Schedule 13D

-----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, MS6Liogi+7KsFX6EUMXieCi/T3/R4z4HBK0mfn8XPwjHh7tSJu5kCqugkubYq0lP tC7Pa92WriqTEtvh8TFmrg== 0001193125-08-256804.txt : 20081219 0001193125-08-256804.hdr.sgml : 20081219 20081219124002 ACCESSION NUMBER: 0001193125-08-256804 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20081219 DATE AS OF CHANGE: 20081219 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GOLD RESOURCE CORP CENTRAL INDEX KEY: 0001160791 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 841473173 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-83761 FILM NUMBER: 081259896 BUSINESS ADDRESS: STREET 1: 222 MILWAUKEE ST STREET 2: SUITE 301 CITY: DENVER STATE: CO ZIP: 80206 BUSINESS PHONE: 303-320-7708 MAIL ADDRESS: STREET 1: 222 MILWAUKEE STREET STREET 2: SUITE 301 CITY: DENVER STATE: CO ZIP: 80206 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Hochschild Mining PLC CENTRAL INDEX KEY: 0001446962 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 8880 [8880] IRS NUMBER: 000000000 STATE OF INCORPORATION: R5 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 60 WALL STREET CITY: NEW YORK STATE: NY ZIP: 10005 BUSINESS PHONE: 212-319-7600 MAIL ADDRESS: STREET 1: 60 WALL STREET CITY: NEW YORK STATE: NY ZIP: 10005 SC 13D 1 dsc13d.htm SCHEDULE 13D Schedule 13D

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

Information to be included in statements filed pursuant to Rule 13d-1(a)

Gold Resource Corporation

(Name of Issuer)

Common Stock

(Title of Class of Securities)

38068T105

(CUSIP Number)

Hochschild Mining plc

Calle La Colonia 180, Surco, Lima 33, Peru

Attention: Jose A. Palma

Telephone No.: (011) 51 1 317 2000

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

December 11, 2008

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act.

CUSIP No. 38068T105


1.		Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Hochschild Mining plc
2.		Check the Appropriate Box if a Member of a Group (See Instructions) (a) N/A (b) N/A
3.		SEC Use Only
4.		Source of Funds WC
5.		Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) N/A
6.		Citizenship or Place of Organization England and Wales


Number of Shares Beneficially Owned by Each Reporting Person With		7. Sole Voting Power 6,000,000¹
		8. Shared Voting Power 0
		9. Sole Dispositive Power 6,000,000²
		10. Shared Dispositive Power 0


11.		Aggregate Amount Beneficially Owned by Each Reporting Person 6,000,000³
12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) N/A
13.		Percent of Class Represented by Amount in Row (11) 14.9%⁴
14.		Type of Reporting Person (See Instructions) CO

¹	4,330,000 of such shares represent an option as further described in this statement.

²	See footnote 1.

³	See footnote 1.

⁴

Based on 34,417,556 shares of common stock outstanding on December 4, 2008, as represented by Gold Resource Corporation in the Subscription Agreement described in this statement, and after giving effect to the (i) initial issuance of 1,670,000 shares and (ii) the issuance of the 4,330,000 shares upon the exercise of the option described in this statement.

ITEM 1.

SECURITY AND ISSUER

This statement on Schedule 13D (the “Statement”) relates to the common stock of Gold Resource Corporation, a Colorado corporation (the “Issuer”). The Issuer’s principal executive offices are located at 222 Milwaukee Street, Suite 301, Denver, CO 80206.

ITEM 2.

IDENTITY AND BACKGROUND

The name of the person filing this Statement is Hochschild Mining plc (“Hochschild”). Hochschild is a company organized under the laws of England and Wales. The principal business of Hochschild is mining. The principal business office of Hochschild is at Calle La Colonia No. 180, Surco, Lima 33, Peru (the “Principal Office”). Hochschild is the sole shareholder of Hochschild Mining Holdings Limited (“Holdings”), a company organized under the laws of England and Wales, and the direct owner of the shares of the Issuer’s common stock covered by this Statement.

Directors of Hochschild

The directors of Hochschild (collectively, the “Directors”) and required information for each of the Directors are as follows:

Eduardo Hochschild is Executive Chairman (the “Chairman”). Mr. Hochschild’s principal occupation is serving in such capacity at the Principal Office. Mr. Hochschild is also the sole director, executive officer and controlling person of Pelham Investment Corporation, a controlling person of Hochschild as discussed below. Mr. Hochschild is a citizen of Peru.

Roberto Dañino is Deputy Chairman and Executive Director. Mr. Dañino’s principal occupation is serving in such capacity at the Principal Office. Mr. Dañino is a citizen of Peru.

Jorge Born Jr. is a non-executive Director. Mr. Born Jr.’s principal occupation is President and CEO of Bomagra S.A., a company involved in real estate, technology and communications equipment and farming industries in Argentina. His business address is Marcelo T. de Alvear 624, 8 Piso, C 1058 AAH Capital Federal, Buenos Aires, Argentina. Mr. Born Jr. is a citizen of Argentina.

Sir Malcolm Field is a non-executive Director. His principal occupation is senior non-executive director of Aricom PLC, a metals and mining group. His business address is 46 Albemarle Street, London W1S 4JL, England. Sir Malcom Field is a citizen of the United Kingdom of Great Britain and Northern Ireland.

Nigel Moore is a non-executive Director. His principal occupation is chairman of TEG Environmental plc., an environmental and organic waste services and technology company. His business address is 46 Albemarle Street, London W1S 4JL, England. Mr. Moore is a citizen of the United Kingdom of Great Britain and Northern Ireland.

Dionisio Romero is a non-executive Director. His principal occupation is Chairman and CEO of Credicorp Ltd., a financial services company. His business address is Calle Centenario 156 – Urb. Las Laderas de Melgajero – La Molina, Lima 12 Peru. Mr. Romero is a citizen of Peru.

Executive Officers of Hochschild

Messrs. Hochschild and Dañino are executive officers of Hochschild in their respective offices indicated above. The other executive officers of Hochschild (with Messrs. Hochschild and Dañino, collectively, the “Executive Officers”) and required information for each of such persons are as follows:

Miguel Aramburú is Chief Executive Officer and his principal occupation is serving in such capacity at the Principal Office. Mr. Aramburú is a citizen of Peru.

Isac Burstein is Corporate Manager—Business Development and his principal occupation is serving in such capacity at the Principal Office. Mr. Burstein is a citizen of Peru.

Ignacio Bustamante is Chief Operating Officer and his principal occupation is serving in such capacity at the Principal Office. Mr. Bustamante is a citizen of Peru.

Raymond Jannas is Vice President—Exploration and Geology and his principal occupation is serving in such capacity. His business address is Ave Presidente Errazuriz No. 2999, Oficina 403 Fourth Floor, Las Condes, Santiago de Chile, Chile. Mr. Jannas is a citizen of Chile.

José Augusto Palma is Vice President and General Counsel and his principal occupation is serving in such capacity at the Principal Office. Mr. Palma is a citizen of Peru.

Ignacio Rosado is Chief Financial Officer and his principal occupation is serving in such capacity at the Principal Office. Mr. Rosado is a citizen of Peru.

Eduardo Villar is Vice President—Human Resources and his principal occupation is serving in such capacity at the Principal Office. Mr. Villar is a citizen of Peru.

Controlling Persons of Hochschild

Pelham Investment Corporation, a corporation organized under the laws of the Cayman Islands (“Pelham”) with its principal place of business at c/o Close Trustees (Cayman) Limited, P.O. Box 1034, Harbour Place, 4th Floor, 103 South Church Street, George Town, Grand Cayman KY1-1102, Cayman Islands, is the majority shareholder and controlling person of Hochschild. Pelham’s principal business is its investment in Hochschild. The Chairman controls Pelham and is the sole director, executive officer and controlling person of Pelham.

None of Hochschild, Holdings, the Directors, the Executive Officers, Pelham or the Chairman has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

ITEM 3.

SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION

Under the terms of a Subscription Agreement for Common Stock entered into between the Issuer and Holdings on December 5, 2008 (the “Subscription Agreement”), Holdings paid $5,010,000 for 1,670,000 shares of the Issuer’s common stock (the “Acquired Shares”) on December 11, 2008. Working capital was the source of the funds for the purchase of the Acquired Shares. In connection with the Subscription Agreement, the Issuer and Holdings entered into a Strategic Alliance Agreement dated December 5, 2008 (the “Strategic Alliance Agreement”), pursuant to which Holdings was granted an option, effective at the closing of the

purchase of the Acquired Shares, to purchase an additional 4,330,000 shares of the Issuer’s common stock for a purchase price of $12,990,000 (the “Option Shares”). No additional consideration was paid by Holdings for such option.

ITEM 4.

PURPOSE OF TRANSACTION

The purpose of purchasing the Acquired Shares and obtaining the option to purchase the Option Shares was and is for investment as described in the Strategic Alliance Agreement. Neither the Acquired Shares nor the Option Shares are registered under the Securities Act of 1933, as amended.

Under the terms of the Strategic Alliance Agreement, the Option Shares may be purchased by Holdings during a period of eighty (80) days from the closing of the purchase of the Acquired Shares. Holdings may only exercise it option to purchase all of the Option Shares and not a portion thereof. The Option Shares may be purchased for a price of $3.00 per share, for a total price of $12,990,000.

The Strategic Alliance Agreement also allows Holdings to acquire additional common stock of the Issuer other than by direct acquisition from the Issuer. Holdings may make market purchases of the Issuer’s common stock, defined as purchases in the over-the-counter market or on any stock exchange on which the stock is then quoted or listed. Holdings may also make private purchases of the Issuer’s common stock other than in the over-the-counter market or on any stock exchange. However, under the Strategic Alliance Agreement, for a period of two (2) years following closing of the purchase of the Acquired Shares, Holdings may not own more than forty percent (40%) of the Issuer’s outstanding common stock on an undiluted basis following any market purchase or private purchase. After a period of two years, Holdings is not limited in the amount of stock it can purchase.

If Holdings acquires the Option Shares, the Strategic Alliance Agreement also provides Holdings a first right of refusal to participate in any future equity financing (a “Future Financing”) solicited by the Issuer at any time prior to commencement of commercial production, as defined in the Strategic Alliance Agreement. The purchase price for each share in any such Future Financing shall be equal to eighty percent (80%) of the average closing price of the Issuer’s common stock during the thirty (30) calendar days preceding the date on which Holdings elects to participate in such Future Financing.

If at any time following closing of the purchase of the Acquired Shares, the Issuer proposes to sell equity securities in certain transactions, the Strategic Alliance Agreement also provides Holdings with preemptive rights to participate in such financing (“Preemptive Rights”). Such Preemptive Rights allow Holdings to purchase an amount of additional common stock equal at any time to its pro-rata interest in the Issuer, as defined in the Strategic Alliance Agreement, subject to certain excluded issuances by the Issuer. Holdings’ Preemptive Rights expire if it does not exercise its option to acquire the Option Shares.

The Strategic Alliance Agreement may also provide Holdings with representation on the Issuer’s board of directors. If Holdings acquires the Option Shares, it shall be entitled to nominate one (1) individual to the Issuer’s board of directors. Thereafter, so long as Holdings owns at least 14.5% of the Issuer’s outstanding common stock, the Issuer’s board of directors shall nominate the Holdings nominee to the slate of directors at each annual meeting following designation of such nominee. If Holdings thereafter acquires additional shares of the Issuer’s common stock, such that its ownership interest equals forty percent (40%) or more, Holdings shall be entitled to appoint an additional individual to the Issuer’s board of directors.

Depending on market and other considerations and subject to its obligations under the above-described agreements and under applicable law, Holdings may purchase the Option Shares or additional shares of the Issuer’s common stock or dispose of some or all of the shares held by it. Except as set forth above, Hochschild has no plans or proposals which would result in any of the actions enumerated in clauses (a)-(j) of Item 4 of Schedule 13D under the Securities Exchange Act of 1934 as amended.

ITEM 5.

INTEREST IN SECURITIES OF THE ISSUER

The percentage interest beneficially owned by Hochschild presented below is based on 34,417,556 shares of Common Stock outstanding on December 4, 2008, as represented by the Issuer under the Subscription Agreement. Holdings is the current direct owner of 1,670,000 shares of the Issuer’s common stock, representing at issuance 4.6% of the Issuer’s issued and outstanding common stock. Holdings has the right to acquire an additional 4,330,000 shares of the Issuer’s common stock which, at the issuance of such shares, would represent 10.7% of the Issuer’s issued and outstanding common stock. As a result, Hochschild may be deemed to beneficially own the Acquired Shares and the Option Shares, representing 14.9% of the shares of the Issuer’s common stock (after giving effect to the issuance of the Acquired Shares and the Option Shares). Except to the extent that the beneficial ownership of the shares of the Issuer’s common stock covered by this Statement may be attributed to the Chairman by virtue of his control of Pelham, none of Hochschild’s directors, executive officers and controlling persons identified in Item 2 above beneficially owns any shares of the Issuer’s common stock.

Hochschild has the sole voting and dispositive power over the shares of common stock deemed to be beneficially owned by it under the first paragraph of Item 5 above.

Other than as set forth in this Statement, there have been no transactions by Hochschild, Holdings, the Directors, the Executive Officers, Pelham or the Chairman in the class of securities reported on in this Statement during the past sixty days.

ITEM 6.

CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER

As described above in this Statement, Holdings and the Issuer are parties to the Subscription Agreement and the Strategic Alliance Agreement. In addition to the terms of the Strategic Alliance Agreement described above under Item 4, the Strategic Alliance Agreement contains a number of additional provisions described below in this Item 6:

(a) If Holdings acquires the Option Shares; (i) it shall have a first right of refusal to participate in any joint venture proposed by the Issuer and involving any properties currently owned or thereafter acquired (a “Right of First Refusal”); and (ii) for a period of two (2) years thereafter, Holdings has agreed to a “standstill,” whereby it has agreed that it will not without the prior written consent of the Issuer assist or encourage other entities to acquire specified interests in the Issuer or take other actions that could result in the acquisition of those interests in the Issuer, subject to certain conditions;

(b) If the Issuer breaches any representation, warranty or covenant contained in the Strategic Alliance Agreement, Holdings is entitled to demand registration rights, pursuant to which the Issuer has agreed, subject to certain conditions, to file a registration statement with the United States Securities and Exchange Commission to register all of the shares of the Issuer’s common stock held by Holdings, including the Acquired Shares and, if purchased, the Option Shares;

(c) The Issuer has agreed that until expiration of the period during which Holdings can purchase the Acquired Shares, it shall not initiate, solicit, promote or encourage inquiries or the

submission of proposals with respect to any offer or action that would be reasonably be expected to delay, prevent or frustrate Holdings’ purchase of the Option Shares or any other transaction contemplated in the Strategic Alliance Agreement; and

(d) If Holdings shall hold an ownership interest in the Issuer of less than 14.5% or if it acquires at least 14.5% and subsequently sells or otherwise disposes of 20% or more of its then-existing ownership interest, Holdings’ rights in respect of a Future Financing, Preemptive Rights, board representation and the Right of First Refusal would be forfeited.

The description of each of the Subscription Agreement and Strategic Alliance Agreement included in this Statement is just a summary and the complete text of each such agreement is included as an Exhibit to this Statement under Item 7 below.

ITEM 7.

MATERIAL TO BE FILED AS EXHIBITS

Exhibit 1. Subscription Agreement for Common Stock between Gold Resource Corporation and Hochschild Mining Holdings Limited dated December 5, 2008.

Exhibit 2. Strategic Alliance Agreement between Gold Resource Corporation and Hochschild Mining Holdings Limited dated December 5, 2008.

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct.


December 19, 2008
Date

/s/ Jose A. Palma
Signature

Jose A. Palma/Vice President and General Counsel
Name/Title

EX-1 2 dex1.htm SUBSCRIPTION AGREEMENT FOR COMMON STOCK DATED DECEMBER 5, 2008 Subscription Agreement for Common Stock dated December 5, 2008

Exhibit 1

SUBSCRIPTION AGREEMENT

FOR

COMMON STOCK

This Subscription Agreement for Common Stock (“Agreement”) is entered into this 5th day of December 2008 between GOLD RESOURCE CORPORATION (“Company”), a corporation incorporated under the laws of the State of Colorado, and HOCHSCHILD MINING HOLDINGS LIMITED (“Hochschild”), a private limited company organized under the laws of England and Wales. The Company and Hochschild may hereinafter be referred to as the “Parties” or individually as a “Party”.

RECITALS

WHEREAS, the Company is a mineral exploration and development company engaged in the acquisition and exploration, as well as development of mineral properties (the “Properties”) in Mexico through its Mexican subsidiaries with prospects for hosting gold, silver and base metal deposits, and through such subsidiaries holds interests in several mineral resource properties, including but not limited to (i) El Aguila, (ii) Las Margaritas, (iii) Solaga, and (iv) El Rey, each located in Oaxaca, Mexico (the “Existing Properties”); and

WHEREAS, Hochschild is an affiliate of Hochschild Mining plc., a leading underground precious metals producer operating in the Americas with a primary focus on silver and gold; and

WHEREAS, the Company intends to raise additional capital to be used to explore and develop the Existing Properties and to meet its growth strategy; and

WHEREAS, in connection with entering into a strategic alliance with Hochschild pursuant to the terms of the Strategic Alliance Agreement (as defined herein), the Company will issue to Hochschild, and Hochschild has agreed to acquire, the Purchased Shares (as defined herein) in the capital of the Company pursuant to the terms and conditions of this Agreement; and

WHEREAS, the Board of Directors of the Company (“Board of Directors”) has authorized the Company to enter into this Agreement and the parties wish to memorialize the terms and conditions of their agreement.

NOW, THEREFORE, in consideration of the foregoing recitals, which shall be considered an integral part of this Agreement, the mutual conditions, covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by both parties, the parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

1.1

Definitions. In this Agreement, unless the context otherwise requires:

“Affiliate” shall have the meaning ascribed thereto in the Securities Act;

“Agreement” means this subscription agreement including the Schedules attached hereto and any instrument amending this Agreement and “hereof”, “hereto”, “hereunder” and similar expressions mean and refer to this Agreement and not to a particular Article, Section, Subsection or Paragraph;

“Audited Financial Statements” means the comparative audited consolidated financial statements of the Company for the years ended December 31, 2007 and December 31, 2006;

“Authority” and “Authorities” means any (i) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, securities commission (including the Securities Commissions), central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (ii) any subdivision, agent, commission, board, or authority of any of the foregoing, or (iii) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing, and includes a stock exchange and any other self-regulatory authority;

“Board of Directors” means the board of directors of the Company;

“Business Day” means any day which is not a Saturday, a Sunday or a day on which banks are generally closed for business in Denver, Colorado or London, England;

“Claims” means all losses, damages, expenses, Liabilities, claims and demands of whatever nature or kind, including all reasonable legal fees and disbursements;

“Closing” means the completion of the issue and delivery by the Company and the acquisition by Hochschild of the Purchased Shares pursuant to this Agreement;

“Closing Date” has the meaning given to it in Section 2.5;

“Closing Time” has the meaning given to it in Section 2.5;

“Company” has the meaning given to it in the preamble hereto;

“Company Indemnities” has the meaning given to it in Section 9.2;

“Contracts” means all agreements, arrangements, understandings, commitments and undertakings (whether written, electronic or oral), to which a Person is a party or a beneficiary or pursuant to which any of its property or assets are or may be affected;

“Convertible Securities” with respect to a corporation or other person, means all warrants, rights, agreements or options, present or future, contingent or absolute, or any right or privilege capable of becoming a right, agreement or option, for the purchase, subscription or issuance of any shares in the capital of such corporation or other person or any other security convertible or exchangeable for shares in the capital of such corporation or other person, including options granted to officers, directors or employees, whether issued pursuant to an established plan or otherwise;

“Debt Instrument” means any loan, bond, debenture, promissory note or other instrument evidencing material indebtedness for borrowed money or other material liability;

“Environmental Laws” means federal, state, municipal or local Laws and Permits relating to environmental, health or safety matters;

“Hochschild Indemnitees” has the meaning given to it in Section 9.1;

“Laws” means any and all applicable (i) laws, constitutions, treaties, statutes, codes, ordinances, orders, decrees, rules, regulations and municipal by-laws, (ii) judicial, arbitral, administrative, ministerial, departmental or regulatory judgments or orders of any Authorities, and (iii) policies, guidelines and protocols;

“Liabilities” means, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due;

“Lien” means any mortgage, easement, encroachment, adverse claim, and assignment by way of security, security interest, servitude, pledge, charge, lien, assignment, hypothecation, conditional sale agreement, title retention, preferential right, trust arrangement, right of set-off, counterclaim or banker’s lien, financing statement, privilege or priority, or other encumbrance of any kind having the effect of security, any designation of loss payees or beneficiaries or any similar arrangement under or with respect to any insurance policy or any preference of one creditor over another arising by operation of law;

“Material Adverse Effect” means in respect of any Person, individually or together with other adverse effects, any matter or action that has an effect that is, or would reasonably be expected to be, material and adverse to (A) the assets, liabilities, results of operations, capitalization or business condition (financial or otherwise) or prospects of such Person and its subsidiaries, taken as a whole, or (B) such Person’s ability to consummate the transactions contemplated by this Agreement;

“Options” means outstanding options to acquire Shares of the Company under the Stock Option Plan;

“Parties” means the Company and Hochschild, collectively, and “Party” means any one of them;

“Permits” means all permits, consents, waivers, licenses, certificates, approvals, authorizations, registrations, franchises, rights, privileges, quotas and exemptions, or any item with a similar effect, issued or granted by any Authority;

“Person” means an individual, partnership, unincorporated association, organization, syndicate, corporation or trust or a trustee, executor, administrator or other legal or personal representative;

“Purchase Price” means US$3.00 per share or a total of US$5,010,000.

“Purchased Shares” means the number of Shares subscribed for by Hochschild under Section 2.1 of this Agreement;

“Regulatory Approvals” means those authorizations, sanctions, rulings, consents, orders, waivers, exemptions, licenses, Permits and other approvals (including a lapse, without objection, of a prescribed time under a statute or regulation that states that a transaction may be implemented if a prescribed time lapses following the giving of notice without an objection being made) of corporate bodies or Authorities or third parties required in connection with the consummation of the subscription for and issuance of the Purchased Shares;

“Securities Act” shall have the meaning given to it in Section 2.4;

“Securities Commissions” means the securities regulator in each jurisdiction whose Securities Laws are applicable to the Company;

“Securities Laws” means the Laws relating to securities of the Company and the regulations and rules made and forms prescribed thereunder together with all applicable published policy statements, blanket orders, rulings and notices adopted by the Securities Commissions of each such jurisdiction or applicable in such jurisdictions;

“Shares” means common shares in the capital of the Company;

“Strategic Alliance Agreement” means the agreement to be entered into by the Company and the Subscriber on the Closing Date in the form attached hereto as Exhibit “A”;

“Tax Returns” means any return, declaration, report, schedule, information statement or return with respect to Taxes required to be filed with an Authority;

“Taxes” means, in respect of a Person, any and all taxes and related governmental charges (including assessments, charges, duties, rates, fees, imposts, levies or other governmental charges and interest, penalties or additions associated therewith) including U.S. federal, provincial, municipal and local, foreign or other income, franchise, capital, real property, personal property, tangible, withholding, payroll, employer health, social security, transfer, sales, use, consumption, IVA, excise, anti-dumping, stamp, countervail and value added taxes, all other taxes of any kind for which the Person may have any liability whether disputed or not and all employment insurance premiums;

“Warrants” means, collectively, (i) outstanding warrants to acquire Shares in the Company, and “Warrant” means any one of the foregoing;

“Unaudited Financial Statements” means the comparative unaudited interim financial statements of the Company for the periods ended March 31, 2008 and 2007, June 30, 2008 and 2007 and September 30, 2008 and 2007.

1.2

Interpretation. In this Agreement, unless the context otherwise requires, the following rules apply:

(a)

the use of words in the singular or plural, or with a particular gender, shall not limit the scope or exclude the application of any provision of this Agreement to such Person or Persons or circumstances as the context otherwise permits;

(b)

unless otherwise specified, time periods within, or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period to the next Business Day, if the last day of the period is not a Business Day;

(c)

reference to legislation or to a provision of legislation includes a modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it;

(d)

all amounts expressed herein in terms of money refer to the lawful currency of the United States of America and all payments made hereunder shall be made in such currency;

(e)

headings in this Agreement are for convenience only and shall not affect its interpretation; and

(f)

references to “include”, “includes” or “including” and the like shall be construed, in each case, as if followed by the words “but without limitation”.

ARTICLE 2

SUBSCRIPTION

2.1

Subscription for Shares

Subject to the terms and conditions of this Agreement, Hochschild hereby subscribes for and agrees to purchase one million six hundred and seventy thousand (1,670,000) Shares (the “Purchased Shares”) at the Purchase Price.

2.2

Acceptance

By its execution of this Agreement, the Company hereby accepts the subscription by Hochschild for the Purchased Shares and subject to the terms and conditions of this Agreement, agrees to issue and sell the Purchased Shares to Hochschild on the Closing Date.

2.3

Payment of Purchase Price

On the Closing Date and subject to the conditions set forth in Section 3.2 below, Hochschild shall pay to the Company the Purchase Price by wire transfer in immediately available funds as the Company shall direct in writing.

2.4

Restricted Securities

Hochschild hereby acknowledges and agrees that the Purchased Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), but will be issued pursuant to an exemption from the registration requirements of the Securities Act. As a result, the certificate representing the Purchased Shares shall bear a restrictive legend and transfer of the Purchased Shares shall be restricted as hereinafter set forth.

2.5

Closing

Closing of the sale of the Purchased Shares and payment of the Purchase Price shall be completed at the offices of the Company in Denver, Colorado at 10:00 a.m. (Denver time) (the “Closing Date Time”) on December 11, 2008 or such other place, date or time as the Company and Hochschild may agree (the “Closing Date”). At that place and time, and subject to the conditions set forth in Section 3.1 below, the Company shall deliver or cause to be delivered to Hochschild, one or more certificates representing the Purchased Shares against payment of the Purchase Price.

2.6

Use of Proceeds

The Company agrees to use the proceeds from the sale of the Purchased Shares to continue exploration and development of the El Aguila project, to fund the construction of facilities for production and for working capital.

ARTICLE 3

CONDITIONS TO CLOSING DATE

3.1

Conditions to the Company’s Obligations to Close

The obligation of the Company to complete the issuance and sale of the Purchased Shares and tender a certificate for the Purchased Shares shall be subject to satisfaction on or before the Closing Date of the following conditions precedent (each of which is acknowledged to be for the exclusive benefit of the Company and may be waived in whole or in part by the Company in its complete discretion):

(a)

All of the representations and warranties made by Hochschild in this Agreement are true and accurate as of the Closing Date;

(b)

All covenants to be performed by Hochschild pursuant to this Agreement have been performed;

(c)

Hochschild has tendered the Purchase Price to the Company;

(d)

There shall be no Laws, injunction, order or decree which restrains or enjoins or otherwise prohibits the issuance and purchase of the Purchased Shares, or any action or proceeding pending or threatened against the Company or against Hochschild by any government authority or any other Person (including a Party hereto) to restrain or prohibit the completion of the transactions contemplated by this Agreement;

(e)

All necessary approvals will have been obtained to permit the Purchased Shares to be duly issued to, and registered in the name of, Hochschild in compliance with all applicable Laws, including regulatory approvals; and

(f)

The Strategic Alliance Agreement shall have been executed and delivered by Hochschild.

3.2

Conditions to the Obligations of Hochschild to Close

The obligation of Hochschild to complete the purchase of the Purchased Shares pursuant to this Agreement shall be subject to the fulfillment of, on or before to the Closing Date, each of the following conditions precedent (each of which is acknowledged to be for the exclusive benefit of Hochschild and may be waived in whole or in part by the Hochschild in its complete discretion):

(a) All of the representations and warranties of the Company made in or pursuant to this Agreement shall be true and correct as at the Closing and with the same effect as if made at and as of the Closing;

(b) The Company shall have performed or complied with, in all respects, all of its obligations, covenants and agreements under this Agreement to be performed or complied with at or prior to the Closing;

(c) There shall be no Laws, injunction, order or decree which restrains or enjoins or otherwise prohibits the issuance and purchase of the Purchased Shares, or any action or proceeding pending or threatened against Hochschild or against the Company by any governmental authority or any other Person (including a Party hereto) to restrain or prohibit the completion of the transactions contemplated by this Agreement;

(d) Nothing has occurred which, in Hochschild’s reasonable opinion, has or could reasonably be expected to have a Material Adverse Effect on the Company;

(e) Hochschild shall have received (i) such written opinions from counsel to the Company (who shall not be an employee of the Company or any of its Affiliates) dated as of the Closing, addressed to Hochschild and in the form acceptable to Hochschild and its counsel, each acting reasonably, and which shall, among other things, include opinions as to the Company’s compliance with applicable requirements under the Securities Act and other United States securities laws and title to the Existing Properties;

(f) Hochschild will be furnished with such certificates or other instruments of the Company or of officers of the Company as Hochschild or Hochschild’s counsel may reasonably believe necessary in order to establish that the obligations and covenants contained in this Agreement have been performed or complied with in accordance with Section 3.2 and that the representations and warranties of the Company herein given are true and correct at the Closing in accordance with Section 3.2(a);

(g) All necessary steps and proceedings will have been taken to permit the Purchased Shares to be duly issued to, and registered in the name of, Hochschild in compliance with all applicable Laws, including the Company having obtained all necessary regulatory approvals; and

(h) The Strategic Alliance Agreement shall have been executed and delivered by the Company.

3.3

Waiver of Condition

Hochschild, in the case of a condition set out in Section 3.2, and the Company, in the case of a condition set out in Section 3.1, will have the exclusive right to waive before the Closing Date the performance or compliance of such condition in whole or in part and on such terms as may be agreed upon without prejudice to any of its rights in the event of non-performance of or non-compliance with any other condition in whole or in part. Any such waiver will not constitute a waiver of any other conditions in favor of the waiving party. Such waiving party will retain the right to complete the sale and purchase of the Purchased Shares herein contemplated and sue the other party in respect of any breach of the other party’s covenants or obligations or any inaccuracy or misrepresentation in a representation or warranty of the other party which gave rise to the non-performance of or non-compliance with the condition so waived.

3.4

Actions to Satisfy Closing Date Conditions.

(a)

The Company shall take all such actions as are within its power to control and shall use commercially reasonable efforts to cause other actions to be taken which are not within its power to control, so as to ensure compliance with all of the conditions set forth in Section 3.2 (except to the extent any such condition is waived by Hochschild pursuant to Section 3.3), including ensuring that during the period from the date hereof to Closing Date, there is no breach of any of its representations and warranties.

(b)

Hochschild shall take all such actions as are within its power to control and shall use commercially reasonable efforts to cause other actions to be taken which are not within its power to control, so as to ensure compliance with all of the conditions set forth in Section 3.1 (except to the extent any such condition is waived by the Company pursuant to Section 3.3), including ensuring that during the period from the date hereof to Closing Date, there is no breach of any of its representations and warranties.

ARTICLE 4

COVENANTS

4.1

Post-Closing Date Covenants of the Company

The Company shall comply with all securities regulatory filing requirements on a timely basis in connection with the distribution of the Purchased Shares to Hochschild, including

filing within the periods stipulated under Securities Laws, at the Company’s expense, all private placement forms required to be filed by the Company and paying all filing fees required to be paid in connection therewith so that the distribution of the Purchased Shares may lawfully occur without the necessity of filing a prospectus, registration statement or any similar document under the Securities Laws.

4.2

Press Releases

(a)

During the period from the date hereof to Closing, no press release or other public announcement with respect to this Agreement or the transactions contemplated herein or in the Strategic Alliance Agreement will be made by a Party until the text of the announcement and the time and manner of its release have been approved by the other Party in writing, acting reasonably.

(b)

Notwithstanding Section 4.2(a), if at any time up to Closing, a Party is bound by Law to make a press release or other public announcement, such Party may do so, notwithstanding the failure of the other Parties to approve same, provided:

(i)

the other Parties are given at least one (1) Business Day prior written notice of the intention to make such announcement and have a reasonable opportunity to comment on the announcement; and

(ii)

the announcement merely relates the facts and then only to the extent necessary to satisfy the specific legal requirement.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

5.1

Representations, Warranties and Covenants of the Company

The Company hereby represents and warrants to, and covenants with, Hochschild as follows and acknowledges that Hochschild is relying on such representations and warranties in connection with the transaction contemplated hereby:

(a) the Company and its subsidiaries have been duly incorporated and are in good standing under the laws of their respective jurisdictions, and are current and up-to-date with all filings required to be made by them in such jurisdiction, have all requisite corporate power and authority and are duly qualified and except as disclosed in Schedule 5.1(a), possess all certificates, authorizations, permits and licences issued by the appropriate state, municipal, or federal regulatory agencies or bodies necessary (and has not received or is aware of any modification or revocation to such licences, authorizations, certificates or permits) to carry on their business as now conducted and to own their Properties and assets and the Company and its subsidiaries have all requisite corporate power and authority to execute, deliver, perform and carry out their obligations under this Agreement.

(b) except as disclosed in Schedule 5.1(b), since September 30, 2008, there has been no change to the Company (actual, or to the knowledge of the Company, proposed or

prospective, whether financial or otherwise) that would cause a Material Adverse Effect to the Company, which has not been disclosed to the public and, in all material respects, the business of the Company has been carried on in the usual and ordinary course consistent with past practice, to the extent that such past practice is consistent with the current business direction of the Company.

(c) this Agreement constitutes a legal, valid and binding obligation of the Company, enforceable in accordance with its terms;

(d) the execution, delivery and performance by the Company of its obligations under this Agreement and the issuance, sale and delivery of the Purchased Shares by the Company:

(i)

has been duly authorized by all necessary action on the part of the Company;

(ii)

does not require the approval, authorization, consent or order of, and no filing, registration or recording with, any governmental authority having jurisdiction over the Company in connection with the execution and delivery or with the performance by the Company of this Agreement;

(iii)

does not require the consent, approval, authorization, registration or qualification of or with any governmental authority, stock exchange, securities commission or other regulatory authority or other third party; and

(iv)

does not and will not (or will not with the giving of notice, the lapse of time or the happening of any other event or condition) result in a violation of any of the terms or provisions of any law applicable to the Company, a breach or a violation of, or conflict with or result in a default under, or allow any other person to exercise any rights under, any of the terms or provisions of the articles, by-laws or resolutions of the Board of Directors (or any committee thereof) or security holders of the Company, or any judgment, decree, order or award of any court, governmental body or arbitrator having jurisdiction over any of them, or any agreement, license or permit to which any of them is a party;

(e) as of the close of business on December 4, 2008, the authorized capital of the Company consists of 60,000,000 shares of common stock and 5,000,000 shares of preferred stock, of which 34,417,556 shares of common stock are issued and outstanding as fully paid and non-assessable, and the Company has no other shares of any kind issued and outstanding;

(f) as at the date of this Agreement there are outstanding Options to acquire an aggregate of up to 3,683,000 shares of Company common stock. Except for the Options, no person holds any Convertible Securities of the Company or any of its Subsidiaries or is entitled to any pre-emptive or any similar rights to subscribe for any Shares or other securities of the Company or any of its Subsidiaries;

(g) immediately following the Closing Date, Hochschild will own the Purchased Shares and the Purchased Shares will collectively represent 4.63% of the then-issued and outstanding Shares on a non-diluted basis;

(h) as at the date of this Agreement, there is no Contract or any other right of another Person binding upon or which at any time in the future may become binding upon the Company or any of its Subsidiaries: (i) to allot or issue any unissued shares thereof to any Person; (ii) to create any additional class of shares of the Company or any of its Subsidiaries; (iii) to sell, transfer, assign, pledge, mortgage or in any way dispose of or encumber any securities of the Company or any of its Subsidiaries to or in favour of any Person; or (iv) to sell, transfer, assign, pledge, mortgage or in any other way dispose of or encumber any of the assets of the Company or any of its Subsidiaries other than in the ordinary course of business;

(i) to the knowledge of the Company, no agreement is in force or effect which in any manner affects the voting or control of any of the securities of the Company or any of its Subsidiaries and, to the knowledge of the Company, following the Closing Date and except for the Strategic Alliance Agreement, there will be no shareholders’ agreement, voting trust agreement or other agreement (i) governing or otherwise affecting the voting rights associated with any securities of the Company; or (ii) restricting or otherwise affecting the power and authority of the directors of the Company;

(j) the Company is in compliance with its obligations under all applicable securities laws and has filed and made timely and accurate disclosure in reports and all other documents required to be filed under securities laws applicable thereto;

(k) neither the Company, nor any person acting on its behalf has, directly or indirectly, (i) made offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the distribution of the Purchased Shares to be qualified by a prospectus filed in accordance with the Securities Laws or (ii) has engaged in any advertisement of Company shares in any printed media of general and regular paid circulation, radio or television or any other form of advertising in connection with the offer and sale of Company shares that would require filing of a prospectus;

(l) the Purchased Shares to be issued have been, or prior to the Closing Time (as hereinafter defined in Section 2.5) will have been duly created and, when issued and delivered to Hochschild, the Purchased Shares will be validly issued as fully paid Shares and will not have been issued in violation of or subject to any pre-emptive rights or contractual rights to purchase securities issued by the Company;

(m) no securities commission, stock exchange or comparable authority has issued any order preventing or suspending the distribution of the Purchased Shares or the trading of securities of the Company generally and the Company is not aware of any investigation, order, inquiry or proceeding which has been commenced or which is pending, contemplated or threatened by any such authority;

(n) the common stock currently trades in the Over-the-Counter market and is quoted on the Bulletin Board system maintained by the Nasdaq Stock Market and no order ceasing or suspending trading in any securities of the Company or the trading of any of the Company’s issued securities is currently outstanding and no proceedings for such purpose are, to the knowledge of the Company, pending or threatened;

(o) except as otherwise publicly disclosed by the Company, the Company has carried out its affairs in compliance in all material respects with the terms and provisions of applicable Laws and is not in material violation of or in material default in the performance of any mortgage, note, indenture, deed of trust, contract, agreement (written or oral), instrument, lease, licence or other document to which it is a party or by which it is bound or to which its property or assets or any of them is subject, and no event has occurred which with notice or lapse of time or both would constitute such a default and all such contracts, agreements and arrangements are in good standing;

(p) the Company and each of its subsidiaries has duly and in a timely manner filed all Tax Returns that are required to be filed by them and all such Tax Returns are correct or complete in all respects; and, to the knowledge of the Company and except as disclosed in Schedule 5.1(p), there are no audits of the Tax Returns of the Company or any of its Subsidiaries by any Authority pending and there are no outstanding claims or Liens for Taxes on the assets of the Company or any of its Subsidiaries;

(q) except as disclosed in Schedule 5.1(q), there is no Contract to which the Company or its subsidiaries is a party or by which any of them or their respective properties or assets are bound that (a) if terminated, would reasonably be expected to have a material adverse effect on the Company; or (b) is a contract that contains any non-competition obligations or otherwise restricts in any material way the business of the Company or its subsidiaries;

(r) the Company and each of its subsidiaries has performed in all material respects all respective obligations required to be performed by them to date under any material contracts and are not, and are not to the knowledge of the Company alleged to be in breach or default in any material respect thereunder;

(s) except as disclosed in Schedule 5.1(s), neither the Company nor its Subsidiaries are parties to, bound by or subject to any debt instrument; or any agreement, contract or commitment to create, assume or issue any debt instrument;

(t) the Audited Financial Statements and the Unaudited Financial Statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) applied on a basis consistent with those of preceding fiscal periods (except that the unaudited, interim statements do not contain all of the footnotes that would be required by GAAP and have been prepared in accordance with the rules of the Unites States Securities and Exchange Commission pertaining to condensed interim statements) and the statements present fairly the assets, liabilities and financial condition of the Company as at the dates and for the periods indicated in such financial statements;

(u) neither the Company nor any of its subsidiaries has been in material violation of any Environmental Laws or Permits and there are no orders, rulings or directives issued, pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries under or pursuant to any Environmental Laws;

(v) the Company and its subsidiaries hold either freehold title, mining leases, mining claims or other conventional property, proprietary or contractual interests or rights, recognized in the jurisdiction in which a particular property is located in respect of the ore bodies and minerals located in the Existing Properties under valid, subsisting and enforceable title documents or other recognized and enforceable agreements or instruments, which are currently sufficient to permit the Company through its subsidiaries to explore the minerals relating thereto, and all such property, leases or claims and all property, leases or claims in which the Company or the subsidiaries have any interest or right have been validly located and recorded in accordance with all applicable laws and are valid and subsisting;

(w) the Company’s Subsidiaries have obtained surface rights, access rights and other rights to only portions of its holdings as follows: the El Aguila Project has been granted surface rights for exploration and surface rights for exploitation in the area of its mining sites and mill site, Las Margaritas has been granted surface rights for exploration on a portion of its claims, El Rey has been granted surface rights for exploration on a portion of its claims, and no surface rights have been obtained for exploration at the Sologa property;

(x) the Company has not declared or paid, or committed to declare or pay, any amount to any person in respect of a performance or incentive or other bonus in connection with the completion of the transaction contemplated by this Agreement;

(y) neither the Company nor any of its subsidiaries is subject to any claim for wrongful dismissal, constructive dismissal or any other claim, actual or threatened, or any litigation, actual or threatened, relating to its employees or independent contractors (including any termination of such persons) other than those claims or such litigation as would individually or in the aggregate not have a material adverse effect on the Company;

(z) the Company and each Subsidiary has timely filed with all applicable securities regulatory authorities, and all applicable self-regulatory organizations true and complete copies of all forms, reports, schedules, statements and other document required to be filed by it, and all such documents complied in all material respects with the requirements of applicable securities laws;

(aa) There are no actions, suits, proceedings or inquiries pending or, to the knowledge of the Company threatened against or affecting the Company or its subsidiaries or their property or assets at law or in equity or before or by any federal, municipal or other governmental department, court, commission, board, bureau, agency or instrumentality;

(bb) there is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply in all material respects with any applicable provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including Section 402 related to loans and Sections 302 and 906 related to certifications.

(cc) the Company acknowledges that the representations, warranties, acknowledgements and agreements contained herein are made by the Company with the intent that they may be relied upon by Hochschild in deciding to subscribe for the Purchased Shares. The Company further agrees that it shall represent and warrant that except as set forth in such representation or warranty, the foregoing representations and warranties will be true and

correct as at the Closing with the same force and effect as if they had been made by the Company at the Closing and that they shall survive the purchase by Hochschild of the Purchased Shares. The Company undertakes to notify Hochschild immediately of any change in any representation, warranty or other information relating to the Company set forth herein which takes place prior to the time of the Closing. For greater certainty, the Company acknowledges that Hochschild is relying upon the representations and warranties of the Company in entering into this Agreement and confirms that no investigation made by Hochschild or its representatives will affect Hochschild’s right to rely on any such representation and warranty made by the Company in this Agreement.

ARTICLE 6

ACKNOWLEDGEMENTS, COVENANTS, REPRESENTATIONS

AND WARRANTIES OF HOCHSCHILD

6.1

Acknowledgements, Representations, Warranties and Covenants of Hochschild

Hochschild hereby represents and warrants to, and covenants with, the Company as follows and acknowledges that the Company is relying on such representations and warranties in connection with the transactions contemplated herein:

(a) Hochschild certifies that it is resident in the jurisdiction set out on the signature page of this Agreement. Such address was not created and is not used solely for the purpose of acquiring the Shares and Hochschild was solicited to purchase in such jurisdiction;

(b) Hochschild is not a U.S. Person (as defined in Rule 902(k) of Regulation S under the Securities Act);

(c) Hochschild is subscribing for the Purchased Shares for its own account and not for the account of a U.S. Person or for resale in the United States and Hochschild confirms that the Purchased Shares have not been offered to Hochschild in the United States and that this Agreement has not been signed in the United States;

(d) Hochschild acknowledges that the Purchased Shares have not been registered under the Securities Act and may not be offered or sold in the United States or to a U.S. Person unless the securities are registered under the Securities Act and all applicable state securities laws or an exemption from such registration requirements is available, and further agrees that hedging transactions involving such securities may not be conducted unless in compliance with the Securities Act;

(e) Hochschild understands that the Company is the seller of the Purchased Shares and that, for purposes of Regulation S, a “distributor” is any underwriter, dealer or other person who participates, pursuant to a contractual arrangement, in the distribution of securities sold in reliance on Regulation S and that an “affiliate” is any partner, officer, director or any person directly or indirectly controlling, controlled by or under common control with any person in question. Except as otherwise permitted by Regulation S, Hochschild agrees that it will not, during a one year distribution compliance period, act as a distributor, either directly or through any affiliate, or sell, transfer, hypothecate or otherwise convey the Purchased Shares or underlying securities other than to a non-U.S. Person;

(f) Hochschild acknowledges and understands that in the event the Purchased Shares are offered, sold or otherwise transferred by Hochschild to a non-U.S Person prior to the expiration of a one year distribution compliance period, the purchaser or transferee must agree not to resell such securities except in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act, or pursuant to an available exemption from registration; and must further agree not to engage in hedging transactions with regard to such securities unless in compliance with the Securities Act;

(g) Hochschild will not offer, sell or otherwise dispose of the Purchased Shares in the United States or to a U.S. Person unless (A) the Company has consented to such offer, sale or disposition and such offer, sale or disposition is made in accordance with an exemption from the registration requirements under the Securities Act and the securities laws of all applicable states of the United States or (B) the SEC has declared effective a Registration Statement in respect of such securities;

(h) The execution and delivery of this Agreement, the performance and compliance with the terms hereof, the subscription for the Purchased Shares and the completion of the transactions described herein by Hochschild will not result in any material breach of, or be in conflict with, or constitute a material default under, or create a state of facts that, after notice or lapse of time, or both, would constitute a material default under any term or provision of the constating documents, by-laws or resolutions of Hochschild, the securities laws or any other laws applicable to Hochschild, any agreement to which Hochschild is a party, or any judgment, decree, order, statute, rule or regulation applicable to Hochschild;

(i) Hochschild is subscribing for the Purchased Shares as principal for its own account and not for the benefit of any other person (within the meaning of applicable securities laws);

(j) This Agreement has been duly authorized, executed and delivered by, and constitutes a legal, valid and binding agreement of, Hochschild. This Agreement is enforceable in accordance with its terms against Hochschild;

(k) Hochschild is duly incorporated and is validly subsisting under the laws of its jurisdiction and has all requisite legal and corporate power and authority to execute and deliver this Agreement, to subscribe for the Purchased Shares as contemplated herein and to carry out and perform its obligations under the terms of this Agreement;

(l) Hochschild is not, with respect to the Company or any of its affiliates, a “control person” as defined under the Securities Act and the purchase of the Purchased Shares hereunder will not result in Hochschild becoming a control person;

(m) Hochschild has been advised to consult its own legal advisors with respect to trading in the Purchased Shares, and with respect to the resale restrictions imposed by the securities laws of the jurisdiction in which Hochschild resides and other applicable securities laws, and acknowledges that no representation has been made respecting the applicable hold periods imposed by the securities laws or other resale restrictions applicable to such securities that restrict the ability of Hochschild to resell such securities, that Hochschild is solely responsible to find out what these restrictions are and Hochschild is solely responsible (and the Company is not in any way responsible) for compliance with applicable resale restrictions and Hochschild is aware that it may not be able to resell such securities except in accordance with limited exemptions under the securities laws and other applicable securities laws;

(n) No person has made any written or oral representations:

(i)

that any person will resell or repurchase the Purchased Shares;

(ii)

that any person will refund the Purchase Price; or

(iii)

as to the future price or value of the Purchased Shares;

(o) There are risks associated with the purchase of and investment in the Purchased Shares and Hochschild has such knowledge and experience that it is capable of evaluating the merits and risks of an investment in the Purchased Shares and fully understands the restrictions on resale of the Purchased Shares and is capable of bearing the economic risk of the investment;

(p) The funds representing the Purchase Price that will be paid by Hochschild to the Company hereunder, will not represent proceeds of crime for the purposes of United States anti-terrorist legislation and Hochschild acknowledges that the Company may in the future be required by law to disclose Hochschild’s name and other information relating to this Agreement and Hochschild’s subscription hereunder pursuant to such legislation. To the best of its knowledge (a) none of the Purchase Price to be provided by Hochschild (i) has been or will be derived from or related to any activity that is deemed criminal under the laws of the United States of America, or any other jurisdiction, or (ii) is being tendered on behalf of a person or entity who has not been identified to Hochschild, and (b) it shall promptly notify the Company if Hochschild discovers that any of such representations ceases to be true, and to provide the Company with appropriate information in connection therewith;

(q) Hochschild acknowledges that no securities commission, agency, governmental authority, regulatory body, stock exchange or other regulatory body or similar regulatory authority has reviewed or passed on the merits of the Purchased Shares;

(r) Hochschild acknowledges that the Purchased Shares shall be subject to statutory resale restrictions under the securities laws of the jurisdiction in which Hochschild resides and under other applicable securities laws, and Hochschild covenants that it will not resell the Shares except in compliance with such laws and Hochschild acknowledges that it is solely responsible (and in no way is the Company responsible) for such compliance;

(s) Hochschild acknowledges that the certificates representing the Purchased Shares, and all certificates issued in substitution or exchange thereof, will bear a legend substantially in the following form:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO GOLD RESOURCE CORPORATION (“GRC”), (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) IN COMPLIANCE WITH RULE 144 OR 144A

THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR (E) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO GRC AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO GRC. HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.

(t) Hochschild acknowledges that the Company is relying on the representations, warranties and covenants contained herein to determine Hochschild’s eligibility to subscribe for the Purchased Shares under applicable securities laws. Hochschild undertakes to immediately notify the Company of any change in any statement or other information relating to Hochschild set forth in this Agreement which takes place prior to the Closing Time;

(u) Hochschild acknowledges that it is responsible for obtaining such legal and tax advice as it considers appropriate in connection with the execution, delivery and performance of this Agreement and the transactions contemplated under this Agreement;

(v) Hochschild has reviewed (i) the prospectus of the Company dated October 17, 2008; (ii) the quarterly reports on Form 10-Q for the quarters ended March 31, June 30, and September 30, 2008; (iii) all other reports filed with the United States Securities and Exchange Commission by the Company since March 31, 2008, each of which is available from the Public Reference Room of the SEC or on its web site at http://www.sec.gov. Hochschild’s decision to purchase the Purchased Shares was based solely on the representations in this Agreement and the filings of the Company with the SEC itemized immediately above, and no person or entity has made any representations or warranties excepts as set forth herein;

(w) There are risks associated with the purchase of the Shares and Hochschild may lose its entire investment. These risks include those itemized in the Company’s filings with the SEC itemized above. Hochschild acknowledges having read these risks and understands them.

(x) Hochschild has had the opportunity to ask questions of, and receive answers from, the officers and directors of the Company regarding the offering, the Company or any other information relevant to Hochschild’s investment;

(y) Hochschild acknowledges the following: (i) this Agreement requires Hochschild to provide certain information to the Company; (ii) such information is being collected by the Company for the purposes of completing the offering, which includes, without limitation, determining Hochschild’s eligibility to purchase the Purchased Shares under the applicable securities laws, preparing and registering certificates representing Purchased Shares to be issued to Hochschild and completing filings required by any stock exchange or securities regulatory authority; (iii) Hochschild’s information may be disclosed by the Company to: (A) stock exchanges or securities regulatory authorities; and (B) the Company’s advisors, including

legal counsel and may be included in record books in connection with the offering. By executing this Agreement, Hochschild is deemed to be consenting to the foregoing collection, use and disclosure of Hochschild’s information. Hochschild also consents to the filing of copies or originals of this Agreement as may be required to be filed with any stock exchange or securities regulatory authority in connection with the transactions contemplated hereby;

(z) Hochschild consents to the Company making a notation on its records and giving instructions to any transfer agent of the Company in order to implement the restrictions on transfers set forth and described herein, and Hochschild understands and acknowledges that the Company may instruct the registrar and transfer agent of the Company not to record a transfer without first being notified by the Company that it is satisfied that such transfer is exempt from or not subject to registration under the Securities Act.

ARTICLE 7

SURVIVAL OF REPRESENTATIONS,

WARRANTIES AND COVENANTS

7.1

Survival of Representations, Warranties and Covenants of the Company

Unless otherwise stated herein, the representations, warranties and covenants of the Company contained in this Agreement shall survive the Closing Date for a period of two years and, notwithstanding such Closing Date or any investigation made by or on behalf of Hochschild with respect thereto, shall continue in full force and effect for the benefit of Hochschild.

7.2

Survival of Representations, Warranties and Covenants of Hochschild

The representations, warranties and covenants of Hochschild contained in this Agreement shall survive the Closing Date for a period of two years and, notwithstanding such Closing Date or any investigation made by or on behalf of the Company with respect thereto and notwithstanding any subsequent disposition by Hochschild of any of the Purchased Shares, shall continue in full force and effect.

ARTICLE 8

TERMINATION

8.1

Termination.

This Agreement may be terminated at any time prior to the Closing Date by:

(a)

Hochschild if (i) at the time of Closing, any of the conditions specified in Section 3.2 has not been satisfied in full; (ii) there has been a material violation or material breach by the Company of any covenant, representation or warranty or other agreement contained in this Agreement such that any condition specified in Section 3.2 would be incapable of being satisfied at Closing, and such violation or breach is not waived by Hochschild or, in the case of a covenant breach, cured by the Company by the earlier of ten days (or such longer period of time as may be required provided the Company is diligently pursuing such cure) after written notice thereof by Hochschild, or the Closing; and

(b)

the Company if (i) at the time of Closing, any of the conditions specified in Section 3.1 has not been satisfied in full; (ii) there has been a material violation or material breach by Hochschild of any covenant, representation or warranty or other agreement contained in this Agreement such that any condition specified in Section 3.1 would be incapable of being satisfied at Closing, and such violation or breach is not waived by the Company or, in the case of a covenant breach, cured by Hochschild by the earlier of ten days (or such longer period of time as may be required provided the Company is diligently pursuing such cure) after written notice thereof by the Company, or the Closing;

(c)

by written agreement of the Parties; or

(d)

by either Hochschild of the Company if the Closing Date has not occurred by December 15, 2008 (other than due to the fault or negligence of the Party purporting to exercise this termination right), which date may be extended with the written consent of both Parties.

8.2

Effect of Termination.

If this Agreement is terminated pursuant to Sections 8.1, all obligations of the Parties under or pursuant to this Agreement will terminate without further liability of any Party to the other except for the provision of Section 10.3 relating to expenses, Section 4.2 relating to press releases and this Section 8.2, provided that nothing herein will relieve any Party from liability for any breach of this Agreement occurring before its termination.

ARTICLE 9

INDEMNIFICATION

9.1

Indemnification by the Company

The Company will indemnify and save harmless Hochschild and the directors, officers, employees and agents of Hochschild (collectively, the “Hochschild Indemnitees”) from and against all Claims incurred by any one or more of Hochschild Indemnitees directly or indirectly resulting from any breach of any covenant of the Company contained in this Agreement or from any inaccuracy or misrepresentation in any representation or warranty set forth in Section 5.1.

9.2

Indemnification by Hochschild

Hochschild will indemnify collectively and save harmless the Company and the directors, officers, employees and agents of the Company (collectively, the “Company Indemnitees”) from and against all Claims incurred by any one or more of the Company Indemnitees directly or indirectly resulting from any breach of any covenant of Hochschild contained in this Agreement or from any inaccuracy or misrepresentation in any representation or warranty set forth in Section 6.1.

ARTICLE 10

MISCELLANEOUS

10.1

Notice

All notices or other communications required or permitted to be given by one party to another by the terms hereof shall be given in writing by personal delivery or facsimile delivered to such other party as follows:

To the Company:

Gold Resource Corporation

222 Milwaukee St., Suite 301

Denver, CO 80206

Attention: William Reid, President

Facsimile No.: (303) 320-7835

To Hochschild:

Hochschild Mining Holdings Ltd.

Calle La Colonia 180

Surco, Lima 33, Peru

Attention: Jose A. Palma

Facsimile No.: +511-437-5009

or at such other address or facsimile number as may be given by either of them to the other in writing from time to time and such other notices or communications shall be deemed to have been received when delivered or, if by facsimile, on the next business day after such notice or other communication has been transmitted by facsimile (with receipt confirmed).

10.2

Further Assurances

Each of the parties hereto upon the request of each of the other parties hereto, whether before or after the Closing Date Time, shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, deeds, documents, assignments, transfers, conveyances, powers of attorney and assurances as may reasonably be necessary or desirable to complete the transactions contemplated herein.

10.3

Costs and Expenses

All costs and expenses (including, without limitation, the fees and disbursements of legal counsel) incurred in connection with this Agreement and the transactions herein contemplated shall be paid and borne by the party incurring such costs and expenses.

10.4

Taxes

Hochschild does not assume and will not be liable for any Taxes which may be or become payable by the Company, including any Taxes resulting from or arising as a consequence of the issuance by the Company of any Purchased Shares to Hochschild herein contemplated, and the Company will indemnify and save harmless Hochschild, its Affiliates and their respective directors, officers, employees and agents from and against all such Taxes.

10.5

Applicable Law

This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of New York and the laws of the United States applicable therein. Any and all disputes arising under this Agreement, whether as to interpretation, performance or otherwise, shall be subject to the non-exclusive jurisdiction of the courts of Colorado and each of the parties hereto hereby irrevocably attorns to the jurisdiction of the courts of such state.

10.6

Entire Agreement

This Agreement, together with the Confidentiality and Non-Disclosure Agreement and the Strategic Alliance Agreement, constitute the entire agreement between the parties with respect to the transactions contemplated herein and cancels and supersedes any prior understandings, agreements, negotiations and discussions between the parties. There are no representations, warranties, terms, conditions, undertakings or collateral agreements or understandings, express or implied, between the parties hereto other than those expressly set forth in this Agreement or in any such agreement, certificate, affidavit, statutory declaration or other document as aforesaid. This Agreement may not be amended or modified in any respect except by written instrument executed by each of the parties hereto.

10.7

Counterparts

This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same Agreement. Counterparts may be delivered either in original or faxed form and the parties adopt any signature received by a receiving fax machine as original signatures of the parties.

10.8

Assignment

This Agreement may not be assigned by either party except with the prior written consent of the other parties hereto.

10.9

Enurement

This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, successors (including any successor by reason of the amalgamation or merger of any party), administrators and permitted assigns.

10.10

Language

It is the express wish of Hochschild that the Agreement and any related documentation be drawn up in English.


GOLD RESOURCE CORPORATION

By:
		Authorized Signing Officer

HOCHSCHILD MINING HOLDINGS LTD.

By:
		Authorized Signing Officer


		Country of Domici.le

EX-2 3 dex2.htm STRATEGIC ALLIANCE AGREEMENT DATED DECEMBER 5, 2008 Strategic Alliance Agreement dated December 5, 2008

Exhibit 2

STRATEGIC ALLIANCE AGREEMENT

THIS AGREEMENT dated for reference the 5th day of December 2008.

BETWEEN:

GOLD RESOURCE CORPORATION, a company organized under the laws of the State of Colorado, with registered office located at 222 Milwaukee Street, Suite 301, Denver, CO 80206 (“GRC” or “the Company”)

AND:

HOCHSCHILD MINING HOLDINGS LIMITED, a private limited company organized under the laws of England and Wales, with registered office located at 46 Albemarle Street, London, England W1S 4JL (“HOC”)

WHEREAS:

A. The Company is a mineral exploration and development company engaged in the acquisition and exploration, as well as development of mineral properties (the “Properties”) in Mexico through its Mexican subsidiaries with prospects for hosting gold, silver and base metal deposits, and through such subsidiaries holds interests in several mineral resource properties, including but not limited to (i) El Aguila, (ii) Las Margaritas, (iii) Solaga, and (iv) El Rey located in Oaxaca, Mexico (the “Existing Properties”);

B. HOC is an Affiliate of Hochschild Mining plc., a leading underground precious metals producer operating in the Americas with a primary focus on silver and gold;

C. The Company and HOC believe that their respective corporate strategies are compatible and, as such, wish to establish a strategic alliance on the terms and conditions set forth herein;

D. The Company and HOC are entering into this Agreement as a condition to and in furtherance of the investment in Shares (as defined below) contemplated in the Subscription Agreement dated December 5, 2008 (the “Subscription Agreement”) between the Company and HOC without the Company having executed and delivered this Agreement; and

E. The Board of Directors has authorized the Company to enter into this Agreement.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual premises, covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by both parties, the parties hereby covenant and agree as follows:

ARTICLE 1

INTERPRETATION

1.1 Definitions. In this Agreement, unless the context otherwise requires:

(a)

“Acceptance Notice” has the meaning ascribed to it in Section 4.1(e);

(b)

“Additional Securities” has the meaning ascribed to it in Section 4.1(a);

(c)

“Additional Shares” has the meaning ascribed to it in Section 2.1;

(d)

“Affiliate” shall have the meaning ascribed thereto in the Securities Act;

(e)

“Agreement” means this strategic alliance agreement and any instrument amending this Agreement and “hereof”, “hereto”, “hereunder” and similar expressions mean and refer to this Agreement and not to a particular Article, Section, Subsection or Paragraph;

(f)

“Alternative Proposal” has the meaning ascribed to it in Section 9.1;

(g)

(h)

“Board of Directors” means the board of directors of the Company;

(i)

“Business Day” means any day which is not a Saturday, a Sunday or a day on which banks are generally closed for business in Denver, Colorado or London, England;

(j)

“Claims” means all losses, damages, expenses, Liabilities, claims and demands of whatever nature or kind, including all reasonable legal fees and disbursements;

(k)

“Closing Date” has the meaning given to it in the Subscription Agreement;

(l)

“Commencement of Production” has the meaning given to it in Section 2.3;

(m)

“Common Stock” has the meaning given to it in Section 4.1(a);

(n)

“Company” has the meaning given to it in the preamble hereto;

(o)

“Company Indemnitees” has the meaning given to it in Section 11.2;

(p)

“Convertible Securities” means all warrants, rights, agreements, options, or Debt Instruments present or future, contingent or absolute, or any right or privilege capable of becoming a right, agreement or option, for the purchase, subscription or issuance of any Shares in the Company or any other security or Debt Instruments convertible or exchangeable for Shares, including options granted to officers, directors or employees, and whether issued pursuant to the Stock Option Plan;

(q)

“Debt Instrument” means any loan, bond, debenture, promissory note or other instrument evidencing material indebtedness of the Company for borrowed money or other material liability;

(r)

“Equity Securities” means Shares, Convertible Securities and any other equity or voting securities of the Company;

(s)

“Existing Properties” has the meaning given to it in the preamble hereto;

(t)

“Financing Election” has the meaning ascribed to it in Section 2.3;

(u)

“HOC Director” has the meaning ascribed to it in Section 5.1;

(v)

“HOC Entities” means HOC and its Affiliates, and any person acting jointly or in concert with any of them, excluding, for greater certainty, the Company and any of its Subsidiaries to the extent they may be or become Affiliates at any relevant point in time;

(w)

“HOC Indemnitees” has the meaning ascribed to it in Section 11.1;

(x)

“HOC JV Acceptance Notice” has the meaning ascribed to it in Section 6.2(b);

(y)

“HOC Option” has the meaning ascribed to it in Section 2.1;

(z)

“Joint Venture Proposal Notice” has the meaning ascribed to it in Section 6.2(a);

(aa)

“JV Negotiation Period” has the meaning ascribed to it in Section 6.2(b);

(bb)

(cc)

(dd)

(ee)

“Market Purchases” has the meaning ascribed to it in Section 3.1;

(ff)

“Option Exercise Notice” has the meaning ascribed to it in Section 2.1;

(gg)

“Option Expiration Date” has the meaning ascribed to it in Section 2.1;

(hh)

“Options” means outstanding options to acquire Shares under the Stock Option Plan;

(ii)

“Other Purchasers” has the meaning ascribed to it in Section 4.1(a);

(jj)

“Parties” means the Company and HOC and their successors and permitted assigns; and “Party” means any one of them;

(kk)

(ll)

“Private Agreement Purchases” means purchases of Equity Securities other than on any stock exchange on which the Shares are then listed or quoted provided such purchases are made in accordance with applicable Laws, including applicable Securities Laws;

(mm)

“Pro Rata Interest” has the meaning ascribed to it in Section 4.1(a);

(nn)

“Proposed Joint Venture” has the meaning ascribed to it in Section 6.1(a);

(oo)

“Properties” has the meaning ascribed to it in the Preamble hereto;

(pp)

“Purchased Shares” shall mean the shares of Common Stock to be acquired by HOC pursuant to the terms of the Subscription Agreement.

(qq)

“Rights Notice” has the meaning ascribed to it in Section 4.1(c);

(rr)

“Securities Exchange Act” means the Securities Exchange Act of 1934;

(ss)

“Securities Commissions” means the securities regulator in each jurisdiction whose Securities Laws are applicable to the Company;

(tt)

“Securities Laws” means the Laws relating to securities of the Company, and the regulations and rules made and forms prescribed thereunder together with all applicable published policy statements, blanket orders, rulings and notices adopted by the Securities Commissions of each such jurisdiction or applicable in such jurisdictions;

(uu)

“Shareholders” means the holders of Shares;

(vv)

“Shares” means common shares or any other securities into which the common shares in the capital of the Company are reorganized, exchanged or converted;

(ww)

“Stock Option Plan” means any stock option plan, agreement or arrangement adopted by the Company from time to time which provides for the issuance of options to acquire Shares;

(xx)

“Subscription Agreement” has the meaning ascribed to it in the Preamble hereto;

(yy)

“Subsequent Closing Date” has the meaning ascribed to it in Section 2.1;

(zz)

“Transactions” means the transactions contemplated in this Agreement.

1.2 Gender and Certain References. Whenever the context requires, the gender of all words used shall include the masculine, feminine and neuter, and the number of all words shall include the singular and plural. The terms “hereof”, “herein” or “hereunder” shall refer to this Agreement as a whole and not to any particular Article or Section hereof. All titles and headings to Articles and Sections in this Agreement are included for convenience and ease of reference. Titles and headings shall not affect in any way the meaning or interpretation of Articles or Sections of this Agreement. Any references to specific Articles or Sections shall mean the Articles and Sections in this Agreement.

ARTICLE 2

ADDITIONAL INVESTMENTS BY HOC

2.1 HOC Option to Purchase Additional Shares. From and after the Closing Date and until 5:00 pm Denver time on the date which is eighty (80) days from the Closing Date (the “Option Expiration Date”), HOC shall have the option (the “Option”), at its sole discretion, to subscribe for all, but not less than all, of an additional 4,330,000 Shares from the Company (the “Additional Shares”) at a price of US$3.00 per share, or a total of US$12,990,000. If HOC wishes to exercise the Option, it shall give written notice to the Company (the “Option Exercise Notice”) prior to the Option Expiration Date in the manner set forth in Section 12.1 of this Agreement. If HOC fails to deliver the Option Exercise Notice on or before the Option Expiration Date, HOC shall be deemed to have waived its rights under this Section 2.1. In the event HOC exercises the Option, one or more of the HOC Entities shall subscribe and pay for and the Company shall issue to the relevant HOC Entities, free and clear of any liens or encumbrances, the Additional Shares and the Parties shall exchange representations and warranties substantially similar to those contained in the Subscription Agreement and execute such documents as may be necessary to complete the subscription and sale of the Additional Shares. Closing of the purchase and sale of the Additional Shares shall take place within ten (10) business days of the delivery of the Option Exercise Notice, such date being referred to as the “Subsequent Closing Date”.

2.2 Use of Proceeds. In the event HOC exercises the Option, the Company agrees to use not less than five million U.S. Dollars (US$5,000,000) of the proceeds from the subscription of the Purchased Shares and the Additional Shares to fund exploration activities (including but not limited to drilling, assaying and staking new claims) on the El Aguila project. The Company further agrees that the balance of the proceeds from the subscription of the Purchased Shares and the Additional Shares shall be used as follows: (i) ten million U.S. Dollars (US$10,000,000) to fund the development and construction of the mine and plant for the El Aguila project; and (ii) three million U.S. Dollars (US$3,000,000) for working capital of the Company and other investments in the El Aguila project.

2.3. Additional Financing. Subject to the provisions of Section 8.2, if the Company determines to solicit additional equity financing subsequent to exercise of the Option but prior to Commencement of Production (hereinafter defined) at the El Aguila project, it shall provide written notice to that effect to HOC and HOC shall be entitled to exclusively provide such financing upon the terms and conditions hereinafter set forth. For purposes of the preceding sentence, “Commencement of Production” shall be defined as the production and delivery to the point of sale (refiner) by the Company (either directly or through a subsidiary) of not less than 4,000 ounces of gold within a 45 day period. HOC shall have ten (10) Business Days from delivery of such notice in which to notify the Company that it desires to provide all of such financing (the “Financing Election”). If HOC delivers the Financing Election, the purchase price for each share shall be equal to eighty percent (80%) of the average closing price of the Shares during the thirty (30) calendar days preceding the date HOC delivers the Financing Election. Closing of the subscription, purchase and sale shall be at such place and time as the Parties agree but not more than ten (10) days from delivery of the Financing Election. If HOC delivers the Financing Election, one or more of the HOC Entities shall pay the purchase price for, and the Company shall issue, additional Shares, free and clear of all liens and encumbrances. The Parties shall exchange representations and warranties, in form and in substance substantially similar to those provided in the Subscription Agreement and execute such documents as may be necessary to complete the subscription and sale of the Shares. In the event HOC fails to provide the Financing Election as set forth above, the Company shall be free to obtain such financing from one or more additional parties, free of any obligation to HOC.

ARTICLE 3

MARKET PURCHASES AND PRIVATE PURCHASES

3.1 Market Purchases. Subject to compliance with applicable laws, the HOC Entities shall at any time and from time to time, in their sole discretion, be entitled to make purchases of the Company’s common stock in the over-the-counter market or on any stock exchange on which its common stock is then quoted or listed (the “Market Purchases”); provided, however, that for a period of two (2) years following the Closing Date, unless the Parties otherwise agree, the HOC Entities do not beneficially own, directly or indirectly, more than forty percent (40%) of the Company’s outstanding common stock on an undiluted basis, following any Market Purchase and any Private Agreement Purchase. For purposes of this Agreement, beneficial ownership shall be determined in accordance with the provisions of Rule 13d-3 of the Securities Exchange Act.

3.2 Private Purchase. In addition to Market Purchases, as described in Section 3.1 above, HOC shall be entitled to make Private Agreement Purchases, provided that such purchases are made in accordance with all applicable laws; and provided further, that for a period of two (2) years following the Closing Date, unless the Parties otherwise agree, the HOC Entities will not beneficially own more than forty percent (40%) of the Company’s outstanding common stock on an undiluted basis following any Market Purchase and/or Private Agreement Purchase. At the request of HOC, the Company shall introduce HOC to persons whom the Company believes may be interested in selling its common stock.

ARTICLE 4

PRE-EMPTIVE RIGHT

4.1 HOC’s Pre-emptive Right.

(a) Subject to the provisions of subsection (g) of this Section 4.1 and Section 8.2 hereof, if at any time after the Closing Date, the Company proposes to issue or sell Equity Securities (“Additional Securities”) other than (i) under any Stock Option Plan, (ii) pursuant to the exercise of options under any Stock Option Plan, (iii) upon the exercise, exchange or conversion of any Convertible Securities, or (iv) for property other than money, the HOC Entities shall have the right to subscribe for and purchase Additional Securities, at the price at which such Additional Securities are offered for sale to other purchasers (the “Other Purchasers”), up to its Pro Rata Interest (as defined below) prior to giving effect to the issuance or sale of such Additional Securities. “Pro Rata Interest” means, at any relevant time, the ownership interest of HOC, expressed as a percentage, equal to: (i) the number of outstanding shares of common stock of the Company (“Common Stock”) beneficially owned by the HOC Entities, including all shares of Common Stock issuable upon the conversion, exercise or exchange of all Convertible Securities beneficially owned by the HOC Entities divided by (ii) the aggregate number of outstanding shares of Common Stock, plus the number of shares of Common Stock issuable upon the conversion, exercise or exchange of all outstanding Convertible Securities;

(b) If the Company issues Equity Securities in circumstances that would not give rise to the rights of the HOC Entities pursuant to Section 4.1(a) (the “Non-Participating Transaction”), then in any concurrent or subsequent transaction which does give rise to the rights of the HOC Entities pursuant to Section 4.1(a) (the “Participating Transaction”), the Company shall allow the HOC Entities to subscribe for and purchase Additional Securities in an amount greater than HOC’s Pro Rata Interest; provided that in the Participating Transaction, HOC shall not be entitled to purchase any more than its Pro Rata Interest of the securities sold collectively in the Non-Participating Transaction and the Participating Transaction.

(c) If the Company intends to authorize and/or issue equity securities that give rise to the rights of HOC pursuant to Section 4.1(a), the Company shall provide notice to HOC (the “Rights Notice”) no less than ten (10) business days before the date on which the Company intends to issue equity securities giving rise to the rights of HOC in Section 4.1(a).

(d) The Rights Notice shall specify sufficient information regarding the particulars of the issuance or sale of the Additional Securities to allow HOC to make a reasoned decision in respect of making the investment, including to the extent any such terms are determinable at such time: (i) the total number of equity securities outstanding as of the date thereof; (ii) the total number of Additional Securities which are being offered; (iii) the rights, privileges, restrictions, terms and conditions of such Additional Securities; (iv) the amount payable by HOC for the Additional Securities to which it is entitled pursuant to Section 4.1(a); and (v) the proposed closing date, and thereafter, to the extent it is not included in the Rights Notice, the Company shall immediately provide notice to HOC of such information as it is determined.

(e) HOC shall give notice (an “Acceptance Notice”) to the Company not later than 5:00 p.m. (Denver time) on the tenth business day following the deemed receipt of any Rights Notice given under paragraph 4.1(c) setting out the number of Additional Securities, if any, which any of HOC Entities intends to subscribe for and purchase and, if applicable, the name and address of HOC Entity whose name in which such securities should be registered, provided that if HOC, acting reasonably, determines that it has insufficient information to make such investment decision, HOC shall notify the Company of the information required to make such investment decision and thereafter shall have the longer of (i) the remainder of the ten (10) Business Days set out in the first sentence of this paragraph; or (ii) two (2) Business Days from the receipt of such additional information to make the investment decision and deliver or refrain from delivering the Acceptance Notice. Notwithstanding the preceding sentence, the Rights Notice shall be deemed to include sufficient information to make such investment decision if it includes the information specified in items (i) to (iv) of Section 4.1(d). If no Acceptance Notice has been provided to the Company within the required time, HOC will be deemed to have elected not to subscribe for or purchase any such Additional Securities.

(f) Following delivery of the Acceptance Notice, if any, the HOC Entities shall pay for, and the Company shall issue to the relevant HOC Entities, free and clear of any liens, the number of Additional Securities specified in the Acceptance Notice and, except as otherwise agreed, the Company shall provide HOC with substantially the same closing documents, including opinions, if applicable, as are delivered to the other persons subscribing for Additional Securities on the closing date for such issuance.

(g) The rights granted to HOC under this Article 4 shall terminate and be of no further force or effect if HOC does not exercise Option and complete the purchase of the Additional Shares.

ARTICLE 5

BOARD REPRESENTATION

5.1 Appointment of HOC Nominee. If, but only if HOC exercises the Option and completes the acquisition of the Additional Shares, HOC shall be entitled to nominate one (1) individual to the Board of Directors (the “HOC Director”). Upon receipt of such nomination and its satisfaction that the individual nominated by HOC meets the qualification requirements for directors under applicable laws, the Board of Directors further agrees to expand its membership to four (4) positions and appoint the individual nominated by HOC to the newly-created vacancy. The Board of Directors further agrees that if HOC maintains a Pro Rata Interest of at least 14.5%, it shall nominate such individual to the slate of directors at each subsequent annual meeting so long as the provisions of Section 8.2 are not invoked.

5.2 Increase in Membership of the Board of Directors. If HOC acquires the Additional Shares and subsequently acquires additional Shares such that it holds a Pro Rata Interest of 40% or more, HOC shall be entitled to appoint one (1) additional individual to the Board of Directors. For greater clarity, if HOC exercises the Option and holds a Pro Rata Interest of at least 40%, HOC shall be entitled to appoint a total of two (2) individuals to the Board of Directors. Upon receipt of a nomination from HOC for the second director

and its satisfaction that the individual meets the qualification requirements for directors under applicable law, the Board of Directors agrees to expand its membership to five positions and appoint the individual nominated by HOC to the newly created vacancy. The Board of Directors further agrees that so long as HOC maintains a Pro Rata Interest of at least 35%, it shall nominate such individual to the slate of directors at each subsequent annual meeting so long as the provisions of Section 8.2 are not invoked. The Company further agrees that if HOC exercises the Option and so long as the provisions of Section 8.2 are not invoked, it will not take any action to authorize and will cause the Board of Directors not to authorize any proposal to expand the Board beyond five (5) members without the advance written approval of HOC.

5.3 Board Meetings. At all times when the provisions of Section 5.1 are satisfied, the Company shall provide HOC Director(s) not less than 7 (seven) Business Days advance written notice of the date on which any meeting of the Board of Directors shall be held. In providing such notice, the Company shall take into consideration the matters to be discussed at the meeting, the proximity to the place of the meeting and the time zone in which the HOC Director is resident.

5.4 Resignation of HOC Director(s). If (x) one or both HOC Directors do not meet the individual qualifications for a director prescribed by applicable laws, (y) the Pro Rata Interest of HOC falls below 14.5%, or (z) the provisions of Section 8.2 hereof become applicable and the Company delivers notice to HOC to that effect, all of the HOC Directors shall forthwith resign; provided, however, that in the event of (x), HOC shall then be entitled to appoint an individual to replace the resigning director(s) and such resigning director(s) shall be afforded the benefits of any indemnity and insurance as may exist for all matters occurring prior to such resignation.

5.5 Indemnification and Director’s and Officer’s Insurance. So long as HOC is entitled to nominate and maintain a director pursuant to this Article 5, the Company shall indemnify each current and former HOC Director and shall maintain director’s and officer’s liability insurance for the benefit of each such director, with the same rights and benefits as are accorded the directors of the Company generally.

ARTICLE 6

RIGHT OF FIRST OFFER

The provisions of this Article 6 shall apply if, but only if, HOC exercises the Option and acquires the Additional Shares and so long as the provisions of Section 8.2 do not apply:

6.1 Joint Venture

(a) If the Company or any of its Subsidiaries decides to seek a joint venture partner to develop, acquire or otherwise earn an interest in any Properties including the Existing Properties, in circumstances where the Company’s participation in such joint venture is not dependent on the participation of a particular third party as joint venture partner (such as in the case of an earn-in) (each a “Proposed Joint Venture”), the Company shall immediately provide notice to HOC (the “Joint Venture Proposal Notice”) specifying sufficient information regarding the particulars of the Proposed Joint Venture to allow HOC to make a reasoned decision in respect of participating in the Proposed Joint Venture, including to the extent any such terms are determinable at such time: (A) a description of the Property in respect of which the Proposed Joint Venture relates, and (B) the terms, including the purchase price, for the Proposed Joint Venture, and if applicable, a true copy of any related term sheet setting forth such terms.

Notwithstanding the foregoing, nothing in this Section 6.1 shall prevent the Company from concurrently negotiating with third parties with respect to those matters set out in this Section 6.1.

(b) If HOC, acting reasonably, determines that the Joint Venture Proposal Notice contains insufficient information to make a reasoned decision in respect of participating in the Proposed Joint Venture, it shall notify the Company of the information required to make such decision and thereafter shall have the greater of (i) five (5) Business Days from the receipt of such information from the Company, and (ii) the days remaining in the period specified in Section 6.2 to make such decision and deliver or refrain from delivering the HOC JV Acceptance Notice in accordance with such Section 6.2. Notwithstanding the foregoing, a copy of the term sheet for the Proposed Joint Venture shall be deemed to be sufficient information to make such reasoned decision, if it includes the information specified in Section 6.1(a).

6.2 Joint Venture Proposal

(a) Receipt of the Joint Venture Proposal Notice by HOC shall be deemed to constitute an invitation to HOC Entities to participate in the Proposed Joint Venture.

(b) If any of HOC Entities provides the Company an acceptance (the “HOC JV Acceptance Notice”) in writing in respect of the Joint Venture Proposal Notice, within fifteen (15) Business Days of receipt thereof or such shorter period as may be specified in the Joint Venture Proposal Notice of a determination in respect of the Proposed Joint Venture, the Company shall negotiate exclusively in good faith with HOC to finalize terms of the Proposed Joint Venture acceptable to each of the Parties, acting reasonably, within a period of sixty days or such additional period as the Parties may from time to time agree in writing (the “JV Negotiation Period”), failing which the Company shall be entitled to pursue other partners for the Proposed Joint Venture. If HOC does not provide HOC JV Acceptance Notice to the Company within fifteen (15) Business Days or such shorter period as may be specified in the Joint Venture Proposal Notice, of receiving of the Joint Venture Proposal Notice, the Company may enter into negotiations with any other person regarding the Proposed Joint Venture. If the Company truncates the period during which the HOC JV Acceptance Notice is required to be returned by HOC, it shall include in the Joint Venture Proposal Notice a statement certified by an officer of the Company that the Company has determined that it is necessary to truncate such period to avoid losing the opportunity to make such acquisition or other related transaction and that it has used commercially reasonable efforts to avoid truncating such period.

ARTICLE 7

STANDSTILL

The provisions of this Article 7 shall apply if HOC acquires the Additional Shares and for a period of two (2) years after the Subsequent Closing Date:

7.1 Standstill

(a) HOC covenants and agrees that, except as otherwise contemplated in this Agreement, HOC will not, and will not allow any HOC Entities to, in either case, without the prior written consent of the Company, directly or indirectly:

(i)

acquire or enter into any agreement to acquire or make any proposal or offer to acquire in any manner any equity securities of the Company (whether issued or unissued) that would result in a Pro Rata Interest greater than 40% other than (A) as a result of a stock dividend or distribution made by or a recapitalization of the Company, (B) in accordance with the terms of any dividend reinvestment or share purchase plan made available from time to time by the Company to holders of equity securities; (C) pursuant to the exercise of rights issued pursuant to a rights offering made by the Company to the holders of its equity securities; or (D) pursuant to the exercise of rights issued pursuant to any shareholder rights plan of the Company and attached to equity securities;

(ii)

assist, encourage or advise any other person to acquire or agree to acquire in any manner any equity securities;

(iii)

propose or support or engage in any discussions or negotiations with respect to, or enter into any agreement, commitment or understanding with any third party to effect, any tender offer, merger, business combination, asset or share transaction, financing transaction or corporate restructuring involving the Company;

(iv)

make or participate directly or indirectly in any solicitation of proxies from shareholders of the Company;

(v)

form, join or in any way participate in any group acting jointly or in concert with any of the foregoing; or

(vi)

make any public disclosure of any intention in connection with the foregoing;

(each an “Acquisition Proposal”).

(b) Notwithstanding Section 6.1, none of the HOC Entities shall be prohibited from making an Acquisition Proposal:

(i)

in the event the Company materially breaches its obligations under Section 2.3 (Additional Financing), Article 4 (Pre-Emptive Right), Article 5 (Board Representation) or Article 6 (Right of First Offer), provided that HOC has notified the Company of any alleged breach and the Company has failed to cure such alleged breach, if curable, within thirty days of such notice;

(ii)

from the date any public announcement of or public disclosure of an intention to commence or enter into any agreement with respect to any of the following is made by any person (other than any HOC

Entity) to the date of the withdrawal or cancellation of the Tender Offer Transaction or Business Combination Transaction (each as defined below):

a tender offer or an intention to undertake a tender offer for equity securities of the Company by any person or group of persons (other than any HOC Entities) which if completed would result in such tender offer person or group of persons holding 20% or more on a non-diluted basis of any class of then outstanding equity securities of the Company (a “Tender Offer Transaction”); or

any acquisition (excluding a Tender Offer Transaction), merger, asset purchase and sale, business combination transaction or other extraordinary transaction involving or relating to the Company or any of its subsidiaries, or an intention to make an offer to the Company and/or its subsidiaries to undertake such a transaction, by any person or group of persons (other than any HOC Entities) which would, if completed, result in (I) any class of outstanding equity securities being converted into cash or securities of another person resulting in shareholders holding less than 50% of the equity and/or voting securities of the resulting entity; or (II) all or substantially all of the Company’s assets being sold to any person or group of persons (other than any HOC Entities) (a “Business Combination Transaction”), provided that in the case of this Section 6.1(b)(ii)(B) HOC must make such Acquisition Proposal confidentially to the Board of Directors and not by way of public offer to the shareholders.

For greater certainty, if HOC has commenced an Acquisition Proposal in reliance on this Section 6.1(b)(ii) or in respect of Section 6.1(b)(ii)(B), has agreed with the Company to an Acquisition Proposal, prior to the withdrawal or cancellation of such Tender Offer Transaction or Business Combination Transaction, HOC shall not be precluded from continuing with such Acquisition Proposal by reason only of the withdrawal or cancellation of any relevant Tender Offer Transaction or Business Combination Transaction; or

(iii)

if a person or group of persons other than any of the HOC Entities, the Company or its subsidiaries obtains proxies carrying a majority of the votes attached to all outstanding voting securities of the Company and exercises such votes to replace the Board of Directors.

7.2 Most Favored Nation. The Company shall immediately inform HOC and provide HOC with a copy of any other standstill provisions in any agreement pertaining to the matters set forth in this Article 6, entered into by the Company with another person subsequent to the date hereof, and notwithstanding delivery of such notice and a copy of any such provisions, HOC shall have the full benefit of any materially more favourable terms, in the opinion of HOC, contained in such standstill and Section 6.1 shall be deemed to be amended accordingly.

ARTICLE 8

COVENANTS

8.1 Designation of Consulting Geologists. During the time up to the Option Expiration Date, and thereafter if HOC exercises the Option and acquires the Additional Shares and the provisions of Section 8.2 do not apply, HOC shall have the right to designate one full or part time geologist to act as a consultant to the Company at any of its Existing Properties for the purpose of advising the Company with regard to ongoing exploration and development. The Company shall provide such geologist with room and board while such geologist is on-site at any of the Existing Properties. HOC, however, shall be responsible for payment of any compensation for such geologist. Other consulting services which may be required by the Company, including metallurgical, underground mining engineering or concentrate contract negotiations, may be requested from HOC, and provided that HOC agrees to deliver those services, any charges for such services shall be billed by HOC to the Company at no more than HOC’s actual cost plus 1%.

8.2 Termination of Certain HOC Rights. Notwithstanding anything in this Agreement to the contrary, in the event (i) HOC shall hold a Pro Rata Interest less than 14.5% or (ii) HOC shall have achieved a Pro Rata Interest greater than 14.5% but subsequently sells or otherwise disposes of 20% or more of its Pro Rata Interest in any one or more transactions, the benefits provided to HOC pursuant to the provisions of Section 2.3 (Additional Financing), Article 4 (Pre-Emptive Rights), Article 5 (Board Representation), Article 6 (First Offer) and Section 8.1 (Designation of Geologist) above shall immediately terminate and be of no further force or effect. Furthermore, any HOC Director nominated and appointed pursuant to the provisions of Section 5.1 or 5.2 shall immediately resign in the event that the provisions of subsection (i) or (ii) above shall be applicable.

ARTICLE 9

ADDITIONAL COVENANTS

9.1 Covenants of the Company.

(a)

Prior to the Option Expiration Date, the Company shall not and shall not permit its Affiliates, agents or other representatives (including any director, officer, investment banker, legal advisor or accountant retained by the Company or any of its Subsidiaries) to:

(i)

initiate, solicit, promote or encourage, directly or indirectly, inquiries or the submission of proposals or offers from any Person with respect to any proposal or offer or action that would reasonably be expected to delay, prevent or frustrate the Transactions or any part thereof (an “Alternative Proposal”);

(ii)

encourage, or participate or engage in negotiations concerning, or furnish to any Person other than to HOC Entities, any non-public information with respect to, or otherwise co-operate in any way with, or participate in, or facilitate or encourage any Person to make an Alternative Proposal; or

(iii)

endorse, accept, approve or recommend a proposal of, or enter into any Contract or understanding with , any Person relating to an Alternative Proposal, or otherwise facilitate any effort or attempt to make or implement an Alternative Proposal.

(b)

Notwithstanding anything else in this Section 9.1, if the Company or any of its subsidiaries receives an unsolicited Alternative Proposal prior to the Option Exercise Date, the Board of Directors may participate in discussions with, furnish information to, or enter into an agreement with the Person that initiated the Alternative Proposal only if: (x) the Board of Directors determines in good faith, after consultation with outside counsel, that such action is necessary in order for them to act in a manner consistent with their fiduciary duty under applicable Laws; (y) the Company shall have provided to HOC notice at least five (5) Business Days prior to the date on which the agreement to effect such Alternative Proposal is to be entered into specifying the terms of the Alternative Proposal; and (z) after taking into account modifications to this Agreement proposed by HOC during such five Business Day period, such proposal would constitute a superior proposal (“Superior Proposal”). If HOC makes a proposal to amend this Agreement to increase the purchase price payable for the Additional Shares, such that the proposal of such other Person shall no longer be a Superior Proposal, and shall complete the purchase of the Additional Shares upon such terms, then neither the Company nor its subsidiaries shall enter into such Alternative Proposal.

(c)

The Company shall comply with all securities regulatory filing requirements on a timely basis in connection with the issuance of any Equity Securities of the Company to any HOC Entity, including filing within the periods stipulated under Securities Laws, at the Company’s expense, all private placement forms required to be filed by the Company and paying all filing fees required to be paid in connection therewith so that such issuance may lawfully occur without the necessity of filing a prospectus, registration statement or any similar document under the Securities Laws.

(d)

The Company shall, to the extent and for so long as HOC Entities hold at least 14.5% of the Shares on a non-diluted basis, upon HOC’s request, permit representatives of the HOC Entities to have access to the site and any of the premises where the business and operations of the Company and its Subsidiaries are conducted and access and duplicating rights (and use commercially reasonable efforts to cause persons or firms possessing such documentation or information to give similar access and duplicating rights) to the Company and its Subsidiaries’ books of account and records and such other documents, communications, items and matters, within the knowledge, possession or control of the Company, which HOC may reasonably request, at HOC’s own cost (other than those it is permitted to examine and make copies of free of charge pursuant to applicable Laws) provided that, except to the extent the information can be provided in the necessary course of business of the Company, acting reasonably including to provide HOC Entities with information to assist the HOC Entities and their advisors with the preparation of the financial statements for such HOC

Entities, nothing herein shall require the Company to provide HOC Entities with any information which would constitute a material fact with respect to the Company which has not been generally disclosed.

(e)

In the event the Company shall breach any representation or warranty, covenant or any other right of HOC under this Agreement in any material respect, including but not limited to, the rights afforded to HOC under Articles 2, 4, 5, 6 and 8 hereof, then at the request of HOC, the Company shall promptly prepare and file with the SEC a registration statement on Form S-l or S-3 (or, if Form S-l or S-3 is not then available, on such form of registration statement as is then available to effect a registration for resale of the Purchase Shares and the Additional Shares (“Registration Statement”)), covering the resale of all of the Shares owned by HOC; provided, however, that if prior to the filing of the Registration Statement, the provisions of Rule 144 of the Securities Act of 1933, as amended (the “1933 Act”) allow the sale of all of the Shares in compliance with that Rule, the Company shall not be obligated to file such Registration Statement so long as the Company at its own expense, does the following: (i) complies with any necessary filing or reporting requirements (under the 1933 Act or otherwise) to permit such sale, (ii) cooperates with HOC in removing any legend on the certificates representing the Shares, including but not limited to instructing its transfer agent to remove such restrictive legend and (iii) provides HOC with an opinion of counsel confirming that such sale is permitted under Rule 144. Such Registration Statement also shall cover, to the extent allowable under the 1933 Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Shares. The Company shall pay all expenses associated with the registration, including filing and printing fees, counsel and accounting fees and expenses, and State “Blue Sky” fees and expenses. The Company shall use its commercially reasonable efforts to have the Registration Statement declared effective by the SEC as soon as practicable. The Company shall notify HOC by facsimile or e-mail as promptly as practicable, and in any event, within three (3) business days, after the Registration Statement is declared effective and shall simultaneously provide HOC with copies of any related prospectus to be used in connection with the sale or other disposition of the securities covered thereby.

(f)

In connection with the foregoing, the Company shall indemnify and hold harmless HOC against any losses, claims, damages or liabilities to which it may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or any other public filing by the Company, so long as such statement has not been provided to the Company by HOC for inclusion in such registration statement; (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, so long as such omission or alleged omission does not relate to HOC or the manner of sale for the Shares as provided to the Company by HOC; or (iii) any violation of the 1933 Act, any rule or regulation thereunder or any other securities law, rule or regulation applicable to the Company and relating to

the action or inaction required of the Company in connection therewith. The foregoing indemnification obligation shall extend to the fees and expenses of any counsel retained by HOC in connection with any such loss, claim, damage or liability.

ARTICLE 10

REPRESENTATIONS & WARRANTIES

10.1 Representations and Warranties of the Company. The Company represents, warrants and agrees with HOC as of the date of this Agreement, that:

(a) The Company is a corporation duly incorporated under the laws of the State of Colorado, and is validly existing and in good standing under the laws of the State of Colorado and no proceedings have been instituted or are pending for the dissolution or liquidation of the Company;

(b) The Company has all requisite legal and corporate power and authority to execute, deliver and perform its obligations under this Agreement;

(c) This Agreement has been duly authorized by all necessary corporate action on the part of the Company and has been duly executed and delivered by the Company and constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms; and

(d) The execution and delivery of this Agreement and the performance by the Company of its obligations hereunder and the consummation of the Transactions, do not and will not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under (whether after notice or lapse of time or both): (i) the constating documents of the Company; (ii) the resolutions of the shareholders or directors (or any committee thereof) of the Company which are in effect at the date hereof; (iii) any mortgage, note, indenture, contract, agreement, instrument, lease or other document to which the Company is a party or by which it is bound; or (iv) any judgement, writ, injunction, decree or order, of any court or of any Authority that is binding the Company or the property or assets of the Company.

10.2 Representations and Warranties of HOC. HOC represents, warrants and agrees with the Company as of the date of this Agreement, that:

(a)

HOC is a limited company incorporated under the Companies Act 1985 (England) as a limited company, registered in England and Wales, and is validly existing and in good standing under the laws of England and no proceedings have been instituted or are pending for the dissolution or liquidation of HOC;

(b)

HOC has all requisite legal and corporate power and authority to execute, deliver and perform its obligations under this Agreement;

(c)

this Agreement has been duly authorized by all necessary corporate action on the part of HOC and has been duly executed and delivered by HOC and constitutes a valid and legally binding obligation of HOC enforceable against HOC in accordance with its terms; and

(d)

the execution and delivery of this Agreement and the performance by HOC of its obligations hereunder and the consummation of the Transactions, do not and will not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under (whether after notice or lapse of time or both): (i) the constating documents of HOC; (ii) the resolutions of the shareholders or directors (or any committee thereof) of HOC which are in effect at the date hereof; (iii) any mortgage, note, indenture, contract, agreement, instrument, lease or other document to which HOC is a party or by which it is bound; or (iv) any judgement, writ, injunction, decree or order, of any court or of any Authority that is binding on HOC or the property or assets of HOC.

ARTICLE 11

INDEMNIFICATION

11.1 Indemnification by the Company.

The Company will indemnify and save harmless the HOC Entities and the directors, officers, employees and agents of the HOC Entities (collectively, the “HOC Indemnitees”) from and against all Claims incurred by any one or more of the HOC Indemnitees directly or indirectly resulting from any breach of any covenant, representation or warranty of the Company contained in this Agreement.

11.2 Indemnification by HOC.

HOC will indemnify and save harmless the Company and the directors, officers, employees and agents of the Company (collectively, the “Company Indemnitees”) from and against all Claims incurred by any one or more of the Company Indemnitees directly or indirectly resulting from any breach of any covenant, representation or warranty of HOC contained in this Agreement.

11.3 Injunctive Relief.

Notwithstanding any other provision of this Agreement, nothing herein is intended to or shall restrict a Party from seeking and receiving injunctive relief (whether as a temporary restraining order, preliminary injunction or otherwise) or specific performance.

ARTICLE 12

MISCELLANEOUS PROVISIONS

12.1 Notices. All notices or other communications required or permitted to be given by one party to another by the terms hereof shall be given in writing by personal delivery or facsimile delivered to such other party as follows:

To the Company:

Gold Resource Corporation

222 Milwaukee St., Suite 301

Denver, CO 80206

Attention: William Reid, President

Facsimile No.: (303) 320-7835

To HOC:

Hochschild Mining Holdings Limited

Calle La Colonia 180

Surco, Lima 33, Peru

Attention: VP & General Counsel

Facsimile No.: +511-437-5009

12.2 Further Assurances. Each of the parties hereto upon the request of each of the other parties hereto, whether before or after the date of this Agreement, shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, deeds, documents, assignments, transfers, conveyances, powers of attorney and assurances as may reasonably be necessary or desirable to complete the transactions contemplated herein.

12.3 Costs and Expenses. All costs and expenses (including, without limitation, the fees and disbursements of legal counsel) incurred in connection with this Agreement and the transactions herein contemplated shall be paid and borne by the party incurring such costs and expenses.

12.4 Applicable Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of New York and the laws of the United States applicable therein. Any and all disputes arising under this Agreement, whether as to interpretation, performance or otherwise, shall be subject to the non-exclusive jurisdiction of the courts of Colorado and each of the parties hereto hereby irrevocably attorns to the jurisdiction of the courts of such province.

12.5 Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the transactions contemplated herein and cancels and supersedes any prior understandings, agreements, negotiations and discussions between the parties. There are no representations, warranties, terms, conditions, undertakings or collateral agreements or understandings, express or implied, between the parties hereto other than those expressly set forth in this Agreement or in any such agreement, certificate, affidavit, statutory declaration or other document as aforesaid.

12.6 Amendment and Waivers. No amendment of this Agreement will be effective unless made in writing and signed by the Parties. A waiver of any default, breach or non-compliance under this Agreement is not effective unless in writing and signed by the Party to be bound by the waiver. No waiver shall be inferred from or implied by any failure to act or delay in acting by a Party in respect of any default, breach or non-observance or by anything done or omitted to be done by the other Party in respect of any default, beach or non-observance or by anything done or omitted to be done by the other Party. The waiver by any Party of any default, breach or non-compliance under this Agreement shall not operate as a waiver of that Party’s rights under this Agreement in respect of any continuing or subsequent default, breach or non-observance (whether of the same or any other nature).

12.7 Severability. If any one or more provisions in this Agreement, for any reason, shall be determined to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of any such provision in any other respect and the remaining provisions of this Agreement shall not be in anyway impaired.

12.8 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same Agreement. Counterparts may be delivered either in original or faxed form and the parties adopt any signature received by a receiving fax machine as original signatures of the parties.

12.9 Assignment. This Agreement may not be assigned by either party except with the prior written consent of the other parties hereto.

12.10 Enurement. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, successors (including any successor by reason of the amalgamation or merger of any party), administrators and permitted assigns.

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


GOLD RESOURCE CORPORATION

By:
		Authorized Signing Officer

HOCHSCHILD MINING HOLDINGS LIMITED

By:
		Authorized Signing Officer

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