plans. The Audit Committee reviews our significant financial risks, is involved in the appointment of senior financial executives, and annually reviews our insurance coverage and any off–balance sheet transactions.

The Audit Committee is mandated to monitor the audit and preparation of our consolidated financial statements and to review and recommend to the board of directors all financial disclosure contained in our public documents. The Audit Committee is also mandated to appoint our external auditors, monitor their qualifications and independence and determine the appropriate level of their remuneration. The external auditors report directly to the Audit Committee and to the board of directors. The Audit Committee and board of directors each have the authority to terminate the external auditor’s engagement (subject to confirmation by our stockholders). The Audit Committee also approves in advance any permitted services to be provided by the external auditors which are not related to the audit.

Our Company provides appropriate funding as determined by the Audit Committee to permit the Audit Committee to perform its duties and to compensate its advisors. The Audit Committee, at its discretion, has the authority to initiate special investigations, and if appropriate, hire special legal, accounting or other outside advisors or experts to assist the Audit Committee to fulfill its duties.

The Audit Committee operates pursuant to a written charter, which complies with the applicable provisions of the Sarbanes–Oxley Act of 2002 and related rules of the SEC and the NYSE Alternext US Exchange.

Compensation Committee

65

The Compensation Committee of our board of directors is comprised of Douglas P. Hamilton, John F. Cook and T. Sean Harvey. John F. Cook is the Chairman of the Compensation Committee. The Compensation Committee is responsible for considering and authorizing terms of employment and compensation of directors, executive officers and providing advice on compensation structures in the various jurisdictions in which our Company operates. In addition, the Compensation Committee reviews our overall salary objectives and any significant modifications made to employee benefit plans, including those applicable to directors and executive officers, and proposes any awards of stock options and incentive and deferred compensation benefits.

The Compensation Committee operates pursuant to a written charter, adopted by the Board of Directors in March 2008.

Corporate Governance and Nominating Committee

The Corporate Governance and Nominating Committee is comprised of Stephen Seymour, Douglas P. Hamilton and John F. Cook. Mr. Seymour is the Chairman of the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee is responsible for developing our approach to corporate governance issues and compliance with governance rules. The Corporate Governance and Nominating Committee is also mandated to plan for the succession of our Company, including recommending director candidates, review of board procedures, size and organization, and monitoring of senior management with respect to governance issues. The Committee is responsible for the development and implementation of corporate communications to ensure the integrity of our disclosure controls and procedures, internal control over financial reporting and management information systems. The purview of the Corporate Governance and Nominating Committee also includes the administration of our board of directors’ relationship with our management.

The Corporate Governance and Nominating Committee identifies individuals believed to be qualified to become board members and recommends individuals to fill vacancies. There are no minimum qualifications for consideration for nomination to be a director of our Company. The Committee will assess all nominees using the same criteria. In nominating candidates, the Committee takes into consideration such factors as it deems appropriate, including judgment, experience, skills and personal character, as well as the needs of our Company. The Corporate Governance and Nominating Committee will consider nominees recommended by stockholders if such recommendations are made in writing to the Committee and will evaluate nominees for election in the same manner whether the nominee has been recommended by a stockholder or otherwise.

The Corporate Governance and Nominating Committee operates pursuant to a written charter adopted by the Board of Directors in October 2008.

Involvement in Certain Legal Proceedings

Except as disclosed in this annual report, during the past five years none of our directors or executive officers is, or has been, a general partner or executive officer of any business that filed a bankruptcy petition (or had a bankruptcy petition filed against it), either at the time of filing or within two years prior to such time.

None of our directors or executive officers has, within the past five years, been convicted in a criminal proceeding or been the subject of a pending criminal proceeding (excluding traffic violations and other minor offences).

None of our directors or executive officers has, within the past five years, been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent

66

jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities.

None of our directors or executive officers has, within the past five years, been found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

There are currently no legal proceedings to which any of our directors or officers is a party adverse to us or in which any of our directors or officers has a material interest adverse to us.

Compliance with Section 16 of the Securities Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 requires the executive officers and directors, and persons who beneficially own more than ten percent of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. During the fiscal year ended December 31, 2008, except as disclosed below, these filings were made on a timely basis:

Reporting Person	No. of Late Reports During the Fiscal Year Ended December 31, 2008	No. of Late Reports During the Fiscal Year Ended December 31, 2007
Ronald Hirsch	3	None
John Perry	1	None
Sean Harvey	4	1
Wayne Morrison	1	None
Douglas Hamilton	3	None
Stephen Seymour	5	None
John Cook	2	None
Geologic Resource Partners, LLC	2	N/A

Code of Ethics

Effective January 5, 2006, we adopted a Code of Ethics that applies to all of our directors and officers. This code summarizes the legal, ethical and regulatory standards that we must follow and is a reminder to our directors and officers of the seriousness of that commitment. Compliance with this code and high standards of business conduct is mandatory for each of our directors and officers. As adopted, our Code of Ethics sets forth written standards that are designed to deter wrongdoing and to promote:

1)	honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
2)	compliance with applicable governmental laws, rules and regulations;
3)	the prompt internal reporting of violations of the Code of Ethics to an appropriate person or persons identified in the Code of Ethics; and

67

4) accountability for adherence to the Code of Ethics.

We will provide a copy of the Code of Ethics to any person without charge, upon request. Requests can be sent to: Nord Resources Corporation, at 1 West Wetmore Road, Suite 203, Tucson, Arizona, USA 85705.

ITEM 11.          EXECUTIVE COMPENSATION

Summary Compensation Table

Particulars of compensation awarded to, earned by or paid during the last two fiscal years to:

(a)	the person(s) serving as our Company’s principal executive officer during the year ended December 31, 2008;
(b)	each of our Company’s two most highly compensated executive officers, other than the principal executive officer, who were serving as executive officers at the end of the year ended December 31, 2008, and whose total compensation exceeds $100,000 per; and
(c)	up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as an executive officer of our Company at the end of the year ended December 31, 2008;

(individually a “Named Executive Officer” and collectively the “Named Executive Officers”) are set out in the summary compensation table below.

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($) (1)	Non– Equity Incentive Plan Compen– sation ($)	Non– qualified Deferred Compen– sation Earnings ($)	All Other Compen– sation Compen– sation ($)	Total ($)
Ronald A. Hirsch Chairman (1)	2008 2007	100,000 110,321	–	– –	5,300 250,881	– –	–	– –	105,300 361,202
Erland A. Anderson Former Executive Vice– President and Chief Operating Officer(2)	2008 2007	175,000 152,522	–	– –	– 159,272	– –	– –	– –	175,000 311,794
John T. Perry President, Chief Executive Officer, Secretary and Treasurer(3)	2008 2007	200,000(3) 192,308	–	– –	23,850 331,693	– –	– –	15,500(5) –	239,350 524,001

68

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($) (1)	Non– Equity Incentive Plan Compen– sation ($)	Non– qualified Deferred Compen– sation Earnings ($)	All Other Compen– sation Compen– sation ($)	Total ($)
Wayne M. Morrison Vice– President, Chief Financial Officer, Secretary and Treasurer(4)	2008 2007	150,000 –	– –	– –	13,250 –	– –	– –	11,250(5) –	174,500 –

Notes:

(1)	This column represents the dollar amount recognized for financial statement reporting purposes with respect to the 2008 and 2007 financial years for the fair value of stock options granted to each Named Executive Officer, in accordance with SFAS 123R. The Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service–based vesting conditions. For additional information on the valuation assumptions with respect to the options, refer to Note 13 under the heading “Stock–Based Compensation” in our consolidated financial statements.
(2)	Mr. Anderson resigned as Executive Vice President and Chief Operating Officer on January 12, 2009 and was replaced by Randy Davenport as Vice President and Chief Operating Officer.
(3)	Mr. Perry resigned as Chief Financial Officer, Secretary and Treasurer effective January 8, 2008.
(4)	Mr. Morrison was appointed Vice-President, Chief Financial Officer, Secretary and Treasurer effective January 8, 2008.
(5)	Represents the dollar amount of our Company’s contribution to the Named Executive Officer’s 401(K) Retirement Plan.

Outstanding Equity Awards as of December 31, 2008

The following table summarizes the outstanding equity awards as of December 31, 2008 for each of our named executive officers:

	Option Awards					Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Ronald Hirsch	100,000 183,332 N/A	50,000 91,668 100,000	N/A N/A N/A	$0.68 $0.85 $0.09	6/11/2017 7/11/2017 11/26/2013	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A
Erland A. Anderson	675,000 166,667 33,333	N/A 83,333 16,667	N/A N/A N/A	$0.50 $0.68 $0.85	2/1/2011 6/11/2017 7/11/2017	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A

69

	Option Awards					Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
John T. Perry	433,333 200,000 100,000 100,000 100,000 N/A	216,667 N/A N/A N/A N/A 450,000	N/A N/A N/A N/A N/A N/A	$0.68 $0.30 $0.40 $0.50 $0.60 $0.09	6/11/2017 4/1/2010 4/1/2010 4/1/2010 4/1/2010 11/26/2013	N/A N/A N/A N/A N/A N/A	N/A N/A N/A N/A N/A N/A	N/A N/A N/A N/A N/A N/A	N/A N/A N/A N/A N/A N/A
Wayne M. Morrison	133,334 N/A	66,666 250,000	N/A N/A	$1.10 $0.09	12/3/2012 11/26/2013	N/A N/A	N/A N/A	N/A N/A	N/A N/A

Equity Compensation Plans

As disclosed in more detail under the heading “Market For Common Equity And Related Shareholder Matters – Equity Compensation Plans”, we have granted options under the Amended and Restated 2006 Stock Incentive Plan. We have also granted stock options under individual compensation arrangements, and under the Coyote Springs option.

There are 7,981,675 stock options outstanding at December 31, 2008, of which 3,271,675 are non–qualified, non–plan stock options and 4,710,000 pursuant to our Company’s Amended and Restated 2006 Stock Incentive Plan. The outstanding options expire at various dates from 2009 to 2017.

To date, certain equity–based fees have been paid to our non–executive directors in the form of awards issued pursuant to our Company’s Amended and Restated 2006 Stock Incentive Plan. The non–executive directors have limited rights, exercisable within applicable time limits, to elect to have any percentage of such awards, and any percentage of cash fees, payable in deferred stock units. Each of our non–executive directors exercised such rights in respect of the equity–based fees payable to him for services rendered during the year ended December 31, 2008.

Compensation of Directors

The following table summarizes the compensation of our Company’s directors for the year ended December 31, 2008:

Name(1)	Fees Earned or Paid in Cash ($)	Stock Awards (2) ($)	Option Awards ($)(3)	Non–Equity Incentive Plan Compen– sation ($)	Non–qualified Deferred Compen– sation Earnings ($)	All Other Compen– sation ($)	Total ($)
T. Sean Harvey	3,000(5)	25,000(4)	5,300	–	–	–	33,000
Doug Hamilton	4,5006)	40,000(4)	5,300	–	–	–	49,800

70

Name(1)	Fees Earned or Paid in Cash ($)	Stock Awards (2) ($)	Option Awards ($)(3)	Non–Equity Incentive Plan Compen– sation ($)	Non–qualified Deferred Compen– sation Earnings ($)	All Other Compen– sation ($)	Total ($)
Stephen Seymour	4,5007)	32,500(4)	5,300	–	–	–	42,300
John Cook	4,5008)	32,500(4)	5,300	–	–	–	42,300

Notes:

(1)	Ronald Hirsch and John Perry, members of our board of directors, are Named Executive Officers and did not receive any compensation as directors that have not been disclosed in the summary compensation table above.
(2)	This column represents the dollar amount recognized for financial statement reporting purposes with respect to the 2008 fiscal year for the fair value of deferred stock units, or DSUs, granted in 2008 in accordance with SFAS 123R. Fair value is calculated using the average of the high and low price of our stock on the trading day prior to the date of grant. The outstanding DSUs for the directors at December 31, 2008 are as follows: Douglas Hamilton (97,171 DSUs), Stephen Seymour (78,952 DSUs), John Cook (78,952 DSUs) and T. Sean Harvey (60,732 DSUs).
(3)	This column represents the fair value of the options awarded in 2008 in accordance with SFAS 123R. Pursuant to SEC rules, the amount shown exclude the impact of estimated forfeitures related to service based vesting conditions.
(4)	Fair value of deferred stock units issued pursuant to our Company’s Amended and Restated 2006 Stock Incentive Plan.
(5)	Cash fees totaling $3,000, of which $1,500 were accrued in 2007 and paid in 2008.
(6)	Cash fees totaling $4,500, of which $1,500 were accrued in 2007 and paid in 2008.
(7)	Cash fees totaling $4,500, of which $1,500 were accrued in 2007 and paid in 2008.
(8)	Cash fees totaling $4,500, of which $1,500 were accrued in 2007 and paid in 2008.

On June 11, 2007, the board of directors granted 150,000 common stock purchase options to each of Ronald Hirsch, John Perry, Stephen Seymour, Douglas Hamilton, John Cook and Sean Harvey. These options were granted pursuant to our 2006 Stock Incentive Plan, and are exercisable for a period of ten years at a price of $0.68 per share. One–third of the options vested on the grant date and the remaining options will vest as to one–third on each of the first and second anniversaries of the grant date.

On July 11, 2007, the board of directors granted options to acquire 125,000 and 275,000 shares of common stock to Stephen Seymour and Ronald Hirsch, respectively. These options were granted pursuant to our 2006 Stock Incentive Plan and are exercisable for a period of ten years at a price of $0.85 per share. One–third of the options vested on the grant date and the remaining options will vest as to one–third on each of the first and second anniversaries of the grant date.

On November 26, 2008, the board of directors granted 100,000 common stock purchase options to each of Ronald Hirsch, John Perry, Stephen Seymour, Douglas Hamilton, John Cook and Sean Harvey. These options were granted pursuant to our Amended and Restated 2006 Stock Incentive Plan, and are exercisable for a period of five years at a price of $0.09 per share. One–third of the options will vest as soon as the Johnson Camp Mine has mined, crushed and conveyed 150,000 tons of ore to the heaps (the “initial vesting date”) and the remaining options will vest as to one–third on each of the first and second anniversaries of the initial vesting date.

The board of directors has approved a compensation structure for our non–executive directors which is designed to fairly pay non–executive directors for work required while aligning the interests of the non–executive directors with the long–term interests of stockholders.

71

Non–executive directors are entitled to receive a $25,000 annual retainer, with an additional $15,000 payable annually to the Chairman of the Audit Committee and $7,500 payable annually to the Chairman of the Compensation Committee and the Chairman of the Nominating and Corporate Governance Committee. All of these fees are payable in stock, restricted stock, restricted stock units, or such other equity–based compensation as the board of directors determines.

Between August 2006 and February 2007, a Special Committee was appointed by the board of directors to assist our Company in its evaluation of the potential merger with Platinum Diversified Mining, Inc. and its Subsidiaries. The Chairman of the Special Committee was entitled to receive a monthly retainer of $7,500 and the members of this committee were entitled to receive a monthly retainer of $5,000. During 2007 and 2006, our Company accrued Special Committee fees of $26,250 and $78,750, respectively. The liability was paid in cash in 2007.

To date, the equity–based fees have been payable in shares of our common stock pursuant to our 2006 Stock Incentive Plan. The non–executive directors have limited rights, exercisable within applicable time limits, to elect to have any percentage of such awards, and any percentage of cash fees, payable in DSUs. Each of our non–executive directors exercised such rights in respect of the equity–based fees payable to him for 2008 and 2007. Accordingly, all retainer fees paid during 2008 and 2007 were paid in DSUs. The DSUs are subject to the Amended and Restated 2006 Stock Incentive Plan. DSUs are awarded on a quarterly basis at the end of March, June, September and December, or as otherwise determined by the administrator of the Amended and Restated 2006 Stock Incentive Plan. The number of DSUs awarded each quarter is calculated by dividing the total fees payable to each director for that quarter by the fair market value of our common stock, determined in accordanc e with the Amended and Restated 2006 Stock Incentive Plan. Each DSU is the economic equivalent of one share of our common stock. The DSUs will be converted into shares of common stock upon the director’s termination of service, or as otherwise provided in their individual deferral election.

During 2008, T. Sean Harvey received 60,732 deferred stock units; Douglas Hamilton, the Chairman of our Audit Committee, received 97,171 deferred stock units; John Cook, the Chairman of our Compensation Committee, received 78,952 deferred stock units; and Stephen Seymour, the Chairman of our Corporate Governance and Nominating Committee received 78,952 deferred stock units. During 2008, 44,411 DSUs issued to John Cook were converted into common shares. The deferred stock units are subject to the Amended and Restated 2006 Deferred Stock Unit Plan.

We paid cash fees to our non–executive directors totaling $16,500 during the year ended December 31, 2008 as follows:

		Amount of Cash
Name		Fees Paid
T. Sean Harvey	$	3,000	(1)
Doug Hamilton		4,500	(1)
John Cook		4,500	(1)
Stephen Seymour		4,500	(1)
	$	16,500

Notes:

(1) Includes $1,500 of fees accrued in 2007 and paid in 2008.

Employment Contracts and Termination of Employment and Change–In–Control Arrangements

Ronald Hirsch

Ronald Hirsch serves as Chairman of our Company’s board of directors pursuant to an executive employment agreement dated January 2, 2004. The executive employment agreement originally

72

governed the terms of Mr. Hirsch’s employment as our Chief Executive Officer, until his resignation from that position effective February 15, 2006. The original term of this executive employment agreement was for three years, expiring on January 2, 2007. The executive employment agreement has been renewed until January 2, 2009, and is subject to automatic renewals for successive one year periods unless cancelled by either of the parties.

The executive employment agreement provides that, absent a change in control, if we were to terminate Mr. Hirsch for any reason not for cause (other than due to death or disability), we would have to pay to Mr. Hirsch: (i) his accrued unpaid salary, bonuses and expenses, if any; (ii) his base salary for 12 months; and (iii) his health insurance premiums until the earlier of the expiration of 12 months and the date he is eligible for similar health benefits with another employer. Following a change in control, in the event we were to terminate Mr. Hirsch for any reason other than for death, disability or cause, we would be required to pay Mr. Hirsch all accrued unpaid salary, bonuses, and expenses, a lump sum equal to three times his annual base salary, and we would be required to pay for his health, medical, and disability insurance premiums for a period of 18 months. Mr. Hirsch may also elect to terminate his employment following a change of control and receive these payments.

Effective October 18, 2006, we entered into an agreement amending our executive employment agreement with Mr. Hirsch, pursuant to which we have paid Mr. Hirsch all of his accrued consulting fees for services provided by him to our Company between May 1, 2001 and October 19, 2003, and all of his accrued and unpaid salary (See “Certain Relationships and Related Transactions – Compensatory Arrangements”). As described in more detail below, the amended executive employment agreement contains certain provisions that will apply if our Company becomes a party to a “Significant Transaction,” which is defined to mean a significant transaction in which: (i) any person, together with all affiliates and associates of such person, becomes the beneficial owner, directly or indirectly, of securities of our Company representing or convertible into 51% or more of the common stock of our Company; or (ii) there is a sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of our Company or of assets of our Company valued at $12,000,000 or greater.

Our amended executive employment agreement with Mr. Hirsch provides, among other things, that:

• Mr. Hirsch’s base salary in his capacity as Chairman from February 15, 2006, to February 15, 2007 continued at the original level provided for in his executive employment agreement of $200,000 per annum, and was reduced to $100,000 per annum thereafter.

• Notwithstanding Mr. Hirsch’s retirement, resignation or termination for any reason other than for cause or as a result of a Significant Transaction which is accompanied by a change of majority ownership of our Company, our Company shall continue to provide health insurance benefits to Mr. Hirsch until he reaches the age of 65.

• If our Company enters into an agreement with respect to a Significant Transaction which is accompanied by a change of majority ownership of our Company, Mr. Hirsch will voluntarily resign as Chairman effective immediately prior to the completion of the Significant Transaction.

• In the event that Mr. Hirsch ceases to be employed by our Company (other than by way of termination for cause) in connection with the completion of a Significant Transaction, other than one which is accompanied by a change of majority ownership of our Company, we must provide to Mr. Hirsch certain payments and benefits set forth in the executive employment agreement – subject to execution and delivery by Mr. Hirsch to our Company of a mutual and general release of claims – including the payment to Mr. Hirsch of an amount equal to three times his annual base salary in a lump sum within 60 days following termination of employment.

73

• In the event of the completion of a Significant Transaction which is accompanied by a change of majority ownership of our Company, Mr. Hirsch will not be entitled to receive the lump sum payment equal to three times his annual base salary.

John T. Perry

John Perry serves as our Company’s President and Chief Executive Officer pursuant to the terms of an executive employment agreement dated April 18, 2005. The executive employment agreement originally governed the terms of Mr. Perry’s employment as our Company’s Senior Vice President and Chief Financial Officer until his resignation from the position of Senior Vice President upon his appointment as President and Chief Executive Officer on April 23, 2007. The initial term of this agreement was for two years, subject to automatic renewal for successive one year periods unless cancelled by either of the parties. Mr. Perry’s annual base salary under the agreement was originally set at $175,000 annually, subject to his agreement to accept 20,000 shares of common stock per month in lieu of cash salary on an interim basis. Following the completion of our Company’s unregistered offering of special warrants in June 2007, Mr. Perry received his salary in cash. Given M r. Perry’s increased responsibilities, the board of directors authorized an increase in his salary to $200,000 effective June 1, 2007.

At the time of his appointment as our Senior Vice President and Chief Financial Officer effective April 1, 2005, we agreed to issue 500,000 shares of common stock to Mr. Perry as a signing bonus, of which 250,000 were issued upon the execution of the memorandum of understanding, and the remaining 250,000 were issued in April 2006. We also issued options to Mr. Perry entitling him to purchase up to 500,000 shares of our common stock, exercisable for a term of five years, as follows: (a) 200,000 shares at an exercise price of $0.30 per share; (b) 100,000 at an exercise price of $0.40 per share; (c) 100,000 at an exercise price of $0.50 per share; and (d) 100,000 at an exercise price of $0.60 per share.

Absent a change in control, if we terminate Mr. Perry for any reason other than for cause, we must pay Mr. Perry’s salary and health and dental insurance premiums for 12 months. Following a change in control, in the event we terminate Mr. Perry for any reason other than for death, disability or cause, we are required to pay Mr. Perry all accrued unpaid salary, bonuses, expenses, a lump sum equal to three times his annual base salary, and we are required to pay for his health, dental, and disability insurance premiums for 18 months. Mr. Perry may also elect to terminate his employment following a change of control and receive these payments.

Effective October 18, 2006, we entered into an agreement amending our executive employment agreement with Mr. Perry. The amended executive employment agreement contained certain provisions that will apply if our Company becomes a party to a “Significant Transaction.” The definition of “Significant Transaction” in our amended executive employment agreement with Mr. Perry is identical to that contained in our amended executive employment agreements with Mr. Hirsch and Mr. Anderson.

Effective September 9, 2008, we entered into an amended and restated executive employment agreement with Mr. Perry. Pursuant to the terms of the amended and restated executive employment agreement, Mr. Perry will continue to serve as our President and Chief Executive Officer. Mr. Perry will perform such duties and responsibilities as set out in the amended and restated executive employment agreement and as our board of director’s may from time to time reasonably determine and assign as is customarily performed by persons in an executive position.

In consideration for Mr. Perry’s services, we have agreed to:

• continue to pay Mr. Perry an annual salary in the amount of $200,000;

74

• continue to provide Mr. Perry with bonuses from time–to–time as determined by our compensation committee; and

• continue to allow Mr. Perry to participate in our 2006 Stock Incentive Plan, our Performance Incentive Plan, and such other plans that may from time to time be adopted by our Company during the term of employment to compensate or provide incentives to qualifying senior executives of our Company.

Prior to its amendment, Mr. Perry’s employment agreement included certain provisions that would apply if our Company entered into an agreement with respect to a Significant Transaction, including the requirement that Mr. Perry immediately resign as an officer our Company, and our obligation to make certain payments and provide certain benefits to Mr. Perry. “Significant Transaction” was defined to mean a significant transaction in which (i) any person, together with all affiliates and associates of such person, becomes the beneficial owner, directly or indirectly, of securities of our Company representing 51% or more of the common shares of our Company, or (ii) there is a sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of our Company or of assets of our Company valued at $12,000,000 or greater.

The provisions applicable in the event of a Significant Transaction have been eliminated from the amended and restated executive employment agreement, but the amended and restated executive employment agreement contains certain provisions that will apply if Mr. Perry resigns or is terminated without cause following a change of control of our Company, including the following:

• we will pay Mr. Perry an amount equal to three times his base salary in a lump sum within 60 days;

• if Mr. Perry elects continuation of coverage of medical and dental benefits under the United States Consolidated Omnibus Budget Reconciliation Act of 1985, our Company will pay 100% such premiums for the first 18 months of coverage;

• we will pay the premiums necessary for continuation of any supplemental disability policy or, at our election, a lump sum amount equal to the aggregate premiums to be paid on such a policy, in either case for a period of 18 months; and

• immediate vesting and/or issuance of all unvested stock options, grants, rights or other equity.

Mr. Perry’s term of employment under the amended and restated executive employment agreement will end on April 22, 2009. The amended and restated executive employment agreement is subject to automatic extension for successive periods of one additional year unless either our Company or Mr. Perry provides written notice of an intention not to renew the agreement no later than 90 days prior to the end of the then–current term of the agreement.

The amended and restated executive employment agreement provides that we may terminate Mr. Perry’s employment without cause, in which event:

• Mr. Perry will be entitled to continue to receive his base salary for the greater of (a) the remainder of the then–current term of the amended and restated executive employment agreement, and (b) 12 months (the “Perry Severance Term”);

• if Mr. Perry is eligible for and elects to continue his health insurance pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 following the date of his termination, we will pay

75

the premiums until the earlier of (a) the expiration of the Perry Severance Term, or (b) the date on which Mr. Perry commences employment with another employer who provides health insurance benefits at least as favorable as those provided by us; and
• immediate vesting and/or issuance of all unvested stock options, grants, rights or other equity.

Erland A. Anderson

Erland Anderson serves as our Company’s Executive Vice President and Chief Operating Officer pursuant to an executive employment agreement dated January 2, 2004. The executive employment agreement originally governed the terms of Mr. Anderson’s employment as our Company’s President. In order to permit the appointment of Nicholas Tintor as President and Chief Executive Officer, Mr. Anderson resigned as President effective February 15, 2006, and he was immediately appointed as our Company’s Executive Vice President and Chief Operating Officer. Mr. Anderson was reappointed interim President and Chief Executive Officer upon Mr. Tintor’s resignation effective August 21, 2006. Mr. Anderson resigned as President and Chief Executive Officer upon Mr. Perry’s appointment to those positions on April 23, 2007, and he was immediately reappointed Executive Vice President and Chief Operating Officer. The board of directors authorized an increase in his annual base salary from $150,000 to $175,000 effective July 9, 2007.

The initial term of Mr. Anderson’s executive employment agreement was for three years and it expired on January 2, 2007. The executive employment agreement has been renewed until January 2, 2009 and is subject to automatic renewal for successive one year periods unless cancelled by either of the parties.

Mr. Anderson resigned as our Executive Vice–President and Chief Operating Officer effective January 12, 2009.

Randy Davenport

Randy Davenport serves as our Company’s Vice President and Chief Operating Officer pursuant to a letter agreement dated January 12, 2009 (the “Letter Agreement”). Pursuant to the terms of the Letter Agreement, Mr. Davenport is entitled to a salary of $230,000 per annum. In addition Mr. Davenport was granted 500,000 stock options on January 12, 2009 pursuant to the Corporation’s 2006 Stock Incentive Plan. These stock options vest as to 166,667 on April 11, 2009, 166,667 on January 12, 2010 and 166,666 on January 12, 2011. The stock options have an exercise price of $0.205 per share and expire on January 12, 2014.

The Letter Agreement also provides that Mr. Davenport will receive all customary benefits from the Corporation (including health care benefits, 401–K and 3 weeks of vacation annually), and that he will also be eligible for participation in bonus plans as implemented by the Board of Directors at a target level of 50% of his salary.

The Corporation and Mr. Davenport will enter into a formal executive employment agreement on these terms, for a term of at least three years, upon confirmation of his acceptability of as an executive officer from the Toronto Stock Exchange. The Letter Agreement provides that, among other provisions, the formal executive employment agreement will include a provision stating that, in the event Mr. Davenport’s employment is terminated by the Corporation without cause, he will be entitled to continuation of his base salary for twelve (12) months.

Wayne Morrison

76

Wayne Morrison has been appointed as our Company’s Vice President and Chief Financial Officer effective as of January 8, 2008. Our Company and Mr. Morrison are parties to a letter agreement dated December 3, 2007, whereby Mr. Morrison was offered the position of Controller of our Company, effective December 1, 2007, with a view toward Mr. Morrison’s appointment as Vice President and Chief Financial Officer upon confirmation of acceptability of Mr. Morrison as an executive officer from the Toronto Stock Exchange.

Effective September 9, 2008, we entered into an executive employment agreement with Mr. Morrison. Pursuant to the terms of the executive employment agreement, Mr. Morrison will continue serve as our Vice President and Chief Financial Officer. Mr. Morrison will perform such duties and responsibilities as set out in the Morrison Agreement and as our board of director’s may from time to time reasonably determine and assign as is customarily performed by persons in an executive position.

In consideration for Mr. Morrison’s services, we have agreed to:

• continue to pay Mr. Morrison an annual salary in the amount of $150,000 as provided in the letter agreement;

• continue to provide Mr. Morrison with bonuses from time–to–time as determined by our compensation committee; and

• continue to allow Mr. Morrison to participate in our 2006 Stock Incentive Plan, our Performance Incentive Plan, and such other plans that may from time to time be adopted by our Company during the term of employment to compensate or provide incentives to qualifying senior executives of our Company.

The executive employment agreement contains certain provisions that will apply if Mr. Morrison resigns or is terminated without cause following a change of control of our Company, including the following:

• we will pay Mr. Morrison an amount equal to three times his base salary in a lump sum within 60 days;

• if Mr. Morrison elects continuation of coverage of medical and dental benefits under the United States Consolidated Omnibus Budget Reconciliation Act of 1985, we will pay 100% of the premiums for the first 18 months of coverage; and

• we will pay the premiums necessary for continuation of any supplemental disability policy or, at the election of our Company, a lump sum amount equal to the aggregate premiums to be paid on such a policy, in either case for a period of 12 months.

Mr. Morrison’s term of employment under the executive employment agreement will end on November 30, 2010. The executive employment agreement is subject to automatic extension for successive periods of one additional year unless either our Company or Mr. Morrison provides written notice of an intention not to renew the agreement no later than 90 days prior to the end of the then–current term of the agreement.

The executive employment agreement provides that we may terminate Mr. Morrison’s employment without cause, in which event:

• Mr. Morrison will be entitled to continue to receive his base salary for 24 months (the “Morrison Severance Term”); and

77

• if Mr. Morrison is eligible for and elects to continue his health insurance pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, following the date of his termination, we will pay the premiums until the earlier of (a) the expiration of the Morrison Severance Term, or (b) the date on which Mr. Morrison commences employment with another employer who provides health insurance benefits at least as favorable as those provided by us.

Performance Incentive Plan

On July 31, 2007, we adopted a performance incentive plan, or the Performance Plan, for the purpose of retaining and providing an incentive to certain key employees involved in restarting and commissioning the Johnson Camp Mine. In December 2008, our Company revised certain targets or milestones, lowered the potential payout and modified the effective period of the plan. The Performance Plan covers the period of time from July 1, 2007, to April 30, 2009 and bases its payouts on the achievement of certain key targets and milestones associated with the restart and commissioning of the Johnson Camp Mine.

Our Compensation Committee is responsible for administering the Performance Plan, including selecting the employees eligible to participate therein, determining their participation level and establishing key target dates for payments to be made under the Performance Plan.

Under the Performance Plan, the achievement of targets or milestones is not on an “all or nothing” basis. If a milestone is achieved later than the target date set by the Compensation Committee, it will still have been achieved; however, it will have been achieved at less than 100%. The level of achievement reached with respect to the established targets or milestones will be determined by the Chief Executive Officer and President, subject to approval by the Compensation Committee

In August, 2007, the Compensation Committee selected the employees entitled to participate in the Performance Plan and set the key target dates and payout levels under the Performance Plan. Currently John Perry, our President and Chief Executive Officer, and Erland A. Anderson, our Executive Vice President and Chief Operating Officer, until his resignation effective January 12, 2009, are both participants under the Performance Plan and are entitled to a maximum payout of up to 110% of their base salary during the plan period if all targets or milestones are met at 100%. Upon appointment as Vice President and Chief Financial Officer on January 8, 2008, Wayne Morrison was also selected to participate in the Performance Plan. He is entitled to a maximum payout of up to 80% of his base salary during the remaining plan period if all targets or milestones are met at 100%. Currently, various other employees are participating in the Performance Plan at lower percentages.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information as of March 15, 2009 regarding the beneficial ownership of our common stock by:

• each person who is known by us to beneficially own more than 5% of our shares of common stock; and

• each named executive officer, each director and all of our directors and executive officers as a group.

The number of shares beneficially owned and the percentage of shares beneficially owned are based on 69,572,587 shares of common stock outstanding as of March 15, 2009.

For the purposes of the information provided below, shares that may be issued upon the exercise or conversion of options, warrants and other rights to acquire shares of our common stock that are

78

exercisable or convertible within 60 days following March 15, 2009, are deemed to be outstanding and beneficially owned by the holder for the purpose of computing the number of shares and percentage ownership of that holder, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

	As of March 15, 2009
Name and Address of Beneficial Owner(1)	Share	Percent
Named Executive Officers and Directors(2)
Ronald A. Hirsch Chairman	8,769,074 (3)	12.46%
Stephen D. Seymour Director	5,503,176(4)	7.86%
Douglas P. Hamilton Director	333,333(5)	0.48%
John F. Cook Director	474,824((6))	0.68%
T. Sean Harvey Director	714,583(7)	1.02%
Randy L. Davenport(8) Vice President and Chief Operating Officer	166,667(9)	0.24%
John T. Perry President and Chief Executive Officer	2,396,190(10)	3.39%
Wayne M. Morrison(11) Vice President, Chief Financial Officer, Secretary and Treasurer	236,668(12)	0.34%
Directors and Executive Officers as a Group (Eight Persons)	18,594,515(13)	25.58%

Notes

(1)	Under Rule 13d–3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of common shares actually outstanding on March 15, 2009.
(2)	The address of the executive officers and directors is c/o Nord Resources Corporation, 1 West Wetmore Road, Suite 203, Tucson, Arizona, 85705.
(3)	Includes 316,666 shares of common stock that may be acquired pursuant to options exercisable within 60 days.
(4)	Includes 441,667 shares of common stock that may be acquired pursuant to options exercisable within 60 days. Also includes 1,575,000 shares of common stock held by Mr. Seymour as a co–trustee of a trust, and 36,300 owned by his spouse. Mr. Seymour disclaims beneficial ownership of the 36,300 shares of common stock owned by his spouse.
(5)	Includes 333,333 shares of common stock that may be acquired pursuant to options exercisable within 60 days.
(6)	Includes 141,491 outstanding shares of common stock, all of which are owned by Tormin Resources Limited, a company owned and controlled by Mr. Cook. Also includes 333,333 shares of common stock that may be acquired pursuant to options exercisable within 60 days.

79

(7)	Includes 93,750 shares of common stock that may be acquired pursuant to warrants, and 133,333 shares of common stock that may be acquired pursuant to options, in each case exercisable within 60 days.
(8)	Mr. Davenport was appointed Vice President and Chief Operating Officer on January 12, 2009.
(9)	Includes 166,667 shares of common stock that may be acquired pursuant to options exercisable within 60 days.
(10)	Includes 1,083,333 shares of common stock that may be acquired pursuant to options exercisable within 60 days.
(11)	Mr. Morrison was appointed Vice President and Chief Financial Officer on January 8, 2008.
(12)	Includes 216,668 shares of common stock that may be acquired pursuant to options exercisable within 60 days.
(13)	Consists of 3,025,000 shares of common stock that may be acquired pursuant to options, and 93,750 shares of common stock that may be acquired pursuant to warrants, in each case exercisable within 60 days.

The following table sets forth, as of March 15, 2009, certain information regarding beneficial ownership of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock.

		Common Stock Beneficially Owned
Name and Address Of Beneficial			Percent of
Owner	Title of Class	Number of Shares	Class(1)
Sprott Asset Management	Common Stock	12,792,000(2)	17.45%
South Tower Royal Bank Plaza
200 Bay Street SL Level
Toronto, ON
Canada, M5J 2J5
RBC Global Resources Fund	Common Stock	6,900,000(3)	9.60%
200 Bay Street
Toronto, ON
Canada, M5J 2J5
Libra Fund LP	Common Stock	10,093,550(4)	14.06%
123 Front Street
Toronto, ON
Canada, M5J 2J5
Geologic Resource Partners, LLC	Common Stock	8,634,950 (6)	12.25%
535 Boylston Street
Boston, MA 02116

Notes:

(1)	Applicable percentage of ownership is based on 69,572,587 shares of common stock outstanding as of March 15, 2009 together with securities exercisable or convertible into shares of common stock within 60 days of March 15, 2009, for each stockholder. Beneficial ownership is determined in accordance with the rules of the Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to securities exercisable or convertible into shares of common stock that are currently exercisable or exercisable within 60 days of March 15, 2009, are deemed to be beneficially owned by the person holding such options for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
(2)	Includes 3,731,000 shares of common stock that may be acquired upon exercise of outstanding common stock purchase warrants.
(3)	Includes 2,300,000 shares of common stock that may be acquired upon exercise of outstanding common stock purchase warrants.
(4)	Includes 2,194,250 shares of common stock that may be acquired upon exercise of outstanding common stock purchase warrants.
(5)	Includes 892,000 shares of common stock that may be acquired upon exercise of outstanding common stock purchase warrants.

80

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Since the beginning of our last fiscal year, none of our directors, officers or principal stockholders, nor any associate or affiliate of the foregoing, have any material interest, direct or indirect, in any transaction, or in any proposed transaction, in which our Company was or is to be a participant and in which the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year–end for the last three completed fiscal years.

Compensatory Arrangements

Other than compensatory arrangements described under “Executive Compensation,” we have no other transactions, directly or indirectly, with our promoters, directors, senior officers or principal stockholders, which have materially affected or will materially affect us.

Where You Can Find More Information

Statements contained in this annual report as to the contents of any contract, agreement or other document referred to include those terms of such documents that we believe are material. Whenever a reference is made in this annual report to any contract or other document of ours, you should refer to the exhibits that are a part of the annual report for a copy of the contract or document.

You may read and copy all or any portion of the annual report or any other information that Nord Resources Corporation files at the SEC’s public reference room at One Station Place, 100 F Street, NE, Washington, DC 20549. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1–800–SEC–0330 for further information on the operation of the public reference room. Our SEC filings, including the annual report, are also available to you on the SEC’s website at www.sec.gov.

Glossary of Technical Terms

SEC Industry Guide 7 Definitions

reserve

The term “reserve” refers to that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Reserves must be supported by a feasibility study done to bankable standards that demonstrates the economic extraction. (“Bankable standards” implies that the confidence attached to the costs and achievements developed in the study is sufficient for the project to be eligible for external debt financing.) A reserve includes adjustments to the in–situ tons and grade to include diluting materials and allowances for losses that might occur when the material is mined.

proven (measured) reserve

The term “proven reserve” refers to reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape depth and mineral content of reserves are well–established.

81

probable (indicated) reserve	The term “probable reserve” refers to reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.
mineralized material	The term “mineralized material” refers to material that is not included in the reserve as it does not meet all of the criteria for adequate demonstration for economic or legal extraction.
exploration stage	An “exploration stage” prospect is one which is not in either the development or production stage.
production stage	A “production stage” project is actively engaged in the process of extraction and beneficiation of mineral reserves to produce a marketable metal or mineral product.

                  Following are definitions of certain technical terms used in this annual report.

Acid Soluble Copper. A measure of the estimated amount of copper in a rock sample that can be dissolved using a weak acid digestion. The acid soluble copper can be significantly less than the total copper in a rock.

Akaganeite. A tetragonal mineral, ferric oxyhydroxide beta–FeO(OH,Cl). A tetragonal mineral belongs to a system of crystallization having all three axes at right angles and the two lateral axes equal.

Anomaly. A geological feature, especially in the subsurface, distinguished by geological, geophysical, or geochemical means, which is different from the general surroundings and is often of potential economic value.

Assay. To analyze the proportions of metals in an ore; to test an ore or mineral for composition, purity, weight, or other properties of commercial interest. “Assay” can also refer to the test or analysis itself, as well as its results.

Block Model. Computer–generated block model of an ore deposit in which each block contains information about the geology, ore grade, tonnage, density and dimensions of that block in space. The purpose of the geological block model is to provide estimates of grade and tonnage for mine reserve estimating purposes and for mine planning.

Cathode Copper. A marketable product of copper resulting from SX–EW.

Chrysocolla. A monoclinic mineral, (Cu,Al)2 H2 Si2 O5 (OH) 4 .nH2 O. It can cryptocrystalline or amorphous, and forms incrustations and thin seams in oxidized parts of copper–mineral veins. Cryptocrystalline is descriptive of the texture of a rock consisting of crystals that are too small to be recognized and separately distinguished.

Column Test. A metallurgical test using columns of various diameters and heights filled with ore of various sizes to confirm recovery, recovery rate and reagent requirements for the tested ores.

Cut off Grade. The cutoff grade is the deemed grade of mineralization, established by reference to economic factors, above which material in included in mineral resource or reserve calculations and below

82

which the material is considered waste. The cutoff grade may be either: (a) an external cutoff grade, which refers to the grade of mineralization used to control the external or design limits of an open pit based upon the expected economic parameters of the operation; or (b) an internal cutoff grade, which refers to the minimum grade required for blocks of mineralization present within the confines of a deposit to be included in resource or reserve estimates. In order for rock to be above the internal cutoff grade, the net revenue from processing the rock must exceed the sum of all cash operating costs, excluding mining costs. One of the reasons that cut off grade is important is that it determines how the mined ore will be processed.

Fault. A planar feature produced by breaking of the Earth’s crust with movement on one, or both, sides of the plane.

Feasibility Study. A comprehensive study of a deposit in which all geological, engineering, operating, economic and other relevant factors are considered in sufficient detail that it could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production.

Geophysical. Surveys that are conducted to measure the Earth’s physical properties as a means of identify areas where anomalous features may exist.

Heap Leaching. A process whereby copper is recovered from ore by heaping broken ore on sloping impermeable pads, repeatedly irrigating the heaps with a diluted sulfuric acid solution which dissolves the copper content in the ore, collecting the copper–laden solutions (PLS), and stripping the solution of copper.

Kilovolt–Ampere. A unit of electrical power equal to 1000 volt–amperes.

Leach. The dissolution of soluble constituents from a rock or ore body by the natural or artificial action of percolating solutions.

Lerchs–Grossman Analysis. A method of precise open pit optimization commonly used in the mining industry. The technique, founded in 3–dimensional graph theory, relies on a regular system of blocks which defines the value (profit, loss) and type (ore, waste) of material contained in the blocks. Each block receives a positive or negative value representing the dollar value (profit/loss) that would be expected by excavating and extracting the mineral.

Lithology. The character of a rock described in terms of its structure, color, mineral composition, grain size, and arrangement of its component part. It is all those visible features that in the aggregate impart individuality to the rock.

Manto. A flat–lying, bedded deposit; either a sedimentary bed or a replacement strata–bound ore body.

Malacite. A monoclinic mineral, Cu2 CO3 (OH)2. It can be dimorphous with georgeite, and occurs with azurite (a monoclinic mineral, Cu₃ (OH)₂ (CO₃ )₂) in oxidized zones of copper deposits. Dimorphism describes the property of a chemical compound to crystallize in either of two different crystal structures.

Metallurgical Testing. The study of the physical properties of metals as affected by composition, mechanical working, and heat treatment.

Mine. An opening or excavation in the ground for the purpose of extracting minerals; a pit or excavation from which ores or other mineral substances are taken by digging; an opening in the ground made for the purpose of taking out minerals; an excavation properly underground for digging out some usable product,

83

such as ore, including any deposit of any material suitable for excavation and working as a placer mine; collectively, the underground passage and workings and the minerals themselves.

Mineralized. Material added by hydrothermal solutions, principally in the formation of ore deposits. Often refers to the presence of a mineral of economic interest in a rock.

Mixer–settler. Extraction apparatus. A mixer–settler consists of an agitation tank (commonly known as a “mixer” or “mix box”) in which the aqueous and organic solutions are contacted (e.g. PLS and kerosene), and a shallow gravity settling basin (commonly known as a “settler”) where the mixed solutions are allowed to settle due to natural gravity. The resulting individual layers of solution are capable of separate discharge.

Open Pit Mining. The process of excavating an ore body from the surface in progressively deeper layered cuts or steps. Sufficient waste rock adjacent to the ore body is removed to maintain mining access and to maintain the stability of the resulting pit.

Open Pit. A surface mine working open to daylight, such as a quarry.

Ore. The naturally occurring material from which a mineral or minerals of economic value can be extracted profitably or to satisfy social or political objectives. The term is generally but not always used to refer to metalliferous material, and is often modified by the names of the valuable constituent.

Oxide. A mineral compound characterized by the linkage of oxygen with one or more metallic elements. Sulfide minerals typically convert to oxides on exposure to oxygen. Oxides are more amenable to heap leach techniques than are sulfides.

Patented Mining Claims. A patented mining claim is one for which the Federal Government has passed its title to the claimant, making it private land. A person may mine and remove minerals from a mining claim without a mineral patent. However. a mineral patent gives the owner exclusive title to the locatable minerals. It also gives the owner title to the surface and other resources.

Porphyry. An igneous rock containing conspicuous crystals or phenocysts in a fine–grained groundmass; type of mineral deposit in which ore minerals are widely disseminated, generally of a low grade by large tonnage.

PLS. Pregnant Leach Solution is acidic copper–laden water generated from stockpile leaching and heap leaching. Pregnant Leach Solution is used in the SX–EW process.

Raffinate. The portion of an original liquid (PLS) that remains after other components have been dissolved by a solvent.

Reverse Circulation. The circulation of bit–coolant and cuttings–removal liquids, drilling fluid, mud, air, or gas down the borehole outside the drill rods and upward inside the drill rods. Often used to describe an advanced drilling and sampling method that takes a discrete sample from a drill interval with the objective of maintaining sample integrity.

Reserve. Measurement of size and grade of a mineral deposit that infers parameters have been applied to assess the potential for economic development.

Run–of–Mine. Ore in its natural, unprocessed state as it is mined (no crushing, grinding, concentrating, metallurgical extraction, etc.). For example, for a copper deposit, run–of–mine ore is material that has been drilled from a mine and blasted into broken pieces of rock taken out and put directly on heap leach pads without any further crushing.

84

Sediments. Material that has been deposited on the surface of the Earth through geologic means, usually transported and deposited by water. This material may eventually be cemented into rock.

Strike. The course or bearing of the outcrop of an inclined bed, vein, or fault plane on a level surface; the direction of a horizontal line perpendicular to the direction of the dip.

Sulfide. A mineral compound characterized by the linkage of sulphur with a metal.

Solvent extraction–electrowinning (SX–EW). A hydrometallurgical process for the recovery of copper from oxide ores through the use of an organic solvent and strong acid to concentrate the metal in solution, and using electrolysis to plate the metal out of solution. Produces a high–grade product that can be treated and sold as refined metal.

Tons. A unit of weight measurement. In this annual report it means dry short tons (2,000 pounds).

Total Copper. A measure of the estimated amount of copper in a rock sample.

Unpatented mining claims. Land which has been staked and recorded in appropriate mining registries and in respect of which the owner has the right to explore for and exploit the minerals contained in such land and to conduct mining operations thereon. In this annual report, unpatented mining claims refers to lode claims (and not placer claims).

Volt–ampere. A unit of electric power equal to the product of one volt and one ampere, equivalent to one watt.

ITEM 14.          PRINCIPAL ACCOUNTING FEES AND SERVICES

We appointed Mayer Hoffman McCann P.C. to serve as our independent auditors for the years ended December 31, 2008 and December 31, 2007. We have not retained the services of any other independent auditors. Mayer Hoffman McCann P.C. performed the services listed below and was paid the fees listed below for the fiscal years ended December 31, 2008 and December 31, 2007:

Audit Fees

2008	2007
$292,085	$380,175

Audit Related Fees

2008	2007
None	None

Audit Fees consist of fees billed for professional services rendered for the audits of our financial statements, reviews of interim financial statements included in quarterly reports, services performed in connection with filings with the Securities and Exchange Commission and related comfort letters and other services that are normally provided by Mayer Hoffman McCann P.C. in connection with statutory and regulatory filings or engagements.

Tax Fees

2008	2007
$36,730	$22,225

85

Tax Fees consist of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and local tax compliance and consultation in connection with various transactions and acquisitions.

All Other Fees

2008	2007
None	None

Audit Committee Pre–Approval of Audit and Permissible Non–Audit Services of Independent Auditors

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before an independent registered public accounting firm is engaged by us to render any auditing or permitted non–audit related service, the engagement be:

• approved by our audit committee; or

• entered into pursuant to pre–approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee’s responsibilities to management.

Our audit committee was formed in February 2006, and has assumed responsibility for the pre–approval of audit and permitted non–audit services to be performed by our Company’s independent auditor. The audit committee will, on an annual basis, consider and, if appropriate, approve the provision of audit and non–audit services by Mayer Hoffman McCann P.C. Thereafter, the audit committee will, as necessary, consider and, if appropriate, approve the provision of additional audit and non–audit services by Mayer Hoffman McCann P.C. which are not encompassed by the audit committee’s annual pre–approval and are not prohibited by law. The audit committee has delegated to the chair of the audit committee the authority to pre–approve, on a case–by–case basis, non–audit services to be performed by Mayer Hoffman McCann P.C.

PART IV

ITEM 15.          EXHIBITS

Exhibit
Number	Description
Articles of Incorporation and By–laws
3.1	Certificate of Incorporation (as amended) of Nord Resources Corporation(1)
3.2	Amended and Restated Bylaws of Nord Resources Corporation(2)
3.3	Amendment to Amended Certificate of Incorporation(26)
Instruments defining the rights of security holders, including indentures
4.1	Pages from Amended and Restated Bylaws of Nord Resources Corporation defining the rights of holders of equity or debt securities(1)
4.2	Convertible Promissory Note for $35,000 issued by Nord Resources Corporation to Ronald A. Hirsch dated June 29, 2004(1)

86

4.3	Amendment to Convertible Promissory Note dated June 29, 2004 issued by Nord Resources Corporation to Ronald A. Hirsch effective November 30, 2005(1)
4.4	Convertible Promissory Note for $66,000 issued by Nord Resources Corporation to Stephen D. Seymour dated August 19, 2004(1)
4.5	Amendment to Convertible Promissory Note dated August 19, 2004 issued by Nord Resources Corporation to Stephen D. Seymour effective September 26, 2005(1)
4.6	Second Amendment to Convertible Promissory Note dated August 19, 2004 issued by Nord Resources Corporation to Stephen D. Seymour effective November 30, 2005(1)
4.7	Convertible Promissory Note for $106,000 issued by Nord Resources Corporation to Ronald A. Hirsch dated October 4, 2004(1)
4.8	Amendment to Convertible Promissory Note dated October 4, 2004 issued by Nord Resources Corporation to Ronald A. Hirsch effective September 26, 2005(1)
4.9	Second Amendment to Convertible Promissory Note dated October 4, 2004 issued by Nord Resources Corporation to Ronald A. Hirsch effective November 30, 2005(1)
4.10	Revolving Line of Credit Agreement, between Nord Resources Corporation and Ronald A. Hirsch and Stephen Seymour dated June 21, 2005(1)
4.11	Security Agreement between Nord Resources Corporation and Ronald A. Hirsch and Stephen Seymour dated June 21, 2005(1)
4.12	Secured Promissory Note ($600,000) between Nord Resources Corporation and Ronald A. Hirsch and Stephen Seymour dated June 21, 2005(1)
4.13	Second Amended and Restated Revolving Line of Credit between Nord Resources Corporation and Ronald A. Hirsch and Stephen Seymour dated November 8, 2005(3)
4.14	Amended and Restated Warrant Certificate issued by Nord Resources Corporation to Auramet Trading, LLC, dated as of October 17, 2005(5)
4.15	Warrant Certificate issued by Nord Resources Corporation to Auramet Trading, LLC, dated April 17, 2006(5)
4.16	Acknowledgement of Ronald A. Hirsch regarding Agreement for Credit Risk Participation dated November, 2005(1)
4.17	Secured Promissory Note for $3,900,000 issued by Nord Resources Corporation to Nedbank Limited dated November 8, 2005(1)
4.18	Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing among Nord Resources Corporation , First American Title Insurance Company and Nedbank Limited dated November 8, 2005(1)
4.19	Warrant Certificate issued by Nord Resources Corporation to Nedbank Limited, dated May 8, 2006(4)

87

4.20	Environmental Indemnity Agreement between Nord Resources Corporation and Nedbank Limited dated November, 2005(1)
4.21	Subordination Agreement among Ronald A. Hirsch, Stephen D. Seymour and Nedbank Limited dated November 8, 2005(1)
4.22	Letter from Nord Resources Corporation to Nedbank Limited regarding conditions subsequent, dated November 8, 2005(1)
4.23	Perfection Certificate completed by Nord Resources Corporation for Nedbank Limited, dated November 8, 2005(1)
4.24	Waiver Agreement and Amendment of Promissory Note between Nord Resources Corporation and Nedbank Limited, dated February 6, 2006(3)
4.25	Letter Agreement between Nord Resources Corporation and Nedbank Limited, dated May 5, 2006, extending the maturity date of the Secured Promissory Note dated November 8, 2005 in the principal amount of $3,900,000, to May 15, 2006(4)
4.26	Letter Agreement between Nord Resources Corporation, Ronald Hirsch and Stephen Seymour, dated May 5, 2006, extending the maturity date indebtedness under the Second Amended and Restated Revolving Line of Credit Agreement, among Nord Resources Corporation and Ronald A. Hirsch and Stephen Seymour dated November 8, 2005(7)
4.27	Modification Agreement between Nord Resources Corporation and Nedbank Limited, dated May 15, 2006(5)
4.28	Warrant Certificate issued by Nord Resources Corporation to Nedbank Limited, dated May 15, 2006(5)
4.29	Warrant Certificate issued by Nord Resources Corporation to Auramet Trading LLC, dated May 15, 2006(5)
4.30	Amended and Restated Secured Promissory Note, dated May 31, 2006, payable to Nedbank Limited in the principal amount of $4,900,000(6)
4.31	First Amendment to Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated May 31, 2006, among Nord Resources Corporation, First American Title Insurance Company and Nedbank Limited(6)
4.32	Amendment to Subordination Agreement, dated May 31, 2006, made for the benefit of Nedbank Limited by Ronald Hirsch and Stephen Seymour(6)
4.33	Warrant Certificate issued by Nord Resources Corporation to Auramet Trading, LLC, dated May 31, 2006 representing 250,000 common stock purchase warrants(6)
4.34	Letter Agreement between Nord Resources Corporation Nedbank Limited and Auramet Trading, LLC dated August 8, 2006, extending the maturity date of a secured loan in the principal amount of $4,900,000(9)
4.35	Agreement between Nord Resources Corporation, Ronald Hirsch and Stephen Seymour, dated August 14, 2006, extending the maturity date indebtedness under the Second Amended and Restated Revolving Line of Credit Agreement, among Nord Resources

88

	Corporation and Ronald A. Hirsch and Stephen Seymour dated November 8, 2005(11)
4.36	Amended and Restated Convertible Promissory Note for $35,000 issued by Nord Resources Corporation to Ronald A. Hirsch dated for reference June 29, 2004(12)
4.37	Amended and Restated Convertible Promissory Note for $66,000 issued by Nord Resources Corporation to Stephen D. Seymour dated for reference August 19, 2004(12)
4.38	Amended and Restated Convertible Promissory Note for $106,000 issued by Nord Resources Corporation to Ronald A. Hirsch dated for reference October 4, 2004(12)
4.39	Agreement between Nord Resources Corporation, Ronald Hirsch and Stephen Seymour, dated August 17, 2006, extending the maturity date indebtedness under the Second Amended and Restated Revolving Line of Credit Agreement, among Nord Resources Corporation and Ronald A. Hirsch and Stephen Seymour dated November 8, 2005(12)
4.40	Modification Agreement dated September 30, 2006 between Nord Resources Corporation and Nedbank Limited(13)
4.41	Amendment agreement dated September 29, 2006 between Nord Resources Corporation and Stephen Seymour in respect of Amended and Restated Convertible Promissory Note dated for reference August 19, 2004, in the principal amount of $66,000(15)
4.42	Amendment agreement dated September 29, 2006 between Nord Resources Corporation and Ronald Hirsch in respect of Amended and Restated Convertible Promissory Note dated for reference October 4, 2004, in the principal amount of $106,000(15)
4.43	Amendment agreement dated September 29, 2006 between Nord Resources Corporation and Ronald Hirsch in respect of Amended and Restated Convertible Promissory Note dated for reference June 29, 2004, in the principal amount of $35,000(15)
4.44	Amending agreement dated September 29, 2006 among Nord Resources Corporation, Ronald Hirsch and Stephen Seymour in respect of that certain $600,000 Revolving Line of Credit Agreement and that certain Secured Promissory Note, as previously amended, each dated for reference June 21, 2005(15)
4.45	Letter Agreement among Nedbank Limited, Nord Resources Corporation and Auramet Trading, LLC dated for reference December 19, 2006 and executed on December 20, 2006(20)
4.46	Amendment agreement dated December 22, 2006 between Nord Resources Corporation and Stephen Seymour in respect of Amended and Restated Convertible Promissory Note dated for reference August 19, 2004, in the principal amount of $66,000(20)
4.47	Amendment agreement dated December 22, 2006 between Nord Resources Corporation and Ronald Hirsch in respect of Amended and Restated Convertible Promissory Note dated for reference October 4, 2004, in the principal amount of $106,000(20)
4.48	Amendment agreement December 22, 2006 between Nord Resources Corporation and Ronald Hirsch in respect of Amended and Restated Convertible Promissory Note dated for reference June 29, 2004, in the principal amount of $106,000(20)
4.49	Amending agreement dated December 22, 2006 among Nord Resources Corporation,

89

	Ronald Hirsch and Stephen Seymour in respect of that certain $600,000 Revolving Line of Credit Agreement and that certain Secured Promissory Note, as previously amended, each dated for reference June 21, 2005(20)
4.50	Letter Agreement among Nedbank Limited, Nord Resources Corporation and Auramet Trading, LLC dated for reference January 11, 2007(21)
4.51	Amendment agreement dated January 15, 2007 between Nord Resources Corporation and Stephen Seymour in respect of Amended and Restated Convertible Promissory Note dated for reference August 19, 2004, in the principal amount of $66,000(21)
4.52	Amendment agreement dated January 15, 2007 between Nord Resources Corporation and Ronald Hirsch in respect of Amended and Restated Convertible Promissory Note dated for reference October 4, 2004, in the principal amount of $106,000(21)
4.53	Amendment agreement dated January 15, 2007 between Nord Resources Corporation and Ronald Hirsch in respect of Amended and Restated Convertible Promissory Note dated for reference June 29, 2004, in the principal amount of $35,000(21)
4.54	Amending agreement dated January 15, 2007 among Nord Resources Corporation, Ronald Hirsch and Stephen Seymour in respect of that certain $600,000 Revolving Line of Credit Agreement and that certain Secured Promissory Note, as previously amended, each dated for reference June 21, 2005(21)
4.55	Letter Agreement among Nedbank Limited, Nord Resources Corporation and Auramet Trading, LLC dated for reference January 30, 2007(22)
4.56	Amendment agreement dated January 31, 2007 between Nord Resources Corporation and Stephen Seymour in respect of Amended and Restated Convertible Promissory Note dated for reference August 19, 2004, in the principal amount of $66,000(22)
4.57	Amendment agreement dated January 31, 2007 between Nord Resources Corporation and Ronald Hirsch in respect of Amended and Restated Convertible Promissory Note dated for reference October 4, 2004, in the principal amount of $106,000(22)
4.58	Amendment agreement dated January 31, 2007 between Nord Resources Corporation and Ronald Hirsch in respect of Amended and Restated Convertible Promissory Note dated for reference June 29, 2004, in the principal amount of $35,000(22)
4.59	Amending agreement dated January 31, 2007 among Nord Resources Corporation, Ronald Hirsch and Stephen Seymour in respect of that certain $600,000 Revolving Line of Credit Agreement and that certain Secured Promissory Note, as previously amended, each dated for reference June 21, 2005(22)
4.60	Letter Agreement among Nedbank Limited, Nord Resources Corporation and Auramet Trading, LLC dated for reference February 23, 2007(23)
4.61	Modification Agreement between Nedbank Limited and Nord Resources Corporation dated for reference February 23, 2007(23)
4.62	Amendment agreement dated February 23, 2007 between Nord Resources Corporation and Stephen Seymour in respect of Amended and Restated Convertible Promissory Note dated for reference August 19, 2004, in the principal amount of $66,000(23)

90

4.63	Amendment agreement dated February 23, 2007 between Nord Resources Corporation and Ronald Hirsch in respect of Amended and Restated Convertible Promissory Note dated for reference October 4, 2004, in the principal amount of $106,000(23)
4.64	Amendment agreement dated February 23, 2007 between Nord Resources Corporation and Ronald Hirsch in respect of Amended and Restated Convertible Promissory Note dated for reference June 29, 2004, in the principal amount of $35,000(23)
4.65	Amending agreement dated February 23, 2007 among Nord Resources Corporation, Ronald Hirsch and Stephen Seymour in respect of that certain $600,000 Revolving Line of Credit Agreement and that certain Secured Promissory Note, as previously amended, each dated for reference June 21, 2005(23)
4.66	Term Sheet and Agreement between Nedbank Limited and Nord Resources Corporation dated for reference April 13, 2007(26)
4.67	Letter Agreement among Nedbank Limited, Nord Resources Corporation and Auramet Trading, LLC dated for reference April 17, 2007(26)
4.68	Amendment Agreement dated April 30, 2007 between Nord Resources Corporation and Stephen Seymour in respect of Amended and Restated Convertible Promissory Note dated for reference August 19, 2004, in the principal amount of $66,000(25)
4.69	Amendment Agreement dated April 30, 2007 between Nord Resources Corporation and Ronald Hirsch in respect of Amended and Restated Convertible Promissory Note dated for reference October 4, 2004, in the principal amount of $106,000(25)
4.70	Amendment Agreement dated April 30, 2007 between Nord Resources Corporation and Ronald Hirsch in respect of Amended and Restated Convertible Promissory Note dated for reference June 29, 2004, in the principal amount of $35,000(25)
4.71	Amending Agreement dated April 30, 2007 among Nord Resources Corporation, Ronald Hirsch and Stephen Seymour in respect of that certain $600,000 Revolving Line of Credit Agreement and that certain Secured Promissory Note, as previously amended, each dated for reference June 21, 2005(25)
4.72	Special Warrant Indenture among Nord Resources Corporation, Blackmont Capital Inc. and Computershare Trust Company of Canada, as special warrant trustee, dated June 5, 2007(27)
4.73	Warrant Indenture between Nord Resources Corporation and Computershare Trust Company of Canada, as warrant agent, dated June 5, 2007(27)
4.74	Registration Rights Agreement among Nord Resources Corporation, Blackmont Capital Inc. and Salman Partners Inc. dated June 5, 2007(27)
4.75	Agent’s Option Certificate issued to Blackmont Capital Inc., dated June 5, 2007(27)
4.76	Agent’s Option Certificate issued to Salman Partners Inc., dated June 5, 2007(27)

91

Material Contracts
10.1	Executive Employment Agreement between Nord Resources Corporation and Ronald A. Hirsch dated January 2, 2004(1)
10.2	Waiver Agreement between Nord Resources Corporation and Ronald A. Hirsch dated February 15, 2006(3)
10.3	Executive Employment Agreement between Nord Resources Corporation and Erland Anderson dated January 2, 2004(1)
10.4	Waiver Agreement and Amendment of Employment Agreement between Nord Resources Corporation and Erland Anderson dated February 15, 2006(3)
10.5	Nord Resources Corporation Stock Option granted to Erland Anderson February 1, 2006(3)
10.6	Executive Employment Agreement between Nord Resources Corporation and John Perry dated April 18, 2005(1)
10.7	Waiver Agreement between Nord Resources Corporation and John Perry dated February 15, 2006(3)
10.8	Letter Agreement between Nord Resources Corporation and Nicholas Tintor regarding employment matters dated February 15, 2006(3)
10.9	Option to Purchase the “Coyote Springs” property from Thornwell Rogers, South Branch Resources LLC and MRPGEO LLC to Nord Resources Corporation dated January 28, 2004(1)
10.10	First Amendment to Option to Purchase Coyote Springs property among Thornwell Rogers, South Branch Resources LLC, MRPGEO LLC and Nord Resources Corporation dated December 14, 2004(1)
10.11	Second Amendment to the Terms of Agreement, Option to Purchase the “Coyote Springs” Property, Graham County, Arizona, between Nord Resources Corporation and Thornwell Rogers, South Branch Resources LLC and MRPGEO LLC, dated January 27, 2006(3)
10.12	Option to Purchase the “Mimbres” Property from Thornwell Rogers, South Branch Resources, LLC and MRPGEO, LLC to Nord Resources Corporation dated June 10, 2004(1)
10.13	Option Agreement between Shirley Bailey and Nord Resources Corporation dated July 19, 2004(1)
10.14	Debt Conversion between Nord Resources Corporation and Thornwell Rogers dated April 16, 2004(1)
10.15	Debt Conversion between Nord Resources Corporation and South Branch Resources LLC dated April 16, 2004(1)

92

10.16	Debt Conversion between Nord Resources Corporation and MRPGEO, LLC dated April 16, 2004(1)
10.17	Debt Conversion Agreement between Peifer, Hanson and Mullins P.A. and Nord Resources Corporation dated October 25, 2005(1)
10.18	Settlement Agreement and General Release between Nord Resources
	Corporation and W. Pierce Carson dated April 22, 2005(1)
10.19	Warrant Certificate issuing 250,000 warrants to W. Pierce Carson dated April 22, 2005(1)
10.20	Warrant Amendment Agreement between Nord Resource Corporation and Pierce Carson dated October 5, 2006(28)
10.21	Nord Resources Corporation form of Subscription Agreement for US Investors (2005 private placement)(1)
10.22	Nord Resources Corporation form of Subscription Agreement for Canadian Investors (2005 private placement)(1)
10.23	Nord Resources Corporation form of Warrant Certificate for US Purchasers (2005 private placement)(1)
10.24	Nord Resources Corporation form of Warrant Certificate for Canadian Purchasers (2005 private placement)(1)
10.25	Letter dated October 25, 2005, amending the terms of the 2005 private placement offering(1)
10.26	Letter dated November 15, 2005, amending the terms of the 2005 private placement offering(1)
10.27	Letter dated December 21, 2005, amending the terms of the 2005 private placement offering(1)
10.28	Agreement for Purchase and Sale of Waste Rock from the Johnson Camp Mine between Nord Resources Corporation and JC Rock, LLC dated December 24, 2004(1)
10.29	Tenth Amendment to the Agreement for Purchase and Sale of Waste Rock from the Johnson Camp Mine dated July 31, 2007(27)
10.30	Office Lease between Issa and Henrietta Hallaq, landlords, and Nord Resources Corporation, tenant, dated January 5, 2006(27)
10.31	Confidential Settlement and Release Agreement between Nord Resources Corporation (plaintiff/counter–defendant), and Titanium Resources Group, Ltd. and Edward Wayne Malouf (defendants/counter–plaintiffs) dated August 9, 2006(10)
10.32	Settlement Agreement between Nord Resources Corporation and Nicholas Tintor dated September 29, 2006(14)
10.33	Mutual General Release between Nord Resources Corporation and Nicholas Tintor dated

93

	September 29, 2006(14)
10.34	Third Amendment to the “Terms of Agreement, Option to Purchase the ‘Coyote Springs’ Property, Graham County, Arizona” among Nord Resources Corporation, Thornwell Rogers, South Branch Resources, LLC and MRGPEO, LLC dated October 17, 2006(16)
10.35	Second Amendment to the “Terms of Agreement, Option to Purchase the ‘Mimbres’ Property, Grant County, New Mexico” among Nord Resources Corporation, Thornwell Rogers, South Branch Resources, LLC and MRGPEO, LLC dated October 17, 2006(16)
10.36	Settlement Agreement dated October 18, 2006, between Nord Resources Corporation and TMD Acquisition Corporation(16)
10.37	Assignment Agreement dated October 18, 2006, between Nord Resources Corporation and TMD Acquisition Corporation(16)
10.38	Amended and Restated Waiver Agreement And Amendment of Employment Agreement between Nord Resources Corporation and Ronald Hirsch dated October 18, 2006(16)
10.39	Amendment of Employment Agreement between Nord Resources Corporation and Erland Anderson dated October 18, 2006(16)
10.40	Amendment of Executive Employment Agreement between Nord Resources Corporation and John Perry dated October 18, 2006(16)
10.41	Indemnification Agreement dated October 18, 2006 by Stephen Seymour, in his personal capacity, and by Stephen Seymour, Kathie Stevens and Louise Seymour, as Trustees U/A dated 7/27/82 FBO Louise Seymour, in favor of Nord Resources Corporation(16)
10.42	Agreement and Plan of Merger dated October 23, 2006 by and among Nord Resources Corporation, Platinum Diversified Mining, Inc., Platinum Diversified Mining USA, Inc. and PDM Merger Corp.(17)
10.43	Voting Agreement dated October 23, 2006 among Nord Resources Corp., Platinum Diversified Mining USA, Inc. and Ronald A. Hirsch(17)
10.44	Voting Agreement dated October 23, 2006 among Nord Resources Corp., Platinum Diversified Mining USA, Inc. and Stephen Seymour(17)
10.45	Deposit Escrow Agreement dated October 23, 2006 among Nord Resources Corp., Platinum Diversified Mining USA, Inc. and American Stock Transfer & Trust Company(17)
10.46	Letter Agreement respecting a performance bonus between Nord Resources Corporation and Ron A. Hirsch dated November 2, 2006(18)
10.47	Letter Agreement respecting a performance bonus between Nord Resources Corporation and Erland A. Anderson dated November 2, 2006(18)
10.48	Letter Agreement respecting a performance bonus between Nord Resources Corporation and John T. Perry dated November 2, 2006(18)
10.49	Amended and Restated Assignment Agreement dated as of October 18, 2006, between

94

	Nord Resources Corporation and TMD Acquisition Corporation(19)
10.50	Seventh Amendment to the Agreement for Purchase and Sale of Waste Rock from the Johnson Camp Mine dated November 2, 2006(19)
10.51	Settlement Agreement dated March 7, 2007 among Nord Resources Corporation, Platinum Diversified Mining, Inc., Platinum Diversified Mining USA, Inc. and PDM Merger Corp.(24)
10.52	Eighth Amendment to the Agreement for Purchase and Sale of Waste Rock from the Johnson Camp Mine dated January 19, 2007(26)
10.53	Ninth Amendment to the Agreement for Purchase and Sale of Waste Rock from the Johnson Camp Mine dated as of April 30, 2007(26)
10.54	Agency Agreement among Nord Resources Corporation, Blackmont Capital Inc. and Salman Partners Inc. dated June 5, 2007(27)
10.55	45Form of Subscription Agreement dated June 5, 2007 between Nord Resources Corporation and each purchaser of special warrants(27)
10.56	Credit Agreement dated as of June 28, 2007 between Nord Resources Corporation, Cochise Aggregates and Materials, Inc., Nedbank Limited and the Lenders from time to time party thereto(27)
10.57	Tenth Amendment to the Agreement for Purchase and Sale of Waste Rock from the Johnson Camp Mine dated July 31, 2007(27)
10.58	Eleventh Amendment to the Agreement for Purchase and Sale of Waste Rock from the Johnson Camp Mine dated October 31, 2007(29)
10.59	Long Term Cathode Sales Agreement effective February 1, 2008, with Red Kite Master Fund Limited (Portions of this document have been omitted and filed separately with the SEC pursuant to a Request for Confidential Treatment filed under 17 C.F.R. 200.80(b)(4) and 240.24b–2) (29)
10.60	Twelfth Amendment to the Agreement for Purchase and Sale of Waste Rock from the Johnson Camp Mine dated January 31, 2008(29)
10.61	Thirteenth Amendment to the Agreement for Purchase and Sale of Waste Rock from the Johnson Camp Mine dated April 30, 2008(31)
10.62	Amended and Restated Credit Agreement dated as of June 30, 2008 among Nord Resources Corporation, Cochise Aggregates and Materials Inc., Nedbank Limited and the Lenders from time to time party thereto(30)
10.63	Amended and Restated Executive Employment Agreement between the Company and John Perry dated September 9, 2008. (32)
10.64	Executive Employment Agreement between the Company and Wayne Morrison dated September 9, 2008. (32)
10.65	Processing Agreement with Texas Canyon Rock & Sand, Inc., dated October 31, 2008(33)

95

10.66	Fourteenth Amendment to the Agreement for Purchase and Sale of Waste Rock from the Johnson Camp Mine dated November 25, 2008(34)
10.67	Amended and Restated Credit Agreement dated as of March 31, 2009 among Nord Resources Corporation, Cochise Aggregates and Materials Inc., Nedbank Limited and the Lenders from time to time party thereto(35)
10.68	Agreement to Purchase Royalty dated as of March 31, 2009 between Nord Resources Corporation and IRC Nevada Inc.(35)
10.69	Royalty Deed and Assignment of Royalty dated as of March 31, 2009, from Nord Resources Corporation to IRC Nevada Inc.(35)
Subsidiaries of the Small Business Issuer
21.1	Subsidiaries of Small Business Issuer:
	Cochise Aggregates and Materials, Inc. (Incorporated in Nevada)
Consents of Experts and Counsel
23.1	Consent of Mayer Hoffman McCann P.C. (35)
Certifications
31.1	Certification of Chief Executive Officer pursuant to Rule 13a–14 and Rule 15d– 14(a), promulgated under the Securities and Exchange Act of 1934, as amended(35)
31.2	Certification of Chief Financial Officer pursuant to Rule 13a–14 and Rule 15d– 14(a), promulgated under the Securities and Exchange Act of 1934, as amended(35)
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes– Oxley Act of 2002(35)
Additional Exhibits
99.1	Nord Resources Corporation Amended and Restated 2006 Stock Incentive Plan(8)
99.2	Nord Resources Corporation Performance Incentive Plan for the period from July 1, 2007 to December 31, 2008(27)

Notes

(1)	Incorporated by reference from our annual report on Form 10–KSB for the year ended December 31, 2004, filed with the SEC on January 17, 2006.
(2)	Incorporated by reference from our current report on Form 8–K dated February 15, 2006, filed with the SEC on February 16, 2006.
(3)	Incorporated by reference from our annual report on Form 10–KSB for the year ended December 31, 2005, filed with the SEC on March 28, 2006.
(4)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on May 11, 2006.

96

(5)	Incorporated by reference from our quarterly report on Form 10–QSB for the quarter ended March 31, 2006, filed with the SEC on May 15, 2006.
(6)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on May 31, 2006.
(7)	Incorporated by reference from Amendment No. 1 to our annual report on Form 10–KSB for the year ended December 31, 2005, filed with the SEC on June 30, 2006.
(8)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on December 6, 2008.
(9)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on August 8, 2006.
(10)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on August 14, 2006.
(11)	Incorporated by reference from our quarterly report on Form 10–QSB for the quarter ended June 30, 2006, filed with the SEC on August 14, 2006.
(12)	Incorporated by reference from Amendment No. 3 to our annual report on Form 10–KSB for the year ended December 31, 2005, filed with the SEC on August 23, 2006.
(13)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on September 28, 2006.
(14)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on October 2, 2006.
(15)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on October 4, 2006.
(16)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on October 23, 2006.
(17)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on October 25, 2006.
(18)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on November 7, 2006.
(19)	Incorporated by reference from our quarterly report on Form 10–QSB for the quarter ended September 30, 2006, filed with the SEC on November 13, 2006.
(20)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on December 26, 2006.
(21)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on January 16, 2007.
(22)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on February 5, 2007.
(23)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on February 26, 2007.
(24)	Incorporated by reference from our annual report on Form 10–KSB for the year ended December 31, 2006, filed with the SEC on March 28, 2007.
(25)	Incorporated by reference from our current report on Form 8–K, filed with the SEC on February 26, 2007.
(26)	Incorporated by reference from our quarterly report on Form 10–QSB for the quarter ended March 31, 2007, filed with the SEC on May 9, 2007.
(27)	Incorporated by reference from our quarterly report on Form 10–QSB for the quarter ended June 30, 2007, filed with the SEC on August 14, 2007.
(28)	Incorporated by reference from our Form SB–2, filed with the SEC on October 19, 2007.

97

(29)	Incorporated by reference from our annual report on Form 10–KSB for the year ended December 31, 2007, filed with the SEC on March 26, 2008.
(30)	Incorporated by reference from our current report on Form 8–K dated June 30, 2008 and filed with the SEC on July 7, 2008.
(31)	Incorporated by reference from our quarterly report on Form 10–Q for the quarter ended June 30, 2008, filed with the SEC on August 14, 2008.
(32)	Incorporated by reference from our current report on Form 8–K dated September 9, 2008 and filed with the SEC on September 12, 2008.
(33)	Incorporated by reference from our current report on Form 8–K dated October 31, 2008 and filed with the SEC on November 5, 2008.
(34)	Incorporated by reference from our current report on Form 8–K dated November 25, 2008 and filed with the SEC on November 28, 2008.
(35)	Filed herewith.

98

FINANCIAL STATEMENTS FILED AS PART OF
THIS ANNUAL REPORT ON FORM 10–K

Index
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F–1
Consolidated Balance Sheets as of December 31, 2008 and 2007	F–2 / F–3
Consolidated Statements of Operations for the Years Ended December 31, 2008 and 2007	F–4
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2008 and 2007	F–5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2008 and 2007	F–6
Notes to Consolidated Financial Statements	F–7

99

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Nord Resources Corporation

We have audited the accompanying consolidated balance sheets of Nord Resources Corporation and Subsidiary as of December 31, 2008 and 2007 and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2008. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nord Resources Corporation and Subsidiary as of December 31, 2008 and 2007 and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As shown in the consolidated financial statements, the Company incurred a net loss of $5,038,374 and $2,512,181 during the two years in the period ended December 31, 2008, respectively. As discussed in Note 2 to the consolidated financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 2. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

/s/ Mayer Hoffman McCann P.C.

Phoenix, Arizona
March 31, 2009

F-1

NORD RESOURCES CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

		At December 31,
		2008			2007
ASSETS
Current Assets:
Cash and cash equivalents	$	4,465,245		$	3,368,910
Accounts receivable		320,493			144,012
Inventories		221,271			–
Current portion of derivative contracts		9,604,405			–
Prepaid expenses and other		360,901			68,012
Total Current Assets		14,972,315			3,580,934
Property and Equipment, at cost:
Property and equipment		4,657,929			4,161,993
Less accumulated depreciation and amortization		(1,614,405	)		(1,460,611	)
		3,043,524			2,701,382
Construction in progress		36,944,454			10,795,491
Net Property and Equipment		39,987,978			13,496,873
Other Assets:
Restricted cash and marketable securities		2,220,138			3,686,476
Derivative contracts, less current portion		9,549,697			–
Debt issuance costs, net of accumulated amortization		877,249			1,117,021
Total Other Assets		12,647,084			4,803,497
Total Assets	$	67,607,377		$	21,881,304

The accompanying notes are an integral part of these consolidated financial statements.

F-2

NORD RESOURCES CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Continued)

		At December 31,
		2008			2007
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	9,694,716		$	1,322,459
Accrued expenses		887,438			1,212,435
Current maturities of accrued interest		265,442			13,251
Current maturities of long–term debt		6,666,667			312,500
Current maturities of derivative contracts		299,717			–
Current maturities of capital lease obligation		7,995			9,375
Total Current Liabilities		17,821,975			2,870,020
Long–Term Liabilities:
Derivative contracts, less current maturities		137,367			9,183,428
Long–term debt, less current maturities		18,333,333			4,687,500
Capital lease obligation, less current maturities		45,015			–
Accrued interest, less current maturities		729,965			–
Accrued reclamation costs		144,256			131,141
Other		47,103			61,863
Total Long–Term Liabilities		19,437,039			14,063,932
Total Liabilities		37,259,014			16,933,952
Commitments and contingencies
Stockholders’ Equity:
Common stock: $.01 par value, 100,000,000 shares authorized,
69,493,635 and 66,659,224 shares issued and outstanding as of
December 31, 2008 and December 31, 2007, respectively		694,936			666,592
Additional paid–in–capital		109,940,000			108,439,030
Accumulated deficit		(100,013,216	)		(94,974,842	)
Accumulated other comprehensive income (loss)		19,726,643			(9,183,428	)
Total Stockholders’ Equity		30,348,363			4,947,352
Total Liabilities and Stockholders’ Equity	$	67,607,377		$	21,881,304

The accompanying notes are an integral part of these consolidated financial statements.

F-3

NORD RESOURCES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS

		Years Ended December 31,
		2008			2007
Net sales	$	8,155,820		$	–
Costs applicable to sales (exclusive of depreciation, depletion and
amortization shown separately below)		8,795,628			–
Operating expenses (includes stock based compensation of
$601,137 and $1,006,676, respectively)		3,701,083			6,135,527
Write–down of inventory to net realizable value		530,964			–
Depreciation, depletion and amortization		251,487			123,768
Loss from operations		(5,123,342	)		(6,259,295	)
Other income (expense):
Interest expense		(408,202	)		(577,171	)
Write-off of speculative mineral properties		(406,838	)		–
Legal settlement		–			3,617,166
Miscellaneous income		900,008			707,119
Total other income		84,968			3,747,114
Loss before income taxes		(5,038,374	)		(2,512,181	)
Provision for income taxes		–			–
Net loss	$	(5,038,374	)	$	(2,512,181	)
Net Loss Per Basic and Diluted Share of Common Stock:
Weighted Average Number of Common Shares Outstanding		67,824,759			36,172,142
Net loss per share of common stock	$	(0.07	)	$	(0.07	)

The accompanying notes are an integral part of these consolidated financial statements.

F-4

NORD RESOURCES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Accumulated

Common Stock

Additional

Other Com-

Total

Paid–in–

Special

Accumulated

prehensive

Stockholders’

Shares

Amount

Capital

Warrants

Deficit

Loss

Equity (Deficit)

Balance at January 1, 2007

34,018,043

$

340,181

$

85,563,087

$

–

$

(92,462,661

)

$

–

$

(6,559,393

)

Comprehensive loss:

Net loss

–

–

–

–

(2,512,181

)

–

(2,512,181

)

Cash flow hedge, net

–

–

–

–

–

(9,183,428

)

(9,183,428

)

Comprehensive loss

–

–

–

–

–

–

(11,695,609

)

Common stock issued for Coyote

Springs

33,332

333

36,332

–

–

–

36,665

Common stock issued to settle

outstanding claims

139,880

1,399

161,601

–

–

–

163,000

Exercise of warrants

931,589

9,315

433,804

–

–

–

443,119

Warrants issued in connection with

bridge loan

–

–

85,846

–

–

–

85,846

Issuance of stock options in

connection with special warrant

financing

–

–

513,436

–

–

–

513,436

Issuance of special warrants (net of

offering costs of $2,179,093)

–

–

–

20,820,932

–

–

20,820,932

Common stock issued for deferred

stock units

90,027

901

(901

)

–

–

–

–

Compensation expense from

issuance of stock options

–

–

801,076

–

–

–

801,076

Conversion of convertible notes,

related party

679,653

6,796

125,884

–

–

–

132,680

Conversion of special warrants

30,666,700

306,667

20,514,265

(20,820,932

)

–

–

–

Compensation from issuance of

deferred stock units

–

–

125,600

–

–

–

125,600

Common stock issued for services

100,000

1,000

79,000

–

–

–

80,000

Balance at December 31, 2007

66,659,224

666,592

108,439,030

–

(94,974,842

)

(9,183,428

)

4,947,352

Comprehensive income (loss):

Net loss

–

–

–

–

(5,038,374

)

–

(5,038,374

)

Unrealized mark to market

adjustment of cash flow hedges

–

–

–

–

–

27,900,446

27,900,446

Realized gain from cash flow

hedges

–

–

–

–

–

1,531,202

1,531,202

Ineffective portion of copper

hedges transferred to miscellaneous

income

–

–

–

–

–

(521,577

)

(521,577

)

Comprehensive income

–

–

–

–

–

–

23,871,697

Stock options issued for Coyote

Springs

–

–

51,040

–

–

–

51,040

Exercise of warrants

2,540,000

25,400

676,600

–

–

–

702,000

Common stock issued for deferred

stock units

44,411

444

(444

)

–

–

–

–

Compensation expense from

issuance of stock options

471,137

471,137

Modification of warrants

–

–

125,137

–

–

–

125,137

Exercise of stock options

250,000

2,500

47,500

–

–

–

50,000

Compensation from issuance of

deferred stock units

–

–

130,000

–

–

–

130,000

Balance at December 31, 2008

69,493,635

$

694,936

$

109,940,000

$

–

$

(100,013,216

)

$

19,726,643

$

30,348,363

The accompanying notes are an integral part of these consolidated financial statements.

F-5

NORD RESOURCES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

		2008			2007
Cash Flows From Operating Activities:
Net loss	$	(5,038,374	)	$	(2,512,181	)
Adjustments to reconcile net loss to net cash (used) by operating activities:
Depreciation, depletion and amortization		251,487			123,768
Accretion expense on reclamation costs		13,115			18,212
Amortization of debt issuance costs		239,772			180,652
Write–off of speculative mineral properties		406,838			–
Write–down of inventory to net realizable value		530,964			–
Accretion of discount on debt		–			85,846
Accretion of modification of warrants		125,137			–
Issuance of common stock and deferred stock units for services rendered		130,000			205,600
Issuance of stock options for services rendered		471,137			801,076
Gain on sale of cash flow hedges – ineffective portion		(521,577	)		–
Changes in assets and liabilities:
Accounts receivable		(176,481	)		(139,085	)
Inventories		(741,155	)		–
Prepaid expenses and other assets		(292,889	)		(37,069	)
Accounts payable		692,690			(503,405	)
Accrued expenses and other liabilities		(353,008	)		(1,925,424	)
Net Cash (Used) By Operating Activities		(4,262,344	)		(3,702,010	)
Cash Flows From Investing Activities:
(Increase) decrease in restricted cash and marketable securities		1,466,338			(3,686,476	)
Capital expenditures		(881,196	)		(748,706	)
Proceeds from the sale of cash flow hedges		1,531,202			–
Construction in progress		(17,473,989	)		(9,348,683	)
Net Cash (Used) By Investing Activities		(15,357,645	)		(13,783,865	)
Cash Flows From Financing Activities:
Debt issuance costs		–			(1,222,673	)
Principal payments on notes payable		–			(5,714,114	)
Proceeds from issuance of notes payable		20,000,000			5,025,000
Proceeds from issuance of special warrants		–			23,000,025
Offering costs paid in connection with special warrant financing		–			(1,665,657	)
Principal payments on capital lease		(35,676	)		(18,750	)
Proceeds from exercise of stock options		50,000			–
Proceeds from exercise of warrants		702,000			443,119
Net Cash Provided By Financing Activities		20,716,324			19,846,950
Net Increase in Cash and Cash Equivalents		1,096,335			2,361,075
Cash and Cash Equivalents at Beginning of Year		3,368,910			1,007,835
Cash and Cash Equivalents at End of Year	$	4,465,245		$	3,368,910
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest	$	43,293		$	396,514
Income taxes		–			–

The accompanying notes are an integral part of these consolidated financial statements.

F-6

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.          NATURE OF OPERATIONS

Nord Resources Corporation and Subsidiary (the “Company”) is a United States based corporation involved in all phases of the mining business including exploration, permitting, developing and operating mining projects. The Company’s primary asset is the Johnson Camp Copper Mine (“Johnson Camp Mine”) located in Arizona. In July 2007, the Company commenced the reactivation of the Johnson Camp Mine. The Company commenced copper cathode production from leaching existing old dumps in January 2008, commenced the mining of new ore in January 2009 and completed the first sale of copper produced from newly-mined ore in February 2009.

2.          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material. The Company’s continuation as a going concern is dependent upon its ability to meet its obligations under its Credit Agreement with Nedbank and to produce copper to sell at a level where the Company becomes profitable. The Company’s continued existence is dependent upon its ability to achieve its operating plan. If management cannot achieve its operating plan because of sales shortfalls, a reduction in copper prices, or other unfavorable events, the Company may find it necessary to dispose of assets, or undertake other actions as may be appropriate.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Cochise Aggregates and Materials, Inc. (“Cochise”). Cochise was set up to produce and market landscape rock products and aggregates derived from the Johnson Camp Mine overburden piles. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to mineral reserves of the Johnson Camp Mine that are the basis for future cash flow estimates; reclamation obligations; asset impairment (including long–lived assets and investments); valuation allowances for deferred tax assets; disclosures and reserves for contingencies and litigation; and the fair value and accounting treatment of financial instruments. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.

F-7

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.

Restricted Cash and Marketable Securities

As required by the Credit Agreement with Nedbank Limited (“Nedbank”) dated June 28, 2007 (the “Credit Agreement”), the Company is required to maintain a balance of the greater of (a) $3,000,000 or an amount equal to obligations scheduled to become due during the period of the next two consecutive fiscal quarters. During 2008, this requirement was clarified and the Company now believes that it is not required to maintain the Debt Service Reserve Balance until it is in the financial position to fund such an account. The balance at December 31, 2008, reflects proceeds received from the close–out of a portion of the Company’s hedge position. This amount was reclassified to unrestricted cash in the first quarter of 2009. The Company maintained balances of $1,533,662 and $3,000,000 at December 31, 2008 and 2007, respectively.

Marketable securities at December 31, 2008 and 2007, consist of certificates of deposit which are considered held-to-maturity securities and are stated at amortized cost of $686,476 on the consolidated balance sheet. The certificates of deposit have an original maturity of 14 months, expire in December 2009 and carry a stated interest rate of 3.05% per annum. All marketable securities are defined as held-to-maturity securities, trading securities, or available-for-sale securities under SFAS No. 115 “Accounting for Certain Investments in Debt and Equity Securities”. Management determines the appropriate classification of the Company’s investments in marketable debt and equity securities at the time of each purchase and re-evaluates such determination at each balance sheet date. Securities that are bought with the intent and ability to be held to maturity are classified as held-to-maturity securities. Held-to-maturity securities are carried at amortized cost on the consolidated balance sheet until sold. Securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and unrealized gains and losses are included in earnings. Debt securities, for which the Company does not have the intent or ability to hold to maturity, and equity securities are classified as available for sale. Available-for-sale securities are carried at fair value, with unrealized gains and losses, net of tax, reported as a separate component of stockholders’ equity. The cost of investments sold is determined on the specific identification or the first-in, first-out method.

Accounts Receivable

The Company grants credit to all qualified customers and generally requires no collateral. Accounts receivable are carried at cost less an allowance for losses, if an allowance is deemed necessary. The Company does not accrue finance or interest charges. On a periodic basis, the Company evaluates its accounts receivable and determines the requirement for an allowance for losses, based upon history of past write–offs, collections and current credit conditions. A receivable is written off when it is determined that all reasonable collection efforts have been exhausted and the potential for recovery is considered remote. Management determined that no allowance for losses was required as of December 31, 2008 and 2007.

Revenue Recognition

The Company recognizes revenue from the sale of products, and related costs of products sold, where persuasive evidence of an arrangement exists, delivery has occurred, the seller’s price is fixed or determinable and collectability is reasonably assured. This generally occurs when the customer receives the product or at the time title passes to the customer. Sales incentives and returns are estimated and

F-8

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

recognized at the date of shipment based upon historical activity and current agreements with customers. The Company evaluates these estimates on a regular basis and revises them as necessary.

Inventories

As described below, costs that are incurred in or benefit the productive process are accumulated as stockpiles, ore on leach pads and inventories and classified as “inventories” on the consolidated balance sheet. Inventories are carried at the lower of average cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on current and long–term metals prices, less the estimated costs to complete production and bring the product to sale. Write–downs of inventories, resulting from net realizable value impairments, are reported as a component of costs applicable to sales. The current portion of inventories is determined based on the expected amounts to be processed within the next 12 months. Inventories not expected to be processed within the next 12 months are classified as long–term. The major classifications of inventories are as follows:

Stockpiles

Stockpiles represent ore that has been mined and is available for further processing. Stockpiles are measured by estimating the number of tons added and removed from the stockpile, the number of contained pounds (based on assay data) and the estimated metallurgical recovery rates (based on the expected processing method). Stockpile ore tonnages are verified by periodic surveys. Costs are allocated to stockpiles based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the ore, including applicable overhead, depreciation, depletion and amortization relating to mining operations, and removed at each stockpile’s average cost per recoverable unit.

Ore on Leach Pads

The recovery of copper from certain copper oxide ores is achieved through the heap leaching process. Under this method, oxide ore is placed on leach pads where it is treated with a chemical solution, which dissolves the copper contained in the ore. The resulting “pregnant” solution is further processed in a plant where the copper is recovered. Costs are added to ore on leach pads based on current mining costs, including applicable depreciation, depletion and amortization relating to mining operations. Costs are removed from ore on leach pads as pounds are recovered based on the average cost per estimated recoverable pound of copper on the leach pad.

The estimates of recoverable copper on the leach pads are calculated from the quantities of ore placed on the leach pads (measured tons added to the leach pads), the grade of ore placed on the leach pads (based on assay data) and a recovery percentage (based on ore type). In general, leach pads recover approximately 70% of the recoverable pounds in the first year of leaching, declining each year thereafter until the leaching process is complete.

Although the quantities of recoverable copper placed on the leach pads are reconciled by comparing the grades of ore placed on pads to the quantities of copper actually recovered (metallurgical balancing), the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is constantly monitored and estimates are refined based on actual results over time. Historically, the Company’s operating results have not been materially impacted by variations between the estimated and actual recoverable quantities of copper on its leach pads. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write–downs to net realizable value are accounted for on a prospective basis.

F-9

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In–process Inventory

In–process inventories represent materials that are currently in the process of being converted to a saleable product. The Company utilizes a solvent extraction electrowinning process to extract the copper from the ore. In–process material is measured based on assays of the material fed into the process and the projected recoveries of the respective plants. In–process inventories are valued at the average cost of the material fed into the process attributable to the source material coming from the mines, stockpiles and/or leach pads plus the in–process conversion costs, including applicable depreciation relating to the process facilities incurred to that point in the process.

Finished Goods Inventory

Finished goods represent saleable copper cathodes. Finished goods are valued at the weighted average cost of source material or net realizable value.

Materials and Supplies

Materials and supplies are valued at the lower of average cost or net realizable value. Cost includes applicable taxes and freight.

Derivative Instruments and Hedging Activities

In connection with the Credit Agreement with Nedbank, the Company is required to maintain a hedging program with respect to a specified percentage of copper output from the Johnson Camp Mine. Under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, these contracts are carried on the consolidated balance sheet at their fair value. As these contracts have been designated as cash flow hedges, the changes to their fair value are currently reflected in accumulated other comprehensive income (loss) within the Statement of Equity. As of December 31, 2008, the carrying value of the derivative asset was $19,154,102, and the increase in fair value was recorded in accumulated other comprehensive income (loss) on the consolidated balance sheet. As of December 31, 2007, the carrying value of the derivative liability was $9,183,428, and the reduction in fair value was recorded in accumulated other comprehensive income (loss) on the consolidated balance sheet.

During 2008, the Company entered into contracts to hedge the interest rate risk exposure on its $25 million Nedbank Credit Facility expiring between 2009 and 2012. Under the interest rate swap contract terms, the Company receives the three month United States Dollar London Interbank Offered Rate (“LIBOR”) and pays a fixed rate of interest of 2.48% . The program requires no cash margins, collateral or other security from the Company. Under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, these contracts are carried on the consolidated balance sheet at their fair value. As these contracts were also designated as cash flow hedges, changes to the fair value of these contracts are reflected in accumulated other comprehensive income (loss). A reduction in fair value of the interest rate swap occurred during the year ended December 31, 2008 in the amount of $437,084 and was recorded as accumulated other comprehensive income (loss) in the consolidated balance sheet as of December 31, 2008.

Fair Value Accounting

In September 2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of SFAS 157 were adopted January 1, 2008. In February 2008, the FASB staff issued FSP No. 157-2 “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”). FSP FAS 157-2 delayed the

F-10

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The Company will adopt those provisions of SFAS 157 that relate to nonfinancial assets and liabilities on January 1, 2009 and is currently evaluating the impact of this statement on the Company’s consolidated financial statements and related disclosure.

In October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP 157-3”), which clarifies the application of SFAS 157 in an inactive market. The intent of this FSP is to provide guidance on how the fair value of a financial asset is to be determined when the market for that financial asset is inactive. FSP 157-3 states that determining fair value in an inactive market depends on the facts and circumstances, requires the use of significant judgment and in some cases, observable inputs may require significant adjustment based on unobservable data. Regardless of the valuation technique used, an entity must include appropriate risk adjustments that market participants would make for nonperformance and liquidity risks when determining fair value of an asset in an inactive market. FSP FAS 157-3 was effective upon issuance. The provisions of FSP 157-3 did not have a material impact on the Company.

SFAS 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under SFAS 157 are described below:

Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2	Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The following table sets forth the Company’s financial assets and liabilities within the consolidated balance sheet as of December 31, 2008 measured at fair value by level within the fair value hierarchy. As required by SFAS 157, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

		Total		Level 1		Level 2		Level 3
Assets:
Derivative contracts – copper cash flow hedges, net	$	19,154,102			$	19,154,102
Liabilities:
Derivative contract – interest rate swap contract	$	(437,084	)		$	(437,084	)

The Company’s derivative instruments, copper cash flow hedges and interest rate swap contracts are valued using pricing models and the Company generally uses similar models to value similar instruments. Where possible, the Company verifies the values produced by its pricing models to market prices. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility, and correlations of such inputs. The Company’s derivatives

F-11

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

generally trade in liquid markets, and as such, model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.

Shipping and Handling Costs

The Company includes shipping and handling costs related to the transport of finished goods in operating expenses.

Debt Issuance Costs

Debt issuance costs are amortized over the life of the related loan as interest expense. During 2007 and 2006, the Company incurred debt issuance costs of $1,297,673 and $161,065 respectively, related to the issuance of promissory notes, bridge loans and the project financing facility. During 2005, debt issuance costs of $100,000 were incurred in connection with an extension of a bridge loan with Nedbank in the total principal amount of $5,000,000. The bridge loan was repaid in 2007 and the associated debt issuance costs were fully amortized in 2007. The remaining debt issuance costs of $1,197,673, incurred in conjunction with the project financing facility, are being amortized over the term of the loans using the straight–line method, which approximates the effective interest method. Accumulated amortization of debt issuance costs was $1,659,369 and $1,419,597 at December 31, 2008 and 2007, respectively. Unamortized debt issuance costs were $877,249 at December 31, 2008.

Property and Equipment

Property and equipment are stated at cost. Mineral exploration costs are expensed as incurred. Equipment is depreciated using the straight–line method over the estimated useful lives of the assets which range from three to seven years. Mineral properties are amortized over the life of the mine using the units-of-production method. Buildings and mining equipment are depreciated over the shorter of their estimated useful lives, or over the life of the mine using the units of production method.

Long–Lived Assets

The Company reviews and evaluates its long–lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An impairment loss is measured as the amount by which the asset carrying value exceeds its fair value. Fair value is generally determined using valuation techniques such as estimated future cash flows. An impairment is considered to exist if total estimated future cash flows on an undiscounted basis are less than the carrying amount of the asset. An impairment loss is measured and recorded based on discounted estimated future cash flows. Future cash flows for the Johnson Camp Mine include estimates of recoverable pounds of copper, copper prices (considering current and historical prices, price trends and related factors), production rates and costs, capital and reclamation costs as appropriate, all based upon life–of–mine engineering plans and feasibility studies. Assumptions underlying future cash flow estimates are subject to risks and uncertainties. No impairment losses were recorded during the years ended December 31, 2008 and 2007.

Reclamation Costs

Reclamation costs are allocated to expense over the life of the related assets and are adjusted for changes resulting from the passage of time and revisions to either the timing or amount of the original present value estimate. The asset retirement obligation is based on when the spending for an existing environmental disturbance and activity to date will occur. The Company reviews its asset retirement obligation, on an annual basis, unless a triggering event occurs that requires a more frequent evaluation.

F-12

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The asset retirement obligation at the mine site is accounted for in accordance with SFAS No. 143, “Accounting for Asset Retirement Obligations.”

Stock Based Compensation

The Company accounts for its awards of stock based compensation under the fair value recognition provisions of SFAS No. 123(R), “Share–Based Payment,” using the modified prospective application method. The Company has granted incentive and non–qualified stock options to its employees and directors under the terms of its 2006 Stock Incentive Plan. The Company has also granted non–qualified, non–plan stock options, which have been authorized by the Company’s board of directors. Stock options are generally granted at an exercise price equal to or greater than the quoted market price on the date of grant.

Net Loss per Share of Common Stock

Basic earnings (loss) per common share are computed by dividing net loss by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share is calculated based on the weighted average number of common shares outstanding adjusted for the dilutive effect, if any, of stock options, warrants and other dilutive securities. Outstanding options, warrants and other dilutive securities to purchase 23,395,025 and 26,687,156 shares of common stock for the years ended December 31, 2008 and 2007, respectively, are not included in the computation of diluted loss per share as the effect of the assumed exercise of these options, warrants and other securities would be anti–dilutive.

Income Taxes

The Company uses the liability method to account for income taxes. Under the liability method, deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the financial statements. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense consists of the income tax payable or refundable for the current period and the change during the period in net deferred tax assets and liabilities.

Accumulated Other Comprehensive Income (Loss)

In addition to net income (loss), accumulated other comprehensive income (loss) includes all changes in equity during a period, including the effective portion of changes in fair value of derivative instruments that qualify as cash flow hedges and cumulative unrecognized changes in fair value of marketable securities classified as available-for-sale or other investments, except those resulting from investments by and distributions to owners.

Recently Issued Accounting Guidance

Fair Value Measurements. In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement does not require any new fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. However, in February 2008, FASB Staff Position (“FSP”) 157–2, “Effective Date of FASB Statement 157”, was issued. FSP 157–2 applies to nonfinancial assets and nonfinancial liabilities, and defers the effective date of SFAS No. 157 for nonfinancial assets and liabilities to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years

F-13

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

for items within the scope of the FSP. The Company adopted SFAS No. 157 as it relates to financial assets and liabilities beginning January 1, 2008. Accordingly, the adoption of this Statement did not have a material impact on the Company’s consolidated financial statements.

Fair Value Option for Financial Assets and Liabilities. In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Liabilities – Including an amendment of FASB No. 115,” which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The Company adopted SFAS No. 159 effective January 1, 2008. The Company did not elect to measure any additional financial instruments at fair value that are not required to be measured at fair value. Accordingly, the adoption of this Statement did not have a material impact on the Company’s consolidated financial statements.

Expected Term for “Plain Vanilla” Share Options. In December 2007, the SEC issued SAB 110 which was issued to express the understanding that the use of a “simplified” method, as discussed in SAB 107, in developing an estimate of the expected term of “plain vanilla” share options in accordance with FASB No. 123 would be acceptable beyond December 31, 2007. The Company adopted this standard beginning January 2008. The adoption of SAB 110 did not have a material impact on the Company’s consolidated financial statements.

Noncontrolling Interests in Consolidated Financial Statements. In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51.” SFAS No. 160 requires that ownership interests in subsidiaries held by parties other than the parent be clearly identified, labeled and presented in the consolidated statement of financial position within equity, but separate from the parent equity. It also requires that the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income. This statement also establishes a single method of accounting for changes in a parent’s ownership position interest in a subsidiary that do not result in deconsolidation. The statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated and that disclosures be expanded in the consolidated financial statements that clearly identify and distinguish between the interests of the parent’s owners and the interests of the noncontrolling owners of a subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company plans to adopt this standard beginning January 2009 and does not anticipate it will have a material impact on its consolidated financial statements.

Business Combinations. In December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations.” SFAS 141 (Revised 2007) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141 (Revised) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company expects SFAS 141 (Revised 2007) will have an impact on the Company’s consolidated financial statements when effective, but the nature and magnitude of the specific effects will depend upon the nature, terms and size of the acquisitions the Company consummates, if any, after the effective date.

Disclosures About Derivative Instruments and Hedging Activities. In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities.” SFAS No. 161 establishes, among other things, the disclosure requirements for derivative instruments and for hedging activities. The objective of this statement is to enhance the understanding of: (1) how and why an entity

F-14

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

uses derivative instruments; (2) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations; and (3) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit–risk–related contingent features in derivative agreements. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company plans to adopt this standard beginning January 2009 and is currently evaluating the potential impact of adopting this statement on the Company’s derivative instrument disclosures.

The Hierarchy of Generally Accepted Accounting Principles. In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements for nongovernmental entities that are present in conformity with generally accepted accounting principles (GAAP) in the United States. SFAS No. 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company plans to adopt this standard in January 2009 and does not believe it will have a material impact on the Company’s consolidated financial statements.

Determining the Fair Value of a Financial Asset when the Market for That Asset is Not Active. In October 2008, FSP 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active”, was issued. FSP 157-3 clarifies the application of SFAS No. 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. This FSP applies to financial assets within the scope of accounting pronouncements that require or permit fair value measurements in accordance with SFAS No. 157. Accordingly, the Company adopted this standard beginning January 2008, and it did not have a material impact on its consolidated financial statements.

3.          INVENTORY

Inventory is as follows:

		At December 31
		2008		2007
Copper in process	$	79,217	$	–
Finished goods		62,490		–
Material and supplies		79,564		–
Total	$	221,271	$	–

The Company’s inventories are carried at the lower of cost or net realizable value. Cost for the product inventory is valued using the weighted average cost of production and includes all costs of purchase, costs of conversion (direct costs and an allocation of fixed and variable production overheads) and other costs incurred in bringing the inventories to their present location and condition. During 2008, the Company recorded write–downs of $530,694 in cost applicable to sales to reduce the carrying value of inventories to net realizable value.

F-15

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.          ACCRETION OF WARRANT MODIFICATION

On May 8, 2008, the Company extended the exercise period on 743,590 and 75,000 common stock purchase warrants held by Nedbank Limited by six months, to November 8, 2008 and November 15, 2008, respectively. The other terms and conditions of the warrants, including their respective exercise prices, remain unchanged. The change in fair value, which was a non-cash charge to interest expense during 2008, resulting from this modification in the warrant expiry date was $125,137 and was calculated using the Black–Scholes option pricing model with the following assumptions:

Risk–free interest rate	1.7%
Expected life	.5 years
Expected volatility	74% to 75%
Expected dividend yield	0%

5.          PRE COMMERCIAL PRODUCTION COSTS

The Company commenced copper cathode production from leaching existing old dumps in January 2008 and completed the first copper cathode sale from these operations in February 2008. Commercial production from existing heaps is defined by the Company as either operating at a minimum of 75% of designed capacity or generating positive cash flows from operations for a period of seven days. Commercial production from residual leaching operations was achieved effective February 1, 2008. Operating costs incurred prior to achieving commercial production, net of the realized value of copper produced during the period, are capitalized as mine development. These costs of $572,765 are being amortized on a straight–line basis over the expected life of production of existing ore heaps which is estimated to be 5 years. Pre commercial production costs in the amount of $104,731 were charged to operations during 2008.

6.          PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

		At December 31,
		2008		2007
Land	$	98,094	$	383,891
Buildings		1,223,691		947,923
Mining and other equipment		3,336,144		2,830,179
Construction in Progress		36,944,454		10,795,491
Total	$	41,602,383	$	14,957,484

Depreciation and amortization of property and equipment charged to operations was $146,756 and $123,768 for the years ended December 31, 2008 and 2007, respectively.

7.          ACCRUED EXPENSES

Accrued expenses consist of the following:

F-16

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		At December 31,
		2008		2007
Accrued payroll expense	$	827,664	$	534,227
Other accrued liabilities		59,774		678,208
Total	$	887,438	$	1,212,435

8.          LONG–TERM DEBT

Long–term debt consists of the following:

		At December 31,
		2008			2007
Project Financing Facility	$	25,000,000		$	5,000,000
Less current maturities		(6,666,667	)		(312,500	)
Total	$	18,333,333		$	4,687,500

Project Financing Facility

The Company entered into a Credit Agreement dated June 28, 2007 (amended as of June 30, 2008), with Nedbank as administrative agent and lead arranger. The Credit Agreement provided for a $25 million secured term loan credit facility that was used by the Company to assist in financing the construction, start–up and operation of the Johnson Camp Mine. The Credit Agreement contemplated a series of term loans that were funded by a syndicate of lenders in response to draw-down requests by the Company, with the aggregate amount of all term loans being $25 million. The term loans were available until the earlier of: (i) the date of termination of the lender commitments; (ii) the first principal repayment date; and (iii) December 31, 2008. The loans bear interest, payable in arrears, at an annual rate equal to the London Interbank Offered Rate for the interest period in effect plus a margin of between 3.00% and 4.75% (3.5% to 5.25% during the initial reactivation period). The annual interest rate on these loans at December 31, 2008 was approximately 7.5% . In the event that the Company defaults under the Credit Agreement, an additional 3.0% interest will be payable in addition to such annual rate and all interest will be payable on demand. The Company paid a $500,000 loan fee on the lenders $25 million term loan commitment, of which $50,000 was credited from a previously expired commitment and an additional $500,000 to Auramet Trading, LLC for their assistance in obtaining the Credit Agreement. The Credit Agreement is collateralized by substantially all of the Company’s assets, restricts the Company from incurring certain additional debt, limits the Company’s ability to pay dividends and make certain restrictive payments and will be repaid beginning one year after the first draw down and ending four years after the date of the first draw down, subject to certain prepayment obligations set forth in the Credit Agreement. The Credit Agreement requires the Company to maintain certain financial covenants and pay a commitment fee of 0.25% on the unused term loan commitments of up to $25 million during the availability period.

Additionally, pursuant to the Credit Agreement, the Company was required to put in place a copper price protection program for a portion of the copper produced from the Johnson Camp Mine.

Transaction costs of $1,197,673 have been included in debt issuance costs and are being amortized on a straight–line basis over the term of the facility. During 2008 and 2007, $239,772 and $80,652 of amortization expense, respectively, which is included in interest expense, was recognized. As of December 31, 2008, $25,000,000 had been drawn down on the loan. Proceeds from the loan have been used for the reactivation of the Johnson Camp Mine.

F-17

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2008, the maturities on the project financing facility were as follows:

2009	$	6,666,667
2010		6,666,667
2011		6,666,666
2012		5,000,000
Total	$	25,000,000

Equipment Loan

In October 2002, the Company signed a promissory note in the amount of $95,000 related to its purchase of equipment. The note bears interest at an annual rate of 12% with monthly payments of $4,472 and is collateralized by the equipment. This note was originally scheduled to mature in November 2004. In August 2005, the holder of the Company’s equipment note sold the loan to an unrelated party. Subsequent to this sale, the terms of the original promissory note were amended to allow for deferment of all past due payments along with any scheduled payments until December 2007. During December 2007, the Company paid $60,362, including accrued interest of $14,561, to satisfy the note.

Bridge Loan Facilities

In October 2005, the Company obtained a loan in the amount of $2,850,000 from Auramet Trading, LLC, of which $1,850,000 was funded by Ronald Hirsch, Chairman of the Board of Directors, pursuant to an Agreement for Credit Risk Participation dated October 2005, between Auramet Trading, LLC and Ronald Hirsch. The agreement gave Mr. Hirsch the right to own a 65% interest in the loan and in all documents, instruments and collateral issued by Auramet Trading, LLC, as well as all payments, recoveries or distributions in connection with the loan. A secured promissory note was issued to Auramet Trading, LLC that provided for interest only payments at a rate of 9% per annum payable monthly and the note was to mature on the earlier of April 2006 or the closing of an equity offering in which the Company raised not less than $25,000,000.

As the arranger of the bridge financing, Auramet Trading, LLC received from the Company a fee of $15,000 and 250,000 warrants for the purchase of an equal number of shares of the Company’s common stock. The warrants were to be exercisable on or before October 17, 2007 at an exercise price equal to the final price at which the Company’s stock was sold in a public offering, provided that if the Company did not complete such an offering on or before April 17, 2006, then the exercise price would be the average closing price of the Company’s common stock for the 20 trading days prior to April 17, 2006. Since the Company did not complete a public offering by April 17, 2006, it issued to Auramet Trading, LLC an amended and restated warrant certificate to fix the exercise price at $.56 per share. Auramet Trading, LLC exercised the 250,000 warrants in 2007.

In addition, Auramet Trading, LLC was entitled to receive such number of common stock warrants as was to be calculated by dividing the Canadian dollar equivalent of $1,000,000 (on October 17, 2005) by the final price at which a share of the Company’s common stock was sold in a public offering and multiplying the result by 0.15. The warrants were exercisable on or before October 17, 2007, provided that the Company completed a public offering on or before April 17, 2006. In the event that the Company did not complete such an offering by April 17, 2006, the warrants were to expire on April 17, 2006, and the Company was required to issue new warrants to Auramet Trading, LLC for the purchase of 256,410 shares of common stock at an exercise price equal to the average closing price of the Company’s common stock for the 20 trading days prior to April 17, 2006. Since the Company did not complete a public offering by April 17, 2006, it issued the 256,410 replacement warrants to Auramet Trading, LLC. The

F-18

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

replacement warrants were exercisable at a price of $.56 per share and were set to expire on April 17, 2008. Auramet Trading, LLC exercised the 256,410 warrants in 2007.

In connection with a $3,900,000 loan with Nedbank, the Company issued to Nedbank warrants to purchase that number of shares of common stock as was to be calculated by dividing the Canadian dollar equivalent of $2,900,000 (on November 8, 2005) by the final price at which a share of the Company’s common stock was sold in a public offering and multiplying the result by 0.15. The warrants were exercisable on or before November 8, 2007, provided that the Company completed a public offering on or before May 8, 2006. Since the Company did not complete such an offering by May 8, 2006, the warrants expired in accordance with their terms on May 8, 2006, and the Company issued new warrants to Nedbank for the purchase of 743,590 shares of common stock at an exercise price of $.88 per share, being the amount equal to the average closing price of the Company’s common stock as quoted on the Pink Sheets LLC for the 20 trading days prior to May 8, 2006. The replacement warrants were scheduled to expire on May 8, 2008. On May 8, 2008, the Company extended the exercise period from May 8, 2008 to November 8, 2008. On November 8, 2008, the warrants expired unexercised.

During 2006, the Company negotiated an extension of the maturity on the $3,900,000 bridge loan from Nedbank. In connection with this extension, the Company agreed to increase the interest rate on the loan from 9% to 10% per annum, pay the lender a closing fee of $39,000, and issue 75,000 common stock purchase warrants to Nedbank and 25,000 common stock purchase warrants to Auramet Trading, LLC. The warrants were exercisable on or before May 15, 2008 at an exercise price of $1.00. At the same time, Auramet Trading, LLC, acting through Nedbank, advanced an additional $1,000,000 loan to the Company which was added to the outstanding principal under the secured bridge loan from Nedbank. In consideration of the additional loan advance, the Company paid to Auramet Trading, LLC $40,000 and issued to Auramet Trading, LLC warrants for the purchase of 250,000 shares of the Company’s common stock, exercisable for a period of two years at an exercise price $1.15 per share. On May 8, 2008, the Company extended the exercise period from May 15, 2008 to November 15, 2008. On November 15, 2008, the warrants expired unexercised.

During 2006, the Company negotiated an extension of the maturity date on the $4,900,000 secured bridge loan from Nedbank. In connection with this extension, the Company agreed to an increase in the interest rate on the loan from 10% to 11% per annum. In consideration for this extension, the Company paid Nedbank a fee of $49,000 and issued 88,770 common stock purchase warrants to Nedbank and 61,230 common stock purchase warrants to Auramet Trading, LLC. Each warrant entitled the holder to purchase one share of the Company’s common stock on or before September 30, 2008, at an exercise price of $.83 per share. On September 30, 2008, the warrants expired unexercised.

During 2007, the Company negotiated further extensions of the maturity date on the $4,900,000 secured bridge loan from Nedbank.. In connection with the extension, the Company received an additional $100,000, thereby increasing the outstanding principal amount of the bridge loan facility to $5,000,000. In consideration for the extension and increased loan amount, the Company paid Nedbank a fee of $75,000 and issued 174,000 common stock purchase warrants to Nedbank and 126,000 common stock purchase warrants to Auramet Trading, LLC. Each warrant entitled the holder to purchase one share of the Company’s common stock on or before September 30, 2008, at an exercise price of $.66 per share. On September 30, 2008, the warrants expired unexercised.

In addition during 2007, the Company negotiated a further extension of the maturity date on the $5,000,000 bridge loan. In consideration of this extension, the Company paid Nedbank a fee of $25,000.

The Company used the Black–Scholes option pricing model to estimate the fair market value of warrants issued in connection with the bridge loan facility. The value of the warrants was recorded as a reduction

F-19

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of debt and increase in additional paid–in–capital. The debt discount was amortized to interest expense over the life of the loan. The risk–free interest rate was based upon the U.S. Treasury yield curve in effect at the date of issuance. The expected volatility was based on the weighted historical volatility of the Company’s common stock and that of its peer group.

The following assumptions were used to estimate the fair value of warrants issued in connection with the bridge loan facility during 2007 and 2006:

	2007	2006
Risk–free interest rate	4.9%	4.7% to 5.0%
Expected term in years	1.6 years	2 years
Expected volatility	70%	66%
Expected dividend yield	0%	0%

The fair value of warrants issued in connection with the bridge loan facility was $85,846 and $260,729 for the years ended December 31, 2007 and 2006, respectively. The Company recognized $85,846 and $374,862 of interest expense associated with the accretion of the debt discount on the bridge loan facility in 2007 and 2006, respectively. In addition, in connection with the modification of the maturity date of the 743,590 and 75,000 warrants held by Nedbank, the Company recognized $125,137 of interest expense during the year ended December 31, 2008.

On June 6, 2007, the bridge loan facility was repaid from proceeds from the special warrant financing.

Revolving Line of Credit – Related Parties

In June 2005, the Company entered into a $600,000 revolving line of credit agreement with Ronald Hirsch and Stephen Seymour, a member of the Board of Directors. The line of credit bore interest at 6.0% per annum, was to have matured on December 31, 2005, and was collateralized by accounts receivable, inventory, property and equipment, and other assets. This loan was subordinated to the Bridge Loan with Nedbank described above.

In consideration for the issuance of the line of credit, the Company agreed to issue to the lenders four shares of common stock and four warrants for every $1 loaned to the Company. Each warrant entitles the lender to purchase one share of common stock at an exercise price of $.25 for a period of three years. Pursuant to this agreement during 2005, the Company issued 2,260,000 shares of common stock valued at $637,000, of which $238,717 was recognized as interest expense in 2006, and 2,260,000 warrants to purchase one share of common stock valued at $562,478.

The Company used the Black–Scholes option pricing model to estimate the fair market value of the warrants granted in connection with the revolving line of credit. The value of the warrants was recorded as a discount to debt and amortized to interest expense over the life of the loan. The Company recognized $170,909 of interest expense in 2006 associated with the accretion of debt discount.

Commencing May 1, 2006, the interest rate was changed from 6.0% per annum to M&T Bank’s prime rate. The Company negotiated extensions to the maturity date which was extended to the earlier of: (a) July 12, 2007; or (b) the closing of (i) a registered equity offering and/or a debt project financing in which the Company raises not less than $20,000,000, or (ii) a significant corporate transaction which results in a change of control of the Company, or which involves a sale, lease, exchange or other transfer of all or substantially all of the Company’s assets or assets valued at $12,000,000 or greater.

On June 6, 2007, the revolving line of credit was repaid from proceeds from the special warrant financing.

F-20

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Convertible Notes – Related Parties

During 2004, the Company entered into promissory notes for $66,000 and $106,000 from Stephen Seymour and Ronald Hirsch, respectively. The loans accrued interest at 10% per annum, were unsecured and had been extended to mature on the earlier of: (a) July 12, 2007; or (b) the closing of (i) a registered equity offering and/or a debt project financing in which the Company raises not less than $25,000,000, or (ii) a significant corporate transaction which results in a change of control of the Company, or which involves a sale, lease, exchange or other transfer of all or substantially all of the Company’s assets or assets valued at $12,000,000 or greater. These loans were repayable upon maturity: (a) in the case of an equity offering or a debt financing, as to 50% in cash and as to the balance in fully paid shares of common stock at a deemed price of $.20 per share; (b) in the case of a significant corporate transaction or a sale, lease or transfer of assets, solely in fully paid shares of common stock at a deemed price of $.20 per share; and (c) in any other case, in such mix of cash and/or fully paid shares of common stock at a deemed price of $.20 per share as the holder may determine. These loans were subordinated to the Bridge Loan with Nedbank.

The loans contained a beneficial conversion feature in the amount of $123,000 due to the value of the Company’s common stock exceeding the debt conversion price on the date of the loans. The beneficial conversion feature was amortized to interest expense over the period during which the notes were convertible into common stock. The Company recognized $1,722 of interest expense associated with the amortization of its beneficial conversion feature in 2006.

During 2007 and 2006, the Company accrued interest on the convertible promissory notes of $8,529 and $17,200, respectively. During 2007, the Company paid 50% of the accrued interest and principal in cash of $110,246 and issued 549,653 shares of common stock valued at $109,930 in exchange for the notes.

During June 2004, Ronald Hirsch exercised 1,750,000 stock options at an exercise price of $35,000. Subsequently, during June 2005, Mr. Hirsch and the Company agreed to rescind this stock option exercise. In exchange for the $35,000 that was paid to exercise the stock options, the Company issued Mr. Hirsch an unsecured convertible promissory note for $35,000 and cancelled the related 1,750,000 shares of common stock. The promissory note bore interest at 10.0% per annum, was unsecured and had been extended to mature on the earlier of: (a) April 30, 2007; or (b) the closing of (i) a registered equity offering and/or a debt project financing in which the Company raises not less than $25,000,000, or (ii) a significant corporate transaction which results in a change of control of the Company, or which involves a sale, lease, exchange or other transfer of all or substantially all of the Company’s assets or assets valued at $12,000,000 or greater. This loan was repayable upon maturity: (a) in the case of an equity offering or a debt financing, as to 50% in cash and as to the balance in fully paid shares of common stock at a deemed price of $.175 per share; (b) in the case of a significant corporate transaction or a sale, lease or transfer of assets, solely in fully paid shares of common stock at a deemed price of $.175 per share; and (c) in any other case, in such mix of cash and/or fully paid shares of common stock at a deemed price of $.175 per share as the holder may determine. The loan was subordinated to the Bridge Loan with Nedbank.

During 2007 and 2006, the Company accrued interest on the convertible promissory note of $1,736 and $3,500, respectively. During 2007, the Company paid 50% of the accrued interest and principal in cash of $22,389 and issued 130,000 shares of common stock valued at $22,750 in exchange for the note.

9.          RECLAMATION COSTS

The Company estimates its asset retirement obligations using an expected cash flow approach, in which multiple cash flow scenarios were used to reflect a range of possible outcomes. The Company estimates the aggregate undiscounted obligation to be approximately $400,000 for the Johnson Camp Mine. To calculate the fair value of this obligation, the projected cash flows are discounted at the Company’s

F-21

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

estimated credit–adjusted, risk free interest rate of 10%. In October 2007, based on an amended feasibility study, the mine life was extended from nine years to sixteen years. Consequently, the Company reduced the retirement cost of the asset and the related liability by $69,193. The majority of cash expenditures for reclamation and closure activities are expected to occur at the conclusion of production, currently anticipated to be in 2023 – 2024. The Company will recognize an increase to the asset retirement obligation concurrent with the impact from mining activity when it resumes in 2009.

A reconciliation of the beginning and ending carrying amounts of the Company’s retirement obligation as of December 31, 2008 and 2007 is as follows:

		2008		2007
Liability, beginning of year	$	131,141	$	182,122
Accretion expense		13,115		18,212
Reduction in asset retirement cost		–		(69,193	)
Liability, end of year	$	144,256	$	131,141

10.        PLATINUM DIVERSIFIFED SETTLEMENT

On September 24, 2007, the Company received the final payment of approximately $2.2 million pursuant to its Settlement Agreement dated March 7, 2007, with Platinum Diversified Mining, Inc. (“PDM”) and PDM’s direct and indirect subsidiaries, Platinum Diversified Mining USA, Inc. (“PDM USA”) and PDM Merger Corp. (together with PDM and PDM USA, the “PDM Parties”). The Settlement Agreement provided for the settlement of the dispute and disagreements between the Company and the PDM Parties arising in connection with the agreement and plan of merger dated October 23, 2006 which had contemplated the acquisition of the Company by PDM in an all–cash merger transaction.

The Company received a total of $3,617,166 from the PDM Parties in full and final settlement of all claims and disputes between the parties.

11.        OTHER INCOME (EXPENSE)

Write-off of speculative mineral properties as of December 31, 2008 is comprised of the $400,836 and the $6,002 expenses to write–off the carrying amounts of the Coyote Springs and Mimbres speculative mineral property projects that were abandoned during the year ended December 31, 2008.

Other income as of December 31, 2008 and 2007 is comprised of the following:

		2008		2007
Royalty income	$	237,043	$	402,624
Interest income		126,017		276,643
Realized gain on ineffective copper hedges		521,577		–
Other		15,371		27,852
Total other income	$	900,008	$	707,119

12.        COPPER PRICE PROTECTION PROGRAM

In connection with the Credit Agreement dated June 28, 2007 with Nedbank, the Company agreed to implement a price protection program with respect to a specified percentage of copper output from the

F-22

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Johnson Camp Mine. The price protection program consists of a synthetic put structure whereby the Company entered into a combination of forward sale and call option contracts for copper quantities, based on a portion of the estimated production from the Johnson Camp Mine during the term of the loan. As of December 31, 2008, the program covers approximately 26% of the estimated copper production from the Johnson Camp Mine during the term of the loan. The Company implemented the price protection program by entering into forward sales contracts for 4,560, 3,600, and 2,400 metric tons of London Metal Exchange cash settlement copper for 2009, 2010, and 2011, respectively, at a net forward price of $5,538, $4,841 and $4,413 per metric ton for the same periods. As of December 31, 2008, the Company has in place forward contracts of 3,820, 3,600 and 2,400 metric tons for 2009, 2010 and 2011, respectively, at a net forward price of $5,490, $4,841 and $4,413 per metric ton for the same periods. The program also included the purchase of long call options for the same quantities with average strike prices of $8,781, $8,523, and $8,723 per metric ton for the same periods, respectively, thereby permitting the Company to participate in price increases in the event that copper prices exceed the strike price of the long call options. As of December 31, 2008, the average strike prices of the long call options were $8,871, $8,523 and $8,723 per metric ton for the periods ending 2009, 2010 and 2011, respectively. The program requires no cash margins, collateral or other security from the Company.

Under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, these contracts are carried on the consolidated balance sheet at their fair value. As these contracts were designated as cash flow hedges, changes to the fair value of these contracts are reflected in accumulated other comprehensive income (loss). During 2008 and 2007, respectively, an increase in fair value in the amount of $29,868,732 and a decrease in the amount of ($9,183,428) was recorded as other comprehensive income (loss) in the consolidated balance sheets. During 2008, contracts representing approximately 242 metric tons of copper originally designated as cash flow hedges were reclassified to trading securities because the Company’s forecasted production of copper during the first quarter of 2009 no longer matched its hedged position, and, as such, the underlying derivative contracts were deemed to be ineffective. Accordingly, the proceeds from the sale of these contracts in the amount of $521,577 have been reclassified from accumulated other comprehensive income and reported within the consolidated statement of operation as miscellaneous income. In addition, during 2008, the Company sold effective hedges in the amount of $1,009,625. The value of this sale continues to be reflected in accumulated other comprehensive income (loss). As of December 31, 2008 and 2007, the fair value of the derivative was approximately $19,154,102 and ($9,183,428), respectively. The amounts in accumulated other comprehensive income (loss) will be reclassified to the statement of operations upon the ultimate sale of the underlying hedged copper cathode or at the determination that the hedge is ineffective. Although this estimate is subject to changes in the forward price curve for copper, as of December 31, 2008, approximately $9,604,405 of the amount deferred in accumulated other comprehensive income (loss) is expected to be reclassified to earnings with the next 12 months.

13.        INTEREST RATE SWAP CONTRACTS

In November 2008, the Company entered into an interest rate swap agreement to hedge the interest rate risk exposure on its $25 million Nedbank Credit Facility expiring between 2009 and 2012. Under the interest rate swap contract terms, the Company receives LIBOR and pays a fixed rate of interest of 2.48% . The program requires no cash margins, collateral or other security from the Company. Under the terms of the interest rate swap, settlement begins on March 31, 2009 and occurs every three months thereafter until the contract expires on September 28, 2012.

Under SFAS No. 133, this interest rate swap agreement is carried on the consolidated balance sheet at their fair value. As these contracts were designated as cash flow hedges, changes to the fair value of this agreement is reflected in accumulated other comprehensive income (loss). A reduction in fair value in the amount of $437,084 was recorded as other comprehensive loss and as a liability in the consolidated balance sheet as of December 31, 2008. The amount deferred will be reclassified to the statement of

F-23

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

operations upon the ultimate payment of the interest expense on the Company’s credit agreement with Nedbank or by declaration that the interest rate swap is ineffective. Although this estimate is subject to changes in the forward interest rate curve for LIBOR, as of December 31, 2008, approximately $299,717 of the deferral in accumulated other comprehensive income (loss) is expected to be reclassified to earnings with the next 12 months.

14.        SALES AGREEMENT

The Company has entered into a long term cathode sales agreement effective February 1, 2008, with Red Kite Master Fund Limited ("Red Kite") for 100% of the copper cathode production from the Johnson Camp Mine. The agreement runs through December 31, 2012 with renewable extensions by mutual agreement of both parties. Pursuant to the agreement, Red Kite will accept delivery of the cathodes at the Johnson Camp Mine, and pricing will be based on the average monthly COMEX price for high–grade copper. Accordingly, during the year ended December 31, 2008, the Company sold approximately 2,901,613 pounds (1,316 metric tons) of copper cathode to Red Kite under the terms of the agreement. This amount represented 100% of the Company’s copper sales.

15.        INCOME TAXES

The components of the provision for income taxes as of December 31, 2008 and 2007 are as follows:

		2008		2007
Current:
Federal	$	–	$	–
State		–		–
Total current income tax expense		–		–
Deferred:
Federal		–		–
State		–		–
Total deferred income tax expense		–		–
Total	$	–	$	–

The provision for income taxes reconciles to the amount computed by applying the federal statutory rate to income before the provision for income taxes as follows:

	2008	2007
Federal statutory rate	35%	35%
State income taxes, net of federal benefits	5%	4%
Valuation allowance	(40)%	(39)%
Total	–%	–%

F-24

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Significant components of deferred income taxes as of December 31, 2008 and 2007 are as follows:

		2008			2007
Net operating loss carry forwards	$	33,248,000		$	32,270,000
Capital loss carry forward		3,618,000			3,476,000
Other tax credits		1,540,000			–
Stock based compensation		584,000			369,000
Deferred gain on cash flow hedges		405,000			–
Accrued payroll expense		273,000			–
Unrealized loss on cash flow hedges		175,000			–
Inventory		121,000			–
Accrued reclamation expense		58,000			52,000
Other		25,000			30,000
Valuation allowance		(31,791,000	)		(35,717,000	)
Total deferred tax asset		8,256,000			480,000
Unrealized gain on cash flow hedges		(7,690,000	)		–
Depreciation and amortization		(566,000	)		(480,000	)
Total deferred tax liability		(8,256,000	)		(480,000	)
Net deferred tax asset	$	–		$	–

The Company records a valuation allowance for certain temporary differences for which it is more likely than not that it will not receive future tax benefits. The Company assesses its past earnings history and trends, sales backlog and projections of future net income. The Company recorded a valuation allowance for the entire amount of the net deferred tax asset in 2008 and 2007 as the Company considered it to be unlikely to recognize sufficient operating income to realize the benefit of these assets over time until the Company has had a reasonable history of net income. Accordingly, the Company recorded a deferred tax valuation allowance in 2008 and prior years to offset the entire deferred tax asset arising from the tax loss carry forward and other temporary differences. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized, based upon criteria that include a recent history of demonstrated profits. The net change in the valuation allowance was a decrease of $3,926,000 and $2,928,000 in 2008 and 2007, respectively. The Company will continue to review this valuation allowance and make adjustments as appropriate.

The tax benefits associated with employee exercises of non–qualified stock options and disqualifying dispositions of stock acquired with incentive stock options reduce income taxes currently payable. However, no benefits were recorded to additional paid–in–capital in 2008 or 2007 because their realization was not more likely than not to occur and consequently, a valuation allowance was recorded against the entire benefit.

At December 31, 2008, the Company had federal and state net operating loss (“NOL”) carry forwards of approximately $92,700,000 and $17,400,000, respectively. The Company also had a capital loss carry forward of approximately $9,000,000 which can be utilized to offset capital gains and expires in 2011. The NOL carry forwards expire in the years 2008 through 2028, and 2009 through 2013, for federal and state purposes, respectively. If a change of control in accordance with section 382 of the Internal Revenue Code occurs in the future, the Company’s ability to fully utilize its net operating loss carry forward in computing its taxable income will be limited to an annual maximum of the value of the Company just prior to the change in control multiplied by the long term tax exempt rate.

F-25

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2008 and 2007, the Company made no provisions for interest or penalties related to uncertain tax positions. The tax years 2005 – 2008 remain open to examination by the Internal Revenue Service of the United States.

16.        ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The Company has adopted SFAS No. 130, “Reporting Comprehensive Income.” This statement requires that all components of comprehensive income be reported in the financial statements in the period in which they are recognized. The components of accumulated other comprehensive income (loss) for the Company include net gain (loss) and mark–to–market adjustments on cash flow hedges.

The activity in accumulated other comprehensive income (loss) for the years ended December 31, 2008 and 2007 consists of the following:

		2008			2007
Balance, beginning of year	$	(9,183,428	)	$	–
Unrealized losses on cash flow hedges		(437,084	)		(9,183,428	)
Unrealized gains on cash flow hedges		28,337,530			–
Realized gains on cash flow hedges		1,531,202			–
Transfer of realized gains on ineffective cash flow hedges		(521,577	)		–
Balance, end of year	$	19,726,643		$	(9,183,428	)

17.        STOCKHOLDERS’ EQUITY

Authorized Shares

On May 8, 2007, the Company amended its Certificate of Incorporation to increase its authorized capital from 50,000,000 to 100,000,000 shares of common stock with a par value of $0.01 per share. In October 2007, the stockholders adopted a resolution approving an amendment to the Company’s Amended Certificate of Incorporation to increase the number of authorized shares of common stock from 100,000,000 to 200,000,000. The Company has not yet taken any steps to give effect to such increase in the number of authorized shares of common stock. The Company’s Board of Directors has discretion to elect not to proceed with this change.

Common Stock

In June 2007, the Company completed an unregistered private placement offering of 30,666,700 special warrants. The special warrants were offered and sold at a price of $.75 per special warrant, for aggregate gross proceeds of $23,000,025. In connection with this offering, the Company paid the agents of the offering a commission equal to $1,380,002, or 6% of the gross proceeds of the offering, and 1,840,002 stock options, each exercisable at $.75 per common share for a period of two years from the date of issuance. For financial reporting purposes, the stock options have been valued at $513,436. After deducting additional offering expenses of approximately $285,655, the Company received net proceeds of $21,334,368, which has been offset by the fair market value of the stock options granted to the agents for financial reporting purposes; for a net total of $20,820,932. Each special warrant was convertible into one fully–paid and non–assessable share of common stock and one–half of one common share purchase warrant for no additional consideration. The special warrants were governed by the terms of a special warrant indenture (the “indenture”) dated June 5, 2007 among the Company, Computershare Trust Company of Canada, as the special warrant trustee, and Blackmont Capital, Inc. Pursuant to the terms of

F-26

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the indenture, the holder of the special warrant was not deemed a holder of the underlying common stock or warrants until the special warrant were converted.

In connection with the terms of the indenture, the Company entered into a registration rights agreement whereby it was required to (a) file and obtain receipt for a Canadian non–offering prospectus to qualify the issuance in Canada of (i) the shares of common stock and the warrants issuable upon conversion of the special warrants and (ii ) the shares of common stock issuable upon exercise of the warrants and (b) file a registration statement under the Securities Act of 1933, as amended, in order to register the resale of (i) the shares issuable upon conversion of the special warrants, and (ii) the shares issuable upon exercise of the warrants. Accordingly, pursuant to the registration rights agreement, if the Company failed to obtain a receipt for a final Canadian Prospectus and effectiveness of the U.S. registration statement by December 3, 2007, representing 180 days following the closing of the special warrant offering, it would be liable for a liquidity incentive payment to the investors equal to 1% per month (pro–rated), subject to a maximum liquidity incentive payment equal to 12% of the gross proceeds of the offering.

As of December 21, 2007, the Company had obtained the receipt for a final Canadian Prospectus as well as the effectiveness of the U.S. registration statement. Accordingly, the Company paid a liquidity incentive payment to the special warrant holders of $118,710.

Pursuant to the terms of the indenture, the special warrants were automatically converted into the underlying common shares and warrants on December 21, 2007. As a result of the conversion, the Company issued 30,666,700 shares of common stock and 15,333,350 warrants, each exercisable into one share of common stock at an exercise price of $1.10 per share for a period of five years from the special warrant’s issuance. The conversion of the special warrant did not result in any additional proceeds to the Company. As of December 31, 2008, the total 15,333,350 warrants are still outstanding.

During 2008, 250,000 stock options were exercised at an exercise price of $50,000. During 2006, 2,715,000 stock options were exercised at an exercise price of $54,300.

During the years ended December 31, 2008 and 2007, certain equity–based fees were paid to the Company’s non–executive directors in the form of awards issued pursuant to the Company’s 2006 Stock Incentive Plan. The non–executive directors have limited rights, exercisable within applicable time limits, to elect to have any percentage of such awards, and any percentage of cash fees, payable in deferred stock units (“DSUs”). Each of the Company’s non–executive directors exercised such rights in respect of the equity–based fees payable to them for 2008 and 2007. Accordingly, during 2008 and 2007, the Company credited a total of 315,807 and 143,627 DSUs, respectively, to its non–executive directors, and recognized compensation expense of $130,000 and $125,600, respectively, related to the issuance of these DSUs. During 2008 and 2007, 44,411 and 90,027 DSUs, respectively, were converted into common shares.

During 2007, the Company issued 33,332 shares of common stock valued at $36,665 as payment under the Coyote Springs Option.

During 2007, pursuant to an employment agreement with John Perry, President and Chief Executive Officer of the Company, the Company issued 100,000 shares of its common stock to Mr. Perry. As a result of these issuances, the Company recognized compensation expense of $80,000 during 2007.

During 2007, pursuant to a settlement agreement dated September 29, 2006, the Company issued 139,880 shares of common stock valued at $163,000 to Nicholas Tintor, a former Director and Chief Executive Officer of the Company.

F-27

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During 2007, the Company issued 130,000 shares of common stock valued at $22,750 and 337,458 shares valued at $67,492 to Ronald Hirsch, and 212,195 shares valued at $42,438 to Stephen Seymour, in partial exchange for convertible notes at conversion rates ranging between $.175 and $.20 per share.

During 2007, Auramet Trading, LLC exercised warrants to purchase 506,410 shares of common stock at a price of $.56 per share. In addition, during 2007, pursuant to the exercise of warrants, the Company issued 210,750 shares of common stock at a price of $.35 per share and 214,429 shares of common stock at a price of $.40 per share.

18.        STOCK–BASED COMPENSATION

2006 Stock Incentive Plan

The Company has adopted a stock incentive plan (the “2006 Stock Incentive Plan”) which was approved by the stockholders of the Company at the Annual General Meeting of Stockholders held on October 18, 2006. A total of 6,000,000 shares of common stock have been reserved for issuance under all awards that may be granted under the 2006 Stock Incentive Plan. “Eligible Participants” who are entitled to participate in the 2006 Stock Incentive Plan consist of employees, directors and consultants of (a) the Company or (b) any of the following entities: (i) any “parent corporation” as defined in the Internal Revenue Code of 1986, as amended (the “Code”); (ii) any “subsidiary corporation” as defined in the Code; or (iii) any business, corporation, partnership, limited liability company or other entity in which the Company, a parent corporation or a subsidiary corporation holds a substantial ownership interest, directly or indirectly.

The 2006 Stock Incentive Plan provides for the granting to Eligible Participants of such incentive awards (each, an “Award”) as the administrator of the 2006 Stock Incentive Plan may from time to time approve. Subject to applicable laws, including the rules of any applicable stock exchange or national market system, the administrator is authorized to grant any type of Award to an Eligible Participant (each a “Grantee”) that by its terms involves or may involve the issuance of: (i) shares of common stock, (ii) a stock option, (iii) a stock appreciation right entitling the Grantee to acquire such number of shares of common stock or such cash compensation as will be determined by reference to any appreciation in the value of the Company’s common stock, (iv) restricted stock issuable for such consideration (if any) and subject to such restrictions as may be established by the administrator, (v) unrestricted stock issuable for such consideration (if any) on such terms and conditions as may be established by the administrator, (vi) restricted stock units, subject to such restrictions as may be imposed by the administrator, and represented by notional accounts maintained in the respective names of the Grantees that are valued solely by reference to shares of common stock of the Company and payable only in shares after the restrictions eligible remuneration otherwise payable in shares of common stock, subject to settlement in accordance with the terms and conditions of the Award and represented by notional accounts maintained in the respective names of the Grantees, (viii) dividend equivalent rights, which are rights entitling the Grantee to receive credits for dividends that would be paid if the recipient had held a specified number of shares of common stock, (ix) any other security with the value derived from the value of the Company’s common stock, or (x) any combination of the foregoing. Subject to payment of the exercise price, the Company issues common stock from treasury on a fully paid and non-assessable basis upon exercise of any stock options granted as Awards under the 2006 Stock Incentive Plan.

Under the 2006 Stock Incentive Plan, stock options may be granted as either incentive stock options or non–qualified stock options.

F-28

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Options

There are 7,981,675 stock options outstanding at December 31, 2008, of which 3,271,675 are non–qualified; non–plan stock options and 4,710,000 have been issued pursuant to the Company’s 2006 Stock Incentive Plan. The outstanding options expire at various dates from 2009 to 2017.

During 2008, the Company granted 1,810,000 stock options to employees and directors, granted 106,674 stock options to persons other than employees and directors and recognized $471,137 in compensation expense. During 2007, the Company granted 2,300,000 stock options to employees and directors and recognized $801,076 in compensation expense.

The following table summarizes annual activity for all stock options for each of the two years in the period December 31, 2008:

				Weighted Average
	Number of Options			Exercise Price
Options outstanding at December 31, 2006	2,924,998		$	.79
Granted	4,140,002			.75
Exercised	–			–
Cancelled/Expired	(449,999	)		1.61
Options outstanding at December 31, 2007	6,615,001			.71
Granted	1,916,674			.14
Exercised	(250,000	)		.20
Cancelled/Expired	(300,000	)		.75
Options outstanding at December 31, 2008	7,981,675		$	.59

The following table summarizes certain additional information about the Company’s total and exercisable stock options outstanding as of December 31, 2008:

		Weighted
		Average
		Remaining		Weighted
	Number	Contractual Life		Average
	Outstanding	in Years		Exercise Price		Intrinsic Value
Total stock options	7,981,675	4.4	$	.59	$	199,100
Exercisable stock options	5,405,008	3.7	$	.73	$	–

The market price of the Company’s common stock on December 31, 2008 was $.20 per share. The weighted average exercise price of the total and exercisable stock options was $.59 and $.73, respectively. Accordingly, the intrinsic value of such total stock options and exercisable stock options on December 31, 2008 was $199,100 and $0, respectively. The total intrinsic value of stock options exercised during the year ended December 31, 2008 was $45,000.

The following table summarizes the activity in unvested stock options for the years ended December 31, 2008 and 2007:

F-29

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

				Weighted Average
				Grant Date
	Number of Options			Fair Value
Non–vested options outstanding at December 31, 2006	533,333		$	.78
Granted	4,140,002			.43
Vested	(2,806,668	)		.39
Cancelled/Forfeited	(66,667	)		.78
Non–vested options outstanding at December 31, 2007	1,800,000			.57
Granted	1,916,674			.08
Vested	(1,140,007	)		.58
Cancelled/Forfeited	–			–
Non–vested Options outstanding at December 31, 2008	2,576,667		$	.20

The total grant date fair value of options vested during the year ended December 31, 2008 was $665,173. The Company recognizes stock option compensation expense on stock options with a graded vesting schedule on a straight line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. As of December 31, 2008, 2,576,667 stock options remained unvested, resulting in $154,410 in compensation expense to be recognized over the next 2.25 years.

The Company uses the Black–Scholes option pricing model to estimate the fair value of stock options granted. The expected forfeiture rate of 8% in 2008 and 2007 was based on historical employee turnover rates and included actual forfeitures of stock options due to the resignation of one of the Company’s officers. Management believes that the historical forfeiture rate is reflective of expected future forfeitures. The expected life of the options granted is estimated using the formula set forth in Securities and Exchange Commission SAB No. 107. The risk–free interest rate is based upon the U.S. Treasury yield curve in effect at the date of grant and, in connection with the adoption of SFAS 123(R), “Share–Based Payment,” the expected volatility is based on the weighted historical volatility of the Company’s common stock and that of its peer group.

The Company granted 1,916,674 and 4,140,002 (including 1,840,002 stock options issued to agents pursuant to the Special Warrant financing during 2007 and 106,674 issued in 2008, pursuant to the Coyote Springs property option agreement) stock options during 2008 and 2007, respectively. The fair values for the stock options granted during 2008 and 2007 were estimated at the respective dates of grant using the Black–Scholes option pricing model with the following assumptions:

	2008	2007
Risk–free interest rate	1.4% to 2.3%	2.9% to 5.0%
Expected life	3.0 to 3.1 years	2.0 to 5.5 years
Expected volatility	78% to 91%	78% to 91%
Expected dividend yield	0%	0%

Deferred Stock Units

During 2008 and 2007, certain equity–based fees have been paid to the Company’s non–executive directors in the form of awards issued pursuant to the Company’s 2006 Stock Incentive Plan. The non–executive directors have limited rights, exercisable within applicable time limits, to elect to have any percentage of such awards, and any percentage of cash fees, payable in deferred stock units (“DSUs”). Each of the Company’s non–executive directors exercised such rights in respect of the equity–based fees payable to them for 2008 and 2007. Accordingly, during 2008, the Company credited a total of 315,807 DSUs to its non–executive directors and recognized expenses of $130,000, related to the issuance of these DSUs. During 2007, the Company credited a total of 143,627 DSUs to its non–executive directors and recognized expenses of $125,600, related to the issuance of DSUs. During 2008 and 2007, 44,411 and

F-30

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

90,027 DSUs were converted into common shares, respectively. As of December 31, 2008, there were 471,237 DSUs outstanding.

Common Stock

During 2007, the Company issued 100,000 shares of common stock to employees of the Company as compensation. There were no shares issued to employees of the Company during 2008. The weighted average grant date fair value of common stock issued to employees during 2007 was $.80. Stock based compensation related to these awards of $80,000 is included in operating expenses for 2007.

19.        COMMITMENTS AND CONTINGENCIES

Capital Lease

During 2004 and 2008, the Company entered into leases for certain mining equipment that qualifies as a capital lease obligation. As a result, the present value of the future minimum lease payments is recorded as equipment and related capital lease obligation in the accompanying consolidated balance sheets. At December 31, 2008 and 2007, the cost of equipment acquired under these capital lease obligations was $154,310 and $75,000, respectively, and the related accumulated amortization was $90,862 and $65,625, respectively.

Future minimum lease payments for the capital lease obligations are as follows for the years ending December 31, 2008 and 2007:

		2008			2007
Total minimum obligations	$	62,245		$	12,647
Less amounts representing interest		(9,235	)		(3,272	)
Total principal		53,010			9,375
Less current portion		(7,995	)		(9,375	)
Long term portion	$	45,015		$	–

Office Lease

Effective June 1, 2006, the Company entered into a lease agreement for office space in Tucson, Arizona. The amount of the lease was $4,000 per month, subject to 3% escalation per annum and rental tax, has a term of 5 years, and includes a right to terminate the lease at the end of the third year.

The following is a schedule of future minimum lease payments at December 31, 2008 under the Company’s operating lease that have initial or remaining non–cancelable lease terms in excess of one year:

Years Ending December 31,
2009	$	52,185
2010		53,765
2011		22,513
Total	$	128,463

Rental expense charged to operations was $67,570 and $50,973 for the years ended December 31, 2008 and 2007, respectively.

F-31

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

401(k) Retirement Plan

Effective March 7, 2008, the Company adopted a 401(k) Plan for all of its employees. Under the 401(k) Plan, when an employee meets certain eligibility requirements, the Company will make non-elective contributions in an amount equal to up to 4% of such employee’s eligible compensation, pursuant to the tax deferral “safe harbor” provided for in section 401(k) of the Internal Revenue Code. The Company recognized $32,003 of expense related to the 401(k) plan during the year ended December 31, 2008.

Coyote Springs

In January 2004, the Company acquired an exclusive option (“Coyote Springs Option”) to purchase the leasehold rights and mining claims located near Safford in Graham County, Arizona described as “Coyote Springs,” consisting of two State of Arizona exploration leases and 52 unpatented mining claims. The Coyote Springs property is a large tonnage porphyry copper–gold exploration target with exposed, surface copper oxides and considerable potential for deeper copper sulfides. Coyote Springs is situated adjacent to the Phelps Dodge Corporation Dos Pobres copper development project near Safford, which has been determined by the United States Geological Survey to be one of the largest undeveloped porphyry copper mining districts in the world with proven undeveloped reserves.

During 2007, the Company issued 33,332 shares of common stock, valued at $36,665 and $18,330 in cash. During 2008, the Company issued options to purchase 106,674 shares of common stock with exercise prices of $1.00 per share and a three year term expiring on July 24, 2010 and valued at $51,040. In addition, the Company paid $60,000 in cash during 2008. In December 2008, the Company elected to terminate the option it held to acquire an interest in the Coyote Springs exploration project. Consequently, the Company recorded a charge to other expenses in the amount of $400,836 to write off its investment in this property.

The stock options relative to the Coyote Springs Option were to be issued at an exercise price of 15% below the market price of the Company’s common stock on the date of grant, be immediately exercisable and expire in 36 months. However, due to Toronto Stock Exchange rules, the Company was required to issue these options with an exercise price equal to the fair market value of the Company’s common stock on the date of grant.

Mimbres

In June 2004, the Company acquired an exclusive option (“Mimbres Option”) to purchase the leasehold rights and mining claims for a large tonnage porphyry copper exploration target located near Silver City, New Mexico (“Mimbres”). As of December 31, 2007, the Company had not issued any common stock or stock options due to certain conditions of the Mimbres Option that have not been satisfied. The Company was under no obligation to issue any consideration until such time that the Mimbres Option conditions have been satisfied. During January 2008, the Company elected to terminate its option to purchase the Mimbres’ leasehold rights and mining claims. Consequently, the Company recorded a charge to other expenses in the amount of $6,002 to write off its investment in this property.

Texas Arizona Mine

In July 2004, the Company entered into an option agreement to acquire a 100% interest in four unpatented mining claims in Cochise County, Arizona, known as the “Texas Arizona Mine”. The Company paid $980 to acquire the option and agreed to pay $10,000 within four years to acquire the Texas Arizona Mine. During 2008, the Company paid $10,000 to the owners the Texas Arizona Mine. Both of the payments have been included in property and equipment in the accompanying consolidated balance sheet.

F-32

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Consent/Compliance Orders

Effective with the acquisition of the Johnson Camp Mine, the Company agreed to a Consent Order with the Arizona Department of Environmental Quality (“ADEQ”). The Consent Order specifies actions the Company must take to remediate conditions at the mine that are not in compliance with current Arizona laws, including modifications to the current facilities that will be required to qualify for an Aquifer Protection Permit (“APP”) application. The Consent Order also sets forth a schedule under which the Company has agreed to file an application for an APP. The ADEQ may impose financial penalties on the Company for failure to meet the requirements of the Consent Order. The Company plans to meet its obligations under the Consent Order in the course of rehabilitating the mine and returning it to full production.

On September 7, 2002, the ADEQ issued a Compliance Order indicating that the Company’s operation of the Johnson Camp Mine was in violation of the Arizona Revised Statutes, the Arizona Administrative Code and the ADEQ Consent Order referenced above, and required the Company to bring the Johnson Camp Mine into compliance with Arizona’s aquifer protection laws. The Compliance Order superseded and replaced the Consent Order referenced above. Pursuant to the Compliance Order, the Company and the ADEQ entered into a stipulated judgment which assessed civil penalties against the Company in the amount of $4,325,000. In addition, the Compliance Order created an escrow account into which the Company was required to deposit $1,500,000 to be used to bring the mine into compliance. The Compliance Order provides that violation of said order will subject the Company to further civil penalties including entry of the stipulated judgment. Pursuant to the Compliance Order, the Company deposited $1,500,000 into an escrow account, all of which has been spent to bring the Johnson Camp Mine into compliance with the Compliance Order. Management believes that the Company is currently operating the mine in compliance with the Compliance Order.

Officer Indemnification

Under the Company’s organizational documents, the Company’s officers, employees, and directors are indemnified against certain liabilities arising out of the performance of their duties. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, based on experience, the Company expects any risk of loss to be remote. The Company also has an insurance policy for its directors and officers to insure them against liabilities arising from their performance in their positions with the Company or its subsidiaries.

Performance Incentive Plan

During 2007, the Company adopted a performance incentive plan, or the Performance Plan, for the purpose of retaining and providing an incentive to certain key employees involved in restarting and commissioning the Johnson Camp Mine. In December 2008, the Company revised certain targets or milestones, lowered the potential payout and modified the effective period of the Performance Plan. The Performance Plan covers the period of time from July 1, 2007, to April 30, 2009 and bases its payouts on the achievement of certain key targets and milestones associated with the restart and commissioning of the Johnson Camp Mine.

The Company’s Compensation Committee is responsible for administering the Performance Plan, including selecting the employees eligible to participate therein, determining their participation level and establishing key target dates for payments to be made under the Performance Plan.

Under the Performance Plan, the achievement of targets or milestones is not on an “all or nothing” basis. If a milestone is achieved later than the target date set by the Compensation Committee, it will still have

F-33

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

been achieved; however, it will have been achieved at less than 100%. The level of achievement reached with respect to the established targets or milestones will be determined by the Chief Executive Officer and President, subject to approval by the Compensation Committee

During 2008 and 2007, the Company recognized $199,958 and $358,839, respectively, in accrued compensation expense associated with the Performance Plan. Should the Company achieve the targets or milestones as currently planned, the Company would be committed to an additional $148,386 in compensation expense during 2009.

Royalty Obligations

Copper metal produced from Johnson Camp Mine is subject to a $0.02 per pound royalty payable to Arimetco when copper prices are in excess of $1.00 per pound. The royalty is capped at an aggregate of $1 million. During 2008, the Company recognized royalty expense of $58,032 which represents the total accumulated amount incurred under the obligation.

Letters of Credit

As part of its ongoing business and operations, the Company is required to provide bank letters of credit as financial support for various purposes, including environmental reclamation and other general corporate purposes. As of December 31, 2008 and 2007, there was $686,476 of outstanding letters of credit. The letters of credit reflect fair value as a condition of their underlying purpose and are subject to fees competitively determined in the market place. The obligations associated with these instruments are generally related to performance requirements that the Company addresses through its ongoing operations. As the specific requirements are met, the beneficiary of the associated instrument cancels and/or returns the instrument to the Company. Certain of these instruments are associated with operating sites with long–lived assets and will remain outstanding until closure.

20.        LITIGATION

Other than as set forth below, as of December 31, 2008, the Company knows of no material, existing or pending legal proceedings against the Company, nor is the Company involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of the Company’s directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. The outcome of open unresolved legal proceedings is presently indeterminable. Any settlement resulting from resolution of these contingencies will be accounted for in the period of settlement. The Company does not believe the potential outcome from any legal proceedings that remain unresolved will significantly impact its financial position, results of operations or cash flows.

Arizona Department of Environmental Quality (ADEQ) Compliance Order and Stipulated Judgment

The ADEQ issued a Compliance Order on September 7, 2002, requiring the Company to bring the Johnson Camp Mine into compliance with Arizona’s aquifer protection laws. Pursuant to the Compliance Order, the Company entered into a stipulated judgment with the ADEQ which assessed civil penalties against it in the amount of $4,325,000. The stipulated judgment can only be entered should a default notice issued pursuant to the Compliance Order not be cured within 60 days after notice is received. The Compliance Order further provides that any future violations of Arizona’s aquifer protection laws would subject the Company to additional civil penalties, including the entry of the stipulated judgment and the assessment of the civil penalties described in the stipulated judgment.

F-34

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The ADEQ has issued a Notice of Violation dated June 26, 2008 concerning alleged violations of the Company’s Aquifer Protection Permit Program and indicating that certain violations constituted non–compliance with the Compliance Order. The Company has responded to the Notice of Violation in a timely manner by submittal dated August 7, 2008, indicating that no such violations occurred. In addition, the Company has performed certain remedial type actions with respect to various areas referenced in the ADEQ’s Notice of Violation.

21.        RELATED PARTY TRANSACTIONS

In addition to related party transactions discussed throughout the notes to the consolidated financial statements, the following related party transactions have occurred:

During 2008, the Company recorded $8,500 and paid $6,000 to John Cook, a director of the Company, for consulting services related to reactivation of Johnson Camp Mine.

At December 31, 2006, the Company had accrued $295,000 for consulting services performed by Ronald Hirsch. This amount was paid in cash in 2007. Mr. Hirsch converted $25,000 of the original accrued consulting liability into a convertible promissory note, which had a balance of $106,000 at December 31, 2006. During 2007, 50% of the balance plus interest for a total of $67,537 was repaid. The remaining balance was converted into 337,458 common shares of the Company at a conversion rate of $.175 per share.

At December 31, 2006, the Company had accrued $600,000 in unpaid salary and $300,000 in unpaid bonus to Mr. Hirsch, $385,833 in unpaid salary and $300,000 in unpaid bonus to Mr. Anderson, and $300,000 in unpaid bonus to Mr. Perry. During 2007, the Company accrued an additional $54,167 in unpaid salary to Mr. Hirsch, and $7,632 in unpaid salary to Mr. Anderson. These amounts were paid in 2007.

The Company had recorded $32,448 in accounts payable for consulting services performed by Mine Tech Services, an entity owned and operated by Erland Anderson, the Company’s CEO and President and member of the board of directors, at December 31, 2006. This amount was paid in 2007.

The Company entered into a settlement agreement (the “Settlement Agreement”) dated October 18, 2006 with TMD Acquisition Corporation (“TMD Acquisition”) to settle certain outstanding matters arising in connection with the transactions and circumstances described below.

In May 2004, the Company commenced pursuing an opportunity (the “Zinc Opportunity”) to acquire assets comprising ASARCO Inc.’s (“ASARCO”) Tennessee Mines Division zinc business (the “Zinc Assets”). Ronald Hirsch and Stephen Seymour subsequently agreed to assist the Company to preserve the Zinc Opportunity by assuming the right to acquire the Zinc Assets, and assigning such right to TMD Acquisition, a new corporation formed specifically to facilitate an asset purchase agreement with ASARCO dated March 21, 2005 (the “Acquisition Agreement”) in respect of the Zinc Assets. The principals of TMD Acquisition were Ronald Hirsch and Stephen Seymour.

Pursuant to the Settlement Agreement and a related Assignment Agreement dated as of October 18, 2006 between the Company and TMD Acquisition, the Company took an assignment of the Acquisition Agreement, and had agreed to reimburse certain expenses in the aggregate amount of $365,000 (the “TMD Expenses”) and assume certain accounts payable in the aggregate amount of $101,442 incurred by TMD in the preservation of the Zinc Opportunity.

The Company advanced to TMD Acquisition the aggregate amount of $50,000 (evidenced by demand promissory notes dated February 27, 2006 and May 8, 2006, each in the principal amount of $25,000) to

F-35

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

cover certain expenses that TMD Acquisition had incurred in preserving the Zinc Opportunity. The loan was repayable to the Company on demand and was subject to set–off against the TMD Expenses.

Although ASARCO’s trustee in bankruptcy had sold the Zinc Assets, the Company instructed counsel to preserve any right of action (the “ASARCO Claim”) that the Company may have against ASARCO and ASARCO’s trustee in bankruptcy. On December 12, 2006, the Company entered into a settlement agreement with ASARCO pursuant to which ASARCO paid to the Company $475,000 in consideration of the execution and delivery by the parties of mutual general releases.

The TMD Settlement Agreement provided that the Company would reimburse the TMD Expenses upon the earlier of certain specified events but no later than December 22, 2006. In addition, if the Company received any cash payment on account of the ASARCO Claim, it was required to first remit such portion of the cash payment to TMD Acquisition in order to pay the outstanding balance of the TMD Expenses. However, TMD Acquisition agreed to defer reimbursement of the TMD Expenses until the Company’s financial position has improved. The Company repaid all outstanding amounts owed to TMD Acquisition in June 2007, out of the net proceeds of the special warrant financing which closed on June 5, 2007.

22.        FAIR VALUE OF FINANCIAL INSTRUMENTS

Disclosures about fair value of financial instruments for the Company’s financial instruments are presented in the table below. These calculations are subjective in nature and involve uncertainties and significant matters of judgment and do not include income tax considerations. Therefore, the results cannot be determined with precision and cannot be substantiated by comparison to independent market values and may not be realized in actual sale or settlement of the instruments. There may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used could significantly affect the results.

The following table presents a summary of the Company’s financial instruments as of December 31, 2008:

		Carrying		Estimated Fair
		Amount		Value
Cash and cash equivalents	$	4,465,245	$	4,465,245
Derivative instruments		19,154,102		19,154,102
Restricted cash		1,533,662		1,533,662
Restricted marketable securities		686,476		686,476
Financial Liabilities:
Long–term debt		25,000,000		*
Derivative instruments		437,084		437,084

Notes:

* The fair value for the Company’s long–term debt cannot be determined as the financial instrument is not actively traded.

The carrying amounts for cash and cash equivalents, marketable securities, receivables, accounts payable, and accrued expenses approximate fair value because of the short maturities of these financial instruments. Pursuant to SFAS No. 133, for reporting purposes, the Company’s derivative instruments are recorded at fair value.

Interest rate risk is the risk to the Company’s earnings that arises from fluctuations in interest rates and the degree of volatility of these rates. In November 2008, the Company entered into contracts to hedge

F-36

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the interest rate risk exposure on its $25 million Nedbank Credit Facility expiring between 2009 and 2012. Under the interest rate swap contract terms, the company pays fixed–rate interest at a rate of 2.48% and receives a floating–rate interest amount based on LIBOR. The program requires no cash margins, collateral or other security from the Company. Under the terms of the interest rate swap, settlement begins on March 31, 2009 and occurs every three months thereafter until the contract expires on September 28, 2012.

23.        CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments, marketable securities, accounts receivable and derivatives. The Company places its cash and marketable securities and derivative contracts with high quality financial institutions and limits its credit exposure with any one financial institution. At times, the Company’s bank account balances may exceed federally insured limits. The Company’s potential loss due to credit risk on its derivative instruments amounts to approximately $18,717,018 as of December 31, 2008. However, the counter party on both the copper price protection program and the interest rate swap agreement is Nedbank, the holder of the Company’s $25 million credit facility. Under the Company’s $25 million Credit Facility and the derivative contracts, there is a master netting agreement which allows either party to offset an obligation by the other should ei ther party be in default of its obligations. The Company neither deposited nor holds any collateral related to its derivative instruments.

24.        NON–CASH INVESTING AND FINANCING ACTIVITIES

Supplemental Disclosure of Non–cash Investing and Financing Activities:		2008		2007
Common stock issued for purchase of property	$	–	$	36,665
Stock options issued for purchase of property		51,040		–
Stock options issued in connection with special warrant financing		–		513,436
Warrants issued in connection with bridge loan		–		85,846
Common stock issued for settlement of accounts payable		–		163,000
Conversion of special warrants into common stock		–		20,820,932
Common stock issued in exchange for deferred stock units		444		901
Debt issuance costs paid through notes payable		–		75,000
Common stock issued upon conversion of related party convertible notes		–		132,680
Mark to market gains (losses) from cash flow hedges		28,910,071		(9,183,428	)
Adjustment to asset retirement obligations		–		69,193
Capitalized interest		995,407		–
Acquisition of equipment under lease		79,310		–
Construction in progress financed by accounts payable		7,679,567		942,772

25.        SUBSEQUENT EVENTS

Sale of a Royalty

On March 31, 2009, the Company sold to IRC Nevada Inc. a 2.5% net smelter royalty on the mineral production sold from the existing mineral rights at Johnson Camp. The net proceeds of the sale are approximately $4,950,000. The royalty is payable in cash on a quarterly basis.

Amendment to Nedbank Credit Facility

In March 2009, the Company agreed to amend and restate its $25 million credit agreement with Nedbank. Payments of principal and interest on the loan are required to be made on the last business day of March, June, September, and December in each year, starting with the last business day of September 2009 and ending on the last business day of March 2013; the payments scheduled to be paid on March 31 and June 30, 2009 (the “Deferred Payments”) have been deferred until December 31, 2012 and March 31, 2013, respectively. The loan bears interest at an annual rate equal to LIBOR for the interest period in effect plus a margin of 6.06%. The margin will be reduced by 1.75% if the Company prepays the deferred payments, and will be reduced by an additional 0.5% upon completion of the Johnson Camp Mine, as defined in the amended and restated credit agreement, which is currently scheduled for October 2009.

F-37

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Under the amended and restated credit agreement, the Company may sell certain copper price hedging instruments that it currently holds under copper price hedging agreements maturing on October 1, 2010 or later, if the net proceeds to the Company will be more than $2,200,000. If the Company elects to do so, it will be required to set aside $2.2 million in a segregated account to fund its debt service obligations under the credit facility. The existing loan will then be separated into two tranches, whereby the first tranche will be equal to the aggregate principal amount then outstanding minus $2,200,000, which will be the principal amount of the second tranche. The second tranche will be subject to an interest rate of LIBOR plus 5.00% per annum and scheduled for repayment on March 31, 2013. However, if the Company prepays the Deferred Payments, the second tranche will be amortized in equal portions over the number of quarters remaining until March 31, 2013.

Under the amended and restated credit agreement dated March 31, 2009, the maturities on the project financing facility will be as follows:

2009	$	3,333,333
2010		6,666,667
2011		6,666,667
2012		6,666,667
2013		1,666,666
Total	$	25,000,000

In consideration of Nedbank’s agreement to amend and restate the credit agreement, the Company has agreed to issue common stock purchase warrants to N.B.S.A. Limited, a company affiliated with Nedbank. Each warrant will be exercisable for two years and will entitle the holder to purchase one share of the Company’s common stock at an exercise price that, subject to the approval of the Toronto Stock Exchange, will be equal to the greater of: (a) 110% of the average closing price of the Company’s common stock on the OTC Bulletin Board during the 20 trading days preceding the date of grant; or (b) the last closing price of the Company’s common stock on the OTC Bulletin Board immediately preceding the date of grant. Subject to the approval of the Toronto Stock Exchange, the Company will have the right, exercisable at any time and from time to time, but in any event no later than the 180th day following the issue date of the warrants, to repurchase some or all of the warr ants at a price to be determined on a pro rata basis where the total repurchase price for all of the warrants is equal to $100,000, being the estimated value of the warrants as determined pursuant to the Black-Scholes model. The number of warrants to be issued to N.B. S.A. Limited will also be determined in accordance with the Black-Scholes model, and is estimated to be approximately 750,000.

Appointment of New Chief Operating Officer

In January 2009, Randy L. Davenport joined the Company as Vice President and Chief Operating Officer. Mr. Davenport is succeeding Erland (Andy) A. Anderson, who is retiring, but has agreed to remain a consultant during a transitional period.

Notice of Violation by the Arizona Department of Environmental Quality (ADEQ)

In connection with the ADEQ’s Notice of Violation dated June 26, 2008, concerning alleged violations of the Company’s Aquifer Protection Permit Program and indicating that certain violations constituted non–compliance with the Compliance Order, the ADEQ has indicated that it is not completely satisfied with the Company’s response dated August 7, 2008. The parties have conferred and the Company has submitted additional information dated January 15, 2009 in accordance with the parties’ discussions. The ADEQ has not responded in writing to the January 15, 2009 submittal.

F-38

NORD RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Patent Infringement Lawsuit

In January 2009, a lawsuit was filed by Corrosion IP Corp. and CTI Southwest, LLC, as plaintiffs, against the Company alleging that certain containers for corrosive materials purchased by the Company from Novenco Consultants Limited (“Novenco”) infringe on three patents held by the plaintiffs and further alleging that the Company has infringed on a copyrighted drawing owned by the plaintiffs. The Company has filed an answer denying all liability and has also filed a Third Party Complaint against Novenco. Prior to the Company’s purchase of the containers from Novenco, Novenco assured the Company that the containers did not infringe on any patents held by others and provided the Company with an indemnification agreement, in which Novenco agreed to indemnify the Company from any damages that might arise from a claim of patent infringement. The Company believes that the containers do not infringe on any patents held by the plaintiffs and believes, in any event, that Novenco will be held responsible for any possible damages. The Company is mitigating its risks associated with the litigation by assembling proof that the plaintiffs’ allegations are false and further through the Third Party Complaint against Novenco. The Company believes that if the plaintiffs are successful, the resulting award of damages against it, if any, will not be material to the financial condition of the Company.

F-39

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NORD RESOURCES CORPORATION

By:	/s/ Ronald A. Hirsch
	Ronald A. Hirsch
	Chairman of the Board of Directors
	Date: March 26, 2009

In accordance with the Securities Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ John T. Perry
	John T. Perry
	(Principal Executive Officer)
	President and Chief Executive Officer
	Date: March 31, 2009
By:	/s/ Wayne M. Morrison
	Wayne M. Morrison
	(Principal Financial Officer and Principal Accounting Officer)
	Vice President, Chief Financial Officer, Secretary and Treasurer
	Date: March 31, 2009
By:	/s/ Ronald A. Hirsch
	Ronald A. Hirsch
	Chairman of the Board of Directors
	Date: March 31, 2009
By:	/s/ Stephen Seymour
	Stephen Seymour
	Director
	Date: March 31, 2009
By:	/s/ T. Sean Harvey
	T. Sean Harvey
	Director
	Date: March 31, 2009

By:	/s/ John F. Cook
	John F. Cook
	Director
	Date: March 31, 2009

EX-10.67

Execution Version

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

dated as of March 31, 2009

by and among

NORD RESOURCES CORPORATION

as Borrower,

and

COCHISE AGGREGATES AND MATERIALS, INC.

as Guarantor,

THE LENDERS FROM TIME TO TIME PARTY HERETO

as Lenders

and

NEDBANK LIMITED,

as Administrative Agent

 ______________________________________

NEDBANK LIMITED,

as Sole Lead Arranger

TABLE OF CONTENTS

				Page
ARTICLE I.		DEFINITIONS		1
	Section 1.1.		Defined Terms	1
	Section 1.2.		Terms Generally	17
	Section 1.3.		Accounting Terms; GAAP	17
ARTICLE II.		THE TERM LOANS		17
	Section 2.1.		Term Loans	17
	Section 2.2.		Borrowings	18
	Section 2.3.		Requests for Borrowings	18
	Section 2.4.		Funding of Borrowings	18
	Section 2.5.		Termination and Reduction of Term Loan Commitments	19
	Section 2.6.		Repayment of Term Loans	19
	Section 2.7.		Evidence of Debt	19
	Section 2.8.		Optional Prepayments of Term Loans	20
	Section 2.9.		Mandatory Prepayments	21
	Section 2.10.		Fees	22
	Section 2.11.		Interest	23
	Section 2.12.		Alternate Rate of Interest	24
	Section 2.13.		Increased Costs	24
	Section 2.14.		Break Funding Payments	25
	Section 2.15.		Taxes	26
	Section 2.16.		Payments Generally; Pro Rata Treatment; Sharing of Set-offs	27
	Section 2.17.		Mitigation Obligations	28
ARTICLE III.		REPRESENTATIONS AND WARRANTIES		30
	Section 3.1.		Status and Power	30
	Section 3.2.		Authorization; Enforceability	30
	Section 3.3.		No Conflicts	30
	Section 3.4.		Financial Statements	30
	Section 3.5.		Intentionally Omitted	31
	Section 3.6.		Litigation, etc	31
	Section 3.7.		Title to Assets	31

i

TABLE OF CONTENTS
(continued)

				Page
	Section 3.8.		Conduct of Business	31
	Section 3.9.		Labor and Employment Matters	31
	Section 3.10.		No Default	31
	Section 3.11.		Tax Returns and Taxes	32
	Section 3.12.		Withholding and Other Taxes	32
	Section 3.13.		Material Contracts	32
	Section 3.14.		Compliance with Environmental Laws	32
	Section 3.15.		Solvency	32
	Section 3.16.		Locations of Tangible Assets	32
	Section 3.17.		Consents and Approvals for the Project	33
	Section 3.18.		Consents and Approvals for the Security	33
	Section 3.19.		Intentionally Omitted	33
	Section 3.20.		Subsidiaries	33
	Section 3.21.		Mining Properties	33
	Section 3.22.		Feasibility Study	33
	Section 3.23.		Financial Model, Construction Schedule and Capital Spending Plan	34
	Section 3.24.		Project Information	34
	Section 3.25.		Intellectual Property	34
	Section 3.26.		Liens	34
	Section 3.27.		Insurance	34
	Section 3.28.		Ranking	35
ARTICLE IV.		CONDITIONS		35
	Section 4.1.		Closing Date	35
	Section 4.2.		Additional Conditions	37
ARTICLE V.		AFFIRMATIVE COVENANTS		38
	Section 5.1.		Financial Statements and Reporting	38
	Section 5.2.		Notices of Material Events	40
	Section 5.3.		Existence; Conduct of Business	41
	Section 5.4.		Payment of Obligations	41

ii

TABLE OF CONTENTS
(continued)

				Page
	Section 5.5.		Maintenance of Properties; Insurance	41
	Section 5.6.		Books and Records; Inspection Rights	41
	Section 5.7.		Compliance with Laws	41
	Section 5.8.		Use of Proceeds	41
	Section 5.9.		Project; Construction; Etc	42
	Section 5.10.		Updated Financial Model	42
	Section 5.11.		Further Assurances	43
	Section 5.12.		Forward Sale Price Protection Program	43
ARTICLE VI.		NEGATIVE COVENANTS		43
	Section 6.1.		Indebtedness	43
	Section 6.2.		Liens	43
	Section 6.3.		Fundamental Changes; Dispositions; Subsidiaries; Etc	44
	Section 6.4.		Investments, Loans, Advances, Guarantees and Acquisitions	44
	Section 6.5.		Hedging Agreements	44
	Section 6.6.		Restricted Payments	45
	Section 6.7.		Transactions with Affiliates	45
	Section 6.8.		Restrictive Agreements	45
	Section 6.9.		Material Contracts	45
	Section 6.10.		Financial Covenants	45
ARTICLE VII.		EVENTS OF DEFAULT		46
ARTICLE VIII.		THE ADMINISTRATIVE AGENT		48
ARTICLE IX.		GUARANTY		50
	Section 9.1.		Guaranty	50
	Section 9.2.		Guaranty Absolute	50
	Section 9.3.		Waiver	51
	Section 9.4.		Continuing Guaranty; Assignments	51
	Section 9.5.		Subrogation	52
	Section 9.6.		Maximum Obligations	52
ARTICLE X.		MISCELLANEOUS		52
	Section 10.1.		Notices	52

iii

TABLE OF CONTENTS
(continued)

				Page
	Section 10.2.		Waivers; Amendments	53
	Section 10.3.		Expenses; Indemnity; Damage Waiver	54
	Section 10.4.		Successors and Assigns	55
	Section 10.5.		Survival	58
	Section 10.6.		Counterparts; Integration; Effectiveness	58
	Section 10.7.		Severability	59
	Section 10.8.		Right of Setoff	59
	Section 10.9.		Governing Law; Jurisdiction; Consent to Service of Process	59
	Section 10.10.		WAIVER OF JURY TRIAL	60
	Section 10.11.		Headings	60
	Section 10.12.		Confidentiality	60
	Section 10.13.		Interest Rate Limitation	61
	Section 10.14.		Know Your Customer Requirements	61
	Section 10.15.		Consent Relating to Existing Copper Hedging Agreements	62
	Section 10.16.		Provisions Relating to B Term Loan	62
ARTICLE XI.		CONDITIONS PRECEDENT TO SECOND AMENDMENT AND RESTATEMENT		62

iv

SCHEDULES:

Schedule 1.1 -- Material Contracts

Schedule 2.1 -- Term Loan Commitments

Schedule 6.2 -- Existing Liens

Disclosure Schedule

EXHIBITS:

Exhibit B -- Form of Term Loan Borrowing Request

Exhibit C -- Form of Collateral Account Agreement

Exhibit D -- Form of Deed of Trust

Exhibit E -- Form of Excess Cash Flow Certificate

Exhibit F -- Form of Account Charge

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

          THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) dated as of March 31, 2009, among NORD RESOURCES CORPORATION, a Delaware corporation (the “Borrower”), and COCHISE AGGREGATES AND MATERIALS, INC., a Nevada corporation (“Cochise”, a “Guarantor”), the lenders from time to time party hereto (each a “Lender” and collectively, the “Lenders”), and NEDBANK LIMITED, as administrative agent (in such capacity, the “Administrative Agent”) and as sole lead arranger (in such capacity, the “Sole Lead Arranger”).

          WHEREAS the Borrower, the Guarantor, the Lenders and the Administrative Agent entered into certain Credit Agreement dated June 17, 2007 to provide to the Borrower a term loan facility to assist in financing the construction, start-up, and operation of mining and metal operations at the Johnson Camp Mine, a copper mine and production facility located 65 miles east of Tuscon, Arizona in Cochise County (the “Original Agreement”);

          WHEREAS, the Original Agreement was Amended and Restated (the “First Amended and Restated Credit Agreement” on June 30, 2008;

           WHEREAS, the Borrower has requested that the First Amended and Restated Agreement be further amended and restated by this Agreement; and

          WHEREAS, subject to the conditions set forth herein (including, without limitation, those conditions set forth in Article 11 hereof) the parties have agreed to cause the First Amended and Restated Credit Agreement to be amended and restated as set forth herein.

          NOW THEREFORE, in consideration of the foregoing recitals, the mutual agreements contained herein and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto agree as follows:

ARTICLE I.
DEFINITIONS

          SECTION 1.1. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

               “A Term Loan” has the meaning set forth in Section 2.1. For the avoidance of doubt, only A Term Loans shall exist immediately following the Second Amendment and Restatement Date, provided that the A Term Loans may be re-tranched into A Term Loans and B Term Loans if a Term Loan Conversion Event shall occur.

               “Account Charge” means an English law governed charge instrument substantially in the form of Exhibit F.

               “Administrative Agent” means Nedbank Limited, in its capacity as administrative agent for the Lenders hereunder.

               “Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

               “Agreement” has the meaning set forth in the recitals hereto.

               “Applicable Law” means all public laws, statutes, ordinances, decrees, judgments, codes, standards, acts, orders, by-laws, rules, regulations, Approvals, permits and requirements of any Governmental Authority, in each case having the force of law and which now or hereafter may be lawfully applicable to and enforceable against any Loan Party or its property or any part thereof.

               “Applicable Margin” means:

                          (a)      for the A Term Loans, 6.06% per annum, provided that such amount (x) shall be reduced by 1.75% after the Deferred Payment Trigger Event, and (y) shall be reduced by an additional 0.50% after Completion; and

                         (b)      for the B Term Loans (if any), 5.00% per annum.

               “Applicable Percentage” means, with respect to any Lender, the percentage of the total Term Loan Commitments represented by such Lender’s Term Loan Commitment. If the Term Loan Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Term Loan Commitments most recently in effect, giving effect to any assignments.

               “Approvals” means each and every approval, order in council, authorization, license, permit, consent, filing and registration by or with any Governmental Authority or other Person which are required by Applicable Law and necessary to authorize or permit the development and operation of the Project and the execution, delivery, performance, validity and enforceability of the Loan Documents or the Material Contracts.

               “Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.4), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

               “Availability Period” means the period from and including the Closing Date to but excluding the earlier of (a) the date of termination of the Term Loan Commitments, and (b) the first Principal Payment Date.

               “B Term Loan” has the meaning set forth in Section 10.16. For the avoidance of doubt, only A Term Loans shall exist immediately following the Second Amendment and Restatement Date, provided that the A Term Loans may be re-tranched into A Term Loans and B Term Loans if a Term Loan Conversion Event shall occur.

               “Board” means the Board of Governors of the Federal Reserve System of the United States of America.

- 2 -

               “Borrower” has the meaning set forth in the recitals hereto.

               “Borrower Public Documents” means all registration statements, prospectuses, forms, reports, schedules, statements and other documents (including any amendments or supplements thereto) filed by the Borrower with: (a) the SEC under the United States Securities Act of 1933, as amended, or the United States Securities Exchange Act of 1934, as amended, and any rules, regulations or other instruments promulgated thereunder; or (b) the Canadian Securities Regulators under the Securities Act (Ontario) or the Securities Act (British Columbia), and any rules, regulations or other instruments promulgated thereunder.

               “Borrowing” means a borrowing of Term Loans.

               “Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

               “CADS” means, for a particular period, (a) gross revenues for such period (for any future period, calculated (i) using the actual hedged price for future hedged production and (ii) the unhedged price for unhedged production, with the unhedged price being the Historic Six Month Average Spot Price at such time) less (b) the sum of (i) the aggregate of Project Development Costs for such period, (ii) cash Tax Expenses for such period, and (iii) cash Operating Costs for such period, and (c) adjusted for changes in Working Capital over such period (plus any increases and minus any decreases).

               “Canadian Securities Regulators” means either or both of the Ontario Securities Commission and the British Columbia Securities Commission, as the context requires.

               “Capital Expenditures” means, for a particular period, the aggregate of all expenditures by the Borrower during such period that, in accordance with GAAP, are classified as capital expenditures.

               “Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

               “Casualty Event” means, with respect to any Property of any Person, any loss of or damage to, or any condemnation or other taking of, such Property for which such Person receives insurance proceeds, or proceeds of a condemnation award or other compensation.

               “Change of Control” means (a) Cochise shall cease to be a direct wholly-owned subsidiary of the Borrower; or (b) the Administrative Agent, for the benefit of the Lenders, shall cease to have a perfected security interest in Equity Interests of Cochise representing 100% of the aggregate equity value represented by the issued and outstanding Equity Interests in Cochise.

- 3 -

               “Change in Law” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.13(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

               “Closing Date” means the second Business Day after which the conditions specified in Section 4.1 are satisfied (or waived in accordance with Section 10.2) .

               “Cochise” has the meaning in the recitals hereto.

               “Code” means the Internal Revenue Code of 1986, as amended from time to time.

               “Collateral” means a collective reference to all real and personal property with respect to which Liens have been granted in favor of the Administrative Agent pursuant to and in accordance with the Security Documents.

               “Collateral Account Agreement” means the Collateral Account Agreement in the form attached as Exhibit C hereto.

               “Collateral Accounts” shall have the meaning set forth in the Collateral Account Agreement.

               “Completion” means the earlier to occur of the date upon which the Borrower has delivered the Completion Certificates to the Administrative Agent, duly executed by the Borrower, and verified by the Independent Technical Consultant, and such certificates shall have been accepted by the Administrative Agent.

               “Completion Certificates” shall mean, collectively, the forms of certificates relating to Completion which shall be in a form satisfactory to the Borrower, the Administrative Agent, and the Independent Technical Consultant.

               “Completion Date” means the date upon which Completion occurs.

               “Consent Agreements” means, collectively, the agreements so named, entered into or to be entered into between the Lenders, the Administrative Agent, the Borrower and each of the counterparties to each Material Contract with a value in excess of $1,000,000 (as determined by the Administrative Agent in consultation with the Borrower) pursuant to which, inter alia, such counterparties consent to the Security and grant to the Lenders or their nominee certain “step-in” rights.

               “Construction Schedule and Capital Spending Plan” means the Borrower’s construction schedule and capital spending plan, dated June 20, 2007, as the same may be modified by the Borrower and approved by the Required Lenders.

- 4 -

               “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

               “Debt Issuance” means the issuance of any Indebtedness by any Loan Party other than the issuance of any Indebtedness permitted under Section 6.1.

               “Debt Service Charges” means, for a particular period, the sum of all scheduled principal payments made or required to have been made by the Borrower hereunder with respect to Term Loans during such period and interest on such Term Loans paid or required to have been paid by the Borrower during such period.

               “Debt Service Coverage Ratio” means, (a) with respect to a particular Historical Test Period, the ratio of (i) CADS for such Test Period to (ii) Debt Service Charges for such Test Period (as determined with respect to the financial statements most recently delivered pursuant to Section 5.1(a) and (b) hereof); and (b) with respect to a particular Future Test Period, the ratio of (i) CADS for such Test Period to (ii) Debt Service Charges for such Test Period (as determined with respect to the Financial Model then in effect).

               “Debt Service Reserve Account” has the meaning set forth in the Collateral Account Agreement.

               “Deed of Trust’ means the Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing in the form of Exhibit D, hereto.

               “Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

               “Deferred Payments” means payments on the A Term Loan made pursuant to Section 2.8(b) or Section 2.9(e) in an aggregate amount equal to the sum of (a) $3,607,085 plus (b) the Deferred Payment Notional Amount. For purposes of this definition, “Deferred Payment Notional Amount” shall mean an amount equal to a notional amount of interest on the amount in clause (a) of the preceding sentence calculated at a rate of 5.98% per annum from and including March 31, 2009 to but excluding the earlier of Completion and the Deferred Payment Trigger Date, and (assuming Completion occurs first) 5.48% per annum from and including Completion to but excluding the Deferred Payment Trigger Date and (ii) such notional amount of interest otherwise calculated in a manner consistent with this Agreement, including with respect to the capitalization of interest in Section 2.11(c) . For the avoidance of doubt, the calculation provided for in the previous sentence is not additional interest required to be paid by the Borrower, but is a calculation of the amount of prepayments required to be made by the Borrower in order for the Deferred Payment Trigger Event to occur.

               “Deferred Payment Trigger Event” means the Deferred Payments shall have been made with respect to the A Term Loan.

               “Disclosure Schedule” means the disclosure schedule that has been prepared by the Borrower, delivered by the Borrower to the Lender, and dated the date of this Agreement, which

- 5 -

shall be deemed to include each Borrower Public Document available on EDGAR or SEDAR and filed prior to the date of this Agreement if the relevance of such disclosure is reasonably apparent on its face.

               “Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, other than the Permitted Royalty Sale.

               “dollars” or “$” refers to lawful money of the United States of America.

               “EBIT” means, for a particular period, Net Income for such period plus, to the extent deducted in determining such Net Income and without duplication, the aggregate of the (a) Interest Expenses for such period, and (b) Tax Expenses for such period, determined in each case in accordance with GAAP.

               “EDGAR” means the Electronic Data-Gathering, Analysis, and Retrieval system of the SEC, accessible on the Internet at www.sec.gov.

               “Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

               “Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

               “Environmental Plan” means the Compliance Order dated September 7, 2002 issued by the Arizona Department of Environmental Quality, as the same may be modified, replaced, or superceded (including, without limitation, by the appropriate Aquifer Protection Permit).

               “Equity Interests” means shares of equity interest, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

               “Equity Issuance” means any issuance by the Borrower to any Person (other than a Loan Party) of shares of its Equity Interests.

               “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

- 6 -

               “ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

               “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

               “Event of Default” has the meaning assigned to such term in Article VII.

               “Excluded Taxes” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.17(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.15(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.15(a) .

               “Excess Cash Flow” means, at any particular time and from time to time, the amount identified in the Excess Cash Flow Certificate.

               “Excess Cash Flow Certificate” means a certificate of a Financial Officer of the Borrower substantially in the form of Exhibit E hereto.

- 7 -

               “Existing Bridge Loan Facility” means the loan evidenced by the $4,900,000 Amended and Restated Secured Promissory Note dated May 31, 2006 between the Borrower and Nedbank Limited, as the same may be amended and modified from time to time.

               “Existing Copper Hedge Counterparty” means the copper hedge provider under any Existing Copper Hedging Agreement.

               “Existing Copper Hedging Agreements” means the Hedge Agreements currently in place that hedge the price of copper.

               “Feasibility Study” means the Feasibility Study, dated October, 2005, prepared by Winters, Dorsey and Company LLC, as supplemented by the Johnson Camp Mine Project Feasibility and Technical Report, dated September, 2007, prepared by Bikerman Engineering & Technology Associated, Inc.

               “Fee Letter” means the fee letter dated June 27, 2007 between the Borrower and Nedbank Limited, as the same may be amended, modified, supplemented or replaced from time to time.

               “Financial Model” means the financial model delivered pursuant to Section 11.2(b), as the same may be modified from time to time in accordance with Section 5.10.

               “Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower.

               “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

               “Forward Sale Price Protection Program” means a hedging program with respect to a specified percentage of copper output from the Project which shall be entered into prior to the Closing Date (with such adjustments consistent with Section 5.12) and which shall be in form and substance satisfactory to the Borrower and the Administrative Agent.

               “Future Test Periods” means with respect to any Test Date, the period of four consecutive fiscal quarters ending on each of the next four succeeding Test Dates.

               “GAAP” means generally accepted accounting principles in the United States of America.

               “Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

               “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any

- 8 -

Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof or (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

               “Guarantor” means Cochise.

               “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

               “Hedging Agreement” means any present or future swap, hedging, foreign exchange or cash management agreement or other derivative transaction entered into by any Loan Party which constitutes any copper or commodity hedging transaction, spot or forward foreign exchange transaction, interest rate swap transaction, currency swap transaction, forward rate transaction, rate cap transaction, rate floor transaction, rate collar transaction, and any other exchange or rate protection transaction, any combination of such transactions or any option with respect to any such transaction entered into by any Loan Party.

               “Historic Six Month Average Spot Price” means, for any day, the average of the closing spot price for copper on New York Comex for each Business Day over the six-month period ending on such day.

               “Historical Test Period” means the period of four consecutive fiscal quarters of the Borrower ending on a Test Date; provided, that for purposes of calculating the Debt Service Coverage Ratio and Interest Coverage Ratio for each of the first three applicable Test Dates after Completion, the amount of each of CADS, Debt Service Charges, EBIT and Interest Expense for purposes of such calculations shall be determined as follows: (a) for the first Test Date, such amounts shall equal the amounts for the most recently ended fiscal quarter multiplied by 4, (b) for the second Test Date, such amounts shall equal the amount for the two most recently ended fiscal quarters multiplied by 2; and (c) for the third Test Date, such amounts shall equal the amount for the three most recently ended fiscal quarters multiplied by 3/4.

               “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase

- 9 -

price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

               “Indemnified Taxes” means Taxes other than Excluded Taxes.

               “Independent Technical Consultant” means the technical engineering consultant as the Administrative Agent, in consultation with the Borrower, may engage from time to time to monitor the Borrower’s construction under and compliance with the Construction Schedule and Capital Spending Plan, certify the passage of the Completion tests and otherwise carry out the responsibilities of the Independent Technical Consultant under the Loan Documents.

               “Intellectual Property” shall mean all issued patents and patent applications, industrial design registrations, trade-marks, registrations and applications therefor, trade-names and styles, logos, copyright registrations and applications therefor, all of the foregoing owned by or licensed to the Loan Parties or any of them and used in or necessary to the operation of the Project.

               “Interest Coverage Ratio” means (a) with respect to a particular Historical Test Period, the ratio of (i) EBIT for such Test Period to (ii) Interest Expense for such Test Period (as determined with respect to the financial statements most recently delivered pursuant to Section 5.1(a) and (b) hereof); and (b) with respect to a particular Future Test Period, the ratio of (i) EBIT for such Test Period to (ii) Interest Expense for such Test Period (as determined with respect to the Financial Model then in effect); provided that any such calculation shall be effected without regard to the effect of any non-cash expense associated with the $23 million equity financing.

               “Interest Expense” means, for any particular period, the aggregate amount which would be classified on the income statement of the Borrower for such period as interest expenses (whether expensed or capitalized or in respect of synthetic lease obligations), all as determined in accordance with GAAP.

               “Interest Payment Date” means the last Business Day of each of March, June, September and December in each year.

               “Interest Period” means, with respect to any Borrowing, (a) the period from and including the date of such Borrowing to but excluding the first Interest Payment Date occurring after such Borrowing, and (b) thereafter, the period from and including the first Interest Payment Date for such Borrowing, to but excluding the next Interest Payment Date.

- 10 -

               “Lenders” has the meaning set forth in the recitals hereto.

               “LIBOR Rate” means the rate of interest per annum, calculated on the basis of a year of 360 days, determined by the Administrative Agent for a particular Interest Period (a) at 11:00 a.m. (London time) on the second Business Day prior to the commencement of such Interest Period that appears as such on the Reuters Page LIBOR01, or (b) if, for any reason, such rate does not appear on such Reuters Page, the rate of interest per annum (rounded upwards if necessary to the nearest whole multiple of 1/16%) determined by the Administrative Agent as being the rate of interest at which the Administrative Agent, in accordance with its normal practices, would be prepared to offer to leading banks in the London interbank market for delivery on the first day of each relevant Interest Period for a period equal to the relevant Interest Period based on the number of days comprised therein, deposits in U.S. dollars of comparable amounts to the amount of the Term Loan, to be outstanding during the Interest Period, at or about 11:00 am (London time) on the second Business Day prior to the commencement of such Interest Period.

               “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

               “Loan Documents” means this Agreement, the Security Documents, and the Fee Letter.

               “Loan Party” means each of the Borrower and the Guarantor.

               “Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Project or any Loan Party, (b) the ability of any Loan Party to perform any of its obligations under this Agreement or (c) the rights of or benefits available to the Lenders under the Loan Documents.

               “Material Contracts” means the material contracts set forth on Schedule 1.1, and any other contract which, in the event of a breach, could reasonably be expected to result in a Material Adverse Effect, as determined by the Administrative Agent in consultation with the Borrower.

               “Material Indebtedness” means Indebtedness (other than the Term Loans), or obligations in respect of one or more Hedging Agreements, of any one or more of any Loan Party in an aggregate principal amount exceeding $200,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of any Loan Party in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Loan Party would be required to pay if such Hedging Agreement were terminated at such time.

                “Mining Properties” means the real property pledged to the Administrative Agent for the benefit of the Lenders pursuant to the Security Documents.

- 11 -

               “Moody’s” means Moody’s Investors Service, Inc.

               “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

               “Net Cash Proceeds” means:

                              (a)      with respect to any Disposition, the excess, if any, of (i) the sum of cash and cash equivalents received in connection with such Disposition less (ii) the sum of (x) the out-of-pocket expenses incurred by the Borrower in connection with such Disposition and (y) taxes reasonably estimated to be actually payable in connection therewith;

                              (b)      with respect to any Casualty Event, the excess, if any, of (i) the sum of insurance proceeds or other condemnation award received (other than any amounts received in connection with business interruption insurance) in connection with such Casualty Event less (ii) the sum of any reasonable expenses incurred in connection therewith; and

                              (c)      with respect to any Debt Issuance, the excess, if any, of (i) all cash received in connection with such Debt Issuance less (ii) the sum of all reasonable expenses by the Borrower incurred in connection therewith.

               “Net Income” means, for a particular period, the aggregate amount which would be classified on the income statement of the Borrower for such period as net income, determined in accordance with GAAP; provided that Net Income shall be inclusive of extraordinary, unusual and non-recurring items to the extent received or paid in cash and exclusive of extraordinary, unusual and non-recurring items to the extent not received or paid in cash.

               “Obligations” means all indebtedness, obligations and liabilities, present or future, absolute or contingent, matured or not, at any time owing by a Loan Party to a Lender or the Administrative Agent under or in connection with the Loan Documents or any Hedging Agreement.

               “Operating Costs” means, for any period, the sum, computed without duplication, of all consolidated costs and expenses (including, without limitation, costs relating to corporate overhead, salaries, insurance, board expenses, legal expenses, deferred salaries, expenses in connection with letters of credit, and royalty payments) paid directly or indirectly by the Borrower during such period (or, in the case of any future period, projected to be paid or payable during such period) in connection with the operation, maintenance and administration of the Project.

               “Other Taxes” means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.

               “Participant” has the meaning set forth in Section 10.4.

- 12 -

               “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

               “Permitted Investments” means:

                         (a)      direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

                         (b)      investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s;

                         (c)      investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;

                         (d)      fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above;

                         (e)      money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000; and

                         (f)      any deposits of the type described in clause (d) of “Permitted Liens”.

               “Permitted Liens” means Liens:

                         (a)      imposed by law for taxes that are not yet due or are being contested in compliance with Section 5.4;

                         (b)      carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in compliance with Section 5.4;

                         (c)      pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

                         (d)      deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds, letters of credit and other obligations of a like nature, in each case in the ordinary course of business;

- 13 -

                    (e)      judgment liens in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII; and

                    (f)      easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower;

provided that the term “Permitted Liens” shall not include any Lien securing Indebtedness.

               “Permitted Royalty Sale” has the meaning set forth in Section 11.1(f) .

               “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

               “Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

               “Principal Payment Dates” means the last Business Day of March, June, September, and December in each year, starting with the last Business Day of September 2009 and ending on the last Business Day of March 2013.

               “Proceeds Account” has the meaning set forth in the Collateral Account Agreement.

                “Project” means the construction, startup and operation by the Borrower of the Johnson Camp Mine, a copper mine and production facility located 65 miles east of Tucson, Arizona, as described in the Feasibility Study and as augmented by the Construction Schedule and Capital Spending Plan and Financial Model.

               “Project Development Costs” means amounts (other than Operating Expenses) spent pursuant to Material Contracts and the Construction Schedule and Capital Spending Plan.

               “Register” has the meaning set forth in Section 10.4.

              “Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

              “Required Lenders” means, at any time, Lenders having Term Loans and unused Term Loan Commitments representing more than 50% of the sum of the total Term Loans and unused Term Loan Commitments at such time.

               “Restricted Payment” means (a) any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Borrower, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on

- 14 -

account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the Borrower or any option, warrant or other right to acquire any such Equity Interests in the Borrower, and (b) any other expenditures not constituting Project Development Costs or Operating Costs, including, without limitation, any amounts expended with respect to (x) exploration at the Coyote Springs site in an amount in excess of $1,500,000 during the Availability Period, and (y) exploration at the Mimbres site in an amount in excess of $100,000 during the Availability Period.

               “S&P” means Standard & Poor’s.

               “SEC” means the United States Securities and Exchange Commission.

               “Second Amendment and Restatement Date” has the meaning set forth in Section 11.1.

               “Secured Parties” means the Administrative Agent and the Lenders.

               “Security” means the collateral security constituted by the Security Documents.

               “Security Documents” means the Deed of Trust, the Collateral Account Agreement, the Account Charge, the Consent Agreements and such other security documents and instruments, including without limitation Uniform Commercial Code financing statements, as may be executed and/or delivered by the Loan Parties pursuant to the terms hereunder or any collateral document which, in each case, shall be deemed executed and delivered for the benefit of the Administrative Agent and the Lenders.

               “SEDAR” means the System for Electronic Document Analysis and Retrieval of the Canadian Securities Administrators (including the Canadian Securities Regulators), accessible on the Internet at www.sedar.com.

               “Solvent” and “Solvency” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can be reasonably be expected to become an actual or matured liability.

               “Start-up of Commercial Production” means the earliest date on which the Borrower has produced at least three million pounds of saleable copper cathodes from newly mined ore.

               “subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of

- 15 -

which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

               “Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

               “Term Loans” has the meaning set forth in Section 2.1, and (a) after the Second Amendment and Restatement Date shall consist of the A Term Loans, and (b) after a Term Loan Conversion Event, shall consist of the A Term Loans and the B Term Loans. For the avoidance of doubt, only A Term Loans shall exist immediately following the Second Amendment and Restatement Date, provided that the A Term Loans may be re-tranched into A Term Loans and B Term Loans if a Term Loan Conversion Event shall occur.

               “Term Loan Borrowing Request” means a borrowing request substantially in the form of Exhibit B.

               “Term Loan Commitment” means the commitment of such Lender to make Term Loans hereunder, as such amount may be reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.4. The initial amount of each Lender’s Term Loan Commitment is set forth on Schedule 2.1, or in the assignment and assumption pursuant to which such Lender shall have assumed its Term Loan Commitment, as applicable. The initial aggregate amount of the Term Loan Commitment is $25,000,000, which amount may be reduced by the Borrower in accordance with Section 2.5(b) .

               “Term Loan Conversion Event” has the meaning set forth in Section 10.16.

               “Test Date” means the last day of December, March, June, and September of each year, commencing from the date on which Completion occurs or the first such date at least 12 months after the first drawdown, whichever is earlier, until the final Principal Payment Date.

               “Transactions” means (a) the execution, delivery and performance by the Loan Parties of (i) the Loan Documents, the Borrowing and the use of the proceeds thereof, and (ii) the Material Contracts, and (b) the development of the Project by the Borrower.

               “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

               “Working Capital” means, at any particular time, (a) the amount which would be classified on the balance sheet of the Borrower at such time as current assets, minus (b) the amount which would be classified on the balance sheet of the Borrower at such time as current

- 16 -

liabilities (other than the current portion of long-term debt), in each case determined in accordance with GAAP.

          SECTION 1.2. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

          SECTION 1.3. Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

ARTICLE II.
THE TERM LOANS

          SECTION 2.1. Term Loans.

                         (a)      Subject to the terms and conditions set forth herein, each Lender agrees to make available to the Borrower during the Availability Period, loans (“Term Loans”) in an aggregate principal amount that will not result in a Lender exceeding such Lender’s Term Loan Commitment. The Term Loan is not revolving in nature, and any portion thereof that is repaid or prepaid cannot be reborrowed. Borrowings may occur from time to time but not more frequently than once per calendar month.

                         (b)      On the Second Amendment and Restatement Date the Term Loans under the Second Amended and Restated Credit Agreement shall be deemed to be Term Loans

- 17 -

hereunder, and such Term Loans shall be deemed to satisfy such Lender’s obligation under the preceding paragraph. Such Term Loans shall be referred to as the “A Term Loans” under this Agreement. The A Term Loans may, upon the occurrence of a Term Loan Conversion Event, be separated into two separate tranches (the “A Term Loan” and the “B Term Loan”), as provided for in Section 10.16.

          SECTION 2.2. Borrowings.

                         (a)      Each Term Loan shall be made as part of a Borrowing consisting of Term Loans made by the Lenders ratably in accordance with their respective Term Loan Commitments. The failure of any Lender to make any Term Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Term Loan Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Term Loans as required.

                         (b)      Each Lender at its option may make any Term Loan by causing any branch or Affiliate of such Lender to make such Term Loan; provided that any exercise of such option shall not affect the obligation of such Lender hereunder to make such Term Loan or the obligation of the Borrower to repay such Term Loan in accordance with the terms of this Agreement; and provided further that any such Lender shall in any event be subject to Section 2.17.

                         (c)      Each Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $2,500,000.

          SECTION 2.3. Requests for Borrowings. To request a Borrowing, the Borrower shall provide a Term Loan Borrowing Request to the Administrative Agent not later than 11:00 a.m., New York City time, two Business Days prior to the date of the proposed Borrowing. Promptly following receipt of a Term Loan Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Term Loan to be made as part of the requested Borrowing.

          SECTION 2.4. Funding of Borrowings.

                         (a)      Each Lender shall make each Term Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Term Loans available to the Borrower by promptly crediting the amounts so received to the Proceeds Account.

                         (b)      Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and

- 18 -

the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to such Borrowing. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Term Loan included in such Borrowing.

          SECTION 2.5. Termination and Reduction of Term Loan Commitments.

                         (a)      Unless previously terminated, the Term Loan Commitments shall terminate on the last day of the Availability Period.

                         (b)      The Borrower may at any time terminate, or from time to time reduce, the Term Loan Commitments; provided that each reduction of the Term Loan Commitments shall be in an amount that is an integral multiple of $100,000 and not less than $1,000,000.

          SECTION 2.6. Repayment of Term Loans. The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender:

                         (a)      the then unpaid principal amount of the A Term Loan in 15 (fifteen) equal installments on each Principal Payment Date; and

                         (b)      the then unpaid principal amount of the B Term Loan (if any) on the final Principal Payment Date, provided that if the Deferred Payment Trigger Event has occurred, then the B Term Loan shall be payable in equal installments on each of the Principal Payment Dates remaining for the A Term Loan (after giving effect to the payment of the Deferred Amounts).

For the avoidance of doubt and by way of illustration (x) if the B Term Loan was outstanding and the Deferred Payment Trigger Event occurred prior to the first Principal Payment Date, then the B Term Loan would be amortized over the first 13 (thirteen) Principal Payment Dates, since the last two installments of the A Term Loan (defined as the “Deferred Payments”) shall have already been paid, and (y) if the Deferred Payment Trigger Event occurs after the first Principal Payment Date but prior to the second Principal Payment Date, then the B Term Loan would be amortized over the next 12 (twelve) Principal Payment Dates.

          SECTION 2.7. Evidence of Debt.

                         (a)      Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Term Loan made by such Lender, including the amounts of principal and interest payable to such Lender hereunder.

                         (b)      The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Term Loan made hereunder and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from

- 19 -

the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

                         (c)      The entries made in the accounts maintained pursuant to paragraph (a) or (b) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Term Loans in accordance with the terms of this Agreement.

                         (d)      Any Lender may request that Term Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Term Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 10.4) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

          SECTION 2.8. Optional Prepayments of Term Loans. The Borrower shall have the right at any time and from time to time to prepay any Term Loan in whole or in part, provided that:

                         (a)      the Borrower shall notify the Administrative Agent in writing of any prepayment hereunder not later than 11:00 a.m., New York City time, at least five Business Days before the date of prepayment; each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Term Loan or portion thereof to be prepaid; promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof;

                         (b)      each prepayment shall be applied (i) first, to the Deferred Payments until such payments have been paid in full, (ii) second to installments of the B Term Loan (if any) in inverse order of maturity until paid in full, and (iii) third, to installments of the A Term Loan in inverse order of maturity until paid in full; prepayments shall be accompanied by accrued interest to the extent required by Section 2.11 and any break funding payments required by Section 2.14;

                         (c)      the Debt Service Reserve Account is fully funded;

                         (d)      the Borrower shall be in compliance with the financial covenants set forth in Section 6.10 after giving effect to any such prepayment (calculated on a proforma basis with respect to the Historical Test Period and Future Test Period for the Test Date most recently ended); and

                         (e)      so long as such prepayment is made with the proceeds of internally generated funds (and not a refinancing) then no prepayment penalty shall apply; provided that a prepayment penalty in an amount set forth on the following schedule shall apply with respect to any prepayment made with proceeds of other than internally generated funds:

- 20 -

Period	Percentage of Principal Amount Prepaid
Closing Date through but excluding the second anniversary of the Closing Date	3.5%
Second anniversary date of the Closing Date to but excluding the third anniversary of the Closing Date	2.5%
Third anniversary date of the Closing Date to but excluding the fourth anniversary of the Closing Date	1.5%
From and after the fourth anniversary of the Closing Date	1.0%

          SECTION 2.9. Mandatory Prepayments.

                         (a)      Excess Cash Flow. After the termination of the Availability Period, on each date of delivery of financial statements as required by Sections 5.01(a) and (b), the Borrower shall deliver to the Administrative Agent an Excess Cash Flow Certificate for the fiscal quarter most recently ended and shall simultaneously prepay outstanding Term Loans in the aggregate principal amount equal to the amount of 80% of Excess Cash Flow indicated on such certificate, provided that, after the Deferred Payment Trigger Event, the Borrower shall be thereafter obliged to prepay outstanding Term Loans in the aggregate principal amount equal to 40% of Excess Cash Flow as indicated on such certificate. The Administrative Agent shall notify the Borrower, within 10 Business Days after receipt of such certificate, whether it validates and approves such certificate, and, if it does not validate and approve the certificate, advise the Borrower of the amount of the Excess Cash Flow as calculated by the Administrative Agent. In the absence of manifest error on the part of the Administrative Agent, the Borrower shall adjust the amount to be paid by it on the following Principal Payment Date by the amount necessary to take account of the discrepancy in such the certificate, as certified by the Administrative Agent. Any such prepayment shall be applied in accordance with clause (e) hereof.

                          (b)      Dispositions. The Borrower shall prepay the Term Loans in an amount equal to 100% of the Net Cash Proceeds of any Disposition or series of Dispositions by any Loan Party or any Subsidiary of a Loan Party pursuant to Section 6.3(a)(iii) generating Net Cash Proceeds in excess of $250,000 in the aggregate after the Closing Date. Each such prepayment

- 21 -

shall be due promptly upon receipt by the such Person of such Net Cash Proceeds and shall be applied as set forth in clause (e) below. Notwithstanding the foregoing, the Borrower shall not be required to apply any such proceeds in accordance with clause (e) to the extent that the Borrower advises the Administrative Agent at the time of the relevant Disposition that the Borrower intends to use the Net Cash Proceeds thereof to finance one or more Operating Costs or Project Development Costs permitted by this Agreement, and such Net Cash Proceeds are in fact so applied (or contractually committed to be applied) to such expenditures within 180 days of such Disposition (it being understood that Net Cash Proceeds shall be deemed to be utilized in the same order in which they are received. Any such Net Cash Proceeds which are not applied (or contractually committed to be applied) within such 180 day period as required by the immediately preceding sentence shall forthwith be applied in accordance with clause (e). Notwithstanding the foregoing, the Borrower shall not be required to prepay any proceeds realized form the sale of any Dispositions generated from the sale of assets exclusively related to the Coyote Springs or Mimbres sites. In addition, the Borrower agrees that the sale of any drilling equipment no longer used in the business of the Borrower shall be considered to be Disposition under Section 6.3(a)(iii) .

                         (c)      Casualty Events. The Borrower shall prepay the Term Loans in an amount equal to 100% of the Net Cash Proceeds received by any Loan Party or any Subsidiary of a Loan Party in connection with any Casualty Event or series of Casualty Events generating Net Cash Proceeds in excess of $1,000,000 in the aggregate for any fiscal year. Each such prepayment shall be due promptly upon receipt by such Person of such Net Cash Proceeds and shall be applied as set forth in clause (e) below. Notwithstanding the foregoing, the Borrower shall not be required to apply any such proceeds in accordance with clause (e) to the extent that the Company advises the Administrative Agent at the time of the relevant Casualty Event that it intends to use Net Cash Proceeds thereof to finance the replacement or repair of such affected property, and such Net Cash Proceeds are in fact so applied (or contractually committed to be applied) to such affected Property within 360 days of receipt thereof (it being understood that Net Cash Proceeds shall be deemed to be utilized in the same order in which they are received). Any such Net Cash Proceeds which are not applied (or contractually committed to be applied) within such 360 day period as required by the immediately preceding sentence shall forthwith be applied as set forth in clause (e) below.

                         (d)      Debt Issuances. The Borrower shall prepay the Term Loans in an amount equal to 100% of the Net Cash Proceeds received by the Borrower or any Subsidiary in connection with any Debt Issuance. Each such prepayment shall be due promptly upon receipt by such Person of such Net Cash Proceeds and shall be applied as set forth in clause (e) below.

                         (e)      Application. Any such prepayment shall be applied (i) first, to the Deferred Payments until such payments have been paid in full, (ii) second to installments of the B Term Loan (if any) in inverse order of maturity until paid in full, and (iii) third, to installments of the A Term Loan in inverse order of maturity until paid in full.

          SECTION 2.10. Fees.

                         (a)      The Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee, which shall accrue at 0.250% per annum on the daily amount of the

- 22 -

unused Term Loan Commitment of such Lender during the Availability Period, subject to the last sentence hereof. Accrued facility fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Term Loan Commitments terminate, commencing on the first such date to occur after the date hereof. All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). Such fees shall be payable on an amount of unused commitments for each day equal to the amount of unused Commitments set forth in the table below minus the amount of Term Loans outstanding on such day:

Period	Amount of unused Commitments
From the Closing Date through the last day of September, 2007	$ 3,000,000
October 2007	7,500,000
November 2007	12,500,000
December 2007	16,000,000
January 2008	20,500,000
February 2008	22,000,000
March 2008	23,000,000
April 2008 through the end of the Availability Period	25,000,000

For purposes of illustration, (a) if Term Loans in an amount in excess of $9,000,000 were outstanding on September 15, 2007, no such fee would be payable on such day, and (b) if Term Loans in an amount of $2,000,000 were outstanding on September 15, 2007, such fee would be payable in respect of $1,000,000 in unused Term Loan Commitments on such day.

                         (b)      All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, in the case of facility fees and participation fees, to the Lenders. Fees paid shall not be refundable under any circumstances.

- 23 -

          SECTION 2.11. Interest.

                              (a)      The aggregate principal amount of all outstanding A Term Loans and B Term Loans (if any) shall bear interest from the date such Term Loan is made until the date the principal of such Term Loan is repaid at an annual rate equal the LIBOR Rate for the Interest Period in effect for such Term Loan plus the Applicable Margin for such A Term Loan or B Term Loan, respectively.

                              (b)      Notwithstanding the foregoing, upon any Event of Default, all principal amounts hereunder shall bear interest, after as well as before judgment, at a rate per annum equal to 3% plus the rate otherwise applicable to such Term Loan as provided in the preceding paragraph of this Section.

                              (c)      Accrued interest on each Term Loan shall be payable in arrears on each Interest Payment Date; provided that (i) interest accrued pursuant to paragraph (b) of this Section shall be payable on demand, and (ii) in the event of any prepayment of any Term Loan, accrued interest on the principal amount prepaid shall be payable on the date of such prepayment. Notwithstanding the foregoing, (x) for each Interest Payment Date prior to the first Principal Payment Date, any interest payable with respect to the A Term Loans on such Interest Payment Date shall be capitalized and shall increase the unpaid principal amount of the A Term Loans, and (y) for each Interest Payment Date prior to the Deferred Payment Trigger Event, any interest payable with respect to the B Term Loans on such Interest Payment Date shall be capitalized and shall increase the unpaid principal amount of the B Term Loans.

                              (d)      The applicable LIBOR Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

          SECTION 2.12. Alternate Rate of Interest. If prior to the commencement of any Interest Period for any Term Loan:

                              (a)      the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the LIBOR Rate for such Interest Period; or

                              (b)      the Administrative Agent is advised by the Required Lenders that the LIBOR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Term Loans (or its Term Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) no borrowing request shall be effective, and (ii) the Borrower and the Lenders shall enter into negotiations in good faith with a view to establish a satisfactory alternative basis for computing interest on the Term Loans.

          SECTION 2.13. Increased Costs.

- 24 -

                         (a)      If any Change in Law shall:

                         (i)      impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender; or

                         (ii)      impose on any Lender or the London interbank market any other condition affecting this Agreement or Term Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Term Loan (or of maintaining its obligation to make Term Loans) or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender, such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

                         (b)      If any Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Term Loans made by, such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s or holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender, as the case may be, such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

                         (c)      A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

                         (d)      Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.

          SECTION 2.14. Break Funding Payments. In the event of (a) the payment of any principal of any Term Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the failure to borrow any Term Loan on the date specified in any notice delivered pursuant hereto, then, in each such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. Such loss, cost or expense to any Lender shall be deemed to include an amount determined by such

- 25 -

Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Term Loan had such event not occurred, at the LIBOR Rate that would have been applicable to such Term Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, for the period that would have been the Interest Period for such Term Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate on demand.

          SECTION 2.15. Taxes.

                         (a)      Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of any present and future tax liability and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

                         (b)      In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

                         (c)      The Borrower shall indemnify the Administrative Agent and each Lender, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

                         (d)      As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

- 26 -

                         (e)      Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate.

                         (f)     If the Administrative Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.15, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.15 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This Section shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.

          SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

                         (a)      The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest or fees, or of amounts payable under Section 2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon, New York City time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made into account number 2000193000423 maintained by the Administrative Agent with Wachovia Bank, N.A. located in New York, New York, except that payments pursuant to Sections 2.13, 2.14, 2.15 and 10.3 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars.

                         (b)      If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal then due hereunder,

- 27 -

ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.

                         (c)      If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Term Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Term Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Term Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Term Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Term Loans to any assignee or participant, other than to the Loan Parties or any Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

                         (d)      Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

                         (e)      If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.4(a), 2.16(d) or 10.3(c) , then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

          SECTION 2.17. Mitigation Obligations. If any Lender requests compensation under Section 2.13, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.15, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking

- 28 -

its Term Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

          Each Loan Party represents and warrants to the Lenders that:

          SECTION 3.1. Status and Power. The Borrower is a corporation duly incorporated and validly existing under the laws of the State of Delaware. The Guarantor is a corporation duly incorporated and validly existing under the laws of the State of Nevada. Each Loan Party is duly qualified, registered or licensed in all jurisdictions where such qualification, registration or licensing is required except where the lack of such qualification, registration or licensing could not reasonably be expected to have a Material Adverse Effect. Each Loan Party has all requisite corporate capacity, power and authority to own, hold under license or lease its properties, to carry on its business as now conducted and to otherwise enter into, and carry out the Transactions. None of the Loan Parties nor any of their property has any immunity from jurisdiction of any court or from any legal process (whether through service, notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise).

          SECTION 3.2. Authorization; Enforceability. All necessary action, corporate or otherwise, has been taken to authorize the execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party. Each Loan Party has duly executed and delivered the Loan Documents to which it is a party. The Loan Documents to which each Loan Party is a party are legal, valid and binding obligations of such Loan Party, enforceable against such Loan Party by the other parties thereto in accordance with their respective terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance and other similar laws of general application limiting the enforcement of creditors’ rights generally and the fact that the courts may deny the granting or enforcement of equitable remedies.

          SECTION 3.3. No Conflicts. The execution, delivery and performance by each Loan Party of the Loan Documents and Material Contracts to which it is a party, and the consummation of the transactions contemplated herein and therein (i) do not conflict with, result in any breach or violation of, or constitute a default under the terms, conditions or provisions of (A) the articles of incorporation or by-laws (or comparable constituting documents) of, or any shareholder agreement relating to, any Loan Party or (B) any law, regulation, judgment, decree or order binding on or applicable to any Loan Party or to which its property is subject or any agreement, lease, license, permit or other instrument to which any Loan Party is a party or is otherwise bound or by which any Loan Party benefits or to which any of its property is subject except, in each case, to the extent that such conflict does not and could not reasonably be expected to have a Material Adverse Effect and (ii) do not require the consent or approval of any

- 29 -

Governmental Authority or any other Person which has not been obtained and provided to the Administrative Agent.

          SECTION 3.4. Financial Statements. The Borrower’s unaudited consolidated financial statements (consisting of a balance sheet, statement of operations, statement of changes in shareholder’s deficit, and statement of cash flows) for the quarter ended September 30, 2008, were prepared in accordance with GAAP consistently applied (except that certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted or condensed and subject to normal and recurring year-end adjustments which will not be individually or in the aggregate material) in accordance with past practice and no Material Adverse Change has occurred since such date. Such financial statements fairly present the financial condition of the Borrower as at the date thereof and the financial statements fairly present the results of operations, cash flow and income of the Borrower during the fiscal period covered thereby.

          SECTION 3.5. Intentionally Omitted.

          SECTION 3.6. Litigation, etc. Except as described in Section 3.6 of the Disclosure Schedule, there are no actions, suits, investigations, claims or proceedings which have been commenced or, to the knowledge of any Loan Party, have been threatened in writing against or affecting any Loan Party before any Governmental Authority which contest any of the transactions contemplated in any of the Loan Documents or Material Contracts. There are no actions, suits, investigations, claims or proceedings which have been commenced or, to the knowledge of any Loan Party, have been threatened in writing against or affecting any Loan Party before any Governmental Authority which could reasonably be expected to have a Material Adverse Effect.

          SECTION 3.7. Title to Assets. Except as described in Section 3.7 of the Disclosure Schedule, each Loan Party has a good and marketable title to all of its property and assets which constitute Collateral, free from any Liens other than the Permitted Liens, and no Person has any agreement or right to acquire any of the Collateral except as permitted hereunder.

          SECTION 3.8. Conduct of Business. No Loan Party is in violation of any mortgage, franchise, license, certificate of approval, permit, judgment, decree, order, statute, rule or regulation relating in any way to itself or to the operation of its business or to its property or assets in a manner which could reasonably be expected to have a Material Adverse Effect. Except as set forth in Section 3.8 of the Disclosure Schedule, each Loan Party has all licenses, certificates of approval, permits, registrations, approvals and consents which are required to own its properties and assets and to operate its businesses where they are currently being operated, other than any such items the absence of which could not reasonably be expected to have a Material Adverse Effect.

          SECTION 3.9. Labor and Employment Matters. Except as described in Section 3.9 of the Disclosure Schedule, there are no material employment agreements covering management of the Borrower and there are no collective bargaining agreements or other labor agreements covering any employees of the Borrower. Hours worked by and payment made to employees of the Borrower have not been in violation of any Applicable Law dealing with such matters. All

- 30 -

payments due and payable from the Borrower on account of employee health and welfare insurance have been paid or accrued as a liability on the books of the Borrower.

          SECTION 3.10. No Default. No Default or Event of Default exists or would result from the incurring by any Loan Party of its respective Obligations. No Loan Party is in default under or with respect to any Material Contract or any other contractual obligation in any respect which, individually or together with all such defaults, could reasonably be expected to have a Material Adverse Effect.

          SECTION 3.11. Tax Returns and Taxes. Except as described in Section 3.11 of the Disclosure Schedule, each Loan Party has filed all tax returns and tax reports required by law to have been filed by it and has paid all taxes and governmental charges thereby shown to be owing, except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books.

          SECTION 3.12. Withholding and Other Taxes. Assuming the Loans are funded by bank branches in London or the United States, no income, stamp or other taxes or levies, imposts, deductions, fees, duties, compulsory loans, withholdings or other charges of any nature whatsoever are or will be, under Applicable Law as in effect on the date hereof, imposed, assessed, levied or collected by the United States or any political subdivision or taxing authority thereof or therein on or in respect of principal, interest or fees payable to the Lenders or the Administrative Agent hereunder or under any other Loan Document, except, as of the date hereof, tax payable on net income under the laws of the United States or any State thereof. To the extent this representation is repeated or deemed repeated pursuant to this Agreement or other Loan Documents, this representation shall continue to be true and correct if the Borrower discloses in writing to the Administrative Agent any change as to this representation.

          SECTION 3.13. Material Contracts. The copies of each Material Contract and of any amendments thereto provided or to be provided by the Loan Parties to the Administrative Agent are, or when delivered will be, true and complete copies of such agreements and documents and no consent or other further action is required for the effectiveness and enforceability of any of such agreements heretofore provided and each such agreement is, or when executed and delivered will be, in full force and effect and enforceable by the relevant Loan Party, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance and other similar laws of general application limiting the enforcement of creditors’ rights generally and the fact that the courts may deny the granting or enforcement of equitable remedies.

          SECTION 3.14. Compliance with Environmental Laws. Except as described in Section 3.14 of the Disclosure Schedule, as of the date hereof, the operations and properties of the Borrower are in compliance with applicable Environmental Laws, except where (a) appropriate remedial action acceptable to the Borrower and the applicable Governmental Authority is (or is in the process of) being taken or (b) failure to so comply, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. The Borrower has designed the Project in compliance in all material respects with applicable Environmental Laws and the

- 31 -

Administrative Agent and the Lenders are fully indemnified by the Loan Parties against any future liabilities arising under any applicable Environmental Laws.

          SECTION 3.15. Solvency. After giving effect to the transactions contemplated by this agreement and the other Loan Documents (including the receipt of equity proceeds as contemplated by Section 4.1(m) and receipt of proceeds from the Permitted Royalty Sale), and before and after giving effect to each Term Loan, each Loan Party is, and the Loan Parties on a consolidated basis are, Solvent.

          SECTION 3.16. Locations of Tangible Assets. The addresses of all locations of the inventory, equipment and other tangible assets of the Borrower comprising part of the Collateral (other than inventory in transit) are as set out in Section 3.16 of the Disclosure Schedule. With respect to inventory located at a public warehouse, the Borrower has not issued a negotiable document of title with respect thereto.

          SECTION 3.17. Consents and Approvals for the Project. Except as set forth in Section 3.17 of the Disclosure Schedule, all Approvals and all concessions, mining rights, water rights, easements, mining and civil usufructs, surface rights, rights of way, property rights and other consents between the Borrower and third parties necessary for the development, construction and operation of the Project and all licenses or other rights to use technology have been obtained, are in full force and effect and are sufficient to permit (a) the development and construction of the Project in all material respects as contemplated by the Construction Schedule and Capital Spending Plan and the Feasibility Study, (b) the operation of the Project in all material respects as contemplated by the Feasibility Study and (c) the execution, delivery and performance by any Loan Party of its obligations under the Material Contracts, in each case other than those which (i) are not now necessary and which are expected to be obtained in the ordinary course of business by the time they are necessary or (ii) the failure to have or to obtain will not now and could not reasonably be expected to have a Material Adverse Effect.

          SECTION 3.18. Consents and Approvals for the Security. No consents, approvals, acknowledgements, undertakings, non-disturbance agreements, directions or other documents or instruments which have not already been provided to the Administrative Agent are required to be entered into by any Person (a) to make effective the Security created or intended to be created by the Loan Parties in favor of the Administrative Agent pursuant to the Security Documents, (b) to ensure the perfection and the intended priority of such Security other than financing statements and other registrations made in connection with such Security or (c) to implement the transactions contemplated by the Loan Documents.

          SECTION 3.19. Intentionally Omitted.

          SECTION 3.20. Subsidiaries. The Borrower has no Subsidiaries, other than Cochise.

          SECTION 3.21. Mining Properties. The Mining Properties have been validly granted to and registered in the name of the Borrower, are owned by the Borrower and are in full force and effect and in good standing. Except as set forth in Section 3.7 of the Disclosure Schedule, no Person other than the Borrower and, to the extent provided in the Security Documents, the Administrative Agent, has any right, title or interest in, to or under the Mining Properties or in

- 32 -

the property and rights encompassed thereby other than Permitted Liens. Taken as a whole, the Mining Properties are sufficient in duration, scope, content and effect to permit the Borrower to conduct all activities contemplated in the Feasibility Study to be conducted by it over the time periods specified therein.

          SECTION 3.22. Feasibility Study. As of the date hereof, the Feasibility Study (as augmented by the Construction Schedule and Capital Spending Plan and the Financial Model) does not, taken as a whole, include any untrue statement of a material fact or omit a material fact necessary to make the information therein not misleading. As of the date hereof, the Borrower believes that, taken as a whole, except for the assumptions relating to metal prices to the extent such prices are not hedged, interest rates, exchange rates and the rate of inflation (which assumptions reflect solely a choice of a reasonable manner of calculation and presentation), (a) the Feasibility Study (as augmented by the Construction Schedule and Capital Spending Plan and Financial Model), taken as a whole, is fair and reasonable in light of the Borrower’s expectations as of the date hereof with respect to the Project, (b) the assessment of reserves of the Project contained in the Feasibility Study (as augmented by the Construction Schedule and Capital Spending Plan and Financial Model) is fair and reasonable, and (c) the cash flow calculations contained in the Feasibility Study (as augmented by the Construction Schedule and Capital Spending Plan and Financial Model) are based on assumptions which, at the date hereof, are fair and reasonable in light of the Borrower’s expectations with respect to the Project.

          SECTION 3.23. Financial Model, Construction Schedule and Capital Spending Plan. The Borrower believes that, except for the assumptions relating to metal prices to the extent such prices are not hedged, interest rates, exchange rates and the rate of inflation (which assumptions reflect solely a choice of a reasonable manner of calculation and presentation), (a) the Construction Schedule and Capital Spending Plan, and the Financial Model, taken as a whole, are fair and reasonable in light of the Borrower’s expectations and information as of the date hereof with respect to the Project and (b) taken as a whole, the cash flow calculations contained in the Financial Model are based on assumptions which, at the date hereof, are fair and reasonable in light of the Borrower’s expectations and information with respect to the Project.

          SECTION 3.24. Project Information. Except as otherwise expressly provided herein, the information provided by or on behalf of the Loan Parties in writing to the Administrative Agent (except to the extent such information relates to Persons other than the Loan Parties) but excluding metal prices to the extent such prices are not hedged, interest rates, exchange rates and the rate of inflation (which assumptions reflect solely a choice of a reasonable manner of calculation and presentation), taken as a whole, does not contain any untrue statement of material fact (or omit any material fact or circumstance necessary in order to make the information contained therein not misleading) known to the Borrower at the time of execution of this Agreement.

          SECTION 3.25. Intellectual Property. The Borrower owns or is licensed or otherwise has the right to use all Intellectual Property that is used in the operation of its business without conflict with the rights of any other Person (other than any Intellectual Property the absence of which or any such conflict with respect to which could not reasonably be expected to have a Material Adverse Effect). The Borrower has not received any notice of any claim of infringement or similar claim or proceeding relating to any of the Intellectual Property which if

- 33 -

determined against the Borrower could reasonably be expected to have a Material Adverse Effect.

          SECTION 3.26. Liens. Subject to the requisite registrations of the Security Documents or filings thereof, the Liens granted to the Administrative Agent pursuant to the Security Documents are fully perfected first priority Liens in and to the Collateral, subject only to Permitted Liens.

          SECTION 3.27. Insurance. All insurance required to be maintained pursuant to Section 5.5 is in full force and effect.

          SECTION 3.28. Ranking. The Term Loans shall rank at least pari passu with all other unsecured indebtedness of the Loan Parties, except for those which are preferred by provisions of applicable statutory law.

ARTICLE IV.
CONDITIONS

          SECTION 4.1. Closing Date. The obligations of the Lenders to make Term Loans hereunder shall not become effective until the second Business Day after the date on which each of the following conditions is satisfied in a manner satisfactory to the Administrative Agent (or waived in accordance with Section 10.2):

                         (a)      The Administrative Agent shall have received executed versions of each of the Loan Documents from each of the parties thereto, including the Borrower.

                         (b)      Each of the Material Contracts set forth on clause (A) of Schedule 1.1 shall be in form and substance reasonably satisfactory to the Administrative Agent and shall have been executed by each of the parties thereto and delivered to the Administrative Agent. Each of the Consent Agreements shall be in form and substance satisfactory to the Administrative Agent and shall have been executed by each of the parties thereto and delivered to the Administrative Agent.

                         (c)      The Administrative Agent and the Borrower shall have agreed on (i) the Financial Model, the Construction Schedule and Capital Spending Plan, and the Environmental Plan and (ii) the operating budgets (which shall include an operating budget for contract mining or lease payments for mining equipment), copies of which shall have been delivered to the Administrative Agent (it being understood that the initial budgets shall be included as part of the Financial Model).

                         (d)      Evidence that the Existing Bridge Loan Facility has been repaid in full and all Liens securing the obligations thereunder have been released.

                         (e)      Evidence that the Forward Sale Price Protection Program has been implemented.

                         (f)      The Independent Technical Consultant shall have been appointed.

- 34 -

                         (g)      The Administrative Agent and the Borrower shall have agreed on the forms of Completion Certificates and the tests for Completion for purposes thereof.

                         (h)      The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Closing Date) of (i) Ballard Spahr Andrews & Ingersoll LLP, Arizona counsel for the Borrower, and (ii) Bingham McCutchen LLP, New York counsel to the Administrative Agent, covering such matters relating to the Loan Parties, this Agreement or the Transactions as the Administrative Agent shall reasonably request.

                         (i)      The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Loan Parties, the authorization of the Transactions and any other legal matters relating to the Borrower and the Guarantor, this Agreement or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel, including, but not limited to:

                         (i)      a copy of the certificate of incorporation and by-laws or other founding documentation of each of the Borrower and the Guarantor;

                         (ii)      a copy of the resolutions of the board of directors or other appropriate decision making body of each of the Borrower and the Guarantor authorizing the conclusion and execution of each of the Loan Documents; and

                         (iii)      specimen signatures of each of the authorized officers of the Borrower for the purposes of implementation of the Loan Documents.

                         (j)      The Administrative Agent shall have received:

                         (i)      evidence that all insurance required to be maintained pursuant to the Loan Documents has been obtained and is in effect, together with evidence that the Administrative Agent has been named as “additional insured” and “loss payee” under each policy of insurance;

                         (ii)      evidence that the Borrower has obtained all Approvals necessary to commence implementation of the Construction Schedule and Capital Spending Plan;

                         (iii)      to the extent relevant, searches of Uniform Commercial Code or other similar records or filings in the jurisdiction of formation of the Borrower, the jurisdiction of the chief executive office of the Borrower and each jurisdiction where any Collateral is located or where a filing would need to be made in order to perfect the Administrative Agent’s security interest in the Collateral, copies of the financing statements on file in such jurisdictions and evidence that no Liens exist other than Liens permitted by Section 6.2;

                         (iv)      all certificates evidencing all certificated equity interests pledged to the Administrative Agent pursuant to the Security Documents, together with duly executed in blank, undated stock powers attached thereto;

- 35 -

                         (v)      in the case of any real property Collateral, a title insurance policy together with proof of payment of all fees and premiums for such policy, from the applicable title insurance Loan Party and in amounts satisfactory to the Administrative Agent, insuring the interest of the Administrative Agent as mortgagee;

                         (vi)      all applicable “Know Your Customer” client identification documentation;

                         (vii)      in the case of any personal property Collateral located at a premises leased the Borrower, such estoppel letters, consents and waivers from the landlords on such real property as may be required by the Administrative Agent; and

                         (viii)      the Collateral Accounts shall have been established with a bank acceptable to the Administrative Agent and the Collateral Account Agreement shall have been executed by such bank and the Lenders, the Administrative Agent and the Borrower and delivered to the Administrative Agent.

                         (k)      The Lenders shall have completed a due diligence investigation of the Project, the Borrower and its subsidiaries in scope, and with results, satisfactory to the Lenders, and shall have been given such access to the management records, books of account, contract and properties of Borrower and its subsidiaries and shall have received such financial, business and other information regarding the Project and each of the foregoing Persons and their businesses as they shall have reasonably requested.

                         (l)      The Administrative Agent shall have received certification that there does not exist (i) any order, decree, judgment, ruling or injunction which restrains the consummation of the Loan Documents in the manner contemplated hereby, and (ii) any pending or threatened action, suit, investigation or proceeding which is reasonably likely to be adversely determined and, if adversely determined, could reasonably be expected to have a Material Adverse Effect.

                         (m)      The Borrower shall have received additional equity proceeds in an amount not less than $23,000,000 on terms acceptable to the Administrative Agent.

                         (n)      The Administrative Agent shall have received a certificate, dated the Closing Date and signed by a Financial Officer, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.2.

                         (o)      The Administrative Agent shall have received all fees, costs and expenses and other amounts due and payable on or prior to the Closing Date in connection with the Transaction, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder.

The Administrative Agent shall notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Term Loans hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 10.2) at or prior to 3:00 p.m., New York City time, on September 30, 2007 (and, in the event such conditions are not so satisfied or waived, the Term Loan Commitments shall terminate at such time).

- 36 -

          SECTION 4.2. Additional Conditions. The obligation of each Lender to make a Term Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions:

                         (a)      The representations and warranties of the Borrower set forth in this Agreement shall be true and correct on and as of the date of such Borrowing.

                         (b)      At the time of and immediately after giving effect to such Borrowing no Default shall have occurred and be continuing.

Each Borrowing shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.

ARTICLE V.
AFFIRMATIVE COVENANTS

          Until the Term Loan Commitments have expired or been terminated and the principal of and interest on each Term Loan and all fees payable hereunder shall have been paid in full, the Loan Parties covenant and agree with the Lenders that:

          SECTION 5.1. Financial Statements and Reporting. The Borrower, will furnish the Administrative Agent and each Lender with the following documents, statements and reports (by email and in pdf format):

                         (a)      Annual Financial Statements. Within 90 days after the end of each fiscal year of the Borrower, its audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth, in the case of statements of operations and cash flows, in comparative form the figures for the previous fiscal year, all reported on by Mayer Hoffman McCann P.C. or other independent public accountants of recognized national standing to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated subsidiaries in accordance with GAAP consistently applied.

                         (b)      Quarterly and Semi-Annual Financial Statements. For the first 3 years after the Closing Date, 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, and after such 3 year period, within 45 days after the end of each fiscal half year, the Borrower shall deliver its consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal quarter or half year, as applicable and the then elapsed portion of the fiscal year, setting forth, in the case of statements of operations and cash flows, in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated subsidiaries in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes.

                         (c)      Quarterly Financial Projections. As soon as available, but in any event at least 30 days prior to the close of each fiscal quarter of the Borrower, a quarterly projection with respect to the operations of the Borrower for the next four fiscal quarters. Such projections shall

- 37 -

be certified by the Financial Officer of the Borrower to the effect that such projections have been prepared on the basis of sound financial planning practice and that such Financial Officer has no reason to believe that they are misleading in any material respect based upon the knowledge and information available at the time of creation, update, and/or certification.

                         (d)      Certificate of Compliance. Concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Borrower (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Section 6.10 and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 3.4 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate.

                         (e)      Certificate of Accounting Firm. Concurrently with any delivery of financial statements under clause (a) above, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines).

                         (f)      Construction Progress Reports. As soon as available, but in no event more than 20 days after the end of each calendar month prior to Completion, a summary of construction of the Project during such month in a form agreed to by the Borrower and the Administrative Agent, describing (i) physical progress and expenditure during such month, (ii) cumulative expenditure through the end of such month, (iii) variations of such progress and expenditure from that set forth in the Construction Schedule and Capital Spending Plan, (iv) the Borrower’s then current estimates of total Project Development Costs and of the date of Start-up of Commercial Production and the Completion Date and (v) any fact or occurrence of which the Borrower is aware that (x) may reasonably be expected to increase the aggregate Project Development Costs above those in the Construction Schedule and Capital Spending Plan, delay Start-up of Commercial Production or the Completion Date beyond the then-currently estimated dates therefor or have a Material Adverse Effect on the performance of the Project when completed or (y) may reasonably be expected to render unreasonable or inappropriate any material assumption on which the Financial Model or the Construction Schedule and Capital Spending Plan was based, and the anticipated manner and timing of actions proposed to be taken by the Borrower in reaction to any such fact or occurrence.

                         (g)      Operating Reports. As soon as available but in no event more than 20 days after the end of each fiscal quarter after the earlier of the date of Completion or Start-up of Commercial Production, a summary of such month’s or such fiscal quarter’s operations and a summary of the fiscal year-to-date operations in a form agreed to by the Borrower and the Administrative Agent, in each case compared to the budgets and forecasts delivered pursuant to clause (h) above, including information in reasonable detail concerning (i) Project production and shipment of Project production during such period and variations from the related projections for such period reflected in the Financial Model, (ii) the Borrower’s inventory of product at the end of such period, (iii) revenues generated during such period from the sale of product, (iv) Operating Costs during such period as compared to the Financial Model, (v) costs

- 38 -

constituting Capital Expenditures during such period as compared to the Construction Schedule and Capital Spending Plan, (vi) the Borrower’s most recent cash planning forecast covering at least the next following month or fiscal quarter, as the case may be, and (vii) any material developments during such period in Project operation, including material technical problems, discovery of any material defects in the physical facilities of the Project, material interruptions to operation or material labor difficulties.

                         (h)      Budget. As soon as available, but in any event at least 30 days prior to the close of each fiscal year of the Borrower, the Borrower’s budget and operating plan for the following fiscal year, such budget to be in a form reasonably satisfactory to the Administrative Agent.

                         (i)      Environmental Compliance. Any material update of the Environmental Plan within 30 days after such update is available. The Borrower shall promptly, but in no event later than 5 Business Days after the Borrower obtains knowledge thereof, deliver written notice to the Administrative Agent (for delivery to each Lender) of the occurrence of (i) any material environmental accident or spill affecting the Borrower or the Project, (ii) any other condition, event or circumstance that results in non-compliance by the Borrower or the Project with any applicable Environmental Law in any material respect and (iii) any other material condition, event or circumstance which is listed as a reportable event under the Environmental Plan then in effect. In addition, the Borrower shall, upon the request of the Administrative Agent, but in any event no more frequently than annually (unless an Event of Default shall have occurred and be continuing) provide a report to the Administrative Agent with regard to the Borrower’s compliance with applicable Environmental Laws in a form as reasonably agreed between the Borrower and the Administrative Agent.

                         (j)      Insurance Certification. As soon as available, but in no event more than 30 days after the end of each fiscal year of the Borrower, a certification by the Borrower’s insurance broker confirming insurance coverage and payment of premiums.

                         (k)      Other Information. Promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request.

Any delivery required to be delivered by clauses (a) and (b) of this Section by the Borrower shall be deemed to be delivered to the Administrative Agent and the Lender upon the filing of such items with the Securities and Exchange Commission or other applicable securities commission, provided that such items are readily available for public viewing.

          SECTION 5.2. Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following:

                         (a)      the occurrence of any Default;

                         (b)      the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Affiliate

- 39 -

thereof that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect;

                         (c)      the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $250,000; and

                         (d)      any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

          SECTION 5.3. Existence; Conduct of Business. The Borrower will do or cause to be done all things reasonably necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business.

          SECTION 5.4. Payment of Obligations. Each Loan Party shall pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) such Loan Party has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

          SECTION 5.5. Maintenance of Properties; Insurance. Each Loan Party will (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations.

          SECTION 5.6. Books and Records; Inspection Rights. Each Loan Party will keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. Each Loan Party will permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.

          SECTION 5.7. Compliance with Laws. Each Loan Party will comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

- 40 -

          SECTION 5.8. Use of Proceeds. The proceeds of the Term Loans will be used only for the purposes of (a) repayment of Existing Bridge Loan Facility (to the extent remaining unpaid) and (b) costs and expenses in connection with redevelopment of the Project. No part of the proceeds of the Term Loans will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board of Governors of the Federal Reserve System, including Regulations T, U and X.

          SECTION 5.9. Project; Construction; Etc.

                         (a)      The Borrower shall not change in any material respect the purpose or scope of the Project from that set forth in the Feasibility Study (as augmented by the Construction Schedule and Capital Spending Plan) unless approved in writing by the Required Lenders. The physical facilities to be constructed and owned by the Borrower shall be substantially the same as those described in the Feasibility Study (as augmented by the Construction Schedule and Capital Spending Plan) and shall be constructed pursuant to and substantially in accordance with the Construction Schedule and Capital Spending Plan.

                         (b)      The Borrower shall enforce against the other parties to the Material Contracts any rights (including warranty rights) under the Material Contracts, except to the extent non-enforcement thereof could not reasonably be expected to have a Material Adverse Effect.

          SECTION 5.10. Updated Financial Model.

                         (a)      On or prior to the date of delivery of financial statements provided for in Sections 5.1(a) and (b), the Borrower shall deliver to the Administrative Agent an updated Financial Model. Each updated Financial Model shall (i) be in substantially the form of, and contain the same type of data, projections, forecasts, calculations, assumptions and other information as, the Financial Model delivered pursuant to Section 11.2(b), but shall be updated to include actual financial results and other current financial information (including with respect to the price for unhedged copper production) and (ii) provide an explanation of any deviation in the amount attributed to any line item specified in such Financial Model where such deviation is 10% or more of the amount attributed to the same line item in the prior Financial Model unless such deviation has been explained and incorporated into a prior Financial Model; and (iii) include such other information as the Administrative Agent may reasonably request.

                         (b)       The Administrative Agent shall have 10 days from the date of receipt of an updated Financial Model to accept or reject such updated Financial Model. In the event that the Administrative Agent accepts such updated Financial Model, it shall become the current Financial Model. The Administrative Agent shall promptly review such updated Financial Model, and if the Administrative Agent does not accept such updated Financial Model, it shall promptly notify the Borrower thereof, the Borrower shall, within 10 Business Days and after consultation with the Administrative Agent as to the reasons therefor, submit an appropriately revised Financial Model. Following such resubmission, the process shall be repeated until the Financial Model has been accepted by the Administrative Agent. To the extent that a fiscal quarter commences without a Financial Model having been approved in accordance with this

- 41 -

Section 5.10, the previously approved Financial Model shall remain in effect until a revised Financial Model shall have been approved.

          SECTION 5.11. Further Assurances. Each Loan Party will, and will cause each of its Subsidiaries to, cooperate with the Lenders and the Administrative Agent and execute such further instruments and documents as the Lenders or the Administrative Agent shall reasonably request to carry out to their satisfaction the transactions contemplated by this Agreement and the other Loan Documents. If the Borrower enters into any Material Contract after the Closing Date, it shall provide a Consent Agreement to such Material Contract in a form reasonably acceptable to the Administrative Agent (if such Material Contract has a value in excess of $1,000,000, as determined by the Administrative Agent in consultation with the Borrower).

          SECTION 5.12. Forward Sale Price Protection Program. In the event that the average forward copper price for the period from October 1, 2010 through December 31, 2011 exceeds $2.00/lb, the Borrower shall implement additional copper price Hedging Agreements on terms satisfactory to the Administrative Agent in order to replace any copper price Hedging Agreements terminated pursuant to Sections 10.15, 10.16 or otherwise.

ARTICLE VI.
NEGATIVE COVENANTS

          Until the Term Loan Commitments have expired or terminated and the principal of and interest on each Term Loan and all fees payable hereunder have been paid in full, the Borrower covenants and agrees with the Lenders that:

          SECTION 6.1. Indebtedness. The Loan Parties will not create, incur, assume or permit to exist any Indebtedness, except:

                         (a)     Indebtedness created hereunder;

                         (b)      Indebtedness in respect of capital leases and purchase money obligations for fixed or Capital Assets within the limitations set forth in Section 6.2(d); provided, that the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed $250,000; and

                         (c)      Indebtedness in respect of letters of credit issued in connection with obligations arising under Material Contracts or other vendor accounts payable in the ordinary course of business.

          SECTION 6.2. Liens. The Loan Parties will not create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except

                         (a)      Permitted Liens;

- 42 -

                         (b)      Liens as of the Closing Date and set forth on Schedule 6.2 (provided that the aggregate amount of Indebtedness or other obligations secured by such Liens does not exceed $1,000,000);

                         (c)      the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing);

                         (d)      Liens securing Indebtedness permitted under Section 6.1(b); provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition; and

                         (e)      Liens resulting from the Permitted Royalty Sale.

          SECTION 6.3. Fundamental Changes; Dispositions; Subsidiaries; Etc.

                         (a)      The Borrower will not merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, or make any Disposition, provided that the Borrower may make Dispositions

                         (i)      of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business,

                         (ii)      of inventory in the ordinary course of business, and

                         (iii)      of Property which results in an aggregate amount of proceeds not to exceed $250,000 from and after the Closing Date, provided that the Net Cash Proceeds of any such Dispositions pursuant to this clause (iii) are applied in accordance with Section 2.9(b) .

                         (b)      The Borrower will not engage in any business or exploration other than the development of the Project or, in accordance with the terms of this Agreement, the Coyote Springs or Mimbres sites.

          SECTION 6.4. Investments, Loans, Advances, Guarantees and Acquisitions. The Borrower will not purchase, hold or acquire any Equity Interest, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person (other than Cochise), or purchase or otherwise acquire any assets of any other Person constituting a business unit, except (a) Permitted Investments, (b) investments in Coyote Springs and the Mimbres sites, in accordance with the terms of this Agreement, (c) and other investment in an amount not to exceed $20,000.

          SECTION 6.5. Hedging Agreements. The Loan Parties will not enter into any Hedging Agreement with respect to copper, except the Forward Sale Price Protection Program.

- 43 -

          SECTION 6.6. Restricted Payments. The Borrower will not declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment except that

                         (a)      the Borrower may make Restricted Payments so long as (i) Completion shall have occurred, (ii) immediately after making such payment, the Debt Service Coverage Ratio for any Historical Test Period or Future Test Period shall not be less than 1.8:1.00, (iii) the Debt Service Reserve Account is fully funded, (iv) the Borrower shall be in compliance with all financial covenants on a proforma basis after giving effect to such Restricted Payment or expenditure (calculated on a proforma basis with respect to the Historical Test Period most recently ended and Future Test Period from such date), and (v) no Default or Event of Default exist or shall occur after giving effect to such Restricted Payment;

                         (b)      the Borrower may make Restricted Payments relating to exploration expenditures at the Mimbres and Coyote Springs sites, so long as (i) Completion shall have occurred, (ii) immediately after making such payment, the Debt Service Coverage Ratio for any Historical Test Period or Future Test Period shall not be less than 1.3:1.00, (iii) the Debt Service Reserve Account is fully funded, (iv) the Borrower shall be in compliance with all financial covenants on a proforma basis after giving effect to such Restricted Payment or expenditure (calculated on a proforma basis with respect to the Historical Test Period most recently ended and Future Test Period from such date), (v) no Default or Event of Default exist or shall occur after giving effect to such Restricted Payment, (vi) the maximum amount of all such expenditures made pursuant to this clause (b) relating to the Mimbres site shall not exceed $2,750,000, and (vii) the maximum amount of all such expenditures relating to the Coyote Springs site made pursuant to this clause (b) shall not exceed $2,100,000 in the aggregate; and

                         (c)      the Borrower may make Restricted Payments constituting “Liquidity Incentive Payments” in connection with and as defined under the $23 million equity financing documentation as such documentation is in effect on the date hereof, provided that such amounts do not exceed $2,760,000 in the aggregate.

          SECTION 6.7. Transactions with Affiliates. The Borrower will not sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower than could be obtained on an arm’s-length basis from unrelated third parties, and (b) any Restricted Payment permitted by Section 6.6.

          SECTION 6.8. Restrictive Agreements. The Borrower will not enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon the ability of the Borrower to create, incur or permit to exist any Lien upon any of its property or assets; provided that the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement.

          SECTION 6.9. Material Contracts; Royalty Arrangements. The Borrower shall not amend, modify or waive any material provision of any Material Contract or royalty arrangement in any way adverse to the Lenders.

          SECTION 6.10. Financial Covenants.

- 44 -

                         (a)      Starting with the last day of the first full fiscal quarter after Completion, the Borrower will not permit the Debt Service Coverage Ratio for any Historical Test Period or any Future Test Period to be less than 1.5 to 1.00.

                         (b)      Starting with the last day of the first full fiscal quarter after Completion, the Borrower will not permit the Interest Coverage Ratio for any Historical Test Period or any Future Test Period to be less than 2.0 to 1.00.

                         (c)      The Borrower will not permit the ratio of (i) Indebtedness of the type described in clauses (a), (b), and (c) of the definition thereof, to (ii) Shareholders Equity to exceed 1.3 to 1.00 at any time. For purposes of this clause (c), “Shareholders Equity” means, as of the date of determination, all items which would be included under “shareholders equity” on a consolidated balance sheet of the Borrower and its Subsidiaries in accordance with GAAP, provided that such amount shall be without regard to the accumulated deficit as of March 31, 2007.

ARTICLE VII.
EVENTS OF DEFAULT

          If any of the following events (“Events of Default”) shall occur:

                         (a)      the Borrower shall fail to pay any principal of the Term Loans when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

                         (b)      the Borrower shall fail to pay any interest on the Term Loans or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five Business Days;

                         (c)      any representation or warranty made or deemed made by or on behalf of any Loan Party in or in connection with this Agreement or any amendment or modification hereof or waiver hereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any amendment or modification hereof or waiver hereunder, shall prove to have been incorrect in any material respect when made or deemed made; provided that any such representation or warranty, if capable of being cured, may be cured by the Borrower within a ten day period;

                         (d)      the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.2, 5.3 (with respect to the Borrower’s existence) or 5.8 or in Article VI; provided that any Default under Sections 6.10 (a) or (b) with respect to a calculation of any Future Test Period (but not any Historical Test Period) shall only be an “Event of Default” hereunder upon a vote thereof by the Required Lenders;

                         (e)      the Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (d) of this Article) or any other Loan Document, and such failure shall continue unremedied for a period of

- 45 -

20 days after notice thereof from the Administrative Agent to the Borrower (which notice will be given at the request of any Lender);

                         (f)      any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; or any Loan Party shall default with respect to its obligations under any royalty arrangements;

                         (g)      an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of either Loan Party or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 90 days or an order or decree approving or ordering any of the foregoing shall be entered;

                         (h)      a Loan Party shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (g) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for a Loan Party or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

                         (i)      a Loan Party shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

                         (j)      one or more judgments for the payment of money in an aggregate amount in excess of $100,000 shall be rendered against a Loan Party and the same shall remain undischarged for a period of 45 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of a Loan Party to enforce any such judgment;

                         (k)      an ERISA Event shall have occurred that, in the opinion of Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower in an amount exceeding $250,000 from and after the Closing Date;

                         (l)      Completion shall not occur on or prior to the 25 month anniversary of the Closing Date; or

                         (m)      any Change of Control shall occur;

- 46 -

then, and in every such event (other than an event with respect to the Borrower described in clause (g) or (h) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Term Loan Commitments, and thereupon the Term Loan Commitments shall terminate immediately, and (ii) declare the Term Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Term Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (g) or (h) of this Article, the Term Loan Commitments shall automatically terminate and the principal of the Term Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

ARTICLE VIII.
THE ADMINISTRATIVE AGENT

          Each of the Lenders hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto.

          The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Loan Parties or other Affiliate thereof as if it were not the Administrative Agent hereunder.

          The Administrative Agent shall not have any duties or obligations except those expressly set forth herein. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.2), and (c) except as expressly set forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.2) or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be

- 47 -

deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

          The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

          The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Term Loan provided for herein as well as activities as Administrative Agent.

          Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 10.3 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in

- 48 -

respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.

          Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder.

ARTICLE IX.
GUARANTY

          SECTION 9.1. Guaranty. Guarantor hereby unconditionally and irrevocably guarantees to each of the Lenders the punctual payment, performance in full and observance when due, whether at stated maturity, by acceleration or otherwise, of the Borrower’s Obligations (the “Guaranteed Obligations”) now or hereafter existing under any Loan Document, whether for principal, interest (including, without limitation, all interest that accrues after the commencement of any bankruptcy proceeding of the Borrower, whether or not constituting an allowed claim in such bankruptcy proceeding), fees, commissions, expense reimbursements, indemnifications or otherwise, and agrees to pay any and all costs, fees and expenses (including reasonable counsel fees and expenses) incurred by the Administrative Agent and the Lenders in enforcing any rights under the guaranty set forth in this Article IX, as they become due from time to time in accordance with the express provisions of the Loan Documents. The Administrative Agent shall be entitled to enforce this Guarantee for its own benefit and the ratable benefit of the Lenders and each Lender shall be entitled to enforce this Guarantee for its own benefit through the Administrative Agent in respect of the Guaranteed Obligations owing to it but without duplication. Without limiting the generality of the foregoing, Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Borrower to the Administrative Agent and the Lenders under any Loan Document but for the fact that they are unenforceable or not allowable due to the existence of an bankruptcy proceeding involving the Borrower.

          SECTION 9.2. Guaranty Absolute. Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Administrative Agent or the Lenders with respect thereto. The obligations of Guarantor under this Article IX are independent of the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against Guarantor to enforce such obligations, irrespective of whether any action is brought against the Borrower or whether the Borrower is joined in any such action or actions. The liability of Guarantor under this Article IX constitutes a primary obligation, and not a contract of surety, and shall be irrevocable, absolute and unconditional irrespective of, and Guarantor hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the following:

- 49 -

                         (a)      any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto;

                         (b)      any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to the Borrower or otherwise

                         (c)      any taking, exchange, release, subordination or non-perfection of any of the Collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;

                         (d)      any change, restructuring or termination of the corporate structure or existence of any of the Loan Parties; or

                         (e)      except for payment in full of the Guaranteed Obligations, any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Administrative Agent or the Lenders that might otherwise constitute a defense available to, or a discharge of, any of the Loan Parties or any other guarantor or surety.

This Article IX shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Administrative Agent or the Lenders or any other Person upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise (and whether as a result of any demand, settlement, litigation or otherwise), all as though such payment had not been made.

          SECTION 9.3. Waiver. Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Article IX and any requirement that the Administrative Agent or the Lenders exhaust any right or take any action against any of the Loan Parties or any other Person or any Collateral. Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated herein and that the waiver set forth in this Section 9.3 is knowingly made in contemplation of such benefits. Guarantor hereby waives any right to revoke this Article IX, and acknowledges that this Article IX is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.

          SECTION 9.4. Continuing Guaranty; Assignments. This Article IX is a continuing guaranty and shall (a) remain in full force and effect until payment in full of the Guaranteed Obligations, (b) be binding upon Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Administrative Agent and the Lenders and their successors, pledgees, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Lender may pledge, assign or otherwise transfer all or any portion of its rights and obligations under this agreement (including, without limitation, all or any portion of its Term Loan Commitment and its Term Loans) to any other Person, and such other Person shall

- 50 -

thereupon become vested with all the benefits in respect thereof granted such Lender herein or otherwise.

          SECTION 9.5. Subrogation. Guarantor shall not exercise any rights that it may now or hereafter acquire against the Borrower or any other guarantor that arise from the existence, payment, performance or enforcement of Guarantor’s obligations under this Article IX, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Administrative Agent or the Lenders against any of the Loan Parties or any other guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any of the Loan Parties or any other guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy or right, unless and until payment in full of the Guaranteed Obligations; provided, that Guarantor shall not have any rights hereunder against the Borrower if all or any portion of the Guaranteed Obligations shall have been satisfied with proceeds from the exercise of remedies in respect of the Equity Interest of the Borrower pursuant to any Security Document. In addition, unless and until payment in full of the Guaranteed Obligations, any indebtedness of the Borrower now or hereafter held by Guarantor is subordinated in right of payment to the Guaranteed Obligations, and any such indebtedness collected or received by Guarantor after an Event of Default has occurred and is continuing but prior to payment in full of the Guaranteed Obligations, shall be held in trust for Administrative Agent on behalf of the Administrative Agent and the Lenders and shall forthwith be paid over to Administrative Agent for the benefit of itself and the Lenders to be credited and applied against the Guaranteed Obligations. If any amount shall be paid to Guarantor in violation of the immediately preceding two sentences, such amount shall be held in trust for the benefit of the Administrative Agent and the Lenders and shall forthwith be paid to Administrative Agent for the benefit of the Administrative Agent and the Lenders to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Article IX, whether matured or unmatured, in accordance with the terms of this Agreement, or to be held as Security for any Guaranteed Obligations or other amounts payable under this Article IX thereafter arising. Upon payment in full of the Guaranteed Obligations, the Administrative Agent and the Lenders will, at the Guarantor’s request and expense, execute and deliver to the Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to Guarantor of an interest in the Guaranteed Obligations resulting from such payment by Guarantor.

          SECTION 9.6. Maximum Obligations. Notwithstanding any provision herein contained to the contrary, Guarantor’s liability with respect to the Obligations shall be limited to an amount not to exceed, as of any date of determination, the amount that could be claimed by the Administrative Agent and the Lenders from Guarantor without rendering such claim voidable or avoidable under Section 548 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.

ARTICLE X.
MISCELLANEOUS

          SECTION 10.1. Notices.

- 51 -

                         (a)      Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

                         (i)      if to the Borrower, to it at 1 West Wetmore, Suite 203, Tucson, AZ 85705, Attention of Chief Financial Officer (Telecopy No. 520-292-0268);

                         (ii)      if to the Administrative Agent, to Nedbank Limited, London Branch, 1st Floor, Old Mutual Place, 2 Lambeth Hill, London EC4V 4GG, Attention: The Head: Mining and Resources (Telecopy No. 44-707-002-3408), with a copy to Nedbank Limited, 135 Rivonia Road, Sandown 2057, Republic of South Africa, Attention: The Head: Investment Banking;

                         (iii)      if to any other Lender, to it at its address (or telecopy number) as indicted to the Administrative Agent.

                         (b)      Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

                         (c)      Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

          SECTION 10.2. Waivers; Amendments.

                         (a)      No failure or delay by the Administrative Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Term Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default at the time.

- 52 -

                         (b)      Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Term Loan Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of the Term Loans or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of the Term Loans, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Term Loan Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.16(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, or (v) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent hereunder without the prior written consent of the Administrative Agent.

          SECTION 10.3. Expenses; Indemnity; Damage Waiver.

                         (a)      The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of any advisor or counsel for the Administrative Agent or any Lender (provided that the Borrower shall not be required to pay for more than one counsel to the Administrative Agent and the Lenders, other than special local counsel), in connection with the syndication of the Term Loans provided for herein (which in any event shall be conducted in accordance with Section 10.4(b)), the due diligence, preparation, negotiation and administration of this Agreement or any amendments, modifications or waivers of the provisions hereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and the other Loan Documents and (ii) all out-of-pocket expenses incurred by the Administrative Agent or any Lender, including the fees, charges and disbursements of any advisor or counsel for the Administrative Agent or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with the Term Loans made, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Term Loans.

                         (b)      The Borrower shall indemnify the Administrative Agent and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Term Loan or the use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property

- 53 -

owned or operated by the Loan Parties, or any Environmental Liability related in any way to the Loan Parties, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

                         (c)      To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent in its capacity as such.

                         (d)      To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions or any Term Loan or the use of the proceeds thereof.

                         (e)      All amounts due under this Section shall be payable promptly after written demand therefor.

          SECTION 10.4. Successors and Assigns.

                         (a)      The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

                         (b)      (i)      Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Term Loan Commitment and the Term Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of:

                         (A)      the Borrower, provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, or, if an

- 54 -

Event of Default has occurred and is continuing, any other assignee; provided that any such assignment to an Affiliate shall in all cases be subject to Section 2.17;

                         (B)      the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment of any Term Loan Commitment to an assignee that is a Lender with a Term Loan Commitment immediately prior to giving effect to such assignment; and

                         (ii)      Assignments shall be subject to the following additional conditions:

                         (A)      except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Term Loan Commitment or Term Loans, the amount of the Term Loan Commitment or Term Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing;

                         (B)      each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, provided that this clause shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one type of Term Loan Commitment or Term Loans;

                         (C)      the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and

                         (D)      the assignee, if it shall not be a Lender, shall designate to the Administrative Agent one or more Credit Contacts to whom all syndicate-level information (which may contain material non-public information about the Loan Parties and their related parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

                         (iii)      Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this

- 55 -

Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 10.3) . Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 10.4 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

                         (iv)      The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Term Loan Commitment of, and principal amount of the Term Loan Commitment or Term Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

                         (v)      Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to Section 2.5(c), 2.6(d) or (e), 2.7(b), 2.16(d) or 10.3(c), the Administrative Agent shall have no obligation to accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

                         (i)      Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Term Loan Commitment and the Term Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver

- 56 -

described in the first proviso to Section 10.2(b) that affects such Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.8 as though it were a Lender, provided such Participant agrees to be subject to Section 2.16(c) as though it were a Lender.

                         (ii)      A Participant shall not be entitled to receive any greater payment under Section 2.13 or 2.15 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.15(e) as though it were a Lender.

                         (c)      Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

          SECTION 10.5. Survival. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Term Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on the Term Loans or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Term Loan Commitments have not expired or terminated. The provisions of Sections 2.13, 2.14, 2.15 and 10.3 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Term Loans and the Term Loan Commitments or the termination of this Agreement or any provision hereof.

          SECTION 10.6. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject

- 57 -

matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.1, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

          SECTION 10.7. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

          SECTION 10.8. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement or any Hedging Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such Hedging Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

          SECTION 10.9. Governing Law; Jurisdiction; Consent to Service of Process.

                         (a)      This Agreement shall be construed in accordance with and governed by the law of the State of New York.

                         (b)      The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction.

                         (c)      The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter

- 58 -

have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

                         (d)      Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.1. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

          SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

          SECTION 10.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

          SECTION 10.12. Confidentiality.

                         (a)      Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower. For the purposes of this Section, “Information” means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent or any Lender on a

- 59 -

nonconfidential basis prior to disclosure by the Borrower; provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

                         (b)      EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 10.12(a) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

                         (c)      ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.

          SECTION 10.13. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to the Term Loans, together with all fees, charges and other amounts which are treated as interest on the Term Loans under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Term Loan in accordance with applicable law, the rate of interest payable in respect of such Term Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Term Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Term Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon to the date of repayment, shall have been received by such Lender.

          SECTION 10.14. Know Your Customer Requirements. Each Lender that is subject to “know-your-customer” requirements of any Governmental Authority, hereby notifies the Borrower that pursuant to such requirements, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the

- 60 -

Borrower and other information that will allow such Lender to identify the Borrower in accordance with such requirements.

          SECTION 10.15. Consent Relating to Existing Copper Hedging Agreements. The Borrower confirms that all of its rights under the Existing Copper Hedging Agreements have been pledged, pursuant to the Security Documents, for the benefit of the Administrative Agent and the Lenders, in order to secure amounts owing under the Credit Agreement. The Borrower expressly agrees that if any Event of Default shall occur and be continuing, the Administrative Agent, on behalf of itself and the Lenders, may exercise any and all rights of the Borrower under the Existing Copper Hedging Agreements, including, without limitation the giving of notice to the Hedge Counterparty to terminate any Existing Copper Hedging Agreements (to the extent required in order to pay the outstanding Obligations in full) and to pay any amount then due and owing to the Borrower under such Existing Copper Hedging Agreements directly to the Administrative Agent to be applied in payment of the obligations under the Credit Agreement.

          SECTION 10.16. Provisions Relating to B Term Loan. The Borrower agrees that if at any time the Borrower would receive in excess of $2,200,000 (net of costs, fees and expenses associated therewith) in proceeds from the termination of certain copper price Hedging Agreements maturing from October 1, 2010 onwards, then it shall terminate such Hedging Agreements in a manner satisfactory to the Administrative Agent (a “Term Loan Conversion Event”), and the following events shall occur:

                         (a)      Deposit to Debt Service Reserve Account. The Borrower shall deposit $2,200,000 in Hedging Agreement proceeds into the Debt Service Reserve Account. The balance of such proceeds, if any, shall be deposited into the Proceeds Account.

                          (b)      Conversion of A Term Loan. The A Term Loans shall automatically be separated into two separate tranches, the first such tranche in an aggregate principal amount outstanding equal to the existing A Term Loans minus the aggregate principal amount of the B Term Loans, and the second such tranche in an aggregate principal amount outstanding equal to $2,200,000 (such tranche, the “B Term Loans”). The amortization payment required on each Principal Payment Date with respect to the A Term Loan (prior to the Term Loan Conversion Event) shall be reduced pro-rata with respect to each Principal Payment Date, and such amount shall be constitute the B Term Loan.

                          (c)      Further Assurances. Notwithstanding the automatic nature of the conversion of the A Term Loan provided for in clause (b), each party hereto agrees to execute such further instruments and documents as the Administrative Agent shall reasonably request in order to effect the conversion provided for above.

ARTICLE XI.
CONDITIONS PRECEDENT TO SECOND AMENDMENT AND RESTATEMENT

          SECTION 11.1. Conditions Precedent to Amendment and Restatement. The amendment and restatement of the First Amended and Restated Credit Agreement provided for herein shall occur on the first such date (the “Second Amendment and Restatement Date”) on which each of the following conditions are satisfied in a manner satisfactory to the Administrative Agent:

- 61 -

                         (a)      Execution of Documents. The Administrative Agent shall have received executed versions of each of this Agreement, the Amended and Restated Collateral Account Control Agreement and the Account Charge from each of the parties thereto, including the Borrower.

                         (b)      Legal Opinions. The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Second Amendment and Restatement Date) of Ballard Spahr Andrews & Ingersoll LLP, Arizona counsel for the Borrower, covering such matters relating to this Agreement as the Administrative Agent shall reasonably request.

                         (c)      Corporate Authority. The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Loan Parties, the authorization of this Agreement and the other documents executed in connection therewith, and any other legal matters relating to this Agreement, all in form and substance satisfactory to the Administrative Agent and its counsel.

                         (d)      Debt Service Reserve Account. The Debt Service Reserve Account shall have been established with Nedbank Limited, London Branch, and all necessary amendments to the Collateral Account Control Agreement and related documents and instruments shall have been executed in connection therewith.

                         (e)      Certifications. The Administrative Agent shall have received and officer’s certificate representing that (i) no order, decree, judgment, ruling, threatened action, suit, investigation or proceeding exists which is reasonably likely to be adversely determined and, if adversely determined, could reasonably be expected to have a Material Adverse Effect, (ii) after giving effect to this Agreement, no Default shall have occurred and be continuing and (iii) the representations contained herein are true and correct as of the Second Amendment and Restatement Date.

                         (f)      Royalty Payments. The Borrower shall have received proceeds of at least $4,950,000 from the sale of a 2.5% royalty to IRC Nevada, Inc. on terms and conditions reasonably satisfactory to the Administrative Agent (the “Permitted Royalty Sale”) and such amount shall have been paid to the Proceeds Account.

                         (g)      Fees and Expenses. The Administrative Agent shall have received all fees, costs and expenses and other amounts due and payable on or prior to the Second Amendment and Restatement Date, including (i) those amounts payable to Nedbank Limited pursuant to the fee letter of even date herewith between the Borrower and Nedbank Limited, and (ii) reimbursement of all reasonable disbursements of Nedbank Limited in connection with the preparation, negotiation and implementation of this Agreement (including, without limitation, traveling expenses and legal costs).

- 62 -

                         (h)      Other Documentation. The Administrative Agent shall have received such other documents and certificates as the Administrative Agent or its counsel may reasonably request relating to this Agreement and the other documents executed in connection therewith.

          SECTION 11.2. Post-Closing Covenants Relating to Second Amendment and Restatement. The Borrower covenants and agrees that it shall use its best efforts to work with the Administrative Agent in order to complete a new and updated Financial Model in a form satisfactory to the Administrative Agent on or prior to April 15, 2009.

[Signature Pages Follow]

- 63 -

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

NORD RESOURCES CORPORATION

By: /s/ Wayne M. Morrison                      
Name: Wayne M. Morrison
Title: Vice-President, Secretary and Chief Financial Officer

COCHISE AGGREGATES AND MATERIALS, INC.

By: /s/ John T. Perry                                  
Name: John T. Perry
Title: Treasurer

[signature page to Second Amended and Restated Credit Agreement]

NEDBANK LIMITED,
     as Administrative Agent

By: /s/ K.C. Ryder                                   
Name: K.C. Ryder
Title: Director: Investment Banking

By: /s/ S.V. Orton                                   
Name: S.V. Orton
Title: Authorized Officer

NEDBANK LIMITED, London Branch,
     as Lender

By: /s/ K.C. Ryder                                   
Name: K.C. Ryder
Title: Director: Investment Banking

By: /s/ S.V. Orton                                   
Name: S.V. Orton
Title: Authorized Officer

[signature page to Second Amended and Restated Credit Agreement]

EXHIBIT A
to Amended and
Restated Credit
Agreement

ASSIGNMENT AND ASSUMPTION

          This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Amended and Restated Credit Agreement identified below (as amended, the “Amended and Restated Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

          For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Amended and Restated Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Amended and Restated Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the Term Loan and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Amended and Restated Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1.	Assignor:         __________________________________________
2.	Assignee:         __________________________________________
	[and is an Affiliate of [identify Lender]1 ]
3.	Borrower: Nord Resources Corporation

^{_________________________________________
1}           Select as applicable.

4.	Administrative Agent:      Nedbank Limited, as the administrative agent under the Amended and Restated Credit Agreement
5.	Amended and $25,000,000 Second Amended and Restated Credit Agreement dated as of March __, 2009 among Restated Credit Nord Resources Corporation, a Delaware corporation (the Agreement : “Borrower”), the guarantor party thereto, the lenders party thereto (the “Lenders”), Nedbank Limited, as Administrative Agent, and the other agents parties thereto.
6.	Assigned Interest:

Aggregate Amount of Term Loan Commitment / Term Loans for all Lenders	Amount of Term Loan Commitment / Term Loans Assigned	Percentage of Assigned Term Loan Commitment / Term Loans 2
$	$	%
$	$	%
$	$	%

          Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

          The Assignee agrees to deliver to the Administrative Agent a designation of one or more Credit Contacts to whom all syndicate-level information (which may contain material non-public information about the Loan Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the Assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

          The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR
[NAME OF ASSIGNOR]

By: __________________________________________
Title:

ASSIGNEE
[NAME OF ASSIGNEE]

^{_____________________________________
2}           Set forth, to at least 9 decimals, as a percentage of the Term Loan Commitment / Term Loans of all Lenders thereunder.

Exhibit A - Assignment and Assumption
2

By: __________________________________________
Title:

[Consented to and]³ Accepted:

NEDBANK LIMITED, as
Administrative Agent

By: __________________________________________
Title:

^{____________________________________________
3}           To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

Exhibit A - Assignment and Assumption
3

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

          1.         Representations and Warranties.

          1.1.      Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Amended and Restated Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Loan Parties, any of their Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Loan Parties, any of their Affiliates or any other Person of any of their respective obligations under any Loan Document.

          1.2.      Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Amended and Restated Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Amended and Restated Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Amended and Restated Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Amended and Restated Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.1 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Amended and Restated Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

          2.         Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the

Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

          3.        General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

2

EX-10.68

AGREEMENT TO PURCHASE ROYALTY

     This AGREEMENT TO PURCHASE ROYALTY (“Agreement”) is made and entered into as of the 31^st day of March, 2009 (“Effective Date”) by and between NORD RESOURCES CORPORATION, a Delaware corporation (“Producer”), and IRC NEVADA INC., a Nevada corporation (“IRC”).

RECITALS:

     A. Producer is the owner of certain mineral properties located in Cochise County, Arizona, consisting of approximately 59 patented lode mining claims, 102 unpatented mining claims and other fee lands, totaling 3,092 acres, more or less, owned or controlled by Producer and more particularly described on Exhibit A attached hereto and incorporated by reference (the “Property”), on which Producer is conducting copper mining and production operations.

     B. Producer desires to sell and IRC desires to purchase a royalty interest in net smelter returns from minerals produced from the Property on the terms and conditions set forth in this Agreement.

     C. The transaction by which Producer would sell and IRC would purchase such royalty interest will be evidenced by: (i) this Agreement, and (ii) the hereinafter described Royalty Deed.

     NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, Producer and IRC agree as follows:

1.	Definitions.
	1.1	The following terms shall have the meaning set forth in this Section:
		(a)	“Affiliate” shall mean any person or entity controlling, controlled by or under common control with a party hereto.
		(b)	“Closing” shall mean the consummation of the transactions and actions necessary to effect the creation and purchase of the Royalty pursuant to this agreement as more particularly described in Section 6.
		(c)	“Disclosure Schedule” means the disclosure schedule dated as of the Effective Date attached hereto as Exhibit B.
		(d)	“Environmental Laws” means Laws aimed at reclamation or restoration of the Property; 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,

1

	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.
(e)	“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) that are asserted by any person, entity or Governmental Authority alleging liability (including 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, 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 Property and/or emanating or migrating and/or threatening to emanate or migrate from the Property to off-site properties; (ii) physical disturbance of the environment other than as authorized by and in compliance with the Permits; or (iii) the violation or alleged violation of any Environmental Laws.
(f)	“Governmental Authority” shall mean any federal, state or local government, district or authority having jurisdiction or authority to regulate or control the Property or any part of Producer’s operations in connection with the production and sale of Minerals.
(g)	“Key Employee” shall mean any current officer of Producer, the current general manager or equivalent employee responsible for operations at the Property or any current manager of Producer responsible for Producer’s compliance with Environmental Laws or health and safety Laws.
(h)	“Law” or “Laws” means all applicable federal, state and local laws, rules, ordinances, regulations, grants, licenses, orders, directives, judgments, decrees, and other governmental restrictions, including Permits, whether legislative, municipal, administrative or judicial in nature.
(i)	“Minerals” shall have the meaning set forth in the Royalty Deed.
(j)	“Permit” shall mean any license, permit, certificate or other authorization by any Governmental Authority necessary for Producer’s operation on the Property or in connection with the removal, processing or sale of Minerals therefrom.

2

(k)	“Permitted Liens” shall have the meaning given the term in the Royalty Deed.
(l)	“Royalty” shall mean the Royalty defined in the Royalty Deed, purchased pursuant to Sections 2 and 3, below
(m)	“Royalty Deed” shall mean the Royalty Deed and Assignment of Royalty to be delivered at Closing in the form of Exhibit C attached hereto.

2.	Purchase and Sale of Royalty. Upon and subject to the terms and provisions of this Agreement, at the Closing, IRC will purchase from Producer and Producer will sell, convey, assign and transfer to IRC the Royalty in the Base Royalty Rate percentage amount, as defined in the Royalty Deed, of two and one-half percent (2.5%) of Net Returns, as also defined in the Royalty Deed, free and clear of all liens, claims, charges, equities or encumbrances of any kind except for any Permitted Liens.
3.	Purchase Price. The “Purchase Price” for the Royalty shall be five million dollars ($US5,000,000.00), paid or payable at Closing, subject to the adjustment of Section 6.3(a).
4.	Due Diligence, Inspection and Records. Prior to Closing, IRC and its agents shall have the right to enter upon the Property and inspect all operations thereon, review all records of Producer pertaining to the Property and production and sale of Minerals (as defined in the Royalty Deed) therefrom, verify Producer’s title to and interest in the Property; review all documents and records pertaining to reserves, Permits and recovery of Minerals from the Property and review Producer’s financial position and all financing and Mineral sales agreements related to or affecting Producer’s ability to own the Property and conduct operations for the mining, processing and sale of Minerals from the Property.

4.1

Property Inspection. IRC and its agents, duly authorized in writing, may enter upon the Property and facilities of Producer at the Property to inspect the same, during normal business hours, at such time as shall not unreasonably hinder or interrupt the operations and activities of Producer.

4.2

Records Inspection. Subject to satisfaction of any requirements with respect to confidentiality, upon reasonable notice, Producer shall afford to the officers, employees, accountants, counsel and other representatives of IRC access, during normal business hours, during the period prior to the Closing, to all of the books, contracts, commitments and records relating to the Property, or Minerals sale agreements that are in Producer’s possession and shall furnish to IRC all other information concerning such assets that is in Producer’s possession as IRC reasonably requests.

5. No Assumption of Liability. IRC is not assuming, by its purchase of the Royalty or otherwise, any liability, obligation or commitment of Producer, whether known or unknown, actual or contingent, now-existing or hereafter arising, and expressly disclaims, in whole or in part, the assumption of all such liabilities, obligations or commitments

3

related to the Property, Minerals or the Producer (“Excluded Liabilities”). The Excluded Liabilities include, but are not limited to, the following:

(a)	Any and all obligations and liabilities, including without limitation Environmental Liabilities, of Producer relating to or arising from environmental or other conditions of any portion of the Property or from Producer’s operations related to the Property; and
(b)	Any and all obligations and liabilities of Producer to any lessor, contractor, customer of Producer or Governmental Authority.

6.	Closing.
	6.1	Time and Place. Producer and IRC shall consummate and close the transaction contemplated herein (“Closing”) at the offices of IRC on March 30, 2009, or as soon thereafter as possible.
	6.2	Deliverables by Producer. At the Closing, and conditioned upon satisfaction of the Closing conditions of Sections 11.1 and 11.3, Producer shall deliver to IRC, in form and substance satisfactory to IRC:
		(a)	The Royalty Deed, duly executed and acknowledged by Producer; and
		(b)	Such other certificates and documents as IRC or its counsel may reasonably request.
	6.3	Deliverables by IRC. At the Closing, and conditioned upon satisfaction of the Closing conditions of Sections 11.1 and 11.2, IRC shall deliver to Producer, in form and substance satisfactory to Producer:
		(a)	The Purchase Price for the Royalty, less IRC’s outside attorney’s fees and the costs for conducting its due diligence examination and negotiating and closing this transaction, (which fees and costs shall not exceed fifty thousand dollars ($US 50,000) as a deduction from the Purchase Price), in the form of an electronic funds transfer to such account and at such location as Producer may direct, cashier’s check or other current funds; and
		(b)	Such other certificates and documents as Producer or its counsel may reasonably request.

7.	Warranties and Representations of IRC. IRC warrants and represents to Producer for the express purpose of inducing Producer to enter into this Agreement, and to otherwise complete all of the transactions contemplated hereby that as of the date of this Agreement and as of the date of Closing, as follows:
	7.1	Organization. IRC is a duly organized, validly existing corporation in good standing under the Laws of the State of Nevada and has all requisite power and

4

	authority to conduct its business and to own its property, as now conducted or owned, and as contemplated by this Agreement.
7.2	Authorization. All required corporate actions and proceedings have been duly taken so as to authorize the execution and delivery by IRC of this Agreement and all other documents or instruments to be executed and delivered hereunder.
7.3	Valid and Binding. This Agreement constitutes the legal, valid and binding obligation of IRC enforceable in accordance with its terms.
7.4	No Violations. The consummation of the transactions contemplated by this Agreement and performance of the obligations of IRC hereunder does not constitute a violation of, nor conflict with, any Law, contract, agreement or organizational document to which IRC is a party or by which it or its property is or may be bound.
7.5	No Litigation. There is no litigation now pending, or to the best of IRC’s knowledge threatened, against IRC which if adversely decided could materially impair the ability of IRC to purchase, own and receive the Royalty hereunder.
7.6	No Consents. IRC need not give any notice to, make any filings with, or obtain any authorization, consent or approval of any person or governmental agency in order to consummate the transactions contemplated by this Agreement.
7.7	Brokers Fees. IRC does not have any liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Producer could become liable or obligated.
7.8	Foreign Person. IRC is not a “foreign person”, as such term is defined in Section 1445 of the Internal Revenue Code.

8.	Warranties and Representations of Producer. Producer warrants and represents to IRC for the express purpose of inducing IRC to enter into this Agreement, and to otherwise complete all of the transactions contemplated hereby that as of the date of this Agreement and as of the date of Closing, as follows:
	8.1	Organization. Producer is a duly organized validly existing corporation in good standing under the Laws of the State of Delaware, and is duly qualified to do business in the State of Arizona and has all requisite power and authority to conduct its business and to own its property, as now conducted or owned, and as contemplated by this Agreement.
	8.2	Authorization. All required corporate actions and proceedings have been duly taken so as to authorize the execution and delivery by Producer of this Agreement and all other documents or instruments to be executed and delivered hereunder and to grant the Royalty to IRC.

5

8.3	Valid and Binding. This Agreement constitutes the legal, valid and binding obligations of Producer enforceable in accordance with its terms.
8.4	No Violations. The consummation of the transactions contemplated by this Agreement and the subsequent payment of the Royalty and performance of the obligations of Producer hereunder does not constitute a violation of, nor conflict with, any Law, contract, agreement or organizational document to which Producer is a party or by which it or its property is or may be bound.
8.5	No Litigation. Except as set forth on the Disclosure Schedule, there is no litigation now pending, or to the best of Producer’s knowledge threatened, against Producer which if adversely decided could materially impair the ability of Producer to grant the Royalty hereunder and to pay the same as it becomes due.
8.6	No Consents. Except for any consent required by Producer’s existing credit facilities identified on Exhibit B to the Royalty Deed, Producer need not give any notice to, make any filings with, or obtain any authorization, consent or approval of any person or governmental agency in order to consummate the transactions contemplated by this Agreement and grant the Royalty to IRC.
8.7	Brokers Fees. Producer does not have any liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which IRC could become liable or obligated.
8.8	Foreign Person. Producer is not a “foreign person”, as such term is defined in Section 1445 of the Internal Revenue Code.
8.9	Rights in the Property.
	(a)	The warranties and representations contained in the Royalty Deed as to Producer’s rights in the Property are true and correct;
	(b)	There are no options or rights of first refusal to purchase or acquire all or any portion of the Property;
	(c)	Producer has access to the Property from roads sufficient to allow Producer to conduct its business at the Property as it is currently conducted and Producer has not received notice of termination of such access; and
	(d)	Producer has not received notice of any taking of the Property or any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any Law, or by reason of the temporary requisition of the use or occupancy of the Property or any part thereof, by any Governmental Authority, civil or military or the commencement or pendency of any action or proceeding therefor.

6

8.10	Condition of Property. Except as set forth on the Disclosure Schedule, with respect to Producer’s operations related to the Property:
	(a)	There has been issued and there remains in full force and effect subject to no revocation, suspension, forfeiture or modification, each and every Permit necessary for the present use, operation and occupancy of the Property by Producer and the conduct of mining, processing and sales of Minerals from the Property and all required zoning, building code, land use, environmental and other similar Permits;
	(b)	The Property and the present and contemplated use and occupancy thereof for Producer’s Mineral operations comply in all material respects with all applicable zoning ordinances, building codes, land use Laws, setback or other development and/or use requirements of Governmental Authorities;
	(c)	There has not occurred any material damage to or destruction of the Property or any portion thereof as a result of any fire or other casualty that, as of the date hereof, has not been repaired in all material respects;
	(d)	All liquid and solid waste disposal, septic and sewer systems located on the Property are in compliance in all material respects with any and all Laws and requirements of any Governmental Authority; and
	(e)	With respect to the environmental condition of the Property and Producer’s operations on the Property:
		(i)	the conditions existing on or with respect to the Property and its ownership and operation of the Property are not (A) in violation of any Laws, including without limitation any Environmental Laws, or (B) causing or resulting in Environmental Liabilities;
		(ii)	there have been no past violations by Producer of any Environmental Laws or other Laws affecting or pertaining to the Property, nor the creation of Environmental Liabilities by Producer or, to the knowledge of any Key Employee of Producer, any of its predecessors in title to the Property, except as has been fully abated and remediated by Producer or its predecessors in title so as to cause the Property and Producer’s operations thereon to be in full compliance with the requirements of applicable Laws and the orders of all Governmental Authority having jurisdiction, and to be free of any claim for damages or remediation costs, natural resources damages or other Environmental Liabilities; and
		(iii)	No Key Employee of Producer has received an inquiry from or notice of a pending investigation from any Governmental Authority or of any administrative or judicial proceeding concerning the violation of any Laws.

7

(f) Producer is in compliance in all material respects with each Permit pertaining to its operations for extracting, processing and sale of Minerals, including without limitation, all Permits pertaining to Environmental Laws and reclamation.

9.	Producer Covenants. During the period from the Effective Date to the Closing, Producer agrees that, except as contemplated or permitted by this Agreement or to the extent that IRC otherwise consents in writing:
		(a)	As soon as possible after execution of this Agreement Producer shall provide IRC with full, complete and correct copies of all leases and other agreements affecting the Property; and all Mineral sales contracts for production from the Property.
		(b)	Producer will not, and will not agree to, sell, lease, exchange, or encumber the Property or its interest in the Minerals except for sales of Minerals in the ordinary course of business.
		(c)	Producer will immediately notify IRC in writing of any event that renders any representation or warranty of Producer hereunder incorrect or inaccurate.
		(d)	Producer will not take any action that would, or would be reasonably likely to, result in any of the conditions in Section 11 not being satisfied or that would materially impair Producer’s ability to consummate the transactions contemplated hereby in accordance with the terms hereof or would materially delay such consummation. Producer shall promptly advise IRC orally and in writing of any change in, or event with respect to, the Property or Producer having, or that could have, a material adverse effect on Producer’s ability to consummate the transactions contemplated hereby.

10.	Covenant of IRC. During the period from the date of this Agreement until the Closing, IRC will not take any action that would, or would be reasonably likely to, result in any of the conditions in Section 11 not being satisfied or that would materially impair IRC’s ability to consummate the transactions contemplated hereby in accordance with the terms hereof or would materially delay such consummation. IRC shall promptly advise Producer orally and in writing of any change or event that could have a material adverse effect on Producer’s ability to consummate the transactions contemplated hereby.
11.	Closing Conditions.
	11.1	Conditions to Each Party’s Obligations. The respective obligations of the parties hereunder are subject to the satisfaction, at or prior to the Closing, of the following conditions:
		(a)	No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal

8

	restraint or prohibition preventing the consummation of the transactions contemplated herein shall be in effect (each party agreeing to use all reasonable efforts to have any such order reversed or injunction lifted).
(b)	No claim, action, litigation or proceeding shall be pending or threatened against IRC or Producer for the purpose of enjoining or preventing the consummation of the transactions contemplated hereby or otherwise claiming that this Agreement or the consummation of the transactions contemplated hereby are illegal.

11.2	Conditions to IRC’s Closing Obligation. IRC’s obligation to close the transactions contemplated hereunder is subject to:
	(a)	IRC being satisfied, in its sole discretion:
		(i)	As to Producer’s title in and to the Property and the ability of Producer to convey the Royalty free and clear of all prior liens and encumbrances except for Permitted Liens or as agreed to by IRC;
		(ii)	As to the tax consequences and impact to IRC of the purchase and conveyance of the Royalty;
		(iii)	As to the quantity, quality and potential recovery of reserves of Minerals from the Property;
		(iv)	As to the status of all Permits required to conduct operations for Minerals on the Property; and
		(v)	As to Nord’s financial position and all financing and Mineral sales agreements pertaining to Property.

(b)	The representations and warranties of Producer set forth herein are correct in all material respects as of the Closing as though they were made as of the Closing.
(c)	Producer shall have fully performed and complied in all material respects with the covenants hereunder that are to be performed or complied with by it at or prior to the Closing.
(d)	The approval of this Agreement and the transactions contemplated hereby by IRC’s board of directors.
(e)	The written approval of this Agreement and the transactions contemplated hereby by Producer’s senior lender, Nedbank Limited, and the agreement of Nedbank, in substantially the form of Exhibit D hereto or as otherwise agreed to by IRC, that the Royalty shall survive any foreclosure or transfer of the Property in lieu thereof of Nedbank’s Deed of Trust included in the Permitted Liens.

9

11.3	Conditions to Producer’s Closing Obligations. Producer’s obligation to close the transactions contemplated hereunder is subject to the fulfillment of the following conditions, at or prior to the Closing (unless waived in writing by Producer):
	(a)	The representations and warranties of IRC set forth herein are correct in all material respects as of the Closing as though they were made as of the Closing.
	(b)	IRC shall have fully performed and complied in all material respects with the covenants hereunder that are to be performed or complied with by it at or prior to the Closing.
	(c)	The approval of this Agreement and the transactions contemplated hereby by Producer’s board of directors.
	(d)	The approval of this Agreement and the transactions contemplated hereby by Producer’s senior lender, Nedbank Limited.

12.	Termination.
	12.1	Termination. This Agreement may be terminated at any time prior to the Closing:
		(a)	By mutual written consent of Producer and IRC;
		(b)	By Producer if any of the representations or warranties of IRC herein are inaccurate in any material respect and if such inaccuracy cannot reasonably be expected to be cured prior to the Closing;
		(c)	By Producer if any obligation, term or condition to be performed or observed by IRC hereunder has not been performed or observed in any material respect at or prior to the time specified in this Agreement;
		(d)	By IRC if, as a result of the investigations of Section 4 and 11.2(a) and (b), title to or the condition of the Property or Producer’s operations or financial condition is unsatisfactory to IRC in IRC’s sole good faith opinion.
		(e)	By IRC if any of the representations or warranties of Producer herein are inaccurate in any material respect and if such inaccuracy cannot reasonably be expected to be cured prior to the Closing;
		(f)	By IRC if any obligation, term or condition to be performed or observed by Producer hereunder has not been performed or observed in any material respect at or prior to the time specified in this Agreement; and
		(g)	By either IRC or Producer if any of the conditions set forth in Subparagraph 11.1 have not been satisfied.

10

12.2

Effect of Termination. If validly terminated pursuant to Subparagraph 12.1 and the Closing does not occur as provided in Section 6, this Agreement will become null and void and, except as provided in Subparagraph 12.3, all further obligations of the parties under this Agreement will terminate and there will be no liability on the part of any party under this Agreement.

12.3

Reimbursement of Negotiation and Due Diligence Costs. Notwithstanding Subparagraph 12.2, if this Agreement terminates without grant by Producer of the Royalty due to the failure of any of the conditions set forth in subparagraph 11.3(c) or (d), all out-of-pocket legal fees and other costs incurred by IRC in negotiating this Agreement and conducting due diligence up to $50,000 shall be reimbursed by Producer to IRC.

13. Notices. Any demand, notice or request by either party to the other shall be in writing and hand delivered to the party intended to receive the same or mailed by registered or certified mail, return receipt requested, addressed to that party as follows:

If to IRC	IRC Nevada Inc.
	c/o IRC (U.S.) Management Inc.
	10 Inverness Dr. East, Suite 104
	Englewood, CO 80112
	Attention: Chief Financial Officer
If to Producer:	Nord Resources Corporation
	1 West Wetmore Road, Suite 203
	Tucson, AZ 85705
	Attention: President and Chief Executive Officer

or at such other address as may be set forth in a notice delivered or mailed as herein provided.

14.

Further Assurances. The parties each covenant and agree, upon request from the other from time to time, to execute, acknowledge and deliver such further instruments or documents which the requesting party may reasonably require in furtherance of its rights under this Agreement.

15.

Assignment. If Producer shall sell, convey, assign, encumber or otherwise transfer any interest in the Minerals (other than sales of Minerals in the ordinary course of Producer’s business), the Property or any Minerals sale contracts (any of which is referred to in this Section as a “Transfer”), then, as a condition to the effectiveness of such Transfer, Producer shall make such Transfer expressly subject to the Royalty and shall obtain the written acknowledgement of the transferee of IRC’s Royalty and, for Transfers other than an encumbrance, shall require the transferee to expressly assume the obligations of Producer with respect to events and conditions occurring after the Transfer and to pay the Royalty accruing after the Transfer according to its terms. Upon the assumption of by the transferee of the foregoing obligations of Producer hereunder, Producer shall be released from performance of all obligations under this Agreement which arise after the Transfer,

11

	except that Producer shall not be deemed released from the performance of any obligations which relate to the period prior to the Transfer, for which Producer shall remain primarily liable.
16.	Transfer of Royalty Interest. If at any time IRC desires to sell or transfer all or any portion of its rights to the Royalty, IRC shall, on a non-exclusive basis, so advise Producer of such desire and of any terms and conditions upon which IRC is willing to entertain a proposal or offer as to a sale or transfer. If IRC solicits offers or bids for the rights, Producer shall be given the opportunity to make an offer or submit a bid; provided, however, that the foregoing shall not create any right of first refusal, right of first offer or other preemptive right in Producer to acquire any interest in rights to the Royalty from IRC, and IRC shall have no obligation whatsoever to accept any offer or bid from Producer, or sell or transfer any such interest to Producer, without regard to whether Producer’s offer or bid is the high bid or best offer, and any decision to sell or transfer to Producer or to any other party shall be in IRC’s sole discretion.
17.	Confidentiality. All information disclosed by Producer to IRC that is not generally known or generally available to persons who are in the mining industry shall be deemed confidential and, except as provided below in this Section, may be used by IRC solely for the purpose of conducting its due diligence investigations pursuant to this Agreement, and shall not be disclosed to anyone except to those persons who have a need to know in connection with such investigations. Notwithstanding the foregoing, IRC may disclose such information to potential private investors, lenders and financial advisors if needed to allow IRC to obtain its own financing based upon such information, provided that any such private investor, lender or financial advisor first agrees to be bound by the confidentiality provisions of this Section.
18.	Parties Bound. The provisions of this Agreement shall be binding upon and inure to the benefit of Producer and IRC and their respective successors and assigns, except as otherwise prohibited by this Agreement. This Agreement is a contract by and between Producer and IRC for their mutual benefit, and no third person shall have any right, claim or interest against either IRC or Producer by virtue of any provision hereof.
19.	Governing Law; Consent to Jurisdiction; Mutual Waiver of Jury Trial.
	19.1	Governing Law; Severability. This Agreement shall be governed by and construed in accordance with the Laws of the State of Arizona without regard to conflict of law principles. In the event that any provision or clause of this Agreement conflicts with applicable Laws, such conflicts shall not affect other provisions of this Agreement which can be given effect without the conflicting provision, and to this end the provisions of this Agreement are declared to be severable.
	19.2	Consent to Jurisdiction. Each party consents to the jurisdiction of the state courts of Colorado and to the federal court for the District of Colorado in connection with any dispute or the pursuit of any remedy or relief in connection with this

12

	Agreement and Producer waives any objection to the venue of any legal process on the basis that the process has been brought in an inconvenient forum.
19.3	Waiver of Jury Trial. Each party hereto waives any right to a trial by jury of any dispute or issue arising under or in connection with this Agreement.

20.	Title and Headings. The titles and the headings of sections are not parts of this Agreement and shall not be deemed to affect the meaning or construction of any of its or their provisions.
21.	Counterparts. This Agreement may be executed in several counterparts, each of which when executed and delivered is an original, but all of which together shall constitute one instrument.
22.	Time Of the Essence. Time is of the essence for each provision of this Agreement.
23.	Entire Agreement. This written Agreement represents the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. This Agreement may only be amended, terminated, extended or otherwise modified by a writing signed by the party against which enforcement is sought. In no event shall any oral agreements, promises, actions, inactions, knowledge, course of conduct, course of dealings or the like be effective to amend, terminate, extend or otherwise modify this Agreement. This Agreement survives the execution and delivery of the Royalty Deed and does not merge into it. The parties agree that this Agreement is the definitive agreement referenced in that certain letter agreement dated March 6, 2009 to Producer from IRC (“Letter Agreement”). This Agreement supersedes the Letter Agreement from and after the date hereof.

[signatures on following page]

13

     IN WITNESS WHEREOF this Agreement has been duly executed and delivered as of the date above first written.

NORD RESOURCES CORPORATION,
a Delaware corporation
By:	/s/ John T. Perry
	John T. Perry, President
IRC NEVADA INC.,
a Nevada corporation
By:	/s/ Doug Silver
	Doug Silver
	President

14

EX-10.69

Recording Requested by, and When Recorded Return to:
IRC Nevada Inc.
10 Inverness Drive East, Suite 104
Englewood, CO 80112

ROYALTY DEED AND ASSIGNMENT OF ROYALTY

     This ROYALTY DEED AND ASSIGNMENT OF ROYALTY (this “Deed”), dated and effective as of the 31^st day of March, 2009 (“Effective Date”), is from NORD RESOURCES CORPORATION, a Delaware corporation (“Producer”), to IRC NEVADA INC., a Nevada corporation (“IRC”).

Definitions.

(a)	Defined Terms. The following terms shall have the meaning set forth in this Section:
	(i)	“Affiliate” shall mean any person or entity controlling, controlled by or under common control with Producer.
	(ii)	“Allowable Deductions” means:
		(1)	in the case of a Smelter or Refinery that is an Unrelated Party of the Producer, all direct costs, charges and expenses of the Smelter or Refinery incurred by the Producer for off-site smelting or refining of the Product following delivery to the Smelter or Refinery (including provisional settlement fees, weighing, sampling, assaying, umpire, insurance and other off-site Smelter or Refinery deductions);
		(2)	otherwise, an amount equal to the commercially reasonable costs of a refinery or smelter on an arms length basis for off-site smelting or refining of the Product following delivery to the refiner or smelter (including provisional settlement fees, weighing, sampling, assaying, umpire, insurance and other off-site refiner or smelter deductions);
		(3)	direct sales, use, and gross receipts taxes, payable by the Producer or other operator of the Property, that are based directly upon, and assessed against, the value or quantity of Product sold or otherwise disposed of from the Property; but excluding any and all taxes based upon the net or gross income of the Owner or other operator of the Property, the value of the Property or the privilege of doing business, and other taxes assessed on a similar basis;
		(4)	costs to market the Product; and

1

	(5)	to the extent paid by the Producer, all costs (including but not limited to insurance costs) for transportation of the Product to the purchaser of the Product.
(iii)	“Business Day” means a day banks are open for general banking business in Denver, Colorado, and Tucson, Arizona, excluding Saturdays, Sundays and public holidays.
(iv)	“Copper” means the element copper in whatever form and however contained.
(v)	“Dollars” or “$” means the currency of the United States of America.
(vi)	“Governmental Authority” shall mean any federal, state or local government, governmental or quasi-governmental agency, district or authority having jurisdiction or authority to regulate or control the Property or any part of Producer’s operations in connection with production and sale of Minerals.
(vii)	“Law” or “Laws” means all applicable federal, state and local laws, rules, ordinances, regulations, grants, licenses, orders, directives, judgments, decrees, and other governmental restrictions, including Permits, whether legislative, municipal, administrative or judicial in nature.
(viii)	“Metal” means any metallic element in whatever form and however contained, including, by way of example, gold, silver, platinum, palladium, Copper, zinc, nickel, iron, lead, cobalt, titanium, iridium and uranium.
(ix)	“Mineral Value” means the actual value of a Mineral determined on arms length terms and at any applicable spot price, the basis for which shall be agreed to in advance by the parties hereto, or if no spot price is available, at fair market value excluding any revenues, gains or losses from forward sales, puts, calls and options (or any similar arrangement) entered into by the Producer.
(x)	“Minerals” means any naturally occurring substance including Copper, all other Metals, coal, and all other hydrocarbons; excepting, however, decorative and structural stone sold for landscape and aggregate rock from overburden stockpiled on the Property and all other industrial minerals.
(xi)	“Net Returns” means:
	(1)	in the case of a sale of Product to an Unrelated Party, the Proceeds of Sale, less the Allowable Deductions; and

2

	(2)	in all other cases, the Mineral Value, on the applicable Product Sale Date less the Allowable Deductions, and for the avoidance of doubt, excludes any Operating Expenses.
(xii)	“Officer” means a president, vice president, chief executive officer, chief operating officer, chief financial officer, secretary or other equivalent officer.
(xiii)	“Operating Expenses” means costs and expenses associated with ownership and maintenance of the Property, production of Minerals therefrom, handling, processing, treating, stockpiling, packaging and preserving Minerals produced from the Property, disposal of waste materials, and reclamation costs and all other charges or costs imposed by Governmental Agencies on the Producer, the Property and Minerals produced and sold therefrom, of whatever kind and nature, expressly including all royalties, taxes and other governmental imposts on the Producer, Property or Minerals.
(xiv)	“Permitted Lien” shall mean any lien for real or personal property taxes not yet due and payable and the liens and encumbrances identified on Exhibit B attached hereto and incorporated by this reference; and any other lien or encumbrance that is or may be superior to the rights of IRC in and to the Royalty, but only if and to the extent that IRC has given its prior written consent thereto.
(xv)	“Proceeds of Sale” means the amount received by the Producer from the sale to an Unrelated Party of Product produced from the Property excluding any revenues, gains or losses from forward sales, puts, calls and options (or any similar arrangement) entered into by the Producer.
(xvi)	“Product” means all of the Producer’s right, title and interest in and to Minerals that have been extracted from the Property whether in concentrate or otherwise and including Stockpiled Material.
(xvii)	“Product Sale Date” in relation to Product, means:
	(1)	in the case of a sale of Product to an Unrelated Party, the date on which care, custody and control is transferred to the buyer; and
	(2)	in all other cases, the date on which the Producer ceases to have the care, custody or control of that Product.
(xviii)	“Property” means:
	(1)	The patented lode mining claims and other fee lands and the unpatented mining claims more particularly described in Exhibit A attached hereto and incorporated by this reference;

3

(2)

with respect to the unpatented mining claims and any leasehold interest in the Property, any present or future renewal, extension, modification, substitution, amalgamation or variation of any of such mining Property;

(3)

any present or future application for or interest in any of the above, which confers or which, when granted, will confer the same or similar rights; and all interests in lands or Minerals hereafter acquired by Producer within the exterior perimeter boundaries of the parcels of land expressly described in Exhibit A, such as but not limited to amendments, relocations or location of fractions with respect to unpatented mining claims, or other acquisitions of lands interior to such perimeter.

(xix)	“Quarter” means each period of three (3) months ending on a Quarterly Date.
(xx)	“Quarterly Date” means each of March 31, June 30, September 30 and December 31 in each year.
(xxi)	“Royalty” is defined in Sections 2 and 3.
(xxii)	“Royalty Period” means each period calculated as such under Section 4.
(xxiii)	“Smelter or Refinery” means any Unrelated Party processor of Product for the account of Producer or who purchases Product for further conversion or processing of Product for sale as a Metal.
(xxiv)	“Stockpiled Material” means Minerals or Mineral bearing material that has been extracted from the Property whether located on the Property or elsewhere.
(xxv)	“Unrelated Party” means a person:

(1)	that is not an Affiliate of the Producer; or
(2)	that the Producer has no economic interest (other than an interest that arises from an arm’s length commercial arrangement) in, or which has no economic interest (other than an interest that arises from an arm’s length commercial arrangement) in the Producer, unless IRC otherwise agrees in writing.

(b)	Interpretation. In this Deed headings are for convenience only and do not affect the interpretation of this Deed and, unless the context otherwise requires:
	(i)	words importing the singular include the plural and vice versa;
	(ii)	words importing a gender include any gender;

4

(iii)	other parts of speech and grammatical forms of a word or phrase defined in this Deed have a corresponding meaning;
(iv)	an expression importing a natural person includes any company, partnership, joint venture, association, corporation or other body corporate and any Governmental Agency;
(v)	a reference to a Section, party, annexure, exhibit or schedule is a reference to a Section of, and a party, annexure, exhibit and schedule to, this Deed and a reference to this Deed includes any annexure, exhibit and schedule;
(vi)	a reference to a statute, regulation, order or ordinance includes all statutes, regulations, orders or ordinances amending, consolidating or replacing it, and a reference to a statute includes all regulations and orders issued under that statute;
(vii)	a reference to a document includes all amendments or supplements to, or replacements or novations of, that document, and in the case of this Deed means only those amendments, supplements, replacements or novations expressly permitted or contemplated by the terms of this Deed;
(viii)	a reference to a party to a document includes that party’s successors and permitted assigns; a reference to an agreement other than this Deed includes an undertaking, Deed, agreement or legally enforceable arrangement or understanding whether or not in writing;
(ix)	a reference to an asset includes all property of any nature, including, but not limited to, a business, and all rights, revenues and benefits;
(x)	a reference to a document includes any agreement in writing, or any certificate, notice, Deed, instrument or other document of any kind;
(xi)	a reference to a body, other than a party to this Deed (including, without limitation, an institute, association or authority), whether statutory or not:
	(1)	which ceases to exist; or
	(2)	whose powers or functions are transferred to another body,
	is a reference to the body which replaces it or which substantially succeeds to its powers or functions;
(xii)	a reference to liquidation includes official management, appointment of an administrator, compromise, arrangement, merger, amalgamation, reconstruction, winding-up, dissolution, deregistration, assignment for the benefit of creditors, scheme, composition or arrangement with creditors, insolvency, bankruptcy, or any similar procedure or, where applicable, changes in the constitution of any partnership or person, or death;

5

(xiii)	no provision of this Deed will be construed adversely to a party solely on the ground that the party was responsible for the preparation of this Deed or that provision; and
(xiv)	words of inclusion are not words of limitation.

2.	Conveyance. For ten dollars and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Producer hereby sells, assigns, grants and conveys to IRC, its successors and assigns, a perpetual, non-participating, non- executory, cost-free royalty interest (“Royalty”) on the Minerals produced and sold from the Property in the amounts and at the rate set forth in Section 3, below.
	TO HAVE AND TO HOLD, all and singular, the said Royalty, together with all appurtenances, unto IRC, its successors and assigns.
	(a)	Covenant Running with Land. The Royalty shall be an interest in the Property and Minerals that runs with the Property and with any assignment or transfer of Producer’s interest in the Property or Minerals, other than for sale of Minerals in the ordinary course of Producer’s business.
	(b)	Amendments, Extensions, Renewals. The Royalty burdens and extends to any amendments, replacements, extensions, renewals or expansions of rights or interests in and to the Property (but not expansions of the existing perimeter boundary of the Property), or any interest or rights Producer now owns or hereafter acquires in and to the parcels of real property that are presently included in the Property or the Minerals within or upon such real property, and any assignment or lease of the Property.

3.	Royalty Rate.
	(a)	Base Royalty Rate. Subject to Section 3.3, 3.4 and 3.5 below, the royalty rate for the royalty herein granted shall be two and one-half percent (2.5%) of the Net Returns from Products produced from the Property (“Base Royalty Rate”).
	(b)	Additional Definitions. For purposes of this Section 3:
		(i)	“Additional Production” shall mean production in any Current Year that causes or occurs after both of the following conditions have been met:
			(1)	There is Current Actual Production in excess of the Target Rate; and
			(2)	The sum of the Cumulative Actual Production and Current Actual Production exceeds the sum of the MCPT plus 2.5 million pounds of Copper on which Royalty is payable.

6

(ii)	“Cumulative Actual Production” shall mean the cumulative number of pounds of Copper produced in all Minimum Production Years prior to the Current Year.
(iii)	“Current Actual Production” shall mean the number of pounds of Copper actually produced and sold or deemed sold for the purposes of payment of Royalty during the Current Year.
(iv)	“Current Minimum Production Target” shall mean 22.5 million pounds of production of Copper on which Royalty is payable for the Current Year.
(v)	“Current Year” means the most recently concluded calendar year that is also a Minimum Production Year and as to which Royalty and the applicability of a Royalty Supplement or Recovery Credit is being determined and calculated.
(vi)	“Minimum Cumulative Production Target” or “MCPT” means the product of 25 million pounds of Copper on which Royalty is payable, multiplied by the cumulative number of Minimum Production Years that have elapsed including the Current Year, less 2.5 million pounds. For example, the MCPT when the Current Year is 2014 is 5 [2010-2014, inclusive] x 25 million-2.5 million = 122.5 million pounds of Copper.
(vii)	“Minimum Production Year” means each of calendar years 2010-2019, inclusive.
(viii)	“Royalty Supplement” is defined in Section 3.3
(ix)	“Royalty Credit” is defined in Section 3.4.
(x)	“Target Rate” shall mean production of 25 million pounds of Copper on which Royalty is payable during each Minimum Production Year.

(c)	Royalty Supplement. If, as of the end of any Current Year, (i) Current Actual Production is not at least 22.5 million pounds and (ii) the Cumulative Actual Production is less than the MPCT, then, as to Current Actual Production, the Producer shall pay IRC, in addition to the Royalty at the Base Royalty Rate otherwise payable, the following additional amount (“Royalty Supplement”) at the same time as the payment for the Quarter ending December 31 of the Current Year is due:
	(i)	If the Current Actual Production is at least 20 million pounds and less than 22.5 million pounds, the additional amount of 0.1875% of Net Returns on Copper on each pound of Current Actual Production.
	(ii)	If the Current Actual Production is less than 20.0 million pounds, the additional amount of 0.3750% of Net Returns on Copper on each pound of Current Actual Production.

7

(iii) No Royalty Supplement shall be payable for Copper produced on or after January 1, 2020.

(d) Recovery of Royalty Supplement. Amounts paid as Royalty Supplement pursuant to Section 3.3 may be recovered by means of “Royalty Credit” pursuant to this Section if there is Additional Production.

(i)	If, after paying Royalty Supplement in any Minimum Production Year or Years, Producer has sufficient Copper production for one or more subsequent Minimum Production Years so as to result in Additional Production, the Royalty on Current Actual Production shall be reduced from the Base Royalty Rate as follows:
	(1)	The number of pounds of Copper which were subject to a Royalty Supplement of 0.3750%, and for which there has not been a prior Royalty Credit, shall be determined and, as to the lesser of that number of pounds or the Actual Current Production, the Royalty shall be payable at the Base Rate less 0.3750%.
	(2)	After there has been complete recovery pursuant to Section 3.4(a)(i) of the 0.3750% Royalty Supplement, the number of pounds of Copper which were subject to a Royalty Supplement of 0.1875%, and for which there has not been a prior Royalty Credit, shall be determined and, as to the lesser of that number of pounds or the Actual Current Production for which the Royalty was not reduced pursuant to 3.4(a)(i), the Royalty shall be payable at the Base Rate less 0.1875%.

(ii)	Royalty Supplement not recovered as a result of Additional Production during the Current Year may be carried forward and recovered in a subsequent Minimum Production Year.
(iii)	No Royalty Supplement shall be recoverable pursuant to Section 3.4(a) from: (i) Copper production after the last Minimum Production Year ending December 31, 2019 or (ii) production and sale of Minerals other than Copper at any time.

(e)

Other Minerals. If and at such time prior to January 1, 2021, IRC has received Royalty on at least 250 million pounds of Copper, the Base Royalty Rate on Minerals other than Copper shall be permanently reduced to one and one-quarter percent (1.25%). The Base Royalty Rate for Copper shall not be subject to the reduction set forth in this Section, and shall at all times be two and one-half percent (2.5%) subject to Sections 3.3 and 3.4.

(f)

Suspension of Production. Notwithstanding Section 3.3, if there is a temporary cessation of production of Minerals at the Property for any bona fide reason, including without limitation events of Force Majeure (as defined in Section 17.10) or unfavorable market conditions, all required benchmarks, such as but not

8

limited to Current Minimum Production Target, Minimum Cumulative Production Target and Target Rate shall be adjusted and pro rated so as to negate the effect of the time period or periods when any such bona fide cessation of production was occurring.

4.	Royalty Periods.
	(a)	When Calculated. The Royalty shall be calculated and payable in respect of Royalty Periods based on the amount of Product sold or which has left the care, custody and control of the Producer during the applicable Royalty Period.
	(b)	First Royalty Period. The first Royalty Period shall be the period between the date after the Effective Date on which the Product is first sold or left the care, custody and control of the Producer in commercial quantities from the Property and the next following Quarterly Date.
	(c)	Subsequent Royalty Periods. Each subsequent Quarter shall be a Royalty Period.

5.	Payment.
	(a)	Due Date for Payment. The Royalty payable in respect of a Royalty Period shall be payable no later than thirty (30) Days after the applicable Quarterly Date, or if there is a dispute, within seven (7) days of the determination of that dispute under Section 17.8.
	(b)	Manner of Payment.
		(i)	Subject to Section 5.2(b), the Royalty shall be payable in cash or other immediately available funds to the account designated by IRC in writing from time to time.
		(ii)	Subject to any prohibitions or limitations in sales contracts of Producer, IRC may elect at any time up to thirty (30) days prior to the due date for payment of an amount on account of the Royalty, to take the Royalty in kind.

(c)	No Deductions. The Royalty shall be payable in accordance with this Deed without withholding, deduction or set off for any reason on any account whatsoever.
(d)	Late Payment. If the Producer does not pay the Royalty on or before the due date for payment for any reason whatsoever, then the Producer shall pay to IRC interest on the amount of the Royalty unpaid by the Producer, until payment in full has been made. Interest shall be calculated at the rate of 12% per annum. Interest shall be calculated daily and shall be payable on demand.

6. Exclusions from Royalty. Sale or transfer by Producer of the Property or any portion thereof or interest therein shall not constitute a sale of Minerals for purposes of

9

calculating or paying Royalty, but any such transferred interest shall remain subject to the Royalty.

7.	Information.
	(a)	Statements.
		(i)	Each payment of Production Royalty shall be accompanied by an itemized statement setting forth all facts and figures necessary in order to verify the accuracy of the amount of the payment.
		(ii)	The Producer will also submit to IRC at not less than monthly intervals (or such other periods as IRC may from time to time agree) a statement of Mineral production and sales from the Property (“Statement”) during the period to which the Statement relates. Each Statement shall be signed by an authorized Officer of the Producer and shall be in a form and contain such detail as IRC may reasonably require.
		(iii)	Each Statement shall be delivered to IRC not later than fifteen (15) days after the end of the month to which the Statement relates.
		(iv)	Each Statement shall be accompanied by such production and sales records, receipts and other records as IRC may reasonably require in order to verify the amount of the Royalty payable on the relevant Quarterly Date.

(b)	Correspondence. The Producer shall within fifteen (15) days after receipt, forward to IRC a copy of all material correspondence between the Producer and any Smelter or Refiner, including without limitation, all statements from the Smelter or Refiner as to the amount of concentrate or intermediate Product received and the amount of Product and precious metals or other Minerals recovered therefrom, and charges or penalties assessed.
(c)	Further Information. The Producer shall, at the request from time to time of IRC, provide to IRC such information as IRC may reasonably require for the purpose of determining the amount of Product derived by the Producer and the amount of Royalty to which IRC is entitled pursuant to this Deed.
(d)	Inspection of Books. IRC, its agents or consultants may at any time during normal business hours on three (3) days’ prior notice to the Producer, inspect the books and records maintained by the Producer in relation to the Property for the purposes of determining and verifying the amount of the Royalty payable in accordance with this Deed. The Producer shall give to IRC such assistance as IRC may reasonably require for that purpose. IRC’s right to inspect Producer’s books and records that relate to any particular calendar year shall expire one (1) year after Producer’s delivery to IRC of the last Statement for that calendar year.

10

8.	Operative Period. The parties acknowledge and agree that the Royalty is perpetual and shall continue to be payable in accordance with the provisions of this Deed notwithstanding:
	(i)	the payment and repayment in full by the Producer of any credit facilities made available to it in connection with or relating to the Property or the Royalty; and/or
	(ii)	the sale or other disposition of all or any part of the Property.

9.	Undertakings.
	(a)	Production. The Producer undertakes, acting on a commercially reasonable basis:
		(i)	to cause all Product extracted or removed from the Property that requires treatment or refinement to be so treated and refined as soon as possible;
		(ii)	if there is any Stockpiled Material not located on the Property, the Producer will obtain an acknowledgment from owner of the land on which the Stockpiled Material is located that the Stockpile Material is subject to the rights of IRC under this Deed; and
		(iii)	material containing Minerals extracted or removed from re-processed materials located on or sourced from the Property are subject to the Royalty.
		Notwithstanding the foregoing, the decision to commence or continue to mine, remove or process any Products from the Property is in the sole discretion of the Producer. The Producer shall be entitled to (i) make all operational decisions with respect to the methods and extent of mining, removing and processing of Products mined, removed or derived from the Property (including, for example, the decision to process by heap leaching rather than conventional milling), (ii) make all decisions related to sales or distribution of such Products, and (iii) make all decisions concerning temporary or long-term cessation of operations.

(b)	Expiration or Other Relinquishment. With respect to the unpatented mining claims included in the Property or any Property held by means of a leasehold interest,
	(i)	If (i) Producer’s rights or interest in any portion of the Property is due to lapse or expire and the Producer is not going to take steps to preserve or renew such interest or a substitute interest over the same area; or (ii) the Producer wishes to surrender any portion of the Property, then the Producer shall give to IRC not less than 60 days prior notice of the proposed lapse, expiration or surrender (whether compulsory or otherwise) together with particulars of the areas which the Producer wishes to surrender, and on request from IRC shall transfer such portion of the Property to IRC or its nominee free of encumbrances (other than the

11

	Royalty) for a consideration of $1.00. IRC agrees that any future Royalty shall not be payable by the Producer as to such a portion of the Property after it is transferred to IRC or its nominee under this Section; however, the Royalty is payable by the person who owns the Property so transferred.
(ii)	For the avoidance of doubt, the parties agree that if any area of the Property is relinquished and subsequently reacquired by the Producer or any Affiliate of Producer, the Royalty will be payable on the Product from that portion of the Property, notwithstanding that the Producer is not the owner of the interest in the Property, on the same terms as this Deed.

(c)	Renewal. Except for Property identified to IRC under Section 9.2(a), the Producer undertakes in a timely fashion to do whatever is necessary to preserve in good standing its rights in the unpatented mining claims according to applicable Laws including, without limitation, the payment of all fees due for unpatented mining claims under the General Mining Law of 1872, as amended (“Mining Law”) and filing of all affidavits or other documents required to maintain the claims in good standing, prior to the date on which the rights in such Property would lapse or expire.
(d)	Maintain Property. The Producer shall:
	(i)	pay on time all rates, taxes, rents, fees and assessments of every nature including rents and fees payable to the United States under the Mining Law, and to the State of Arizona or any local Governmental Authority which are levied on the Property; and
	(ii)	comply with (i) all provisions of the Mining Law (ii) in all material respects with all other Laws affecting the Property or the holder, occupier, mortgagee or chargee of the Property (including all work and expenditure obligations applicable to the Property) and (iii) in all material respects with all leases comprising the Property.

(e)	Smelter or Refiner. The Producer covenants and agrees with IRC that, with respect to Product that is to be sold to, or processed on behalf of Producer by a Smelter or Refiner, the Producer shall select a Refiner that has weights and assays acceptable to a generally recognized trading exchange, association or industry body within the applicable market for the relevant Product.
(f)	Records. The Producer covenants and agrees with IRC that the Producer shall maintain accurate and proper records of mining operations carried out upon the Property and of all Product derived therefrom.
(g)	Commingling. The Producer may commingle ore and Minerals from the Property with ore and Minerals from other lands and properties but it shall representatively measure and sample for moisture, metal and other appropriate content prior to commingling.

12

(i)	If concentrates are produced from the commingled ores by the Producer, the Producer shall also calculate from representative samples the average recovery percentage for all concentrates produced during the applicable Royalty Period.
(ii)	In obtaining representative samples, calculating the average grade of the ore and average recovery percentages, the Producer shall consult with IRC and apply the mining and metallurgical industry generally accepted procedures applicable to the type of mining and processing activity being conducted.
(iii)	Prior to any commingling, the Producer shall notify IRC of the proposed arrangements for commingling and obtain IRC’s written consent, which consent will not be unreasonably withheld, to its proposed procedures for undertaking the commingling and calculating the Royalty in respect of the commingled ore or Minerals.

10.	Representations and Warranties. As of the date of this Agreement, Producer represents and warrants as follows with respect to the Property:
	(a)	Ownership. Producer owns or has a valid leasehold interest in the Property, as set forth on Exhibit A, subject to any Permitted Liens;
	(b)	No Prior Liens. The Property and the Royalty are not subject to any prior liens or encumbrances other than the Permitted Liens;
	(c)	Leases. Each lease of the Property (i) is a valid and subsisting lease, (ii) is in full force and effect and no default (nor any event which, with notice or lapse of time or both, would constitute such a default) has occurred or is continuing under any such lease and (iii) is not subject to any defenses, offsets or counterclaims and there have been no renewals or extensions of or supplements, modifications or amendments to the lease not previously disclosed to IRC;
	(d)	Possession. Producer is in actual possession of the Property and enjoys peaceful, undisturbed possession thereof;
	(e)	Maintenance of Unpatented Claims. With respect to the unpatented mining claims included in the Property, all claim maintenance or rental fees and all affidavits and other filing required to hold the claims and maintain them in good standing with applicable Governmental Authorities have been made or performed; and
	(f)	Status as Collateral. Producer is in compliance in all material respects with each term, condition and provision of any obligation of Producer which is secured by the Property.

13

11.	Recording; Filing. IRC may record, file or lodge this Deed in the county records or with any other Governmental Authority IRC deems necessary or desirable to protect its rights in the Royalty.
12.	Review and Audit.
	(a)	Audit. IRC may from time to time on fourteen (14) days notice conduct an audit and review of the mining and metallurgical accounting conducted by the Producer in calculating the Product produced from the Property, using representatives qualified to conduct such an audit, provided, however, that this audit and review right with respect to any particular calendar year shall expire one (1) year after delivery to IRC of the last Statement with respect to such calendar year.
	(b)	Methodology. If it is not satisfied that the methodology of the mining and metallurgical accounting of the Producer is that of a reasonable miner, IRC shall advise Producer of deficiencies it determines to exist and shall provide Producer with IRC’s calculations as to Product produced.
	(c)	Adjustments. If IRC’s audit determines that the Royalty payments under this Deed to IRC are lower than the sums to which IRC is entitled, the Producer shall pay the amount of the discrepancy to IRC within five (5) Business Days or shall dispute IRC’s conclusions. If Producer disputes IRC’s conclusions or if the parties are unable to agree upon the methodology of the mining and metallurgical accounting, the matter shall be subject to the dispute resolution procedures of Section 16.8. No adjustment shall be made with respect to any calendar year for which IRC has not given Producer a written notice of deficiency, pursuant to Section 12.2, within one year after delivery to IRC of the last Statement with respect to such calendar year.

13.	Assignment.
	(a)	Assignment by IRC.
		(i)	IRC may, at any time, without the consent of the Producer transfer by way of assignment (including, by way of security) or novation all or any of its rights, benefits and obligations hereunder to any person or persons.
		(ii)	If IRC transfers any of its rights, benefits and obligations hereunder pursuant to Section 13.1(a) all references in this Deed to IRC shall thereafter be construed as a reference to IRC and its transferee or transferees or, in the case of a transfer of all of its rights, benefits and obligations, to its transferee or transferees alone.

(b) Assignment by Producer. If Producer or any successor or assign shall sell, convey, assign, encumber or otherwise transfer or dispose of in any manner whatsoever any interest in the Minerals (other than sales in the ordinary course of Producer’s business) or the Property or any Minerals sale contracts (any of which is referred to in this Section as a “Transfer”), then, as a condition to the

14

effectiveness of such Transfer, Producer shall make such Transfer expressly subject to the Royalty and shall obtain the written acknowledgement of the transferee of IRC’s Royalty and, for Transfers other than an encumbrance, shall require the transferee to expressly assume the obligations of Producer with respect to events and conditions occurring after the Transfer and to pay the Royalty accruing after the Transfer according to its terms. Upon the assumption of by the transferee of the foregoing obligations of Producer hereunder, Producer shall be released from performance of all obligations under this Agreement which arise after the Transfer, except that Producer shall not be deemed released from the performance of any obligations which relate to the period prior to the Transfer, for which Producer shall remain primarily liable. Any Transfer in violation of this Section shall be void and ineffective as between IRC and the Producer.

14.	No Assumption of Liability. IRC is not assuming, by its acceptance of this Deed or of Royalty hereunder, any liability, obligation or commitment of Producer, whether known or unknown, actual or contingent, now-existing or hereafter arising (“Excluded Liabilities”). The Excluded Liabilities include, but are not limited to, the following:
		(i)	Any and all obligations and liabilities of Producer relating to or arising from environmental or other conditions of any portion of the Property or from Producer’s operations related to the Property; and
		(ii)	Any and all obligations and liabilities of Producer to any lessor of the Property, to any contractor, to any customer of Producer or to any Governmental Authority.

15.	Indemnity.
	(a)	From Costs. The Producer agrees to indemnify and hold IRC harmless from all Operating Expenses, and all other costs, expenses, liabilities and claims arising from ownership and operation of the Property, disposal of waste therefrom, reclamation of the Property, and the marketing and sale of Product therefrom, it being understood and agreed between the Producer and IRC that the Royalty is a right to receive certain payments or Product from the Producer based upon Product produced from the Property and sold, but is not a right that imposes on IRC any associated or other obligations, to the Producer or to any other person or entity, including Governmental Agencies, any obligation on IRC to contribute to or otherwise pay any costs or expenses associated with or arising from such activities by the Producer.
	(b)	Survival. The indemnity contained in Section 15.1 is continuing for so long as the Royalty is payable, subject to Section 13.2.

16. Transfer of Royalty Interest. If at any time IRC desires to sell or transfer all or any portion of its rights to the Royalty, IRC shall, on a non-exclusive basis, so advise Producer of such desire and of any terms and conditions upon which IRC is willing to entertain a proposal or offer as to a sale or transfer. If IRC solicits offers or bids for the

15

rights, Producer shall be given the opportunity to make an offer or submit a bid; provided, however, that the foregoing shall not create any right of first refusal, right of first offer or other preemptive right in Producer to acquire any interest in rights to the Royalty from IRC, and IRC shall have no obligation whatsoever to accept any offer or bid from Producer, or sell or transfer any such interest to Producer, without regard to whether Producer’s offer or bid is the high bid or best offer, and any decision to sell or transfer to Producer or to any other party shall be in IRC’s sole discretion.

17.	Miscellaneous.
	(a)	Confidentiality.
		(i)	Except as otherwise expressly provided in this Section, all information obtained in relation to the Royalty that is not generally known to or generally available to persons who are knowledgeable in the mining industry (or which is generally known or generally available only as a result of a breach of this Section) shall be kept confidential and shall not be disclosed by the parties. Disclosure of the information referred to in this Section 17.l may be made if the disclosure is, subject to Section 17.2:
			(1)	agreed to by the parties;
			(2)	required by Law or the rules or regulations of any securities exchange or regulatory agency;
			(3)	made to a bona fide purchaser of IRC’s rights under this Deed or the Producer’s rights or title in or to the Property;
			(4)	to any lender of either party;
			(5)	to any potential or actual partner (whether general or limited) in IRC; or
			(6)	to any joint venture partner of the Producer.

(ii) In the case of disclosure to persons referred to in Sections 17.1(a)(iii), (iv), (v) and (vi) (“Recipient”), the disclosing party shall ensure that the Recipient complies with the terms of Section 17.1(a).

(b)	Notices. All notices, requests, demands, waivers, consents, appointments or other communications in connection with or pursuant to this Deed:
	(i)	shall be in legible writing addressed as follows:
		(1)	if to the Producer:
			Nord Resources Corporation 1 West Wetmore Road, Suite 203

16

	Tucson, AZ 85705
	Attention: President and Chief Executive Officer
(2)	if to IRC:
	IRC Nevada Inc. c/o IRC (U.S.) Management Inc. 10 Inverness Dr. East, Suite 104 Englewood, CO 80112 Attention: Chief Financial Officer Facsimile: (303) 799-9017

or as specified to the sender by a party by notice;

(ii)	shall be signed by an Officer of the sender;
(iii)	is regarded as being given by the sender and received by the addressee:
	(1)	if by delivery in person, when delivered to the addressee;
	(2)	if by post, three (3) Business Days from and including the date of postage; or
	(3)	if by facsimile transmission, on receipt of a transmission report confirming successful transmission in its entirety,

(iv)	if the delivery or receipt is on a day which is not a Business Day or is after 4:00 pm (addressee’s time) it is regarded as received at 9:00 am on the following Business Day; and
(v)	can be relied on by the addressee and the addressee is not liable to another person for the consequences of that reliance if the addressee believes it to be genuine, correct and authorized by the sender.

(c)	Governing Law and Jurisdiction.
	(i)	This Deed is governed by the Laws of the State of Arizona.
	(ii)	The Producer irrevocably and unconditionally:
		(1)	submits and accepts the non-exclusive jurisdiction of the courts of Colorado; and
		(2)	waives any objection to the venue of any legal process on the basis that the process has been brought in an inconvenient forum.

17

(d)	Successors and Assigns and Survival. This Deed shall be binding upon the permitted successors, transferees and assigns of the Producer and be binding on and inure to the benefit of IRC and its successors, transferees and assigns.
(e)	Documentary and Transfer Fees. The Producer shall pay all documentary fees, transfer fees and other costs and expenses of and incidental to the delivery and recording of this Deed.
(f)	Amendment.
	(i)	The provisions of this Deed may only be amended, varied, supplemented or waived by a document signed by all of the parties. Any amendment, variation, supplement or waiver which is not contained in a document signed by all of the parties shall not be valid or enforceable.
	(ii)	In the event any Property subject to this Deed has been transferred by the Producer, this Deed may be amended, varied, supplemented or waived, insofar as it pertains to the Property so transferred, by a document signed by the successors, transferees and assigns of the Producer and by IRC or its successors, provided that the liability of Producer is not affected or increased thereby.

(g)	Counterparts. This Deed may be executed in any number of counterparts and by different parties hereto on separate counterparts, each complete set of which, when executed by all parties, shall be original but all such counterparts shall together constitute but one and the same instrument.
(h)	Dispute Resolution.
	(i)	If the parties are unable to resolve a dispute about the subject matter or terms of this Deed after good faith negotiations, a party may, after two (2) Business Days’ notice to the other, refer the matter to resolution by arbitration pursuant to the Commercial Arbitration Rules of the American Arbitration Association, as the same may be modified by the terms of this Agreement (“AAA Rules”).
	(ii)	The arbitrator shall be appointed by agreement, or failing agreement after two (2) Business Days notice by one party to the other, shall be appointed as provided in the AAA Rules.
	(iii)	The arbitrator shall be an appropriately qualified expert with adequate knowledge of the mining industry who has no direct or personal interest in the outcome of the decision he or she is requested to make.
	(iv)	The decision of the arbitrator shall be final and binding on the parties, except in the case of manifest error.

18

(v)	The costs and expenses of the arbitrator shall be borne in such proportions as the arbitrator may decide.
(vi)	The parties shall provide such information as the arbitrator reasonably requires in order to make a determination under this Section.

(i)

Further Assurances. The parties each covenant and agree, upon request from the other from time to time, to execute, acknowledge and deliver such further instruments or documents which the requesting party may reasonably require in furtherance of its rights under this Deed.

(j)

Force Majeure. The prevention or delay in the performance hereof caused by acts of war, riot, rebellion, fire, flood, strike, lockout, accident, equipment breakdown, lack of rail or truck transportation from regular point of shipment, economic shutdown of mine or plant facilities, shortage of raw material, unavailability of water, laws, regulations or requirements of any other Governmental Authority, or any other circumstances beyond the reasonable control of either party (any such event being called “Force Majeure”); shall entitle the party affected to suspend this Deed to the extent and for so long as its performance is made impracticable by such event of Force Majeure, by the affected party giving written notice thereof to the other party. Except for payment of sums becoming due at or prior to the event of Force Majeure, the party invoking the provisions of this Section will not be liable for non-performance of any obligations hereunder during continuation of such event; provided, however, that such party exercises all reasonable efforts to limit and obviate the event of Force Majeure, but the affected party shall not be required to settle any strike.

19

     IN WITNESS WHEREOF this Deed has been duly executed and delivered as of the date above first written.

NORD RESOURCES CORPORATION,
a Delaware corporation
By:	/s/ John T. Perry
	John T. Perry
	President
IRC NEVADA INC.,
a Nevada corporation
By:	/s/ Doug Silver
	Doug Silver
	President

20

State of Arizona	)
	) ss.
County of Pima	)

     The foregoing instrument was acknowledged before me this ___ day of _______________, 2009 by John T. Perry as President of Nord Resources Corporation, a Delaware corporation.

     Witness my hand and official seal.

     My commission expires: _________________

[SEAL] Notary Public

State of Colorado	)
	) ss.
County of	)

     The foregoing instrument was acknowledged before me this ___ day of _______________, 2009 by ____________________________________________ as President of IRC Nevada, Inc., a Nevada corporation.

     Witness my hand and official seal.

     My commission expires: _________________

[SEAL] Notary Public

21

EXHIBIT A
TO
ROYALTY DEED AND ASSIGNMENT OF ROYALTY

PROPERTY

1

EXHIBIT B
TO
ROYALTY DEED AND ASSIGNMENT OF ROYALTY

PERMITTED LIENS

1.	As to the unpatented mining claims included in the Property, the paramount title of the United States of America.
2.	Producer is a party to an Amended and Restated Credit Agreement with Nedbank Limited, as the administrative agent and lead arranger, which provided for a $25,000,000 secured term loan credit facility (the “Loan”) that has been drawn down by Producer to finance the reactivation of the Property. Under the Amended and Restated Credit Agreement, Producer has delivered:
	(a)	Deed of Trust from Nord Resources Corporation to First American Title Insurance Company for the benefit of NedBank Limited, a limited liability company, recorded August 3, 2007, Recording No. 2007-0825945, Cochise County, Arizona;
	(b)	Collateral Account Agreement, dated July 31, 2007, among Producer, Nedbank Limited and wells Fargo Bank, N.A. and
	(c)	UCC financing statements and other security documents and instruments.
	Nedbank Limited holds a first priority lien encumbering all of the real and personal property associated with the Property, including all patented mining claims, fee lands and unpatented mining claims in which Producer has an interest. Immediately following the Closing, Producer and Nedbank will enter into a Second Amended and Restated Credit Agreement , as well as an Amended and Restated Collateral Account Agreement and an Account Charge with respect to the Loan.
3.	Regulations, conditions and restrictions governing use of ground water pursuant to Arizona Revised Statutes 45-101 et. seq.
4.	Reservations or Exceptions in Patents, or in Acts authorizing the issuance thereof.
5.	Established and/or existing roads, roadways, highways, rights-of-way and easements therefore.
6.	Water rights, claims or title to water, whether or not shown by the public records.
7.	Liabilities and obligations imposed on the land located within Northern Cochise County Hospital District.
8.	An easement for electric lines and incidental purposes in the document recorded as Book 55 of Miscellaneous Records, Page 299.

9.	An easement for telephone and telegraph lines and incidental purposes in the document recorded as Book 59, Page 135, of Miscellaneous Records.
10.	Right of way for a road as shown in Book 2 of Maps at pages 7 and 58.
11.	An easement for electric transmission lines and incidental purposes in the document recorded as Docket 952, Page 77 of Official Records.
12.	An easement for electric transmission lines and incidental purposes in the document recorded as Docket 933, Page 390 of Official Records.
13.	An easement for electric transmission lines and incidental purposes in the document recorded as Instrument No. 9411-30104 of Official Records.
14.	The terms and provisions contained in the document entitled “Access and Water Use Agreement” recorded as Instrument No. 8701-02368 of Official Records.
15.	The terms and provisions contained in the document entitled “Grant of Production Payment” recorded as Instrument no. 9906-18419 of Official Records.
16.	Any facts, rights, interests or claims which would be disclosed by a correct ALTA/ACSM survey.

3

EX-23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

As independent registered public accountants, we hereby consent to the incorporation by reference in Registration Statement No. 333-152099 on Form S-8, of our report dated March 31, 2009, relating to the consolidated financial statements of Nord Resources Corporation and Subsidiary as of December 31, 2008 and 2007 and the related consolidated statements of operations, cash flows and changes in stockholders’ equity for each of the two years in the period ended December 31, 2008, included in the 2008 Annual Report on Form 10-K of Nord Resources Corporation and Subsidiary.

/s/ Mayer Hoffman McCann P.C.

MAYER HOFFMAN MCCANN P.C.

Phoenix, Arizona

March 31, 2009

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, John T. Perry, certify that:

1.	I have reviewed this annual report on Form 10-K of Nord Resources Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 31, 2009

By:	/s/ John T. Perry
	John T. Perry
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, Wayne M. Morrison, certify that:

1.	I have reviewed this annual report on Form 10-K of Nord Resources Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 31, 2009

By:	/s/ Wayne M. Morrison
	Wayne M. Morrison
	Vice President, Chief Financial Officer,
	Secretary and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL
OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, John T. Perry, Chief Executive Officer of Nord Resources Corporation, and Wayne M. Morrison, Chief Financial Officer of Nord Resources Corporation, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of Nord Resources Corporation for the year ended December 31, 2008 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in the Annual Report on Form 10-K fairly presents in all material respects the financial condition and results of operations of Nord Resources Corporation.

Date: March 31, 2009

By:	/s/ John T. Perry
	John T. Perry
	President and Chief Executive Officer
By:	/s/ Wayne M. Morrison
	Wayne M. Morrison
	Vice President, Chief Financial Officer, Secretary & Treasurer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.