1. Parties : Barrick Gold Exploration Inc. (“BGEI”) and MGC Resources Inc. (MGC)
2. Property : See attached Exhibit A (the “Property”).
3. Area of Interest:
Area of Interest as defined in the Confidentiality Agreement dated August 31, 2008
4. Underlying royalties and obligations :
MGC Resources Inc. (Spring Valley Project)
MGC’s interest in the Property is subject to royalties as described in Exhibit B.
5. Exploration Agreement with Option to Joint Venture : BGEI and MGC will enter into an
agreement (“Agreement”) granting BGEI the exclusive and irrevocable right to earn a 60% interest
in the subject property by spending $30,000,000 on the property ($4,000,000 guaranteed in the
first year) over 5 years. BGEI may at its sole discretion increase its interest by 10% (70% total) by
spending an additional $8,000,000 by the 6 th anniversary of the agreement. At MGC’s election,
BGEI may also earn an additional 5% (75% total) by carrying MGC to a production decision and
arranging financing for MGC’s share of mine construction expenses. The carrying and financing
costs plus interest would be recouped by BGEI once production has been established.
6. Work Commitment : Subject to BGEI’s right to terminate as set out below, in order to maintain
the Agreement in effect BGEI shall expend the following minimum Work Expenditures on or for the
benefit of the Property:
“Work Expenditures” shall include all direct and indirect costs of land holdings, evaluation,
exploration and development of the Property, including without limitation drilling, drilling and
tunneling costs, machinery, equipment and supply costs, salaries, benefits and wages of
employees, contractor charges and fees, assay, metallurgical and other lab fees, permitting and
environmental compliance costs, land maintenance costs, bonding and insurance costs, local office
and camp expenses, and utility and infrastructure costs.. The first year’s obligation will be a hard