-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hhc8A/OFyP+htnQRDOyoroMfDBGtDzX345U4dfSQWn4snaJDrXvzd8uFmt7GkIMs 8M8rnkpTLvkGeKFsfaDlRw== 0001222758-03-000008.txt : 20030912 0001222758-03-000008.hdr.sgml : 20030912 20030620124928 ACCESSION NUMBER: 0001222758-03-000008 CONFORMED SUBMISSION TYPE: 20FR12G/A PUBLIC DOCUMENT COUNT: 21 FILED AS OF DATE: 20030620 DATE AS OF CHANGE: 20030912 FILER: COMPANY DATA: COMPANY CONFORMED NAME: J PACIFIC GOLD INC CENTRAL INDEX KEY: 0001222758 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 20FR12G/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-50238 FILM NUMBER: 03751381 BUSINESS ADDRESS: STREET 1: SUITE 1440 - 1166 ALBARNI ST CITY: VANCOUVER BC STATE: A1 ZIP: 00000 BUSINESS PHONE: 6046846677 MAIL ADDRESS: STREET 1: SUITE 1440 - 1166 ALBARNI ST CITY: VANCOUVER BC STATE: A1 ZIP: 00000 20FR12G 1 jpn20fjune03.htm 20F DOCUMENT J-Pacific Gold Inc. 20-F
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
REVISION NO. 1
[X] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ________
Commission file number ___________
J-Pacific Gold Inc.
(Exact name of Registrant as specified in its charter)

_______________British Columbia, Canada_______________
(Jurisdiction of incorporation or organization)

Suite 1440, 1166 Alberni Street, Vancouver, B.C. CANADA V6E 3Z3
(Address of principal executive offices)
 
Securities to be registered pursuant to Section 12(b) of the Act: None
 
Securities to be registered pursuant to Section 12(g) of the Act:
Common Shares, without par value
(Title of Class)
 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
 
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 33,494,325
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 or 15(d) of the Securities Exchange Act of 1934 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 ninety days. Yes ___ No xxx
 
Indicate by check mark which financial statement item the registrant has elected to follow: Item 17 xxx Item 18 ___

Page 1 of 83
Index to Exhibits on Page 69

Page 1


J-PACIFIC GOLD INC.
FORM 20-F REGISTRATION STATEMENT
TABLE OF CONTENTS

Technical Glossary and Definitions 3
Introduction 9
   

PART I

 
   

Item 1. Identity of Directors, Senior Management and Advisors

10
Item 2. Offer Statistics and Expected Timetable 11
Item 3. Key Information 11
Item 4. Information on the Company 18
Item 5. Operating and Financial Review and Reports 37
Item 6. Directors, Senior Management and Employees 47
Item 7. Major Shareholders and Related Party Transactions 53
Item 8. Financial Information 54
Item 9. The Offer and Listing 55
Item 10. Additional Information 59
Item 11. Quantitative and Qualitative Disclosures About Market Risk 67
Item 12. Description of Securities Other Than Equity Securities 67
   

PART II

 
   
Item 13. Default, Dividend Arrearages and Delinquencies 68
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 68
Item 15. Controls and Procedures 68
Item 16. Reserved 68
   

PART III

 
   
Item 17. Financial Statements 69
Item 18. Financial Statements 69
Item 19. Exhibits 69
   

Audited Financial Statements

71
Signature Page 83
Exhibits 84

page 2

TECHNICAL GLOSSARY AND ABBREVIATIONS

Adits:
Nearly horizontal passages from the surface by which a mine is entered and dewatered.
Aditing:
To construct an adit.
Ag:
Chemical symbol for silver.
Agglomerates:
Pyroclastic rocks of volcanic origin containing a predominance of rounded or sub angular fragments.
Alkaline:
Igneous rock in which the abundance of alkalies in relation to other constituents has impressed a distinctive mineralogical character; generally indicated by the presence of soda pyroxenes, soda amphiboles and or felspathoids.
Alluvial:
Transported and deposited by water.
Alteration systems, Altered:
Zone within which rock-forming minerals have been chemically changed, the changed rock.
Andesite, Andesitic Flows:
A volcanic rock composed of andesine and one or more mafic constituents.
Archipelago:
Any sea or broad sheet of water interspersed with many islands or with a group of islands; also, such a group of islands.
Argillic alteration, Argillization:
Refers to the product of alteration and infers a rock of high clay content.
Arkosic Wackes:
Sandstone of unsorted grain size in which more than 25% of the grains are feldspars.
Artisan Miners:
Local or native miners who win subsistence from processing alluvial material to recover gold.
Au:
Chemical symbol for gold.
Basaltic:
A rock formation formed of basalt, basalt is an extrusive volcanic rock composed primarily of plagioclase feldspar, pyroxene and other mafic minerals.
Base Metal:
Generally a metal inferior in value to the precious metals, eg copper, lead, zinc, nickel.
Belt:
A general term applied to a group of rocks and or a group of mineral deposits within a district.
Bornite:
A mineral Cu5FeS4 - sometimes called peacock copper ore, an important ore of copper.
Boulders:
A term for large rounded blocks of stone lying at the surface which have been transported to their location by natural means.
Breccia:
Rock consisting of angular fragments in a finer grained matrix, distinct from conglomerate.
Bulk Leach Extractable, BLEG:
Bulk Leach Extractable Gold, a semiquantatative measure of cyanide extractable gold contained in a sample.
page 3

Calc-Alkaline:
An alkaline rock containing calcium carbonate.
Carbonate:
Minerals containing calcium and or magnesium carbonate.
Chalcopyrite:
A mineral CuFeS2 - copper pyrites, an important ore of copper.
Chargeability:
A measurement commonly used in time-domain induced polarisation measurement.
Chromite:
A mineral of the spinel group. The principal ore of chromium.
Clastics:
Pertaining to rocks or sediment composed principally of fragments derived from pre-existing rocks or minerals and transported some distance from their places of origin.
Conglomerate:
A cemented clastic rock containing rounded fragments corresponding in their grade sizes to gravel or pebbles.
Copper:
A base metal.
Cretaceous:
A period of historical geological time between 66 and 131 million years before present.
Crop Out:
To be exposed at the surface; referring to rocks exposed at the surface.
Cross-Cuts:
Small passages or openings driven at right angles to the main entry or drives or across the course of a vein.
Crustal:
A portion of the earth's crust beneath an oceanic or continental region.
Crystalline:
Mineral with obvious crystal structure.
Cu:
Chemical symbol for copper.
Dacitic:
A rock formation formed of dacite, dacite is an equivalent of quartz diorite and is composed primarily of plagioclase feldspar, quartz, pyroxene and or hornblende with minor biotite.
Deposits:
An accumulation of potentially economic minerals.
Diamond Core Drilling:
Rotary drilling using diamond-impregnated bits, to produce a solid continuous core sample of the rock.
Dilatational:
A process of widening and pulling apart of an area of rock.
Diorite, Dioritic:
An igneous intrusive rock composed primarily of plagioclase feldspar, biotite, pyroxene and or hornblende sometimes with small amounts of quartz.
Disseminated:
Fine particles of the ore mineral dispersed through the enclosing rock.
Drilling:
A method of obtaining sub surface rock samples using a rotary drill.
Drives:
Small passages or openings usually following the course of a vein.
Dykes:
Tabular intrusive bodies of igneous rock that cuts across bedding.
Epidote:
A mineral.
Eurasian Plates:
Portions of the earths crust beneath an oceanic or continental region, which move relative to other plates as a single unit. The Eurasian plate consists of parts of continental Asia and Europe.
page 4


Faults:
A fracture in rocks on which there has been movement on one of the sides relative to the other.
g/t:
Grams per tonne.
Galena:
A mineral PbS - the principal ore of lead.
Garnet:
A mineral.
Genetic:
Pertaining to relationships due to a common origin.
Geochemical:
Prospecting techniques that measure the content of certain metals in soils sediments and rocks and define anomalies for further testing.
Geological:
Pertaining to the study of the earth.
Geophysical Survey:
The exploration of an area in which the geophysical properties and relationships unique to an area are mapped by various geophysical methods.
Gold:
A metal.
Grass-Roots:
Term given to early stage mineral exploration.
Greywackes:
A type of sandstone marked by large detrital quartz and feldspars set in a prominent to dominant clay matrix. Ha:
Hectares.
Haematite:
A mineral Fe2O3 - the principal ore of iron.
Induced Polarisation (IP):
A surface electrical technique of geophysical surveying.
Intercalated:
A sequence of differing rock layers.
Intrusions:
Bodies of igneous rocks that invade older rock.
IP Frequency Effect:
A measurement used induced polarisation geophysical techniques.
Iron:
A metal.
Keratophyre, Keratophyric Flows:
A name generally applied to all salic lavas and dyke rocks characterised by containing albite or albite oligoclase, chlorite, epidote and calcite.
Km:
Kilometre(s).
Landsat:
An unmanned satellite designed to provide multi-spectral imagery of the earth's surface.
Lead:
A base metal.
Lenses:
Bodies of rock thick in their centre and thin on their edges.
Limestone:
A sedimentary rock consisting chiefly of calcium carbonate.
Limy Siltstone:
A fine-grained clastic sedimentary rock containing a high content of calcium carbonate.
Low Sulphidation:
Refers to mineralising fluids with a low sulphur content.
M:
Million.
oz:
Troy ounces.
page 5

Magnetite:
A mineral - magnetic iron ore.
Manganese:
An element.
Measured Category:
A category defining a mineral resource according to the Australasian Code for Reporting of Mineral and Ore Reserves (The JORC Code) as prepared by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC).
Metallic:
Of or belonging to metals, containing metals, more particularly the metals that are the object of mining.
Metallurgical:
The application of the science of preparing metals from their ores.
Metamorphosed Greenstones:
Rocks that have been changed by low grade metamorphic processes and generally have a green colour due to green metamorphic minerals.
Metavolcanics:
Term applied to volcanic rocks that have been altered by metamorphic processes.
Microcrystalline:
Term applied where individual crystals can only be seen as such under the microscope.
Mineral Endowment:
Term applied to the amount of mineral content a region contains.
Minerals:
Naturally occurring elements or compounds.
Miocene:
A period of historical geological time between 5 and 23.5 million years before present.
Neogene:
A period of historical geological time between 1.8 and 23.5 million years before present.
Natural Resources:
Resources provided by nature.
Non-Metallic:
Resources with no metal content.
Oligocene:
A period of historical geological time between 23.5 and 37 million years before present.
Overprint:
An event superimposed on a previous event.
Pacific Rim:
The Circum-Pacific area where geologic forces have led to a continuous belt of volcanic and seismic activity.
Palaeogene:
A period of historical geological time between 23.5 and 66 million years before present.
Panned Concentrate:
The particles of greatest specific gravity which are retained after washing and agitating soils, sediments or crushed rock in a "pan".
Pervasive, Pervasively:
Refers to invasive alteration of rocks within an alteration system.
Peso, PhP:
The Philippine currency the Peso.
Plagioclase:
A mineral.
Pleistocene:
A period of historical geological time between 0.01 and 1.8 million years before present.
page 6

Pliocene:
A period of historical geological time between 1.8 and 5 million years before present.
Plutons, Plutonic:
Bodies of igneous rock that has formed beneath the earth's surface and their association.
Porphyry, Porphyries:
Disseminated minerals in a large body of rock. In the commercial sense the term is not restricted to ore in porphyry but is applied to deposits characterised by huge size uniform dissemination and low average metal content.
ppm:
Parts per million.
Prospecting:
To explore areas for the existence of valuable minerals.
Prospects:
A geologic anomaly or area of known mineralization where further exploratory work is required to evaluate its economic potential.
Pyrite:
A mineral.
Pyroclastics:
A general term applied to detrital volcanic materials that have been explosively or aerially ejected from
a volcanic vent.
Quartz:
A mineral.
Quartz-Diorite:
An igneous intrusive rock composed primarily of plagioclase, quartz, and hornblende or biotite or both.
Radarsat:
An unmanned satellite designed to provide spectral imagery of the earth's surface.
Residual:
Material remaining in place after processes of erosion has taken place.
Resistivity:
That factor of the resistance of a conductor, which depends upon the material and its physical condition. A measurement used in geophysical work.
Sandstone:
A medium grained sedimentary rock with a high content of quartz.
Sediments:
Rocks formed by transportation of particles by air water or ice.
Shale:
A fine-grained, clay rich laminated sedimentary rock.
Shear:
A planer zone of deformation.
Silicified:
Referring to rocks in which a significant proportion of the original constituent minerals have been replaced by silica.
Skarn:
A rock, often rich in calcium silicates, formed by contact metamorphism and or metasomatism and often host to mineral deposits.
Sluiced:
The product of the process of washing auriferous earth or sediments through long races or boxes provided with riffles and other gold saving devises.
Spar:
An offshoot to a major structure.
Spectrum Analysis:
An analytical method whereby a broad range of elements are analysed.
Sphalerite:
A mineral (Zn,Fe)S - the principal ore of zinc.
Stock, Stocks:
A body of plutonic rock that covers less than 40 square miles and has steep contacts.
page 7

Stockworking:
A solid mass of rock impregnated by small veins.
Stratabound:
Lying within a particular rock stratum.
Strike:
The direction or bearing of the outcrop of an inclined bed or structure on a level surface.
Structure, Structures:
The general disposition, attitude, arrangement or relative positions of rock masses in a region or area, also applied to faults.
Sulphidation:
Term applied to the amount of sulphur within a mineral and alteration system.
Sulphide:
A group of minerals in which one or more metals is found in combination with sulphur.
Surface trenching:
A prospecting method.
t 000's:
Tonnes X 1000.
Tailings:
Those portions of washed ore that are regarded as too poor to be treated further.
Tectonic:
Relating to structural features.
Textures:
Geometrical aspects of the component particles of a rock, including size, shape and arrangement.
Thrust:
A reverse fault characterised by a low angle of inclination with reference to the horizontal plane.
Trenches:
A prospecting method.
Unconformable:
Where a time break in rock deposition or formation has occurred.
Vein Systems:
A group of narrow intrusive mineralised bodies.
Veinlets:
Very small veins.
Veins:
A narrow intrusive body.
Volcanic Flow Rock:
Extrusive volcanic rock.
Volcanic Wackes:
A type of sediment, usually unsorted in character, derived from the product of volcanic activity and marked by large detrital quartz and feldspars set in a prominent to dominant clay matrix.
Volcanics:
General term given to rocks of volcanic origin.
Zinc:
A base metal.
page 8

INTRODUCTION

J-Pacific Gold Inc. was organized under the laws of British Columbia, Canada. In this Registration Statement, the "Company", "we," "our" and "us" refers to J-Pacific Gold Inc. (unless the context otherwise requires). We have prepared this Registration Statement on the basis of information that we have or that we have obtained from sources we believe to be reliable. Summary discussions of documents referred to in this Registration Statement may not be complete and we refer you to the actual documents for more complete information. Our principal corporate offices are located at Suite 1440, 1166 Alberni Street, Vancouver, B.C. CANADA V6E 3Z3. Our telephone number is 604-684-6677.

BUSINESS OF J-PACIFIC GOLD INC.

The Company is an exploration stage company that acquires and explores natural resource properties. At present, the Company is involved in exploration work in the both Canada and the United States. No known bodies of commercial ore or economic deposits have been established on any of the Company's natural resource properties and further exploration is required before a final evaluation as to the economic and legal feasibility is determined.

FINANCIAL AND OTHER INFORMATION
In this Registration Statement, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars ("CDN$" or "$"). The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).

FORWARD-LOOKING STATEMENTS
This Registration Statement includes forward-looking statements, principally in ITEM #4, "Information on the Company" and ITEM #5, "Operating and Financial Review and Prospects". We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting our business. These forward- looking statements are subject to risks, uncertainties and assumptions including, among other things, the factors discussed in this Registration Statement under ITEM #3, "Key Information, Risk Factors" and factors described in documents that we may furnish from time to time to the Securities and Exchange Commission.

The words "believe", "may", "will", "estimate", "continue", "anticipate", "intend", "expect", and similar words are intended to identify forward-looking statements. In light of these risks and uncertainties, the forward-looking information, events and circumstances discussed in this Registration Statement might not occur. Our actual results and performance could differ substantially from those anticipated in our forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements because of new information, future events or otherwise.
page 9

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

1.A.1. Directors
Table No. 1 lists, as of 5/31/2003, the names of the Directors of the Company.

Table No. 1
Directors
Name     Age Date First Elected/Appointed
Nicholas T. Ferris (1) (2) 44 February 1, 2000
D'Arcy Adam (1) (3) 50 April 18, 2000
Kazuo Shuto   (4) 65 June 15, 2001
Driffield Cameron   (5) 55 April 12, 2001
John Mesrobian, Esq. (1) (6) 51 February 1, 2002
Ralph Braun   (7) 38 April 1, 2001
Manabu Kameda   (8) 35 May 16, 2003
         
(1) Member of Audit Committee.
(2) Business Address: Suite 1440 - 1166 Alberni Street, Vancouver, B.C. V6E 3Z6
(3) Business Address: 301 Stewardson Way, New Westminster, B.C. V3M 2A5
(4) Business Address: 3-6-9 Kita Shinagawa, Shinagawa-ku, Tokyo 140-0001
(5) Business Address: 1700-155 University Avenue, Toronto, Ontario M5H 3B7
(6) Business Address: 220 Charleston Place, Williamsburg, Virginia 23185
(7) Business Address: Suite 1440 - 1166 Alberni Street, Vancouver, B.C. V6E 3Z6
(8) Business Address: 3-6-9 Kita Shinagawa, Shinagawa-ku, Tokyo 140-0001

1.A.2. Senior Management
Table No. 2 lists, as of 5/31/2003, the names of the Senior Management of the Company. The Senior Management serves at the pleasure of the Board of Directors.
Table No. 2
Senior Management
Name     Position Age Date of First Appointment
Nicholas Ferris (1) (4) President/CEO 44 February 1, 2000
Ralph Braun (2) (4) CFO 38 April 1, 2001
Cheri Pedersen (3) (4) Secretary 49 June 8, 2000
           
(1) He spends 100% of his time on the affairs of the Company.
(2) He spends 50% of his time on the affairs of the Company.
(3) She spends 5% of her time on the affairs of the Company
(4) Business Address: c/o J-Pacific Gold Inc. 1440 - 1166 Alberni Street Vancouver, B.C. V6E 3Z6

page 10


Nicholas Ferris's business functions, as President/CEO, include overall management of the Company including setting policy/procedures and the annual budget, control and approval of major expenditures, negotiation of major contracts/agreements with third parties, supervision of staff including performance reviews and related matters, and reporting to the Board of Directors. In addition, he manages the Company's project development program, investor relations program and corporate finance efforts.

Ralph Braun's business functions, as Chief Financial Officer, includes fiscal management of the Company.

Cheri Pedersen's business functions, as Corporate Secretary, include: ensuring the Company's compliance with all statutory and regulatory requirements and managing administrative functions at the corporate headquarters.

1.B. Advisors
The Company's banker is the Bank of Montreal located at 595 Burrard Street, Vancouver, British Columbia V7X 1L7. The telephone number for the Bank of Montreal is 604-665-7506 and the contact person is Muriel Pru'd Homme. The Company's legal counsel is DuMoulin Black located at 595 Howe Street, 10th Floor, Vancouver, B.C. CANADA V6C 2T5. The telephone number of the Company's legal counsel is 604-687-1224 and the contact person is Cheri Pedersen.

1.C. Auditors
The Company's auditors for its financial statements for each of the preceding two years was Morgan & Company, Chartered Accountants. Morgan & Company is located at 700 West Georgia Street, Suite 1488, Vancouver, B.C. CANADA V7Y 1A1. Morgan & Company is licensed to practice in British Columbia by the Institute of Chartered Accountants.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.
--- No Disclosure Necessary ---

ITEM 3. KEY INFORMATION.

3.A.1. Selected Financial Data
3.A.2. Selected Financial Data
The selected financial data of the Company for Fiscal 2002 and 2001, ended December 31st was derived from the financial statements of the Company which have been audited by Morgan & Company, Chartered Accountants, as indicated in their auditors report which is included elsewhere in this Registration Statement. The selected financial data set forth for Fiscal 2000, 1999 and Fiscal 1998 ended December 31st is derived from the Company's audited consolidated financial statements, not included herein. The selected financial data set forth for the first quarter ended March 31, 2003 was derived from unaudited financial statements.

The selected financial data should be read in conjunction with the consolidated financial statements and other financial information included elsewhere in the Registration Statement.

The Company has not declared any dividends since incorporation and does not anticipate that it will do so in the foreseeable future. The present policy of the Company is to retain future earnings for use in its operations and the expansion of its business.

Table No. 3 is derived from the consolidated financial statements of the Company, which have been prepared in accordance with United States Generally Accepted Accounting Principles (GAAP).
page 11

 

Table No. 3
Selected Financial Data
(CDN$ in 000, except per share data)
Quarter Ended 3/31/03 Quarter Ended 3/31/02 Year Ended 12/21/02 Year Ended 12/21/01 Year Ended 12/21/00 Year Ended 12/21/99 Year Ended 12/21/98
Revenue Nil Nil Nil Nil Nil $1,252 Nil
Net Income (Loss) (159) (120) (1,210) (645) (752) (4,949) (2)
(Loss) per Share <($0.01) <($0.01) ($0.04) ($0.03) ($0.03) ($0.23) ($0.01)
Dividends Per Share 0 0 0 0 0 0 0
Wtg. Avg. Shares (000)  32,400 30,118 31,172 24,419 23,100 21,616 16,360
           
Working Capital 537 259 156 (8) (29) 11 1,101
Long Term Debt 184 101 188 100 635 191 289
Shareholders' Equity 1,184 969 793 696 108 826 4,830
Total Assets  1,481 1,211 1,194 969 910 1,416 5,951
 

3.A.3. Exchange Rates
Table No. 4 sets forth the rate of exchange for the Canadian Dollar at the end of the five most recent fiscal periods ended December 31st, the average rates for the period, and the range of high and low rates for the period. Exchange rates are also disclosed for the preceding eight fiscal quarters and the most recent six monthly periods.

For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. The table sets forth the number of Canadian dollars required under that formula to buy one U.S. Dollar. The average rate means the average of the exchange rates on the last day of each month during the period.
page 12

Table No. 4
U.S. Dollar/Canadian Dollar

  Average High Low Close
May 2003 $1.38 $1.42 $1.34 $1.37
April 2003 $1.46 $1.48 $1.43 $1.43

March 2003

$1.48 $1.49 $1.47 $1.47

February 2003

$1.51 $1.53 $1.49 $1.51
January 2003 $1.54 $1.58 $1.52 $1.53
December 2002 $1.56 $1.58 $1.55 $1.58
November 2002 $1.57 $1.59 $1.55 $1.57
October 2002 $1.58 $1.59 $1.56 $1.56
September 2002 $1.58 $1.59 $1.55 $1.59
         
Three Months Ended 12/31/02 $1.57 $1.59 $1.55 $1.58
Three Months Ended 9/30/02 $1.58 $1.60 $1.51 $1.59
Three Months Ended 6/30/02 $1.54 $1.60 $1.51 $1.52
Three Months Ended 3/31/02 $1.60 $1.61 $1.58 $1.60
Three Months Ended 12/31/01 $1.58 $1.60 $1.56 $1.59
Three Months Ended 9/30/01 $1.55 $1.58 $1.51 $1.58
Three Months Ended 6/30/01 $1.54 $1.58 $1.51 $1.52
Three Months Ended 3/31/01 $1.53 $1.58 $1.49 $1.58
         
Fiscal Year Ended 12/31/02 $1.57 $1.61 $1.51 $1.52
Fiscal Year Ended 12/31/01 $1.55 $1.60 $1.49 $1.59
Fiscal Year Ended 12/31/00 $1.50 $1.56 $1.44 $1.50
Fiscal Year Ended 12/31/99 $1.49 $1.53 $1.44 $1.44
Fiscal Year Ended 12/31/98 $1.49 $1.57 $1.41 $1.54

The exchange rate was 1.37 on May 31, 2003.
page 13

3.B. Capitalization and Indebtedness

Table No. 5 sets forth the capitalization and indebtedness of the Company as of 5/31/2003. There have been no material changes since that date.

Table No. 5
Capitalization and Indebtedness
May 31, 2003

Shareholders' Equity: Common Shares, no par value; 100,000,000 common shares authorized

Number of Shares
Capitalization
Common shares issued and outstanding
35,025,325
$8,756,331
Stock Options Outstanding
3,005,000
$84,000
Warrants Outstanding

5,115,166

$0
Capital Leases
Nil
Nil
Guaranteed Debt
Nil
Nil
Secured Debt
Nil
Nil


3.C. Reasons For The Offer And Use Of Proceeds
--- No Disclosure Necessary ---

3.D Risk Factors

Unsuccessful Exploration Efforts By J-Pacific Gold Personnel Could Result In a Cessation of Operations by Company:

The expenditures to be made by the Company in the exploration of its properties as described herein may not result in discoveries of mineralized material in commercial quantities. Most exploration projects do not result in the discovery of commercially mineable ore deposits and this occurrence could force J-Pacific Gold to cease operations.

J-Pacific Gold Has No Reserves on the Properties in Which It Has an Interest:

The properties in which J-Pacific Gold has an interest or the concessions in which the Company has the right to earn an interest are in the exploratory stage only and are without a known body of ore. Properties on which Company personnel do not find mineral reserves will have to be discarded causing the Company to write each respective property off resulting in unrecoverable expenses.

There is No Guarantee of Clear Title to Any of the Exploration Properties to which J-Pacific Gold Has an Interest:

Unregistered agreements or unregistered transfers of title could cause J-Pacific Gold To forfeit its interests in one or more of its property interests.
page 14

Mineral Prices May Not Support Corporate Profit for J-Pacific Gold:

The resource exploration industry is intensely competitive and even if commercial quantities of mineral resources are developed (which is not guaranteed), a profitable market may not exist for the sale of same. If a profitable market does not exist the Company could have to cease operations.

J-Pacific Gold Has No Positive Cash Flow and No History of Earnings and Is Dependent Upon Public and Private Distributions of Equity to Obtain Capital in Order to Sustain Operations:

None of the Company's properties have advanced to the commercial production stage and the Company has no history of earnings or positive cash flow from operations. The cumulative loss since the Company's inception of the development stage, according to U.S. GAAP, is ($11,350,017) as at December 31, 2003 and ($11,509,377) as at March 31, 2003. The Company does not know if it will ever generate material revenue from mining operations or if it will ever achieve self-sustaining commercial mining operations. Historically, the only source of funds available to the Company has been through the sale of its common shares. Any future additional equity financing would cause dilution to current stockholders.

The Expense of Meeting Environmental Regulations Could Cause a Significantly Negative Effect on J-Pacific Gold:


The current and anticipated future operations of the Company, including further exploration activities require permits from various Canadian Federal and Provincial governmental authorities. Such operations are subject to various laws governing land use, the protection of the environment, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, mine safety and other matters. Unfavorable amendments to current laws, regulations and permits governing operations and activities of resource exploration companies, or more stringent implementation thereof, could cause increases in capital expenditures which could result in a cessation of operations by the Company.

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 resource exploration 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 violation of applicable laws or regulations.
Large increases in capital expenditures resulting from any of the above factors could force J-Pacific Gold to cease operations.

Operating Hazards and Risks Associated with the Mining Industry Could Result in Significant and Large Expenditures By J-Pacific Gold Which Could Force Cessation of Operations

Resource exploration activities generally involve a high degree of risk. Hazards such as unusual or unexpected formations and other conditions are involved. Operations in which the Company has a direct or indirect interest will be subject to all the hazards and risks normally incidental to exploration, development and production of precious and base metals, any of which could result in work stoppages, damage to or destruction of exploration facilities, damage to life and property, environmental damage and legal liability for any or all damage. The Company may become subject to liability for cave-ins and other hazards for which it cannot insure or against which it may elect not to insure where premium costs are disproportionate to the Company's perception of the relevant risks. The payment of such insurance premiums and of such liabilities would reduce the funds available for exploration activities and could force the Company to cease operations.
page 15

There is the Possibility of Significant Dilution to the Present and Prospective Shareholders of J-Pacific Gold:

The Company's plan of operation, in part, contemplates the accomplishment of business negotiations by the issuance of cash, securities of the Company, or a combination of the two, and possibly, incurring debt. Any transaction involving the issuance of previously authorized but unissued shares of common stock, or securities convertible into common stock, would result in dilution, possibly substantial, to present and prospective holders of common stock.

J-Pacific Gold currently has 3,005,000 share purchase options outstanding and 5,115,166 share purchase warrants outstanding. If all of the share purchase warrants and share purchase options were exercised, the number of common shares issued and outstanding would increase from 35,025,325 to 43,145,491. This represents an increase of 23.1% in the number of shares issued and outstanding and would result in significant dilution to current shareholders.

The Risks Associated with Penny Stock Classification Could Negatively Affect the Marketability of the Common Stock of J-Pacific Gold And Shareholders Could Find It Difficult to Sell Their Stock:

The Company's stock is subject to "penny stock" rules as defined in 1934 Securities and Exchange Act rule 3a51-1. The Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. The Company's common shares are subject to these penny stock rules. Transaction costs associated with purchases and sales of penny stocks are likely to be higher than those for other securities. Penny stocks generally are equity securities with a price of less than U.S. $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker- dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the Company's common shares in the United States and shareholders may find it more difficult to sell their shares.
page 16

The Company is Dependent on Key Personnel and the Absence of Any of These Individuals Could Result in the Company Having to Cease Operations:

The Company strongly depends on the business and technical expertise of its management and key personnel. There is little possibility that this dependence will decrease in the near term. As the Company's operations expand, additional general management resources will be required, especially since the Company encounters risks that are inherent in doing business in several countries. The Company is dependent, in particular, on its President Mr. Nicholas T. Ferris. Key man life insurance is not in place on Mr. Ferris.

J-Pacific Gold Has Limited Financial Resources and Without the Addition of Additional Capital May Not Be Able to Continue in Operation


The Company has limited financial resources and, if the business does not become profitable or is unable to raise sufficient funds to sustain, continue or expand its business, it would have to cease operations. Our auditors have stated in our audited financial statements that we may be unable to continue operations as a going concern.

It is Difficult for U.S. Investors to Effect Service of Process Against the Company


The Company is incorporated under the laws of Canada. The Company's directors and officers are residents of Canada and a substantial portion of the Company's assets are located outside of the United States. Consequently, it may be difficult for United States investors to effect service of process in the United States upon the Company's directors and officers or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under the United States Securities Exchange Act of 1934, as amended. A judgment of a U.S. court predicated solely upon such civil liabilities would probably be enforceable in Canada by a Canadian court if the U.S. court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter. There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or the Company predicated solely upon such civil liabilities.

J-Pacific Gold has $175,000 in Cash Deposited in a Bank Which Is In Excess of that Financial Institution's Deposit Insurance and If the Bank Were to Fail, J-Pacific Could Forfeit the Cash.

Canadian federal insurance protects cash held on deposit in Canadian federally insured banks. The limit on this insurance is $60,000 per deposit. The Company has $175,000 in excess of this amount on deposit with Bank of Montreal and should the bank fail, J-Pacific Gold could lose this money.

J-Pacific Gold is Involved in Exploration Projects in the United States and, As Such, is Subject to the Risk of Currency Fluctuations Between the Canadian Dollar and the U.S. Dollar Whereby the Canadian Dollar Decreases in Value

If the Canadian Dollar should decrease in value relative to the U.S. Dollar, the costs, in Canadian Dollars, to J-Pacific Gold of doing work in the United States would become higher and have a negative effect on the operations of the Company.

page 17

ITEM 4. INFORMATION ON THE COMPANY

4.A. History and Development of the Company

Introduction

The Company's executive office is located at:
Suite 1440, 1166 Alberni Street,
Vancouver, British Columbia
V6E 3Z6 CANADA
Telephone: (604) 684-6677
Facsimile: (604) 684-6678
E-Mail: ir@jpgold.com
Website: www.jpgold.com

The contact person in Vancouver is Nicholas T. Ferris, President.

The Company's fiscal year ends December 31st.

The Company has 100,000,000 common shares without par value authorized. At 12/31/2002, the end of the Company's most recent fiscal year, there were 33,494,325 common shares issued and outstanding.

History and Development
J-Pacific Gold Inc. (the "Company" or "J-Pacific") was incorporated under the laws of British Columbia, Canada on February 8, 1990 under the name of Claimstaker Resources Ltd., and changed its name to J-Pacific Gold Inc. on September 5, 2001.

J-Pacific Gold Inc. has a 50% incorporated joint-venture partnership interest, two wholly-owned subsidiaries, and a third subsidiary wholly owned by a wholly owned subsidiary of the Company:

a.) No. 75 Corporate Ventures Inc., incorporated in British Columbia, the 50% joint-venture patnership interest in British Columbia;
b.) Equinox Resources (Calif) Inc., incorporated in the state of California, and is wholly owned by the Company;
c.) Auric Resources Inc., incorporated in the state of Nevada, and is wholly owned by the Company;
d.) Golden Trend Resources Inc., incorporated in the state of Nevada, which is the wholly owned subsidiary of the Company's wholly owned subsidiary, Auric Resources Inc.

Exploration and Evaluation Expenditures
During the years ended 1998 through 2002, the Company spent the following amounts on exploration and evaluation expenditures:

1998: $153,180
1999: $168,158
2000: $151,116
2001: $49,212
2002: $588,274

Business Overview
The Company is an exploration stage Company that acquires and explores natural resource properties. At present, the Company is involved in exploration work in the both Canada and the United States. No known bodies of commercial ore or economic deposits have been established on any of the Company's natural resource properties and further exploration is required before a final evaluation as to the economic and legal feasibility is determined.

The Company either directly or through joint venture partnerships, holds interests in several gold-silver metal properties in Canada and the United States. The Company currently has two key projects: the Blackdome Gold Mine ("Blackdome"), an exploration property located in the Province of British Columbia, Canada, and the Zenda Gold Mine ("Zenda"), an exploration property located in the State of California, USA. The Company recently acquired the Elizabeth Project, an early stage exploration project located approximately 20 kilometres south of Blackdome. As well, the Company acquired through staking the Blackdome South Project, which is contiguous to the south of Blackdome. In addition to these, the Company has assembled a number of early-stage, drill-ready exploration projects located in the State of Nevada including the Golden Trend Project, the Callaghan Project, the RC Project, and the HC Project.

The Company has developed a business relationship with Jipangu Inc. ("Jipangu") of Tokyo, Japan (controlled by Tamisuke Matsufuji). Through share purchases and private placements in 1998, 1999, 2001 and 2002, Jipangu has become the Company's largest shareholder. The affiliation with Jipangu has provided J-Pacific with the opportunity to utilize Jipangu's financial expertise and access to low-cost capital to grow its asset base.

J-Pacific's strategy in 1998 and 1999 was focused on bringing the Blackdome and Zenda mining projects into production. Production at Blackdome commenced in November of 1998, but was halted in May of 1999 due to the prevailing low price of gold. Also in 1999, J-Pacific completed a reverse-circulation exploration drill program at the Golden Trend project that returned high arsenic and anomalous gold values.

In 2000, the Company went through an extensive restructuring and cost reduction program due to the deep depression in the gold mining and exploration industry and the closing of Blackdome. As a part of the process, the Company divested three early-stage exploration projects, namely, Los Hilos (Mexico), Warrior Extension (Nevada) and BRU-Lovie (Nevada).

In 2001, J-Pacific commissioned Steffen Robertson and Kirsten (Canada) Inc. ("SRK") of Vancouver, British Columbia, to complete a geological modeling and resource estimate of the Blackdome property. SRK concluded that there is significant potential for the discovery of new mineable ore bodies.

In 2002, the Company acquired the Callaghan, RC and HC gold exploration projects in the State of Nevada, USA, along with the Elizabeth and Blackdome South exploration projects located in the Province of British Columbia. During 2002, J-Pacific completed a drill/sampling program of the tailings facility at Blackdome, a drill/sampling and geochemical program at Elizabeth and a geological reconnaissance program at Blackdome South. At December 31, 2002, the Company wrote-off the value of the Alwin Copper Property in British Columbia.

Plan of Operations
The Company had on hand, at December 31, 2002, working capital of $155,633. Subsequent to this date, the Company completed private placement financings in the amounts of $400,000 on January 24, 2003 and $150,000 with Jipangu Inc. on January 31, 2003. The Company estimates general corporate working capital needs of $450,000 for the period.

United States vs. Foreign Sales/Assets
The Company has generated no sales revenue.

At 12/31/2002:
$981 of the Company's assets were located in the United States; and,
$1,193,256 of the Company's assets were located in Canada.

At 12/31/2001:
$8,531 of the Company's assets were located in the United States; and,
$960,004 of the Company's assets were located in Canada.

Seasonality
Dependency upon Patents/Licenses/Contracts/Processes
Sources/Availability of Raw Materials
Material Effects of Government Regulations

--- No Disclosure Necessary ---

4.C. Organization Structure
The Company is not part of a "group". Please refer to History and Development section on Page 18.

4.D. Property, Plant and Equipment
The Company's executive offices are located in rented premises of approximately 1000 sq. ft. at Suite 1440, 1166 Alberni Street, Vancouver, B.C. CANADA V6E 3Z6. The Company began occupying these facilities in May 1997. The Company is currently paying $3,000.00 per month as rent for our executive offices.
page 19
Mineral Property Interests

DESCRIPTION OF PROPERTIES: (Canada)

British Columbia



page 20

Blackdome Gold Mine, British Columbia

The Blackdome Gold Mine is currently an advanced exploration project with a drill inferred mineral resource and significant engineering studies completed. At present there are no known reserves on the property. Commercial production of gold from high grade veins and structures occurred in the 1980s and early 1990s. All the facilities remain on site and are in good condition to recommence operations. The Company is attempting to identify additional resources.

Location, Access and Ownership

The property is located approximately 250 kilometres north of Vancouver, B.C., and 70 kilometres west- northwest of the town of Clinton, B.C. Road access to the property is provided by gravel road, westerly from Highway 97, 16km north of Clinton. This road crosses the Fraser River at the Gang Ranch, 116km west of Hwy 97. From the Gang Ranch Bridge, an additional 40 kilometres of road leads to Blackdome Mountain and the claims (see Map 1).

The property consists of 39 mineral claims totaling 276 claim units, ten crown- granted mineral claims and two mining leases. Total area of the property is approximately 8050 hectares.

The property is 100% owned by, and recorded in the name of, No. 75 Corporate Ventures Ltd., which is owned equally by the Company (50%), and Jipangu Inc. (50%).

The property is permitted for mine production, processing, development, and general exploration under the terms and conditions of the Mines Act, Permit M- 171, issued by the Ministry of Energy and Mines of British Columbia and of the Waste Management Act, Permit PE 7378, issued by the Ministry of Environment and Lands of British Columbia. The Company posted a $100,000 bond in compliance with these permits. These permits subject the Company to various mine, plant, waste dump, wastewater and tailings liabilities. Prior to abandonment of the site, reclamation requirements to decommission all tailings and waste dumps, fluid discharge, removal of all plant and equipment, and restoration of the site to an acceptable standard and level of safety will be required prior to the release of the bond.

Any future mine production and related mineral processing would be subject to the submission and approval of a new Plan of Operations. This would include required application for renewal of appropriate water, explosive handling, timber cutting, water and waste monitoring, and gas operating licenses being submitted and approved.

History

The Blackdome property was initially located by an individual prospector in 1947. In 1953 Empire Valley Gold Mines Ltd. gained control of the property and six adjacent placer leases on Fairless Creek. Empire completed road building, underground exploration and trenching which exposed several gold bearing veins. The property was optioned by Silver Standard Mines Ltd. in 1953, who completed additional drilling and trenching. This work extended the exposure of previously identified veins. A short landing strip was also constructed. In 1977 the property came under the control of Barrier Reef Resources Ltd. who completed extensive geological mapping, geochemistry and geophysical surveys as well as limited diamond drilling. This work was continued in 1979 by Blackdome Exploration Ltd, a company formed by the various stakeholders in the project. In 1982 the project was optioned to a subsidiary of Noranda Exploration Company who completed additional mapping, sampling and geophysical work. In addition, Noranda conducted extensive diamond drilling and underground drifting. In 1983 the property was returned to Blackdome Exploration Ltd. and in 1984 a positive production decision was reached.

The Blackdome Gold Mine began commercial production in 1986 and continued to 1991 during which time it recovered 240,000 ounces of gold from 371,950 tons of ore. In 1994 the property was acquired by Claimstaker Resources Ltd. and following additional underground work and diamond drilling the mine was returned to production in 1998 under a 50/50 joint venture with Jipangu, a private Japanese company. Production ceased in 1999 due to the declining price of gold and has been on care and maintenance since that time. The carrying value of the operation was written down to reflect impairment with the cessation of operations. The carrying value currently represents plant and equipment (mill, machinery, tailings facility, and camp). No intangible items are capitalized in the carrying value of plant and equipment.

page 21

Geology and Mineralization

The area of the Blackdome property is underlain by a sequence of Early - Middle Tertiary felsic/intermediate volcanic rocks and associated volcaniclastic sediments cut by small intermediate to mafic dykes. The rocks strike north- northeast with shallow, 10-20 degree dips to the southeast.

Northerly trending tension fractures are the locus of epithermal precious metal- bearing veins and structures. Minor normal faulting occurs throughout the area.

The vein systems at Blackdome have been formed by the infilling of dilatant tensional fractures, breccia zones and shears. Typical veins contain both non-ore (gangue) and ore minerals. Gangue minerals are dominantly quartz, adularia, calcite and various alteration related clay minerals. Ore minerals consists of native gold, electrum, native silver and various silver minerals.

Three stages of mineralization have been identified: a pre-ore stage, an ore stage, and a post-ore stage. The pre-ore stage consists of massive crystalline quartz lining veinlets and vein walls. The ore stage is dominated by the deposition of quartz, adularia, and other minor silicate phases, along with sulphides and precious metal minerals. During ore-stage mineralization native gold was deposited as minute, isolated grains of different sizes in tiny veinlets of pyrite and primarily within grains of silver minerals. Gold also occurs as free gold in vugs and appears to be closely associated with clays. The post-ore stage consists dominantly of calcite occurring as intergrowths with quartz and adularia.

Inferred Mineral Resources

Several inferred mineral resource estimates have been derived since the Company acquired the project in 1994. However, previously calculated reserves and resources are no longer current and a feasibility study will be required to determine whether or not any of the known mineralization can be reported. The cost of the feasibility project will depend upon the size of any resource discovered and the type of mining and processing proposed. The cost of a feasibility study can range from a few tens of thousands of dollars to over one hundred thousand dollars.

Recent Work on the Property

In 2001 the Company commissioned a study of the Blackdome Property entitled, "Geological Modeling and Preliminary Review of the Resource Estimate for the Blackdome Gold-Silver Property" November 2001, (The SRK Report) to evaluate the exploration potential of the property and the economic viability of the Inferred Resource. The report identifies four High Priority Targets, which are summarized as follows:

1) The intersection of #1 and #2 Veins. This intersection has never been tested as it is projected to occur below the current depth of mining. As both veins are important mineral bearing structures, the projected intersection is an important location for future exploration.

2) Southern extension of Vein #1. The existing maps suggest an abrupt termination of this structure, with little effort having been given to resolving the reason for termination. In the southern portion of the Blackdome property cross-faulting is evident. The SRK model suggests that the structure hosting the #1 vein may actually be continuous through a "fault jog" (i.e. a bend) in the structure.

3) # 1 Hanging Wall Tension Veins.

4) Watson and Southwest Connector Veins.

During the period March 25th to April 4th, 2002 a drill- sampling program was completed on the Blackdome Mine tailings facility (51 holes, producing 266 samples). The primary objectives were to determine the gold content of the tailings and provide material for metallurgical testing. This work demonstrated that the gold content of the tailings is anomalous with the "uncut" weighted, average of all samples being 1.89 gm/tonne.

Three distinct areas of high gold content have been outlined by the Company as areas of further interest. If feasible, the tailings would be subjected to further gold extraction and then used for underground backfilling.
page 22

Recommendations

Further exploration is recommended in the areas identified in the SRK Report. The Company estimates the cost of this exploration program to be $1,000,000.

The mineral content of the tailings remains of interest. Management intends that representative sections of the high gold content areas be submitted for metallurgical study. This will determine both the optimal treatment method and gold recovery rates. Estimated costs of initial pre-feasibility, engineering and permitting studies are $50,000.

The Blackdome South Property, British Columbia

The Blackdome South property is a very early exploration stage project that was recently acquired by the Company. There are no gold resources established at this time.

Location and Ownership and Access

In 2002, the Company located 54 claims (341 claim units), tied on to the southern boundary of the Blackdome Mine property. All claims are 100% owned by the Company.

Please refer to Blackdome Gold mine section on page 21. (see Map 1).

In British Columbia, the Company's projects are subject to the permitting and bonding requirements of the property conforms to the Mineral Exploration Code of the British Columbia Ministry of Energy and Mines (BCMEM). These requirements are dependent on the extent of the work to be done. J-Pacific has not yet proposed any work that would require bonding and permitting, but prior to commencing such activities the Company must obtain approval from the BCMEM. In addition the Company may be required to post a bond in an amount acceptable to the BCMEM. The Company will comply with these requirements at such time as a program of work is proposed.

History, Geology, and Mineralization

The first known claims on what is now the Blackdome South property were located in 1980. Throughout the 1980's portions of the property were controlled by a numerous small companies who completed localized geochemical and geophysical surveys and geological mapping. No drilling has been done on the property. In 2001 the Company acquired the project area by staking. For descriptions of the Geology and Mineralization at Blackdome South see the Geology and Mineralization sections - Blackdome Gold Mine description on page 22)

page 23

Recent Work

The property was acquired by the Company on the basis of its proximity to the Blackdome Mine, the reported occurrence of a similar structural and stratigraphic setting and the reported occurrence of alteration and mineralization typical of vein systems such as those at Blackdome.

During the fall of 2002, the Company commissioned extensive geologic reconnaissance and data compilation covering much of the Blackdome South property holding. This work has verified the existence of a geologic setting similar to that at the Blackdome Mine, and has identified one area of immediate interest based on previous geologic mapping and geochemical sampling.

Recommendations

In 2003, the Company plans to carry out detailed mapping, sampling and trenching in the currently identified area of interest as well as in other selected areas. This work is expected to develop drill targets and bring the Blackdome South project to the next stage of exploration. The cost of the planned 2003 exploration program is estimated to be $100,000.

Future programs will be contingent upon results of this exploration work.

The Elizabeth Project, British Columbia

The Elizabeth Project is an exploration stage project without known reserves or resources. There is not a commercial economic mineral deposit developed at this time.

Location, Access and Ownership

The Elizabeth Project is located in the Lillooet Mining District of British Columbia, approximately 36 miles northwest of Lillooet, 22 miles northeast of Bralorne and 19 miles southwest of the Company's Blackdome project (see Map 1). The property is accessible via Highway 40 that heads west from Lillooet to Goldbridge. At 32 kilometres west of Lillooet, a logging road heads north-westerly along the Yalakom River. Near the 67-kilometre marker of the Yalakom road, a branch road climbs nine kilometres westerly along Blue Creek to the Elizabeth property. The driving time from Lillooet is less than two hours (see Map 1).

On May 23, 2002, the Company entered into two option agreements that allows it to purchase the Elizabeth property. In October of 2002, the Company staked two additional mineral claims (24 claim units). In total, the property is comprised of four crown- granted mineral claims and the six Blue mineral claims (88 claim units).

The option agreement to purchase the four crown-granted mineral claims was completed with Mr. David D. White of Vancouver, British Columbia Canada and Mr. Thomas Illidge of Goldbridge, British Columbia. The Company paid Mr. Illidge and Mr. White $10,000 upon signing the agreement and issued them, collectively, 50,000 common shares. By the terms of the agreement, the Company must make another cash payment of $5,000 on May 23, 2003 and issue another 50,000 common shares. Upon the exercise of the option the Company must issue another 50,000 common shares. Additionally, if the project should ever go into production, the Company must issue a further 50,000 common shares.

Beginning on May 23, 2004, the Company must also make advanced minimum royalty payments of $10,000 per year, which are to be deducted from any future royalty payments. The agreement also stipulates that the Company must complete exploration work in the amount of $500,000 according to the following schedule: $200,000 by December 31, 2003; $150,000 by December 31, 2004; and, $150,000 by December 31, 2005. The vendors, Mr. Illidge and Mr. White, also retained a four percent Net Smelter Royalty interest, of which two percentage points are purchasable by the Company for $1,000,000 per percentage point.

The option to purchase the Blue Claims was completed with Mr. Illidge on May 23, 2002. The Company made a payment of $2,000 and 20,000 common shares to Mr. Illidge upon signing the agreement. To maintain the option, the Company must issue 30,000 shares upon the first anniversary of the agreement and a further 50,000 shares upon the Company's exercise of the option. As well, the Company must make advanced minimum royalty payments of $5,000 per year. These amounts are deductible from any future production royalties.

The agreement also includes a $500,000 exploration work commitment by the Company wherein $50,000 is to be completed by December 31, 2003; $150,000 by December 31, 2004; $150,000 by December 31, 2005; and, $150,000 by December 31, 2006. Mr. Illidge, retains a three percent Net Smelter royalty interest, of which 2% may be bought for $1,000,000 per 1%.

According to the terms of both of the option agreements, the Company must complete a feasibility study pertaining to the Elizabeth Project prepared by an independent mining engineer. The cost of the feasibility project will depend upon the size of any resource discovered and the type of mining and processing proposed. The cost of a feasibility study can range from a few tens of thousands of dollars to over one hundred thousand dollars.

Exploratory work on the property conforms to the Mineral Exploration Code administered by the Ministry of Energy and Mines (BCMEM). J-Pacific Gold Inc. has a current exploration work permit issued by the BCMEM office in Kamloops for which the Company has posted a $3,500 reclamation bond. A Notice of Completion for the 2003 program was submitted to the Kamloops office and has been accepted. Applications for further exploration work will be submitted in advance of the commencement of any programs.
page 24

History

In 1939 gold was discovered in quartz veins on what is now the Elizabeth No. 1 claim. Between 1940 and 1949, Bralorne Mines Ltd. explored the Elizabeth and surrounding areas by surface trenching and underground exploration. Several quartz veins were explored with two returning gold values. During 1958 and 1959, Bethlehem Copper Mines Ltd. explored the West (No. 1) Vein with a tunnel, approximately 180 meters vertically above the underground workings previously explored by Bralorne. Gold zones were identified and a small bulk sample was shipped.

In 1990, Blackdome Mining Corp. conducted trenching, portal rehabilitation, surveying and detailed surface and underground sampling programs. Surface sampling identified two distinct high-grade zones in the West Vein. Blackdome personnel reported that the first zone was open to the southwest and exposed a quartz vein that contained areas of visible gold. Approximately 65 meters below this trench in the upper adit drift sampling of this vein returned a 20.0 meter length averaging 1.8 oz. Gold/ton across 0.6 meter, and a 7.5 meter length averaging 3.7 oz. Gold/ton across 1.0 meter.

Geology and Mineralization

The Elizabeth property is underlain by two distinct rock types. The oldest and most extensive is represented by ultramafic intrusive rocks and the youngest is represented by porphyritic quartz diorite intrusives.

The ultramafic rocks have commonly undergone varying degrees of alteration called serpentinization. This results in rocks that are typically green to greenish- black and have a waxy lustre and a soapy feel. Polished and/or striated fracture planes known as slickensides are locally common and are indicative of faulting in these easily deformed rocks.

All of the known gold veins on the Elizabeth property are hosted by the younger porphyritic quartz diorite intrusion although in some areas the vein is observed in contact with sheared and serpentinized ultramafic rocks.

Veins range from several centimetres to over 1.5 metres in width and can have highly variable orientations. For the most part, veins dip steeply (greater than 60 degrees). Veins have been traced for several metres to several hundred metres in along strike.

Mineralization in the veins consists of electrum, auriferous pyrite and trace arsenopyrite. Gold values were generally low for the vein samples with the exception of one sample, collected from an area of reported high grade, which assayed 0.207 oz/ton. A "metallics" assay of this sample returned a value of 0.065oz/ton indicating that the gold is likely coarse and erratically distributed in the vein. This "nugget effect" is common in vein gold deposits.

Recent Work

In the fall of 2002, the Company commissioned an extensive mapping, sampling and drilling program at the Elizabeth project. In detail, the work included grid based geological mapping, the collection of 440 surface and underground samples and the drilling of sixteen diamond drill holes totaling 1642 meters. This work confirmed the presence of high grade gold values in known quartz veins, demonstrated the continuity of the structures which host veins, and identified several new areas with potential for economic gold mineralization.

Recommendations

In 2003, the Company plans to continue the exploration of the Elizabeth property by exposing, through trenching, at least one of the high potential zones identified in the 2002 program and by expanding the mapping and sampling program to areas beyond the current grids. If warranted, the material excavated by the trenching will be used as a bulk sample for metallurgical testing. The cost of the planned 2003 exploration program is estimated to be $30,000.

page 25

The Truax Claims, British Columbia

The Truax Claims are an early exploration stage project without known reserves or resources. There is not a commercial economic mineral deposit developed at this time.

Location, Access and Ownership

The Truax property is situated approximately 7 kilometres southeast of the community of Gold Bridge in southwestern British Columbia. Gold Bridge is situated on Highway 40 approximately 100 km by road west of Lillooet. Driving time from Gold Bridge to the property is approximately 30 minutes. Several logging roads in the Gold Bridge area provide access to the lower elevations of the property. Cat trails, 4X4 roads, and ATV trails allow access to higher elevations (see Map 1).

In 2002, the Company located 4 claims (94 claim units). All claims are 100% owned by the Company.

Permitting issues are covered under the Blackdome South section on Page 23.

History, Geology, and Mineralization

The first recorded work on the Truax property took place in the 1930s. Prospectors discovered high-grade mineralized float scattered across south and westerly facing talus slopes. Bralorne Mines Ltd. drilled some shallow holes in the early 1940s. From the 1970s through the 1980s, various companies conducted soil and silt sampling, trenching, airborne and ground geophysics. Targets included gold, silver, copper, lead, and antimony.

The geology of the Truax property consists of metamorphic rocks that have been intruded by granitic rocks. The property lies just east of an area cut by major north-northwest trending faults. Some of these faults controlled the gold bearing veins of the nearby Bralorne-Pioneer mines. In the central portion of the Truax property mineralization consists of gold-silver-zinc-antimony bearing, irregular pods within rusty fault zones that cut the granitic rocks. East of this area previous workers also found disseminated copper-molybdenum mineralization in the granitic rocks suggesting a possible "porphyry" (large tonnage-low grade) environment.

Recent Work

In the fall of 2002, the Company commissioned a soil and rock sampling program at the Truax Claims. Most of the work was conducted over two separate grids. Weakly anomalous gold and moderately anomalous arsenic in soil and rock were found to be associated with the fault zones in the granitic rocks on one of these grids.

Recommendations

The Company plans to carry out detailed mapping, sampling and trenching in the currently identified area of interest as well as in other selected areas. This work is expected to develop drill targets and bring the Truax Project to the next stage of exploration. The cost of the proposed exploration program is estimated to be $50,000.

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DESCRIPTION of PROPERTIES: (United States)

California, USA



page 27

Zenda Gold Mine, California

The Zenda Gold Mine is an advanced exploration project with no known reserves. There is a significant drill inferred resource but no current feasibility study has been done and there are no immediate plans for commercial production.

Location, Access and Ownership

The Zenda property is registered in the name of Equinox Resources (Calif) Inc., which is a wholly owned subsidiary of the Company. The property consists of patented lode mining claims and 44 unpatented mineral claims and fee simple lands. The total area is approximately 1000 acres.

The property is located in Kern County, California, 60 kilometres east of Bakersfield. Year round access is available to the property east from Bakersfield along Highway 58. The towns of Tehachapi and Mojave are 25 and 45 kilometres further to the east along Highway 58. The mine turnoff is 30 kilometres along the canyon road and is accessed by a 3 kilometre one lane dirt road (See Map 2).

The Company also holds two right of way easements that are leased from local property owners, with one expiring January 29, 2007 and the second expiring April 10, 2008. These Rights of Way guarantee access to the property from the Caliente Creek Road.

A 5% Net Smelter Royalty is held by Paramount Gold Company, of which a US$300,000 advanced royalty payment has been completed. In addition to this royalty, there is a US$200,000 finder's fee payable at US$2.00 per ounce Au on the NSR. These are the only encumbrances on the property.

Permitting

Kern County Planning Commission in the State of California is the lead agency for the permitting of mining projects in this jurisdiction. The project was originally permitted in 1990 by the Kern County Planning Commission under a Conditional Use Permit ("CUP") Number 130-89. The outstanding items under the CUP are:

- - Building Permit - location of trailers for the processing plant , office, shop and other support buildings and the foundation slabs upon which they will be constructed
- - Air Permit - granted when equipment list is submitted to the County by the Operator
- - Power - To reduce expenses and avoid the need for permitting on-site generators (and the related concerns for NOx emissions), Southern California Edison will be employed to bring power to the site.
- - Health Permit - application submitted to County upon positive production decision.
- - Fire - Operator must supply approved fire fighting equipment and water storage facility upon positive production decision.

Kern County in a letter of November 1996 confirmed that all other conditions to the CUP have been met.

 
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History

Historically gold mining activities have been intermittent since the 1880s with the last activity occurring in the 1950s. The old Zenda mine reportedly produced 32,000 ounces of gold from 54,000 tons of ore from both glory hole and underground mining. The property remained dormant until Shell Mining Inc., a subsidiary of Shell Oil, acquired an option on the patented claims in 1984, drilling 22 holes during the period 1985 - 1987.

Equinox acquired the property from Shell in 1988 and drilled 32 holes in 1988/90 and 13 holes in the early 1990s. Equinox carried out an extensive exploration program on the property and completed a feasibility study in March 1990.

Equinox subsequently merged with Hecla Mining Co. in the spring of 1994. Hecla's objective in acquiring Equinox was to develop the Rosebud mine in Nevada. The Zenda project did not meet Hecla's development criteria and Saga Exploration Co. ('Saga') subsequently acquired the project in 1995, and undertook a detailed review of the Project in 1996. In 1996, Saga drilled another 27 holes.

In 1997, Saga entered into a purchase agreement whereby the ownership of the Project was transferred to the Company for share and future share consideration. The two companies have been working co-operatively to bring the Project into production. The Company is responsible for arranging financing for the Project while Saga is the developer of the project and will be the contractor to the Company to operate Zenda.

Geology and Mineralization

The geology of the Zenda Project can be characterized as granodiorite intrusives of the Sierra Nevada Batholith with associated roof pendants of Paleozoic Kernville Series metasedimentary rocks and younger rhyolite intrusions/extrusions. Local hydrothermal alteration and mineralization found in the Loraine Mining District is associated with this youngest intrusive event.

The Zenda deposit consists of epithermal, precious metal mineralization associated with a structural zone that cuts the intrusive rocks. In the deposit area, the granodiorites of the Sierra Nevada Batholith have been intruded by two northeast trending, elongate stocks and numerous narrow dikes of rhyolite porphyry.

Precious metal mineralization is associated with a northwest-striking, northeast dipping structural zone that cuts both the granodiorite and rhyolite intrusives. Within this zone, hydrothermal alteration and precious-metal mineralization occur over a thickness typically ranging from 50 to 150 feet, along strike for more than 1,200 feet, and down dip in excess of 600 feet. Alteration consists of silica and various mica (sericite) and clay minerals. The highly silicic zone ranges from massive microcrystalline silica ("jasperoid") to brecciated stockworks of intersecting silica veins and veinlets.

Gold and silver mineralization in the deposit tends to increase with the degree of silicification, with the central silicified (+/- sericite) and adjacent sericite zones constituting the majority of the deposit.

Mineral Resources

In a 1997 independent study, a computer resource model was created from computer data and maps and reflects geology, gold, and silver data. The three- dimensional block, with dimensions of 6 metres (20-feet) in plan and 5 metre (15 foot) benches, provides a representation of the mineralized zone given the current data spacing and approximates potential mineable units. The mineral resources for the Zenda Property are summarized in table below.

Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Resources

This section uses the term "measured" and "indicated resources." We advise U.S. investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that part or all of mineral deposits in these categories will ever be converted into reserves.

 
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Classified Measured and Indicated Mineral Resources for the Zenda Project

Measured Indicated
Cutoff Grade
(opt Au)
Tons (X 1000) Gold Grade (opt) Silver Grade (opt) Tons (X 1000) Gold Grade (opt) Silver Grade (opt)
0.015 1,158 0.035 0.05 1,418 0.030 0.38
0.020 895 0.040 0.58 1,020 0.035 0.46
0.025 675 0.045 0.68 728 0.040 0.55
0.030 531 0.050 0.76 533 0.045 0.63
0.035 400 0.056 0.86 383 0.050 0.72
Note: Tonnage factors used were 12.5 - 14.0 cubic feet per ton based on rock and alteration type.

Cautionary Note to U.S. Investors concerning estimates of Inferred Resources

This section uses the term "inferred resources." We advise U.S. investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules estimates of inferred Mineral Resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

Classified Inferred Mineral Resources for the Zenda Project

Inferred

Cutoff Grade (opt Au) Tons (X 1000) Gold Grade (opt) Silver Grade (opt)
0.015 597 0.027 0.26
0.020 404 0.031 0.30
0.025 248 0.037 0.36
0.030 149 0.043 0.46
0.035 100 0.048 0.51

In 2002 the Company commissioned a study of the Zenda Gold Mine entitled, "Independent Review of the Zenda Project" June 2002 by Steffen Robertson and Kirsten (Canada) Inc. ("SRK"). In the opinion of SRK, the aforementioned resources conform to CIM, 2000 definitions, which are compliant with National Instrument 43-101 (Canada).
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Drill Hole Program Completions to Date and Assay Analysis

During the period 1984 - 1996 three drill campaigns completed 81 holes (16,620 feet) by Shell Mining, Equinox and Saga. In the early 1990s, Equinox twinned 13 of the Shell holes, bringing the total holes to 94 (totaling some 20,500 feet). All of the drilling was completed by reverse circulation drill methods.

Recommendations

The mineralized structure has been drilled thoroughly in all directions. To the west, north and south, the projection of the altered and mineralized structure has been eroded. To the east, the possible down-dip extension of the mineralized structure results in excessive waste having to be removed in an open-pit, and therefore limits exploration potential. There is no other evidence discovered to date of additional mineralized zones.

There has been no exploration completed since 1997 that would improve this very limited exploration potential. The Company, therefore, does not believe that the project warrants any immediate exploration activities. Limited exploration to test along strike and dip for further mineralization may be planned and budgeted when an updated review of the project's economic viability by way of a pre- feasibility study has been completed. The cost of completing a pre-feasibility study is estimated at US$50,000. The cost of the exploration program is estimated to be US$150,000.

Nevada, USA

Map 3 - J-Pacific Nevada Projects



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Golden Trend Property, Nevada

The property is an early-stage exploration project, with no commercial ore reserve developed at this time.

Location and Ownership

The Golden Trend Project is located in Eureka County, Nevada approximately 300 miles northeast of Reno. The project consists of 111 claims. The project can be reached from Reno, Nevada by traveling east on Interstate 80 to Fernly (30 miles) and then east on U.S. 50 to the intersection of Grass Valley Road (approximately 210 miles) then north west for 45 miles to the property (see Map 3).

The Company acquired an option to purchase a 100% interest in this property in August of 1996. On July 16, 2002, the Company announced that it had completed the acquisition of the property. The acquired interest is subject to a 3% Net Smelter Royalty of which 2% is purchasable. The Company paid U.S.$10,000 and issued 25,000 common shares to the vendors as the initial payment.

The Company also paid U.S.$10,000 along with an additional 75,000 common shares to the vendors in 1997. Thereafter the Company paid U.S.$10,000 each year to maintain the option. All of the cash payments are advance royalties to be deducted from the Net Smelter Royalty.

On July 27, 1998, the Company entered into a letter of agreement with Jipangu whereby Jipangu could acquire a 50% interest in this property in return for payments totaling U.S.$500,000. A down payment of U.S.$25,000 was made on signing and a first installment of U.S.$175,000 was received by the Company on September 30, 1998. The remaining payments were due on September 30, 1999 and September 30, 2000. During the year ended December 31, 1999, Jipangu terminated the agreement due to the inconclusive results from the initial drill program. The $200,000 was spent on exploration as part of the earn-in agreement thus the Company was not required to repay these funds to Jipangu.

In Nevada, the Company's projects are subject to the permitting and bonding requirements of the U.S. Bureau of Land Management (USBLM). These requirements are dependent on the extent of the work to be done. J-Pacific has not yet proposed any work that would require bonding and permitting, but prior to commencing such activities the Company must obtain approval from the USBLM of either a "Notice of Intent" for a planned disturbance of under five acres or a "Plan of Operations" for a planned disturbance of more than 5 acres. In addition the Company will be required to post a bond in an amount acceptable to the USBLM and the Nevada Department of Environmental Quality. The Company will comply with these requirements at such time as a program of work is proposed.

History

There is no record of work prior to the 1980s but there is evidence on the ground of significant trenching and shallow shaft sinking, which is apparently related to extensive barite mineralization on parts of the property. Several drill holes have been identified on the property but there is no information on depth or rock types encountered. It is assumed that this work was completed in the 1950's and 1960's. In the early 1980's, Noranda Exploration located a large claim group, which included the entire current J-Pacific land holding. Noranda completed airborne geophysical surveys, limited geological mapping and sampling. A number of shallow reverse circulation drill holes were completed but none encountered mineralization or geochemically anomalous rocks. Rubicon Resources Inc. acquired the property in 1993. Under an option agreement with Rubicon, Rocket Resources Ltd. of Vancouver B.C. completed grid based geophysics, geochemistry and geologic mapping. The property was acquired by the Company in 1996 which has completed limited drilling and trenching to date.
page 32

Geology and Mineralization

The Golden Trend claims are largely underlain by cherts, quartzites, siltstones and some minor carbonates of the Ordovician Vinini Formation. The western one half of the claim area is covered with overburden.

Mapping of old trenches reveals weak to moderate argillic alteration and silicification as well as barite mineralization. Exploration by J-Pacific in 1998 and 1999 identified significant coincident gold and arsenic soil geochemical values correlated with high angle structures. Rock chip sampling yields geochemically anomalous gold, arsenic and occasionally copper values.

Recent Work

Exploration in the form of geological mapping, geochemistry, geophysics, and drilling has been completed on the property during the period 1997 - 1999.

In 1998/99, nine drill holes were completed, totaling 2970 feet, to a maximum depth of 500 feet. Rock types encountered were all upper plate rocks of the Vinini Formation. No work has been completed on the property since 1999.

Recommendations

Further work on the property is planned to consist of limited additional geologic mapping and data synthesis and interpretation to refine projections of structural/stratigraphic targets. This work would be quickly followed by the drilling of several 1,000 foot drill holes to test the identified targets. Estimated costs for the first stage of exploration are US$150,000. Work will commence upon the when financing becomes available.

The Callaghan Property

The Callaghan is an early-stage exploration property that has no developed commercial mineral reserve.

Location and Ownership

The Callaghan Property is located in Lander County, Nevada, 20 miles northeast of Austin, the county seat. The property is approximately 150 Miles east of Reno, Nevada and 100 miles southwest of Elko, Nevada (see Map 3). Access is via the Grass Valley Road from Austin or Battle Mountain.

The Company announced on April 9, 2002 that it had entered into a lease agreement with an option to purchase ten unpatented claims to augment the adjacent 42 unpatented mining claims staked by the Company.

The terms of this agreement are between the Company and Mr. and Mrs. Joseph Kizis of Reno, Nevada and are summarized as follows:

1. All mineral and mining rights to the property are granted to the Company for a ten year term with the option to extend the agreement for an additional ten years;
2. The Company made an initial payment of US $5000;
3. Future Advanced Minimum Royalty payments are due as follows: US$5000 at the second anniversary of the agreement; US$5000 at the third anniversary of the agreement; US$20,000 at the fourth anniversary of the agreement; and US$25,000 in the fifth and each subsequent anniversary.
4. Following the cumulative expenditure of US$500,000 the Company has an option by paying US$20,000 to purchase 100% of the property subject to Net Smelter Royalty payments;
a. 3% Net Smelter Royalty interest is retained by the vendors, of which two percentage points are purchasable by the Company for US$1,000,000 per percentage point; and,
b. The Advanced Minimum Royalty payments are deductible from any production royalties that might be payable to the vendors.

Permitting and bonding requirements of the U.S. Bureau of Land Management (USBLM) and the Nevada Department of Environmental Quality are describe in the Golden Trend section on page 32.

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History

The Callaghan Project covers several areas of prior work, including significant localized drilling and trenching. Little data is available for work prior to 1988. The earliest known work on the property was carried out in the 1930's and consisted of sinking of a 60 foot deep shaft at the Rast Mine. A minor placer gold occurrence one half mile southeast of the Rast mine was also prospected in the 1930's. In 1969, Cache Creek Exploration Company of Reno explored the area around the Rast mine. Exploration programs followed this work on portions of the current property holding by Hanna Mining, Dome Exploration, and Houston Oil and Minerals. No data are available from any of these programs.

From 1988 to 1990, Kerr McGee completed geologic mapping, soil and rock chip sampling and drilled ten reverse circulation holes. In 1993 and 1994 FMC conducted an extensive soil and sagebrush sampling program and drilled nine reverse circulation holes. Placer Dome leased the property in 1995 and 1996, and conducted an extensive airborne magnetometer survey over the project area. Storimin Resources leased the property in 1997, but did no significant work on the property before returning the property in May 1998. Kennecott leased the property later in 1998, drilled 6 widely spaced holes in the region, and returned the property in December 1998.

Geology

The Callaghan property is underlain by siliceous upper plate rocks of the Vinini Formation and a sequence of lower plate Cambrian, Ordovician and Silurian age rocks, which host gold deposits elsewhere in northern Nevada. It is interpreted that the relationship of the two plates is similar to other areas of the State. Geochemical anomalies, including gold, arsenic and mercury, and hydrothermally altered bedrock characteristic of gold deposits in this region have been identified on the property. Previous drilling and geologic mapping has identified a structural setting amenable to the development of significant ore deposits.

Recommendations

The property is essentially drill ready with several targets currently identified and additional targets expected from limited synthesis and interpretation of existing data. Estimated costs for the first stage of exploration are US$150,000. Work will commence upon the when financing becomes available.
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The RC Property

The RC Property is an early-stage exploration project that has no developed commercial mineral reserve.

Location and Ownership
The RC Property is located in Elko County, Nevada, approximately 30 miles south of Carlin (see Map 3).

The Company announced on June 7, 2002 that it had entered into a lease with an option to purchase twenty unpatented claims to augment the 41 unpatented mining claims staked by the Company.

The terms of this agreement are between the Company and KM Exploration LLC, an unrelated Company, located in Elko, Nevada, and summarized as follows:

1. All mineral and mining rights to the property are granted to the Company for a ten year term with the option to extend the agreement for an additional ten years;
2. The Company made an initial payment of US$8,470;
3. Future Advanced Minimum Royalty payments are due as follows: US$10,000 at the first anniversary of the agreement; US$15,000 at the second anniversary of the agreement; US$20,000 at the third anniversary of the agreement; and US$30,000 at the fourth and each subsequent the anniversary of the agreement to maintain the agreement;
4. The Company issued 20,000 common shares upon regulatory approval to the vendors;
5. The Company is to issue 30,000 common shares at the first anniversary of the agreement;
6. Following the cumulative expenditure of US$500,000, the Company has an option by paying US$20,000 to purchase 100% of the property, subject to royalty payments;
7. A 3% Net Smelter Royalty interest is retained by the vendors, of which two percentage points are purchasable by the Company for US$1,000,000 per percentage point; and,
8. The Advanced Minimum Royalty payments are deductible from any production royalties that might be payable to the vendors, as are any federal and state royalties.

Permitting and bonding requirements of the U.S. Bureau of Land Management (USBLM) and the Nevada Department of Environmental Quality are describe in the Golden Trend section on page 32.

History

There is very little evidence of major exploration programs on the property. Limited reconnaissance mapping and sampling has been completed by the property owners. In the vicinity, several major companies, including MK Gold and Phelps Dodge have completed drill programs.

Geology

The claims are underlain by sequences of Devonian and Mississippian age carbonate and clastic rocks, as well as minor Tertiary volcanic rocks. The Paleozoic rocks are cut by at least two sets of high angle faults. The dominant N- S trending high angle faults bring the contact between the Devonian Devil's Gate limestone and the Mississippian Chainman Formation, which is a regionally permissive host for gold deposits, to within drilling distance of the surface. Geochemical anomalies and hydrothermal alteration characteristic of "Rain Type" deposits (a cluster of known gold deposits near Carlin, Nevada) have been identified and indicate the possible presence of a mineral system underlying the property.

page 35

Recommendations

The Company plans to carry out limited additional geologic mapping and sampling in an effort to define exploratory drill target locations. Minimal work programs are required to establish these targets. This work will be quickly followed by a series of drill holes designed to test these targets. Estimated costs for the first stage of exploration are US$150,000. Work will commence upon the when financing becomes available.

The HC Property

The HC Property is an early-stage exploration property with no commercial mineral reserve discovered to date.

Location and Ownership

The property is located in Eureka County, approximately 60 miles northwest of the town of Eureka, the county seat (see Map 3).

The Company announced on June 11, 2002 that it had entered into a lease agreement with an option to purchase 100% interest for twenty unpatented claims to augment the thirty additional unpatented mining claims previously staked by the Company.

The terms of this agreement are between the Company and KM Exploration LLC, an unrelated Company located in Elko, Nevada, are summarized as follows:

1. All mineral and mining rights to the property are granted to the Company for a ten year term with the option to extend the agreement for an additional ten years;
2. The Company made an initial payment of US$8,470;
3. Future Advanced Minimum Royalty payments are due as follows: US$10,000 at the first anniversary of the agreement; US$15,000 at the second anniversary of the agreement; US$20,000 at the third anniversary of the agreement; and US$30,000 at the fourth and each subsequent the anniversary of the agreement to maintain the agreement;
4. The Company issued 20,000 common shares to the vendor upon regulatory approval of the agreement;
5. The Company is to issue 30,000 common shares at the first anniversary of the agreement;
6. Following the cumulative expenditure of US$500,000, the Company has an option by paying US$20,000 to purchase 100% of the property, subject to royalty payments;
7. A 3% Net Smelter Royalty interest is retained by the vendor, of which two percentage points are purchasable by the Company for US$1,000,000 per percentage point; and,
8. The Advanced Minimum royalty payments are deductible from any production royalties that might be payable to the vendor.

Permitting and bonding requirements of the U.S. Bureau of Land Management (USBLM) and the Nevada Department of Environmental Quality are describe in the Golden Trend section on page 32.

History

There is little evidence of early historical work on the property. A number of old drill hole collars have been located but no data is available concerning them.

Geology

The claims are underlain by sequences of Devonian and Mississippian carbonate and clastic rocks. The Paleozoic rocks are cut by a high angle fault. It is the geological setting of the property that makes it an attractive setting for a gold resource. The high-angle fault brings the contact between the Devonian Devil's Gate limestone and the Mississippian Chainman Formations, which is a regionally permissive host for gold deposits, to within drilling distance of the surface. Geochemical anomalies and hydrothermal alteration characteristic of "Rain Type" deposits (a cluster of known gold deposits near Carlin, Nevada) have been identified and indicate the possible presence of a mineral system underlying the property.

Recommendations

The Company plans to carry out limited additional geologic mapping and sampling in an effort to define exploratory drill target locations. Minimal work programs are required to establish these targets. This work will be quickly followed by a series of drill holes designed to test these targets. Estimated costs for the first stage of exploration are US$150,000. Work will commence upon the when financing becomes available.

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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion for the fiscal years ended 12/31/2002, 12/31/2001, and 12/31/2000 should be read in conjunction with the consolidated financial statements of the Company and the notes thereto.

Introduction
The Company has spent the last five years acquiring/exploring exploration properties.

To fund this effort the Company has issued equity in numerous private placements and stock-for-debt arrangements as described elsewhere in this document.

Financing Time Line

During the year ended December 31, 1998 the Company issued shares pursuant to the following transactions:

a. On January 15, 1998 the the Company closed a private placement and issued a total of 845,000 units at a price of $0.30 per unit. Each unit consisted of one common share and one non-transferable two year term share purchase warrant exercisable at $0.30 per share in the first year and $0.35 in the second year,

b. During this fiscal year, options were exercised for 5,000 common shares at $0.30 per share.

During the year ended December 31, 1999, the Company issued shares pursuant to the following transactions:

a. On June 10, 1999, the Company closed a private placement and issued a total of 1,125,000 units at a price of $0.40 per unit. Each unit consisted of one common share and one non-transferable share purchase warrant exercisable at $0.50 per share for a one-year period.

b. The Company issued a total of 764,000 common shares for the exercise of stock options for total consideration of $204,810. The weighted average exercise price of the shares issued was $0.27.

c. The Company issued 20,000 common shares upon the exercise of 20,000 share purchase warrants for total consideration of $6,000.

d. The Company issued 75,000 common shares at a deemed price of $0.60 per share for mineral property option payments and finder's fees.

e. The Company issued 25,000 common shares at a deemed price of $0.40 in satisfaction of a licensing agreement.

f. The Company issued 574,350 at a deemed price of $1.06 on conversion of a convertible debenture.

page 37

During the year ended December 31, 2000, the Company issued shares pursuant to the following transactions:

a. On April 27, 2000 the Company issued 100,000 common shares at a price of $0.11 per common share as payment for the prepaid royalty on the Warrior Property.

b. On May 3, 2000, 555,555 share purchase warrants were exercised for an equal number of common shares for proceeds of $250,000.

c. On September 6, 2000, the Company issued 50,000 common shares at a price of $0.40 per common share as payment for a license agreement classified as other deferred assets.


During the year ended December 31, 2001, the Company issued shares pursuant to the following transactions:

a. Pursuant to a private placement, the Company issued 5,800,000 common shares at a price of $0.20 per common share. Proceeds from this transaction were $1,160,000.

During the year ended December 31, 2002, the Company has issued shares pursuant to the following transactions:

a. On February 21, 2002, the Company announced that it had closed a private placement consisting of the sale of 800,000 units at a price of $0.20 per unit. Each unit consisted of one common share and one share purchase warrant. Each share purchase warrant allows the holder to purchase an additional common share of the Company at a price of $0.30 per share until February 21, 2004.

b. On March 27, 2002, the Company closed a private placement consisting of the sale of 670,000 units at a price of $0.35 per unit. Each unit consisted of one common share and one share purchase warrant. Each share purchase warrant allows the holder to purchase an additional common share of the Company at a price of $0.50 per share until March 27, 2004.

c. On September 30, 2002, the Company closed a private placement consisting of the sale of 666,667 units at a price of $0.30 per unit. Each Unit consisted of one common share and one warrant, each warrant entitling the holder to purchase one additional common share of the Company at a price of $0.50 per share until September 30, 2004. In addition, 66,667 warrants were issued as a finders fee entitling the holder to purchase one additional common share of the Company at a price of $0.30 per share until September 30, 2004.

d. On October 11, 2002, the Company closed a private placement consisting of the sale of 1,373,332 units at a price of $0.30 per unit. Each Unit consisted of one common share and one warrant, each warrant entitling the holder to purchase one additional common share of the Company at a price of $0.50 per share until October 11, 2004. In addition, 128,500 warrants were issued as a finders fee entitling the holder to purchase one additional common share of the Company at a price of $0.30 per share until October 11, 2004.

page 38

e. On October 30, 2002, the Company closed a private placement consisting of the sale of 350,000 common shares at a price of $0.30 per unit. In addition, 35,000 warrants were issued as a finders fee entitling the holder to purchase one additional common share of the Company at a price of $0.30 per share until October 30, 2004.

f. The Company issued 100,000 common shares upon the exercise of 100,000 share purchase warrants for total consideration of $50,000.

g. The Company The Company issued 110,000 common shares at a deemed price of $0.41 per share for mineral property option payments.

f. The Company issued a total of 270,000 common shares for the exercise of stock options for total consideration of $54,000.

Subsequent to the end of Fiscal 2002, the Company has issued shares pursuant to the following transactions:

a. On January 24, 2003, the Company closed a private a private placement for 1,000,000 Units of the Company at a price of $0.40 per Unit where each Unit consists of one common share and one warrant, each warrant entitling the holder to purchase one additional common share of the Company at a price of $0.60 per share until January 24, 2005. In addition, 100,000 warrants were issued as a finders fee entitling the holder to purchase one additional common share of the Company at a price of $0.30 per share until January 24, 2005.

b. On January 31, 2003, the Company closed a private a private placement with Jipangu Inc. of Tokyo, Japan, for 375,000 Units of the Company at a price of $0.40 per Unit where each Unit consists of one common share and one warrant, each warrant entitling the holder to purchase one additional common share of the Company at a price of $0.60 per share January 31, 2005.

page 39

Results of Operations

Three Months Ended 3/31/03 vs. Three Months Ended 3/31/02
The Company incurred a net loss in the amount of $159,360 during the first three months of Fiscal 2003. Among the more significant expenses making up this loss are wages of $38,134 (2002 - $22,785); office expenses and office rent of $79,881 (2002 - $58,221); and, transfer agent fees, filing fees and shareholder communications of $21,385 (2002 - $5,450).

During the three months ended March 31, 2003 the Company had modest revenues of $1,402, which consisted entirely of interest income.

The 2003 exploration and evaluation plan consists of the Company expanding its efforts on the Elizabeth and Blackdome South exploration projects. Based on the results of the 2002 exploration programs, additional work is merited to better determine the potential of identifying economic ore bodies on these properties. Also, the Company is evaluating technologies to extract gold from its Blackdome tailings facility. Lastly, the Company is making plans for an exploratory drill program on its Golden Trend property in Nevada.

Fiscal 2002 Ended 12/31/2002 compared to Fiscal 2001
The loss for Fiscal 2002 was $1,209,891 or $0.04 per share compared with a loss of $645,408 or $0.03 per share for Fiscal 2001. The larger loss in Fiscal 2001 can be attributed to increased exploration and evaluation expenditures ($588,274 in 2002 versus $49,212 in 2001) and higher general and administrative expenses ($599,605 in 2002 versus $522,524 in 2001).

General and administrative expenses increased during Fiscal 2002 as compared to Fiscal 2001 in the amount of $55,855. The increase was due primarily to the fact that during Fiscal 2002 the Company incurred higher administrative costs due to the increased activities of the Company. General and administrative costs increased year on year due to increased financing related charges (finders fees, news releases, legal and audit fees) as well as higher promotional expenses. The Company did take part in several trade shows during the year. Higher government, transfer agent, and exchange fees were incurred do to increased exploration and evaluation activity and financing activity. Fees are paid to various regulatory bodies and government agencies for private placements, filing of documents, and the filing of assessment reports for exploration and evaluation.

Care and maintenance during Fiscal 2002 dropped to $57,386 as compared to $68,139 during Fiscal 2001 due primarily to the camp and site being open for shorter period of time.

The Company expended a total of $588,274 during the period ending December 31, 2002, on exploration and evaluation compared to $49,212 during the period ended December 31, 2001. The higher level of expenditures reflected the increased funds available to carry out exploration programs.

page 40

Fiscal 2001 Ended 12/31/2001 compared to Fiscal 2000
The loss for Fiscal 2001 was $645,408 or $0.03 per share compared with a loss of $752,189 or $0.03 per share in reported for Fiscal 2000. The smaller loss in Fiscal 2001 can be attributed to reductions in expenses at the Blackdome mine site as well as a reduction in exploration and evaluation expenditures. During Fiscal 2001, the Company incurred higher legal and other related costs resulting from the corporate reorganization and name change. These costs have now declined to a level that are typical for a junior mineral exploration company.

Total expenses decreased during Fiscal 2001 as compared to Fiscal 2000 in the amount of $106,781. The decrease was due primarily to the fact that during Fiscal 2000 the Company incurred higher exploration and evaluation expenses ($151,116 in 2000 versus $49,212 in 2001); a write-off of accounts receivable in the amount of $49,643; and, care and maintenance during Fiscal 2000 of $97,555 as compared to $68,139 during Fiscal 2001. General and administrative expenses increased in Fiscal 2001 to $522,524 from $381,929 in Fiscal 2000 (a difference of $140,595) due primarily to deemed interest on the shareholders loan $47,611; stock option valuation expense of $55,696 and higher legal and related costs associated with a corporate reorganization and name change that occurred in 2001.

The Company expended a total of $49,212 during the period ending December 31, 2001, on evaluation and exploration activities compared to $151,116 during the period ended December 31, 2000. The lower level of expenditures reflected the limited funds available to carry out exploration programs and maintain the various exploration properties.

Fiscal 2000 Ended 12/31/2000 compared to Fiscal 1999
During the fiscal year ended December 31, 2000, the Company reported a consolidated net loss of $752,189 compared to a net loss of $4,949,418 for the fiscal year ended December 31, 1999. Revenue reported was nil in Fiscal 2000 compared to $1,252,093 for the fiscal year ended December 31, 1999.

During Fiscal 1999 the Company ceased operations at Blackdome due to the prevailing low price of gold. As a result, the carrying value of the asset was reduced by $2,480,538. Revenue from gold sales during Fiscal 1999 was $1,252,093 and production and operating costs were $2,232,797. The high cost of production during Fiscal 1999 was mainly attributed to the Company's decision to operate the mine during the winter season. During Fiscal 2000, the carrying value of the mine was further reduced by $186,115 due to the abandonment of capital lease obligations.

page 41

Fiscal 1999 Ended 12/31/1999 compared to Fiscal 1998
In December 1998, the Company changed its fiscal year end to December 31st from April 30th.

As stated earlier, during Fiscal 1999 the Company ceased operations at its Blackdome Mine because of the prevailing low price of gold which was causing unprofitable operations.

For the year ended December 31, 1999, the Company derived revenues of $1,252,093 from mining operations; however, because of the associated expenses the Company experienced a consolidated net loss of $4,949,418 compared to a consolidated net loss of $2,287 for the eight months ended December 31, 1998.

During the year ended December 31, 1998, under an Agreement signed April 24, 1998, Jipangu Inc. of Tokyo agreed to acquire a 35% interest in the Blackdome Gold Mine. Under the terms of this agreement, the Company had to spend $1.7 million on its gold/silver property near Clinton, BC. According to the agreement, six payments were to be made by Jipangu, all of which were completed as scheduled. Jipangu acquired its 35% interest as of July 2, 1998. In addition, Jipangu also had the option to purchase an additional 15% interest in the Blackdome Gold Mine on payment of an additional $1,000,000 on or before October 24, 1998. As part of the transaction, Jipangu and related investors agreed to purchase, by way of a private placement, one million units of the Company at a price of $0.25 per unit, each consisting of one common share and one non-transferable share purchase warrant of the Company. One share purchase warrant entitled the holder to purchase an additional share of the Company for 18 months at a price of $0.50 per share. The common shares and any share issued on the exercise of the share purchase warrants were subject to a "hold period" of 12 months.

Liquidity and Capital Resources

The Three Month Period Ended 3/31/03
The working capital of the Company at 3/31/02 was $536,907 and the accumulated deficit was $11,509,377. At this date the Company's working capital position was sufficient to undertake the its plans to continue exploration and related geotechnical work as well as fund the Company's on-going general and administrative costs for through August 2003.

During the quarter, the Company closed two private placements.

The first private placement consisted of the sale of 1,000,000 units at a price of $0.40 per unit. Each unit consisted of one common share and one share purchase warrant.   Each share purchase warrant entitled the holder to purchase an additional common share at a price of $0.60 until January 24, 2005. The Company paid a finder's fee associated with this private placement to Raymond James Ltd. in the amount of $8,000 and issued Raymond James Ltd. 100,000 share purchase warrants allowing Raymond James Ltd. to purchase 100,000 common shares at a price of $0.60 per common share until January 24, 2005.

The second private placement was with Jipangu Inc. of Tokyo, Japan.  Pursuant to this private placement, Jipangu Inc. purchased 375,000 units at a price of $0.40 per unit.   Each unit consisted of one common share and one common share purchase warrant allowing Jipangu Inc. to purchase an additional 375,000 common shares at a price of $0.60 per common share until January 31, 2005.

Cash commitments through the end of calendar 2003 are $17,555 representing the balance of rent payments to the end of the office rental lease and the balance of vehicle payments to the end of the vehicle lease.

Cash Used in the Three Months Ended 3/31/03 Operating Activities totaled $243,818 including the Net Loss of $159,360. The only adjustments during this period was $2,253 for amortization and changes in non-cash working capital were a decrease in accounts receivable of $12,892 and a decrease in accounts payable of $99,603.

Cash Used in the Three Months Ended 3/31/03 on Investing Activities totaled $7,568 consisting entirely of expenditures on office equipment.

Cash Provided by Three Months Ended 3/31/03 Financing Activities was $546,852 as described above. In addition to the two private placements, a shareholder loan was reduced by $4,148; and, $1,000 was received from the exercise of share purchase options.

page 42

Fiscal 2002 Ended 12/31/2002
At December 31, 2002, the Company had a working capital surplus of $155,663 compared to working capital deficiency of $7,962 at December 31, 2001.

The Company's long term debt as of December 31, 2002 in the amount of $188,222 was $88,571 more than the long term debt of $99,651 as of December 31, 2001. The $188,222 and $99,651 are mounts due to a shareholder (Jipangu Inc.). The increase year on year was due to additional funds received from a shareholder during the year in the form of a shareholder loan.

Equity transactions during 2002 included five private placements (see Financing Timeline on pages 39 and 39). The Company issued a total of 4,229,999 shares for total proceeds of $1,215,500, including the exercise of incentive stock options and warrants. An additional 110,000 shares equaling consideration of $45,100 were issued for properties. Subsequent to year end, the Company completed two private placements issuing 1,375,000 shares for total proceeds of $550,000. Other cash was provided by proceeds from a net increase in the shareholder loan of $74,812 (net of deemed interest and repayments).

Cash used in the fiscal year ended December 31, 2002 for Operating Activities totaled $1,067,996. Significant non-cash adjustments during this period included amortization in the amount of $7,256, stock based compensation of $77,320, shares issued for properties of $45,100, deemed interest of $6,879 and deferred taxes on the issue of flow through shares of $28,000. There was also an increase in non-cash working capital items in the amount of $33,340.

Cash Used in the fiscal year ended December 31, 2002 on Investing Activities totaled $29,175 consisting of $32,481 used in the category of mine property, plant and equipment, and, $4,463 for reclamation deposits. The Company also spent $1,157 on the purchase of capital assets not associated with properties.

Cash from Financing Activities in the fiscal year ended December 31, 2002 was $1,297,292 consisting of proceeds from the private placements of $1,215,500 and a change in the shareholder's loan in the amount of $81,691 net of deemed interest.

Fiscal 2001 Ended 12/31/2001
At December 31, 2001, the Company had a working capital deficiency of $7,962 compared to working capital deficiency of $28,998 at December 31, 2000.

The Company's long term debt as of December 31, 2001 in the amount of $99,651 was $535,118 less than the long term debt of $634,769 as of December 31, 2000. In both Fiscal 2001 and Fiscal 2000, long term debt is an amount due to a shareholder. The decrease was due to funds paid back to a shareholder from the proceeds of a private placement financing which occurred in the Fall of 2001.

In October 2001, the Company completed a 5,800,000 share private placement with Jipangu in the amount of $1,160,000. Proceeds from this private placement were used to retire a shareholder loan from Jipangu and to augment general working capital. The shares have a one-year hold period and were issued without share purchase warrants.

Cash Used in the fiscal year ended December 31, 2001 on Operating Activities totaled $538,593 including the Net Loss of $645,408. Significant adjustments during this period included amortization in the amount of $5,596, stock based compensation of $55,696, deemed interest on the shareholder's loan of $47,611. There was also a change in non-cash working capital items in the amount of $9,729.

Cash Used in the fiscal year ended December 31, 2001 on Investing Activities totaled $36,981 consisting of $28,446 used in the category of mine property, and, $462 used for reclamation deposits. The Company also spent $8,073 on the purchase of capital assets not associated with properties.

Cash Provided by Financing Activities during the fiscal year ended 12/31/01 was $589,088 consisting of the proceeds from the private placement described earlier in the amount of $1,160,000 and the proceeds from a shareholder loan from Jipangu Inc. in the amount of $509,328. During this period the Company also repaid a shareholder loan in the amount of $1,080,240.

page 43

Fiscal 2000 Ended 12/31/2000
At December 31, 2000, the Company had working capital deficiency of $28,998 compared to working capital of $10,661 at December 31, 1999.

At December 31, 2000 the Company had long term debt in the amount of $634,769 in the form of a shareholder.

In 2000, the Company terminated claim and option interests agreements. Mine property plant and equipment dropped due to the elimination of capital lease obligations on account of cessation of operations. The remaining claim and option interests agreements remain in effect and all agreements are in good standing.

Cash Flows From Operating Activities during the twelve months ended December 31, 2000 totaled $681,743 including the Net Loss of $752,189. Significant adjustments included depreciation and depletion of $9,157; deemed interest of $12,144; a reduction in a due to from the Company's joint venture partner, Jipangu Inc., in the amount of $56,595; the loss on the disposal of capital assets in the amount of $27,737; and, the change in non-cash working capital items in the amount of $35,187.

Cash Flows Used in Investing Activities in the twelve months ended December 31, 2000 totaled $16,990, consisting of $10,529 spent on plant and equipment for the mine property; $5,241 invested in reclamation deposits; and, $1,220 spent on the purchase of other capital assets.

Cash Flows From Financing Activities in the twelve months ended December 31, 2000 totaled $560,356 which consisted of proceeds from a shareholder loan of $622,625 less the repayment of capital lease obligations of $93,269. Also, net of shares issued but not allocated, shares were issued for consideration of $31,000.

page 44

Critical Accounting Policies
The Company issues financial statements in Canada according to Canadian GAAP and financial statements in the U.S. according to U.S. GAAP.

Under Canadian GAAP costs incurred to acquire, explore and develop a mineral interest are capitalized. These capitalized costs are periodically assessed for impairment and an impairment change is recognized in the accounts upon abandonment, upon failure to detect economically recoverable mineralization or when exploration activities are not anticipated to occur or to continue in the foreseeable future. Under U.S. GAAP exploration and evaluation costs are expensed as incurred. Mine development and betterment costs are capitalized, however, mine maintenance costs are expensed as incurred.

The Company has a stock option plan which reserves common shares for issuance to employees and directors. Under U.S. GAAP the Company has adopted the disclosure only provisions of Statement of Financial Accounting Standards ("SFAS") 123 "Accounting for Stock Based Compensation" and SFAS No. 148 "Accounting for Stock-Based Compensation - Transition and Disclosure" for stock options granted to employees and directors. Accordingly, no compensation costs have been recognized for options to employees and directors. Compensation costs are recognized for options to non-employees. Had compensation cost for the stock option plan been determined based on the fair value at the grant date for awards during the periods ended December 31, 2002 and 2001 consistent with the provisions of SFAS No. 123 and SFAS No. 148, the Company's net income (loss) and earnings (loss) per share would have been increased as indicated in Note 10 to the consolidated financial statements.

The Company conducts the majority of its equity financing pursuant to private placements. Under the policies of the TSX Venture Exchange, on which the Company's common stock is listed, the Company may provide a discount off the market price of the Company's common stock. U.S. GAAP requires the recognition of the market value of the Company's common stock as a credit to share capital, with a charge to operations for the portion of the discount relating to equity financing conducted with officers and directors of the Company and a charge to shareholders' equity, as a capital distribution, for the discount relating to the remaining portion of the equity financing.

The accounting policy disclosures as required by U.S. GAAP are described in Note 2 to the consolidated financial statements.
page 45

Recent Accounting Pronouncements Applicable to US
Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 141 - "Business Combinations:, and SFAS No. 142 - "Goodwill and Other Intangible Assets". The adoption of these standards had no effect on the Company's financial position, results of operations or liquidity in 2002.

Effective January 1, 2002, the Company adopted SFAS No. 144 - "Accounting for Impairment or Disposal of Long-Lived Assets". This standard establishes a single accounting model for the impairment of long-lived assets to be held and used, or to be disposed of by sale or abandonment, and broadens the definition of discontinued operations. The adoption of this standard had no effect on the Company's accounting for impairment and disposal of long-lived assets.

In April 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No. 145 - "Rescission of FASB Statements No. 4, 44 and 64, Amendment of SFAS No. 13 and Technical Corrections". The Company will apply SFAS No. 145 in 2003. It is not expected that the implementation of SFAS will have a significant impact on the Company's financial position or results of operations.


page 46

ITEM 6. DIRECTORS, SENIOR MANAGEMENT, AND EMPLOYEES

6.A. Directors and Senior Management
Table No. 6
Directors and Senior Management
May 31, 2003
Name Position Age Date of First Election or Appointment
Nicholas T. Ferris President, CEO, Director (1) 44 February 1, 2000
Ralph Braun CFO, Director 37 April 1, 2001
Cheri Pedersen Secretary 49 June 8, 2000
D'Arcy Adam Director (1) 50 April 18, 2000
Kazuo Shuto Director 65 June 15, 2001
Driffield Cameron Director 55 April 12, 2001
John Mesrobian, Esq. Director (1) 51 February 1, 2002
Manabu Kameda Director 35 May 16, 2003

(1) Member of the audit committee. The Audit Committee is composed of three Directors, two of whom are non-officers of the Company. The Audit Committee meets at once a year to review the annual audited financial statements and make appropriate recommendations to the Board of Directors based upon their review.

Nicholas T. Ferris has been the President of the Company since February 1, 2000 and a member of the Board of Directors since February 1, 2000. Mr. Ferris is a graduate of McGill University in Montreal, Quebec where he received a Bachelor of Arts Degree in Economics. Prior to joining the Company he was employed by Canadian Home Income Plan in that company's mortgage department. He was employed by Canadian Home Income Plan from January 1992 until January of 1999. Mr. Ferris currently has no affiliation with any other public or private companies.

D'Arcy Adam has been a member of the Board of Directors since April 18, 2000. Mr. Adam is graduated from N.A.I.T. a technical school located in Edmonton, Alberta in June of 1973. He has been employed by Key West Ford in Vancouver, British Columbia since 1987 where he is currently the lease manager. Mr. Adam currently has no affiliation with any other public company.

Kazuo Shuto has been a member of the Board of Directors since June 15, 2001. Mr. Shuto is a graduate of Tohoku University where he received a Bachelor of Science Degree in 1956. He is a "Surveyor First Class", a designation he received from the Japanese Association of Surveyors and a "Consultant Engineer of Geology", a designation he received from the Science Technology Agency of the Japanese Government. From 1992 until 1999 he was a senior research geologist for Japan Mining Engineering and since 1999 he has been employed by Jipangu, Inc. as the Exploration Manager. He is also a member of the Board of Directors of Jipangu which is a major shareholder of the Company.

Driffield Cameron has been a member of the Board of Directors since April 12, 2001. Mr. Cameron is a graduate of Acadia University, located in Wolfville, Nova Scotia, where he received a Bachelor of Science Degree in 1971. He also received a Completion Certificate in 1991 from the Canadian Securities Institute, located in Toronto, Ontario, indicating he successfully completed the Canadian Securities Course. Mr. Cameron has been the Vice President of Exploration for High River Gold Mines Ltd., a publicly traded company located in Toronto, Ontario, since 1994. From 1992 until he joined High River Gold Mines Ltd. he was the principal of Geologic Associates, a geological consulting firm.

John Mesrobian, Esq. has been a member of the Board of Directors since February 1, 2002. Mr. Mesrobian is a graduate of the University of Massachusetts where he received his Bachelor of Arts degree in 1975. In 1993 he was given the professional designation of "Esq" from the Institute of Directors London. (He is not an attorney.) Since 1990 he has been both the President and Chairman of Constantinople Advisors and Financial Institutions Services Corp., private consulting companies which he founded. Mr. Mesrobian is not currently affiliated with any other public companies.

Ralph Braun has been the Chief Financial Officer of the Company since April 1, 2001. His duties include working in the areas of planning, budgeting, finance, accounting and systems. He is a Certified General Accountant in Canada, a designation that he received in 1998. Mr. Braun is a graduate of the University of British Columbia. He received his Bachelor of Arts degree from this institution in 1988. He is also a graduate of the University of Western Washington where he received his MBA in 1992. From 1996 until 1998 he held the position of Controller of Finance with the Canadian Home Income Plan and from 1996 until 2000 he held the position of Controller of IT with the same organization. He is currently doing database application development for the Canadian Home Income Plan as an independent contractor.

Manabu Kameda has been a member of the Board of Directors since May 16, 2003. A graduate of Kyoto Sangyo University in Business Administration, Mr. Kameda has extensive experience in commercial banking and has consulted for both public and private companies. He is also a member of the Board of Directors of Jipangu which is a major shareholder of the Company.
page 47

The Directors have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-Laws of the Company.

The Executive Officers serve at the pleasure of the Board of Directors.

No Director and/or Executive Officer has been the subject of any order, judgment, or decree of any governmental agency or administrator or of any court or competent jurisdiction, revoking or suspending for cause any license, permit or other authority of such person or of any corporation of which he is a Director and/or Executive Officer, to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining or enjoining any such person or any corporation of which he is an officer or director from engaging in or continuing any conduct, practice, or employment in connection with the purchase or sale of securities, or convicting such person of any felony/misdemeanor involving a security or any aspect of the securities business or of theft or of any felony.

There are no family relationships between any two or more Directors or Executive Officers.

There are no arrangements or understandings between any two or more Directors or Executive Officers, pursuant to which he was selected as a Director or Executive Officer.

6.B. Compensation

Cash Compensation. Total compensation accrued and/or paid (directly and/or indirectly) to all Directors/Executive Officers during Fiscal 2002 ended 12/31/2002 was $122,045

Table No. 7 details compensation paid/accrued for Fiscal 2001/2000/1999 ended December 31st for the Senior Management.
page 48

Table No. 7
Summary Compensation Table
Senior Management
    Annual Compensation Long-Term Compensation Awards
Name and Principal Position Fiscal Year Salary Bonus Other Annual Compensation Stock Award(s) Restricted Options/SARS(#) All Other Compensation
Nicholas T. Ferris, President and Director
2002
$76,350
---
---
---
150,000
---
 
2001
$84,000
---
---
---
350,000
---
 
2000
$42,000
---
---
---
250,000
---
 
Ralph Braun, Chief Financial Officer
2002
$45,696
---
---
---
175,000
---
 
2001
$21,669
---
---
---
175,000
---
 
2000
nil
---
---
---
nil
---

Options/SARs Granted/Exercised During The Most Recently Completed Fiscal Year

During the most recently completed fiscal year, the following incentive stock options were granted to Senior Management, Directors and employees. No SARs (stock appreciation rights) were granted during this period.

Table No. 8
Stock Option Grants in Fiscal 2002 Ended 12/31/2002
Name Number of Options Granted Percentage of total options granted Exercise Price per Share Grant Date Expiry Date Market Value of Securities Number of Exer. Underlying Options of Total Price on Date of Grant per Share
Nicholas T. Ferris
150,000
25%
$0.28
2/1/02
2/1/07
$0.17
Ralph Braun
Nil
--
--
--
--
--
Cheri Pedersen
Nil
--
--
--
--
--
D'Arcy G. Adam
Nil
--
--
--
--
--
Kazuo Shuto
Nil
--
--
--
--
--
Driffield Cameron
Nil
--
--
--
--
--
John Mesrobian
150,000
25%
$0.28
2/1/02
2/1/07
$0.17
William J. Murphy III
125,000
20%
$0.50
3/5/02
3/5/04
$0.45
David R. Shaddrick
100,000
16%
$0.50
3/13/02
3/13/04
$0.36
Oussama El-Mohtar
75,000
14%
$0.50
5/6/02
5/6/04
$0.42

page 49

The following table gives certain information concerning stock option exercises during Fiscal 2001 by our Senior Management and Directors. It also gives information concerning stock option values.

Table No. 9
Aggregated Stock Options Exercises in Fiscal 2002
Fiscal Yearend Unexercised Stock Options
Fiscal Yearend Stock Option Values
Senior Management/Directors
Name
Number of Shares Acquired on Exercise
Aggregate Value Realized
Number of Unexercized Options at Fiscal Year-End Exercisable/Unexercisable
Value of Unexercised In-The-Money Options at the Fiscal Year-End Exercisable/Unexercisable
Nicholas T. Ferris
--
--
500,000
$128,000
Ralph Braun
--
--
175,000
$49,000
Cheri Pedersen
--
--
125,000
$35,000
D'Arcy G. Adam
--
--
200,000
$56,000
Kazuo Shuto
--
--
150,000
$42,000
Driffield Cameron
--
--
150,000
$42,000
John Mesrobian
--
--
150,000
$42,000
Gregory Austin, Past Director
150,000
$30,000
N/A
N/A

Director Compensation.
The Company has no formal plan for compensating its Directors for their service in their capacity as Directors. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of the Board of Directors. The Board of Directors may award special remuneration to any Director undertaking any special services on behalf of the Company other than services ordinarily required of a Director. Other than indicated below no Director received any compensation for his services as a Director, including committee participation and/or special assignments.

Stock Options.
The Company grants stock options to Directors, Senior Management and employees; refer to ITEM #6.E., "Share Ownership".

Pension/Retirement Benefits.
No funds were set aside or accrued by the Company during Fiscal 2002 to provide pension, retirement or similar benefits for Directors or Executive Officers.

Other Compensation.
No Executive Officer/Director received "other compensation" in excess of the lesser of US$25,000 or 10% of such officer's cash compensation, and all Executive Officers/Directors as a group did not receive other compensation which exceeded US$25,000 times the number of persons in the group or 10% of the compensation.

Bonus/Profit Sharing/Non-Cash Compensation.
Except for the stock option program discussed in ITEM #6.E., the Company has no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to the Company's Directors or Executive Officers.
page 50

Written Management/Consulting Agreements
Nicholas T. Ferris
Ralph Braun
David Shaddrick

6.C. Board Practices

6.C.1. Terms of Office.
Refer to ITEM 6.A.1.

6.C.2. Directors' Service Contracts.
--- Not Applicable ---

6.C.3. Board of Director Committees.

The Company has an Audit Committee, which recommends to the Board of Directors the engagement of the independent auditors of the Company and reviews with the independent auditors the scope and results of the Company's audits, the Company's internal accounting controls, and the professional services furnished by the independent auditors to the Company. The Audit Committee was formed on 4/18/00 and met on 4/27/2001 in Fiscal 2001 and met on 4/19/2002 in Fiscal 2002. The current members of the Audit Committee are: Nicholas T. Ferris, D'Arcy Adam and John Mesrobian.

6.D. Employees
As of 2/03/2003, the Company had two employees, including the two members of senior management. As of 12/31/2002 and 12/31/2001, the Senior Management were the only employees. None of the Company's employees are covered by collective bargaining agreements. Management is defined as employees for disclosure purposes.

6.E. Share Ownership
Table No. 10 lists, as of 5/31/2003, Directors and Executive Officers who beneficially own the Company's voting securities and the amount of the Company's voting securities owned by the Directors and Executive Officers as a group. The Company is aware of one shareholder who has 5% or greater beneficial interest in the Company's securities: Mr. Tamisuke Matsufuji.

Table No. 10
Shareholdings of Directors and Executive Officers
Shareholdings of 5% Shareholders
Title of Class Name of Beneficial Owner Amount and Nature of Beneficial Ownership Percent of Class#
Common
Nicholas T. Ferris (1)
937,666
2.7%
Common
Ralph Braun (2)
275,000
<1%
Common
Cheri Pedersen (3)
291,666
<1%
Common
D'Arcy G. Adam (4)
429,000
1.2%
Common
Kazuo Shuto (5)
250,000
<1%
Common
Driffield Cameron (6)
250,000
<1%
Common
John Mesrobian (7)
250,000
<1%
Common Manabu Kameda (8)
150,000
<1%
Total Directors and Executive Officers
2,833,332
8.1%
Common
Tamisuke Matsufuji (9)
13,904,055
39.7%
Total Directors/Officers/5% Shareholders
16,737,387
47.8%

page 51

# Based on 35,034,325 shares outstanding as of 5/31/2003 and stock options and warrants held by each beneficial holder exercisable within sixty days.

(1) of these shares, 700,000 represent currently exercisable share purchase options and 83,333 share purchase warrants;

(2) of these shares, 275,000 represent currently exercisable share purchase options;

(3) of these shares, 125,000 represent currently exercisable share purchase options and 83,333 share purchase warrants;

(4) of these shares, 300,000 represent currently exercisable share purchase options;

(5) of these shares, 250,000 represent currently exercisable share purchase options;

(6) Of these shares, 250,000 represent currently exercisable share purchase options;

(7) Of these shares, 250,000 represent currently exercisable share purchase options;

(8) Of these shares, 150,000 represent currently exercisable share purchase options and,

(9) Of these shares, 945,000 represent currently exercisable share purchase warrants.

Stock Options

J-Pacific stock options plan is limited to the issuance of 10% of the issued and outstanding common shares of the Company. Approval for stock options grants are made annually by a special resolution at the Company's Annual General Meeting approved by disinterested shareholders.

The names and titles of the Directors/Executive Officers of the Company to whom outstanding stock options have been granted and the number of common shares subject to such options are set forth in Table No. 11 as of 5/31/2003, as well as the number of options granted to Directors and all employees as a group.

Table No. 11
Stock Options Outstanding
Name
Number of Shares of Common Stock
CDN$ Exercise Price
Grant Date
Expiration Date
Nicholas T. Ferris
350,000
$0.20
11/16/01
11/16/06
 
150,000
$0.28
2/7/02
2/7/07
 
200,000
$0.70
1/6/03
1/6/08
Ralph Braun
175,000
$0.20
11/16/01
11/16/06
 
100,000
$0.70
1/6/03
1/6/08
Cheri Pedersen
125,000
$0.20
11/16/01
11/16/06
D'Arcy G. Adam
200,000
$0.20
11/16/01
11/16/06
 
100,000
$0.70
1/6/03
1/6/08
Kazuo Shuto
150,000
$0.20
11/16/01
11/16/06
 
100,000
$0.70
1/6/03
1/6/08
Driffield Cameron
150,000
$0.20
11/16/01
11/16/06
 
100,000
$0.70
1/6/03
1/6/08
John Mesrobian
150,000
$0.20
1/2/02
1/2/07
 
100,000
$0.70
1/6/03
1/6/08
Manabu Kameda
150,000
$0.30
5/30/03
5/30/08
Consultant/Employee
250,000
$0.20
11/16/01
11/16/06
 
130,000
$0.20
6/15/01
6/15/03
 
100,000
$0.50
3/13/02
3/13/04
 
125,000
$0.50
4/22/02
4/22/04
 
100,000
$0.30
5/30/03
5/30/08
Total Officers/Directors
2,300,000
Total Employees/Consultants
705,000
Total Officers/Directors/Etc.
3,005,000

page 52

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A. Major Shareholders.

7.A.1.a. Holdings By Major Shareholders.
Refer to ITEM #6.E. and Table No. 10.

7.A.1.b. Significant Changes in Major Shareholders' Holdings.
The participation in private placements of equity by the Company and exercise of stock options/share purchase warrants has lead over the last several year to some significant changes in the holdings of major shareholders; the table below reflects direct holdings of common shares, refer to Table No. 10 for additional information.

Table No. 12
Changes in Holdings of Major Shareholders
Shares Owned 12/31/2002
Shares Owned 12/31/2001
Shares Owned 12/31/2000
Shares Owned 12/31/1999
Tamisuke Matsufuji
12,584,055
11,804,555
6,014,055
5,350,000

7.A.1.c. Different Voting Rights.
The Company's major shareholders do not have different voting rights.

7.A.2. Canadian Share Ownership.
On March 31, 2003, the shareholders' list for the Company's common shares showed 89 registered shareholders and 34,874,325 shares issued and outstanding. Of these shareholders, 61 were resident in Canada and 17 were resident in the United States.

The Company has researched the indirect holding by depository institutions and estimates that there are 666 "holders of record" resident in Canada, holding 16,244,004 shares; and, 305 "holders of record" resident in the United States, holding 270,303 common shares.

Based on this research and other research into the indirect holdings of other financial institutions, the Company believes that it has in excess of 1050 beneficial owners of its common shares.

7.A.3. Control of Company.
The Company is a publicly-owned Canadian corporation, the shares of which are owned by U.S. residents, residents of Japan, Canadian residents and other foreign residents. The Company is not controlled by any foreign government or other person(s) except as described in ITEM #4.A., "History and Development of the Company", and ITEM #6.E., "Share Ownership".

7.A.4. Change of Control of Company Arrangements.

- No Disclosure Necessary -
page 53

7.B. Related Party Transactions
Certain geological, consulting and corporate services were provided to the Company and its subsidiaries by David Shaddrick, the Company's Chief Consulting Geologist who provided consulting services and by Ralph Braun, the Company's Chief Financial Officer.

The cost of such services for Fiscal 2002, ended December 31, 2002 was $90,999. The services provided were at rates similar to those charged to non-related customers.

Other than as disclosed above, there have been no transactions or proposed transactions, which have materially affected or will materially affect the Registrant in which any director, executive officer, or beneficial holder of more than 10% of the outstanding common stock, or any of their respective relatives, spouses, associates or affiliates has had or will have any direct or material indirect interest. As stated above, the transactions referenced above were on terms at least as favorable to the Company as the Company could have obtained from unaffiliated parties.

Trust Agreements
- No Disclosure Necessary -

Shares for Compensation to Shareholders Who Exercised Warrants
- No Disclosure Necessary -

Legal Services
- No Disclosure Necessary -

7.C. Interests of Experts and Counsel
- No Disclosure Necessary -

ITEM 8. FINANCIAL INFORMATION

8.A. Consolidated Statements and Other Financial Information
The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with U.S. Generally Accepted Accounting Principles.

The financial statements as required under ITEM #17 are attached hereto and found immediately following the text of this Annual Report. The audit report of Morgan & Company, independent Chartered Accountants, are included herein immediately preceding the financial statements and schedules.

8.A.7. Legal/Arbitration Proceedings
The Directors and the management of the Company know of no material, active or pending, legal proceedings against them; nor is the Company involved as a plaintiff in any material proceeding or pending litigation.

The Directors and the management of the Company know of no active or pending proceedings against anyone that might materially adversely affect an interest of the Company.

8.B. Significant Changes
No significant change has occurred since the date of the annual financial statements.
page 54

ITEM 9. THE OFFER AND LISTING

9.A.4. Common Share Trading Information
As of 12/31/2002, the authorized capital of the Company was 100,000,000 common shares without par value. As of 12/31/2002, there were 33,494,325 common shares issued and outstanding.

The Company's common shares began trading on the TSX Venture Exchange (formerly the Vancouver Stock Exchange) in Vancouver, British Columbia, Canada, under its former name "Claimstaker Resources Ltd." on August 9, 1990. The current stock symbol is "JPN". The CUSIP number is #46625P.

Table No. 13 lists the high and low sale prices on the TSX Venture Exchange for the Company's common shares for the last five fiscal years, the last two years by quarter, and the last six months.

Table No. 13
TSX Venture Exchange (formerly the Canadian Venture Exchange)
Common Shares Trading Activity

- Sales -
Canadian Dollars

Period
High
Low

Month Ended 05/31/03

0.30
0.25
Month Ended 04/30/03
0.35
0.28
Month Ended 03/31/03
0.38
0.25
Month Ended 02/28/03
0.48
0.30

Month Ended 01/31/03

0.56
0.30

Month Ended 12/31/02

0.53
0.22
 
Fiscal Year Ended 12/31/2002
0.70
0.10

Fiscal Year Ended 12/31/2001

0.17
0.05
Fiscal Year Ended 12/31/2000
0.30
0.05
Fiscal Year Ended 12/31/1999
0.80
0.11
Fiscal Year Ended 12/31/1998
0.55
0.15
 
Quarter Ended 12/31/02
0.53
0.21
Quarter Ended 09/30/02
0.52
0.25
Quarter Ended 06/30/02
0.70
0.35
Quarter Ended 03/31/02
0.52
0.10
 
Quarter Ended 12/31/01
0.17
0.05
Quarter Ended 09/30/01
0.15
0.08
Quarter Ended 06/30/01
0.15
0.07
Quarter Ended 03/31/01
0.10
0.05

The TSX Venture Exchange

The TSXV currently has five service centers: Calgary, Toronto, Vancouver, Winnipeg and Montreal. These service centers provide corporate finance, surveillance and marketing expertise. The corporate office for the TSXV is located in Calgary and the operations office is located in Vancouver.

The TSXV is a self-regulating organization owned and operated by the TSX Group. Representatives of its member firms and the public govern it.
page 55

The TSX Group acts as a business link between TSX Venture Exchange members, listed companies and investors. TSXV policies and procedures are designed to accommodate companies still in their formative stages and recognize those that are more established. Listings are predominately small and medium sized companies.

Regulation of the TSX Venture Exchange, its member firms and its listed companies is the responsibility of Market Regulation Services Inc. ("RS"), which was created as a joint initiative of The Toronto Stock Exchange Inc. and the Investment Dealers Association of Canada.

RS is recognized as a self-regulatory entity in the provinces of British Columbia, Alberta, Manitoba, Ontario and Quebec. As a Regulation Service Provider, RS provides independent regulation services to marketplaces (existing exchanges, quotation and trade reporting systems (QTRSs) and alternative trading systems (ATSs) and their participants in Canada that contract with RS Inc. for the provision of regulation services. As a national regulator for the Canadian marketplace, it is the first independent regulator of its kind for the Canadian securities market.

RS administers, oversees and enforces the Universal Market Integrity Rules ("UMIR"). To ensure compliance with UMIR, RS monitors real-time trading operations and market-related activities of marketplaces and participants. RS also enforces compliance with UMIR by investigating alleged rule violations and administering any settlements and hearings that may arise in respect of such violations.

RS's areas of responsibility include Market Surveillance; Operations and General Counsel (Market Policy); and Investigations and Enforcement.
The Market Surveillance division monitors all securities trading for compliance with the Universal Market Integrity Rules and marketplace specific rules. Market Surveillance also investigates irregularities and complaints relating to trading on marketplaces for which RS acts as regulation services provider to ensure a fair and orderly marketplace for all participants. This division is responsible for market supervision, which includes monitoring trading activity and timely disclosure, as well as preliminary investigations and trade desk compliance.

The market surveillance department issues TSXV notices to inform the public of halts, suspensions, de-listings and other enforcement actions. All TSXV notices can be found on the TSE/TSX website at www.tse.com. In the public interest, trading halts or suspensions are maintained until the surveillance department is satisfied that there is adequate disclosure of the company's affairs and a level playing field for investors. By Exchange policy, the department also reviews and approves certain types of transactions for all TSX listed companies. These types of transactions includes option grants, private placements and other share issuances, mergers and acquisitions, property-asset acquisitions and dispositions, loans, bonuses and finder's fees, changes of business, name changes, stock splits, and related party transactions. If the Exchange's review of such transactions finds them to be contrary to the public interest or is in violation of policy, approval for the transaction will be denied and any action taken by the company towards the completion of the transaction must be reversed.

The Operations and General Counsel division is responsible for the development and implementation UMIR as well as providing interpretations of, or exemptions from, UMIR with the goal of promoting market integrity. This division also coordinates all operational activities of RS including strategic planning and overall organizational matters. Finally, the General Counsel's office of this division is responsible for all legal services and matters relating to RS's Board of Directors.

page 56

The Investigation and Enforcement division is responsible for conducting investigations and prosecutions of violations of the UMIR and Policies and market integrity and market quality rules specific to the TSX Venture Exchange. Functions of this division include Investigations, Enforcement and Investigative Research.

a) Investigations
Investigations focus on activities that may be in breach of the UMIR and/or the rules of the TSX Venture Exchange. The types of violations frequently investigated include high closings, market manipulation, client priority trading violations, unapproved trading, trading in restricted securities and conduct inconsistent with the just and equitable principles of trade.

Requests for investigations come primarily from the Market Surveillance division of RS. Other sources include the provincial securities commissions, the Operations and General Counsel division, marketplaces, and in some instances, the general public. Investigators also lend assistance to investigations conducted by provincial securities commissions.

b) Enforcement
Once an investigation is complete and a decision has been made to proceed with a prosecution a statement of allegations is served upon the concerned party which references the rule or rules alleged to have been in violation. An Offer of Settlement is also presented to the concerned party, who can either accept or reject the Offer of Settlement. If accepted, the Offer of Settlement must be approved by a hearing panel of RS. The hearing panel may accept the Offer of Settlement or reject it. If the Offer of Settlement is rejected by either the concerned party or by a settlement hearing panel, a Notice of Hearing is issued and served upon the concerned party and the matter proceeds to a hearing before a hearing panel. If the hearing panel determines that an applicable requirement has been violated, it may impose a range of penalties, including a reprimand, a fine, or the restriction, suspension or revocation of access to a marketplace. After all hearings, there is an official public notification concerning the outcome of the hearing and the penalty or remedy imposed.

c) Investigative Research
The Investigative Research Division performs in-depth corporate research relating to officers, directors, and significant shareholders of organizations applying to list securities on the TSX Venture Exchange, or applying to obtain access to the marketplace's trading systems. Due diligence is a major function of the Enforcement division. The overall goal is to improve communication and to raise the standards of compliance in the securities trading industry.

Investors in Canada are protected by the Canadian Investor Protection Fund ("CIPF"). The CIPF is a private trust fund established to protect customers in the event of the insolvency of a member of any of the following Self- Regulatory Organizations: the TSX Venture Exchange, the Montreal Exchange, the Toronto Stock Exchange, the Toronto Futures Exchange and the Investment Dealers Association of Canada.
page 57

9.A.5. Common Share Description

Registrar/Common Shares Outstanding/Shareholders
The Company's common shares are issued in registered form and the following information is taken from the records of the Company's transfer agent, Pacific Corporate Trust Company of Canada, located in Vancouver, British Columbia.

Common Share Description
All of the authorized common shares of the Company are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets. Holders of common stock are entitled to one vote for each share held of record on all matters to be acted upon by the shareholders. Holders of common stock are entitled to receive such dividends as may be declared from time to time by the Board of Directors, in its discretion, out of funds legally available therefore.

Upon liquidation, dissolution or winding up of the Company, holders of common stock are entitled to receive pro rata the assets of Company, if any, remaining after payments of all debts and liabilities. No shares have been issued subject to call or assessment. There are no pre-emptive or conversion rights and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds.

Provisions as to the modification, amendment or variation of such shareholder rights or provisions are contained in the British Columbia Corporations Act ("Act"). Unless the Act or the Company's Articles or Memorandum otherwise provide, any action to be taken by a resolution of the members may be taken by an ordinary resolution or by a vote of a majority or more of the shares represented at the shareholders' meeting.

The Company's Articles and the British Columbia Corporations Act contain provisions that require a "special resolution" for effecting certain corporate actions. Such a "special resolution" requires a two-thirds vote of shareholders rather than a simple majority for passage. The principle corporate actions that require a "special resolution" include:

a. Changing the Company name;

b. Adding/changing/removing any restriction on the business or businesses that the Company may carry on;

c. Changing the maximum number of shares that the Company is authorized to issue;

d. Creating a new class of shares;

e. Changing the designation of all or any of its shares, and adding/changing/ removing any rights/privileges/restrictions and conditions, including rights to accrued dividends, in respect of all or any of its shares, whether issued/unissued;

f. Changing the number of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares or other classes or series.

g. Dividing a class of shares, whether issued/unissued, into series and fixing the number of shares in each series and the rights/privileges/restrictions/conditions of that series;

h. Authorizing the Directors to divide any class of unissued shares into series and fixing the number of shares in each series and the rights/privileges/restrictions/conditions of that series;

i. Authorizing the Directors to change the rights/privileges/ restrictions/conditions attached to unissued shares of any series;

j. Revoking/diminishing/enlarging any authority conferred under (h) and (i);

k. Increasing/decreasing the number of Directors or the minimum or maximum number of Directors, subject to other rules;

l. Subject to section 45(8), adding/changing/removing any other provision that is permitted by the British Columbia Corporations Act to be set out in the Articles;

m. Amending the Articles of Incorporation;

n. Shareholder approval of an amalgamation agreement;

o. Continuance of the Company into another jurisdiction;

p. Disposing of all or substantially all of the Company's assets and liabilities; and

q. Dissolution of the Company.

There are no restrictions on the repurchase or redemption of common shares of the Company while there is any arrearage in the payment of dividends or sinking fund installments.
page 58

Share Purchase Warrants

Table No. 14 lists, as of May 31, 2003 share purchase warrants outstanding, the date the share purchase warrants were issued, the exercise price, and the expiration date of the share purchase warrants.

Table No. 14
Share Purchase Warrants Outstanding
     
Exercise Price
 
Effective Date of Issuance

Number of Share Purchase Warrants Originally Granted

Number of Share Purchase Warrants Still Outstanding

First Year

Second Year

Expiration Date of Share Purchase Warrants

02/21/02
800,000
800,000
$0.30
$0.30
2/21/04
03/27/02
670,000
570,000
$0.50
$0.50
3/27/04
09/30/02
666,667
666,667
$0.50
$0.50
9/30/04
09/30/02
66,667
66,667
$0.30
$0.30
9/30/04
10/03/02
1,373,332
1,373,332
$0.50
$0.50
10/03/04
10/03/02
128,500
128,500
$0.30
$0.30
10/03/04
10/30/02
35,000
35,000
$0.30
$0.30
10/30/04
01/24/03
1,100,000
1,100,000
$0.60
$0.60
01/24/05
01/31/03
375,000
375,000
$0.60
$0.60
01/31/05

9.A.6. Differing Rights
9.A.7.a. Subscription Warrants/Right
9.A.7.b. Convertible Securities/Warrants

--- No Disclosure Necessary ---

9.C. Stock Exchanges Identified
The common shares trade on the TSX Venture Exchange in Canada. Refer to ITEM #9.A.4.

ITEM 10. ADDITIONAL INFORMATION

10.A. Share Capital

10.A.1. Authorized/Issued Capital.
As of 12/31/2002, the authorized capital of the Company was 100,000,000 common shares without par value. As of 12/31/2002, there were 33,494,325 common shares issued and outstanding.

10.A.2. Shares Not Representing Capital.

10.A.3. Shares Held By Company.

--- No Disclosure Necessary ---

10.A.4. Stock Options/Share Purchase Warrants
10.A.5. Stock Options/Share Purchase Warrants

--- Refer to ITEM #6.E. and Table No. 14. ---
page 59

10.A.6. History of Share Capital

During the year ended December 31, 1998 the Company issued shares pursuant to the following transactions:

a. On January 15, 1998 the the Company closed a private placement and issued a total of 845,000 units at a price of $0.30 per unit. Each unit consisted of one common share and one non-transferable two year term share purchase warrant exercisable at $0.30 per share in the first year and $0.35 in the second year,

b. During this fiscal year, options were exercised for 5,000 common shares at $0.30 per share.

During the year ended December 31, 1999, the Company issued shares pursuant to the following transactions:

a. On June 10, 1999, the Company closed a private placement and issued a total of 1,125,000 units at a price of $0.40 per unit. Each unit consisted of one common share and one non-transferable share purchase warrant exercisable at $0.50 per share for a one-year period.

b. The Company issued a total of 764,000 common shares for the exercise of stock options for total consideration of $204,810. The weighted average exercise price of the shares issued was $0.27.

c. The Company issued 20,000 common shares upon the exercise of 20,000 share purchase warrants for total consideration of $6,000.

d. The Company issued 75,000 common shares at a deemed price of $0.60 per share for mineral property option payments and finder's fees.

e. The Company issued 25,000 common shares at a deemed price of $0.40 in satisfaction of a licensing agreement.

f. The Company issued 574,350 at a deemed price of $1.06 on conversion of a convertible debenture.

During the year ended December 31, 2000, the Company issued shares pursuant to the following transactions:

a. On April 27, 2000 the Company issued 100,000 common shares at a price of $0.11 per common share as payment for the prepaid royalty on the Warrior Property.

b. On May 3, 2000, 555,555 share purchase warrants were exercised for an equal number of common shares for proceeds of $250,000.

c. On September 6, 2000, the Company issued 50,000 common shares at a price of $0.40 per common share as payment for a license agreement classified as other deferred assets.

page 60


During the year ended December 31, 2001, the Company issued shares pursuant to the following transactions:

a. Pursuant to a private placement, the Company issued 5,800,000 common shares at a price of $0.20 per common share. Proceeds from this transaction were $1,160,000.

During the year ended December 31, 2002, the Company has issued shares pursuant to the following transactions:

a. On February 21, 2002, the Company announced that it had closed a private placement consisting of the sale of 800,000 units at a price of $0.20 per unit. Each unit consisted of one common share and one share purchase warrant. Each share purchase warrant allows the holder to purchase an additional common share of the Company at a price of $0.30 per share until February 21, 2004.

b. On March 27, 2002, the Company closed a private placement consisting of the sale of 670,000 units at a price of $0.35 per unit. Each unit consisted of one common share and one share purchase warrant. Each share purchase warrant allows the holder to purchase an additional common share of the Company at a price of $0.50 per share until March 27, 2004.

c. On September 30, 2002, the Company closed a private placement consisting of the sale of 666,667 units at a price of $0.30 per unit. Each Unit consisted of one common share and one warrant, each warrant entitling the holder to purchase one additional common share of the Company at a price of $0.50 per share until September 30, 2004. In addition, 66,667 warrants were issued as a finders fee entitling the holder to purchase one additional common share of the Company at a price of $0.30 per share until September 30, 2004.

d. On October 3, 2002, the Company closed a private placement consisting of the sale of 1,373,332 units at a price of $0.30 per unit. Each Unit consisted of one common share and one warrant, each warrant entitling the holder to purchase one additional common share of the Company at a price of $0.50 per share until October 3, 2004. In addition, 128,500 warrants were issued as a finders fee entitling the holder to purchase one additional common share of the Company at a price of $0.30 per share until October 3, 2004.

e. On October 30, 2002, the Company closed a private placement consisting of the sale of 350,000 common shares at a price of $0.30 per unit. In addition, 35,000 warrants were issued as a finders fee entitling the holder to purchase one additional common share of the Company at a price of $0.30 per share until October 30, 2004.

f. The Company issued 100,000 common shares upon the exercise of 100,000 share purchase warrants for total consideration of $50,000.

g. The Company The Company issued 110,000 common shares at a deemed price of $0.41 per share for mineral property option payments.

f. The Company issued a total of 270,000 common shares for the exercise of stock options for total consideration of $54,000.

page 61

Subsequent to the end of Fiscal 2002, the Company has issued shares pursuant to the following transactions:

a. On January 24, 2003, the Company closed a private a private placement for 1,000,000 Units of the Company at a price of $0.40 per Unit where each Unit consists of one common share and one warrant, each warrant entitling the holder to purchase one additional common share of the Company at a price of $0.60 per share until January 24, 2005. In addition, 100,000 warrants were issued as a finders fee entitling the holder to purchase one additional common share of the Company at a price of $0.30 per share until January 24, 2005.

b. On January 31, 2003, the Company closed a private a private placement with Jipangu Inc. of Tokyo, Japan, for 375,000 Units of the Company at a price of $0.40 per Unit where each Unit consists of one common share and one warrant, each warrant entitling the holder to purchase one additional common share of the Company at a price of $0.60 per share January 31, 2005.

c. The Company issued 140,000 common shares at a deemed price of $0.26 per share for mineral property option payments.

d. The Company issued a total of 25,000 common shares for the exercise of stock options for total consideration of $5,000.

10.A.7. Resolutions/Authorizations/Approvals
--- No Disclosure Necessary ---

10.B. Memorandum and Articles of Association
The Memorandum and Articles of the Company do not address the Company's objects and purposes.

A Director shall not vote in respect of the approval of any contract or transaction with the Company in which he is interested and if he shall do so his vote shall not be counted, but he shall be counted in the quorum present at the meeting at which the vote is taken.

The Directors may from time to time in behalf of the Company:

(a) borrow money in a manner and amount, on any security, from any source and upon any terms and conditions;

(b) issue bonds, debentures, and other debt obligations either outright or as security for any liability or obligation of the Company or any other person; and

(c) mortgage, charge, whether by way of specific or floating charge, or give other security on the undertaking, or on the whole or any part of the property and assets, of the Company (both present and future).

There are no age considerations pertaining to the retirement or non-retirement of directors.

A Director shall not be required to hold a share in the capital of the Company as qualification for his office but shall be qualified as required by The Act, to become or act as a Director.

All of the authorized common shares of the Company are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets. Holders of common stock are entitled to one vote for each share held of record on all matters to be acted upon by the shareholders. Holders of common stock are entitled to receive such dividends as may be declared from time to time by the Board of Directors, in its discretion, out of funds legally available therefore.

Upon liquidation, dissolution or winding up of the Company, holders of common stock are entitled to receive pro rata the assets of Company, if any, remaining after payments of all debts and liabilities. No shares have been issued subject to call or assessment. There are no pre-emptive or conversion rights and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds.

Provisions as to the modification, amendment or variation of such shareholder rights or provisions are contained in the "Company Act" of British Columbia. Unless the "Company Act" or the Company's Articles or Memorandum otherwise provide, any action to be taken by a resolution of the members may be taken by an ordinary resolution or by a vote of a majority or more of the shares represented at the shareholders' meeting.

The Company's Articles and the Company Act of British Columbia contain provisions which require a "special resolution" for effecting certain corporate actions. Such a "special resolution" requires a three-quarters vote of shareholders rather than a simple majority for passage. The principle corporate actions that require a "special resolution" include:

a. Transferring the Company's jurisdiction from British Columbia to another jurisdiction;

b. Giving financial assistance under certain circumstances;

c. Certain conflicts of interest by Directors;

d. Disposing of all/substantially all of Company's undertakings;

e. Removing Director before expiration of his term of office;

f. Certain alterations of share capital;

g.Changing the Company name;

h. Altering any restrictions on the Company's business; and

i. Certain reorganizations of the Company.

There are no restrictions on the repurchase or redemption of common shares of the Company while there is any arrearage in the payment of dividends or sinking fund installments.
page 62

There is no liability to further capital calls by the Company.

There are no provisions discriminating against any existing or prospective holder of securities as a result of such shareholder owning a substantial number of shares.

The rights of holders of the Company's stock can only be altered by a Special Shareholders' meeting.

Subject to Article 9.2 and to The Act, the first annual general meeting shall be held within 15 months from the date of incorporation and the following annual general meetings shall be held once in every calendar year at a time, not being more than 13 months after the holding of the last preceding annual general meeting, and at a place as the Directors shall appoint. In default of the meeting being held, the meeting shall be called by any two members in the same manner as nearly as possible as that in which meetings are to be called by the Directors.

The Directors may, whenever they think fit, convene a general meeting. A general meeting, if requisitioned in accordance with The Act, shall be convened by the Directors or, if not convened by the Directors, may be convened by the requisitionists as provided in The Act.

Not less than 21 days' notice of any general meeting specifying the time and place of meeting and in case of special business, the general nature of that business shall be given in the manner mentioned in Article 22, or in such other manner, if any, as may be prescribed by ordinary resolution whether previous notice has been given or not, to any person as may by law or under these Articles or other regulations of the Company entitled to receive the notice from the Company. But the accidental omission to give notice of any meeting to, or the non-receipt of any notice, by any person shall not invalidate any proceedings at that meeting.

Persons entitled to notice of a general meeting may waive or reduce the period of notice convening the meeting, by unanimous consent in writing, and may give such waiver before, during or after the meeting.

There are no limitations on the rights to own securities.

There is no provision of the Company's articles of association, charter or bylaws that would have an effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company (or any of its subsidiaries).

Shareholder ownership must be disclosed to the British Columbia Securities Commission and the TSX Venture Exchange by any shareholder who owns more than 10% of the Company's common stock.

10.C. Material Contracts

The following is a list of each material contract to which the Company is a party:

1. Management Agreement with Ralph W. Braun (CFO) of Delta B.C. dated April 1, 2001.

2. Management Agreement with Nicholas T. Ferris (President and CEO) of Vancouver B.C., dated November 1, 2000.

3. Consulting Services Agreement with David Shaddrick (Chief Consulting Geologist) of Reno, Nevada, dated June 14, 2001.

4. Share Purchase Agreement between the Company and No. 75 Corporate Ventures Ltd. and Jipangu Inc. of Tokyo, Japan, dated August 1, 1999.

5. Zenda Agreement with Saga Exploration of Reno, Nevada dated January 16, 1997.

6. Elizabeth Agreement with David White of Vancouver, B.C. and Tom Illidge of Goldbridge B.C, dated May 23, 2002.

7. Blue Agreement with Tom Illidge of Goldbridge B.C, dated May 23, 2002.

8. Golden Trend Agreement with Rubicon Resources of Reno, Nevada, dated March 29, 2002.

9. HC Agreement with KM Exploration LLC of Elko, Nevada, dated May 23, 2002.

10. RC Agreement with KM Exploration LLC of Elko, Nevada, dated May 23, 2002.

11. Callahan Agreement with Mr. and Mrs. Kizis of Reno, Nevada, dated April 3, 2002.

page 63

10.D. Exchange Controls

Except as discussed in ITEM #10.E., the Company is not aware of any Canadian federal or provincial laws, decrees, or regulations that restrict the export or import of capital, including foreign exchange controls, or that affect the remittance of dividends, interest or other payments to non-Canadian holders of the common shares. There are no limitations on the right of non-Canadian owners to hold or vote the common shares imposed by Canadian federal or provincial law or by the charter or other constituent documents of the Company.

The Investment Canada Act (the "IC Act") governs acquisitions of Canadian business by a non-Canadian person or entity. The IC Act requires a non- Canadian (as defined in the IC Act) making an investment to acquire control of a Canadian business, the gross assets of which exceed certain defined threshold levels, to file an application for review with the Investment Review Division of Industry Canada. The IC Act provides, among other things, for a review of an investment in the event of acquisition of "control" in certain Canadian businesses in the following circumstances:

1. If the investor is a non-Canadian and is a national of a country belonging to the North American Free Trade Agreement ("NAFTA") and/or the World Trade Organization ("WTO") ("NAFTA or WTO National"), any direct acquisition having an asset value exceeding $179,000,000 is reviewable. This amount is subject to an annual adjustment on the basis of a prescribed formula in the IC Act to reflect inflation and real growth within Canada. This threshold level does not apply in certain sections of Canadian industry, such as uranium, financial services (except insurance), transportation services and cultural services (i.e. the publication, distribution or sale of books, magazines, periodicals (other than printing or typesetting businesses), music in print or machine readable form, radio, television, cable and satellite services; the publication, distribution, sale or exhibition of film or video recordings on audio or video music recordings), to which lower thresholds as prescribed in the IC Act are applicable.

2. If the investor is a non-Canadian and is not a NAFTA or WTO National, any direct acquisition having an asset value exceeding $5,000,000 and any indirect acquisition having an asset value exceeding $50,000,000 is reviewable.

3. If the investor is a non-Canadian and is NAFTA or WTO National, an indirect acquisition of control is reviewable if the value of the assets of the business located in Canada represents more than 50% of the asset value of the transaction or the business is involved in uranium, financial services, transportation services or cultural services.

Finally, certain transactions prescribed in the IC Act are exempted from review altogether.

In the context of the Company, in essence, three methods of acquiring control of a Canadian business are regulated by the IC Act:

(i) the acquisition of all or substantially all of the assets used in carrying on business in Canada;

(ii) the acquisition, directly or indirectly, of voting shares of a Canadian corporation carrying on business in Canada; or

(iii) the acquisition of voting shares of an entity which controls, directly or indirectly, another entity carrying on business in Canada.

An acquisition of a majority of the voting shares of a Canadian entity, including a corporation, is deemed to be an acquisition of control under the IC Act. However, under the IC Act, there is a rebuttable presumption that control is acquired if one-third of the voting shares of a Canadian corporation or an equivalent undivided interest in the voting shares of such corporation are held by a non-Canadian person or entity. An acquisition of less than one-third of the voting shares of a Canadian corporation is deemed not to be an acquisition of control. An acquisition of less than a majority, but one-third or more, of the voting shares of a Canadian corporation is presumed to be an acquisition of control unless it can be established that, on the acquisition, the Canadian corporation is not, in fact, controlled by the acquirer through the ownership of voting shares. For partnerships, trusts, joint ventures or other unincorporated Canadian entities, an acquisition of less than a majority of the voting interests is deemed not to be an acquisition of control.
page 64

In addition, if a Canadian corporation is controlled by a non-Canadian, the acquisition of control of any other Canadian corporation by such corporation may be subject to the prior approval of the Investment Review Division, unless it can be established that the Canadian corporation is not in fact controlled by the acquirer through the ownership of voting shares.

Where an investment is reviewable under the IC Act, the investment may not be implemented unless it is likely to be of net benefit to Canada. If an applicant is unable to satisfy the Minister responsible for Industry Canada that the investment is likely to be of net benefit to Canada, the applicant may not proceed with the investment. Alternatively, an acquirer may be required to divest control of the Canadian business that is the subject of the investment. In addition to the foregoing, the IC Act provides for formal notification under the IC Act of all other acquisitions of control by Canadian businesses by non-Canadian investors. The notification process consists of filing a notification within 30 days following the implementation of an investment, which notification is for information, as opposed to review, purposes.

10.E. Taxation

Canadian Federal Income Tax Considerations
The following summary discusses only the Canadian federal income tax considerations generally applicable to a holder (a "Holder") of one or more common shares of the Company who, for the purposes of the Income Tax Act (Canada) (the "Tax Act") is a non-resident of Canada who holds common shares as capital property. The summary deals with the provisions of the Tax Act in force on 12/31/1999. It does not discuss all the tax consequences that may be relevant to particular holders in light of their circumstances or to holders subject to special rules. Holders and prospective holders should consult their own tax advisers with respect to their particular circumstances.

Dividends
A Holder will be subject to Canadian withholding tax ("Part XIII Tax") equal to 25%, or such lower rate as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on common shares. Under the Canada-U.S. Income Tax Convention (1980) as amended by the Protocols signed on 6/14/1983, 3/28/1984, 3/17/1995, and 7/29/1997 (the "Treaty"), the rate of Part XIII Tax applicable to a dividend on common shares paid to a Holder who is a resident of the United States and who is the beneficial owner of the dividend, is 5%. If the Holder is a company that owns at least 10% of the voting stock of the Company paying the dividend, and, in all other cases, the tax rate is 15% of the gross amount of the dividend. The Company will be required to withhold the applicable amount of Part XIII Tax from each dividend so paid and remit the withheld amount directly to the Receiver General for Canada for the account of the Holder.

Disposition of Common Shares
A Holder who disposes of a common share, including by deemed disposition on death, will not normally be subject to Canadian tax on any capital gain (or capital loss) thereby realized unless the common share constituted "taxable Canadian property" as defined by the Tax Act. Generally, a common share of a public corporation will not constitute taxable Canadian property of a Holder if the share is listed on a prescribed stock exchange unless the Holder or persons with whom the Holder did not deal at arm's length alone or together held or held options to acquire, at any time within the five years preceding the disposition, 25% or more of the shares of any class of the capital stock of the Company. The Canadian Venture Exchange is a prescribed stock exchange under the Tax Act. A Holder who is a resident of the United States and realizes a capital gain on a disposition of a common share that was taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the common shares is derived from, or from an interest in, Canadian real estate, including Canadian mineral resource properties, (b) the common share formed part of the business property of a permanent establishment that the Holder has or had in Canada within the 12 month period preceding the disposition, or (c) the Holder is an individual who (i) was a resident of Canada at any time during the 10 years immediately preceding the disposition, and for a total of 120 months during any period of 20 consecutive years, preceding the disposition, and (ii) owned the common share when he ceased to be resident in Canada.
page 65

A Holder who is subject to Canadian tax in respect of a capital gain realized on a disposition of a common share must include three quarters of the capital gain (taxable capital gain) in computing the Holder's taxable income earned in Canada. The Holder may, subject to certain limitations, deduct three-quarters of any capital loss (allowable capital loss) arising on a disposition of taxable Canadian property from taxable capital gains realized in the year of disposition in respect to taxable Canadian property and, to the extent not so deductible, from such taxable capital gains realized in any of the three preceding years or any subsequent year.

United States Taxation
For federal income tax purposes, an individual who is a citizen or resident of the United States or a domestic corporation ("U.S. Taxpayer") will recognize a gain or loss on the sale of the Company's common shares equal to the difference between the proceeds from such sale and the adjusted tax basis of the common shares. The gain or loss will be a capital gain or capital loss if the Company's common shares is a capital asset in the hands of the U.S. Taxpayer.

For federal income tax purposes, a U.S. Taxpayer will be required to include in gross income dividends received on the Company's common shares. A U.S. Taxpayer who pays Canadian tax on a dividend on common shares will be entitled, subject to certain limitations, to a credit (or alternatively, a deduction) against federal income tax liability. A domestic corporation that owns at least 10% of the voting shares should consult its tax advisor as to applicability of the deemed paid foreign tax credit with respect to dividends paid on the Company's common shares.

Under a number of circumstances, United States Investor acquiring shares of the Company may be required to file an information return with the Internal Revenue Service Center where they are required to file their tax returns with a duplicate copy to the Internal Revenue Service Center, Philadelphia, PA 19255. In particular, any United States Investor who becomes the owner, directly or indirectly, of 10% or more of the shares of the Company will be required to file such a return.

Holders and prospective holders are urged to consult their own tax advisers with respect to their particular circumstances.

10.F. Dividends and Paying Agents
The Company has not declared any dividends on its common shares for the last five years and does not anticipate that it will do so in the foreseeable future. The present policy of the Company is to retain future earnings for use in its operations and the expansion of its business.
page 66

Notwithstanding the aforementioned: the Company is unaware of any dividend restrictions; has no specific procedure for the setting of the date of dividend entitlement; but might expect to set a record date for stock ownership to determine entitlement; has no specific procedures for non- resident holders to claim dividends, but might expect to mail their dividends in the same manner as resident holders. The Company has not nominated any financial institutions to be the potential paying agents for dividends in the United States.

10.G. Statement by Experts
The Company's auditors for its financial statements for the preceding year was Morgan & Company, Chartered Accountants, located at 700 West Georgia Street, Suite 1488, Vancouver, B.C. CANADA V7Y 1A1. Morgan & Company is licensed to practice in British Columbia by the Institute of Chartered Accountants. Their audit report for Fiscal 2002/Fiscal 2001 is included with the related financial statements in this Registration Statement with their consent.

10.H. Document on Display
All of the documents referred to in this Registration Statement may be inspected at the head office of the Company, the address of which is indicated on the Cover Sheet of this Registration Statement.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--- No Disclosure Necessary ---

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

12.A. Debt Securities
--- No Disclosure Necessary - ---

12.B. Warrants and Rights
--- No Disclosure Necessary ---

12.C. Other Securities
--- No Disclosure Necessary ---

12.D. American Depository Shares
-- No Disclosure Necessary ---
page 67

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
--- No Disclosure Necessary ---

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
--- No Disclosure Necessary ---

ITEM 15. CONTROLS AND PROCEDURES
Within the 90-day period prior to the filing of this report ("Date of Evaluation"), an evaluation was carried out under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of our disclosure controls and procedures. Based on that evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

The Company's disclosure controls and procedures operate such that important information flows to appropriate collection and disclosure points in a timely manner and are effective to ensure that such information is accumulated and communicated to the Company's management, and made known to the Company's Chief Executive Officer and Chief Financial Officer, including the period when this Registration Statement on Form 20-F was prepared, as appropriate to allow timely decision regarding the required disclosure.

There have been no significant changes in the Company's internal controls or the occurrence of events or other factors that could significantly affect these controls, subsequent to the Date of Evaluation. Nor have there been any corrective actions with regard to significant deficiencies or material weaknesses.

ITEM 16. RESERVED
page 68

PART III

ITEM 17. FINANCIAL STATEMENTS
The Company's consolidated financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP).

The financial statements as required under ITEM #17 are attached hereto and found immediately following the text of this Registration Statement. The auditors' report of Morgan & Company, Chartered Accountants, is included herein immediately preceding the consolidated financial statements and schedules.

ITEM 18. FINANCIAL STATEMENTS
The Company has elected to provide financial statements pursuant to ITEM #17.

ITEM 19. EXHIBITS
 
Page Number
1. Certificate of Incorporation, Certificate of Name Change, Articles of Incorporation
84
2. Instruments defining the rights of holders of the securities being registered ***See Exhibit Number 1***
3. Voting Trust Agreements - NA

4. Material Contracts -

a. Management Agreement: Ralph Braun

114

b. Management Agreement: Nicholas T. Ferris

118

c. Consulting Agreement: David Shaddrick

123

d. Share Purchase Agreement: Jipangu Inc.

127

e. Zenda Agreement: Saga Exploration

145

f. Elizabeth Agreement: White and Illidge

154

g. Blue Agreement: Illidge

157

h. Golden Trend Agreement: Rubicon Resources Inc.

160

i. HC Agreement: KM Exploration LLC

179

j. RC Agreement: KM Exploration LLC

181

k. Callaghan Agreement: Mr. & Mrs. Kizis

183

l. SRK Consent letter - Blackdome

184

m. SRK Consent letter - Zenda

185
5. List of Foreign Patents - N/A
6. Calculation of earnings per share - N/A
7. Explanation of calculation of ratios - N/A
8. List of Subsidiaries - N/A
9. Statement pursuant to the instructions to Item 8.A.4, regarding the financial statements filed in registration statements for initial public offerings of securities - N/A
10. Other Documents -

Auditor's Consent Letter

186

Signature Page

83

page 69

Audited Financial Statements

J-Pacific Gold Inc.
Consolidated Financial Statements
December 31, 2002 and 2001


("Auditor's Logo")

AUDITORS' REPORT

To the Shareholders of
J-Pacific Gold Inc.

We have audited the consolidated balance sheets of J-Pacific Gold Inc. as at December 31, 2002 and 2001, and the consolidated statements of loss and deficit, shareholders' equity, and cash flows for the years then ended. 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 Canadian and United States generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2002 and 2001, and the results of its operations and cash flows for the years then ended in accordance with United States generally accepted accounting principles. As required by the British Columbia Company Act, we report that, in our opinion, these principles have been applied on a consistent basis.

Vancouver, Canada   "Morgan & Company"
February 24, 2003 Chartered Accountants

Comments by Independent Auditors for U.S. Readers on Canada-U.S. Reporting Conflict

In the United States, reporting standards for auditors require that the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by going concern considerations such as described in Note 1 to the financial statements. Our report to the shareholders, dated February 24, 2003, is expressed in accordance with Canadian reporting standards which do not permit a reference to such considerations in the Auditors' Report when the consideration is adequately disclosed in the financial statements.

Vancouver, Canada   "Morgan & Company"
February 24, 2003 Chartered Accountants

page 70

J-Pacific Gold Inc.
Consolidated Balance Sheet

As at December 31, 2002 and 2001
(expressed in Canadian Dollars)

 
2002
$
2001
$

Assets
Current assets

Cash
235,734
38,769
Accounts receivable
25,340
4,607
Prepaid expenses
7,732
21,648
 
268,806
65,024
 
Deposits (note 4)
114,500
118,963
Property, plant and equipment (note 5)
810,931
784,548
 
1,194,237
968,535
Liabilities
Current liabilities
Accounts payable and accrued liabilities
97,540
54,803
Accounts payable - related parties
15,603
18,183
 
113,143
72,986
 
Provision for reclamation costs (note 4)
100,000
100,000
 
Shareholder loans (note 8)
188,222
99,651
 
401,365
272,637
 
Shareholders' Equity
Capital stock
, no par value; 100,000,000 authorized; 33,494,325 issued (2001: 29,154,326 issued)
11,981,870
10,749,270
Contributed surplus (note 10)
133,016
55,696
Accumulated other comprehensive income (note 15)

28,003

31,058
Deficit
(11,350,017)
(10,140,126)
 

792,872

695,898
 
1,194,237
968,535
 
Going concern and nature of operations (note 1)
 
See accompanying notes

page 71
J-Pacific Gold Inc.
Consolidated Statement of Loss and Deficit

For the years ended December 31, 2002 and 2001
(expressed in Canadian Dollars)

 
2002
$
2001
$
Revenue

-

-

Expenses  
Amortization
7,256
5,596
Exploration and evaluation costs
588,274
49,212
General and administrative
599,605
523,524
Care and maintenance
57,386
68,139
 
1,252,521
646,471
Loss from operations
(1,252,521)
(646,471)
 
Other income (expenses)    
Interest income
1,641
1,063
Other income
12,989
-
Loss before income taxes
(1,237,891)
(645,408)
 
Deferred income tax on issue of flow-through shares
28,000
-
 
Loss for the year
(1,209,891)
(645,408)
 
Deficit - Beginning of year
(10,140,126)
(9,494,718)
 
Deficit - End of year
(11,350,017)
(10,140,126)
 
Basic and diluted loss per share
(0.04)
(0.03)
 
Weighted average number of common shares outstanding
31,171,513
24,418,984
See accompanying notes

page 72
J-Pacific Gold Inc.
Consolidated Statement of Cash Flows

For the years ended December 31, 2002 and 2001
(expressed in Canadian Dollars)

 
2002
$
2001
$
Cash flows from (used in) operating activities
Loss for the year
(1,209,891)
(645,408)
Items not affecting cash
  Amortization
7,256
5,596
  Stock based compensation
77,320
55,696
  Deemed interest on shareholder loans
6,879
47,611
  Shares issued for exploration and evaluation
45,100
-
  Tax benefit on flow-through shares
(28,000)
-
Changes in non-cash working capital items
  Accounts receivable
(20,733)
(1,192)
  Prepaid expenses
13,916
5,081
  Accounts payable
40,157
(5,977)
 
(1,067,996)
(538,593)
 
Cash flows from (used in) financing activities
Proceeds from the issue of common shares
1,215,500
1,160,000
Increase in shareholder loan
168,432
509,328
Repayment of shareholder loan
(86,741)
(1,080,240)
 
1,297,191
589,088
 
Cash flows from (used in) investing activities
Mine property, plant and equipment
(32,481)
(28,446)
Reclamation deposits
4,463
(462)
Purchase of other capital assets
(1,157)
(8,073)
 
(29,175)
(36,981)
Effect of exchange rate changes on monetary items
(3,055)
17,251
 
Increase in cash
196,965
30,765
 
Cash - Beginning of year
38,769
8,004
 
Cash - End of year
235,734
38,769
 
Supplementary cash flow information (note 13)

See accompanying notes

page 73
J-Pacific Gold Inc.
Consolidated Statement of Shareholders' Equity

As at December 31, 2002 and 2001
(expressed in Canadian Dollars)

 
Common Shares
       
Number of Shares
At Par Value
$
Contributed Surplus
$
Accumulated Other Comprehensive Income (Loss)
$
Deficit
$
Total Shareholders' Equity
$
             
Balance at December 31, 2000
23,354,326
9,589,270
13,807
(9,494,718)
108,359
Shares issued
5,800,000
1,160,000
1,160,000
Stock based compensation
55,696
55,696
Comprehensive income (loss):
  Net income (loss)
(645,408)
(645,408)
Other comprehensive income (loss):
 
  Unrealized foreign exchange gain / (loss)
17,251
17,251
 
Balance at December 31, 2001
29,154,326
10,749,270
55,696

31,058

(10,140,126)
695,898
Shares issued
3,859,999
1,111,500
1,111,500
Warrants exercised
100,000
50,000
50,000
Options exercised
270,000
54,000
54,000
Shares for exploration and evaluation
110,000
45,100
45,100
Stock based compensation
77,320
77,320
Tax benefit of shares issued
(28,000)
(28,000)
Comprehensive income (loss):
  Net income (loss)
(1,209,891)
(1,209,891)
Other comprehensive income (loss):
Unrealized foreign exchange gain / (loss)
(3,055)
(3,055)
Balance at December 31, 2002
33,494,325
11,981,870
133,016
28,003
(11,350,017)

792,872


See accompanying notes
page 74
J-Pacific Gold Inc.
Notes to Consolidated Financial Statements

December 31, 2002 and 2001
(expressed in Canadian Dollars)

1 Nature of operations and going concern

The Company was formed on February 8, 1990 under the Company Act of British Columbia, Canada.   The Company is engaged in the exploration and evaluation of exploration properties, primarily gold, in Canada and the United States. The Company also maintains a fully permitted mine operation in British Columbia and a near fully permitted mine operation in California.   Both operations are currently not in production but are maintained in a state allowing for short time-lines (less than one year) to production.

The Company has a working capital surplus of $155,663 at the end of the year.  Additional financing or continued financial support from Jipangu Inc. ("Jipangu"), a major shareholder, is required to sustain the Company at the current rate of expenditure and to meet its spending commitments to keep the Blackdome Mine and its exploration and development projects in good standing.   To raise capital, the Company continues to maintain relationships with brokers and private individuals interested in exploration investments.   The Canadian government provides incentives to investors investing in companies engaged in exploration activity in Canada.   One such incentive program referred to as flow through shares allows the Company to renounce expenses to individual investors effectively reducing an investor's exposure and potentially increasing an investor's return.   The Company intends to take full advantage of this and other available government programs.   

These consolidated financial statements are prepared on a going concern basis, which implies that the Company will continue realizing its assets and discharging its liabilities in the normal course of business.   Accordingly, they do not give effect to any of the adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities, contingent obligations and commitments in other than the normal course of business and at amounts different from those in these consolidated financial statements.

   
2 Significant accounting policies

Basis of consolidation

The consolidated financial statements include the accounts of J-Pacific Gold Inc. and its direct and indirect subsidiaries, Equinox Resources (Calif.) Inc., Golden Trend Resources Inc. and Auric Resources Inc. and it's proportionate share of the assets, liabilities, revenues and expenses of No. 75 Corporate Ventures ("No. 75"), an incorporated joint venture in which the Company has a 50% interest.  All inter-company transactions have been eliminated.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States required management to make estimates and assumptions that affect the reported amount 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 period.   Actual results may differ from these estimates.

Property, plant and equipment

Property, plant and equipment are carried at cost.   Expenditures for replacements and betterments are capitalized; maintenance and repair expenditures are charged to operations as incurred. 

The principal depreciation method used for mining, smelting and refining operations is the units-of-production method applied on a group basis. Buildings, machinery and equipment for other operations are depreciated using the straight-line method over estimated economic lives of three to forty years. Upon disposal of assets depreciated on a group basis, cost less salvage is charged to accumulated depreciation.

Depletion of mines is computed on the basis of an overall unit rate applied to the pounds of principal products sold from mine production.   Mine exploration costs and development costs to enhance reserve calculations are charged to operations as incurred. 

Values for mining properties represent the Company's 50% interest in property, plant and equipment.   Property, plant and equipment consists of mill, machinery, tailings facility, mining equipment and camp.   No intangible items are capitalized in the carrying value of property, plant and equipment.   The Company reviews its long-lived assets to be held and used whenever events or circumstances indicate that the carrying value of those assets may not be recoverable.   An impairment loss is recognized when the carrying amount of the asset exceeds fair market value.   

Claims and option interests

Exploration and evaluation costs are expenses as incurred.

The Company is currently exploring and evaluating a number of claims and has option interests in a number of properties. All exploration and evaluation expenditures incurred on these claims and option interests are charged to operations until it is determined that the property has economically recoverable mineral reserves. Upon determination of economic recoverable mineral reserves, costs are capitalized by area of interest and depleted on a units of production basis after commencement of mining.

Stock based compensation

Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation ("SFAS No. 123"), and SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure, defines a fair-value-based method of accounting for stock-based employee compensation and transactions in which an entity issues its equity instruments to acquire goods or services from non-employees, and encourages but does not require companies to record compensation cost for stock-based employee compensation at fair value.   The Company has chosen to account for stock-based employee compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations.   Accordingly, compensation cost for stock options is measured for the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount an employee must pay to acquire the stock.

SFAS No. 130, "Reporting Comprehensive Income", requires companies to classify items of other comprehensive income by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position.  

Earnings per share

Basic income (loss) per share is computed by dividing income (loss) applicable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution that could occur if dilutive securities and other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company, unless the effect is to reduce a loss or increase earnings per share.

Impairment

Management assesses the carrying value of assets held for sale, mineral claims, and property and equipment for impairment when circumstances warrant such a review.

Generally, assets to be used in operations are considered impaired if the sum of expected undiscounted future cash flows is less than the assets' carrying values. If impairment is indicated, the loss is measured based on the amounts by which the assets' carrying values exceed their fair values. The Company has no assets considered impaired.

Foreign exchange translation

The operations of the Company's foreign subsidiaries are translated into Canadian dollars as follows: monetary assets and liabilities at the rates of exchange prevailing at the balance sheet date; other assets and liabilities at the applicable historical exchange rates; and revenues and expenses at the average rate of exchange for the year, except for non-monetary expenses which are at the rates used for the translation of the related assets. Unrealized gains and losses on translation are included in comprehensive income.

Flow-Through Shares

Under FAS 109 the proceeds from issuance should be allocated between the offering of shares and the sale of tax benefits. The allocation is made based on the difference between the quoted price of the existing shares and the amount the investor pays for the shares. A liability is recognized for this difference. The liability is reversed when tax benefits are renounced and a deferred tax liability is recognized at that time. Income tax expense is the difference between the amount of the deferred tax liability and the liability recognized on issuance.

3 Recent Accounting Pronouncements
Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 141 - "Business Combinations:, and SFAS No. 142 - "Goodwill and Other Intangible Assets".   The adoption of these standards had no effect on the Company's financial position, results of operations or liquidity in 2002.

Effective January 1, 2002, the Company adopted SFAS No. 144 - "Accounting for Impairment or Disposal of Long-Lived Assets".   This standard establishes a single accounting model for the impairment of long-lived assets to be held and used, or to be disposed of by sale or abandonment, and broadens the definition of discontinued operations.   The adoption of this standard had no effect on the Company's accounting for impairment and disposal of long-lived assets.

In April 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No. 145 - "Rescission of FASB Statements No. 4, 44 and 64, Amendment of SFAS No. 13 and Technical Corrections".   The Company will apply SFAS No. 145 in 2003.   It is not expected that the implementation of SFAS will have a significant impact on the Company's financial position or results of operations.

   
4 Deposits

Deposits represent an amount receivable of $100,000 (2001 - $100,000) and bonds of $14,500 (2001 - $18,963) relating to reclamation permits issued on various exploration properties held by the Company. An irrevocable letter of credit issued by a Canadian chartered bank has been issued as collateral for the amount receivable.

page 75

       
5 Property, plant and equipment
   
2002
$
2001
$
  Mine property, plant and equipment
794,827
762,346
  Other equipment
109,551
106,836
   
904,378
869,182
  Less: accumulated depreciation
(93,447)
(84,637)
   
810,931
784,548
6 Investment in joint venture

The Company has entered into a joint venture with Jipangu for the operation of the Blackdome Mine near Clinton, British Columbia, Canada. The Company has been appointed operator of the joint venture agreement and, in that capacity, is entitled to management fees equal to 7% of the operating costs.

During the years ended December 31, 2002 and 2001, Jipangu advanced funds to the Company to allow for continued care and maintenance of the mine.


The consolidated financial statements include the Company's 50% interest in the corporate joint venture as follows:

         
   
2002
$
2001
$
 
  Current assets
709
2,865
 
  Long-term assets
804,827
772,346
 
  Current liabilities
-
12,351
 
  Long-term liabilities
100,000
100,000
 
  Expenses
57,386
68,138
 
  Cash flows from operating activities
(54,935)
(52,300)
 
  Cash flows from financing activities
86,901
121,099
 
  Cash flows from investing activities
(32,481)
(65,946)
 
page 76

   
7 Claims and option interests

a) Zenda claim and option interest

The Company has a 100% interest in the Zenda Gold Mine located near Bakersfield, California. The agreement requires the Company to issue to the vendors a maximum of 2,050,000 common shares, of which 1,000,000 common shares have been issued. Under the terms of the agreement, the vendors are the operator and, upon the raising of financing by the Company, are required to construct the facility. The vendors can earn up to an additional 550,000 shares dependant upon completing the facility at various cost levels compared to the approved capital cost budget. The final 500,000 shares will be issued when the Company recovers its pre-production expenses.

The vendors retain a 25% net profits interest after capital payback to the Company and a 5% net smelter royalty ("NSR") is payable to underlying interests.

b) Golden Trend claim interest

Golden Trend consists of 111 unpatented mining claims in Eureka County, Nevada. Of the 111 claims, 90 are subject to a 3% NSR of which 2% may be purchased. The Company must pay US $10,000 each year as an advance royalty on the NSR.

c ) Callaghan claim and option interest

Callaghan consists of a lease agreement with an option to purchase the ten unpatented claims of the Callaghan property in Lander County, Nevada. The claims are subject to a 3% NSR (net of federal and state royalties) of which 2% can be purchased. The Company made an advance minimum royalty ("AMR") payment of $8,470 upon signing the agreement. Advance minimum royalty payments are US$5,000 in year two and three, US$20,000 in year four, and US$25,000 in year five and there after. The Company has an option to purchase 100% of the property for US$20,000 after total expenditures of US$500,000. The agreement includes 50 unpatented mining claims staked by the Company adjacent to the original ten. The agreement grants all mineral and mining rights to the property for a ten-year term, which is renewable for additional ten-year terms.

d) RC claim and option interest

On May 23, 2002, the Company entered into a lease agreement with an option to purchase the twenty unpatented claims of the RC Project, an early stage gold exploration project located in Elko County, Nevada. The agreement with the optionor includes forty-one unpatented mining claims staked by the Company adjacent to the original twenty. The agreement grants all mineral and mining rights to the property for a ten-year term, which is renewable for additional ten-year terms. The Company made a royalty payment of US $8,470 upon signing the agreement and is to make additional AMR payments of US$10,000 in years two, US$15,000 in years three, US$20,000 in year four, and US$30,000 in year five and each subsequent year to maintain the agreement. The Company issued 20,000 shares upon signing the agreement and is to issue an additional 30,000 shares at the first anniversary of the lease. Following the cumulative expenditure of US$500,000, the Company has an option to purchase 100% of the property, subject to royalty payments, for US$20,000. A three percent Net Smelter Royalty interest is retained by the optionor, of which two percentage points are purchasable by the Company for US$1,000,000 per percentage point. The AMR payments are deductible from any production royalties that might be payable to the optionor, as are any federal and state royalties.

e) HC option interest

On May 23, 2002, the Company entered into a lease agreement with an option to purchase the twenty unpatented claims of the HC Project, an early stage gold exploration project located in Eureka County, Nevada. The agreement with the optionor includes thirty unpatented mining claims staked by the Company adjacent to the original twenty. The agreement grants all mineral and mining rights to the property for a ten-year term, which is renewable for additional ten-year terms. The Company made a royalty payment of US $8,470 upon signing the agreement and is to make additional AMR payments of US$10,000 in years two, US$15,000 in years three, US$20,000 in year four, and US$30,000 in year five and each subsequent year to maintain the agreement. The Company issued 20,000 shares upon signing the agreement and is to issue an additional 30,000 shares at the first anniversary of the lease. Following the cumulative expenditure of US$500,000, the Company has an option to purchase 100% of the property, subject to royalty payments, for US$20,000. A three percent Net Smelter Royalty interest is retained by KM, of which two percentage points are purchasable by the Company for US$1,000,000 per percentage point. The AMR payments are deductible from any production royalties that might be payable to the optionor, as are any federal and state royalties.

f) Elizabeth claim and option interest

On May 23, 2002, the Company entered into option to purchase agreements for the four crown granted mineral claims known as the "Elizabeth Property" and for surrounding mineral claims known as the "Blue Claims" in the Lillooet Mining District, British Columbia, Canada. In October 2002, the Company staked an additional 24 mineral claims. Collectively, the claims are referred to as the "Elizabeth Project". The property is an early-stage exploration project, located roughly 35 kilometres northeast of the former gold mining town of Bralorne and 30 kilometres south of the Company's Blackdome Gold Mine.

With respect to the Elizabeth property, the Company made a payment of $10,000 upon signing the agreement and issued 50,000 common shares. To maintain the option, the Company is to make an additional cash payment of $5,000 at the first anniversary of the agreement, issue 50,000 common shares at the first anniversary of the agreement, 50,000 shares upon the exercise of the option and 50,000 common shares upon the commencement of production. As well, beginning at the second anniversary of the agreement, the Company is to make AMR payments of $10,000 per year, which are deductible from any production royalties. The agreement includes a $500,000 exploration work commitment wherein $200,000 is to be completed by December 31, 2003, $150,000 by December 31, 2004, and $150,000 by December 31, 2005. The optionors retain a four percent NSR interest, of which two percentage points are purchasable by the Company for $1,000,000 per percentage point.

With respect to the Blue claims, the Company made a payment of $2,000 upon signing the agreement and issued 20,000 common shares. To maintain the option, the Company must issue 30,000 common shares at the first anniversary of the agreement and 50,000 shares upon the exercise of the option. As well, beginning at the first anniversary of the agreement, the Company is to make AMR payments of $5,000 per year, which are deductible from any production royalties. The agreement includes a $500,000 exploration work commitment wherein $50,000 is to be completed by December 31, 2003, $150,000 by December 31, 2004, $150,000 by December 31, 2005 and $150,000 by December 31, 2006. The optionor retains a three percent NSR, of which two percentage points are purchasable by the Company for $1,000,000 per percentage point.

In addition to the above terms, to complete the exercise of both option agreements, the Company must complete a feasibility study prepared by an independent mining engineer.

g) Blackdome South claim interest

During the late spring and summer of 2002, the Company staked a total of 341 mineral claim units contiguous to the south of the Blackdome Gold Mine project in the Clinton mining division of British Columbia. These new claims have been named the "Blackdome South" project and are held 100% by the Company.

h) Truax claim interest

In October of 2002, the Company staked a total of 94 mineral claim units contiguous in the historic Bridge River Mining Camp in the Lillooet mining division of British Columbia. These new claims are 100 % held by the Company.

   
8 Shareholder loans

During the year ended December 31, 2002, shareholder loans in the amount of $188,222 (2001 - $99,651) were made to the Company from Jipangu. Loans for $70,000 and $60,000 bear interest at a rate of 7.0% per annum accruing a total of $2,323 during 2002. The balance of the loan amount is non-interest bearing. The loans are unsecured and have no fixed repayment terms. During 2002, $168,432 was received from Jipangu (2001 - $509,328). During the year, the shareholder loan was reduced by $86,741 representing Jipangu's 50% interest in the Blackdome operation.

Deemed interest at 7.0% is accrued and expensed on the non-interest bearing portion of the shareholder loans.

   
9 Commitments

Effective August 31, 2002, the Company entered into an amended lease agreement for office space for a one year period expiring August 31, 2003. The Company has also committed to certain operating leases for the rental of a vehicle. The future minimum lease payments required under these lease agreements are:

page 77

Office
$
Vehicles
$
2003
23,998
4,480
   
10 Stock options and warrants outstanding

The Company has no formalized stock option plan. The following table summarizes information about the options at December 31, 2002 and 2001 and the changes for the years then ended.

           
   
2002
2001
   
Number of shares
Weighted
average
exercise
price
$
Number of shares
Weighted
average
exercise
price
$
  Options outstanding -
  Beginning of year
1,825,000
0.20
695,000
0.25
  Granted
600,000
0.37
2,750,000
0.19
  Exercised
(270,000)
0.20
-
-
  Forfeited
-
-
(1,500,000)
0.19
  Expired
-
-
(120,000)
0.20
  Options outstanding -        
  End of year
2,155,000
0.25
1,825,000
0.20
 


The following table summarizes information about stock options outstanding and exercisable at December 31, 2002:

Exercise
price
$
Options
outstanding
Weighted average
remaining contracted life (years)
Weighted
average
exercise price
$
0.20
1,705,000
3.58
0.20
0.28
150,000
4.10
0.28
0.50
300,000
1.28
0.50
2,155,000
3.30
0.25
  Stock based compensation

SFAS No. 123 "Accounting for Stock-Based Compensation" contains a fair value-based method for valuing stock based compensation. Management accounts for options under Accounting Principles Board ("APB") No. 25 "Accounting for Stock Issued to Employees", under which no compensation is recognized in connection with options granted to employees and directors except if options are granted at a exercise price below the market price of the underlying stock. The Company recognizes compensation expense on all options granted to contractors.

The fair value of each option granted to employees and directors has been estimated as of the date of grant using the Black-Scholes option pricing model with the following assumptions: risk-free rate 2.45% (2001 - 2.46%); dividend yield 0% (2001 - 0%); volatility of 137% (2001 - 123%); and 4.10 years of expected lives (2001 - 4.9 years). The weighted average fair value of options granted to directors and employees during is $0.17.

Had compensation expense been recognized on the basis of fare value pursuant to SFAS No. 123, loss for the year and loss per share would have been as follows:

   
2002
$
2001
$
  Loss for the year (as reported)
(1,209,891)
(645,408)
  Pro-forma
(1,260,976)
(701,104)
  Basic loss per share (as reported)
(0.04)
(0.03)
  Pro-forma
(0.04)
(0.03)

page 78
 
Share Purchase Warrants
   
Number of warrants
2002 Weighted
average
exercise
price
$
Number of warrants

2001 Weighted average
exercise
price
$

  Warrants outstanding -
-
-
2,444,445
0.45
  Beginning of year
-
-
  Granted
3,740,166
0.45
-
-
  Exercised
(100,000)
0.50
-
-
  Expired
-
-
(2,444,445)
0.45
  Warrants outstanding -
  End of year
3,640,166
0.44
-
-
 
The following table summarizes information about warrants outstanding and exercisable at December 31, 2002:
 
Exercise
price
$
Warrants
outstanding
Weighted average
remaining
contracted life
(years)
Weighted
average
exercise price
$
 
0.30
1,030,167
1.28
0.30
 
0.50
2,609,999
1.65
0.50
 
3,640,166
1.55
0.44
   
11 Related party transactions

During the year ended December 31, 2002, fees totaling $90,999 were paid to officers of the Company. During the year ended December 31, 2001, a fee of $3,653 was paid to a former director and officer.

   
12 Income Taxes
       
 
2002
$
2001
$
  Loss for the year
(1,209,891)
(645,408)
  Statutory income tax rate
40%
45%
  Expected income tax (recovery)
(483,956)
(290,434)
  Increase in valuation allowance
483,956
290,434
  Income tax
-
-
 

The significant components of the Company's deferred tax assets are as follows:

   
2002
$
2001
$
  Operating losses
1,738,000
1,754,000
  Accounting value of mineral property interest in excess of tax values
202,000
-
   
1,940,000
1,754,000
  Valuation allowance
(1,940,000)
(1,754,000)
   
-
-
       
  The Company has non-capital loss carry forwards of approximately $4,345,536 that may be available for tax purposes. A valuation allowance has been fully provided on these losses as currently these amounts are less likely to be realized. The losses expire as follows:
     
   
$
  2003
330,000
  2004
710,000
  2005
771,000
  2006
920,000
 
2007
372,000
 
2008
572,000
 
2009
670,000
 
4,345,000
 

The Company also has accumulated exploration and development costs available for deduction against future Canadian income for tax purposes. No benefit has be recognized in respect of these amounts which may be carried forward indefinitely.
page 79

   
13 Segmented financial information

The Company operates in two segments: the care and maintenance of the Blackdome Mine in Canada and the exploration and development of gold properties in Canada and the USA.

 
   
Blackdome
Mine
$
Exploration
in Canada
$

Exploration
in USA
$

Corporate
Office
$
Total
$
  December 31, 2002
  Loss for the year
44,224
576,323
11,951
577,393
1,209,891
  Total Assets
905,536
-
981
287,720
1,194,237
  Capital Assets
794,827
-
-
16,104
810,931
  Capital Expenditures
32,481
-
-
1,157
33,638
  Amortization
-
-
-
7,256
7,256
   
  December 31, 2001
  Loss for the year
68,138
855
48,357
528,058
645,408
  Total Assets
875,211
-
8,531
84,793
968,535
  Capital Assets
762,346
-
-
22,202
784,548
  Capital Expenditures
28,446
-
-
8,073
36,519
  Amortization
-
-
-
5,596
5,596
   
14 Supplementary cash flow information

During the years ended December 31, 2002 and 2002, the Company conducted non-cash operating, investing and financing activities as follows:

   
2001
$
2002
$
  Non-cash financing activities
  Shares issued for property
45,100
-
 

Interest paid during the years ended December 31, 2002 and 2001 was as follows:

   
2001
$
2002
$
  Interest paid
2,825
3

page 80
   
15 Comprehensive income

The Company has the following comprehensive income:

   
2001
$
2002
$
  Unrealized foreign exchange gain (loss)
(3,055)
17,251
       
16 Risk

The Company has $175,000 (2001 - nil) of cash at financial institutions in excess of insured limits. The Company is exposed to foreign exchange risk pertaining to its U.S. exploration and evaluation programs.

   
17 Subsequent events

a) Subsequent to December 31, 2002, the Company granted 700,000 options to directors and officers with an exercise price of $0.70 expiring January 15, 2008.

b) Subsequent to December 31, 2002, the Company completed two private placements for the issuance of 1,375,000 units at $0.40 for proceeds of $550,000 to the Company. Each unit consists of one common share and one share purchase warrant. One share warrant entitles the holder to acquire one common share of the Company at a price of $0.60 on before January 31, 2005.

c) On January 23, 2003, 5,000 options where exercised for proceeds of $1,000.

d) On February 24, 2003, 75,000 options expired unexercised.

page 81
 
Corporate Data

J-Pacific Gold Inc. is a public company trading on the TSX Venture Exchange. The Company is involved in mineral exploration and mine development in North America.

     
  Head Office  
    Suite 1440 - 1166 Alberni Street
Vancouver, B.C. V6E 3Z3
Telephone: (604) 684-6677
Fax: (604) 684-6678
Toll free for Investor Relations: 1-888-236-5200
Email: ir@jpgold.com
Web site: www.jpgold.com
     
  Directors  
    D'Arcy Adam, Langley, British Columbia
Driffield Cameron, Burlington, Ontario
Nicholas T. Ferris, Vancouver, British Columbia
John H. Mesrobian, Williamsburg, Virginia
Kazuo Shuto, Tokyo, Japan
     
  Officers  
    Nicholas T. Ferris, President and Chief Executive Officer
Ralph Braun, Chief Financial Officer
Cheri Pedersen, DuMoulin Black, Secretary
David R. Shaddrick - Chief Consulting Geologist
     
  Registrar and Transfer Agent
    Pacific Corporate Trust Company
     
  Banker  
    Bank of Montreal
     
  Legal Counsel  
    DuMoulin Black, Vancouver, British Columbia
     
  Stock Exchange  
    TSX Venture Exchange (TSX)
Symbol: JPN
page 82

Signatures

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this registration statement on its behalf.

J-Pacific Gold Inc.
(Registrant)


_/s/ Nicholas T. Ferris
(Signature)
Nicholas T. Ferris
President

Date:

June 19, 2003

page 83

EX-10 5 braun.htm MANAGEMENT AGREEMENT - R BRAUN Braun management agreement

MANAGEMENT AGREEMENT

THIS AGREEMENT made as of the 1st day of April, 2001.

BETWEEN:

CLAIMSTAKER RESOURCES LTD.

(hereinafter called the "Company")

OF THE FIRST PART

AND:

RALPH W. BRAUN

(hereinafter called the "Manager")

OF THE SECOND PART

WHEREAS:

A. The Company is engaged in, inter alia, the business of natural resource exploration and development;

B. The Company has agreed to retain the Manager, and to appoint the Manager for the provision of management/administrative services and to act as its Chief Financial Officer, on terms and conditions hereinafter set forth;

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereto covenant and agree each with the other as follows:

ARTICLE I

COMPENSATION

1.01 The Manager will faithfully, honestly and diligently provide management/administrative services and serve the Company in the capacity of Chief Financial Officer in consideration of which the Company will pay to the Manager the sum of $50 per hour for a minimum of 10 hours per month.

ARTICLE II

DUTIES AND DEVOTION OF TIME

2.01 During the term of this Agreement, the Manager will, subject to the direction of the directors of the Company, be responsible for the following: the supervision, direction, control and operation of the Company's financial activities and will have the obligation, duties, authority and power to do all acts and things as are customarily done by persons holding the position of Chief Financial Officer or performing duties similar to those performed by the Chief Financial Officer in corporations of similar size to the Company, and all acts and things as are reasonably necessary for the efficient and proper operation and development of the Company, but, without limiting the generality of the foregoing, will include all matters related to:

(a) using the best efforts of the Manager to obtain financing for the Company as and when required;

(b) managing the general administration of the Company's finances and data systems including its daily accounting, computer network, software development, personnel management, and other matters of daily administration;

(c) carry out such other duties as the Board of Directors of the Company shall decide from time to time; and

(d) other matters of day-to-day administration which may reasonably be considered the responsibility of persons holding the position of Chief Financial Officer in corporations of similar size to the Company.

2.02 It is understood between the parties hereto that the Manager shall be required to exert such efforts and expend such time as required to perform the duties referred to in Clause 2.01 hereof, and the Manager may engage in other activities and businesses as the Manager sees fit provided the Manager performs the duties referred to in Clause 2.01 hereof as required.

2.03 In conducting his duties under this Agreement, the Manager will report to the Company's Chief Executive Officer and will act consistently with his directives and policies.

2.04 The Manager will, during the term of this Agreement, obtain the consent of the Board of Directors of the Company before becoming a Director or Senior Officer of any company other than the Company, such consent not to be unreasonably withheld.

ARTICLE III

TERM

3.01 The effective date of this Agreement is April 1, 2001 and will, from such date, continue unless terminated in accordance with the terms and provisions of this Agreement.

ARTICLE IV

REIMBURSEMENT FOR EXPENSES

4.01 The Manager will be reimbursed for all reasonable out-of-pocket expenses incurred by the Manager in or about the execution of the Manager's duties hereunder, including, without limiting the generality of the foregoing, all travel and promotional expenses payable or incurred by the Manager in connection with his duties under this Agreement. All payments or reimbursements will be made immediately upon submission by the Manager of vouchers, bills or receipts for all expenses; PROVIDED, HOWEVER, that all such expenses in excess of $2000.00 are approved by the Company in writing prior to the Manager incurring same.

ARTICLE V

CONFIDENTIAL INFORMATION

5.01 The parties hereto acknowledge and agree that the Manager by virtue of duties hereunder will have access to confidential and secret information and therefore the Manager agrees that during the term of this Agreement and on termination or expiry of same, for any reason whatsoever, the Manager will not divulge or utilize for his own benefit or to the detriment of the Company any of such secret or confidential information so obtained.

ARTICLE VI

INTERRUPTION OF COMPANY'S BUSINESS

6.01 If during the term of this Agreement the Company will discontinue or interrupt the operations of its business in Canada for a period of ninety (90) days, then this Agreement will automatically terminate without liability on the part of either of the parties hereto.

ARTICLE VII

TERMINATION OF AGREEMENT

7.01 Notwithstanding any other provision herein, it is understood and agreed by and between the parties hereto that the Company or the Manager may terminate this Agreement by giving one month's written notice to the other part. In the event the Compay does not provide the required one month's notice, the Company shall forthwith pay the Manager a sum equal to one month's minimum amount due to the Manager as set out in Clause 1.01.

ARTICLE VIII

ARBITRATION

8.01 Any controversy or claim arising out of or relating to this Agreement or any breach of this Agreement will be finally settled by arbitration in accordance with the provisions of the Commercial Arbitration Act (British Columbia).

ARTICLE IX

PERSONAL CONTRACT

9.01 This Agreement and all other rights, benefits and privileges herein confirmed will be personal, and accordingly may not be assigned by the Manager.

ARTICLE X

ADDRESS FOR SERVICE

10.01 The address for service for any notice, consent, acceptance or other document required or permitted hereunder will be: To the Company:

CLAIMSTAKER RESOURCES LTD.
Suite 1440 - 1166 Alberni Streeet
Vancouver, B. C. V6E 3Z3

To the Manager:

RALPH W. BRAUN
Suite 1440 - 1166 Alberni Streeet
Vancouver, B. C. V6E 3Z3

or such other address as either of such parties will from time to time hereunder by notice in writing to the other of them appoint. Any notice delivered will be deemed to have been received on the date of delivery and any notice mailed by first class prepaid mail addressed as aforesaid will be deemed to have been received three (3) days after the date of mailing thereof; provided, however that if there should be a postal strike, slow down or other labour dispute which may affect the delivery of such notice through the mail between the time of mailing and the actual receipt of the notice, then such notice will be effective only if actually delivered.

ARTICLE XI

ENTIRE AGREEMENT

11.01 This Agreement represents the entire agreement between the parties and supersedes any and all prior agreements and understandings, whether written or oral, between the parties. The Manager acknowledges that he was not induced to leave his former occupation or to enter into this Agreement by any representation, warranty, promise or other statement, except as contained herein.

ARTICLE XII

AMENDMENT

12.01 This Agreement may not be amended or otherwise modified except by an instrument in writing signed by both parties.

ARTICLE XIII

APPLICABLE LAW

13.01 This Agreement will be construed under and governed by the laws of British Columbia.

13.02 This Agreement is subject to the approval of the Canadian Venture Exchange and the Executive Director as required. The Manager will comply with all conditions and requirements which may be imposed by the Canadian Venture Exchange and the Executive Director.

IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of the day and year first above written. EX-10 6 ferris.htm MANAGEMENT AGREEMENT - N FERRIS Nick Ferris management contract

AMENDED AND RESTATED MANAGEMENT AGREEMENT

THIS AGREEMENT made as of the 1st day of November, 2000.

BETWEEN:

CLAIMSTAKER RESOURCES LTD.

(hereinafter called the "Company")

OF THE FIRST PART

AND:

NICHOLAS T. FERRIS

(hereinafter called the "Manager")

OF THE SECOND PART

WHEREAS:

A. The Company is engaged in, inter alia, the business of natural resource exploration and development;

B. The Manager has been providing management/administrative services and acting as President of the Company on the terms and conditions of an agreement dated as of April 2000 (the "Agreement");

C. The Company and the Manager wish to amend the compensation payable to the Manager under and to otherwise restate the Agreement.

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereto covenant and agree each with the other as follows:

ARTICLE I

SALARY

1.01 The Manager will faithfully, honestly and diligently provide management/administrative services and serve the Company in the capacity of President in consideration of which the Company will pay to the Manager the sum of $7,000 per month.

ARTICLE II

DUTIES AND DEVOTION OF TIME

2.01 It is acknowledged and agreed by the manager and the Company that the work of the Manager is and will be of such a nature that regular hours may be impossible, and there may be occasions in which the Manager will not be required to work a full eight (8) hours per day and/or a full five (5) days per week. It is also anticipated that there will be certain evenings, Saturdays, Sundays and holidays during which the Manager will be required to work. The work of the Manager is of a supervisory nature, and accordingly the manager agrees that the consideration herein set forth will be in full and complete satisfaction for the Manager's work and services, no matter how or when performed, and the Manager hereby releases the Company from any claims for overtime pay or compensation whatsoever which the Manager might have by reason of any existing or future legislation or otherwise.

2.02 During the term of this Agreement, the Manager will, subject to the direction of the directors of the Company, be responsible for the following: the supervision, direction, control and operation of the Company and will have the obligation, duties, authority and power to do all acts and things as are customarily done by persons holding the position of President or performing duties similar to those performed by the President in corporations of similar size to the Company, and all acts and things as are reasonably necessary for the efficient and proper operation and development of the Company, but, without limiting the generality of the foregoing, will include all matters related to:

(a) providing the Company with opportunities to participate in the exploration and development of resource properties;

(b) using the best efforts of the Manager to obtain financing for the Company as and when required;

(c) managing the general administration of the Company including its internal corporate affairs, daily accounting, office and personnel management, and other matters of daily administration;

(d) carry out such other duties as the board of directors of the Company shall decide from time to time; and

(e) other matters of day-to-day administration which may reasonably be considered the responsibility of persons holding the position of President in corporations of similar size to the Company.

2.03 In conducting his duties under this Agreement, the Manager will report to the Company's Board of Directors and will act consistently with their directives and policies.

2.04 The Manager will, during the term of this Agreement, obtain the consent of the Board of Directors of the Company before becoming a Director or Senior Officer of any company other than the Company, such consent not to be unreasonably withheld.

ARTICLE III

TERM

3.01. The effective date of this Agreement is November 1, 2000, and will, from such date, continue unless terminated in accordance with the terms and provisions of this Agreement.

ARTICLE IV

REIMBURSEMENT FOR EXPENSES

4.01 The Manager will be reimbursed for all reasonable out-of-pocket expenses incurred by the Manager in or about the execution of the Manager's duties hereunder, including, without limiting the generality of the foregoing, all travel and promotional expenses payable or incurred by the Manager in connection with his duties under this Agreement. All payments or reimbursements will be made immediately upon submission by the Manager of vouchers, bills or receipts for all expenses; PROVIDED, HOWEVER, that all such expenses in excess of $2000.00 are approved by the Company in writing prior to the Manager incurring same.

ARTICLE V

INCAPACITY

5.01 In the event that the Manager will at any time during the term hereof by reason of illness or mental or physical disability or incapacity be prevented or incapable from performing the Manager's duties hereunder, then the Manager will be entitled to receive the remuneration provided for herein at the rate hereinbefore provided for the period during which such incapacity will continue but not exceeding six (6) successive months, and if such incapacity will continue for a longer period then this Agreement will, at the option of the Directors of the Company, forthwith terminate, and the Manager will not be entitled to any compensation from the Company in respect of such termination.

ARTICLE VI

CONFIDENTIAL INFORMATION

6.01 The parties hereto acknowledge and agree that the Manager by virtue of duties hereunder will have access to confidential and secret information and therefore the Manager agrees that during the term of this Agreement and on termination or expiry of same, for any reason whatsoever, the Manager will not divulge or utilize for his own benefit or to the detriment of the Company any of such secret or confidential information so obtained.

ARTICLE VII

INTERRUPTION OF COMPANY'S BUSINESS

7.01 If during the term of this Agreement the Company will discontinue or interrupt the operations of its business in Canada for a period of ninety (90) days, then this Agreement will automatically terminate without liability on the part of either of the parties hereto.

ARTICLE VIII

TERMINATION OF AGREEMENT

8.01 Notwithstanding any other provision herein, it is understood and agreed by and between the parties hereto that the Manager may terminate this Agreement by giving 30 days written notice of such intention to terminate, and the Company may terminate this Agreement in its entirety with or without cause and for any reason whatsoever by the payment to the Manager of four months' compensation as termination allowance, and the Manager does hereby agree that such termination allowance will be payment in full for any discharge by the Company, whether unlawful or unwarranted; provided that the Company will not be liable to pay any further monies, notwithstanding that such termination of employment may be without cause; and the expression "such further monies" will include, without restricting the generality of the foregoing, if applicable, holidays, holiday pay, Canada Pension Plan contributions and any and all other monies arising hereunder.

ARTICLE IX

VACATION

9.01 The Manager will be entitled to an annual holiday with pay of four weeks (consecutive or otherwise as he will see fit) which will be taken at a time, or times, to be arranged in advance with the Company so that it does not unduly affect the operations of the Company.

ARTICLE X

ARBITRATION

10.01 Any controversy or claim arising out of or relating to this Agreement or any breach of this Agreement will be finally settled by arbitration in accordance with the provisions of the Commercial Arbitration Act (British Columbia).

ARTICLE XI

PERSONAL CONTRACT

11.01 This Agreement and all other rights, benefits and privileges herein confirmed will be personal, and accordingly may not be assigned by the Manager.

ARTICLE XII

ADDRESS FOR SERVICE

12.01 The address for service for any notice, consent, acceptance or other document required or permitted hereunder will be:

To the Company:

CLAIMSTAKER RESOURCES LTD.
Suite 1440 - 1166 Alberni Streeet
Vancouver, B. C. V6E 3Z3

To the Manager:

NICHOLAS T. FERRIS
Suite 1440 - 1166 Alberni Streeet
Vancouver, B. C. V6E 3Z3

or such other address as either of such parties will from time to time hereunder by notice in writing to the other of them appoint. Any notice delivered will be deemed to have been received on the date of delivery and any notice mailed by first class prepaid mail addressed as aforesaid will be deemed to have been received three (3) days after the date of mailing thereof; provided, however that if there should be a postal strike, slow down or other labour dispute which may affect the delivery of such notice through the mail between the time of mailing and the actual receipt of the notice, then such notice will be effective only if actually delivered.

ARTICLE XIII

ENTIRE AGREEMENT

13.01 This Agreement represents the entire agreement between the parties and supersedes any and all prior agreements and understandings, whether written or oral, between the parties. The Manager acknowledges that he was not induced to leave his former occupation or to enter into this Agreement by any representation, warranty, promise or other statement, except as contained herein.

ARTICLE XIV

AMENDMENT 14.01 This Agreement may not be amended or otherwise modified except by an instrument in writing signed by both parties.

ARTICLE XV

APPLICABLE LAW

15.01 This Agreement will be construed under and governed by the laws of British Columbia.

15.02 This Agreement is subject to the approval of the Canadian Venture Exchange and the Executive Director as required. The Manager will comply with all conditions and requirements which may be imposed by the Canadian Venture Exchange and the Executive Director.

IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of the day and year first above written.

EX-10 7 shaddrick.htm MANAGEMENT AGREEMENT - D SHADDRICK Shaddrick CONSULTING SERVICES AGREEMENT

CONSULTING SERVICES AGREEMENT

THIS AGREEMENT made as of the 14th day of June, 2001.

BETWEEN:

DAVID R. SHADDRICK
P.O. Box 4940
Sparks, Nevada, USA 89432
(hereinafter called the "Consultant")

OF THE FIRST PART

AND:

CLAIMSTAKER RESOURCES LTD.
1440, 1166 Alberni Street
Vancouver, British Columbia V6E 3Z3
(hereinafter called the "Company")

OF THE SECOND PART

WHEREAS:

A. The Company is desirous of engaging the Consultant, and the Consultant is ready, willing and able, to carry out and provide geological consulting services (the "Work") on the terms and conditions, herein set forth.

NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the premises and of the sums herein provided to be paid by the Company to the Consultant, and of the mutual covenants and undertakings to be performed hereunder, the parties agree as follows:

ARTICLE I

AGREEMENT TO PROVIDE CONSULTING SERVICES

1.01 The Consultant will carry out the Work for the Company as described and at the rate set out in Schedule "A" hereto.

1.02 The Consultant will carry out the Work in consultation with, and reporting directly to, the President and/or the Chief Financial Officer of the Company and covenants to conduct the Work in a businesslike manner, in keeping with professional practices in the industry and in a safe and lawful manner.

ARTICLE II

REPORTING

2.01 The Consultant will, as directed in writing, provide the Company with regular progress reports, in such form as the Company may reasonably require. All reports and copies thereof are to be directed as follows:

Mr. Nicholas T. Ferris
President
Claimstaker Resources Ltd.
1440, 1166 Alberni Street
Vancouver, British Columbia V6E 3Z3

2.02 To the extent that it relates to the Company, the information contained in such reports will be the exclusive property of the Company.

ARTICLE III

WORKER'S COMPENSATION

3.01 In the event the Consultant employs in the Work any person who is required to be insured under Worker's Compensation legislation, or the Regulations of a Provincial or State employment commission or authority or equivalent, the Consultant shall, and covenants to, register with such authority and to pay all levies, premiums, and assessments required to maintain itself in good standing with such authority in respect of the Work to be performed under this Agreement.

ARTICLE IV

INDEMNIFICATION

4.01 In the event the Company shall use the advice or report(s) of the Consultant in any way as an inducement or representation to others to rely thereon without the prior written consent of the Consultant and such holding out or representation or inducement shall become the subject of any claim for any loss, demand, cost, damage, action, suit or proceeding whatsoever, the Company covenants to indemnify and save the Consultant harmless therefrom, it being understood that such indemnification shall survive termination of this Agreement for a period of two years.

ARTICLE V

ACCOUNTS

5.01 The Consultant shall within fifteen (15) days after the end of each month during which the Work is performed provide the Company with a statement of account for the work performed during such month, such statement to be reasonably detailed and supported by receipts and vouchers for out-of-pocket and other expenses incurred and materials supplied by the Consultant under this Agreement during the period to which such statement relates. At the conclusion of the Work, the Consultant shall furnish the Company with a final itemized statement of account. 5.02 The Company shall, within fifteen (15) days of receipt of each itemized statement of account furnished by the Consultant, pay the Consultant all fees, costs and charges on disbursements shown in such itemized statement of account.

ARTICLE VI

TERMINATION

6.01 Any of the parties may for any reason and in their sole discretion terminate this Agreement by giving thirty (30) days notice to the other to that effect. The Company shall be liable to pay the Consultant for all Work undertaken and expenses incurred by the Consultant to the effective date of termination.

ARTICLE VII

ASSIGNMENT

7.01 The Consultant shall not assign any of its rights or obligations under this Agreement without the prior written consent of the Company.

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

8.01 The terms and conditions of this Agreement may be altered only by written form of amendment duly executed by both parties hereto.

ARTICLE IX

NOTICE

9.01 Any notice required or permitted to be given hereunder by any party shall be deemed to have been given on the day such notice is delivered in writing to the addresses as set out in the front page of this Agreement or, if verbal, when communicated personally or by telephone to the party to whom it is directed and confirmed in writing delivered within three days; written notice shall be directed to the address of such party herein before set out or such other address of which written notice may be given from time to time; notice sent by registered mail will be deemed to have been delivered at the earlier of the time when the receipt thereof is signed by the addressee and seventy-two (72) hours after the posting thereof in any Post Office in Canada.

ARTICLE X

FORCE MAJEURE

10.01 If any party is prevented or delayed from performing any of the obligations on its part to be performed hereunder by reason of force majeure, including but not limited to Act of God, strike, threat of imminent strike, fire, flood, war, insurrection or riot, mob violence or requirement or regulation of government which cannot be overcome by reasonable and lawful means and the use of the facilities normally employed in performing such obligation, then and in any such event, and so often as the same shall occur, any such failure to perform shall not be deemed a breach of this Agreement and the performance of any such obligation shall be suspended during the period of disability, it being understood that if such situation persists more than 14 days, either party may thereupon terminate this Agreement. The parties agree to use all due diligence to remove such causes of disability as may occur from time to time.

ARTICLE XI

CONFIDENTIALITY OF INFORMATION

11.01 The Consultant shall keep confidential from all persons, other than the Company or its directors, officers or counsel or its authorized representatives or such persons as the Company may allow or except as compelled by law or regulation, all private and confidential information obtained in connection with their services as herein provided for and shall at all times make full disclosure of all such information to the Company or such persons as the Company may request, and shall not withhold from the Company or its representatives, or such other persons as the Company may request, any such information;

11.02 On the termination of this Agreement, any reports, advice, information or documentation which may have been rendered for, or delivered by the Consultant to the Company, shall remain with and be the exclusive property of the Company; and

11.03 any documentation supplied by the Company the Consultant during the term of this Agreement shall remain the property of the Company and, upon termination of this Agreement, all such documentation shall forthwith be returned to the Company.

ARTICLE XII

APPLICABLE LAW

12.01 This Agreement shall be governed by and any dispute arising hereunder shall be determined in accordance with the laws of the Province of British Columbia.

ARTICLE XIII DISPUTES

13.01 Any dispute between the parties concerning any matter or thing arising from this Agreement shall be referred to a mutually agreeable professional who is knowledgeable in the mining industry.

13.02 The decision of the professional referred to in Subsection 13.01 shall be final and binding upon the parties.

13.03 Failing agreement on appointment of a professional under Subsection 13.01, any disagreement or dispute shall be resolved by resort to law and shall be referred to, and the parties hereby expressly attorn to, the jurisdiction of the Courts of the Province of British Columbia.

ARTICLE XIV

OTHER AGREEMENTS

14.01 This Agreement constitutes the complete agreement between the Consultant and the Company and with respect to subject matter treated herein and shall not be varied in its terms by oral agreement, representation or otherwise except an instrument or instruments in writing dated subsequent to the date hereof and executed by the duly authorized representatives of the Consultant and the Company, and this Agreement supercedes all prior agreements, memoranda, correspondence, communication, negotiations or representations, whether oral or written, express or implied, between the parties with respect to the subject matter.

ARTICLE XV

ENUREMENT

15.01 This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. IN WITNESS WHEREOF the parties have hereunto to have effect, caused their common seal(s) to be affixed in the presence of their proper officers duly authorized in that regard the day and year first above written.

SCHEDULE "A"

to the Consulting Services Agreement (the "Agreement") dated the 14th of June, 2001.

1.0 Duties

1.1 The Consultant hereby agrees that he shall make himself available at such times and from time to time as the Company may require to render consultative services to the Company.

1.2 The duties of the Consultant shall include geological consulting services for the Company with respect to the ongoing management of the Company's mineral projects.

1.3 The Consultant agrees to fulfil their duties hereunder faithfully, diligently, and using his best efforts to facilitate the interests of the Company.

2.0 Term

2.1 The engagement of the Employee hereunder shall be for a term of one year (the "Term)" commencing on the 14th day of June, 2001 and terminating on the 14th day of June, 2003, subject to Article VI of the Agreement.

2.2 The Agreement may be extended in writing by the parties on such terms and conditions as can be agreed between the parties.

3.0 Compensation

3.1 The Company agrees to pay the Employee for his services the sum of US$50.00 per hour to a maximum of US$400 per day, plus pre-approved expenses as set out herein.

4.0 Expenses

4.1 The Company agrees to reimburse the Consultant for all pre-approved travel and other expenses actually and properly incurred by the Consultant at the request of the Company in connection with his duties hereunder.

4.2 The expenses covered hereby are to be incurred only on the prior written instructions of the President of the Company and will be reimbursed upon presentation to the Company of the statements and vouchers relating to these expenses.

EX-23 8 morganconsent.htm AUDITOR CONSENT LETTER Auditor's Consent Letter ("Auditor's Logo")

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the inclusion of our Auditors' Report, dated February 24, 2003, on the financial statements of J-Pacific Gold Inc. for the years ended December 31, 2002 and 2001 in the Company's Report on Form 20F. We also consent to application of such report to the financial information in the Report on Form 20F, when such financial information is read in conjunction with the financial statements referred to in our report.

Vancouver, Canada   "Morgan & Company"
June 19, 2003 Chartered Accountants

EX-23 9 srkconsentbd.htm ENGINEERS CONSENT LETTER BLACKDOME SRK Blackdome Consent Letter ("SRK Logo")

Steffen Robertson and Kirsten (Canada.) Inc.
850, 121 King Street West
Toronto, ON.
M5H 3T9
email: mmichaud@srk.com
URL: http://www.srk.com
Tel: 416.601.1445
Fax: 416.601.1450

June 9, 2003

US Securities and Exchange Commission
450 Fifth Street N.W.
Washington, DC
20549

Dear Sirs/Mesdames:

Re: J-Pacific Gold Corporation ("J-Pacific") - Initial 20F Filing - Blackdome Property, British Columbia

We refer to the Form 20F dated April 8, 2003 (the "20F") of J-Pacific. We hereby consent to:

(i) being referenced in the 20F for the preparation our report entitled "Geological Modeling and Preliminary Review of the Resource Estimate for the Blackdome Gold-Silver Property" (The Report) prepared for J-Pacific Gold Inc. by Steffen Robertson and Kristen (Canada) Inc., (November 2001); and
(ii) to the written disclosure of and the use of extracts from the Reports in the 20F.

We have read the 20F and do not have any reason to believe that there are any misrepresentations in the information derived from the Reports, or that the 20F contains any misrepresentation of the information contained in the Report.

Yours truly,

STEFFEN, ROBERTSON AND KIRSTEN CONSULTING (CANADA) INC.

Michael J. Michaud, P.Geo.
cc: Nick Ferris, President and CEO, J-Pacific Gold Corporation

EX-23 10 srkconsentzenda.htm ENGINEERS CONSENT LETTER ZENDA SRK Zenda Consent Letter ("SRK Logo")

Steffen Robertson and Kirsten (Canada.) Inc.
850, 121 King Street West
Toronto, ON.
M5H 3T9
email: mmichaud@srk.com
URL: http://www.srk.com
Tel: 416.601.1445
Fax: 416.601.1450

June 13, 2003

US Securities and Exchange Commission
450 Fifth Street N.W.
Washington, DC
20549

Dear Sirs/Mesdames:

Re: J-Pacific Gold Corporation ("J-Pacific") Initial 20F Filing, Zenda Project, California

We refer to the Form 20F dated April 8, 2003 (the "20F") of J-Pacific. We hereby consent to:

(i) being referenced in the 20F for the preparation our report entitled "Independent Review of the Zenda Project" (The Report) prepared for J-Pacific Gold Inc. by Steffen Robertson and Kristen (Canada) Inc., (June 2002); and
(ii) to the written disclosure of and the use of extracts from the Reports in the 20F.

In the opinion of SRK, the description of the Zenda Project resources conform to CIM, 2000 definitions, which are compliant with National Instrument 43-101 (Canada). We have read the 20F and do not have any reason to believe that there are any misrepresentations in the information derived from the Reports, or that the 20F contains any misrepresentation of the information contained in the Report.

Yours truly,

STEFFEN, ROBERTSON AND KIRSTEN CONSULTING (CANADA) INC.

Michael J. Michaud, P.Geo.
cc: Nick Ferris, President and CEO, J-Pacific Gold Corporation

EX-3 11 articlesinc.htm ARTICLES OF INCORPORATION Certificate and Articles of Incorporation J-PACIFIC GOLD INC.


CERTIFICATE OF INCORPORATION


CERTIFICATE OF NAME CHANGE


ARTICLES OF INCORPORATION

PROVINCE OF BRITISH COLUMBIA

COMPANY ACT

ARTICLES OF

CLAIMSTAKER RESOURCES LTD.

PART I

INTERPRETATION

1.1 In these Articles, unless there is something in the subject or
context inconsistent therewith:

"Board" and "the Directors" or "the directors" mean the Directors or sole Director of the Company for the time being.

"Company Act" means the Company Act of the Province of British Columbia as from time to time enacted and all amendments thereto and includes the regulations made pursuant thereto.

"seal" means the common seal of the Company.

"month" means calendar month.

"registered owner" or "registered holder" when used with respect to a share in the authorized capital of the Company means the person registered in the register of members in respect of such share.

Expressions referring to writing shall be construed as including references to printing, lithography, typewriting, photography and other modes of representing or reproducing words in a visible form.

Words importing the singular include the plural and vice versa; and words importing male persons include female persons; and words importing persons shall include corporations.

1.2 The meaning of any words or phrases defined in the Company Act shall, if not inconsistent with the subject or context, bear the same meaning in these Articles.

1.3 The Rules of Construction contained in the Interpretation Act shall apply, mutatis mutandis, to the interpretation of these Articles.

PART 2
SHARES AND SHARE CERTIFICATES

2.1 Every member is entitled, without charge, to one certificate representing the share or shares of each class held by him, provided that, in respect of a share or shares held jointly by several persons, the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint registered holders or to his duly authorized agent shall be sufficient delivery to all; and provided further that the Company shall not be bound to issue certificates representing redeemable shares, if such shares are to be redeemed within one month of the date on which they were allotted. Any share certificate may be sent through the mail by registered prepaid mail to the member entitled thereto, and neither the Company nor any transfer agent shall be liable for any loss occasioned to the member owing to any such share certificate so sent being lost in the mail or stolen.

2.2 If a share certificate

(i) is worn out or defaced, the Directors shall, upon production to them of the said certificate and upon such other terms, if any, as they may think fit, order the said certificate to be cancelled and shall issue a new certificate in lieu thereof;

(ii) is lost, stolen or destroyed, then, upon proof thereof to the satisfaction of the Directors and upon such indemnity, if any, as the Directors deem adequate being given, a new share certificate in lieu thereof shall be issued to the person entitled to such lost, stolen or destroyed certificate; or

(iii) represents more than one share and the registered owner thereof surrenders it to the Company with a written request that the Company issue in his name two or more certificates each representing a specified number of shares and in the aggregate representing the same number of shares as the certificate so surrendered, the Company shall cancel the certificate so surrendered and issue in lieu thereof certificates in accordance with such request.

Such sum as the Directors may from time to time prescribe shall be paid to the Company for each certificate to be issued under this Article.

2.3 Every share certificate shall be signed manually by at least one officer or Director of the Company or by or on behalf of a registrar, branch registrar, transfer agent or branch transfer agent of the Company and any additional signatures may be printed or otherwise mechanically reproduced and, in such event, a certificate so signed is as valid as if signed manually, notwithstanding that any person whose signature is so printed or mechanically reproduced shall have ceased to hold the office that he is stated on such certificate to hold at the date of the issue of a share certificate.

2.4 Except as required by law, statute or these Articles, no person shall be recognized by the Company as holding any share upon any trust and the
Company shall not be bound by or compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial 
interest in any share or in any fractional part of a share or (except only as by law, statute or these Articles provided or as ordered by a court of 
competent jurisdiction) any other rights in respect of any share except an absolute right to the entirety thereof in its registered holder.

PART 3
ISSUE OF SHARES

3.1 Subject to Article 3.2 and to any direction to the contrary contained in a resolution passed at a general meeting authorizing any increase or alteration of capital, the shares shall be under the control of the Directors who may, subject to the rights of the holders of the shares of  the Company for the time being issued, issue, allot, sell or otherwise dispose of, or grant options on, issue warrants for or otherwise deal in, shares authorized but not outstanding at such times, to such persons (including Directors), in such manner, upon such terms and conditions, and at such price or for such
consideration, as they, in their absolute discretion, may determine.

3.2 If the Company is, or becomes, a company which is not a reporting company and the Directors are required by the Company Act before 
allotting any shares to offer them pro rata to the members, the Directors shall, before allotting any shares, comply with the applicable provisions of the Company Act.

3.3 Subject to the provisions of the Company Act, the Company, or the Directors on behalf of the Company, may pay a commission or allow a 
discount to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the Company, or procuring or agreeing to procure subscriptions, whether absolutely or conditionally, for any such shares, provided that, if the Company is not a specially limited company.. the rate of the commission and discount shall not in the aggregate exceed twenty five per centum of the amount of the subscription price of such shares.

3.4 No share may be issued until it is fully paid and the Company shall have received the full consideration therefore in cash, property or past services actually performed for the Company. The value of property or services for the purpose of this Article shall be the value determined by the 
Directors by resolution to be, in all circumstances of the transaction, the fair market value thereof.

PART 4
SHARE REGISTERS

4.1 The Company shall keep or cause to be kept within British Columbia, a register of members, a register of transfers and a register of allotments,
all as required by the Company Act, and may combine one or more of such registers. If the Company's capital shall consist of more than one class 
of shares, a separate register of members, register of transfers and register of allotments may be kept in respect of each class of shares. The Directors, on behalf of the Company, may appoint a trust company to keep the register of members, register of transfers and register of allotments or, if there is more than one class of shares, the Directors may appoint a trust company, which need not be the saw trust company, to keep the register of members, the register of transfers and the register of allotments for each class of shares. The Directors, on behalf of the Company, may also appoint one or more trust companies, including the trust company which keeps the said registers of its shares or of a class thereof, as transfer agent for its shares or such class thereof, as the case may be, and the same or another trust company or companies as registrar for its shares or such class thereof, as the case may be. The Directors may terminate the appointment of any such trust company at any time and may appoint another trust company in its place.

4.2 Unless prohibited by the Company Act, the Company may keep or cause to be kept one or more branch registers of members at such place or 
places, either within or outside British Columbia, as the Directors may from time to time determine.

4.3 The Company shall not at any time close its register of members.

PART 5
TRANSFER AND TRANSMISSION OF SHARES

5.1 Subject to the provisions of the Memorandum and of these Articles that may be applicable, any member may transfer any of his shares by instrument in writing executed by or on behalf of such member and delivered to the Company or its transfer agent. The instrument of transfer of any share of the Company shall be in the form, if any, on the back of the Company's share certificates or in such other form as the Directors may from time to time approve. Except to the extent that the Company Act may otherwise provide, the transferor shall be deemed to remain the holder of the shares until the name of the transferee is entered in the register of members or a branch register of members in respect thereof.

5.2 The signature of the registered owner of any shares, or of  his duly authorized attorney, upon an authorized instrument of transfer shall 
constitute a complete and sufficient authority to the Company, its Directors, officers and agents to register, in the name of the transferee as named in the instrument of transfer, the number of shares specified therein or, if no number is specified, all the shares of the registered owner represented by share certificates deposited with the instrument of transfer. If no transferee is named in the instrument of transfer, the instrument of transfer shall constitute a complete and sufficient authority to the Company, its Directors, officers and agents to register, in the name of the person in whose behalf any certificate for the shares to be transferred is deposited with the Company for the purpose of having the transfer registered, the number of shares specified in the instrument of transfer or, if no number is specified, all the shares represented by all share certificates deposited with the instrument of transfer.

5.3 Neither the Company nor any Director, officer or agent thereof shall be bound to inquire into the title of the person named in the form of transfer as transferee or, if no person is named therein as transferee, of the person on whose behalf the certificate is deposited with the Company for the purpose of having the transfer registered or be liable to any claim by such registered owner or by any intermediate owner or holder of the certificate or of any of the shares represented thereby or any interest therein for registering the transfer, and the transfer, when registered, shall confer upon the person in whose name the shares have been registered a valid title to such shares.

5.4 Every instrument of transfer shall be executed by the transferor and left at the registered office of the Company or at the office of its transfer agent or registrar for registration, together with the share certificate for the shares to be transferred and such other evidence, if any, as the Directors or the transfer agent or registrar may require to prove the title of the transferor or his right to transfer the shares and the right to the transferee to have the transfer registered. All instruments of transfer where the transfer is registered shall be retained by the Company or its transfer agent or registrar and any instrument of transfer where the transfer is not registered shall be returned to the person depositing the same, together with the share certificate which accompanied the same when tendered for registration.

5.5 There shall be paid to the Company in respect of the registration of any transfer such sum, if any, as the Directors may from time to time determine.

5.6 In the case of the death of a member, the survivor or survivors, where the deceased was a joint registered holder, and the legal personal representative of the deceased, where he was the sole holder, shall be the only persons recognized by the Company as having any title to his interest in the shares. Before recognizing any legal personal representative, the Directors may require him to obtain a grant of probate or letters of administration in British Columbia.

5.7 Upon the death or bankruptcy of a member, his personal representative or trustee in bankruptcy, although not a member, shall have the same
rights, privileges and obligations that attach to the shares formerly held by the deceased or bankrupt member if the documents required by the Company Act shall have been deposited at the Company's registered office.

5.8 Any person becoming entitled to a share in consequence of the death or bankruptcy of a member shall, upon such documents and evidence being
produced to the Company as the Company Act requires, or who becomes entitled to a share as a result of an order of a Court of competent jurisdiction or a statute, has the right either to be registered as a member in his representative capacity in respect of such share, or, if he is a personal 
representative, instead of being registered himself, to make such transfer of the share as the deceased or bankrupt person could have made; but the Directors shall, as regards a transfer by a personal representative or trustee in bankruptcy, have the same right, if any, to decline or suspend registration of a transferee as they would have in the case of a transfer of a share by the deceased or bankrupt person before the death or bankruptcy.

PART 6
ALTERATION OF CAPITAL

6.1 The Company may, by ordinary resolution filed with the Registrar, amend its Memorandum to increase the authorized capital of the Company 
by:

(i) creating shares with par value or shares without par value, or both;

(ii) increasing the number of shares with par value or shares without par value, or both; or

(iii) increasing the par value of a class of shares with par value. if no shares of that class are issued.

6.2 The Company may, by special resolution, alter its Memorandum to subdivide. consolidate, change from shares with par value to shares without par value, or from shares without par value to shares with par value, or change the designation of all or any of its shares but only to such extent, in such manner and with such consents of members holding a class of shares which is the subject of or affected by such alteration, as the Company Act provides.

6.3 The Company may alter its Memorandum or these Articles:

(i) by special resolution, to create, define and attach special rights or restrictions to any shares, and

(ii) by special resolution and by otherwise complying with any applicable provision of its Memorandum or these Articles, to vary or abrogate any special rights and restrictions attached to any shares

and in each case by filing a certified copy of such resolution with the Registrar but no right or special right attached to any issued shares shall be prejudiced or interfered with unless all members holding shares of each class whose right or special right is so prejudiced or interfered with consent thereto in writing, or unless a resolution consenting thereto is passed at a separate class meeting of the holders of the shares of each such class by a majority of three fourths, or such greater majority as may be specified by the special rights attached to the class of shares, of the issued shares of such class.

6.4 Notwithstanding such consent in writing or such resolution, no such alteration shall be valid as to any part of the issued shares of any class unless the holders of the rest of the issued shares of such class either all consent thereto in writing or consent thereto by a resolution passed by the votes of members holding three fourths of the rest of such shares.

6.5 If the Company is or becomes a reporting company, no resolution to create, vary or abrogate any special right of conversion attaching to 
any class of shares shall be submitted to any meeting of members unless, if so required by the Company Act, the Superintendent of Brokers for British Columbia shall have consented to the resolution.

6.6 Unless these Articles otherwise provide, the provisions of  these Articles relating to general meetings shall apply, with the necessary changes and so far as they are applicable, to a class meeting of members holding a particular class of shares but the quorum at a class meeting shall be one person holding or representing by proxy one third of the shares affected.

PART 7
PURCHASE AND REDEMPTION OF SHARES

7.1 Subject to the special rights and restrictions attached to any class or series of shares, the Company may, by a resolution of the Directors and in compliance with the Company Act, purchase any of its shares at the price and upon the terms specified in such resolution or redeem any class or 
series of its shares in accordance with the special rights and restrictions attaching thereto. No such purchase or redemption shall be made if the Company is insolvent at the time of the proposed purchase or redemption or if the proposed purchase or redemption would render the Company insolvent. Unless otherwise permitted under the Company Act, the Company shall make its offer to purchase pro rata to every member who holds shares of the class or kind, as the case may be, to be purchased.

7.2 If the Company proposes at its option to redeem some but not all of the shares of any class, the Directors may, subject to the special rights and
restrictions attached to such class of shares, decide the manner in which the shares to be redeemed shall be selected.

7.3 Subject to the provisions of the Company Act, any shares purchased or redeemed by the Company may be sold or issued by it, but, while such 
shares are held by the Company, it shall not exercise any vote in respect of these shares and no dividend or other distribution shall be paid or made 
thereon.

PART 8
BORROWING POWERS

8.1 The Directors may from time to time on behalf of the Company:

(i) borrow money in such manner and amount, on such security, from such sources and upon such terms and conditions as they think fit,

(ii) issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person, and

(iii) mortgage, pledge, charge, whether by way of specific or floating charge, or give other security on the undertaking, or on the whole or any part of the property and assets, of the Company (both present and future).

8.2 Any bonds, debentures or other debt obligations of the Company may be issued at a discount, premium or otherwise, and with any special 
privileges as to redemption, surrender, drawing, allotment of or conversion into or exchange for shares or other securities, attending and voting at general meetings of the Company, appointment of Directors or otherwise and may, by their terms, be assignable free from any equities between the Company and the person to whom they were issued or any subsequent holder thereof, all as the Directors may determine.

8.3 The Company shall keep or cause to be kept within the Province of British Columbia in accordance with the Company Act a register of its 
debentures and a register of debentureholders which registers may be combined and, subject to the provisions of the Company Act, may keep or cause to be kept one or more branch registers of its debentureholders at such place or places as the Directors may from time to time determine and the Directors may by resolution, regulation or otherwise make such provisions as they think fit respecting the keeping of such branch registers.

8.4 Every bond, debenture or other debt obligation of the Company shall be signed manually by at least one Director or officer of the Company or by or on behalf of a trustee, registrar, branch registrar, transfer agent or branch transfer agent for the bond, debenture or other debt obligation appointed by the Company or under any instrument under which the bond, debenture or other debt obligation is issued and any additional signatures may be printed or otherwise mechanically reproduced thereon and, in such event, a bond, debenture or other debt obligation so signed is as valid as if signed manually notwithstanding that any person whose signature is so printed or mechanically reproduced shall have ceased to hold the office that he is stated on such bond, debenture or other debt obligation to hold at the date of the issue thereof.

8.5 The Company shall keep or cause to be kept a register of its indebtedness to every Director or officer of the Company or an associate of any
of them in accordance with the provisions of the Company Act.

PART 9
GENERAL MEETINGS

9.1 Subject to any extensions of time permitted pursuant to the Company Act, the first annual general meeting of the Company shall be held 
within fifteen months from the date of incorporation and thereafter an annual general meeting shall be held once in every calendar year at such time (not being more than thirteen months after the holding of the last preceding annual general meeting) and place as may be determined by the Directors.

9.2 If the Company is, or becomes, a company which is not a reporting company and all the members entitled to attend and vote at an annual general
meeting consent in writing to all the business which is required or desired to be transacted at the meeting, the meeting need not be held.

9.3 All general meetings other than annual general meetings are herein referred to as and may be called extraordinary general meetings.

9.4 The Directors may, whenever they think fit, convene an extra ordinary general meeting. An extraordinary general meeting, if  requisitioned in accordance with the Company Act, shall be convened by the Directors or, if not convened by the Directors, may be convened by the requisitionists as provided in the Company Act.

9.5 If the Company is, or becomes, a reporting company, advance notice of any general meeting at which Directors are to be elected shall be 
published in the manner required by the Company Act.

9.6 A notice convening a general meeting specifying the place, the day and the hour of the meeting and, in the case of special business, the 
general nature of that business, shall be given as provided in the Company Act and in the manner hereinafter in these Articles mentioned or in such other manner, if any, as may be prescribed by ordinary resolution, whether previous notice thereof has been given or not, to such persons as are entitled by law or under these Articles to receive such notice from the Company. Accidental omission to give notice of a meeting to, or the non receipt of notice of a meeting by, any member shall not invalidate the proceedings at that meeting.

9.7 All the members of the Company entitled to attend and vote at a general meeting may, by unanimous consent in writing given before, during or after the meeting or, if they are present at the meeting, by a unanimous vote, waive or reduce the period of notice of such meeting and an entry in the minute book of such waiver or reduction shall be sufficient evidence of the due convening of the meeting.

9.8 Except as otherwise provided by the Company Act, where any special business at a general meeting includes considering, approving, ratifying, adopting or authorizing any document or the execution thereof or the giving of effect thereto, the notice convening the meeting shall, with respect to such document, be sufficient if it states that a copy of the document or proposed document is or will be available for inspection by members at the 
registered office or records office of the Company or at some other place in British Columbia designated in the notice during usual business hours up to the date of such general meeting.

PART 10
PROCEEDINGS AT GENERAL MEETINGS

10.1 All business shall be deemed special business which is transacted at

(i) an extraordinary general meeting other than the conduct of and voting at such meeting; and

(ii) an annual general meeting, with the exception of the conduct of, and voting at, such meeting, the consideration of the financial statement and of the respective reports of the Directors and Auditor, fixing or changing the number of Directors, the election of Directors, the appointment of the Auditor, the fixing of the remuneration of the Auditor and such other business as by these Articles or the Company Act may be transacted at a general meeting without prior notice thereof being given to the members or any business which is brought under consideration by the report of the Directors.

10.2 No business, other than election of the chairman or the adjournment of the meeting, shall be transacted at any general meeting unless a quorum of members, entitled to attend and vote, is present at the commencement of the meeting, but the quorum need not be present throughout the meeting.

10.3 Save as herein otherwise provided, a quorum shall be two members or proxyholders present. If there is only one member, the quorum is one 
person present and being, or representing by proxy, such member. The Directors, the Secretary or, in his absence, an assistant Secretary, and the solicitor of the Company shall be entitled to attend at any general meeting but no such person shall be counted in the quorum or be entitled to vote at any general meeting unless he is a member or proxyholder entitled to vote thereat.

10.4 If, within half an hour from the time appointed for a general meeting a quorum is not present, the meeting, if convened upon the requisition of members, shall be dissolved. In any other case, it shall stand adjourned to the same day in the next week, at the same time and place, and, if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the person or persons present and being, or representing by proxy, a member or members entitled to attend and vote at the meeting shall be a quorum.

10.5 The Chairman of the Board, if any, or in his absence the President of the Company shall be entitled to preside as Chairman at every general meeting of the Company.

10.6 If at any general meeting neither the Chairman of the Board nor the President is present within fifteen minutes after the time appointed for holding the meeting or is willing to serve as Chairman, the members present shall choose a Chairman.

10.7 The Chairman may and shall, if so directed by the meeting, adjourn the meeting from time to time and from place to place, but no business 
shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting is adjourned for thirty days or more, notice, but not "advance notice", of the adjourned meeting shall be given as in the case of an original meeting. Save as aforesaid, it shall not be necessary to give any notice of an adjourned meeting or of the business to be transacted at an adjourned meeting.

10.8 No motion proposed at a general meeting need be seconded and the Chairman may propose or second a motion.

10.9 Subject to the provisions of the Company Act, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands) a poll is directed by the Chairman or demanded by at least one 
member entitled to vote who is present in person or by proxy. The Chairman shall declare to the meeting the decision on every question in accordance with the result of the show of hands or the poll, and such decision shall be entered in the minute book of the Company. A declaration by the Chairman that a resolution has been carried, or carried unanimously, or by a particular majority, or lost or not carried by a particular majority and an entry to that effect in the minute book of the Company shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against that resolution.

10.10 In the case of an equality of votes, whether on a show of hands or on a poll, the Chairman of the meeting at which the show of hands takes 
place or at which the poll is demanded shall not be entitled to a second or casting vote.

10.11 No poll may be demanded on the election of a Chairman. A poll demanded on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken as soon as, in the opinion of the Chairman, is reasonably convenient, but in no event later than seven days after the meeting and at such time and place and in such manner as the Chairman of the meeting directs. The result of the poll shall be deemed to be the resolution of and passed at the meeting at which the poll was demanded.

Any business other than that upon which the poll has been demanded may be proceeded with pending the taking of the poll. A demand for a poll may be withdrawn. In any dispute as to the admission or rejection of a vote, the decision of the Chairman made in good faith shall be final and conclusive.

10.12 Every ballot cast upon a poll and every proxy appointing a proxy holder who casts a ballot upon a poll shall be retained by the Secretary for
such period and be subject to such inspection as the Company Act may provide.

10.13 On a poll, a person entitled to cast more than one vote need not, if he votes, use all his votes or cast all the votes he uses in the same way.

10.14 Unless the Company Act, the Memorandum or these Articles otherwise provide, any action to be taken by a resolution of the members may be taken by an ordinary resolution.

PART 11
VOTES OF MEMBERS

11.1 Subject to any special voting rights or restrictions attached to any class of shares and the restrictions on joint registered holders of shares, on a show of hands every member who is present in person and entitled to vote thereat shall have one vote and on a poll every member shall have one
vote for each share of which he is the registered holder and may exercise such vote either in person or by proxyholder.

11.2 Any person who is not registered as a member but is entitled to vote at any general meeting in respect of a share may vote the share in the same manner as if he were a member; but, unless the Directors have previously admitted his right to vote at that meeting in respect of the share, he shall satisfy the Directors of his right to vote the share before the time for holding the meeting or adjourned meeting, as the case may be, at which he proposes to vote.

11.3 Any corporation not being a subsidiary which is a member of the Company may by resolution of its directors or other governing body 
authorize such person as it thinks fit to act as its representative at any general meeting or class meeting. The person so authorized shall be entitled to
exercise in respect of and at such meeting the same powers on behalf of  the corporation which he represents as that corporation could exercise if 
it were an individual member of the Company personally present including, without limitation, the right, unless restricted by such resolution, to appoint 
a proxyholder to represent such corporation, and shall be counted for the purpose of forming a quorum if present at the meeting. Evidence of the 
appointment of any such representative may be sent to the Company by written instrument, telegram, telex or any method of transmitting legibly recorded messages. Notwithstanding the foregoing, a corporation which is a member may appoint a proxyholder.

11.4 In the case of joint registered holders of a share, the vote of the senior who exercises a vote, whether in person or by proxyholder, shall be
accepted to the exclusion of the votes of the other joint registered holders; and for this purpose seniority shall be determined by the order in which the names stand in the register of members. Several legal personal representatives of a deceased member whose shares are registered in his sole name shall for the purpose of this Article be deemed joint registered holders.

11.5 A member of unsound mind entitled to attend and vote, in respect of whom an order has been made by any court having jurisdiction, may vote, 
whether on a show of hands or on a poll, by his committee, curator bonis or other person in the nature of a committee or curator bonis appointed by that court, and  any such committee, curator bonis or other person may appoint a proxyholder.

11.6 A member holding more than one share in respect of which he is entitled to vote shall be entitled to appoint one or more (but not more than five) proxyholders to attend, act and vote for him on the same occasion. If such a member should appoint more than one proxyholder for the same 
occasion, he shall specify the number of shares each proxyholder shall be entitled to vote. A member may also appoint one or more alternate proxyholders to act in the place and stead of an absent proxyholder.

11.7 A form of proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a
corporation, either under the seal of the corporation or under the hand of a duly authorized officer or attorney. A proxyholder need not be a member 
of the Company if:

(i) the Company is, at the time, a reporting company, or

(ii) the member appointing the proxyholder is a corporation, or

(iii) the Company shall have, at the time, only one member, or

(iv) the persons present in person or by proxy and entitled to vote at the meeting by resolution permit the proxyholder to attend and vote; for the purpose of such resolution, the proxyholder shall be counted in the quorum but shall not be entitled to vote and in all other cases a proxyholder must be a member.

11.8 A proxy and any power of attorney or other authority under which it is signed or a notarially certified copy of the power or authority shall be deposited at the place specified for that purpose in the notice of meeting or, in the documents mailed to the members with the notice of meeting or, if no place is so specified, at the registered office of the Company before the time for holding the meeting at which the person named in the proxy proposes to vote or such earlier time as the Directors may determine. In default, the proxy will not be treated as valid.

11.9 Unless the Company Act or any other statute or law which is applicable to the Company or to any class of its shares requires any other form of proxy, a proxy, whether for a specified meeting or otherwise, shall be in the form following, but may also be in any other form that the Directors or the Chairman of the meeting shall approve:

"The undersigned member of (hereinafter called the "Company") hereby appoints , or failing him, or failing either of them, as the proxyholder for and on behalf of the undersigned to attend, act and vote for and on behalf of the undersigned at the general meeting of the members of the Company to be held on and at any adjournments thereof, to the same extent and with the same powers as if the undersigned were present at the said meeting, or any adjournment thereof, and the persons named are specifically directed to vote as indicated below:

Dated:

"Signature of Member"

11.10 A vote given in accordance with the terms of a proxy is valid, notwithstanding the previous death or incapacity of the member giving the proxy
or the revocation of the proxy or of the authority under which the form of proxy was executed or the transfer of the share or shares in respect of 
which the proxy is given, provided that no notification in writing of such death, incapacity, revocation or transfer shall have been received at the 
registered office of the Company or by the Chairman of the meeting or adjourned meeting for which the proxy was given before the vote is taken.

11.11 Every proxy may be revoked by an instrument in writing

(i) executed by the member giving the same or by his attorney authorized in writing or, where the member is a corporation, by a duly authorized officer or attorney of the corporation; and

(ii) delivered either at the registered office of the Company at any time up to and including the last business day preceding the day of the meeting, or any adjournment thereof at which the proxy is to be used, or to the Chairman of the meeting on the day of the meeting or any adjournment thereof before any vote in respect of which the proxy is to be used shall have been taken or in any other manner provided by law.

PART 12
DIRECTORS

12.1 The subscribers to the Memorandum of the Company are the first Directors. The Directors to succeed the first Directors may be appointed in writing by a majority of the subscribers to the Memorandum or at a meeting of the subscribers, or if not so appointed, they shall be elected by the 
members entitled to vote on the election of Directors and the number of Directors shall be the same as the number of Directors so appointed or elected. The number of Directors, excluding additional Directors, may be fixed or changed from time to time by ordinary resolution, whether previous notice thereof has been given or not, but notwithstanding anything contained in these Articles, the number of Directors shall never be less than one or, if the Company is or becomes a reporting company, less than three. 

12.2 The remuneration of the Directors as such may from time to time be determined by the Directors or, if the Directors shall so decide, by 
the members. Such remuneration may be in addition to any salary or other remuneration paid to any officer or employee of the Company as such who is also a Director. The Directors shall be repaid such reasonable travelling, hotel and other expenses as they incur in and about the business of the Company and, if any Director shall perform any professional or other services for the Company that in the opinion of the Directors are outside the ordinary duties of a Director or shall otherwise be specially occupied in or about the Company's business, he may be paid a remuneration to be fixed by the Board or, at the option of such Director, by the Company in general meeting and such remuneration may be either in addition to, or in substitution for, any other remuneration that he may be entitled to receive. The Directors, on behalf of the Company, unless otherwise determined by ordinary resolution, may pay a gratuity or pension or allowance on retirement to any Director who has held any salaried office or place of profit with the Company or to his spouse or dependents and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

12.3 A Director shall not be required to hold a share in the capital of the Company as qualification for his office but shall be qualified as required by the Company Act to become or act as a Director.

12.3 A Director shall not be required to hold a share in the capital of the Company as qualification for his office but shall be qualified as required by the Company Act to become or act as a Director.

PART 13
ELECTION AND REMOVAL OF DIRECTORS

13.1 At each annual general meeting of the Company all the Directors shall retire and the members entitled to vote thereat shall elect a Board of Directors. If the Company is, or becomes, a company that is not a reporting company and the business to be transacted at any annual general meeting is consented to in writing by all the members who are entitled to attend and vote thereat, such annual general meeting shall be deemed for the purpose of this Part to have been held on such written consent becoming effective.

13.2 A retiring Director shall be eligible for re election.

13.3 Where the Company fails to hold an annual general meeting in accordance with the Company Act, the Directors then in office shall be deemed to have been elected or appointed as Directors on the last day on which the annual general meeting could have been held pursuant to these Articles and they may hold office until other Directors are appointed or elected or until the day on which the next annual general meeting is held. 

13.4 If at any general meeting at which there should be an election of Directors, the places of any of the retiring Directors are not filled by such election, such of the retiring Directors who are not re elected as Directors may be requested by the newly elected Directors, and they shall, if willing to do so, continue in office to complete the number of Directors for the time being fixed pursuant to these Articles until further new Directors are  elected at a general meeting convened for the purpose. If any such election or continuance of Directors does not result in the election or continuance  of the number of Directors for the time being fixed pursuant to these Articles, such number shall be fixed at the number of Directors actually elected or continued in office or at such number as fixed by resolution at a general meeting.

13.5 Any casual vacancy occurring in the Board of Directors may be filled by resolution of the remaining Directors or Director.

13.6 Between successive annual general meetings, the Directors shall have power to appoint one or more additional Directors but not more than one third of the number of Directors fixed pursuant to these Articles and in effect at the last general meeting at which Directors were elected. Any Director so appointed shall hold office only until the next following annual general meeting of the Company but shall be eligible for election at such meeting and, so long as he is an additional Director, the number of Directors shall be increased accordingly.

13.7 Any Director may, by instrument in writing delivered to the Company, appoint any person to be his alternate to act in his place at meetings of the Directors at which he is not present unless the Directors shall have reasonably disapproved the appointment of such person as an alternate Director and shall have given notice to that effect to the Director appointing the alternate Director within a reasonable time after delivery of such instrument to the Company. Every such alternate shall be entitled to notice of meetings of the Directors and to attend and vote as a Director at a meeting at which the person appointing him is not personally present, and, if he is a Director, to have a separate vote on behalf of the Director he is representing in addition to his own vote. A Director may at any time by instrument, telegram, telex or any method of transmitting legibly recorded messages delivered to the Company revoke the appointment of an alternate appointed by him. The remuneration payable to such an alternate shall be payable out of the remuneration of the Director appointing him.

13.8 The office of Director shall be vacated if the Director:

(i) resigns his office by notice in writing delivered to the registered office of the Company; or

(ii) is convicted of an indictable offence and the other Directors shall have resolved to remove him; or

(iii) ceases to be qualified to act as a Director pursuant to the Company Act.

13.9 The Company may, by special resolution, remove any Director before the expiration of his period of office and may, by an ordinary resolution,
appoint another person in his stead.

PART 14
POWERS AND DUTIES OF DIRECTORS

14.1 The Directors shall manage, or supervise the management of, the affairs and business of the Company and shall have the authority to exercise all such powers of the Company as are not, by the Company Act or by the Memorandum or these Articles, required to be exercised by the Company in general meeting.

14.2 The Directors may from time to time by power of attorney or other instrument under the seal, appoint any person to be the attorney of the Company for such purposes. and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles and excepting the powers of the Directors relating to the constitution of the Board and of any of its committees and the appointment or removal of officers and the power to declare dividends) and for such period, which such remuneration and subject to such conditions as the Directors may think fit, and any such appointment may be made in favour of any of the Directors or any of the members of the Company or in favour of any corporation, or of any of the members, directors, nominees or managers of any corporation, firm or joint venture and any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney as the Directors think fit. Any such attorney may be authorized by the Directors to subdelegate all or any of the powers, authorities and discretions for the time being vested in him.

PART 15
DISCLOSURE OF INTEREST OF DIRECTORS

15.1 A Director who is, in any way, directly or indirectly interested in an existing or proposed contract or transaction with the Company or who holds any office or possesses any property whereby, directly or indirectly, a duty or interest might be created to conflict with his duty or interest as a Director shall declare the nature and extent of his interest in such contract or transaction or of the conflict or potential conflict with his duty and interest as a Director, as the case may be, in accordance with the provisions of the Company Act.

15.2 A Director shall not vote in respect of any such contract or transaction with the Company in which he is interested and, if he shall do so, his vote shall not be counted, but he shall be counted in the quorum present at the meeting at which such vote is, taken. Subject to the provisions of the Company Act, the foregoing prohibitions shall not apply to

(i) any such contract or transaction relating to a loan to the Company, which a Director, or a specified corporation or a specified firm in which he has an interest, has guaranteed or joined in guaranteeing the repayment of the loan or any part of the loan;

(ii) any contract or transaction made or to be made with, or for the benefit of, an affiliated corporation of which a Director is a director;

(iii) determining the remuneration of the Directors;

(iv) purchasing and maintaining insurance to cover Directors against liability incurred by them as Directors; or

(v) the indemnification of any Director by the Company.

These exceptions may from time to time be suspended or amended to any extent approved by the Company in general meeting and permitted by the Company Act, either generally or in respect of any particular contract or transaction or for any particular period.

15.3 A Director may hold any office or place of profit with the Company (other than the office of auditor of the Company) in conjunction with his office of Director for such period and on such terms (as to remuneration or otherwise) as the Directors may determine and no Director or intended 
Director shall be disqualified by his office from contracting with the Company either with regard to his tenure of any such other office or place of profit or as vendor, purchaser or otherwise, and, subject to compliance with the provisions of the Company Act, no contract or transaction entered into by or on behalf of the Company in which a Director is in any way interested shall be liable to be voided by reason thereof.

15.4 Subject to compliance with the provisions of the Company Act, a Director or his firm may act in a professional capacity for the Company (except as auditor of the Company) and he or his firm shall be entitled to remuneration for professional services as if he were not a Director.

15.5 A Director may be or become a director or other officer or employee of, or otherwise interested in, any corporation or entity in which the Company may be interested as a shareholder or otherwise, and, subject to compliance with the provisions of the Company Act, such Director shall not be accountable to the Company for any remuneration or other benefits received by him as director, officer or employee of, or from his interest in, such other corporation or firm, unless the Company in general meeting otherwise directs.

PART 16
PROCEEDINGS OF DIRECTORS

16.1 The Chairman of the Board, if any, or, in his absence, the President shall preside as Chairman at every meeting of the Directors. If there is no Chairman of the Board or neither the Chairman of the Board nor the President is present within 15 minutes of the time appointed for holding the meeting or is willing to act as Chairman or, if the Chairman of the Board, if any, and the President have advised the Secretary that they will not be 
present at the meeting, the Directors present shall choose one of their number to be Chairman of the meeting.

16.2 The Directors may meet together for the dispatch of  business, adjourn and otherwise regulate their meetings, as they think fit. Questions arising at any meeting shall be decided by a majority of votes. In case of an equality of votes, the Chairman shall have a second or casting vote. Meetings
of the Board held at regular intervals may be held at such place, at such time and upon such notice, if any, as the Board may by resolution from time to time determine.

16.3 A meeting of the Board or of any committee of the Directors may be held by means of conference telephones or other communications facilities
whereby all Directors participating in the meeting can hear each other provided that all such Directors agree to such participation. A Director participating in a meeting in accordance with this Article shall be deemed to be present at the meeting and to have so agreed and shall be counted in the quorum therefore and be entitled to speak and vote thereat.

16.4 A Director may, and the Secretary or an Assistant Secretary upon request of a Director shall, call a meeting of the Board at any time. Reasonable notice of such meeting specifying the place, day and hour of such meeting shall be given by mail, postage prepaid, addressed to each of 
the Directors and alternate Directors at his address as it appears on the books of the Company or by leaving it at his usual business or residential address or by telephone, telegram, telex or any method of transmitting legibly recorded messages. It shall not be necessary to give notice of a meeting of Directors to any Director or alternate Director if such meeting is to be held immediately following a general meeting at which such Director shall have been elected or is the meeting of Directors at which such Director is appointed.

16.5 Any Director of the Company may file with the Secretary a document executed by him waiving notice of any past, present or future meeting or
meetings of the Directors being, or required to have been, sent to him and may at any time withdraw such waiver with respect to meetings held thereafter. After filing such waiver with respect to future meetings and until such waiver is withdrawn no notice need be given to such Director and, unless the Director otherwise requires in writing to the Secretary, to his alternate Director of any meeting of Directors and all meetings of the Directors so held shall be deemed not to be improperly called or constituted by reason of notice not having been given to such Director or alternate Director.

16.6 The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors and, if not so fixed, shall be a majority of the Directors or, if the number of Directors is fixed at one, shall be one Director.

16.7 The continuing Directors may act notwithstanding any vacancy in their body, but, if and so long as their number is reduced below the number
fixed pursuant to these Articles as the necessary quorum of Directors, the continuing Directors may act for the purpose of increasing the number of
Directors to that number or of summoning a general meeting of the Company, but for no other purpose.

16.8 Subject to the provisions of the Company Act, all acts done by any meeting of the Directors or of a committee of Directors, or by any person
acting as a Director, shall, notwithstanding that it be afterwards discovered that there was some defect in the qualification, election or appointment of any such Directors or of the members of such committee or person acting as aforesaid, or that they or any of them were disqualified, be as valid as if
every such person had been duly elected or appointed and was qualified to be a Director.

16.9 A resolution consented to in writing, whether by document, telegram, telex or any method of transmitting legibly recorded messages or other means, by all of the Directors shall be as valid and effectual as if it had been passed at a meeting of the Directors duly called and held. Such resolution may be in two or more counterparts which together shall be deemed to constitute one resolution in writing. Such resolution shall be filed with the minutes of the proceedings of the Directors and shall be effective on the date stated thereon or on the latest date stated on any counterpart.

PART 17
EXECUTIVE AND OTHER COMMITTEES

17.1 The Directors may by resolution appoint one or more committees consisting of such member or members of their body as they think fit and may
delegate to any such committee between meetings of the Board such powers of the Board (except the power to fill vacancies in the Board and the power to change the membership of or fill vacancies in any committee of the Board and the power to appoint or remove officers appointed by the Board) subject to such conditions as may be prescribed in such resolution, and all committees so appointed shall keep regular minutes of their transactions and shall cause them to be recorded in books kept for that purpose, and shall report the same to the Board of Directors at such times as the Board of Directors may from time to time require. The Directors shall also have power at any time to revoke or override any authority given to or acts to be done by any such committees except as to acts done before such revocation or overriding and to terminate the appointment or change the membership of a committee and to fill vacancies in it. Commit tees may make rules for the conduct of their business and may appoint such assistants as they may deem necessary. A majority of the members of a committee shall constitute a quorum thereof.

17.2 Any committee may meet and adjourn as it thinks proper. Questions arising at any meeting shall be determined by a majority of votes of the
members of the committee present and, in case of an equality of votes, the Chairman shall not have a second or casting vote. A resolution approved in writing by all the members of the Executive Committee or any other committee shall be as valid and effective as if it had been passed at a meeting of such committee duly called and constituted. Such resolution may be in two or more counterparts which together shall be deemed to constitute one resolution in writing. Such resolution shall be filed with the minutes of the proceedings of the committee and shall be effective on the date stated thereon or on the latest date stated in any counterpart.

PART 18
OFFICERS

18.1 The Directors shall from time to time appoint a President and a Secretary and such other officers, if any, as the Directors shall determine and the Directors may, at any time, terminate any such appointment. No officer shall be appointed unless he is qualified in accordance with the provisions of the Company Act.

18.2 One person may hold more than one of such offices, except that the offices of President and Secretary must be held by different persons unless the Company has only one member. Any person appointed as the Chairman of the Board, the President or the managing Director shall be a Director. The other officers need not be Directors. The remuneration of the officers of the Company as such and the terms and conditions of their tenure of office or employment shall from time to time be determined by the Directors; such remuneration may be by way of salary, fees, wages, commission or participation in profits or any other means or all of these modes and an officer may, in addition to such remuneration, be entitled to receive, after he ceases to hold such office or leaves the employment of the Company, a pension or gratuity. The Directors may decide what functions and duties each officer shall perform and may entrust to and confer upon him any of the powers exercisable by them upon such terms and conditions and with such restrictions as they think fit and may from time to time revoke, withdraw, alter or vary all or any of such functions, duties and powers. The Secretary shall, inter alia, perform the functions of the Secretary specified in the Company Act.

18.3 Every officer of the Company who holds any office or possesses any property whereby, whether directly or indirectly, duties or interests might be created in conflict with his duties or interests as an officer 'of the Company shall, in writing, disclose to the President the fact and the nature, character and extent of the conflict.

PART 19
INDEMNITY AND PROTECTION OF DIRECTORS, OFFICERS AND EMPLOYEES

19.1 Subject to the provisions of the Company Act, the Directors shall cause the Company to indemnify a Director or former Director of the Company and the Directors may cause the Company to indemnify a Director or former Director of a corporation of which the Company is or was a shareholder and the heirs and personal representatives of any such person against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him or them including an amount paid to settle an action or satisfy a judgment in a civil, criminal or administrative action or proceeding to which he is or they are made a party by reason of his being or having been a Director of the Company or a director of such corporation, including any action brought by the Company or any such corporation. Each Director of the Company on being elected or appointed shall be deemed to have contracted with the Company on the terms of the foregoing indemnity.

19.2 Subject to the provisions of the Company Act, the Directors may cause the Company to indemnify any officer, employee or agent of the 
Company or of a corporation of which the Company is or was a shareholder (notwithstanding that he is also a Director) and his heirs and personal representatives against all costs, charges and expenses whatsoever incurred by him or them and resulting from his acting as an officer, employee or agent of the Company or such corporation. In addition, the Company shall indemnify the Secretary or an Assistant Secretary of the Company (if he shall not be a full time employee of the Company and notwithstanding that he is also a Director) and his respective heirs and legal representatives against all costs, charges and expenses whatsoever incurred by him or them and arising out of the functions assigned to the Secretary by the Company Act or these Articles and each such Secretary and Assistant Secretary shall on being appointed be deemed to have contracted with
the Company on the terms of the foregoing indemnity.

19.3 The failure of a Director or officer of the Company to comply with the provisions of the Company Act or of the Memorandum or these Articles shall not invalidate any indemnity to which he is entitled under this Part.

19.4 The Directors may cause the Company to purchase and maintain insurance for the benefit of any person who is or was serving as a director,
officer, employee or agent of the Company or as a director, officer, employee or agent of any corporation of which the Company is or was a shareholder and his heirs or personal representatives against any liability incurred by him as such director, officer, employee or agent.

PART 20
DIVIDENDS AND RESERVE

20.1 The Directors may, from time to time, declare and authorize payment of such dividends, if any, as they may deem advisable and need not give
notice of such declaration to any member. No dividend shall be paid otherwise than out of funds and/or assets properly available for the payment of dividends and a declaration by the Directors as to the amount of such funds or assets available for dividends shall be conclusive. The Company may pay any such dividend, wholly or in part, by the distribution of specific assets and, in particular, by paid up shares, bonds, debentures or other securities of the Company or any other corporation or in any one or more such ways as may be authorized by the Company or the Directors and where any difficulty arises with regard to such a distribution the Directors may settle the same as they think expedient and, in particular, may fix the value for distribution of such specific assets or any part thereof and may determine that cash payments in substitution for all or any part of the specific assets to which any members are entitled shall be made to any members on the basis of other value so fixed in order to adjust the rights of all parties and may vest any such specific assets in trustees for the persons entitled to the dividend as may seem expedient to the Directors.

20.2 Any dividend declared on shares of any class by the Directors may be made payable on such date as is fixed by the Directors.

20.3 Subject to the rights of members, if any, holding shares with special rights as to dividends, all dividends on shares of any class shall be declared and paid according to the number of such shares held.

20.4 The Directors may, before declaring any dividend, set aside out of the funds properly available for the payment of dividends such sums as they
think proper as a reserve or reserves, which shall, at the discretion of the Directors, be applicable for meeting contingencies, or for equalizing dividends, or for any other purpose to which such funds of the Company may be properly applied and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments as the Directors may from time to time think fit. The Directors may also, without placing the same in reserve, carry forward such funds which they think prudent not to divide.

20.5 If several persons are registered as joint holders of any share, any one of them may give an effective receipt for any dividend, bonuses or
other moneys payable in respect of the share.

20.6 No dividend shall bear interest against the Company. Where the dividend to which a member is entitled includes a fraction of a cent, such
fraction shall be disregarded in making payment thereof and such payment shall be deemed to be payment in full.

20.7 Any dividend, bonuses or other moneys payable in cash in respect of shares may be paid by cheque or warrant sent through the post directed 
to the registered address of the holder or, in the case of joint holders, to the registered address of that one of the joint holders who is first named in the register, or to such person and to such address as the holder or joint holders may direct in writing. Every such cheque or warrant shall be made 
payable to the order of the person to whom it is sent. The mailing of such cheque or warrant shall, to the extent of the sum represented thereby (plus the amount of any tax required by law to be deducted), discharge all liability for the dividend, unless such cheque or warrant shall not be paid on presentation or the amount of tax so deducted shall not be paid to the appropriate taxing authority.

20.8 Notwithstanding anything contained in these Articles, the Directors may from time to time capitalize any undistributed surplus on hand of 
the Company and may from time to time issue as fully paid and non assessable any unissued shares, or any bonds, debentures or debt obligations of the Company as a dividend representing such undistributed surplus on hand or any part thereof'.

PART 21
DOCUMENTS. RECORDS AND REPORTS

21.1 The Company shall keep at its records office or at such other place as the Company Act may permit, the documents, copies, registers, 
minutes and records which the Company is required by the Company Act to keep at its records office or such other place, as the case may be.

21.2 The Company shall keep or cause to be kept proper books of account and accounting records in respect of all financial and other transactions of the Company in order to properly record the financial affairs and conditions of the Company and to comply with the Company Act.

21.3 Unless the Directors determine otherwise, or unless otherwise

determined by an ordinary resolution, no member of the Company shall be entitled to inspect the accounting records of the Company.

21.4 The Directors shall from time to time at the expense of the Company, cause to be prepared and laid before the Company in general 
meeting such financial statements and reports as are required by the Company Act.

21.5 Every member shall be entitled, without charge, to a copy of the latest annual financial statement of the Company and, if so required by 
the Company Act, a copy of each such annual financial statement and interim financial statement shall be mailed to each member.

PART 22

NOTICES

22.1 A notice, statement or report may be given or delivered by the Company to any member either by delivery to him personally or by sending it
by mail to him to his address as recorded in the register of members. Where a notice, statement or report is sent by mail, service or delivery of the 
notice, statement or report shall be deemed to be effected by properly addressing, prepaying and mailing the notice, statement or report and to have been given on the day, Saturdays, Sundays and holidays excepted, following the date of mailing. A certificate signed by the Secretary or other officer of the Company or of any other corporation acting in that behalf for the Company that the letter, envelope or wrapper containing the notice, statement or report was so addressed, prepaid and mailed shall be conclusive evidence thereof.

22.2 A notice, statement or report may be given or delivered by the Company to the joint holders of a share by giving the notice to the joint holder first named in the register of members in respect of the share.

22.3 A notice, statement or report may be given or delivered by the Company to the persons entitled to a share in consequence of the death, bankruptcy or incapacity of a member by sending it through the mail prepaid addressed to them by name or by the title of representatives of the 
deceased or incapacitated person or trustee of the bankrupt, or by any like description, at the address, if any, supplied to the Company for the purpose by the persons claiming to be so entitled, or (until such address has been so supplied) by giving the notice in a manner in which the same might have been given if the death, bankruptcy or incapacity had not occurred.

22.4 Notice of every general meeting or meeting of members holding a class of shares shall be given in a manner hereinbefore authorized to every
member holding at the time of the issue of the notice or the date fixed for determining the members entitled to such notice, whichever is the earlier, shares which confer the right to notice of and to attend and vote at any such meeting. No other person except the auditor of the Company and the Directors of the Company shall be entitled to receive notices of any such meeting.

PART 23
RECORD DATES

23.1 The Directors may fix in advance a date, which shall not be more than the maximum number of days permitted by the Company Act preceding 
the date of any meeting of members or any class thereof or of the payment of any dividend or of the proposed taking of any other proper action requiring the determination of members as the record date for the determination of the members entitled to notice of, or to attend and vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend or for any other proper purpose and, in such case, notwithstanding anything elsewhere contained in these Articles, only members of record on the date so fixed shall be deemed to be members for the purposes aforesaid.

23.2 Where no record date is so fixed for the determination of members as provided in the preceding Article, the date on which the notice is mailed or on which the resolution declaring the dividend is adopted, as the case may be, shall be the record date for such determination.

PART 24
SEAL

24.1 The Directors may provide a seal for the Company and, if they do so. shall provide for the safe custody of the seal which shall not be affixed to any instrument except in the presence of the following persons, namely:

(a) any two Directors, or

(if) one of the Chairman of the Board, the President, the managing Director and a Vice President together with one of the Secretary, the Treasurer, the Secretary Treasurer, an Assistant Secretary, an Assistant Treasurer and an Assistant Secretary Treasurer, or

(air) if the Company shall have only one member, the President or the Secretary, or

(iv) such person or persons as the Directors may from time to time by resolution appoint

and the said Directors, officers, person or persons in whose presence the seal is to be affixed to an instrument shall sign such instrument. For the purpose of certifying under seal true copies of any document or resolution, the seal may be affixed in the presence of any one of the foregoing persons.

24.2 To enable the seal of the Company to be affixed to any bonds, debentures, share certificates or other securities of the Company, whether in definitive or interim form, on which facsimiles of any of the signatures of the Directors or officers of the Company are, in accordance with the Company Act and/or these Articles, printed or otherwise mechanically reproduced, there may be delivered to the firm or company employed to engrave, lithograph or print such definitive or interim bonds, debentures, share certificates or other securities one or more unmounted dies reproducing the Company's seal and the Chairman of the Board, the President, the Managing Director or a Vice President and the Secretary, Treasurer, Secretary Treasurer, or Assistant  Secretary, an Assistant Treasurer or an Assistant Secretary Treasurer may by a document authorize such firm or company to cause the Company's seal to be affixed to such definite or interim bonds, debentures, share certificates or other securities by the use of such dies. Bonds, debentures, share certificates or other securities to which the Company's seal has been so affixed shall for all purposes be deemed to be under and to bear the Company's seal lawfully affixed thereto.

24.3 The Company may have for use in any other province, state, territory or country an official seal which shall have on its face the name of the province, state, territory or country where it is to be used and all of the powers conferred by the Company Act with respect thereto may be exercised by the Directors or by a duly authorized agent of the Company.

PART 25
PROHIBITIONS

So long as the Company is a company that is not a reporting company, the following prohibitions shall apply:

25.1 No shares or debt obligations issued by the Company shall be offered for sale to the public.

25.2 No shares shall be transferred without the previous consent of the Directors expressed by a resolution of the Board and the Directors shall not be required to give any reason for refusing to consent to any such proposed transfer.

EX-10 12 blue.htm PROPERTY AGREEMENT BLUE Blue letter agreement Thursday, May 23, 2002

Mr. Thomas James Illidge
Goldbridge, British Columbia
VOK 1P0

Dear Sir,

LETTER AGREEMENT

This agreement is by and between J-Pacific Gold Inc., a registered corporation in British Columbia (hereinafter referred to as JPN) and Mr. Thomas James Illidge of Goldbridge, British Columbia (hereinafter referred to as "Illidge").

1. Illidge represents that he is the sole owners of four (4) mineral claims known as the "Blue Claims" ("The Property") located in the Lillooet Mining District, British Columbia as described in Exhibit A attached to this document, that the claims have been properly maintained with the Province of British Columbia and are in good standing with no liens or obligations outstanding against them.

2. In return for $1.00 and other good and valuable consideration, Illidge grants to JPN an option to purchase all of its interest in The Property under the following terms and conditions:

A. Cash Payments - JPN shall make the following cash payments to Illidge:

1) $2,000 at signing.

B. Share Issuance - Subject to TSX Venture Exchange approval, JPN shall issue to Illidge, common shares of the Company, under the following schedule:

1) 20,000 shares on signing.
2) 30,000 shares at the first anniversary of the agreement.
3) 50,000 shares upon the exercise of the option.

C. Work Commitments - JPN agrees to complete the following schedule of exploration work commitments on The Property:

1) $50,000 by December 31, 2003,
2) $150,000 by December 31, 2004,
3) $150,000 by December 31, 2005.
4) $150,000 by December 31, 2006.

D. Production Royalty - Illidge shall retain a 3% Net Smelter Royalty ("NSR") royalty interest in The Property and:

1) Illidge grants to JPN an option to purchase up to two (2) percentage points of the NSR royalty for $1,000,000 per percentage point.

2) Federal and Provincial royalties, if any, shall be deducted as an expense prior to calculation of the retained NSR royalty.

3) Commencing at the first anniversary of this agreement, JPN shall pay Advanced Minimum Royalty (AMR) payments of $5,000 per year to Illidge, which shall be cumulatively deductible from any NSR production royalties due.

E. Exercise of Option to Purchase - Upon JPN having made the aggregate expenditures of $500,000, made the prescribed cash payments, issued the prescribed shares, made the prescribed AMR payments and completed a bankable-quality feasibility study prepared by an independent and registered professional engineer, the option will deemed to be exercised and JPN shall have acquired 100% rights and title to The Property subject to the NSR.

G. Claim Maintenance - All filings and fees to maintain The Property will be the responsibility of JPN, with copies to Illidge at least 30 days prior to due date or Illidge will have the option to make those filings and JPN will reimburse Illidge twice the amount of the actual fees paid by Illidge within 60 days or forfeit all rights to The Property.

H. Termination - JPN may terminate this agreement at any time by providing written notice to Illidge and paying all fees, if any, due during the ninety (90) days following the date of the written notice.

I. Data - Upon termination JPN shall provide Illidge all cores, cuttings, samples and all factual data it has generated.

J. Environmental Liability - JPN shall be responsible for all environmental damages caused by it and will indemnify Illidge for these environmental damages.

K. Successors and Assigns - All terms will be binding upon the assigns, heirs, and successors of each party.

L. Regulatory Approval This Letter Agreement is subject to the approval of the TSX Venture Exchange and the British Columbia Securities Commission.

M. Laws This Letter Agreement shall be governed by the laws of the Province of British Columbia.

N. Final Agreement - The parties to this agreement shall work diligently to conclude a formal Option to Purchase Agreement as soon as practicable.

IN WITNESS WHEREOF the parties hereto have executed these presents.

Exhibit A

In this Letter Agreement, the Blue Claims ("The Property"), collectively refers to the following mineral rights in the Lillooet Mining District, Caribou Assessment Area, Province of British Columbia:

1. All minerals precious and base save coal petroleum and natural gas lying in and under Tenure 393081 Lillooet District known as "Blue No. 1" mineral claim.

2. All minerals precious and base save coal petroleum and natural gas lying in and under Tenure 393082 Lillooet District known as "Blue No. 2" mineral claim.

3. All minerals precious and base save coal petroleum and natural gas lying in and under Tenure 393083 Lillooet District known as "Blue No. 3" mineral claim.

4. All minerals precious and base save coal petroleum and natural gas lying in and under Tenure 393084 Lillooet District known as "Blue No. 4" mineral claim.

EX-10 13 callaghan.htm PROPERTY AGREEMENT CALLAGHAN Callaghan Property agreement AGREEMENT

This agreement is by and between J-Pacific Gold Inc., a registered corporation in British Columbia, Canada (J-Pacific) and Joseph Anthony Kizis, of Reno, Nevada (Kizis).

1. Kizis represents that he is the sole owner of ten (10) unpatented mining claims (The Property) located in Lander County, Nevada as described in Exhibit A attached to this document, and that the claims are in good standing with no liens or obligations outstanding against them.

2. In return for $1.00 and other good and valuable consideration, Kizis grants to J- Pacific a mining lease with option to purchase on all of his interest in The Property under the following terms and conditions:

A. All dollar amounts are in US dollars.

B. Royalty: Kizis retains a 3% NSR royalty interest in The Property.
1) Kizis grants to J-Pacific an option to purchase up to two (2) percentage points of the NSR royalty for $1,000,000 per percentage point.
2) Federal and State royalties, if any, shall be deducted from the retained NSR royalty.
3) Advanced minimum royalty (AMR) payments: J-Pacific shall pay AMR payments to Kizis, which are cumulatively deductible from any production royalties due, under the following schedule:
a. $5.000 upon signing.
b. $5,000 at the beginning of year 2, due on or before the anniversary date.
c. $5,000 at the beginning of year 3, due on or before the anniversary date.
d. $20,000 at the beginning of year 4, due on or before the anniversary date.
e. $25,000 at the beginning of year 5 and at the beginning of each year thereafter, due on or before the respective anniversary dates.

C. Mining Lease term: 10 years, renewable for additional 10-year terms with written notice from J-Pacific.

D. Option to purchase: At any time following the total expenditure of $500,000, J- Pacific may, by notifying Kizis and paying $20,000, exercise it's option to purchase 100% of The Property subject to the NSR Royalty and AMR payments described above.

E. Area of Interest: An Area of Interest, subject to the 3% NSR royalty described above, shall extend to all unpatented mining claims acquired by J-Pacific within one mile of the boundaries of The Property, excluding lands held by others.

F. Claim Maintenance: All filings and fees to maintain The Property will be the responsibility of J-Pacific, with copies to Kizis at least 30 days prior to due date or Kizis will have the option to make those filings and J-Pacific will reimburse Kizis twice the amount of the actual fees paid by Kizis.

G. Termination:
1) J-Pacific may terminate this agreement at any time by providing written notice to Kizis and paying all fees, if any, due during the ninety (90) days following the date of the written notice.
2) Upon termination, J-Pacific shall deliver to Kizis a quit claim deed granting to Kizis all of J-Pacific's interest in any unpatented mining claims located by J- Pacific within the Area of Interest as defined in Paragraph E above.

H. Data: Upon termination J-Pacific shall provide Kizis all cores, cuttings, samples and all factual data it has generated.

I. Company will be responsible for all environmental damages caused by it and will indemnify Kizis for these environmental damages.

J All terms will be binding upon the assigns, heirs, and successors of each party.

K. The parties to this agreement shall work diligently to conclude a formal Mining Lease with Option to Purchase Agreement as soon as practicable.

EX-10 14 elizabeth.htm PROPERTY AGREEMENT ELIZABETH Elizabeth letter agreement Thursday, May 23, 2002

Mr. David Davis White
4985 Sherbrooke Street
Vancouver, British Columbia
V5W 3M1

AND

Mr. Thomas James Illidge
Goldbridge, British Columbia
VOK 1P0

Dear Sirs,

LETTER AGREEMENT

This agreement is by and between J-Pacific Gold Inc., a registered corporation in British Columbia (hereinafter referred to as JPN) and Mr. David Davis White of Vancouver, British Columbia and Mr. Thomas James Illidge of Goldbridge, British Columbia (hereinafter jointly referred to as "W&I").

1. W&I represents that they are the sole owners of four (4) Crown Granted mining claims known as the "Elizabeth Property" ("The Property") located in the Lillooet Mining District, British Columbia as described in Exhibit A attached to this document, that the grants have been properly maintained with the Province of British Columbia and are in good standing with no liens or obligations outstanding against them.

2. In return for $1.00 and other good and valuable consideration, W&I grants to JPN an option to purchase all of its interest in The Property under the following terms and conditions:

A. Cash Payments - JPN shall make the following cash payments to W&I:

1) $10,000 at signing.
2) $5,000 at the first anniversary of this agreement.

B. Share Issuance - Subject to TSX Venture Exchange approval, JPN shall issue to W&I, common shares of the Company, under the following schedule:

1) 50,000 shares on signing.
2) 50,000 shares at the first anniversary of the agreement.
3) 50,000 shares upon the exercise of the option.
4) 50,000 shares upon the commencement of production.

C. Work Commitments - JPN agrees to complete the following schedule of exploration work commitments on The Property:

1) $200,000 by December 31, 2003,
2) $150,000 by December 31, 2004,
3) $150,000 by December 31, 2005.

D. Production Royalty - W&I shall retain a 4% Net Smelter Royalty ("NSR") royalty interest in The Property and:

1) W&I grants to JPN an option to purchase up to two (2) percentage points of the NSR royalty for $1,000,000 per percentage point.

2) Federal and Provincial royalties, if any, shall be deducted as an expense prior to calculation of the retained NSR royalty.

3) Commencing at the second anniversary of this agreement, JPN shall pay Advanced Minimum Royalty (AMR) payments of $10,000 per year to W&I, which shall be cumulatively deductible from any NSR production royalties due.

E. Exercise of Option to Purchase - Upon JPN having made the aggregate expenditures of $500,000, made the prescribed cash payments, issued the prescribed shares, made the prescribed AMR payments and completed a bankable-quality feasibility study prepared by an independent and registered professional engineer, the option will deemed to be exercised and JPN shall have acquired 100% rights and title to The Property subject to the NSR.

G. Claim Maintenance - All filings and fees to maintain The Property will be the responsibility of JPN, with copies to W&I at least 30 days prior to due date or W&I will have the option to make those filings and JPN will reimburse W&I twice the amount of the actual fees paid by W&I within 60 days or forfeit all rights to The Property.

H. Termination - JPN may terminate this agreement at any time by providing written notice to W&I and paying all fees, if any, due during the ninety (90) days following the date of the written notice.

I. Data - Upon termination JPN shall provide W&I all cores, cuttings, samples and all factual data it has generated.

J. Environmental Liability - JPN shall be responsible for all environmental damages caused by it and will indemnify W&I for these environmental damages.

K. Successors and Assigns - All terms will be binding upon the assigns, heirs, and successors of each party.

L. Regulatory Approval This Letter Agreement is subject to the approval of the TSX Venture Exchange and the British Columbia Securities Commission.

M. Laws This Letter Agreement shall be governed by the laws of the Province of British Columbia.

N. Final Agreement - The parties to this agreement shall work diligently to conclude a formal Option to Purchase Agreement as soon as practicable.

IN WITNESS WHEREOF the parties hereto have executed these presents.

Exhibit A

In this Letter Agreement, the Elizabeth Property ("The Property"), collectively refers to the following undersurface rights in the Lillooet Mining District, Caribou Assessment Area, Province of British Columbia:

1. All minerals precious and base save coal petroleum and natural gas lying in and under DL 7400 Lillooet District known as "Elizabeth No 1" mineral claim.

2. All minerals precious and base save coal petroleum and natural gas lying in and under DL 7401 Lillooet District known as "Elizabeth No 2" mineral claim.

3. All minerals precious and base save coal petroleum and natural gas lying in and under DL 7402 Lillooet District known as "Elizabeth No 3" mineral claim.

4. All minerals precious and base save coal petroleum and natural gas lying in and under DL 7403 Lillooet District known as "Elizabeth No 4" mineral claim. EX-10 15 gt.htm PROPERTY AGREEMENT GT Golden Trend Property agreement Mining Claim Purchase Option Agreement

This Mining Claim Purchase Option Agreement ("Agreement") is made and entered into by and between Rubicon Resources Inc., a Nevada corporation ("Rubicon"), and J-Pacific Gold Inc., formerly known as Claimstaker Resources Ltd., a British Columbia corporation ("Claimstaker").

Recitals

A. Rubicon owns the unpatented mining claims situated in Eureka County, Nevada, more particularly described as:

Claim Name Book/Page BLM NMC Nos. GT 1-66 249/189-254 680268-680333 GT 67-80 271/440-453 702491-702504 GT 81-90 319/137-146 789943-789952

B. Rubicon and Claimstaker are parties to the Letter Agreement dated August 20, 1996, as amended by the letter dated December 8, 1997, in accordance with which Rubicon agreed to sell and Claimstaker agreed to buy the unpatented mining claims.

C. Claimstaker has performed its obligations in accordance with the Letter Agreement and the parties desire to formalize the terms and conditions of the purchase and sale of the unpatented mining claims in accordance with the terms of the Letter Agreement. The Letter Agreement is superseded by this Agreement.

Now, therefore, in consideration of their mutual covenants and promises, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

1. Definitions.

a. "Agreement" means this Mining Claim Purchase Option Agreement, including all amendments and modifications, and all schedules and exhibits (each individually an "Exhibit" and collectively the "Exhibits") attached to and by this reference incorporated in this Agreement.

b. "Claimstaker" means J-Pacific Gold Inc., formerly known as Claimstaker Resources Ltd., a corporation organized under the laws of the Province of British Columbia, and its successors and assigns.

c. "Closing" means the delivery of documents and other items to be delivered by the parties, the exchange of consideration, and the consummation of the transactions contemplated under this Agreement.

d. "Closing Date" means the date on which the Closing shall occur.

e. "Deed" means the Deed With Reservation of Net Smelter Returns Royalty to be executed and delivered by Rubicon in accordance with Section 4 of this Agreement.

f. "Dollar" and "$" means United States currency.

g. "Effective Date" means the date this Agreement has been executed by both parties.

h. "Escrow Instructions" means the Mining Claim Purchase Option Agreement Escrow Instructions to be executed and delivered by the parties in accordance with this Agreement.

i. "Letter Agreement" means the letter agreement signed by Rubicon and Claimstaker dated August 20, 1996, as amended by the letter signed by Rubicon and Claimstaker dated December 8, 1997.

j. "Option" means the option to purchase the Property granted by Rubicon to Claimstaker under this Agreement.

k. "Property" means collectively Rubicon's rights in the unpatented mining claims which are subject to this Agreement, including all amendments and relocations of the unpatented mining claims and any other ownership interests, rights or tenures appurtenant to the unpatented mining claims or to which the unpatented mining claims are converted in the event of the amendment or repeal of the general mining law, as amended.

l. "Purchase Price" means the price to be paid by Claimstaker for its purchase of the Property.

m. "Royalty" means the production royalty reserved by Rubicon in accordance with the terms of the Deed.

n. "Royalty Option" means the option to purchase a portion of the Royalty granted by Rubicon to Claimstaker in accordance with Section 5.

o. "Rubicon" means Rubicon Resources Inc., a Nevada corporation, and its successors and assigns.

p. "Shares" means the shares of the common capital stock of Claimstaker.

2. Option to Purchase. Subject to all the terms and conditions of this Agreement and for the consideration described in this Agreement, Rubicon grants to Claimstaker the option to purchase the Property and agrees to sell the Property to Claimstaker, subject to Rubicon's reservation to itself of the Royalty. The Purchase Price shall consist of the cash payments described in Section 3.1 and the stock payments described in Section 3.2. Rubicon acknowledges that Claimstaker has notified Rubicon that Claimstaker has elected to exercise the Option.

3. Payments.

a. Cash Payments. Rubicon acknowledges that Claimstaker has paid to Rubicon the following payments:

(1) The sum of $5,000.00 payable in accordance with Section 2 of the Letter Agreement.

(2) The sum of $5,000.00 payable in accordance with Section 3 of the Letter Agreement.

(3) The sum of $5,000.00 and 53,300 Shares payable in accordance with Section 4 of the Letter Agreement, as amended.

(4) The sums of $ 10,000.00 payable on December 15,1999, and December 15, 2000, in accordance with Section 5 of the Letter Agreement.

b. Stock Payments. Rubicon acknowledges that Claimstaker has caused to be issued and delivered to Rubicon one hundred thousand (100,000) shares of the common capital stock of Claimstaker Resources Ltd., a British Columbia corporation, in accordance with Sections 4 (as amended), 6 and 7 of the Letter Agreement.

c. Minimum Payments. Claimstaker shall pay to Rubicon the sum of $ 10,000.00 on December 15, 2001, and on a like date of each subsequent year in accordance with the terms of the Deed.

d. Maintenance of Mining Claims. Rubicon acknowledges that Claimstaker has paid the federal annual mining claim maintenance fees payable on or before August 31,1996, and each subsequent federal annual mining claim maintenance fee payment deadline, and that Claimstaker has recorded and paid the fees for recording the affidavits of payment and notices of intent to hold the mining claims in accordance with Nevada law.

4. Closing. On execution of this Agreement, Rubicon and Claimstaker shall execute and deliver the following: (a) the Deed With Reservation of Net Smelter Returns Royalty in the form marked as Exhibit A attached to this Agreement; and (b) such other written assurances as are reasonably required for the purpose of the Closing and the sale and purchase of the Property. The Closing shall occur promptly following the parties' execution of this Agreement, but in no case more than ten (10) business days after the Effective Date. Claimstaker shall pay all recording fees and real property transfer taxes, if any, for the recording of the Deed and the filing of a notice of transfer in the Nevada State Office of the Bureau of Land Management. On the Closing, Claimstaker shall acquire and own the Property, subject to Rubicon's rights and Claimstaker's obligations under the Deed.

5. Royalty Option. Subject to all of the terms and conditions of this Agreement and for the consideration described in this Agreement, Rubicon grants to Claimstaker the option to purchase an absolute two percent (2%) of the three percent (3%) Royalty. The purchase price for each absolute one percent (I %) of the Royalty shall be $ 1,000,000.00. If Claimstaker elects to exercise the Royalty Option, in whole or in part, it shall do so in accordance with the terms of the Deed. If Claimstaker exercises the Royalty Option, the percentage rate of the Royalty shall be reduced by an absolute I% or 2%, as applicable.

6. Rubicon's Covenants, Representations and Warranties. Rubicon represents and warrants to and in favor of Claimstaker as of the Effective Date and as of the Closing Date, and covenants, as follows:

a. Authority. Rubicon has full power, legal right and authority to enter into this Agreement and the instruments which it is obligated to execute and deliver in accordance with the terms of this Agreement and to do all such acts and things as are required to be done, observed or performed by Rubicon in accordance with this Agreement.

b. Valid Authorization of this Agreement. Rubicon has taken all necessary action to authorize the execution, delivery and performance of this Agreement and the instruments which it is obligated to execute and deliver in accordance with this Agreement and to observe and perform the provisions of this Agreement and any such instrument to which it is a party in accordance with its terms.

c. Validity of Agreement and Non-Conflict. Except as described in this Section, none of the authorization, creation, execution, delivery of this Agreement or any of the instruments which Rubicon is obligated to execute and deliver in accordance with this Agreement requires Rubicon to obtain any approval or consent of any governmental agency or authority having jurisdiction of Rubicon, nor is it in conflict with or contravention of, as applicable, the provisions of any material indenture, instrument, agreement or under-taking to which Rubicon is a party or by which it or any of its respective properties or assets are bound, including, without limitation, the Property. This Agreement and each instrument executed and delivered by Rubicon constitutes a valid and legally binding obligation of Rubicon and, when executed and delivered, of the instruments which Rubicon is obligated to execute and deliver in accordance with this Agreement will constitute valid and legally binding obligations of Rubicon, enforceable against it in accordance with their respective terms, except to the extent that the enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws or events relating to or affecting creditors' rights generally.

d. Title.

(1) With respect to the unpatented mining claims comprising all or a portion of the Property, Rubicon represents and warrants that: (a) effective as of August 20, 1996, the claims were properly located in accordance with applicable Federal and state laws and regulations; (b) effective as of August 20, 1996, all assessment work and mining claim rental or maintenance fee payment requirements for the claims have been performed or paid and all filings and recordings of proof of performance or payment have been made properly; (c) effective the Effective Date the claims are in good standing and Rubicon has good title to and owns the entire undivided legal and equitable interest in the claims, subject to the paramount title of the United States; and (d) effective the Effective Date Rubicon has good right and full power to convey the interests described in this Agreement.

(2) Rubicon's title to the Property is free and clear of all liens, claims and encumbrances created by, through or under Rubicon.

e. Rubicon Not a Foreign Person. Rubicon is not a "foreign person" as defined under Section 1445(f) of the Internal Revenue Code of 1954, as amended.

7. Claimstaker's Covenants, Representations and Warranties. To induce Rubicon to enter this Agreement, Claimstaker represents and warrants to and in favor of Rubicon as of the Effective Date and as of the Closing Date, and covenants, as follows:

a. Authority. Claimstaker has full power, legal right and authority to enter into this Agreement and the instruments which it is obligated to execute and deliver in accordance with the terms of this Agreement and to do all such acts and things as are required to be done, observed or performed by Claimstaker in accordance with this Agreement.

b. Valid Authorization of this Agreement. Claimstaker has taken all necessary action to authorize the execution, delivery and performance of this Agreement and the instruments which it is obligated to execute and deliver in accordance with this Agreement and to observe and perform the provisions of this Agreement and any such instrument to which it is a party in accordance with its terms.

c. Validity of Agreement and Non-Conflict. Except as described in this Section, none of the authorization, creation, execution, delivery of this Agreement or any of the instruments which Claimstaker is obligated to execute and deliver in accordance with this Agreement requires Claimstaker to obtain any approval or consent of any governmental agency or authority having jurisdiction of Claimstaker, nor is it in conflict with or contravention of, as applicable, the provisions of any material indenture, instrument, agreement or undertaking to which Claimstaker is a party or by which it or any of its respective properties or assets are bound, including, without limitation, the Property. This Agreement and each instrument executed and delivered by Claimstaker constitutes a valid and legally binding obligation of Claimstaker and, when executed and delivered, of the instruments which Claimstaker is obligated to execute and deliver in accordance with this Agreement will constitute valid and legally binding obligations of Claimstaker, enforceable against it in accordance with their respective terms, except to the extent that the enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws or events relating to or affecting creditors' rights generally.

8. Default. In the event of default by Claimstaker or any of Claimstaker's successors and assigns, Rubicon shall have the remedies and rights described in this Section which shall be incorporated in the Deed.

a. Default of Minimum Payments. In the event of any default or failure by Claimstaker to pay the minimum payments prescribed in Section 3.3, Rubicon shall be entitled to give Claimstaker written notice of the default, specifying details of the same. If the parties do not execute a written extension of the time for payment of the minimum payment or the default is not remedied within thirty (30) days after receipt of the notice, Rubicon may terminate Claimstaker's rights in the Property and compel delivery of the Deed deposited in escrow by Claimstaker. If the parties execute a written extension of the time for payment, Claimstaker shall pay interest at the prime interest rate of Wells Fargo Bank N.A., San Francisco, California, or its successor, plus two percent (2%) from the due date of the minimum payment until payment is made in accordance with the written extension. If Wells Fargo Bank N.A., San Francisco, or its successor, dissolves or no longer exists, the prime rate shall be that established by the largest commercial bank having an office in San Francisco, California.

b. Other Defaults. In the event of any default or failure by Claimstaker to comply with any of the covenants, terms or conditions of this Agreement, Rubicon shall be entitled to give Claimstaker written notice of the default, specifying details of the same. If such default is not remedied within thirty (30) days after receipt of the notice, provided the same can reasonably be done within that time, or, if not, if Claimstaker has not within that time commenced action to cure the same or does not after such commencement diligently prosecute such action to completion, Rubicon may terminate this Agreement by delivering notice to Claimstaker of Rubicon's termination of this Agreement. Termination shall not be based on a default or on a failure to remedy the same which results from any cause beyond the reasonable control of Claimstaker, including, without limitation, force majeure. If Claimstaker contests an), alleged default, Claimstaker may give written notice of such contest to Rubicon during the period allowed for Claimstaker's cure of any alleged default. If Claimstaker notifies Rubicon of Claimstaker's contest of the alleged default, Rubicon shall have no right to deliver notice of termination or to terminate this Agreement until such time as a court of competent jurisdiction enters a decree or order that Claimstaker is in fact in default under this Agreement and the times for amendment, appeals and review of the decree or order have expired. If a court of competent jurisdiction enters a decree or order that Claimstaker is in fact in default under this Agreement, Claimstaker shall have thirty (30) days after entry of the decree or order and expiration of all times for amendment, appeal and review of the decree or order during which to commence action to cure the default as determined by the court of competent jurisdiction.'

c. Default in Maintenance of Property. If during the term of this Agreement or following the Closing Claimstaker fails to maintain the status of the Property as prescribed in the Deed, in addition to the other remedies provided in this Section 8, Rubicon shall have all remedies and rights in equity or at law against Claimstaker.

9. Escrow Instructions. The parties shall execute and deliver the Mining Claim Purchase Option Agreement Escrow Instructions in the form marked as Exhibit B attached to and by this reference incorporated in this Agreement.

10. Confidentiality. The data and information, including the terms of this Agreement, coming into the possession of Rubicon or Claimstaker by virtue of this Agreement, shall be deemed confidential and shall not be disclosed to outside third parties except as may be required to publicly record or protect title to the Property or to publicly announce and disclose information under the laws and regulations of Canada or the United States or any provincial, state or local government or any country, or under the rules arid regulations of any stock exchange on which stock of any party, or the parent or affiliates of any party, is listed. Each of the parties agrees, with respect to any public announcements or disclosures so required, including the announcement of the execution of this Agreement, if any, to inform the other party of the content of the announcement or disclosure in advance of its intention to make such announcement or disclosure in sufficient time to permit the other party to jointly or simultaneously make a similar public announcement or disclosure if the other party so desires. Nothing in this Agreement shall limit or restrict the right of either party to provide, deliver or release to parent companies, companies with a common parent, subsidiary companies, affiliated or related companies and/or co-venturers the data and information, including the terms of this Agreement, coming into the possession of such party by virtue of this Agreement.

11. Notices. Any notices required or authorized to be given by this Agreement shall be in written form. Any notices required -or authorized to be given by this Agreement may be sent by registered or certified delivery, postage prepaid and return receipt requested, addressed to the proper party at the following address or such address as the party shall have designated to the other parties in accordance with this paragraph. Any notice required or authorized to be given by this Agreement shall be deemed to have been sufficiently given or served in written form if mailed as provided herein, personally delivered to the proper party, or sent by telex, telegraph, telecopier or other means of electronic transmission, and actually received by such party. Such notice shall be effective on the date of receipt by the addressee party.

If to Rubicon: Rubicon Resources Inc. PO Box 4940 Sparks, Nevada 89432 If to Claimstaker: J-Pacific Gold Inc. Suite 1440 1166 Alberni Street Vancouver, BC, Canada V6E 3Z3

12. Binding Effect of Obligations. This Agreement shall be binding upon and inure to the benefit of the respective parties, and their personal representatives, successors and assigns.

13. Whole Agreement. The parties agree that the whole agreement between them is written in this Agreement and in a memorandum agreement of even date which is intended to be recorded, and that memorandum of agreement together with this Agreement shall constitute the entire contract between the parties. There are no terms or conditions, express or implied, other than in this Agreement. This Agreement may be amended or modified only by an instrument in writing, signed by the parties with the same formality as this Agreement.

14. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada.

15. Jurisdiction and Venue. The parties submit to the jurisdiction of the district courts of the State of Nevada and agree that any action concerning the construction or enforcement of any rights or obligations under this Agreement shall be commenced and maintained in the Second Judicial District Court of the State of Nevada, Reno, Washoe County, Nevada.

16. Multiple Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which shall constitute the same Agreement.

17. Severability. If any part, term or provision of this Agreement is held by the Courts to be illegal or in conflict with any law of the United States or any state, the validity of the remaining portions or provisions shall not be affected, and the rights and obligations of the parties shall be construed and enforced as if the Agreement did not contain the particular part, term or provision held to be invalid.

18. Assignment. Either party may assign its interest in this Agreement, provided that the assigning party shall notify the other party of the assignment. On the Closing, Claimstaker may cause title to the Property to be conveyed to Golden Trend Resources Inc., a Nevada corporation, which is the wholly-owned subsidiary of Claimstaker, provided, however, that no such assignment shall relieve Claimstaker of its obligations under this Agreement and Golden Trend Resources Inc. shall assume and perform all of Claimstaker's obligations under the Deed.

The parties have executed this Agreement effective on the Effective Date.

Recorded at the request of and when recorded return to: Golden Trend Resources Inc. c/o Thomas P. Erwin & Thompson LLP P.O. Box 40817 Reno, Nevada 89504

Deed With Reservation of Net Smelter Returns Royalty

This Deed With Reservation of Net Smelter Returns Royalty (this "Deed") is made and entered into by and between Rubicon Resources Inc., a Nevada corporation ("Grantor"), and Golden Trend Resources Inc., a Nevada corporation ("Grantee").

Recitals

A. Grantor and J-Pacific Gold Inc., formerly known as Claimstaker Resources Ltd., a British Columbia corporation ("Claimstaker"), are parties to that certain Mining Claim Purchase Option Agreement pursuant to which Grantor granted to Claimstaker the option to purchase the Property, as defined in this Deed.

B. Claimstaker has exercised its option to purchase the Property and the parties desire that Grantor convey, grant and transfer title to the Property to Grantee, which is Claimstaker's wholly owned subsidiary, subject to the Royalty and the rights and obligations of the parties under this Deed.

Now, therefore, in consideration of their mutual covenants and promises, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

1. Definitions. The following terms shall have the meanings defined below.

1.1 "Dollar" and "$" means United States currency.

1.2 "Grantee" means Golden Trend Resources Inc., a Nevada corporation, and its successors and assigns.

1.3 "Grantor" means Rubicon Resources Inc., a Nevada corporation, and its successors and assigns.

1.4 "Net Smelter Returns" shall have the meaning prescribed in Exhibit A attached to and by this reference incorporated in this Deed.

1.5 " Property" means collectively Grantor's rights in the unpatented mining claims which are subject to this Deed, including all amendments and relocations of the unpatented mining claims and any other ownership interests, rights or tenures appurtenant to the unpatented mining claims or to which the unpatented mining claims are converted in the event of the amendment or repeal of the general mining law, as amended. The unpatented mining claims which constitute the Property and which are conveyed by this Deed are situated in Eureka County, Nevada, and are described as follows:

Claim Name Book/Page BLM NMC Nos. GT 1-66 249/189-254 680268-680333 GT 67-80 271/440-453 702491-702504 GT 81-90 319/137-146 789943-789952

1.6 "Royalty" means the production royalty reserved by and payable to Rubicon in accordance with the terms of this Deed.

1.7 "Royalty Option" means the option to purchase a portion of the Royalty granted by Grantor to Grantee.

2. Conveyance of Property. For and in consideration of Grantee's payment to Grantor of the sum of Ten Dollars ($ 10.00) United States currency, and other good and valuable consideration, the receipt and sufficiency of which Grantor acknowledges, Grantor assigns, conveys, grants, bargains and sells the Property to Grantee, and Grantee's successors and assigns, forever, subject to the reservation by and to Grantor of the Royalty.

3. Reservation of Royalty. Grantor grants, reserves and retains to itself, and Grantor's successors and assigns forever, and Grantee is covenanted and obligated to pay to Grantor, and Grantor's successors and assigns, a production royalty of three percent (3%) of the Net Smelter Returns from the production of minerals and mineral ores which are extracted or mined on, in or under the Property. The Net Smelter Returns production royalty shall be calculated, determined and paid to Grantor and Grantee shall perform the obligations described in Exhibit A attached to and by this reference incorporated in this Deed. The Net Smelter Returns production royalty reserved to Grantor under this Deed shall burden and run with the Property, including any amendments, conversions to a lease or other form of tenure, relocations or patent of all or any of the unpatented mining claims which comprise all or part of the Property, Grantee covenants to and shall execute, deliver and record in the Office of the Recorder of Eureka County, Nevada, an instrument by which Grantee grants to Grantor the Net Smelter Returns production royalty and subjects the amended, converted or relocated unpatented mining claims and the patented claims, if applicable, to all of the burdens, conditions, obligations and terms of this Deed. The following provisions shall apply in the calculation and payment of the Royalty.

3.1 Minimum Advance Royalty Payments. Beginning on December 15, 200 1, and on the like day of each subsequent year during which Grantee holds title to the Property, Grantee shall pay to Grantor the sum of Ten Thousand Dollars ($ 10,000.00) as a minimum advance royalty payment. The minimum annual royalty payments paid by Grantee to Grantor in accordance with the parties' Mining Claim Purchase Option Agreement and this Deed shall be credited cumulatively to Grantee's account and against Grantee's Royalty obligations under this Deed.

3.2 Audit. At Grantor's expense, Grantor or its authorized agents shall have a right to audit and inspect Grantee's accounts and records used in calculating the Royalty payments, which right may be exercised as to each payment at any reasonable time during a period of two (2) years from the date on which the payment was made by Grantee. If no such audit is performed during such period, such accounts, records and payments shall be conclusively deemed to be true, accurate and correct.

3.3 Production Records. Grantee shall keep accurate records of the sale or shipment of minerals and mineral products from the Property, and these records shall be available for inspection by Grantor, at Grantor's expense, at reasonable times subject to the provisions of this Deed regarding accounts, inspection, records and payments.

4. Lesser Interest. If Grantor owns an interest in the Property which is less than the entire and undivided estate in the Property, the Royalty shall be reduced proportionately in accordance with the nature and extent of Grantor's interest so that the Royalty shall be paid to Grantor only in the proportion that Grantor's interest bears to the entire and undivided estate in the Property or the portion of the Property from which minerals or mineral materials are produced.

5. Royalty Option. Subject to all of the terms and conditions of this Deed and for the consideration described in this Deed, Grantor grants to Grantee the option to purchase an absolute two percent (2%) of the three percent (3%) Royalty. The purchase price for each absolute one percent (I %) of the Royalty shall be $ 1,000,000.00. If Grantee elects to exercise the Royalty Option, in whole or in part, it shall do so in accordance with the following terms. If Grantee elects to exercise the Royalty Option, Grantee must give written notice of its election. On Grantee's delivery of the notice, Grantor and Grantee shall make diligent efforts to close the purchase and sale of the Royalty, or part of the Royalty, as applicable, within ten (10) business days after Grantee's delivery of the notice. Grantor shall execute and deliver to Grantee a conveyance of the Royalty, or part of the Royalty, as applicable, in form acceptable for recording and consistent with the terms of this Deed, and such other written assurances as are reasonably required for Grantee's closing of the Royalty Option and purchase of the Royalty. Grantee shall deliver payment of the purchase price for purchase of the Royalty by certified funds or wire transfer to an account designated by Grantor. Grantee shall pay all recording fees and real property transfer taxes, if any, for the recording of the instrument necessary to convey title to the Royalty. On closing of the Royalty Option, Grantor's Royalty shall be reduced by an absolute one percent (I %) or two percent (2%), as applicable, in accordance with Grantee's exercise of the Royalty Option (for example, if Grantee exercises the Royalty Option as to an absolute I%, the Royalty percentage rate shall be reduced from 3% to 2%). Until the closing of the Royalty Option, Grantee shall pay to Grantor the Royalty for minerals and mineral products produced before the closing at the Royalty percentage rate applicable before the closing of the Royalty Option.

6. Compliance with Laws. All mineral exploration, mineral development, mining and mineral processing performed by Grantee on the Property shall conform with the applicable laws and regulations of the State of Nevada and the United States of America. Grantee shall be fully responsible for compliance with all applicable federal, state and local reclamation statutes, regulations and ordinances relating to such work, all at Grantee's cost, and Grantee shall indemnify, defend and hold Grantor harmless from any and all claims, assessments, fines and actions arising from Grantee's failure to perform the foregoing obligations.

7. Indemnity. Grantee shall defend, indemnify and save harmless Grantor, its successors and assigns, of and from any and all I liability whatsoever for any claims, actions or damages, including court costs and attorney's fees, in any way arising from or relating to Grantee's occupation, ownership and use of the Property, or its operations on or in the Property. The Grantee's defense, indemnification and hold harmless obligations shall extend to and include any and all claims, actions or damages arising from or relating to federal, state or local laws, regulations or ordinances concerning the preservation of the environment or reclamation of the Property, including the Comprehensive Environmental Response, Compensation and Liability Act, and the Resource Conservation and Recovery Act.

8. Inspection. At Grantor's expense and on Grantor's advance request and notice to Grantee, Grantor or Grantor's duly authorized representatives shall be permitted to enter on the Property and Grantee's workings at reasonable times for the purpose of inspection, but they shall enter on the Property at their own risk and in such a manner as not to unreasonably delay, hinder, or interfere with the operations of Grantee. Grantor shall defend, indemnify and hold Grantee harmless from any and all damages, claims or demands arising from injury to Grantor, Grantor's agents or representatives or any third party, on the Property or on any access to the Property arising from or relating to Grantor's entry and inspection.

9. Maintenance of Mining Claims.

9.1 Annual Assessment Work. Beginning with the annual assessment work year of September 1, 2002, to September 1, 2003, and for each subsequent annual assessment work year during which Grantee holds title to the Property, Grantee shall perform work of a type customarily deemed applicable as assessment work and of sufficient value to satisfy the annual assessment work requirements, if any, of all applicable federal, state and local laws, regulations and ordinances, and shall prepare evidence of the same in form proper for recordation and filing, and shall timely record and/or file such evidence in the appropriate federal, state and local office as required by applicable federal, state and local laws, regulations and ordinances, provided that if Grantor terminates Grantee's rights and interest in the Property in accordance with this Deed or if Grantee elects to surrender all of the unpatented mining claims which are part of the Property more than ninety (90) days before expiration of the annual assessment year, Grantee shall have no further obligation to perform annual assessment work nor to prepare, record and/or file evidence of the same with respect to all of the unpatented mining claims or the surrendered unpatented mining claims, as the case may be, for the then current or any subsequent annual assessment year.

9.2 Mining Claim Maintenance Fees. If under applicable federal laws and regulations federal annual mining claim maintenance or rental fees are required to be paid for the unpatented mining claims which constitute all or part of the Property, beginning with the annual assessment work year of September 1, 2002, to September 1, 2003, Grantee shall properly pay the federal annual mining claim maintenance or rental fees not less than sixty (60) days before the deadline established under applicable federal laws and regulations. Grantee shall deliver to Grantor proof of Grantee's proper payment of the federal annual mining claim maintenance fees not less than forty-five (45) days before the payment deadline. Grantee shall execute and record or file, as applicable, proof of payment of the federal annual mining claim maintenance or rental fees and of Grantee's intention to hold the Property not less than sixty (60) days before the deadline for such recording or filing prescribed by Nevada law. Grantee shall deliver to Grantor proof of Grantee's recording not less than forty-five (45) days before the deadline for the recording prescribed under Nevada law. If Grantor terminates Grantee's rights and interest in the Property in accordance with the terms of this Deed or Grantee elects to surrender to Grantor all of the unpatented mining claims which are part of the Property not less than ninety (90) days before the deadline for payment of the federal annual mining claim maintenance fees prescribed under federal law, Grantee shall have no further obligation to pay the fees or to record or file proof of payment of the fees with respect to the then current or any subsequent annual assessment year for any of the unpatented mining claims. If Grantee defaults in its obligations under this Section to timely pay the federal annual mining claim maintenance fees, Grantor shall have the right to deliver notice of Grantee's default and to terminate Grantee's rights under this Deed, in which case Grantor shall have the right to instruct the escrow agent to deliver the reconveyance deed executed and deposited by Grantee in escrow. If Grantee defaults in its obligations under this Section or otherwise fails to maintain the status of the Property, in addition to the remedies prescribed in this Deed, Grantor shall have all remedies and rights in equity or at law against Grantee.

10. Default. If Grantee defaults in its obligations under this Deed, Grantor shall have the following remedies and rights.

10.1 Default of Minimum Payments. In the event of any default or failure by Grantee to pay the minimum payments prescribed in Section 3. 1, Grantor shall be entitled to give Grantee written notice of the default, specifying details of the same. If the parties do not execute a written extension of the time for payment of the minimum payment or the default is not remedied within thirty (30) days after receipt of the notice, Grantor may terminate Grantee's rights in the Property and compel delivery of the Deed deposited in escrow by Grantee. If the parties execute a written extension of the time for payment, Grantee shall pay interest at the prime interest rate of Wells Fargo Bank N.A., San Francisco, California, plus two percent (2%) from the due date of the minimum payment until payment is made in accordance with the written extension. If Wells Fargo Bank N.A., San Francisco, or its successor, dissolves or no longer exists, the prime rate shall be that established by the largest commercial bank having an office in San Francisco, California.

10.2 Other Defaults. Except as otherwise expressly provided in this Deed, in the event of any default or failure by Grantee to comply with any of the covenants, terms or conditions of this Deed, Grantor shall be entitled to give Grantee written notice of the default, specifying details of the same. If such default is not remedied within thirty (30) days after receipt of the notice, provided the same can reasonably be done within that time, or, if not, if Grantee has not within that time commenced action to cure the same or does not after such commencement diligently prosecute such action to completion, Grantor may terminate this Deed by delivering notice to Grantee of Grantor's termination of this Deed. Termination shall not be based on a default or on a failure to remedy the same which results from any cause beyond the reasonable control of Grantee, including, without limitation, force majeure. If Grantee contests any alleged default, Grantee may give written notice of such contest to Grantor during the period allowed for Grantee's cure of any alleged default. If Grantee notifies Grantor of Grantee's contest of the alleged default, Grantor shall have no right to deliver notice of termination or to terminate this Deed until such time as a court of competent jurisdiction enters a decree or order that Grantee is in fact in default under this Deed and the times for amendment, appeal and review of the decree or order have expired. If a court of competent jurisdiction enters a decree or order that Grantee is in fact in default under this Deed, Grantee shall have thirty (30) days after entry of the decree or order and expiration of all times for amendment, appeal and review of the decree or order during which to commence action to cure the default as determined by the court of competent jurisdiction.'

10.3 Default in Maintenance of Property. If Grantee fails to timely pay the federal annual mining claim maintenance fees in accordance with Section 9, in addition to the other remedies provided in Section 9 and Section 10, Grantor shall have all remedies and rights in equity or at law against Grantee.

11. Reconveyance or Surrender of Mining Claims. If Grantor terminates Grantee's rights in the Property in accordance with this Deed or if Grantee elects to surrender all of the unpatented mining claims which constitute the Property, Grantee shall promptly execute and deliver to Grantor a deed of Grantee's right, title and interest in and to all of the mining claims which constitute the Property, free and clear of any adverse claim, encumbrance or lien against Grantor's title to the Property. Grantee shall have no right to surrender less than all of the unpatented mining claims which constitute the Property except on the parties' mutual agreement. Grantor shall have the right to cause the holder of any deed executed by Grantee to Grantor and deposited in escrow to be delivered to Grantor in accordance with the terms of the parties' escrow instructions.

12. Data. Upon termination of Grantee's rights in the Property or Grantee's surrender to Grantor of all of the unpatented mining claims which constitute the Property, Grantee shall deliver to Grantor copies of all analyses, drill logs, maps, reports and any other data regarding the Property and any cuttings or cores from the Property in Grantee's possession at the time of such termination or surrender which before such termination or surrender have not been delivered to Grantor. Grantee agrees that it will within thirty (30) days of such termination or surrender deliver the data and other items to Grantor. Grantee shall have no liability on account of any such information received or acted on by Grantor or any other party to whom Grantor delivers such information.

13. Governing Law and Forum Selection. This Deed shall be construed and enforced in accordance with the laws of the State of Nevada. The parties submit to the jurisdiction of the state courts within and the United States District Court for the district and division in which the Property is situated, and waive any objections to the jurisdiction of such courts and venue of any actions or proceedings in such courts arising from or relating to this Deed.

14. Severability. If any part, term or provision of this Deed is held by a court of competent jurisdiction to be illegal or in conflict with any law of the United States or any state, the validity of the remaining portions or provisions shall not be affected, and the rights and obligations of the parties shall be construed and enforced as if the Agreement did not contain the particular part, term or provision held to be invalid.

15. Assignment. No change in ownership of Grantor's interest in the Royalty shall affect Grantee's obligations under this Deed unless and until Grantor delivers and Grantee receives certified copies of instruments recorded or other documents necessary to demonstrate the change in ownership of Grantor's interest. No other type of notice, whether actual or constructive, shall be binding on Grantee. Until Grantee receives Grantor's notice and the documents required to be delivered under this Section, Grantee may continue to make all payments under this Deed as if the transfer of Grantor's ownership interest had not occurred. No division of Grantor's ownership as to all or any part of the Property shall enlarge Grantee's obligations or diminish Grantee's rights under this Deed, and Grantee may disregard any such division.

Grantor and Grantee have executed this Deed effective

Exhibit A to Deed With Reservation of Net Smelter Returns Royalty Between Rubicon Resources Inc., a Nevada corporation ("Recipient") and Golden Trend Resources Inc., a Nevada corporation ("Payor")

Net Smelter Returns Provisions

Recipient: Rubicon Resources Inc. Payor: Golden Trend Resources Inc.

Net Smelter Returns Provisions

1. Definitions. Terms defined in the Deed With Reservation of Net Smelter Returns Royalty to which this Exhibit A is attached shall have the same meaning in this Exhibit A. The following defined terms, wherever used in this Exhibit, shall have the meanings described below:

1.1 "Deed" means the Deed With Reservation of Net Smelter Returns Royalty to which this Exhibit is attached.

1.2 "Gold Production" means the quantity of refined gold outturned to Payor's account by an independent third party refinery for gold produced from the Property during the calendar month on either a provisional or final settlement basis.

1.3 "Gross Value" shall be determined on a calendar month basis and have the following meanings with respect to the following Minerals:

1.3.1 Gold

(a) If Payor sells unprocessed gold ores, or gold dore or gold concentrates produced from Minerals, then Gross Value shall be equal to the proceeds received by Payor during the calendar month from such sales. Payor shall have the right to sell such unprocessed gold ores, gold dore and gold concentrates to an affiliated party, except that such sales shall be considered, solely for the purpose of determining Gross Value, to have been sold at prices and on terms no less favorable than those that would be obtained from an unaffiliated third party in similar quantities and under similar circumstances.

(b) If Payor produces refined gold (meeting the specifications of the London Bullion Market Association) from Minerals, and if Section 1.3.1(a) above is not applicable, then for purposes of determining Gross Value, the refined gold shall be deemed to have been sold at the Monthly Average Gold Price for the month in which it was refined. The Gross Value shall be determined by multiplying Gold Production during the calendar month by the Monthly Average Gold Price.

1.3.2 Silver.

(a) If Payor sells unprocessed silver ores, or silver dore or silver concentrates produced from Minerals, then Gross Value shall be equal to the proceeds received by Payor during the calendar month from such sales. Payor shall have the right to sell such unprocessed silver ores, silver dore and silver concentrates to an affiliated party, provided that such sales shall be considered, solely for the purpose of determining Gross Value, to have been sold at prices and on terms no less favorable than those that would be obtained from an unaffiliated third party in similar quantities and under similar circumstances.

(b) If Payor produces refined silver (meeting the specifications for refined silver subject to the New York Silver Price published by Handy & Harmon) from Minerals, and if Section 1.3.2(a) above is not applicable, the refined silver shall be deemed to have been sold at the Monthly Average Silver Price for the month in which it was refined. The Gross Value shall be determined by multiplying Silver Production during the calendar month by the Monthly Average Silver Price.

1.3.3 All Other Minerals.

(a) If Payor sells unprocessed ores, dore or concentrates of any Minerals other than gold or silver, then the Gross Value shall be equal to the amount of proceeds received by Payor during the calendar month from such sales. Payor shall have the right to sell such unprocessed ores, dore or concentrates to an affiliated party, provided that such sales shall be considered, solely for the purpose of determining Gross Value, to have been sold at prices and on terms no less favorable than those that would be obtained from an unaffiliated third party in similar quantities and under similar circumstances.

(b) If Payor produces refined or processed metals from Minerals other than refined gold or refined silver, and if Section 1.3.3(a) above is not applicable, then Gross Value shall be equal to the amount of the proceeds received by Payor during the calendar month from the sale of such refined or processed metals. Payor shall have the right to sell such refined or processed metals to an affiliated party, provided that such sales shall be considered, solely for purposes of determining Gross Value, to have been sold at prices and on terms no less favorable than those that would be obtained from an unaffiliated third party in similar quantities and under similar circumstances.

1.4 "Monthly Average Gold Price" means the average London Bullion Market Association Afternoon Gold Fix, calculated by dividing the sum of all such prices reported for the calendar month by the number of days for which such prices were reported during that month. If the London Bullion Market Association Afternoon Gold Fix ceases to be published, all such references shall be replaced with references to prices of gold for immediate sale in another established marked selected by Payor, as such prices are published in Metals Week magazine.

1.5 "Monthly Average Silver Price" means the average New York Silver Price as published daily by Handy & Harmon, calculated by dividing the sum of all such prices reported for the calendar month by the number of days in such calendar month for which such prices were reported. If the Handy & Harmon quotations cease to be published, all such references shall be replaced with references to prices of silver for immediate sale in another established market selected by Payor as published in Metals Week magazine.

1.6 "Net Smelter Returns" means the Gross Value of all Minerals, less all costs, charges and expenses paid or incurred by Payor with respect to the transportation, processing, treatment and upgrading of such Minerals, including without limitation:

1.6.1 Charges for treatment in the smelting and refining processes (including handling, processing, interest and provisional settlement fees, sampling, assaying and representation costs; penalties and other processor deductions); and

1.6.2 Actual costs of transportation (including freight, insurance, security, transaction taxes, handling, port, demurrage, delay and forwarding expenses incurred by reason of or in the course of such transportation) of Minerals to the place of treatment, including any costs incurred by Payor for transportation of such Minerals from the Property to the place of sale.

1.7 "Payor" means Golden Trend Resources Inc., a Nevada corporation, and its successors and assigns.

1.8 "Recipient" means the party to whom the Net Smelter Returns production royalty is payable.

1.9 "Silver Production" means the quantity of refined silver outturned to Payor's account by an independent third-party refinery for silver produced from the Property during the calendar month on either a provisional or final settlement basis.

2. Payment Procedures.

2.1 Accrual of Obligation. Payor's obligation to pay the Net Smelter Returns royalty shall accrue upon the sale of unrefined metals, dore, concentrates, ores or other Minerals products or, if refined metals are produced, upon the outturn of refined metals meeting the requirements of the specified published price to Payor's account.

2.2 Futures or Forward Sales, Etc.. Except as provided in Sections 1. 3. 1 (a), 1. 3.2(a) and 1.3.3 above (with respect to sales of unprocessed gold and silver and sales of Minerals other than gold and silver), Gross Value shall be determined irrespective of any actual arrangements for the sale or other disposition of Minerals by Payor, specifically including but not limited to forward sales, futures trading or commodities options trading, and any other price hedging, price protection, and speculative arrangements that may involve the possible delivery of gold, silver or other metals produced from Minerals.

2.3 Sampling and Commingling. All Minerals for which a Net Smelter returns royalty is payable shall be measured, sampled and analyzed in accordance with sound mining and metallurgical practices. After such measurement, Payor may mix or commingle Minerals with ores from properties other than the Property.

2.4 Monthly Calculations and Payments. Net Smelter Returns royalties shall be determined on a calendar month basis. Net Smelter Return royalties shall be paid on or before the last business day of the calendar month immediately following the last day of the calendar month in which same accrued.

2.5 Statements. At the time of payment of the Net Smelter Returns royalty, Payor shall accompany such payment with a statement showing in reasonable detail the quantities and grades of refined gold, silver or other metals or dore, concentrates or ores produced and sold or deemed sold by Payor in the preceding calendar month; the Monthly Average Gold Price and Monthly Average Silver Price, as applicable; costs and other deductions, and other pertinent information in reasonable detail to explain the calculation of the Net Smelter Returns royalty payment with respect to such calendar month. Payment shall be made to the address provided in the Deed to which this Exhibit is attached for purposes of notices.

2.6 Inventories and Stockpiles. Payor shall include in all monthly statements a description of the quantity and quality of any gold or silver dore that has been retained as inventory for more than ninety (90) days. Recipient shall have thirty (30) calendar days after receipt of the statement to either (a) elect that the dore be deemed sold, with Gross Value to be determined as provided in Sections 1.3.1 (b), with respect to gold, and 1.3.2(b), with respect to silver, as of such thirtieth (30th) day utilizing the mine weights and assays for such dore and utilizing a reasonable recovery rate for refined metal and reasonable deemed charges for all deductions specified in Section 1.6 above, or (b) elect to wait until such time as royalties otherwise would become payable pursuant to Sections 1. 3. 1 (b) and 1. 3.2(b). The failure of Recipient to respond within such time shall be deemed to be an election to use the methods described in Sections 1.3. 1 (b) and 1.3.2(b). No Net Smelter Returns royalty shall be due with respect to Stockpiles of ores or concentrates unless and until such ores or concentrates are actually sold.

2.7 Final Settlement. All Net Smelter Returns royalty payments shall be considered final and in full satisfaction of Payor's obligations, unless Recipient gives Payor written notice describing a specific objection to the calculation within one year after receipt by Recipient of the monthly statement provided for in 2.5. Recipient shall have the right to audit Payor's records as provided in the Deed. If such audit determines that there has been a deficiency or an excess in the payment made to Recipient, such deficiency or excess shall be resolved by adjusting the next monthly Net Smelter Returns royalty payment due Recipient. Recipient shall pay all costs of such audit unless a deficiency of five percent (5%) or more of the Net Smelter Returns royalty due for the calendar month in question is determined to exist. Payor shall pay the costs of such audit if a deficiency of five percent (5%) or more of the amount due for the calendar month in question is determined to exist. All books and records used by Payor to calculate the Net Smelter Returns royalties due shall be kept in accordance with generally accepted accounting principles.

2.8 Owner's Transfer or Encumbrance of Royalty. Recipient may transfer, pledge, mortgage, charge or otherwise encumber all or any part of its right, title and interest in and to the Net Smelter Returns royalty, except that Payor shall be under no obligation to make its payments to such assignee, transferee, pledgee or other third party until Payor's receipt of written notice concerning the assignment, transfer or pledge.

Mining Claim Purchase Option Agreement Escrow Instructions

To: Thomas P. Erwin, Erwin & Thompson LLP, One E. Liberty Street, Suite 424, Reno, Nevada 89501

These Escrow Instructions ("Instructions") are given by Rubicon Resources Inc., Nevada corporation ("Rubicon"), J-Pacific Gold Inc., formerly known as Claimstaker Resources Ltd., a British Columbia corporation ("Claimstaker"), and Golden Trend Resources Inc., a Nevada corporation ("Golden Trend"), in accordance with the Mining Claim Purchase Option Agreement (the "Agreement") and the Deed With Reservation of Net Smelter Returns Royalty among Rubicon, Claimstaker and Golden Trend.

You are advised that in accordance with the terms of the Agreement and the Deed With Reservation of Net Smelter Returns Royalty, the parties have agreed that Claimstaker and Golden Trend shall execute a Deed of Unpatented Mining Claims (the "Reconveyance Deed") to be deposited with you and to be delivered in accordance with the instructions of Sections 8 and 9 of the Agreement. In connection with the Agreement, we enclose the executed original of the Reconveyance Deed.

You are authorized and directed to hold in escrow each of the enclosed executed original documents in accordance with the terms of the Agreement and these instructions.

A. Surrender of Property or Termination of Interest.

If Claimstaker or Golden Trend, as applicable, elects to surrender the Property, on delivery to you from Claimstaker or Golden Trend, as applicable, of written notice from Claimstaker or Golden Trend, as applicable, of such surrender, you shall enter the date of surrender on and deliver to Rubicon, at Rubicon's address described below, the Reconveyance Deed. If Claimstaker or Golden Trend, as applicable, defaults in its obligations under the Agreement or the Deed With Reservation of Net Smelter Returns Royalty executed by the parties and the interest of Claimstaker or Golden Trend, as applicable, is terminated in accordance with the terms of the Deed With Reservation of Net Smelter Returns Royalty, on delivery to you from Rubicon of written notice that the Deed With Reservation of Net Smelter Returns Royalty has been terminated in accordance with its terms and proof of Rubicon's delivery and receipt by Claimstaker or Golden Trend, as applicable, of the notice of default and termination in accordance with the terms of the Deed With Reservation of Net Smelter Returns Royalty, you shall not act on such written notice until ten (10) business days following your receipt of such written notice. If after the expiration of the ten (10) day period following your receipt of the written notice you have not received from Claimstaker or Golden Trend, as applicable, a written objection to the notice of termination, or in the case of a default by Golden Trend to timely pay the federal annual mining claim maintenance fees and record proof of such payment and a notice of intent to hold, you have not received from Golden Trend proof certified by an authorized officer of the United States Bureau of Land Management that Golden Trend timely paid the federal annual mining claim maintenance fees for the mining claims subject to the Deed you shall enter the date of termination on and deliver the enclosed Reconveyance Deed to Rubicon, at Rubicon's address described below. Except in the case of Golden Trend's failure to timely pay the federal annual mining claim maintenance fees in accordance with the Deed, if within the ten (10) day period following your receipt of the written notice Claimstaker or Golden Trend, as applicable, delivers notice to you of its objection to Rubicon's written notice of termination, you shall hold all documents deposited in escrow until you receive further instructions executed by Rubicon and Claimstaker or Golden Trend, as applicable, for delivery of the documents or you are instructed to deliver the documents in accordance with an order entered by a court having jurisdiction of Rubicon, Claimstaker and Golden Trend.

B. Rights of Escrow Agent.

In consideration of your acting as Escrow Agent, as defined in the Agreement, Rubicon and Claimstaker agree that you shall in no case or event be liable for the failure of any of the conditions of this escrow or any damage caused by the exercise of your responsibilities, except your gross negligence or willful misconduct with respect to the escrow. Your responsibility is limited to the delivery of the documents received in the escrow without any warranty or guarantee of any nature in connection with such documents.

Rubicon and Claimstaker agree that if any dispute arises between Rubicon and Claimstaker or if any legal action or other proceeding is commenced by either of Rubicon or Claimstaker against the other, you shall not be required to decide or resolve such dispute, action or proceeding or to independently take any action in respect of the dispute, action or proceeding, and you shall not be required to deliver the Reconveyance Deed unless all of the parties instruct you in writing that you may deliver the Reconveyance Deed or you are instructed to do so in accordance with an order entered by a court having jurisdiction of Rubicon, Claimstaker and Golden Trend. In such event, you shall have the right to commence an action naming Rubicon, Claimstaker and Golden Trend as parties for the purpose of depositing the documents deposited in escrow. If any of Rubicon, Claimstaker or Golden Trend commences an action against the other and either party requests that you deliver to the court the documents deposited in escrow, you are authorized to deposit the documents in court. On your deposit in court of the documents held in escrow, your responsibilities under these Instructions shall terminate.

C. Substitution of Escrow Agent.

Thomas P. Erwin may resign as Escrow Agent by delivering written notice to Rubicon, Claimstaker and Golden Trend. Rubicon, Claimstaker and Golden Trend may substitute another person as Escrow Agent by delivering an executed amendment of these Instructions appointing the substitute Escrow Agent. Thomas P. Erwin shall deliver the documents deposited in escrow to the substituted Escrow Agent. If the parties are unable to agree to the appointment of a substitute Escrow Agent, the Escrow Agent shall be Flowers Escrow Company, 885 Tyler Way, Sparks, Nevada 8943 1.

D. Acknowledgment of Representation.

Rubicon, Claimstaker and Golden Trend acknowledge that Thomas P. Erwin is a member of the firm of Erwin & Thompson LLP, counsel for Claimstaker and Golden Trend. The parties acknowledge that Thomas P. Erwin is acting as escrow agent as an accommodation to the parties, and that by undertaking to act as Escrow Agent Thomas P. Erwin shall not be deemed to be counsel for or the agent (except Escrow Agent under these Instructions) or representative of Rubicon. Thomas P. Erwin's agreement to act as Escrow Agent shall not be asserted as nor constitute grounds for disqualification of Thomas P. Erwin, or any law firm of which he is or may become a member, as counsel for Claimstaker and Golden Trend in any dispute, legal action or other proceeding between Rubicon and Claimstaker and Golden Trend.

E. Notices.

Any notices required or authorized to be given by this Agreement shall be in written form. Any notices required or authorized to be given by this Agreement may be sent by registered or certified delivery, postage prepaid and return receipt requested, addressed to the proper party at the following address or such address as the party shall have designated to the other parties in accordance with this paragraph. Any notice required or authorized to be given by this Agreement shall be deemed to have been sufficiently given or served in written form if mailed as provided herein, personally delivered to the proper party, or sent by telex, telegraph, telecopier or other means of electronic transmission, and actually received by such party. Such notice shall be effective on the date of receipt by the addressee party.

If to Rubicon: Rubicon Resources Inc. PO Box 4940 Sparks, Nevada 89432 If to Claimstaker or Golden Trend: J-Pacific Gold Inc. Golden Trend Resources Inc. Suite 1440 1166 Alberni Street Vancouver, BC, Canada WE 3Z3 If to Thomas P. Erwin: Erwin & Thompson LLP PO Box 40817 Reno, Nevada 89501

Mining Claim Purchase Option Agreement Escrow Instructions

To: Thomas P. Erwin, Erwin & Thompson LLP, One E. Liberty Street, Suite 424, Reno, Nevada 89501

These Escrow Instructions ("Instructions") are given by Rubicon Resources Inc., Nevada corporation ("Rubicon"), J-Pacific Gold Inc., formerly known as Claimstaker Resources Ltd., a British Columbia corporation ("Claimstaker"), and Golden Trend Resources Inc., a Nevada corporation ("Golden Trend"), in accordance with the Mining Claim Purchase Option Agreement (the "Agreement") and the Deed With Reservation of Net Smelter Returns Royalty among Rubicon, Claimstaker and Golden Trend.

You are advised that in accordance with the terms of the Agreement and the Deed With Reservation of Net Smelter Returns Royalty, the parties have agreed that Claimstaker and Golden Trend shall execute a Deed of Unpatented Mining Claims (the "Reconveyance Deed") to be deposited with you and to be delivered in accordance with the instructions of Sections 8 and 9 of the Agreement. In connection with the Agreement, we enclose the executed original of the Reconveyance Deed.

You are authorized and directed to hold in escrow each of the enclosed executed original documents in accordance with the terms of the Agreement and these instructions.

A. Surrender of Property or Termination of Interest.

If Claimstaker or Golden Trend, as applicable, elects to surrender the Property, on delivery to you from Claimstaker or Golden Trend, as applicable, of written notice from Claimstaker or Golden Trend, as applicable, of such surrender, you shall enter the date of surrender on and deliver to Rubicon, at Rubicon's address described below, the Reconveyance Deed. If Claimstaker or Golden Trend, as applicable, defaults in its obligations under the Agreement or the Deed With Reservation of Net Smelter Returns Royalty executed by the parties and the interest of Claimstaker or Golden Trend, as applicable, is terminated in accordance with the terms of the Deed With Reservation of Net Smelter Returns Royalty, on delivery to you from Rubicon of written notice that the Deed With Reservation of Net Smelter Returns Royalty has been terminated in accordance with its terms and proof of Rubicon's delivery and receipt by Claimstaker or Golden Trend, as applicable, of the notice of default and-termination in accordance with the terms of the Deed With Reservation of Net Smelter Returns Royalty, you shall not act on such written notice until ten (10) business days following your receipt of such written notice. If after the expiration of the ten (10) day period following your receipt of the written notice you have not received from Claimstaker or Golden Trend, as applicable, a written objection to the notice of termination, or in the case of a default by Golden Trend to timely pay the federal annual mining claim maintenance fees and record proof of such payment and a notice of intent to hold, you have not received from Golden Trend proof certified by an authorized officer of the United States Bureau of Land Management that Golden Trend timely paid the federal annual mining claim maintenance fees for the mining claims subject to the Deed, you shall enter the date of termination on and deliver the enclosed Reconveyance Deed to Rubicon, at Rubicon's address described below. Except in the case of Golden Trend's failure to timely pay the federal annual mining claim maintenance fees in accordance with the Deed, if within the ten (10) day period following your receipt of the written notice Claimstaker or Golden Trend, as applicable, delivers notice to you of its objection to Rubicon's written notice of termination, you shall hold all documents deposited in escrow until you receive further instructions executed by Rubicon and Claimstaker or Golden Trend, as applicable, for delivery of the documents or you are instructed to deliver the documents in accordance with an order entered by a court having jurisdiction of Rubicon, Claimstaker and Golden Trend.

B. Rights of Escrow Agent.

In consideration of your acting as Escrow Agent, as defined in the Agreement, Rubicon and Claimstaker agree that you shall in no case or event be liable for the failure of any of the conditions of this escrow or any damage caused by the exercise of your responsibilities, except your gross negligence or willful misconduct with respect to the escrow. Your responsibility is limited to the delivery of the documents received in the escrow without any warranty or guarantee of any nature in connection with such documents.

Rubicon and Claimstaker agree that if any dispute arises between Rubicon and Claimstaker or if any legal action or other proceeding is commenced by either of Rubicon or Claimstaker against the other, you shall not be required to decide or resolve such dispute, action or proceeding or to independently take any action in respect of the dispute, action or proceeding, and you shall not be required to deliver the Reconveyance Deed unless all of the parties instruct you in writing that you may deliver the Reconveyance Deed or you are instructed to do so in accordance with an order entered by a court having jurisdiction of Rubicon, Claimstaker and Golden Trend. In such event, you shall have the right to commence an action naming Rubicon, Claimstaker and Golden Trend as parties for the purpose of depositing the documents deposited in escrow. If any of Rubicon, Claimstaker or Golden Trend commences an action against the other and either party requests that you deliver to the court the documents deposited in escrow, you are authorized to deposit the documents in court. On your deposit in court of the documents held in escrow, your responsibilities under these Instructions shall terminate.

C. Substitution of Escrow Agent.

Thomas P. Erwin may resign as Escrow Agent by delivering written notice to Rubicon, Claimstaker and Golden Trend. Rubicon, Claimstaker and Golden Trend may substitute another person as Escrow Agent by delivering an executed amendment of these Instructions appointing the substitute Escrow Agent. Thomas P. Erwin shall deliver the documents deposited in escrow to the substituted Escrow Agent. If the parties are unable to agree to the appointment of a substitute Escrow Agent, the Escrow Agent shall be Flowers Escrow Company, 885 Tyler Way, Sparks, Nevada 8943 1.

D. Acknowledgment of Representation.

Rubicon, Claimstaker and Golden Trend acknowledge that Thomas P. Erwin is a member of the firm of Erwin & Thompson LLP, counsel for Claimstaker and Golden Trend. The parties acknowledge that Thomas P. Erwin is acting as escrow agent as an accommodation to the parties, and that by undertaking to act as Escrow Agent Thomas P. Erwin shall not be deemed to be counsel for or the agent (except Escrow Agent under these Instructions) or representative of Rubicon. Thomas P. Erwin's agreement to act as Escrow Agent shall not be asserted as nor constitute grounds for disqualification of Thomas P. Erwin, or any law firm of which he is or may become a member, as counsel for Claimstaker and Golden Trend in any dispute, legal action or other proceeding between Rubicon and Claimstaker and Golden Trend.

E. Notices.

Any notices required or authorized to be given by this Agreement shall be in written form. Any notices required or authorized to be given by this Agreement may be sent by registered or certified delivery, postage prepaid and return receipt requested, addressed to the proper party at the following address or such address as the party shall have designated to the other parties in accordance with this paragraph. Any notice required or authorized to be given by this Agreement shall be deemed to have been sufficiently given or served in written form if mailed as provided herein, personally delivered to the proper party, or sent by telex, telegraph, telecopier or other means of electronic transmission, and actually received by such party. Such notice shall be effective on the date of receipt by the addressee party.

If to Rubicon: Rubicon Resources Inc.
PO Box 4940
Sparks, Nevada 89432
If to Claimstaker or Golden Trend: J-Pacific Gold Inc.
Golden Trend Resources Inc.
Suite 1440 1166 Alberni Street
Vancouver, BC, Canada V6E 3Z3
If to Thomas P. Erwin: Erwin & Thompson LLP
PO Box 40817
Reno, Nevada 89501
EX-10 16 hc.htm PROPERTY AGREEMENT HC HC-KM agreement Thursday, May 23, 2002

LETTER AGREEMENT: HC CLAIMS

This letter agreement is by and between J-Pacific Gold Inc., a registered corporation in British Columbia, Canada (J-Pacific) and KM Exploration LLC, a Nevada corporation (KM).

1. KM represents that it is the sole owner of twenty (20) unpatented mining claims (The Property) located in Eureka County, Nevada as described in Exhibit A attached to this document, that the claims have been properly filed with the county and BLM and that the claims are in good standing with no liens or obligations outstanding against them.

2. In return for $1.00 and other good and valuable consideration, KM grants to J-Pacific a mining lease with option to purchase on all of its interest in The Property under the following terms and conditions:

A. All dollar amounts are in US dollars.

B. Upon signing J-Pacific shall pay to KM the sum of $3,470.00 as reimbursement of KM's acquisition costs.

C. Royalty: KM retains a 3% NSR royalty interest in The Property:

1) KM grants to J-Pacific an option to purchase up to two (2) percentage points of the NSR royalty for $1,000,000 per percentage point.
2) Federal and State royalties, if any, shall be deducted as an expense prior to calculation of the retained NSR royalty.
3) Advanced minimum royalty (AMR) payments: J-Pacific shall pay AMR payments to KM, which is cumulatively deductible from any production royalties due, under the following schedule:
a. $5,000 upon signing.
b. $10,000 at the beginning of year 2, due on or before the anniversary date.
c. $15,000 at the beginning of year 3, due on or before the anniversary date.
d. $20,000 at the beginning of year 4, due on or before the anniversary date.
e. $30,000 at the beginning of year 5 and at the beginning of each year thereafter, due on or before the respective anniversary dates.

D. Share issuance: J-Pacific shall issue shares of the company to KM, subject to exchange approval, under the following schedule:

1) 20,000 shares upon signing.
2) 30,000 shares at the beginning of year 2.

E. Mining Lease term: 10 years, renewable for additional 10-year terms with written notice from J-Pacific.

F. Option to purchase: At any time following the total expenditure of $500,000, J-Pacific may, by notifying KM and paying $20,000, exercise it's option to purchase 100% of The Property subject to the NSR Royalty, AMR payments and share issuance schedule described above.

G. Area of Interest: An Area of Interest, subject to the 3% NSR royalty described above, shall extend to all unpatented mining claims acquired by J-Pacific within three thousand (3,000) feet of the boundaries of The Property, excluding lands held by others.

H. Claim Maintenance: All filings and fees to maintain The Property will be the responsibility of J-Pacific, with copies to KM at least 30 days prior to the due dates or KM will have the option to make those filings and J-Pacific will reimburse KM twice the amount of the actual fees paid by KM within 60 days or forfeit all rights to The Property.

I. Termination:

1) J-Pacific may terminate this agreement at any time by providing written notice to KM and paying all fees, if any, due during the ninety (90) days following the date of the written notice.
2) Upon termination, J-Pacific shall deliver to KM a quit claim deed granting to KM all of J-Pacific's interest in any unpatented mining claims located by J-Pacific within the Area of Interest as defined in Paragraph F above.

J. Data: Upon termination J-Pacific shall provide KM all cores, cuttings, samples and all factual data it has generated.

K. Company will be responsible for all environmental damages caused by it and will indemnify KM for these environmental damages.

L. All terms will be binding upon the assigns, heirs, and successors of each party.

M. The parties to this agreement shall work diligently to conclude a formal Mining Lease with Option to Purchase Agreement as soon as practicable.

EX-10 17 no75.htm PROPERTY AGREEMENT NO75 No. 75 Agreements SHARE PURCHASE AGREEMENT

THIS AGREEMENT dated for reference the 1st day of August 1999.

BETWEEN:

CLAIMSTAKER RESOURCES LTD.

(the "Vendor")

AND:

NO. 75 CORPORATE VENTURES LTD.

(the "Company")

AND:

JIPANGU INC.

(the "Purchaser")

WITNESSES THAT WHEREAS:

A. The Vendor is the registered and beneficial owner of all of the issued and outstanding shares of the Company;

B. Pursuant to an agreement dated April 24, 1998, as amended by letter agreement dated September 1, 1998 and November 30, 1998 (together the "Initial Agreement") the Vendor agreed to sell and the Purchaser agreed to purchase up to a 50% interest in the Blackdome Mine on the terms and conditions described in the Initial Agreement;

C. The Vendor and the Purchaser have agreed that the purchase and sale shall be effected through the transfer and issuance of shares in the capital of the Company, as at the date of the Initial Agreement, and have agreed to enter into this share purchase agreement in pursuance of the foregoing.

THEREFORE in consideration of the premises and the mutual covenants and agreements herein set forth, the parties hereto covenant and agree each with the other as follows:

1. INTERPRETATION

1.1 In this Agreement, including the schedules hereto, except as otherwise expressly provided:

(a) "Agreement" means this agreement, including the preamble and the Schedules hereto, as it may from time to time be supplemented or amended;

(b) "Financial Statements" means the financial statements of the Company attached as Schedule "A" hereto;

(c) "Liens" means all liens, mortgages, debentures, charges, hypothecations, pledges or other security interests or encumbrances of whatever kind;

(d) "Mine" means those mineral claims, leases and crown grants set out in Schedule "B" hereto and the mining facilities located thereon.

(e) "Shareholders' Agreement" means that shareholders' agreement attached as Schedule "C" hereto.

(f) "Treasury Shares" means the 1,962,886 shares of the Company subscribed for by the Purchaser hereunder at a price of $0.866 per share

(g) "Vendor's Shares" means the 915,883 shares of the Vendor in the Company to be sold to the Purchaser hereunder at a price of $1.41939 per share;

(h) all references in this Agreement to a designated "Section" or other subdivision or to a Schedule are to the designated Section or other subdivision of, or Schedule to, this Agreement;

(i) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision or Schedule;

(j) the headings are for convenience only and do not form a part of this Agreement and are not intended to interpret, define, or limit the scope, extent or intent of this Agreement or any provision hereof;

(k) the singular of any term includes the plural, and vice versa; the use of any term is equally applicable to any gender and, where applicable, a body corporate; the word "or" is not exclusive and the word "including" is not limiting (whether or not non-limiting language, such as "without limitation" or "but not limited to" or words of similar import, is used with reference thereto);

1.2 The following are the Schedules to this Agreement:

SCHEDULE DESCRIPTION A Financial Statements B Mine Property C Shareholders' Agreement D Mine Encumbrances

2. PURCHASE AND SALE

2.1 Subject to the terms and conditions of this Agreement, the Vendor hereby sells and assigns to the Purchaser, and the Purchaser hereby purchases from the Vendor a total of 915,883 of the shares of the Company held by the Vendor free and clear of any Liens.

2.2 The purchase price payable by the Purchaser for the Vendor's Shares is a total of $1,300,000 and the Vendor hereby acknowledges receipt of same.

3. SUBSCRIPTION

3.1 The Purchaser hereby subscribes for 1,962,886 common shares of the Company and the Company agrees to cause such shares to be issued in the name of the Purchaser as fully paid and non-assessable shares.

3.2 The acquisition cost of the Treasury Shares is $1,700,000 and the Company hereby acknowledges receipt of same.

4. WARRANTIES AND REPRESENTATIONS OF THE VENDOR AND THE COMPANY

4.1 The Vendor and the Company jointly and severally warrant and represent to the Purchaser, with the intent that the Purchaser will rely thereon in entering into this Agreement and in concluding the purchase and sale and subscription contemplated herein that:

(a) the Vendor is the registered holder and beneficial owner of the Vendor's Shares free and clear of all Liens;

(b) the issued and outstanding share capital of the Company is 2,800,000 common shares, all of which are legally and beneficially owned by the Vendor;

(c) with the exception of this Agreement, no party has any agreement, right or option, consensual or arising by law, present or future, contingent or absolute, or capable of becoming an agreement, right or option:

(i) to require the Company to issue or allot any further or other shares in its capital or any other security convertible or exchangeable into shares in its capital or to convert or exchange any securities into or for shares in the capital of the Company;

(ii) to require the Company to purchase, redeem or otherwise acquire any of the issued and outstanding shares in its capital; or

(iii) to purchase or otherwise acquire any shares in the capital of the Company;

(d) each of the Vendor and the Company have full corporate power and authority to enter into this Agreement on the terms and conditions herein set forth and to perform their obligations hereunder and this Agreement has been duly authorized, executed and delivered by each of the Vendor and the Company and constitutes a legal, valid and binding obligation of each of the Vendor and the Company, enforceable in accordance with its terms;

(e) the Company is duly incorporated, validly existing and in good standing under the laws of the Province of British Columbia;

(f) the directors and officers of the Company are as follows:

Richard Somerville Karl Hampel

(g) the Company is the legal and beneficial owner of the Mine, free and clear of all liens, charges and encumbrances other than as set out in Schedule "D" hereto and there are no royalty payments to be made in connection with the Mine;

(h) the Company is duly registered to carry on business in all jurisdictions in which the Company carries on business except where the failure to so register would not have a material adverse effect on the Company;

(i) the Company has the power, authority and capacity to carry on its business as presently conducted by it; the Company holds all licences and permits required for the conduct in the ordinary course of its business as presently conducted by it and all such licences and permits are in good standing and the conduct and uses of the same by the Company are in compliance with all laws, and other restrictions, rules, regulations and ordinances applicable to the Company and its respective business, save and except for breaches which do not have a material adverse effect on the Company or its business as presently conducted;

(k) the making of this Agreement and the completion of the transactions contemplated hereby and the performance of and compliance with the terms hereof will not:

(i) conflict with or result in a breach of or violate any of the terms, conditions, or provisions of the constating documents of the Company;

(ii) conflict with or result in a breach of or violate any of the terms, conditions or provisions of any law, judgment, order, injunction, decree, regulation or ruling of any court or governmental authority, domestic or foreign, to which the Company or the Vendor is subject or constitute or result in a default under any agreement, contract or commitment to which the Company or the Vendor is a party;

(iii) give to any person any remedy, cause of action, right of termination, cancellation or acceleration in or with respect to any understanding, agreement, contract, or commitment, written, oral or implied, to which the Company is a party;

(iv) give to any government or governmental authority including any governmental department, commission, bureau, board, or administrative agency any right of termination, cancellation, or suspension of, or constitute a breach of or result in a default under any permit, license, control, or authority issued to the Company and which is necessary or desirable in connection with the conduct and operation of the businesses currently conducted by the Company;

(v) constitute a default by the Company or an event which, with the giving of notice or lapse of time or both, might constitute an event of default or non-observance under any agreement, contract, indenture or other instrument relating to any indebtedness of any of the Company which would give any party the right to accelerate the maturity for the payment of any amount payable under that agreement, contract, indenture, or other instrument;

so as to have a material adverse effect on the Company;

(l) the Financial Statements were prepared on an accrual basis in accordance with Canadian generally accepted accounting principles applied on a basis consistent with prior years and are true and correct in every material respect and accurately and fairly represent the assets and liabilities and the financial condition of the Company as at the date thereof;

(m) there is no indebtedness of the Company, including to the Vendor, which is not disclosed or reflected in the Financial Statements;

(n) the Company has been assessed for income tax for all years to and including April 30, 1997, and the Company has withheld and remitted to all applicable tax collecting authorities all amounts required to be remitted to all tax collecting authorities respecting payments to employees or to non-residents, or otherwise and has paid all instalments of corporate taxes due and payable as of the date hereof;

(o) all tax returns and reports of the Company required by law to be filed prior to the date hereof including all income tax returns and all other corporate tax returns required to be filed with any governmental taxing -authority or board have been filed and are true, complete and correct, and all taxes and other government charges including all income, excise, sales, business-and property taxes and other rates, charges, assessment, levies, duties, taxes, contributions, fees and licenses required to be paid have been paid, and if not required to be paid as at the date hereof, have been accrued in the Financial Statements;

(p) adequate provision has been made for taxes payable by the Company which are not yet due and payable and there are no agreements, waivers or other arrangements providing for an extension of time with respect to the assessment or reassessment of any tax return by any taxing authority or for the filing of any tax return by or payment of any tax, governmental charge or deficiency by the Company, and to the Vendor's knowledge, there are no contingent tax liabilities or any grounds which would prompt a re-assessment;

(q) the Vendor does not have any specific information relating to the Company which is not generally known by, and which to the knowledge of the Vendor has not been disclosed to the Purchaser and which if known could reasonably be expected to have a material adverse effect on the Company;

(r) (i) the business of the Company as currently carried on by it, and in particular the conduct of the Company as owner and operator of the Mine, complies with all applicable laws, judgments, decrees, orders, injunctions, rules, statutes and regulations of all courts, arbitrators or governmental authorities, including all environmental, health and safety statutes and regulations except where the failure to comply would not have a material adverse effect on the Company;

(ii) the Company' business, assets or properties are not subject to any Judicial or administrative proceeding alleging the violation of any applicable environmental, health or safety law, judgment, decree, order, injunction, rule, statute or regulation except where such proceeding would not have a material adverse effect on the Company;

(s) since the date of the Financial Statements, there has not been any occurrence or event which has had, or might reasonably be expected to have, a material adverse effect on the business of the Company as currently carried on or the results of its operations except as disclosed to the Purchaser;

(t) except as disclosed to the Purchaser, there are no actions, suits, judgments, investigations or proceedings outstanding or pending or to the knowledge of the Vendor threatened against or affecting the Company at law or in equity or before or by any court or federal, state, municipal or other governmental authority, department, commission, board, tribunal, bureau or agency and the Company is not a party to or to the knowledge of the Vendor and the Company threatened with any litigation which in either case would have a material adverse effect on the Company;

5. NON-MERGER

5.1 The representations and warranties of the Vendor and the Company contained herein will survive the Closing Date and notwithstanding the completion of the transactions herein contemplated, the waiver of any condition contained herein (unless such waiver expressly releases a partner of such representation and warranty), or any investigation by the Purchaser, the same will remain in full force and effect for a period of two years hereafter.

6. SHAREHOLDERS' AGREEMENT

6.1 The parties hereto shall enter into the Shareholders' Agreement concurrent with the execution of this Agreement.

7. COUNTERPARTS

7.1 This Agreement may be executed in any number of facsimile counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same document.

8. TIME OF THE ESSENCE

8.1 Time is of the essence of this Agreement.

9. ENTIRE AGREEMENT

9.1 This Agreement, together with the agreements and documents provided for herein, contains the entire agreement between the parties hereto in respect of the purchase and sale of the Vendor's Shares and the issuance of the Treasury Shares and there are no warranties, representations, terms, conditions or collateral agreements, express or implied, other than expressly set forth or provided for in this Agreement.

10. FURTHER ASSURANCES

10.1 The parties will execute and deliver such further documents and instruments and do all such acts and things as may be reasonably necessary or requisite to carry out the full intent and meaning of this Agreement and to effect the transactions contemplated by this Agreement, and the parties will cooperate in respect of any requirement to file an application with Investment Canada.

11. SUCCESSORS AND ASSIGNS

11.1 This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.

12. PROPER LAW

12.1 This Agreement will be governed by and construed In accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein and the parties will attorn to the Courts thereof.

SCHEDULE A FINANCIAL STATEMENTS

NO. 75 CORPORATE VENTURES LTD

FINANCIAL STATEMENTS APRIL 30, 1998 AND 1997

Unaudited

NO. 75 CORPORATE VENTURES LTD.

BALANCE SHEET -APRIL 30,1998 AND 1997

(Unaudited)

ASSETS

CROWN GRANTS:

MOOSEHORN L7871
SADIE L7872
WHISKEY JACK L7873
PINON PINE L7874
ELECTRUM FR L7875
BONANZA L7876
ELDORADO L7877
BLACKDOME L7878
PTARMIGAN L7879
SUGAR BOWL L7880

Notes
(1) Mineral Leases are good for 30 years from date of issuance as long as the annual lease payments are made on or before the expiry dates. In this case they are good until 2017 and 2019 respectively.

SCHEDULE C

SHAREHOLDERS AGREEMENT

THIS AGREEMENT made as of the 1st day of August, 1999

BETWEEN:

CLAIMSTAKER RESOURCES LTD.

(hereinafter called "Claimstaker")

OF THE FIRST PART AND:

JIPANGU INC.

(hereinafter called "Jipangu")

OF THE SECOND PART AND:

NO. 75 CORPORATE VENTURES LTD.

(hereinafter called the "Company")

OF THE THIRD PART

WHEREAS:

A. Claimstaker and Jipangu each own 50% of the issued and outstanding shares of the Company.

B. The Company will carry on the business of owning and operating the Blackdome Mine;

C. Claimstaker, Jipangu and the Company desire to enter into this Agreement in order to record their respective rights and obligations.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereto agree with the other as follows:

1. DEFINITIONS

1.1 In this Agreement, the following words and phrases will have the following meanings:

(a) "Affiliate" means, with respect to any Shareholder, any corporation which is directly or indirectly controlled by such Shareholder and, if any Shareholder shall be a Corporation, means, in addition to the foregoing, any corporation which Controls such corporate Shareholder;

(b) "Blackdome Mine" means the Property and the mining facilities located thereon;

(c) "Board" means the board of directors of the Company;

(d) "Control" or "Controls" means:

(i) the Fight to exercise a majority of the votes which may be put at a general meeting of a corporation; and

(ii) the right to elect or appoint directly or indirectly a majority of the directors of a corporation or other persons who have the right to manage or supervise the management of the affairs and business of the corporation;

(e) "Interest" means all the right, title and interest of a Shareholder in and to any of the Shares, any Loan and accrued interest thereon and any other right or claim a Shareholder may have against the Company as a Shareholder and the Shareholder's interest in and to this Agreement;

(f) "Loan" means at the relevant time any amounts advanced and outstanding by a Shareholder to the Company;

(g) "Operator" means Claimstaker or if replaced in accordance with the terms of this Agreement such other person as may be engaged by the Company to operate the Blackdome Mine on behalf of the Company;

(h) "Operator's Agreement" means that agreement contemplated to be entered into pursuant to clause 3. 1;

(i) "Products" means any and all ores (and concentrates derived therefrom) and minerals, precious and base, metallic and non-metallic mined from the Blackdome Mine and all by-products from the production thereof at their highest state of beneficiation at the Blackdome Mine.

(j) "Property" means those mineral claims, leases and crown grants set out in Schedule "A" hereto;

(k) "Shareholders" means Claimstaker and Jipangu or their respective successors or permitted assigns and "Shareholder" means any one of them;

(1) Shares" means at the relevant time the shares without par value in the capital of the Company issued and outstanding.

2. CONDUCT OF THE AFFAIRS OF THE COMPANY

2.1 The Shareholders shall vote their Shares so that the Board shall be comprised of four directors and so that two nominees of each of the Shareholders are directors of the Company. In the event that a position on the Board shall be open for any reason whatsoever, the Shareholder whose nominee formerly occupied such position shall be entitled to nominate a new director to fill such vacancy.

2.2 In the event that a nominee or nominees to the Board of one of the Shareholders shall fall to vote and act as a director to carry out the provisions of this Agreement, then the Shareholders agree to exercise their right as shareholders of the Company and in accordance with the Articles of the Company to remove such nominee or nominees from the Board and to elect in the place or stead thereof such individuals who will use their best efforts to carry outthe provisions of this Agreement.

2.3 Unless otherwise provided herein the conduct of the business of the Company shall be governed in accordance with its Memorandum and Articles.

2.4 A quorum required for the transaction of business at a meeting of the Board shall be three directors or their alternates.

2.5 The following matters shall only be undertaken with the approval of at least 75 % of the directors present at any meeting of the Board:

(a) the sale, lease, transfer, mortgage, pledge or other disposition of the undertaking of the Company, or any of its subsidiaries;

(b) any increase or reduction in the authorized or issued capital of the Company;

(c) the consolidation, merger or amalgamation of the Company with any other company, association, partnership or legal entity;

(d) any single capital purchase of the Company in excess of $100,000;

(e) any borrowing by the Company or any of its subsidiaries which would result in the aggregate indebtedness of the Company (other than amounts due to Shareholders) being in excess of $100,000 at any one time; any loans by the Company or any of its subsidiaries to any Shareholders, or to an Affiliate;

(g) any transaction out of the ordinary course of business;

(h) any contract between the Company and any Shareholders or an Affiliate;

(1) a waiver of the appointment of an auditor of the Company; any change in the authorized signing officers in respect of any bank or other financial institution;

(k) the requirement for any further capital contributions from the Shareholders;

(1) the requirement for any further Shareholder's Loans pursuant to Article 4.3;

(m) the approval of any Program as submitted by the Operator;

(n) the removal of the Operator or the appointment of a new Operator; and

(o) the issuance of any shares of the Company to a party other than the Shareholders or an Affiliate of the Shareholders, provided that nothing in this Article 2.5 shall be construed so as to fetter the discretion of the directors of the Company or require such directors to act in a particular manner with respect to any of the foregoing matters.

3. OPERATION

3.1 The Company shall, subsequent to the execution of this agreement, enter into the Operator's Agreement with Claimstaker wherein Claimstaker will be engaged as the Operator to carry out the development of the Property and the operations of the Blackdome Mine on behalf of the Company.

3.2 In consideration of Claimstaker acting as the Operator, the Operator's Agreement shall provide that Claimstaker shall be entitled to a fee equal to 7% of the operating costs of the Blackdome Mine.

3.3 The Operator's Agreement may only be terminated or a new agreement entered into with the approval of the Board as provided for in Article 2.5(h) herein.

4. FINANCING AND SHAREHOLDERS CONTRIBUTIONS

4.1 Funds required from time to time by the Company will be obtained, to the greatest extent possible, by borrowing from a chartered bank or other institutional lender.

4.2 Except with the unanimous agreement of the Shareholders no Shareholder shall be obliged to enter into any agreement of guarantee with respect to the indebtedness of the Company or to pledge his credit on behalf of the Company. Any such guarantees shall be borne by the Shareholders parties hereto pro rata in proportion to the shareholdings in the Company (at the time of demand for payment by such bank or institution) and if any of the Shareholder discharges any liabilities of the Company either directly or pursuant to such guarantee given hereunder then the Shareholder discharging the liabilities shall have the right to be reimbursed by the party or parties not so contributing so that in the end result, each of the Shareholders shall have contributed in proportion as aforesaid.

4.3 Failing the ability of the Company to obtain funds as provided in Article 4.1 hereof and if approved by a majority of the Board, the Company may make a written request for a loan to all Shareholders. The Company's request for a loan shall be made to each Shareholder pro rata in proportion to his shareholdings in the Company. A Shareholder shall advance the money requested from him within 30 days of receipt of the written request for the loan. Unless specified in the Company's request the Loans shall not bear interest. No Shareholder shall, so long as he remains a Shareholder, demand repayment of his Loans. If the Company repays the Loans, in whole or in part, it shall do so pro rata in proportion to each Shareholder's contribution by way of Loan. If the Shareholders take security for their Loans, the security granted to each Shareholder shall rank pari passu, notwithstanding the priority of registration of any such security.

4.4 The Shareholders shall subordinate and postpone all Loans to permanent financing or other borrowing by the Company to the extent required by the Board.

5. DISTRIBUTION OF NET PROFIT

5.1 The profits of the Company available for distribution, after making such provisions and transfers to reserves as shall be required in the opinion of the Board and the Operator to meet expenses or anticipated expenses shall be distributed quarterly, within sixty (60) days of the end of each calendar quarter, firstly by way of repayment of Loans on a pro rata basis and secondly by way of dividend provided that it is open to a Shareholder to elect to receive such Loan repayments or dividends in gold and/or silver in which case such shareholder shall be entitled to receive such amount of gold and/or silver (valued using the average price of gold and silver for the previous 30 days as determined by the afternoon closing price on the London Metal Exchange) as shall be equal to the value of the dividend or loan repayments otherwise payable to such Shareholder.

6. RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL

6.1 Except as otherwise expressly permitted in this Agreement:

(a) no Shareholder shall sell, transfer or otherwise dispose or offer to sell, transfer or otherwise dispose, of any of his Interest unless that Shareholder (the"Offeror") first offers by notice in writing (the "Offer") to the other Shareholder (the "Other") the prior right to purchase, receive or otherwise acquire the same;

(b) the Offer shall set forth:

(i) the Interest offered for sale;

(ii) the consideration therefore expressed only in lawful money of Canada;

(iii) the terms and conditions of the sale; and

(iv) that the Offer is open for acceptance for a period of 30 days after receipt of such Offer by the Other;

(c) if, and to the extent the Offer is not accepted, the Offeror may sell, transfer or otherwise dispose of its remaining Interest to any other person, firm or corporation ("Third Party") only for the consideration and upon the terms and conditions as set out in the Offer but only within the period of 90 days after the expiry of the period for acceptance by the Other and, if the Offeror does not do so, the provisions of the Article 6.1 will again become applicable to the sale, transfer or other disposition of its Interest and so on from time to time;

(d) no disposition of any Interest permitted by this Article 6.1 shall be made unless the Third Party shall have entered into an agreement with the Other by which the Third Party shall be bound by and entitled to the benefit of the provisions of this Agreement and the Other shall enter into such an agreement; and

(e) any Shareholder who shall have disposed of all of its Interest in compliance with the provisions of this Agreement shall be entitled to the benefit of and be bound by only the rights and obligations which arose pursuant to this Agreement prior to such disposition.

6.2 Any Shareholder may sell, transfer or otherwise dispose of the whole or any part of its Interest to any of its Affiliates provided that the Shareholder and the Affiliate enter into an agreement with the other Shareholders that:

(a) the Affiliate will remain such so long as the Affiliate holds the Interest or any part thereof;

(b) prior to the Affiliate ceasing to be such, the Affiliate will transfer its Interest back to the Shareholder or to another Affiliate of the Shareholder provided that such other Affiliate enters into a similar agreement with the other Shareholders; and

(c) the Affiliate will otherwise be bound by and have the benefit of the provisions ofthis Agreement.

6.3 Any sale, transfer or other disposition referred to in Article 6.2 shall not release the Shareholder from his obligations hereunder.

6.4 Except as specifically provided herein, no Shareholder shall mortgage, pledge, charge, hypothecate or otherwise encumber his Interest or any part thereof without the prior written consent thereto of the other Shareholders, which consent may be arbitrarily withheld.

6.5 Notwithstanding any other provision of this Agreement, no Shareholder shall be entitled to sell, transfer or otherwise dispose of any of his Interest if it is at such time a Defaulting Shareholder as defined in Article 8 hereof, unless prior to or concurrently with such sale, transfer or other disposition he ceases to be a Defaulting Shareholder.

6.6 Notwithstanding any other provision of this Agreement, no Shareholder shall be entitled to sell, transfer or otherwise dispose of any of his Interest or any part thereof without first obtaining:

(a) the consent of the other Shareholder, if such action would permit any other party to accelerate or demand the payment of any indebtedness of the Company; or

(b) the consent of any other party, if such is required by agreement of the Company.

6.7 Upon execution of this Agreement, the Shareholders shall surrender to the Company, and there shall be legibly stamped or endorsed upon each certificate representing the shares held by the Shareholders, a statement as follows:

"The shares represented by this certificate are transferable only in compliance with and pursuant to the terms of an agreement between Claimstaker, Jipangu and the Company dated the 1st day of August, 1999."

7. COMPULSORY BUY-OUT

7.1 In this Article 7, unless the context otherwise requires, the following words and terms will have the respective meanings ascribed to them:

(a) "Compulsory Offer" means a notice in writing to the Recipient Shareholder and signed by the Instigating Shareholder pursuant to this Article 7;

(b) "Election Period" means the 60 day period from the date of receipt of the Compulsory Offer by the Recipient Shareholder;

(c) "Instigating Shareholder" means a Shareholder which elects to issue a Compulsory Offer pursuant to this Article 7;

(d)"Recipient Shareholder" means the Shareholder to whom the Compulsory Offer is given.

7.2 An Instigating Shareholder desiring to offer all, but not less than all, of its Interest to the Recipient Shareholder pursuant to this Article 7 will deliver the Compulsory Offer to the Recipient Shareholder, which Compulsory Offer will state that the Instigating Shareholder has determined to avail itself of the provisions of this Article 7, and will contain offers on the part of the Instigating Shareholder:

(a) to sell to the Recipient Shareholder the Instigating Shareholder's Interest, and stipulating:

(i) the number of Shares owned by the Instigating Shareholder and the price per Share thereof;

(ii) the amount of the Instigating Shareholder's Shareholders Loans; and

(iii) the terms and conditions of such sale, which terms and conditions must be commercially reasonable; and

(b) to buy from the Recipient Shareholder the Recipient Shareholder's Interest, and stipulating:

(i) that the price per Share will be the price set by the Instigating Shareholder pursuant to Article 7.2(a)(i);

(ii) the amount of the Shareholders Loan of the Recipient Shareholder; and

(iii) the sale of the Recipient Shareholder's Interest is to be made on the same terms and conditions as set forth in Article 7.2(a)(iii).

7.3 The Compulsory Offer will not be revocable without the written consent of the Recipient Shareholder within the Election Period.

7.4 The Recipient Shareholder will be entitled, at its option, within the Election Period, by notice in writing to the Instigating Shareholder to either:

(a) buy the Instigating Shareholder's Interest at the price and upon the terms and conditions of purchase and sale contained in the Compulsory Offer; or

(b) sell to the Instigating Shareholder the Recipient Shareholder's Interest at the price and upon the terms and conditions of purchase and sale contained in the Compulsory Offer.

7.5 If the Recipient Shareholder elects to buy the Instigating Shareholder's Interest, the Recipient Shareholder will advise the Instigating Shareholder by notice in writing of its election within the Election Period and upon the giving of such notice by the Recipient Shareholder, a binding contract of purchase and sale between the Recipient Shareholder and the Instigating Shareholder will be deemed to come into existence, which contract will contain the terms and conditions stipulated in the Compulsory Offer.

7.6 If the Recipient Shareholder elects to sell its Interest to the Instigating Shareholder, the Recipient Shareholder will advise the Instigating Shareholder by notice in writing of its election within the Election Period, and upon the giving of such notice by the Recipient Shareholder, a binding contract of purchase and sale between the Recipient Shareholder and the Instigating Shareholder will be deemed to come Into existence, which contract will contain the terms and condition stipulated in the Compulsory Offer.

7.7 If the Recipient Shareholder does not notify the Instigating Shareholder in writing within the Election Period of its election under Article 7.4, the Recipient Shareholder will be deemed to have accepted the Compulsory Offer of the Instigating Shareholder to sell the Recipient Shareholder's Interest at the price stipulated and upon the terms and conditions of purchase and sale specified in the Compulsory Offer and a binding contract of purchase and sale for such Interest between the Instigating Shareholder and the Recipient Shareholder will be deemed to come into existence. The Instigating Shareholder expressly waives any requirement to receive communication from the Recipient Shareholder confirming the Recipient Shareholder's acceptance of the Compulsory Offer and the deemed acceptance provided by this Article 7.7 will be a complete estoppel to any action taken or defence raised by any person which in any way contests the validity, formation or existence of the contract of purchase and sale stipulated by this Article 7.7.

7.8 Upon a contract coming into existence with respect to the sale of an Interest as provided in this Article 7, the Instigating Shareholder and the Recipient Shareholder will complete the purchase and sale at a closing which will occur at the principal place of business of the Company (or such other place as mutually agreed by the Shareholders) on the 15th day following the date of the final acceptance or deemed acceptance under this Article, at which time the parties will execute and deliver such certified cheques, promissory notes, share certificates, instruments, conveyances, assignments, escrow agreements, releases and other documents as may be reasonably required to effect and complete the sale as set out in the Compulsory Offer, and, if required by the remaining Shareholder, the departing Shareholder will deliver to the remaining Shareholder a written resignation of the departing Shareholder's nominee as a director and/or officer of the Company.

7.9 In respect of any disposal by a Shareholder of its Interest in compliance with the provisions of this Article 7, the remaining Shareholder and the Company will use their best efforts to cause to be discharged or cancelled any guarantee given by such departing Shareholder in respect of the Company.

8. DEFAULT

8.1 It is an event of default (a "Default") if a Shareholder (the "Defaulting Shareholder") (the other Shareholders being the "Non-Defaulting Shareholders"):

(a) fails to observe, perform or carry out any of his obligations hereunder and such failure continues for 30 days after the Non-Defaulting Shareholder has in writing demanded that such failure be cured;

(b) fails to take reasonable actions to prevent or defend assiduously, any action or proceeding in relation to any of its Interest for seizure, execution or attachment or which claims:

(i) possession;

(ii) sale;

(iii) foreclosure;

(iv) the appointment of a receiver or receiver-manager of its assets; or

(v) forfeiture or termination;

of or against any of the Interest of the Defaulting Shareholder, and such failure continues for 30 days after a Non-Defaulting Shareholder has in writing demanded that the same be taken or the Defaulting Shareholder fails to defend successfully any such action or proceeding;

(c) becomes a bankrupt or commits an act of bankruptcy or if a receiver or receiver-manager of its assets is appointed or makes an assignment for the benefit of creditors or otherwise;

8.2 In the event of a Default, the Non-Defaulting Shareholder(s) may do any one or more of the following:

(a) pursue any remedy available to them in law or equity, it being acknowledged by each of the Shareholders that specific performance, injunctive relief (mandatory or otherwise) or other equitable relief may be the only adequate remedy for a Default;

(b) take all actions in their own names or in the name of the Defaulting Shareholder, the Shareholders or the Company as may reasonably be required to cure the Default, in which event all payments, costs and expenses incurred therefor shall be payable by the Defaulting Shareholder to the Non-Defaulting Shareholder(s) on demand with interest as provided in Article 9.1 hereof;

(c) if applicable, implement the Default Loan procedure as set out in Article 8.3 hereof;

(d) waive the Default provided, however, that any waiver of a particular Default shall not operate as a waiver of any subsequent or continuing Default; or

(e) negotiate a mutually agreeable solution.

Loan Default

8.3 In addition to the rights of the Non-Defaulting Shareholder(s) provided for in Articles 8.2 hereof, if the Defaulting Shareholder defaults by refusing or failing to make a contribution or payment as provided in Article 4.3 hereof, then:

(a) the Non-Defaulting Shareholder(s), or either of them, may elect not to make their concomitant contribution or payment (if any), in which case:

(i) the Defaulting Shareholder is still in Default but the Non-Defaulting Shareholder(s) who so elect shall not be in default; and

(ii) if the Non-Defaulting Shareholder(s), or either of them, have already made their concomitant contribution or payment, the Company will forthwith pay to them the amount of such contribution or payment and the Shareholders will take all steps necessary to obtain the repayment thereof;

(b) if the Non-Defaulting Shareholder(s) do not elect as provided in Article 8.3(a) hereof, the Non-Defaulting Shareholder(s) may elect to make, and are hereby authorized by the Defaulting Shareholder to make, such contribution or payment (the "Default Loan") on behalf of and for the account of the Defaulting Shareholder in which event the Defaulting Shareholder shall pay, or cause to be paid, to the Non-Defaulting Shareholder(s):

(i) the amount of the Default Loan;

(ii) the reasonable costs of the Non-Defaulting Shareholder(s) relating to obtaining monies to make the Default Loan; and

(iii) interest calculated and payable on the first business day of each and every month on the amount of the Default Loan outstanding from time to time equal to: (1) the rate of interest payable by the Non-Defaulting Shareholder(s) to any third party on any monies borrowed by it to make the Default Loan plus 4% per annum; or (2) if any such monies are not borrowed by the Non-Defaulting Shareholder(s), the prime commercial lending rate of the bank of the Company at the time the Default Loan is made plus 4% per annum.

8.4 If and so long as a Shareholder is a Defaulting Shareholder as a result of a default under Article 4.3 hereof, all monies payable to that Defaulting Shareholder by the Company by way of dividends, repayment of loans or other distribution shall be paid to the Non-Defaulting Shareholder(s) until they have receive:

(a) the amounts set out in Article 8.3(b) hereof; or

(b) if the Non-Defaulting Shareholder(s) elected pursuant to Article 8.3(a) hereof an amount equal to the concomitant contribution of payment already made by the Non-Defaulting Shareholders in the circumstances set out in Article 8.3(a)(ii);

at which time the Defaulting Shareholder is no longer a Defaulting Shareholder; but in no event shall the Defaulting Shareholder be entitled to any amount of or credit for the amount not paid to it as aforesaid or any interest thereon.

8.5 Upon the request of the Non-Defaulting Shareholder(s), or any of them, from time to time, the Defaulting Shareholder and the directors of the Company appointed by him shall vote to ensure that any monies of the Company available for payment of dividends or repayment of loans will be declared and paid by the Company or its directors in accordance with Article 7 hereof.

9. INTEREST

9.1 If any Shareholder is required by this Agreement to pay monies to the other Shareholders, other than Default Loans, such monies shall bear interest at the prime commercial lending rate of the bank of the Company at the time the monies became payable plus 4% per annum calculated monthly until repayment.

10. CHANGE IN OWNERSHIP

10.1 In circumstances where the ownership positions of Claimstaker and Jipangu in the Company change from that detailed in paragraph A to the preamble to this Agreement, the parties hereto shall use their reasonable best efforts to amend this Agreement to more accurately reflect the adjusted ownership positions of Claimstaker and Jipangu.

10.2 This Agreement shall terminate in circumstances where the parties hereto have failed to amend this Agreement as contemplated in Article 10.1 hereof within 90 days following the change in ownership positions in the Company of Claimstaker and Jipangu.

11. GENERAL PROVISIONS

11.1 This Agreement shall terminate:

(a) if the Company ceases to carry on business, has a receiving order made against it, goes into bankruptcy either voluntarily or involuntarily or makes a proposal to its creditors;

(b) if the parties hereto consent in writing to the termination hereof.

11.2 The Shareholders shall execute such further assurances and other documents and instruments and do such further and other things as may be necessary to implement and carry out the intent of this Agreement.

11.3 The provisions herein constitute the entire agreement between the Shareholders and supersedes all previous expectations, understandings, communications, representations and agreements whether verbal or written between the Shareholders with respect to the subject matter hereof.

11.4 If any provision of this Agreement is unenforceable or invalid for any reason whatever, such unenforceability or invalidity shall not affect the enforceability or validity of the remaining provisions of this Agreement and such provision shall be severable from the remainder of this Agreement.

11.5 Any notice required to be given hereunder by any party shall be deemed to have been well and sufficiently given if mailed by prepaid registered mail, or telecopied to, or delivered at, the address of the other party hereinafter set forth:

If to Claimstaker or the Company:

1440, 1166 Alberni Street Vancouver, B. C. V6E 3Z3

If to Jipangu: 3-6-9 Kitashinagawa Shinagawa-ku, Tokyo Japan 140-0001

or at such other address as the other party may from time to time direct in writing, and any such notice shall be deemed to have been received, if mailed, five business days after the time of mailing, if delivered, upon the date of delivery, and if telecopied on the next business day after telecopying. If normal mail service is interrupted by strike, slowdown, force majeure or other cause, a notice sent by mail will not be deemed to be received until actually received, and the party sending the notice shall utilize any other such services which have not been so interrupted or shall deliver such notice in order to ensure prompt receipt thereof.

11.6 Time shall be of the essence hereof.

11.7 This Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia.

11.8 Should there be a disagreement or a dispute between the parties hereto with respect to this Agreement or the interpretation thereof, the same shall be referred to a single arbitrator pursuant to the Commercial Arbitration Act (British Columbia), and the determination of such arbitrator shall be final and binding upon the parties hereto.

11.9 The headings in this Agreement form no part of this Agreement and shall be deemed to have been inserted for convenience only.

11.10 This Agreement shall enure to the benefit of and be binding upon the Shareholders and the Company and their respective successors and permitted assigns.

IN WITNESS WHEREOF the parties hereto have executed these presents in the presence of their proper officers duly authorized as of the day and year first above written.

SCHEDULE D

MINE ENCUMBRANCES

1. The mill building and contained equipment and facilities are field as security as part of the Blackdome requirements for reclamation as required by the province of British Columbia.

2. From time to time the Company has and will enter into lease agreements for new equipment and facilities. By their nature, lease agreements are encumbered to the extent of the unpaid balance of the lease.

EX-10 18 rc.htm PROPERTY AGREEMENT RC RC Property agreement Thursday, May 23, 2002

LETTER AGREEMENT RC CLAIMS

This agreement is by and between J-Pacific Gold Inc., a registered corporation in British Columbia, Canada (J-Pacific) and KM Exploration LLC, a Nevada corporation (KM).

1. KM represents that it is the sole owner of twenty (20) unpatented mining claims (The Property) located in Elko County, Nevada as described in Exhibit A attached to this document, that the claims have been properly filed with the county and BLM and are in good standing with no liens or obligations outstanding against them.

2. In return for $1.00 and other good and valuable consideration, KM grants to J-Pacific a mining lease with option to purchase on all of its interest in The Property under the following terms and conditions:

A. All dollar amounts are in US dollars.

B. Upon signing J-Pacific shall pay to KM the sum of $3,470.00 as reimbursement of KM's acquisition costs.

C. Royalty: KM retains a 3% NSR royalty interest in The Property:

1) KM grants to J-Pacific an option to purchase up to two (2) percentage points of the NSR royalty for $1,000,000 per percentage point.
2) Federal and State royalties, if any, shall be deducted as an expense prior to calculation of the retained NSR royalty.
3) Advanced minimum royalty (AMR) payments: J-Pacific shall pay AMR payments to KM, which are cumulatively deductible from any production royalties due, under the following schedule:
a. $5,000 upon signing.
b. $10,000 at the beginning of year 2, due on or before the anniversary date.
c. $15,000 at the beginning of year 3, due on or before the anniversary date.
d. $20,000 at the beginning of year 4, due on or before the anniversary date.
e. $30,000 at the beginning of year 5 and at the beginning of each year thereafter, due on or before the respective anniversary dates.

D. Share issuance: J-Pacific shall issue shares of the company to KM, subject to exchange approval, under the following schedule:

1) 20,000 shares upon signing.
2) 30,000 shares at the beginning of year 2.

E. Mining Lease term: 10 years, renewable for additional 10-year terms with written notice from J-Pacific.

F. Option to purchase: At any time following the total expenditure of $500,000, J-Pacific may, by notifying KM and paying $20,000, exercise it's option to purchase 100% of The Property subject to the NSR Royalty, AMR payments and share issuance schedule described above.

G. Area of Interest: An Area of Interest, subject to the 3% NSR royalty described above, shall extend to all unpatented mining claims acquired by J-Pacific within three thousand (3,000) feet of the boundaries of The Property, excluding lands held by others.

H. Claim Maintenance: All filings and fees to maintain The Property will be the responsibility of J-Pacific, with copies to KM at least 30 days prior to the due dates or KM will have the option to make those filings and J-Pacific will reimburse KM twice the amount of the actual fees paid by KM within 60 days or forfeit all rights to The Property.

I. Termination:

1) J-Pacific may terminate this agreement at any time by providing written notice to KM and paying all fees, if any, due during the ninety (90) days following the date of the written notice.
2) Upon termination, J-Pacific shall deliver to KM a quit claim deed granting to KM all of J-Pacific's interest in any unpatented mining claims located by J-Pacific within the Area of Interest as defined in Paragraph F above.

J. Data: Upon termination J-Pacific shall provide KM all cores, cuttings, samples and all factual data it has generated.

K. Company will be responsible for all environmental damages caused by it and will indemnify KM for these environmental damages.

L. All terms will be binding upon the assigns, heirs, and successors of each party.

M. The parties to this agreement shall work diligently to conclude a formal Mining Lease with Option to Purchase Agreement as soon as practicable.

Exhibit A

RC Claims, Elko County, Nevada EX-10 19 zenda.htm PROPERTY AGREEMENT ZENDA Zenda Property agreement Claimstaker Resources Ltd.
Suite 1440 - 1188 West Georgia St.
Vancouver, B.C.
Canada V6E 4A2
Telephone: (604) 684-6677
Fax: (604) 684-6678

January 16, 1997

Mr. Greg Austin

and

Saga Exploration Company Ltd. P.O. Box 6479
Reno, Nevada 89513
USA

Dear Sirs:

LETTER AGREEMENT

The following are the terms and conditions; upon which Mr. Greg Austin (hereinafter called "Austin") and Saga Exploration Company Ltd. (hereinafter called "Saga") agree to sell to Claimstaker Resources Ltd. (hereinafter referred to as "Claimstaker") all of the shares (herein after referred to as the "Shares") of Equinox Resources (Calif.) Inc., a California registered company (hereinafter referred to as "Equinox") which company holds a 100 % interest in the Zenda property, more particularly described in Appendix A (hereinafter referred to as the "Property") and upon which Claimstaker agrees to purchase all the shares in Equinox.

1. Claimstaker agrees to deliver to Austin and Saga a maximum of two million and fifty thousand shares of the capital of Clainmstaker subject to the following terms.

(a) 1,000,000 shares of the capital of Claimstaker before March 31, 1997

(b)(i) 500,000 shares of the capital of Claimstaker within 30 days of the Zenda project being in production within 110% of the estimated capital cost budget (attached hereto in Appendix B and hereinafter referred to as the "Capital Cost")

(b)(ii) If the actual capital cost of putting the Property into production as contemplated is in excess of the Capital Cost by more than 10% then the number of shares referred to in I (b)(i) shall be reduced from 500,000 by 100,000 to 400,000 and the total number of shares delivered to Austin and Saga as part of the purchase of Equinox shall be reduced accordingly

(b)(iii) If the actual capital cost of putting the Property into production as contemplated is in excess of the Capital Cost by more than 20% then the total number of shares referred to in I (b)(i) will be reduced from 500,000 by 200,000 to 300,000 and the total number of shares delivered to Austin and Saga as part of the purchase of Equinox shall be reduced accordingly

(b)(iv) If the actual capital cost of putting the Property into production as contemplated is in excess of the Capital Cost by more than 30% then the total number of shares referred to in I (b)(i) shall be reduced from 500,000 by 300,000 to 200,000 shares and the total number of shares delivered to Austin and Saga as part of the purchase of Equinox shall be reduced accordingly

(b)(v) If the actual capital cost of putting the Property into production as contemplated is in excess of the Capital Cost by more than 40% then the number of shares referred to in I (b)(i) shall be reduced from 500,000 by 400,000 to 100,000 shares and the total number of shares delivered to Austin and Saga as part of the purchase of Equinox shall be reduced accordingly

(b)(vi) If the actual capital cost of putting the Property into production as contemplated is less than the Capital Cost by more than 5% then the number of shares referred to in I (b)(i) shall be increased from 500,000 by 25,000 to 525,000 shares and the total number of shares delivered to Austin and Saga as part of the purchase of Equinox shall be increased accordingly.

(b)(vii) If the actual capital cost of putting the Property into production as contemplated is less than the Capital Cost by more than 10%, then the number of shares referred to in I (b)(i) shall be increased from 500,000 by 50,000 to 550,000 shares and the total number of shares delivered to Austin and Saga as part of the purchase of Equinox shall be increased accordingly.

(c) 500,000 shares within 30 days of the Property producing a net profit (as defined in Appendix C and hereinafter referred to as the NOP) equal to 125% of the actual Capital Cost

2. Claimstaker agrees to pay to Saga 25% of the net profits (hereinafter referred to as the NPI) after Claimstaker has recovered the Pre-production Expenses (capital costs) resulting from the operation of the Property or any other property acquired by Claimstaker within 5 miles of the present boundary of the Property (the "Common Interest Lands"). The NPI is defined in Appendix C. It is understood by both parties that prior to any distribution of NPI, Claimstaker is entitled to receive from the Net Profits, as defined in Appendix C, the full amount of Pre-production Expenses paid for by Claimstaker and Saga is entitled to receive from net profits, as defined in Appendix C, the full amount of any funds borrowed by Saga that form part of the Capital Costs and Collateral as per clause 8, below. In the event that Saga guarantees any loan arranged by Claimstaker towards the financing of the Capital Costs per clause 8 below, then such loan is to be repaid in priority to any other repayment of the Capital Costs With the express intent of releasing any charges or liens placed against the equipment owned by Saga that has been used as collateral towards such loan.

3. If, by February 28, 1998, Claimstaker has not significantly advanced the Property toward production, and if Austin or Saga indicate in writing that they wish the Property to go into production, then Claimstaker must within six months of receipt of such a letter either (a) provide the necessary funds to complete the project to full production OR (b) put the Property into full production OR (c) pay to Austin and Saga a total of $50,000 per year thereafter as an advance royalty on the NPI payable to them. If the price of gold should fall below $350.00 per ounce, while in that range, this section would not apply. Any delay caused by problems in obtaining permits for the property would delay the implementation of this section by the length of the delay caused by the permitting problem.

4. Saga agrees to supply as needed and as much as is possible various people, services and equipment to Claimstaker to advance the Property during the construction and operational period. Claimstaker will enter into agreements with Saga as necessary to pay for these people, equipment and services at industry rates or lower. In particular, Mr. Greg Austin agrees to act as Project Manager at the request of Claimstaker. The renumeration for this position is subject to negotiation but would be commensurate with industry standards taking into account the time devoted by Mr. Austin to the position.

5. Saga and Austin warrant that:

(a) substantially all the required permits necessary to place the Property into production have been obtained.

(b) both a right of way for a powerline and waterline have been obtained and approved. Also, it is understood that the local power supplier will agree to supply the necessary power and that a sufficient supply of water is available for the project.

(c) the Property is in good standing with the Laws of the United States of America and the State of California. Equinox is a company, duly incorporated, validly existing and in good standing under the laws of the State of California and has filed all necessary federal and state tax returns and reports.

(d) there are no outstanding claims, liens or encumbrances against the Property except the following: (i) the royalty to Paramount of 5% NSR (ii) payments due to Bierend et al for the purchase of the fee simple land - a total of $150,000 of which $50,000 has been paid (iii) a $2.00/ounce royalty to Page

(e) 100 % of the shares of Equinox (the "Shares") are owned by them and that they have the right to sell them to Claimstaker.

(f) the Shares are validly issued and outstanding as fully paid and nonassessable, free and clear of all liens, charges and encumbrances and represent all of the issued and outstanding shares of Equinox.

(g) Saga and Austin are responsible for these payables in Equinox as of the date of closing of this Agreement.

6. It is understood by both parties that until March 31, 1997 Claimstaker has the right to examine all documents (technical, legal or financial) pertaining to the Zenda Project and determine by its due diligence whether to proceed with the purchase contemplated in this Letter Agreement. If Claimstaker decides not to proceed with the purchase then, upon notification to Saga, Claimstaker will have no further right, title or interest in Equinox or the Property and Austin and Saga will have no right to any remuneration of any kind from Claimstaker under this agreement.

7. All payments of money or shares made to Austin and Saga under this agreement will be made pro rata to their share ownership in Equinox.

8. Saga agrees to put up approximately $600,000 of equipment (the Collateral Equipment) as collateral if required for any loans necessary to put the Property into production. The Collateral Equipment, limited to the equipment, is listed in Appendix D.

9. Claimstaker agrees that it will not sell for a period of five years from the date of this Agreement either the Shares or the Property without the prior consent of Austin. Such consent will not be unreasonably withheld.

10. All dollars referred to in this agreement are United States currency.

11. (a) The Common Interest Lands will be deemed to be any claim or fee simple land purchased or staked, or any rights to a claim acquired by option within 5 miles of the present boundary of the Property as discussed in clause 2 of this Agreement, including, but not limited to, the claims referred to as the Cowboy claims.

(b) All parties agree that the cost of exploration on the Property and the Common Interest Lands is chargeable as an operating expense, for the purpose of calculating the NPI, excepting that, in any year, the total exploration expense charged must not be greater than 10% of the Net Profits. Any exploration expense in any year in excess of 10% of the Net Profits may be carried forward into a subsequent year as a charge for calculating the NPI. In effect, all of the exploration expenses incurred will be pooled. In any year, the exploration expenses from this pool equivalent to 10% of the Net Profits may be deducted from the Net Profits for the purpose of calculating the NPI. This change would be applicable to any Net Profits realized on the Zenda deposit or any other deposit found within the Common Interest Lands.

12. This Letter Agreement is subject to the approval of the Vancouver Stock Exchange and the British Columbia Securities Commission and the Board of Directors of Claimstaker.

13. This Letter Agreement will be replaced by a Share Purchase Agreement as soon as is possible. All parties to this Letter Agreement hereby agree to work in good faith to accomplish this.

14. This Agreement shall be governed by the laws of the state of California.

If the above terms and conditions meet with your approval, please indicate by signing below in the space provided.

APPENDIX A

"The Property"

Description of Zenda Mine, Kern County, California

1. Patented Lode Mining Claims

Purchased from Wilmar T. and Donna May Kahler by Deed dated January 11, 1988.

Zenda, Zenda Junior, Pearl, Pearl Fraction, Emmett, Annie, Hidden Treasure and Mustang, M.S. 5473, Sections 29-30, T. 30 S., R. 33 E., MDM.

2. Unpatented Lode Mining Claims

Claim Name BLM Serial Number
Zenda 1 CAMC 166996
Zenda 2 CAMC 166997
Zenda 3 CAMC 166998
Zenda 5 CAMC 167000
Zenda 6 CAMC 167001
Zenda 7 CAMC 167002
Zenda 8 CAMC 167003
Zenda 9 CAMC 167004
Zenda 10 CAMC 167005
Zenda 15 CAMC 167008
Zenda 16 CAMC 167009
Zenda 21 CAMC 167010
Zenda 27 CAMC 167011
Zenda 28 CAMC 167012
Zenda 29 CAMC 167013
Zenda 30 CAMC 167014
Zenda 17 CAMC 168317
Zenda 18 CAMC 168318
Zenda 19 CAMC 168319
Zenda 20 CAMC 168320
Zenda 22 CAMC 168321
Zenda 26 CAMC 168322
Zenda 31 CAMC 168323
Zenda 23 CAMC 170942
Fr. Zenda 9 CAMC 170945
Fr. Zenda 33CAMC 170946

The foregoing claims are located in Sections 29-30, T. 30 S., R. 33 E., MDM.

3. Rights-of-Way

a. Right-of-Way Agreement with Ralph & Betty Larimer, dated April 20, 1988 10-year term.

Rights of ingress and egress and right to expand, widen, improve and repair, subject to Grantors' review and approval, Studhorse Canyon Road and the SE 1 /4 of the SEI/4 and Lot 3, Section 20, T. 30 S, R. 33 E., MDM, Kern County, California.

b. Right-of-Way Agreement with Prestige Land & Development, Bill & Phil Shirley, dated February 3, 1992 - 5 years, with right to extend for an additional 5 years.

Rights of ingress and egress and right to expand, widen, improve and repair Studhorse Canyon Road and the NE 1/4, the E 1/2 of the NW 1/4, and the S 1/2 of the SWI/4 of Section 29, T. 30 S, R. 33 E., MDM, Kern County, California.

Surface Fee Simple Land

The property consists of approximately 490 acres, more or less. The property is legally described as:

Lots, 2, 3, 4, 5, 7, 8, 11, 12, 13, 16, 17, 18, and 19 and the SW 1/4 of Section 30 in Township 30 South, Range 33 East, M.D.B.M., in the County of Kern, State of California, according to the Official Plat of the Re-Survey of said land on file in the General Land Office;

EXCEPTING THEREFROM all of the coal and other minerals in said land, as reserved in Patent of record.

Appendix "B" Zenda Mining - Capital Cost Estimates

Phase I Capital Cost Site Preparation Road Work and Design $183,931 Site Clearing & Grubbing $7,470 Diversion Ditch & Exit Channel $7,270 Telecommunications $10,000 Sanitary System $10,000 Supply Storage $2,000 Establish Power $45,000 Fuel Storage $12,000 Fire Water Storage $2,177 Total Site Preparation $279,848

Embankment Dam Preparation Keywall Excavation $60,000 Keywall Fill & Place $9,000 Foundations $19,000 Total Embankment Dam Preparation $88,000

Pond & Process Site Work Process Pond Excavation $152,500 Grading $924 Floating Pump Station $5,000 Concrete Slab for Plant $45,051 Pond Liner & Bedding Material $42,520 Key in Pond Liner $240 LCDRS $1,588 Install Carbon Columns $10,000 Install Office, Warehouses, Lab $4,000 Sundry non-budgeted costs $10,000 Install Fencing around pond $22,250 Total Pond & Process Site Work $294,073

Water Install Pumps, Distribution, fire $65,000 Total Water $65,000

Other Phase I Earthworks Pre Stripping $65,000 Road from Dam to Pit $30,000 Pre-strip and materials placement $35,000 Total Other Phase I Earthworks $130,000

Phase I Dam Construction French Drains & Conduit $58,354 Placement of Fill $45,000 Facing Materials $3,000 Total Phase I Dam Construction $106,354

Liner Installation Grade Pad $2,025 Liner Bedding Material $54,300 Installation of liner & incl. liner mat's $232,020 Total Liner Installation $288,345

Pad Anchor Trench, Pump, Leachate Collection Pad Anchor Trench $6,825 Pad Pump Station $19,300 Pad LCS $1,850 Pad Sprays/Drippers $18,000 Misc, Permit Requirements $29,200 Total Pad Anchor Trench, Pump, Leachate Collection $75,175

Leachate Collection Piping Materials $7,480 Installation $1,486 Total Leachate Collection Piping $8,966

Equipment to be Acquired Water Pumps $22,000 Carbon Columns $130,000 Secondary Crushing Plant $130,000 Generator $30,000 Haul Trucks - 35 ton $40,000 All Terrain Back Hoe $30,000 All Terrain Forklift $20,000 Total Equipment to be Acquired $402,000

Total Phase I Capital Cost $1,737,761

Phase II Capital Cost Earthworks $381,843 Liner Installation $232,020 Total Phase If Capital Cost $613,863

Start Up Working Capital $148,376

Total Capital Costs $2,500,000

APPENDIX C

NET PROFITS DEFINITION (REVISED)

(a) The following calculation shall be made on a monthly basis.

(b) "Net Profits" means, for any period, the excess, if any, of Gross Proceeds for the period over the aggregate of:

(i) operating costs for the period,

(ii) operating costs for all previous periods to the extent they have exceeded Gross Proceeds from such periods and not previously been deducted in computing Net Profits; and

(iii) such amount of working capital as, in the reasonable opinion of Claimstaker, is required for the operation of the Property as a mine; provided that this amount shall be added to the Gross Proceeds in calculating the Net Profits for the next period and provided that such working capital shall not exceed $300,000 (approximately 30 days operating costs) or any other amount mutually agreed upon by Saga and Claimstaker.

(c) "Gross Proceeds" means, for any period, the aggregate gross revenues received during the period from the operation of the Property as a mine and any cash proceeds received during the period from the disposition of any capital assets the cost of which has been treated as a Pre-production Expense.

(d) "Operating Costs" means, for any period, all costs, expenses, obligations, liabilities and charges of whatsoever kind or nature incurred or chargeable, directly or indirectly, by Claimstaker, after commencement of production, in connection with the operation of the Property as a mine during the period, which costs, expenses, obligations, liabilities and charges shall include, without limiting the generality of the foregoing, the following:

(i) all costs of or related to the mining and concentrating of ore or other products and the operation of the Mining Facilities;

(ii) all costs of or related to marketing of mineral Products including, without limitation, transportation, commissions and/or discounts;

(iii) all costs of maintaining in good standing or renewing from time to time the Property, including the patented and unpatented Claims and the fee simple land listed in Schedule A, or any interest therein including the payment of all royalties and taxes of any nature whatsoever in connection therewith;

(iv) all costs of or related to providing and/or operating employee facilities, including housing;

(v) all duties, charges, levies, royalties, taxes (excluding taxes levied under the Income Tax Act, Canada, the Income Tax Act of British Columbia, and any other act which taxes the income of the parties hereto individually) and other payments imposed upon or in connection with operating the Property as a mine by any government or municipality or department or agency thereof,

(vi) all reasonable and actual costs and fees of Claimstaker for providing technical, management and/or supervisory services;

(vii) all costs of consulting, legal, accounting, insurance and other services,

(viii) all amounts expended in doing work hereunder;

(ix) all costs of construction, equipment, and mine development, after commencement of production, including maintenance, repairs and replacements, except capital expenditures relating to a major improvement, expansion, modernization or replacement of the Mining Facilities (for the purposes hereof a major improvement, expansion, modernization or replacement of the Mining Facilities is one which involves an aggregate cost of more than $500,000);

(x) all costs for pollution control, reclamation or any other similar costs incurred or to be incurred as a result of any governmental regulations or requirements,* and

(xi) any costs or expenses incurred or to be incurred relating to the termination of the operation of the Property as a mine including all reclamation costs;

all operating costs shall be determined in accordance with generally accepted accounting principles consistently applied, except that such costs shall not include the non-cash expense items such as depreciation, depletion or amortization of Pre-production Expenses and post-production capital expenses.

(e) "Pre-production Expenses" shall mean all development expenditures, and all other costs, expenses, obligations and liabilities of whatsoever nature or kind, including those of a capital nature, incurred or chargeable, directly or indirectly, by Claimstaker with respect to the development of the Property and equipping them for production up to and including the date of commencement of production including sufficient initial working capital to finance the first three months of production.

(f) "Mineral Products" shall mean the products derived from operating the Property as a mine.

(g) "Mining Facilities" shall mean all mines and plants, including, without limitation, all pits, shafts, haulageways, and other underground workings, and all buildings, plants, facilities and other structures, fixtures and improvements, and all other property, whether fixed or movable, as the same may exist at any time in, on or outside the Property and relating to the operation of the Property as a mine.

(h) "operating the Property as a mine" or "operation of the Property as a mine" shall mean the extraction or production of minerals from the Property, the milling, smelting, refining, beneficiating, and other processing of minerals and mineral products and the marketing of Mineral Products.

(1) "Other Tenements" shall mean all surface rights of and to any lands within or outside of the property,

including surface rights held in fee or under lease, licence, easement, right-of-way or other right of any kind (and all renewals, extensions and amendments thereof) required by Claimstaker with respect to the Property.

"Net Profits Interest-& "NPI" is defined as 25% of the Net Profits as defined above.

(k) Regardless of the foregoing, Claimstaker may not charge any overhead against income in calculation of the 25% of the Net Profits proceeds and furthermore, only expenses that are directly related to the Zenda project will be allowed.

APPENDIX D

Zenda Mining Project

Equipment owned by Saga Exploration Inc to be Leased to the Project

Description Make Model Serial Number Estimated (to be provided) Market Value Radial Stacker $22,500 Air Track Drill Atlas Copco $50,000 Air Track Drill IR 350 $50,000 Front End Loader $30,000 Haul Truck - 35 ton Wabco $20,000 Haul Truck - 35 ton Wabco $20,000 Shovel NW 180D $80,000 All Terrain Crane A-W 10 ton $15,000 Forklift $3,500 Pick-up Truck 94 Ford F250 $10,000 Pick-up Truck 84 Ford F250 $10,000 Pick-up Truck 86 Ford F150 $10,000 Pick-up Truck 82 Ford F350 $10,000 Jaw Crusher $150,000 Grizzley $8,000 Generator Cat 200KW $15,000 Generator Cat 100KW $8,000 Dozer Cat D8H $40,000 Grader Wabco 550 $15,000 Lube Truck $20,000 Water Truck $25,000 Service Truck $8,000 Warehouse Containers $10,000 Office Trailers $20,000 Powder Magazine $10,000 Lab Trailer $10,000 Sundry Shop Tools $5,000

Total Value of Equipment Owned $675,000

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