8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
________________

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 28, 2004

WITS BASIN PRECIOUS MINERALS INC.
(Exact Name of Registrant as Specified in Charter)

Minnesota	1-12401	84-1236619
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification No.)

520 Marquette Avenue, Suite 900
Minneapolis, Minnesota	55402
(Address of Principal Executive Offices)	(Zip Code)

612.349.5277
(Registrant’s telephone number, including area code)

(Former Name or Former Address, if Changed Since Last Report)

Item 5. Other Events

On May 28, 2004, the Company completed a financing transaction resulting in gross proceeds of $650,000 (approximately $525,000 net after expenses related to the financing) by issuing an 18-month secured convertible promissory note to Pandora Select Partners LP (“Pandora”), a Virgin Islands fund. In lieu of cash, the Company may satisfy its repayment obligations by issuing shares of its common stock, at a price equal to the average of the closing bid price of the common stock during the 30 trading days prior to payment, which shall be no less than $0.35 and no greater than $0.65 per share, provided that the shares to be issued have been registered for resale under the Securities Act of 1933. The note is secured by substantially all of the Company’s assets. As further consideration for the financing, the Company issued to Pandora a 5-year warrant to purchase up to 928,571 shares of its common stock at a price of $0.40 per share, subject to adjustment. The Company also paid $40,000 in cash and issued warrants to purchase an aggregate of 200,000 shares of its common stock to two affiliates of Pandora as origination fees.

The note is secured by a personal guaranty provided by Wayne W. Mills, a shareholder and former director of the Company. As consideration for the guaranty and for advisory related services, the Company paid Mr. Mills or his affiliate $48,750 and $25,000, respectively, and agreed to issue to Mr. Mills or his affiliate 5-year warrants to purchase, at an exercise price of $0.40 per share, 375,000 and 100,000 shares of its common stock, respectively.

The foregoing is qualified in its entirety by reference to the Purchase Agreement, which is being filed as Exhibit 10.1 to this Current Report on Form 8-K; and such exhibit is incorporated herein by reference. In addition, the Company is attaching as Exhibit 99.1 a Press Release dated June 1, 2004, with respect to the secured convertible promissory note, which is incorporated herein by reference.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

(a) Not required

(b) Not required

(c) Exhibits

Exhibit	Description of Document
4.1	Form of Warrant issued to Pandora Select Partners, L.P.
4.2	Form of Warrant issued to two affiliates of Pandora Select Partners, L.P.
10.1	Purchase Agreement by and among Wits Basin Precious Minerals Inc. and Pandora Select
	Partners L.P. dated May 28, 2004.
10.2	Secured Convertible Promissory Note by Wits Basin Precious Minerals Inc. to Pandora Select
	Partners L.P. dated May 28, 2004.
10.3	Registration Rights Agreement by and among Wits Basin Precious Minerals Inc. and Pandora
	Select Partners L.P. dated May 28, 2004.
10.4	Security Agreement by and between Wits Basin Precious Minerals Inc. and Pandora Select
	Partners L.P. dated May 28, 2004.
99.1	Press Release dated June 1, 2004.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Wits Basin Precious Minerals Inc.
Date: June 4, 2004	By:	/s/ Mark D. Dacko
		Mark D. Dacko
		Chief Financial Officer

EXHIBIT INDEX

Exhibit	Description of Document
4.1	Form of Warrant issued to Pandora Select Partners, L.P.
4.2	Form of Warrant issued to two affiliates of Pandora Select Partners, L.P.
10.1	Purchase Agreement by and among Wits Basin Precious Minerals Inc. and Pandora Select
	Partners L.P. dated May 28, 2004.
10.2	Secured Convertible Promissory Note by Wits Basin Precious Minerals Inc. to Pandora Select
	Partners L.P. dated May 28, 2004.
10.3	Registration Rights Agreement by and among Wits Basin Precious Minerals Inc. and Pandora
	Select Partners L.P. dated May 28, 2004.
10.4	Security Agreement by and between Wits Basin Precious Minerals Inc. and Pandora Select
	Partners L.P. dated May 28, 2004.
99.1	Press Release dated June 1, 2004.

EX-4.1

Exhibit 4.1

WARRANT NO. PSP 1

To Purchase 928,571* Shares of Common Stock
of
WITS BASIN PRECIOUS MINERALS INC.
_______________

*Subject to Special Adjustment in Section 11 Below

      This Warrant and the Securities issuable upon exercise of this Warrant have not been registered under the Securities Act of 1933 (the “1933 Act”) or under any state securities or “Blue Sky” laws (“Blue Sky Laws”). No transfer, sale, assignment, pledge, hypothecation or other disposition of this Warrant or the Securities issuable upon exercise of this Warrant or any interest therein may be made except (a) pursuant to an effective registration statement under the 1933 Act and any applicable Blue Sky Laws or (b) if the Corporation has been furnished with an opinion of counsel for the holder, which opinion and counsel shall be reasonably satisfactory to the Corporation, to the effect that no registration is required because of the availability of an exemption from registration under the 1933 Act and applicable Blue Sky laws.

      THIS CERTIFIES THAT, for good and valuable consideration Pandora Select Partners L.P., a British Virgin Islands limited partnership (the “Holder”), or the Holder’s registered assigns, is entitled to subscribe for and purchase from Wits Basin Precious Minerals Inc., a Minnesota corporation (the “Corporation”), at any time on or after May 28, 2004, to and including May 28, 2009 (subject to the limitations provided in Section 10 below), 928,571 fully paid and nonassessable shares of the Common Stock of the Corporation at the price of $0.40 per share (the “Warrant Exercise Price”), subject to the anti-dilution and price protection provisions, and the special adjustments in Section 11, of this Warrant.

      The shares which may be acquired upon exercise of this Warrant are referred to herein as the “Warrant Shares.” As used herein, the term “Holder” means the Holder, any party who acquires all or a part of this Warrant as a registered transferee of the Holder, or any record holder or holders of the Warrant Shares issued upon exercise, whether in whole or in part, of the Warrant. The term “Common Stock” means the common stock, $0.01 par value per share, of the Corporation.

     This Warrant is subject to the following provisions, terms and conditions:

1.     Exercise; Transferability.

     (a) The rights represented by this Warrant may be exercised by the Holder hereof, in whole or in part (but not as to a fractional share of Common Stock), by written notice of exercise (in the form attached hereto) delivered to the Corporation at the principal office of the Corporation prior to the expiration of this Warrant and accompanied or preceded by the surrender of this Warrant along with a check in payment of the Warrant Exercise Price for such Warrant Shares.

     (b) Except as provided in Section 7 hereof, this Warrant may not be sold, transferred, assigned, hypothecated or divided into two or more Warrants of smaller denominations, nor may any Warrant Shares issued pursuant to exercise of this Warrant be transferred. In no event may this Warrant be transferred and divided (without any exercise hereof) into any denomination(s) of less than 100 Warrant Shares.

2.     Exchange and Replacement. Subject to Sections 1 and 7 hereof, this Warrant is exchangeable upon the surrender hereof by the Holder to the Corporation at its office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of Warrant Shares purchasable hereunder, each of such new Warrants to represent the right to purchase such number of Warrant Shares (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the Holder at the time of such surrender. Upon receipt by the Corporation of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of this Warrant, if mutilated, the Corporation will make and deliver a new Warrant of like tenor, in lieu of this Warrant. This Warrant shall be promptly canceled by the Corporation upon the surrender hereof in connection with any exchange or replacement. The Corporation shall pay all expenses, taxes (other than stock transfer taxes), and other charges payable in connection with the preparation, execution, and delivery of Warrants pursuant to this Section 2.

3.Issuance of the Warrant Shares.

     (a) The Corporation agrees that the Warrant Shares shall be and are deemed to be issued to the Holder as of the close of business on the date on which this Warrant shall have been surrendered and the payment made for such Warrant Shares as aforesaid. Subject to the provisions of paragraph (b) of this Section 3, certificates for the Warrant Shares so purchased shall be delivered to the Holder within a reasonable time after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the right to purchase the number of Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder.

     (b) Notwithstanding the foregoing, however, the Corporation shall not be required to deliver any certificate for Warrant Shares upon exercise of this Warrant except in accordance with exemptions from the applicable securities registration requirements or registrations under applicable securities laws. Except as described in Section 9, nothing herein shall obligate the Corporation to effect registrations under federal or state securities laws. If registrations are not in effect and if exemptions are not available when the Holder seeks to exercise the Warrant, the Warrant exercise period will be extended, if need be, to prevent the Warrant from expiring, until such time as either registrations become effective or exemptions are available, and the Warrant shall then remain exercisable for a period of at least 30 calendar days from the date the Corporation delivers to the Holder written notice of the availability of such registrations or exemptions. The Holder agrees to execute such documents and make such representations, warranties and agreements as may be required solely to comply with the exemptions relied upon by the Corporation, or the registrations made, for the issuance of the Warrant Shares.

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4.     Covenants of the Corporation. The Corporation covenants and agrees that all Warrant Shares will, upon issuance, be duly authorized and issued, fully paid, non-assessable and free from all taxes, liens and charges with respect to the issue thereof. The Corporation further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Corporation will at all times have authorized and reserved for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant.

5.     Anti-dilution Adjustments. The provisions of this Warrant are subject to adjustment as provided in this Section 5.

     (a) Stock Splits, Dividends and Combinations. The Warrant Exercise Price shall be adjusted from time to time such that in case the Corporation shall hereafter:

          (i) pay any dividends on any class of stock of the Corporation payable in Common Stock or securities convertible into Common Stock;

          (ii) subdivide its then outstanding shares of Common Stock into a greater number of shares; or

          (iii) combine outstanding shares of Common Stock, by reclassification or otherwise;

then, in any such event, the Warrant Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) determined by dividing (A) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the then existing Warrant Exercise Price, by (B) the total number of shares of Common Stock outstanding immediately after such event (including in each case the maximum number of shares of Common Stock issuable in respect of any securities convertible into Common Stock), and the resulting quotient shall be the adjusted Warrant Exercise Price per share. An adjustment made pursuant to this Subsection shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this Subsection, the Holder of any Warrant thereafter surrendered for exercise shall become entitled to receive shares of two or more classes of capital stock or shares of Common Stock and other capital stock of the Corporation, the Board of Directors (whose determination shall be conclusive) shall determine the allocation of the adjusted Warrant Exercise Price between or among shares of such classes of capital stock or shares of Common Stock and other capital stock. All calculations under this Subsection shall be made to the nearest cent or to the nearest 1/100 of a share, as the case may be. In the event that at any time as a result of an adjustment made pursuant to this Subsection, the holder of any Warrant thereafter surrendered for exercise shall become entitled to receive any shares of the Corporation other than shares of Common Stock, thereafter the Warrant Exercise Price of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Section.

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     (b) Mechanics of Adjustment for Stock Splits, Dividends and Combinations. Upon each adjustment of the Warrant Exercise Price pursuant to Section 5(a) above, the Holder of each Warrant shall thereafter (until another such adjustment) be entitled to purchase at the adjusted Warrant Exercise Price the number of shares, calculated to the nearest full share, obtained by multiplying the number of shares specified in such Warrant (as adjusted as a result of all adjustments in the Warrant Exercise Price in effect prior to such adjustment) by the Warrant Exercise Price in effect prior to such adjustment and dividing the product so obtained by the adjusted Warrant Exercise Price.

     (c) Consolidations, Mergers and Reorganization Events. In case of any consolidation or merger to which the Corporation is a party other than a merger or consolidation in which the Corporation is the continuing corporation, or in case of any sale or conveyance to another corporation of the property of the Corporation as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Corporation), there shall be no adjustment under Subsection (a) of this Section 5; but the Holder of each Warrant then outstanding shall have the right thereafter to convert such Warrant into the kind and amount of shares of stock and other securities and property which he would have owned or have been entitled to receive immediately after such consolidation, merger, statutory exchange, sale or conveyance had such Warrant been converted immediately prior to the effective date of such consolidation, merger, statutory exchange, sale or conveyance and, in any such case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in this Section with respect to the rights and interests thereafter of any Holders of the Warrant, to the end that the provisions set forth in this Section shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock and other securities and property thereafter deliverable on the exercise of the Warrant. The provisions of this Subsection shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances.

     (d) Adjustments for Diluting Issues. In addition to the adjustments of the Warrant Exercise Price provided above, the Warrant Exercise Price shall be subjected to further adjustment from time to time as follows (the main operative provision hereof is in Section 5(d)(iii) below):

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          (i) Special Definitions:

               (A) “Options” shall mean rights, options or warrants (other than as excluded by Section 5(d)(i)(D) below) to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities (as defined herein).

               (B) “Original Issue Date” shall mean the date hereof.

               (C) “Convertible Securities” shall mean securities (other than as excluded by (4) below) convertible, either directly or indirectly, into or exchangeable for Common Stock.

               (D) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, deemed to be issued) by the Corporation after the Original Issue Date other than shares of Common Stock issued (or deemed to be issued):

                    1. to employees, consultants or directors pursuant to stock option, stock grant, stock purchase or similar plans or arrangements approved by the Corporation’s Board of Directors;

                    2. as a dividend or other distribution in connection with which an adjustment to the Warrant Exercise Price is made;

                    3. in a merger, consolidation, acquisition or similar business combination that is approved by the Corporation’s Board of Directors;

                    4. pursuant to credit, lease or other commercial financing arrangements with parties not affiliated with the Corporation that are approved by the Corporation’s Board of Directors;

                    5. in exchange for technology or other non-cash assets as approved by the Corporation’s Board of Directors;

                    6. pursuant to any rights or agreements outstanding on the Original Issue Date; or

                    7. if the Holder agrees in writing that such shares shall not constitute Additional Shares of Common Stock.

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          (ii) Deemed Issue of Additional Shares of Common Stock. Except as otherwise provided in Section 5(d), in the event the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of any holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such record date shall have been fixed, as of the close of business on such record date, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued:

               (A) no further adjustment in the Warrant Exercise Price shall be made upon the subsequent issue of such Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;

               (B) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Company, or increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion or exchange thereof, the Warrant Exercise Price computed upon the original issue thereof or upon the occurrence of a record date with respect thereto, and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease;

               (C) upon the expiration of any such Option or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Warrant Exercise Price computed upon the original issue thereof or upon occurrence of a record date with respect thereto, and any subsequent adjustments based thereon, shall, upon such expiration:

                    1. in the case of Convertible Securities or Options for Common Stock, be recomputed as though the only Additional Shares of Common Stock issued were shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities, and the consideration received therefor was the consideration actually received by the Company for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Company upon such exercise, or for the issue of all such Convertible Securities, whether or not converted or exchanged, plus the additional consideration, if any, actually received by the Company upon such conversion or exchange; and

                    2. in the case of Options for Convertible Securities, be recomputed as though only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options and the consideration received by the Company for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the Company for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Company upon the issue of the Convertible Securities with respect to which such Options were actually exercised.

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               (D) no readjustment pursuant to Section 5(d) shall have the effect of increasing the Warrant Exercise Price to an amount which exceeds the Warrant Exercise Price existing immediately prior to the original adjustment with respect to the issuance of such Options or Convertible Securities, as adjusted for any Additional Shares of Common Stock issued (or deemed to be issued) between such original adjustment date and such readjustment date; and

               (E) in the case of any Option or Convertible Security with respect to which the maximum number of shares of Common Stock issuable upon exercise or conversion or exchange thereof is not determinable, no adjustment to the Warrant Exercise Price shall be made until such number becomes determinable.

          (iii) Adjustments for Issuance of Additional Shares of Common Stock. If the Company, at any time after the issuance of this Warrant, shall issue any Additional Shares of Common Stock (otherwise than as provided in the Sections 5(a) and 5(c) above) at a price per share less than the applicable Warrant Exercise Price then in effect or without consideration, then the applicable Warrant Exercise Price upon each such issuance shall be adjusted to that price (rounded to the nearest cent) determined by multiplying the applicable Warrant Exercise Price then in effect by a fraction, (i) the numerator of which shall be equal to the sum of (A) the number of shares of Common Stock outstanding immediately prior to the issuance of such Additional Shares of Common Stock plus (B) the number of shares of Common Stock (rounded to the nearest whole share) which the aggregate consideration for the total number of such Additional Shares of Common Stock so issued would purchase at a price per share equal to the applicable Warrant Exercise Price then in effect, and (ii) the denominator of which shall be equal to the number of shares of Common Stock outstanding immediately after the issuance of such Additional Shares of Common Stock.

               The provisions of this Section 5(d)(iii) shall not apply under any of the circumstances for which an adjustment is provided in Sections 5(a), 5(b) or 5(c) above. No adjustment of the applicable Warrant Exercise Price shall be made under this Section 5(d) upon the issuance of any Additional Shares of Common Stock which are issued pursuant to any Options or Convertible Securities if upon the issuance of such Options or Convertible Securities (x) any adjustment shall have been made pursuant to Section 5(d)(ii) above or (y) no adjustment was required pursuant to this Section 5(d)(iii). No adjustment of the applicable Warrant Exercise Price shall be made under this Section 5(d)(iii) in an amount less than $.01 per share, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment, if any, which together with any adjustments so carried forward shall amount to $.01 per share or more; provided, however, that upon any adjustment of the applicable Warrant Exercise Price as a result of any dividend or distribution payable in Common Stock or Convertible Securities or the reclassification, subdivision or combination of Common Stock into a greater or smaller number of shares, the foregoing figure of $.01 per share (or such figure as last adjusted) shall be adjusted (to the nearest one-half cent) in proportion to the adjustment in the applicable Warrant Exercise Price.

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          (iv) Determination of Consideration. For purposes of this Section 5(d), the consideration received by the Corporation for any Additional Shares of Common Stock issued (or deemed to be issued) shall be computed as follows:

               (A) Cash and Property. Such consideration shall:

                    (i) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Company;

                    (ii) insofar as it consists of securities and the value of such securities is not determinable by reference to a separate agreement, (A) if the securities are then traded on a national securities exchange or the Nasdaq Stock Market (or a similar national quotation system), then the value shall be computed based on the average of the closing prices of the securities on such exchange or system over the thirty (30)-day period ending on the date of receipt by the Corporation, (B) if the securities are actively traded over-the-counter, then the value shall be computed based on the average of the closing bid prices over the thirty (30) day ending on the date of receipt by the Corporation, and (C) if there is no active public market, then the value shall be computed based on the fair market value thereof on the date of receipt by the Corporation, as determined in good faith by the Board of Directors;

                    (iii) insofar as it consists of property other than cash and securities, be computed at the fair market value thereof at the time of such issuance, as determined in good faith by the Board of Directors; and

                    (iv) if Additional Shares of Common Stock are issued (or deemed to be issued) together with other shares or securities or other assets of the Corporation for consideration which cover both, by the proportion of such consideration so received, computed as provided in the immediately preceding Sections 5(d)(iv)(A)(i), 5(d)(iv)(A)(ii) and 5(d)(iv)(A)(iii), as determined in good faith by the Board of Directors.

               (B) Options and Convertible Securities. The consideration received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 5(d) relating to Option and Convertible Securities, shall be the sum of (x) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus (y) the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

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     (e) Default. For purposes of a secured convertible promissory note of this date (the “Note”) issued by the Corporation to the original Holder hereof, this Warrant is in default if the Corporation fails by November 28, 2004 (the “Registration Deadline”) to obtain effectiveness under the 1933 Act and applicable state securities laws of a registration statement for the benefit of the Holder under the terms of a Registration Rights Agreement of this date covering all of the Warrant Shares hereunder and all of the shares of Common Stock issuable as payment under or upon conversion of the Note. Despite the foregoing, if the Holder consents (as provided under the Registration Rights Agreement) to an extension of the effective date of the Registration Statement beyond November 28, 2004, then the Registration Deadline hereunder shall be extended by a like period.

     (f) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Warrant Exercise Price or the number of Warrants covered hereby pursuant to this Section 5 or pursuant to Section 11 below, the Corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of the Holder, furnish or cause to be furnished to the Holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Warrant Exercise Price at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the exercise of this Warrant.

6.     No Voting Rights. This Warrant shall not entitle the Holder to any voting rights or other rights as a shareholder of the Corporation.

7.     Notice of Transfer of Warrant or Resale of the Warrant Shares.

     (d) Subject to the sale, assignment, hypothecation or other transfer restrictions set forth in Section 1 hereof, the Holder, by acceptance hereof, agrees to give written notice to the Corporation before transferring this Warrant or transferring any Warrant Shares of such Holder’s intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice, the Corporation shall present copies thereof to the Corporation’s counsel. If in the opinion of such counsel the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Corporation, as promptly as practicable, shall notify the Holder of such opinion, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Corporation; provided that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory to the Corporation to prevent further transfers which would be in violation of Section 5 of the 1933 Act and applicable state securities laws; and provided further that the prospective transferee or purchaser shall execute such documents and make such representations, warranties and agreements as may be required solely to comply with the exemptions relied upon by the Corporation for the transfer or disposition of the Warrant or Warrant Shares.

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     (e) If, in the opinion of the Corporation’s counsel, the proposed transfer or disposition of this Warrant or such Warrant Shares described in the written notice given pursuant to this Section 7 may not be effected without registration or qualification of this Warrant or such Warrant Shares, the Corporation shall promptly give written notice thereof to the Holder, and the Holder will limit its activities in respect to such transfer or disposition as, in the opinion of such counsel, are permitted by law.

8.     Fractional Shares. Fractional shares shall not be issued upon the exercise of this Warrant, but in any case where the holder would, except for the provisions of this Section, be entitled under the terms hereof to receive a fractional share, the Corporation shall, upon the exercise of this Warrant for the largest number of whole shares then called for, pay a sum in cash equal to the sum of (a) the excess, if any, of the Market Price of such fractional share over the proportional part of the Warrant Exercise Price represented by such fractional share, plus (b) the proportional part of the Warrant Exercise Price represented by such fractional share. For purposes of this Section, the term “Market Price” with respect to shares of Common Stock of any class or series means the last reported sale price or, if none, the average of the last reported closing bid and asked prices on any national or regional securities exchange or quoted in the National Association of Securities Dealers, Inc.’s Automated Quotations System (“Nasdaq”), or if not listed on a national or regional securities exchange or quoted in Nasdaq, the average of the last reported closing bid and asked prices as reported by Metro Data Corporation, Inc. or the OTC Bulletin Board from quotations by market makers in such Common Stock on the Minneapolis-St. Paul local over-the-counter market, or if no quotations in such Common Stock are available, the fair market value of the shares as determined in good faith by the Board of Directors of the Corporation.

9.     Registration Rights. Holder shall have registration rights for the shares underlying its Warrants as described in the Registration Rights Agreement of this same date.

10.     Limitation of Exercise of this Warrant. Despite anything to the contrary in this Warrant, the Holder may not exercise this Warrant during the time period and to the extent that the shares of Common Stock that the Holder could acquire upon the exercise hereof would cause Holder’s Beneficial Ownership (as defined below) of the Corporation’s Common Stock to exceed 4.99%. These limitations on the right to exercise this Warrant shall first reduce the Holder’s Beneficial Ownership of the Corporation’s Common Stock before limitation of the Holder’s conversion rights, or the Corporation’s right to make payments in Common Stock, under the Note. The parties shall compute the Holder’s "Beneficial Ownership" of Common Stock in accordance with U.S. Securities and Exchange Commission Rule 13d-3. The Holder will, at the request of the Corporation, from time to time, notify the Corporation of the Holder’s computation of Holder’s Beneficial Ownership.

11.     Special Adjustment in Number of Warrant Shares and Warrant Exercise Price.

Despite the foregoing provisions of this Warrant, if the U.S. Securities and Exchange Commission (the “SEC”) declares the Corporation’s Registration Statement on Form S-2, SEC File No. 333-110831 (the “S-2 Registration Statement”), effective on or before July 1, 2004 (the date of any such effectiveness being the "Effective Date”), the number of Warrant Shares that Holder may acquire hereunder, and the Warrant Exercise Price, shall be adjusted (before any other adjustments otherwise provided in this Warrant) effective as of the 31st trading day after the Effective Date, as follows. The adjusted number of Warrant Shares shall equal the number (rounded to the nearest whole share) computed by dividing $650,000 by a price (the “Computation Price”) equal to the greater of:

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          (i) $0.35 or

          (ii) the lower of (x) $0.65 or (y) the average (rounded to the nearest $0.01) of the high closing bid prices of the Corporation’s Common Stock on the OTC Bulletin Board as reported by bigcharts.com (or if this service is discontinued, such other reporting service acceptable to Holder) for the 30 trading days immediately following the Effective Date.

     The Warrant Exercise Price shall be adjusted simultaneously to equal 115% of the Computation Price (rounded to the nearest $0.01).

     If on or before July 1, 2004, the SEC has not declared the S-2 Registration Statement effective, then there shall be no adjustment in the number of Warrant Shares or the Warrant Exercise Price pursuant to this Section 11.

     IN WITNESS WHEREOF, Wits Basin Precious Minerals Inc. has caused this Warrant to be signed by its duly authorized officer and this Warrant to be dated May 28, 2004.

WITS BASIN PRECIOUS MINERALS INC.
By	/s/ Mark D. Dacko
	Mark D. Dacko, Chief Financial Officer

-11-

EX-4.2

Exhibit 4.2

WARRANT NO. ___

To Purchase 100,000 Shares of Common Stock
of
WITS BASIN PRECIOUS MINERALS INC.

      This Warrant and the Securities issuable upon exercise of this Warrant have not been registered under the Securities Act of 1933 (the “1933 Act”) or under any state securities or “Blue Sky” laws (“Blue Sky Laws”). No transfer, sale, assignment, pledge, hypothecation or other disposition of this Warrant or the Securities issuable upon exercise of this Warrant or any interest therein may be made except (a) pursuant to an effective registration statement under the 1933 Act and any applicable Blue Sky Laws or (b) if the Corporation has been furnished with an opinion of counsel for the holder, which opinion and counsel shall be reasonably satisfactory to the Corporation, to the effect that no registration is required because of the availability of an exemption from registration under the 1933 Act and applicable Blue Sky laws.

      THIS CERTIFIES THAT, for good and valuable consideration [ ], a Minnesota resident (the “Holder”), or the Holder’s registered assigns, is entitled to subscribe for and purchase from Wits Basin Precious Minerals Inc., a Minnesota corporation (the “Corporation”), at any time on or after May 28, 2004, to and including May 28, 2009 (subject to the limitations provided in Section 10 below), 100,000 fully paid and nonassessable shares of the Common Stock of the Corporation at the price of $0.40 per share (the “Warrant Exercise Price”), subject to the anti-dilution and price protection provisions, and the special adjustments in Section 11, of this Warrant.

     The shares which may be acquired upon exercise of this Warrant are referred to herein as the “Warrant Shares.” As used herein, the term “Holder” means the Holder, any party who acquires all or a part of this Warrant as a registered transferee of the Holder, or any record holder or holders of the Warrant Shares issued upon exercise, whether in whole or in part, of the Warrant. The term “Common Stock” means the common stock, $0.01 par value per share, of the Corporation.

     This Warrant is subject to the following provisions, terms and conditions:

1.     Exercise; Transferability.

     (a) The rights represented by this Warrant may be exercised by the Holder hereof, in whole or in part (but not as to a fractional share of Common Stock), by written notice of exercise (in the form attached hereto) delivered to the Corporation at the principal office of the Corporation prior to the expiration of this Warrant and accompanied or preceded by the surrender of this Warrant along with a check in payment of the Warrant Exercise Price for such Warrant Shares.

     (b) Except as provided in Section 7 hereof, this Warrant may not be sold, transferred, assigned, hypothecated or divided into two or more Warrants of smaller denominations, nor may any Warrant Shares issued pursuant to exercise of this Warrant be transferred. In no event may this Warrant be transferred and divided (without any exercise hereof) into any denomination(s) of less than 100 Warrant Shares.

2.     Exchange and Replacement. Subject to Sections 1 and 7 hereof, this Warrant is exchangeable upon the surrender hereof by the Holder to the Corporation at its office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of Warrant Shares purchasable hereunder, each of such new Warrants to represent the right to purchase such number of Warrant Shares (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the Holder at the time of such surrender. Upon receipt by the Corporation of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of this Warrant, if mutilated, the Corporation will make and deliver a new Warrant of like tenor, in lieu of this Warrant. This Warrant shall be promptly canceled by the Corporation upon the surrender hereof in connection with any exchange or replacement. The Corporation shall pay all expenses, taxes (other than stock transfer taxes), and other charges payable in connection with the preparation, execution, and delivery of Warrants pursuant to this Section 2.

3.     Issuance of the Warrant Shares.

     (a) The Corporation agrees that the Warrant Shares shall be and are deemed to be issued to the Holder as of the close of business on the date on which this Warrant shall have been surrendered and the payment made for such Warrant Shares as aforesaid. Subject to the provisions of paragraph (b) of this Section 3, certificates for the Warrant Shares so purchased shall be delivered to the Holder within a reasonable time after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the right to purchase the number of Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder.

     (b) Notwithstanding the foregoing, however, the Corporation shall not be required to deliver any certificate for Warrant Shares upon exercise of this Warrant except in accordance with exemptions from the applicable securities registration requirements or registrations under applicable securities laws. Except as described in Section 9, nothing herein shall obligate the Corporation to effect registrations under federal or state securities laws. If registrations are not in effect and if exemptions are not available when the Holder seeks to exercise the Warrant, the Warrant exercise period will be extended, if need be, to prevent the Warrant from expiring, until such time as either registrations become effective or exemptions are available, and the Warrant shall then remain exercisable for a period of at least 30 calendar days from the date the Corporation delivers to the Holder written notice of the availability of such registrations or exemptions. The Holder agrees to execute such documents and make such representations, warranties and agreements as may be required solely to comply with the exemptions relied upon by the Corporation, or the registrations made, for the issuance of the Warrant Shares.

4.      Covenants of the Corporation. The Corporation covenants and agrees that all Warrant Shares will, upon issuance, be duly authorized and issued, fully paid, non-assessable and free from all taxes, liens and charges with respect to the issue thereof. The Corporation further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Corporation will at all times have authorized and reserved for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant.

5.      Anti-dilution Adjustments. The provisions of this Warrant are subject to adjustment as provided in this Section 5.

     (a) Stock Splits, Dividends and Combinations. The Warrant Exercise Price shall be adjusted from time to time such that in case the Corporation shall hereafter:

     (i) pay any dividends on any class of stock of the Corporation payable in Common Stock or securities convertible into Common Stock;

     (ii) subdivide its then outstanding shares of Common Stock into a greater number of shares; or

     (iii) combine outstanding shares of Common Stock, by reclassification or otherwise;

then, in any such event, the Warrant Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) determined by dividing (A) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the then existing Warrant Exercise Price, by (B) the total number of shares of Common Stock outstanding immediately after such event (including in each case the maximum number of shares of Common Stock issuable in respect of any securities convertible into Common Stock), and the resulting quotient shall be the adjusted Warrant Exercise Price per share. An adjustment made pursuant to this Subsection shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this Subsection, the Holder of any Warrant thereafter surrendered for exercise shall become entitled to receive shares of two or more classes of capital stock or shares of Common Stock and other capital stock of the Corporation, the Board of Directors (whose determination shall be conclusive) shall determine the allocation of the adjusted Warrant Exercise Price between or among shares of such classes of capital stock or shares of Common Stock and other capital stock. All calculations under this Subsection shall be made to the nearest cent or to the nearest 1/100 of a share, as the case may be. In the event that at any time as a result of an adjustment made pursuant to this Subsection, the holder of any Warrant thereafter surrendered for exercise shall become entitled to receive any shares of the Corporation other than shares of Common Stock, thereafter the Warrant Exercise Price of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Section.

     (b) Mechanics of Adjustment for Stock Splits, Dividends and Combinations. Upon each adjustment of the Warrant Exercise Price pursuant to Section 5(a) above, the Holder of each Warrant shall thereafter (until another such adjustment) be entitled to purchase at the adjusted Warrant Exercise Price the number of shares, calculated to the nearest full share, obtained by multiplying the number of shares specified in such Warrant (as adjusted as a result of all adjustments in the Warrant Exercise Price in effect prior to such adjustment) by the Warrant Exercise Price in effect prior to such adjustment and dividing the product so obtained by the adjusted Warrant Exercise Price.

     (c) Consolidations, Mergers and Reorganization Events. In case of any consolidation or merger to which the Corporation is a party other than a merger or consolidation in which the Corporation is the continuing corporation, or in case of any sale or conveyance to another corporation of the property of the Corporation as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Corporation), there shall be no adjustment under Subsection (a) of this Section 5; but the Holder of each Warrant then outstanding shall have the right thereafter to convert such Warrant into the kind and amount of shares of stock and other securities and property which he would have owned or have been entitled to receive immediately after such consolidation, merger, statutory exchange, sale or conveyance had such Warrant been converted immediately prior to the effective date of such consolidation, merger, statutory exchange, sale or conveyance and, in any such case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in this Section with respect to the rights and interests thereafter of any Holders of the Warrant, to the end that the provisions set forth in this Section shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock and other securities and property thereafter deliverable on the exercise of the Warrant. The provisions of this Subsection shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances.

     (d) Adjustments for Diluting Issues. In addition to the adjustments of the Warrant Exercise Price provided above, the Warrant Exercise Price shall be subjected to further adjustment from time to time as follows (the main operative provision hereof is in Section 5(d)(iii) below):

          (i) Special Definitions:

               (A) “Options” shall mean rights, options or warrants (other than as excluded by Section 5(d)(i)(D) below) to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities (as defined herein).

               (B) “Original Issue Date” shall mean the date hereof.

               (C) “Convertible Securities” shall mean securities (other than as excluded by (4) below) convertible, either directly or indirectly, into or exchangeable for Common Stock.

               (D) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, deemed to be issued) by the Corporation after the Original Issue Date other than shares of Common Stock issued (or deemed to be issued):

                    1. to employees, consultants or directors pursuant to stock option, stock grant, stock purchase or similar plans or arrangements approved by the Corporation’s Board of Directors;

                    2. as a dividend or other distribution in connection with which an adjustment to the Warrant Exercise Price is made;

                    3. in a merger, consolidation, acquisition or similar business combination that is approved by the Corporation’s Board of Directors;

                    4. pursuant to credit, lease or other commercial financing arrangements with parties not affiliated with the Corporation that are approved by the Corporation’s Board of Directors;

                    5. in exchange for technology or other non-cash assets as approved by the Corporation’s Board of Directors;

                    6. pursuant to any rights or agreements outstanding on the Original Issue Date; or

                    7. if the Holder agrees in writing that such shares shall not constitute Additional Shares of Common Stock.

          (ii) Deemed Issue of Additional Shares of Common Stock. Except as otherwise provided in Section 5(d), in the event the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of any holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such record date shall have been fixed, as of the close of business on such record date, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued:

               (A) no further adjustment in the Warrant Exercise Price shall be made upon the subsequent issue of such Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;

               (B) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Company, or increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion or exchange thereof, the Warrant Exercise Price computed upon the original issue thereof or upon the occurrence of a record date with respect thereto, and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease;

               (C) upon the expiration of any such Option or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Warrant Exercise Price computed upon the original issue thereof or upon occurrence of a record date with respect thereto, and any subsequent adjustments based thereon, shall, upon such expiration:

                    1. in the case of Convertible Securities or Options for Common Stock, be recomputed as though the only Additional Shares of Common Stock issued were shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities, and the consideration received therefor was the consideration actually received by the Company for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Company upon such exercise, or for the issue of all such Convertible Securities, whether or not converted or exchanged, plus the additional consideration, if any, actually received by the Company upon such conversion or exchange; and

                    2. in the case of Options for Convertible Securities, be recomputed as though only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options and the consideration received by the Company for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the Company for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Company upon the issue of the Convertible Securities with respect to which such Options were actually exercised.

               (D) no readjustment pursuant to Section 5(d) shall have the effect of increasing the Warrant Exercise Price to an amount which exceeds the Warrant Exercise Price existing immediately prior to the original adjustment with respect to the issuance of such Options or Convertible Securities, as adjusted for any Additional Shares of Common Stock issued (or deemed to be issued) between such original adjustment date and such readjustment date; and

               (E) in the case of any Option or Convertible Security with respect to which the maximum number of shares of Common Stock issuable upon exercise or conversion or exchange thereof is not determinable, no adjustment to the Warrant Exercise Price shall be made until such number becomes determinable.

          (iii) Adjustments for Issuance of Additional Shares of Common Stock. If the Company, at any time after the issuance of this Warrant, shall issue any Additional Shares of Common Stock (otherwise than as provided in the Sections 5(a) and 5(c) above) at a price per share less than the applicable Warrant Exercise Price then in effect or without consideration, then the applicable Warrant Exercise Price upon each such issuance shall be adjusted to that price (rounded to the nearest cent) determined by multiplying the applicable Warrant Exercise Price then in effect by a fraction, (i) the numerator of which shall be equal to the sum of (A) the number of shares of Common Stock outstanding immediately prior to the issuance of such Additional Shares of Common Stock plus (B) the number of shares of Common Stock (rounded to the nearest whole share) which the aggregate consideration for the total number of such Additional Shares of Common Stock so issued would purchase at a price per share equal to the applicable Warrant Exercise Price then in effect, and (ii) the denominator of which shall be equal to the number of shares of Common Stock outstanding immediately after the issuance of such Additional Shares of Common Stock.

     The provisions of this Section 5(d)(iii) shall not apply under any of the circumstances for which an adjustment is provided in Sections 5(a), 5(b) or 5(c) above. No adjustment of the applicable Warrant Exercise Price shall be made under this Section 5(d) upon the issuance of any Additional Shares of Common Stock which are issued pursuant to any Options or Convertible Securities if upon the issuance of such Options or Convertible Securities (x) any adjustment shall have been made pursuant to Section 5(d)(ii) above or (y) no adjustment was required pursuant to this Section 5(d)(iii). No adjustment of the applicable Warrant Exercise Price shall be made under this Section 5(d)(iii) in an amount less than $.01 per share, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment, if any, which together with any adjustments so carried forward shall amount to $.01 per share or more; provided, however, that upon any adjustment of the applicable Warrant Exercise Price as a result of any dividend or distribution payable in Common Stock or Convertible Securities or the reclassification, subdivision or combination of Common Stock into a greater or smaller number of shares, the foregoing figure of $.01 per share (or such figure as last adjusted) shall be adjusted (to the nearest one-half cent) in proportion to the adjustment in the applicable Warrant Exercise Price.

          (iv) Determination of Consideration. For purposes of this Section 5(d), the consideration received by the Corporation for any Additional Shares of Common Stock issued (or deemed to be issued) shall be computed as follows:

               (A) Cash and Property. Such consideration shall:

                    (i) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Company;

                    (ii) insofar as it consists of securities and the value of such securities is not determinable by reference to a separate agreement, (A) if the securities are then traded on a national securities exchange or the Nasdaq Stock Market (or a similar national quotation system), then the value shall be computed based on the average of the closing prices of the securities on such exchange or system over the thirty (30)-day period ending on the date of receipt by the Corporation, (B) if the securities are actively traded over-the-counter, then the value shall be computed based on the average of the closing bid prices over the thirty (30) day ending on the date of receipt by the Corporation, and (C) if there is no active public market, then the value shall be computed based on the fair market value thereof on the date of receipt by the Corporation, as determined in good faith by the Board of Directors;

                    (iii) insofar as it consists of property other than cash and securities, be computed at the fair market value thereof at the time of such issuance, as determined in good faith by the Board of Directors; and

                    (iv) if Additional Shares of Common Stock are issued (or deemed to be issued) together with other shares or securities or other assets of the Corporation for consideration which cover both, by the proportion of such consideration so received, computed as provided in the immediately preceding Sections 5(d)(iv)(A)(i), 5(d)(iv)(A)(ii) and 5(d)(iv)(A)(iii), as determined in good faith by the Board of Directors.

               (B) Options and Convertible Securities. The consideration received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 5(d) relating to Option and Convertible Securities, shall be the sum of (x) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus (y) the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

     (e) Default. For purposes of a secured convertible promissory note of this date (the “Note”) issued by the Corporation to the original Holder hereof, this Warrant is in default if the Corporation fails by November 28, 2004 (the “Registration Deadline”) to obtain effectiveness under the 1933 Act and applicable state securities laws of a registration statement for the benefit of the Holder under the terms of a Registration Rights Agreement of this date covering all of the Warrant Shares hereunder and all of the shares of Common Stock issuable as payment under or upon conversion of the Note. Despite the foregoing, if the Holder consents (as provided under the Registration Rights Agreement) to an extension of the effective date of the Registration Statement beyond November 28, 2004, then the Registration Deadline hereunder shall be extended by a like period.

     (f) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Warrant Exercise Price or the number of Warrants covered hereby pursuant to this Section 5 or pursuant to Section 11 below, the Corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of the Holder, furnish or cause to be furnished to the Holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Warrant Exercise Price at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the exercise of this Warrant.

6.      No Voting Rights. This Warrant shall not entitle the Holder to any voting rights or other rights as a shareholder of the Corporation.

7.Notice of Transfer of Warrant or Resale of the Warrant Shares.

     (d) Subject to the sale, assignment, hypothecation or other transfer restrictions set forth in Section 1 hereof, the Holder, by acceptance hereof, agrees to give written notice to the Corporation before transferring this Warrant or transferring any Warrant Shares of such Holder’s intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice, the Corporation shall present copies thereof to the Corporation’s counsel. If in the opinion of such counsel the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Corporation, as promptly as practicable, shall notify the Holder of such opinion, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Corporation; provided that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory to the Corporation to prevent further transfers which would be in violation of Section 5 of the 1933 Act and applicable state securities laws; and provided further that the prospective transferee or purchaser shall execute such documents and make such representations, warranties and agreements as may be required solely to comply with the exemptions relied upon by the Corporation for the transfer or disposition of the Warrant or Warrant Shares.

     (e) If, in the opinion of the Corporation’s counsel, the proposed transfer or disposition of this Warrant or such Warrant Shares described in the written notice given pursuant to this Section 7 may not be effected without registration or qualification of this Warrant or such Warrant Shares, the Corporation shall promptly give written notice thereof to the Holder, and the Holder will limit its activities in respect to such transfer or disposition as, in the opinion of such counsel, are permitted by law.

8.      Fractional Shares. Fractional shares shall not be issued upon the exercise of this Warrant, but in any case where the holder would, except for the provisions of this Section, be entitled under the terms hereof to receive a fractional share, the Corporation shall, upon the exercise of this Warrant for the largest number of whole shares then called for, pay a sum in cash equal to the sum of (a) the excess, if any, of the Market Price of such fractional share over the proportional part of the Warrant Exercise Price represented by such fractional share, plus (b) the proportional part of the Warrant Exercise Price represented by such fractional share. For purposes of this Section, the term “Market Price” with respect to shares of Common Stock of any class or series means the last reported sale price or, if none, the average of the last reported closing bid and asked prices on any national or regional securities exchange or quoted in the National Association of Securities Dealers, Inc.’s Automated Quotations System (“Nasdaq”), or if not listed on a national or regional securities exchange or quoted in Nasdaq, the average of the last reported closing bid and asked prices as reported by Metro Data Corporation, Inc. or the OTC Bulletin Board from quotations by market makers in such Common Stock on the Minneapolis-St. Paul local over-the-counter market, or if no quotations in such Common Stock are available, the fair market value of the shares as determined in good faith by the Board of Directors of the Corporation.

9.      Registration Rights. Holder shall have registration rights for the shares underlying its Warrants as described in the Registration Rights Agreement of this same date.

10.      Limitation of Exercise of this Warrant. Despite anything to the contrary in this Warrant, the Holder may not exercise this Warrant during the time period and to the extent that the shares of Common Stock that the Holder could acquire upon the exercise hereof would cause Holder’s Beneficial Ownership (as defined below) of the Corporation’s Common Stock to exceed 4.99%. These limitations on the right to exercise this Warrant shall first reduce the Holder’s Beneficial Ownership of the Corporation’s Common Stock before limitation of the Holder’s conversion rights, or the Corporation’s right to make payments in Common Stock, under the Note. The parties shall compute the Holder’s "Beneficial Ownership" of Common Stock in accordance with U.S. Securities and Exchange Commission Rule 13d-3. The Holder will, at the request of the Corporation, from time to time, notify the Corporation of the Holder’s computation of Holder’s Beneficial Ownership.

11.      Special Adjustment in Warrant Exercise Price. Despite the foregoing provisions of this Warrant, if the U.S. Securities and Exchange Commission (the “SEC”) declares the Corporation’s Registration Statement on Form S-2, SEC File No. 333-110831 (the “S-2 Registration Statement”), effective on or before July 1, 2004 (the date of any such effectiveness being the "Effective Date”), the Warrant Exercise Price hereunder shall be adjusted (before any other adjustments otherwise provided in this Warrant) effective as of the 31st trading day after the Effective Date, as follows. The adjusted Warrant Exercise Price shall equal 115% (rounded to the nearest $0.01) of the greater of:

     (i) $0.35 or

     (ii) the lower of (x) $0.65 or (y) the average (rounded to the nearest $0.01) of the high closing bid prices of the Corporation’s Common Stock on the OTC Bulletin Board as reported by bigcharts.com (or if this service is discontinued, such other reporting service acceptable to Holder) for the 30 trading days immediately following the Effective Date.

     The Warrant Exercise Price shall be adjusted simultaneously to equal 115% of the Computation Price (rounded to the nearest $0.01).

     If on or before July 1, 2004, the SEC has not declared the S-2 Registration Statement effective, then there shall be no adjustment in the Warrant Exercise Price pursuant to this Section 11.

     IN WITNESS WHEREOF, Wits Basin Precious Minerals Inc. has caused this Warrant to be signed by its duly authorized officer and this Warrant to be dated May 28, 2004.

WITS BASIN PRECIOUS MINERALS INC.
By	/s/ Mark D. Dacko
	Mark D. Dacko, Chief Financial Officer

EX-10.1

Exhibit 10.1

PURCHASE AGREEMENT

     THIS PURCHASE AGREEMENT (the “Agreement”) is entered into as of the 28th day of May, 2004, by and among Wits Basin Precious Minerals Inc., a Minnesota corporation (the “Company”), and Pandora Select Partners L.P., a British Virgin Islands limited partnership(the “Purchaser”).

R E C I T A L S :

     WHEREAS, in consideration of $650,000, the Company proposes to issue to the Purchaser, and the Purchaser desires to purchase, a $650,000 secured convertible promissory note in the form attached as Exhibit A (the “Note”) and a warrant in the form of Exhibit B (the “Warrant”) to purchase particular shares of the Company’s common stock, $0.01 par value (the “Common Stock”); and

     WHEREAS, conditioned on the Company’s timely satisfaction of particular milestones and conditions as described in a separate letter agreement in the form attached as Exhibit C (the "Call and Option Agreement"), the Purchaser shall purchase, and the Company shall issue to the Purchaser, an additional secured convertible promissory note of at least $350,000 (which, at Purchaser’s option, may be for up to $850,000 inclusive of the foregoing $350,000) and an additional warrant to purchase Common Stock;

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the parties hereto agree as follows:

SECTION 1. AGREEMENT TO SELL AND PURCHASE

     1.1. Authorization of Transaction. On or prior to the closing of the transactions contemplated in this Agreement (the “Closing”), the Company shall have authorized the sale and issuance to the Purchaser of the Note, the Warrant and the shares of Common Stock issuable as payment under the Note, upon conversion of the Note and upon exercise of the Warrant (collectively, the “Shares”).

     1.2.Sale and Purchase. Subject to the terms and conditions hereof, at the Closing, the Company hereby agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase from the Company, the Note and the Warrant for an aggregate purchase price of $650,000 (the “Purchase Price”).

SECTION 2. CLOSING, DELIVERY AND PAYMENT

     2.1.Closing. The Closing shall take place at 10:00 a.m. on the date hereof at the offices of the Purchaser’s legal counsel, Messerli & Kramer P.A., in Minneapolis, Minnesota, or at such other time or place as the Company and the Purchaser may mutually agree (the “Closing Date”). At the Closing, subject to the terms and conditions hereof, the Company will issue, sell and deliver to the Purchaser the Note and the Warrant, against payment of the Purchase Price by certified check or wire transfer of immediately available funds. At that time, the Company shall also execute and deliver to the Purchaser the Registration Rights Agreement in the form attached as Exhibit D (the “Registration Rights Agreement”) and the Security Agreement in the form attached as Exhibit E (the “Security Agreement”). In addition, at the Closing, the Company shall cause Wayne W. Mills ("Mills") to execute and deliver to the Purchaser the Personal Guaranty in the form attached as Exhibit F (the "Mills Guaranty").

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to the Purchaser as of the Closing Date, and agrees, as follows:

     3.1. Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota. The Company’s only active subsidiaries are Active Hawk Minerals, LLC, a Minnesota limited liability company (“Active Hawk”), and Brazmin Ltda., a limited liability company organized under the laws of Brazil (“Brazmin,” and together with Active Hawk, the "Subsidiaries"). Active Hawk is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Minnesota. Brazmin is a limited liability company duly organized, validly existing and in good standing under the laws of Brazil. Each of the Company and the Subsidiaries has all requisite corporate or limited liability company power and authority to own and operate its respective properties and assets and to carry on its respective business as presented conducted and as presently proposed to be conducted. The Company has all requisite corporate power and authority to execute and deliver this Agreement, the Note, the Warrant, the Registration Rights Agreement and the Security Agreement (together, the “Transaction Documents”), to pledge the Company’s assets as described on the attached Exhibit G as security for the Note (the “Collateral”), to issue and sell the Shares as payment under the Note, upon conversion of the Note and upon exercise of the Warrant and to carry out the provisions of the Transaction Documents. Each of the Company and the Subsidiaries is duly qualified and is authorized to do business and is in good standing in each U.S. and foreign jurisdiction in which the nature of its respective activities and of its respective properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to be so qualified would not have a materially adverse effect on the Company or its business, taken as a whole.

     3.2. Capitalization. The Company is authorized to issue 150,000,000 shares of Common Stock, par value $0.01 per share, of which 33,275,181 shares are issued and outstanding. Except as set forth on Schedule 3.2 or in the Company’s current, quarterly, annual and other periodic filings (the “SEC Reports”) with the U.S. Securities and Exchange Commission (the “Commission”), the Company has no outstanding options, warrants or other rights to acquire any capital stock, or securities convertible or exchangeable for capital stock or for securities themselves convertible or exchangeable for capital stock (together, “Convertible Securities”). Except as set forth on Schedule 3.2 or in the SEC Reports, the Company has no agreement or commitment to sell or issue any shares of capital stock or Convertible Securities. All issued and outstanding shares of the Company’s capital stock (i) have been duly authorized and validly issued, (ii) are fully paid and nonassessable, (iii) are free from any preemptive and cumulative voting rights and (iv) were issued pursuant to an effective registration statement filed with the Commission and applicable state securities authorities or pursuant to valid exemptions under federal and state securities laws. Except as set forth on Schedule 3.2, there are no outstanding rights of first refusal or proxy or shareholder agreements of any kind relating to any of the Company’s securities to which the Company or any of its executive officers and directors is a party or as to which the Company otherwise has knowledge of. When issued in compliance with the provisions of the Note and the Warrant (and upon payment as provided by the Warrant), the Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

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     3.3. Authorization; Binding Obligations. All corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization of the Transaction Documents, the performance of all obligations of the Company hereunder and thereunder at the Closing, including the pledge of the Collateral as security for the Note, and the authorization, sale, issuance and delivery of the Shares as payment under the Note, upon conversion of the Note and upon exercise of the Warrant has been taken. The Transaction Documents, when executed and delivered, will be valid and binding obligations of the Company enforceable in accordance with their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights, (ii) according to general principles of equity that restrict the availability of equitable remedies and (iii) to the extent that the enforceability of the indemnification provisions of the Registration Rights Agreement may be limited by applicable laws. The Mills Guaranty, when executed and delivered, will be a valid and binding obligation of Mills enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (ii) according to general principles of equity that restrict the availability of equitable remedies. The sale of the Shares upon exercise of the Warrant, upon conversion of the Note or as payment under the Note is not and will not be subject to any preemptive rights or rights of first refusal.

     3.4. Financial Statements. The Company’s audited consolidated balance sheets at, and the audited consolidated statements of operations, cash flows and shareholders’ equity of the Company for the years ended, December 31, 2003 (as restated) and 2002 and the Company’s unaudited consolidated balance sheet at, and the unaudited consolidated statements of operations and cash flows of the Company for the three months ended March 31, 2004 (all of the foregoing together, the “Financial Statements,” with March 31, 2004 being the “Latest Statement Date” and the consolidated financial statements at and for the three months ended March 31, 2004 being the “Latest Financial Statements”), as contained in the SEC Reports, fairly present in all material respects the consolidated financial position, results of operations, cash flows and shareholders’ equity of the Company as of the respective dates and for the respective periods covered thereby in accordance with generally accepted accounting principles consistently applied and the rules and regulations of the Commission.

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     3.5. Liabilities. The Company has no material liabilities and, to the best of its knowledge, the Company knows of no material contingent liabilities, not disclosed in the Latest Financial Statements or SEC Reports, except current liabilities incurred in the ordinary course of business subsequent to the Latest Statement Date that have not been, either in any individual case or in the aggregate, materially adverse.

     3.6. Certain Agreements and Actions. Except as disclosed in the SEC Reports, the Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) since the Latest Statement Date, incurred any indebtedness for money borrowed or any other material liabilities out of the ordinary course of business, (iii) made any loans or advances to any person, other than ordinary advances for travel or entertainment expenses or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than in the ordinary course of business.

     3.7. Obligations of or to Related Parties. Except as disclosed on Schedule 3.7 or in the SEC Reports, there are no obligations of the Company to officers, directors, shareholders, employees or consultants of the Company, or to any members of their immediate families or other affiliates, other than (i) for payment of salary for services rendered since the commencement of the Company’s most recent payroll period, (ii) reimbursement for expenses reasonably incurred on behalf of the Company and (iii) for other standard employee benefits made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company). Except as disclosed on Schedule 3.7 or in the SEC Reports, none of the officers, directors, shareholders, employees or consultants of the Company, or any members of their immediate families or other affiliates, are indebted to the Company or have any direct or indirect ownership interest in any firm, corporation or other entity with which the Company is affiliated or with which the Company has a business relationship, or any firm, corporation or other entity that competes with the Company. Except as disclosed in the SEC Reports, no officer, director, shareholder, employee or consultant of the Company, or, to the Company’s knowledge, any member of their immediate families or other affiliates, is, directly or indirectly, interested in or a party to any material contract with the Company. Except as disclosed on Schedule 3.7 or in the SEC Reports, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation.

     3.8. Changes. Since the Latest Statement Date, and except as disclosed in the SEC Reports, there has not been, to the Company’s knowledge, any event or condition of any character that, either individually or cumulatively, has materially and adversely affected the business, assets, liabilities, financial condition, operations or prospects of the Company.

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     3.9. Title to Properties and Assets; Liens. Except as set forth on Schedule 3.9 or in the SEC Reports, the Company has good and marketable title to its properties and assets, including the properties and assets reflected in the Latest Financial Statements and (directly or through its joint venture interests) the gold exploration rights in South Africa, Canada and South America as described in the SEC Reports, and good title to its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than (i) those resulting from taxes that have not yet become delinquent, (ii) minor liens and encumbrances that do not materially detract from the value of the property subject thereto or materially impair the operations of the Company and (iii) those that have otherwise arisen in the ordinary course of business. All facilities, machinery, equipment, fixtures and other properties owned, leased or used by the Company are in good operating condition and repair and are reasonably fit and usable for the purposes for which they are being used, reasonable wear and tear excepted.

     3.10. Patents and Trademarks. Except as set forth on Schedule 3.10 or in the SEC Reports, the Company owns or licenses all patents, trademarks, service marks, trade names, copyrights, trade secrets, information and other proprietary rights and processes necessary for its business as now conducted and as proposed to be conducted, without any known infringement of the rights of others. The Company is not aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with their duties to the Company or that would conflict with the Company’s business as proposed to be conducted. None of the execution or delivery of, or the performance of the transactions contemplated by, the Transaction Documents, the pledge of the Collateral by the Company to secure the Note, the carrying on of the Company’s business by the employees of the Company nor the conduct of the Company’s business as currently conducted or proposed will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any employee is now obligated. The Company does not believe it is or will be necessary to utilize any inventions, trade secrets or proprietary information of any of its employees made prior to their employment by the Company, except for inventions, trade secrets or proprietary information that have been assigned to the Company.

     3.11. Compliance with Other Instruments. Except as disclosed in the SEC Reports, the Company is not in violation or default of any term of its Articles of Incorporation or Bylaws, or of any provision of any mortgage, indenture, contract, agreement, instrument or contract to which it is party or by which it is bound or of any judgment, decree, order, writ or, to its knowledge, any statute, rule or regulation applicable to the Company that would materially and adversely affect the business, assets, liabilities, financial condition, operations or prospects of the Company. The execution and delivery of, and the performance of and compliance with the transactions contemplated by, the Transaction Documents, and the issuance and sale of the Shares as payment under the Note, upon conversion of the Note or upon exercise of the Warrant, will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term, or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties.

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     3.12. Litigation. Except as disclosed in the SEC Reports, there is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, currently threatened against the Company that questions the validity of this Agreement or the other agreements contemplated hereby or the right of the Company to enter into any of such agreements, or to consummate the transactions contemplated hereby or thereby. Except as disclosed in the SEC Reports, there is no action, suit, proceeding or investigation or, to the Company’s knowledge, currently threatened against the Company that might result, either individually or in the aggregate, in any material adverse change in the assets, condition, affairs or prospects of the Company, financial or otherwise, or any change in the current equity ownership of the Company, nor is the Company aware that there is any basis for the foregoing. The foregoing includes, without limitation, actions pending or threatened (or any basis therefor known to the Company) involving the prior employment of any of the employees of the Company, their use in connection with the Company’s business of any information or techniques allegedly proprietary to any of their former employers or their obligations under any agreements with prior employers. Except as disclosed in the SEC Reports, the Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality.

     3.13. Tax Returns and Payments. The Company has timely filed all tax returns (federal, state and local) required to be filed by it. All taxes shown to be due and payable on such returns, any assessments imposed, and, to the Company’s knowledge, all other taxes due and payable by the Company on or before the Closing have been paid or will be paid prior to the time they become delinquent. The Company has not been advised (i) that any of its returns, federal, state or other, have been or are being audited as of the date hereof or (ii) of any deficiency in assessment or proposed judgment to its federal, state or other taxes. The Company has no knowledge of any liability of any tax to be imposed upon the properties or assets of the Company as of the date of this Agreement that is not adequately provided for.

     3.14. Employees. The Company has no collective bargaining agreements with any of its employees. There is no labor union organizing activity pending or, to the Company’s knowledge, threatened with respect to the Company. Except as set forth on Schedule 3.14 or in the SEC Reports, no employee has any agreement or contract, written or verbal, regarding his employment. Except as disclosed on Schedule 3.14 or in the SEC Reports, the Company is not a party to or bound by any currently effective employment contract, deferred compensation arrangement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation plan or agreement. To the Company’s knowledge, no employee of the Company, nor any consultant with whom the Company has contracted, is in violation of any material term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company because of the nature of the business to be conducted by the Company; and, to the Company’s knowledge, the continued employment by the Company of its present employees, and the performance of the Company’s contracts with its independent contractors, will not result in any such violation. The Company has not received any notice alleging that any such violation has occurred. Except as disclosed on Schedule 3.14 or in the SEC Reports, no employee of the Company has been granted the right to continued employment by the Company or to any material compensation following termination of employment with the Company. The Company is not aware that any officer or key employee, or that any group of key employees, intends to terminate their employment with the Company, nor does the Company have a present intention to terminate the employment of any officer, key employee or group of key employees.

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     3.15. Registration Rights. Except as to a registration statement on Form S-2, SEC File No. 333-110831, filed by the Company with the Commission (the "S-2 Registration Statement"), or as disclosed on Schedule 3.15 or required pursuant to the Registration Rights Agreement, the Company is presently not under any obligation, and has not granted any rights, to register (as defined in the Registration Rights Agreement) any of the Company’s presently outstanding securities or any of its securities that may hereafter be issued.

     3.16. Compliance with Laws; Permits. Except as disclosed in the SEC Reports, the Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties that would materially and adversely affect the business, assets, liabilities, financial condition, operations or prospects of the Company. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained and no registrations or declarations are required to be filed in connection with the execution and delivery of, and the performance of the transactions contemplated by, the Transaction Documents, the pledge of the Collateral to secure the Note or the issuance of the Shares as payment under the Note, upon conversion of the Note or upon exercise of the Warrant, except such as has been duly and validly obtained or filed, or with respect to any filings that must be made after the Closing, as will be filed in a timely manner. The Company has all franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, prospects or financial condition of the Company and the Company believes it can (and covenants to Purchaser that it will) obtain any similar authority for the conduct of its business as planned to be conducted.

     3.17. Environmental and Safety Laws. Except as disclosed in the SEC Reports, to the Company’s knowledge, the Company is not in violation of any applicable statute, law or regulation relating to the environment or occupational health and safety, and to the Company’s knowledge, no material expenditures are or will be required in order to comply with any such existing statute, law or regulation. Without limiting the foregoing, and except as disclosed in the SEC Reports:

     (a) with respect to any real property owned, leased or otherwise utilized by the Company (“Real Property”), the Company is not or has not in the past been in violation of any Hazardous Substance Law which violation could reasonably be expected to result in a material liability to the Company or its properties and assets;

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     (b) the Company nor, to the knowledge of the Company, any third party has used, Released, generated, manufactured, produced or stored, in, on, under, or about any Real Property, or transported thereto or therefrom, any Hazardous Substances that could reasonably be expected to subject the Company to material liability, under any Hazardous Substance Law;

     (c) to the knowledge of the Company, there are no underground tanks, whether operative or temporarily or permanently closed, located on any Real Property that could reasonably be expected to subject the Company to material liability under any Hazardous Substance Law;

     (d) there are no Hazardous Substances used, stored or present at, or on, or to the knowledge of the Company that could reasonably be expected to migrate onto any Real Property, except in compliance with Hazardous Substance Laws; and

     (e) to the knowledge of the Company, there neither is nor has been any condition, circumstance, action, activity or event that could reasonably be expected to be a material violation by the Company of any Hazardous Substance Law, or to result in liability to the Company under any Hazardous Substance Law.

     For purposes hereof, “Hazardous Substances” means (statutory acronyms and abbreviations having the meaning given them in the definition below of “Hazardous Substances Laws”) substances defined as “hazardous substances,” “pollutants” or “contaminants” in Section 101 of the CERCLA; those substances defined as “hazardous waste,” “hazardous materials” or “regulated substances” by the RCRA; those substances designated as a “hazardous substance” pursuant to Section 311 of the CWA; those substances defined as “hazardous materials” in Section 103 of the HMTA; those substances regulated as a hazardous chemical substance or mixture or as an imminently hazardous chemical substance or mixture pursuant to Sections 6 or 7 of the TSCA; those substances defined as “contaminants” by Section 1401 of the SDWA, if present in excess of permissible levels; those substances regulated by the Oil Pollution Act; those substances defined as a pesticide pursuant to Section 2(u) of the FIFRA; those substances defined as a source, special nuclear or by-product material by Section 11 of the AEA; those substances defined as “residual radioactive material” by Section 101 of the UMTRCA; those substances defined as “toxic materials” or “harmful physical agents” pursuant to Section 6 of the OSHA; those substances defined as hazardous wastes in 40 C.F.R. Part 261.3; those substances defined as hazardous waste constituents in 40 C.F.R. Part 260.10, specifically including Appendix VII and VIII of Subpart D of 40 C.F.R. Part 261; those substances designated as hazardous substances in 40 C.F.R. Parts 116.4 and 302.4; those substances defined as hazardous substances or hazardous materials in 49 C.F.R. Part 171.8; those substances regulated as hazardous materials, hazardous substances, or toxic substances in 40 C.F.R. Part 1910; any chemical, material, toxin, pollutant, or waste regulated by or in any other Hazardous Substances Laws; and in the regulations adopted and publications promulgated pursuant to said laws, whether or not such regulations or publications are specifically referenced herein.

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     “Hazardous Substances Law” means any of:

     (i) the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.) (“CERCLA”);

     (ii) the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.) (“Clean Water Act” or “CWA”);

     (iii) the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) (“ RCRA”);

     (iv) the Atomic Energy Act of 1954 (42 U.S.C. Section 2011 et seq.) (“AEA”);

     (v) the Clean Air Act (42 U.S.C. Section 7401 et seq.) (“CAA”);

     (vi) the Emergency Planning and Community Right to Know Act (42 U.S.C. Section 11001 et seq.) (“EPCRA”);

     (vii) the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.) (“FIFRA”);

     (viii) the Oil Pollution Act of 1990 (33 U.S.C.A. Section 2701 et seq.);

     (ix) the Safe Drinking Water Act (42 U.S.C. Sections 300f et seq.) (“SDWA”);

     (x) the Surface Mining Control and Reclamation Act of 1974 (30 U.S.C. Sections 1201 et seq.) (“SMCRA”);

     (xi) the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.) (“TSCA”);

     (xii) the Hazardous Materials Transportation Act (49 U.S.C. Section 5101 et seq.) (“HMTA”);

     (xiii) the Uranium Mill Tailings Radiation Control Act of 1978 (42 U.S.C. Section 7901 et seq.) (“UMTRCA”);

     (xiv) the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.) (“OSHA”); and

     (xv) all other federal, state and local governmental rules which govern Hazardous Substances, and the regulations adopted and publications promulgated pursuant to all such foregoing laws.

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     3.18. Offering Valid. Assuming the accuracy of the representations and warranties of the Purchaser contained in Section 4, the offer, sale and issuance of the Note and the Warrant (and the Shares issuable as payment under the Note, upon conversion of the Note or upon exercise of the Warrant) will be exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of the State of Minnesota.

     3.19. Full Disclosure. None of the Transaction Documents nor the SEC Reports contain any untrue statement of a material fact nor, to the Company’s knowledge and belief, omit to state a material fact necessary in order to make the statements contained herein or therein not misleading. There are no facts that (individually or in the aggregate) materially adversely affect the business, assets, liabilities, financial condition or operations of the Company that have not been set forth in the Transaction Documents, the SEC Reports or in other documents delivered to the Purchaser or its attorneys or agents in connection herewith.

     3.20. Insurance. The Company has fire and casualty insurance policies with coverage customary for companies similarly situated to the Company.

     3.21. Investment Company Act. The Company is not, and will not use the proceeds from the Note in a manner so as to become, an “investment company,” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

     3.22. Security Interest in Collateral. The Company owns the Collateral free and clear of all claims, liens or encumbrances of any kind. Upon consummation of the transactions as contemplated hereby, the Purchaser will have a first priority security interest in the Collateral.

     3.23. NASDAQ Compliance. The Company’s Common Stock is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is listed on the Over-the-Counter Bulletin Board administered by The Nasdaq Stock Market, Inc. (the “OTCBB”). The Company has taken no action designed to, or likely to have the effect of, and the transactions contemplated by this Agreement will not have the effect of, terminating the registration of the Common Stock under the Exchange Act or de-listing of the Common Stock from the OTCBB. The Company has not received any notification that the Commission, the National Association of Securities Dealers, Inc., the OTCBB or any other self-regulatory organizational body is contemplating terminating such registration or listing. Without limiting the foregoing, the Transaction Documents and the transactions contemplated by them require no shareholder approval under the rules or interpretations of the OTCBB.

     3.24. Reporting Status. The Company has filed in a timely manner all documents that the Company was required to file under the Exchange Act during the 12 months preceding the date of this Agreement. The SEC Reports complied in all material respects with the Commission’s requirements as of their respective filing dates, and the information contained therein as of the date thereof did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date hereof, the Company satisfies the eligibility requirements for the use of Form S-2 under the Securities Act of 1933, as amended.

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     3.25. No Manipulation of Stock. Neither the Company, nor any of its directors, officers or controlling persons, has taken or will, in violation of applicable law, take, any action designed to or that might reasonably be expected to cause or result in, or which has constituted, stabilization or manipulation of the price of the Common Stock to facilitate the sale or resale of the securities issued or issuable in connection with the transactions contemplated hereunder.

     3.26. Foreign Corrupt Practices; Sarbanes-Oxley.

     (a) Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any corrupt funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

     (b) The Company is in compliance in all material respects with all provisions of the Sarbanes-Oxley Act of 2002 that are applicable to it as of the Closing Date.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     The Purchaser hereby represents and warrants to the Company as of the Closing Date, and agrees, as follows:

     4.1. Investment Representations. The Purchaser understands that neither the offer nor the sale of the Note, the Warrant or the Shares has been registered under the Securities Act. The Purchaser also understands that the Note and Warrant are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon the Purchaser’s representations contained in the Agreement. The Purchaser hereby represents and warrants as follows:

     (a) Purchaser Bears Economic Risk. The Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. The Purchaser must bear the economic risk of this investment indefinitely unless the Note or Warrant (or the Shares) are registered pursuant to the Securities Act, or an exemption from registration is available. Except as contemplated by the Registration Rights Agreement, the Purchaser has no present intention of selling or otherwise transferring the Note, the Warrant or the Shares, or any interest therein. The Purchaser also understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow the Purchaser to transfer all or any portion of the Note, the Warrant or the Shares under the circumstances, in the amounts or at the times the Purchaser might propose.

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     (b) Acquisition for Own Account. Except as contemplated by the Registration Rights Agreement, the Purchaser is acquiring the Note, the Warrant and the Shares for the Purchaser’s own account for investment only, and not with a view towards their public distribution.

     (c) Purchaser Can Protect Its Interest. The Purchaser represents that by reason of its, or of its management’s, business or financial experience, the Purchaser has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement, the Note, the Warrant and the Registration Rights Agreement. Further, the Purchaser is aware of no publication of any advertisement in connection with the transactions contemplated in the Agreement.

     (d) Accredited Investor. The Purchaser represents that it is an accredited investor within the meaning of Regulation D of the Securities Act.

     (e) Residence. The Purchaser represents that it is organized under the laws of the British Virgin Islands and that its principal office is located in the State of Minnesota.

     (f) Rule 144. The Purchaser acknowledges and agrees that the Note and Warrant, and, if issued, the Shares, must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. The Purchaser has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being through an unsolicited “broker’s transaction” or in transactions directly with a market maker (as such term is defined under the Securities Exchange Act of 1934, as amended) and the number of shares being sold during any three-month period not exceeding specified limitations.

     4.2. Transfer Restrictions. The Purchaser acknowledges and agrees that the Note and Warrant and, if issued, the Shares, are subject to restrictions on transfer and will bear restrictive legends.

     4.3. Acquisition of Shares. Until the Note is paid in full, the Purchaser may not acquire “beneficial ownership” (as defined by Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of Shares except for those which are or may be acquired as payment on the Note or upon exercise of the Warrant. The foregoing covenant shall lapse if the Company defaults in the timely payment of any amount due under the Note.

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SECTION 5. CONDITIONS FOR CLOSING

     5.1. Conditions for the Company to Satisfy. The obligation of the Purchaser to purchase the Note and Warrant as contemplated by this Agreement is subject to satisfaction of the following contingencies at or prior to Closing:

     (a) The Company shall have obtained all third party consents required in connection herewith, including consents to pledge the Collateral to the Purchaser as security for the Note.

     (b) The Company shall have executed and delivered to the Purchaser at Closing the Transaction Documents.

     (c) The Company shall have paid Gary S. Kohler and Scot W. Malloy, together, a $40,000 cash origination fee related to the transactions contemplated hereby and shall have issued warrants (in form substantially similar to that of the Warrant) to purchase 100,000 shares of the Company’s Common Stock to each of Messrs. Kohler and Malloy. Purchaser acknowledges that the Company has previously paid $20,000 of the cash origination fee to Whitebox Advisors, LLC pursuant to a letter agreement dated May 13, 2004 and that only the $20,000 balance is due to Messrs. Kohler and Malloy at Closing.

     (d) Mills shall have executed and delivered the Mills Guaranty to the Purchaser.

     (e) Maslon Edelman Borman & Brand, LLP, legal counsel to the Company, shall have delivered an opinion to the Purchaser with respect to the following matters:

          (i) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota. To such firm’s knowledge, the Subsidiaries are the only operating subsidiaries of the Company. Active Hawk is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Minnesota. Each of the Company, Active Hawk and, to such firm’s knowledge, Brazmin has all requisite corporate or limited liability company power and authority to own and operate its respective properties and assets and to carry on its respective business as presently conducted and as presently proposed to be conducted. The Company has all requisite corporate power and authority to execute and deliver the Transaction Documents, to pledge the Collateral as security for the Note, to issue and sell the Shares, to carry out the provisions of the Transaction Documents. Each of the Company and Active Hawk is duly qualified and is authorized to do business and is in good standing in each U.S. and foreign jurisdiction in which the nature of its respective activities and of its respective properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to be so qualified would not have a materially adverse effect on the Company or its business, taken as a whole.

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          (ii) The Company is authorized to issue 150,000,000 shares of Common Stock, par value $0.01 per share, of which, to the firm’s knowledge, 33,275,181 shares are issued and outstanding. To the firm’s knowledge, the Company has no outstanding Convertible Securities or any agreement or commitment to sell or issue any shares of capital stock or Convertible Securities, except as described herein. All issued and outstanding shares of the Company’s capital stock (a) have been duly authorized and validly issued, (b) are fully paid and nonassessable, (c) are free from any preemptive and cumulative voting rights and (d) were issued pursuant to an effective registration statement filed with the Commission and applicable state securities authorities or pursuant to valid exemptions under federal and state securities laws. To the firm’s knowledge, there are no outstanding rights of first refusal or proxy or shareholder agreements of any kind relating to any of the Company’s securities to which the Company or any of its executive officers and directors is a party. When issued in compliance with the provisions of the Note and the Warrant (and upon payment as provided by the Warrant), the Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

          (iii) All corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization of the Transaction Documents, the performance of all obligations of the Company under the Transaction Documents at the Closing, including the pledge of the Collateral as security for the Note, and the authorization, sale, issuance and delivery of the Shares as payment under the Note, upon conversion of the Note or upon exercise of the Warrant has been taken. The Transaction Documents, when executed and delivered, will be valid and binding obligations of the Company enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights, (b) according to general principles of equity that restrict the availability of equitable remedies; and (c) to the extent that the enforceability of the indemnification provisions of the Registration Rights Agreement may be limited by applicable laws. Although it is not representing Mr. Mills in connection with the transactions contemplated by this Agreement and the Transactions Documents, nothing has come to such firm’s attention in connection with its regular representation of the Company that would cause it to believe that the Mills Guaranty, when executed and delivered, will not be a valid and binding obligation of Mills enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (b) according to general principles of equity that restrict the availability of equitable remedies. The sale of the Shares upon exercise of the Warrant or upon payment under the Note is not and will not be subject to any preemptive rights or rights of first refusal.

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          (iv) The execution and delivery to the Purchaser of the Transaction Documents does not violate or constitute a default under the Articles of Incorporation or Bylaws, as amended, of the Company, or under any agreement known to such firm to which the Company or the Subsidiary is a party or by which any of their respective properties or assets are bound.

          (v) To such firm’s knowledge, except as disclosed in the SEC Reports, there is no action, suit, proceeding or investigation pending or currently threatened against the Company, including any that questions the validity of the Agreement or the other agreements contemplated thereby or the right of the Company to enter into any of such agreements, or to consummate the transactions contemplated thereby. To such firm’s knowledge, except as disclosed in the SEC Reports, there is no action, suit, proceeding or investigation or, to such firm’s knowledge, currently threatened against the Company that might result, either individually or in the aggregate, in any material adverse change in the assets, condition, affairs or prospects of the Company, financial or otherwise, or any change in the current equity ownership of the Company, nor is such firm aware that there is any basis for the foregoing. To such firm’s knowledge, and except as disclosed in the SEC Reports, the Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality.

          (vi) Upon tender of the funds by the Purchaser to the Company as contemplated by the Agreement and filing of a UCC Financing Statement covering the Collateral, a security interest in the Collateral will attach in favor of the Purchaser.

SECTION 6. MISCELLANEOUS

     6.1. Governing Law. This Agreement shall be governed by the laws of the State of Minnesota as such laws are applied to agreements between Minnesota residents entered into and performed entirely in Minnesota.

     6.2. Survival. The representations, warranties, covenants and agreements made herein shall survive any investigation made by the parties and the closing of the transactions contemplated hereby. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument.

     6.3. Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of the Note, the Warrant or the Shares from time to time.

     6.4. Entire Agreement. The Transaction Documents, the Mills Guaranty and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein.

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     6.5. Severability. In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

     6.6. Amendment and Waiver. This Agreement may be amended or modified, and any provision hereunder may be waived, only upon the written consent of the Company and the Purchaser.

     6.7. Notices. All notices, requests, consents, and other communications hereunder shall be in writing and shall be deemed effectively given and received when delivered in person or by national overnight courier service or by certified or registered mail, return receipt requested, or by telecopier, addressed as follows:

(a)	if to the Company, at
	Wits Basin Precious Minerals Inc.
	520 Marquette Avenue, Suite 900
	Minneapolis, Minnesota 55402
	Attention: H. Vance White, Chief Executive Officer
	Facsimile: (612) 371-2077
	with a copy to:
	Maslon Edelman Borman & Brand, LLP
	90 South Seventh Street, Suite 3300
	Minneapolis, Minnesota 55402
	Attention: William M. Mower, Esq.
	Facsimile: (612) 642-8358
(b)	if to the Purchaser, in care of:
	Whitebox Advisors, LLC
	3033 Excelsior Boulevard, Suite 300
	Minneapolis, Minnesota 55416
	Attention: Jonathan Wood, Chief Financial Officer
	Facsimile: (612) 253-6151

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with a copy to:

Messerli & Kramer P.A.
150 South Fifth Street, Suite 1800
Minneapolis, Minnesota 55402
Attention: Jeffrey C. Robbins, Esq.
Facsimile: (612) 672-3777.

     6.8. Indemnification by the Company. The Company agrees to indemnify and hold the Purchaser harmless against any loss, liability, damage or expense (including reasonable legal fees and costs) that the Purchaser may suffer, sustain or become subject to as a result of or in connection with the breach by the Company of any representation, warranty, covenant or agreement of the Company contained in any of the Transaction Documents, or by Mills of any representation, warranty, covenant or agreement of Mills contained in the Mills Guaranty.

     6.9. Expenses. At Closing, the Company shall pay the Purchaser’s counsel, Messerli & Kramer P.A., $10,000 for its legal fees and expenses in representing the Purchaser in connection with the transactions contemplated hereby. In addition, the Purchaser agrees to pay or reimburse the Purchaser for its reasonable legal fees and expenses that it may incur after the date hereof in connection with the granting of any waiver with respect to, the modification of any of the terms or provisions of, or the enforcement of any of the Transaction Documents or the Mills Guaranty.

      6.10. Titles and Subtitles. The titles of the sections and subsections of the Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

     6.11. Counterparts. This Agreement may be delivered via facsimile or other means of electronic communication, and may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

      IN WITNESS WHEREOF, the parties hereto have hereunto affixed their signatures.

Wits Basin Precious Minerals Inc.		Pandora Select Partners L.P.
By	/s/ Mark D. Dacko	By
	Mark D. Dacko, Chief Financial Officer
		Its

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EX-10.2

EXHIBIT 10.2

SECURED CONVERTIBLE PROMISSORY NOTE

$650,000 May 28, 2004

     FOR VALUE RECEIVED, the undersigned, WITS BASIN PRECIOUS MINERALS INC., a Minnesota corporation (the “Maker”), hereby promises to pay to the order of Pandora Select Partners L.P., a British Virgin Islands limited partnership, or its assigns (the “Payee”), at such place as the Payee may designate in writing, the principal sum of Six Hundred Fifty Thousand Dollars ($650,000), under the terms set forth herein.

1.      Interest.      The unpaid principal balance hereof from time to time outstanding shall bear interest from the date hereof at the rate of ten percent (10%) per annum.

2.      Payment.      The principal and interest hereof is payable as follows:

     (a) Payments of $5,416.67 in cash of interest only are payable in arrears on June 28, July 28 and August 28, 2004; and

     (b) Commencing on September 28, 2004, and on the 28th day of each of the following 14 months, Maker shall pay amortized principal and interest on this Note of $46,278.15 (the “Monthly Scheduled Payment”).

3.      Optional Payment in Stock.

     (a) In lieu of making a cash payment under subsection 2(b) above, Maker may pay the Monthly Scheduled Payment, or any portion thereof, but only to the extent permitted by this subsection (a), by the issuance of shares of its $0.01 par value common stock (the “Common Stock”), the per-share value of which is computed as provided in Subsection (b) below. Despite the foregoing, the number of shares of Common Stock which may be issued to pay all or any portion of a particular Monthly Scheduled Payment may not exceed the lesser of (i) 10% of the aggregate number of traded shares of Common Stock reported on the OTC Bulletin Board as reported by bigcharts.com (or if this service is discontinued, such other reporting service acceptable to Payee) for the 30 trading days immediately preceding such Monthly Scheduled Payment due or (ii) the greatest number of shares of Common Stock which, when added to the number of shares of Common Stock "Beneficially Owned" (within the meaning set forth in subsection (d) below) by Payee, would not cause Payee to Beneficially Own more than 4.99% of the Maker’s outstanding Common Stock. In computing under this subsection (a) the aggregate number of traded shares during any time period, the Maker shall exclude (i) shares sold by or for the account or at the direction of the Maker, officers or directors of Maker or any members of their immediate families or any affiliates of Maker and (ii) shares determined solely by Payee (for which Payee shall so inform the Maker in writing) to represent unlawful or potentially unlawful sales. Maker may pay the Monthly Scheduled Payment, or any portion thereof, by the issuance of Common Stock only if, at the time of such payment, Maker has in effect a registration statement on Form S-2 or SB-2 with the U.S. Securities and Exchange Commission (the “SEC”) and applicable state securities laws covering the original issuance of such shares by the Maker or the resale of such shares by the Payee (the “Registration Statement”).

     (b) The per-share value of the Common Stock as of a specified Scheduled Monthly Payment date for the purposes of this Section 3 is 85% (rounded to the nearest $.01) of the average (rounded to the nearest $.01) of the high closing bid prices of Maker’s Common Stock on the OTC Bulletin Board as reported by bigcharts.com (or if this service is discontinued, such other reporting service acceptable to Payee) for the 20 trading days immediately preceding the particular Scheduled Monthly Payment date.

     (c) Payment by Common Stock shall be deemed to be made by Maker by giving written notice to the Payee of the number of shares being issued in such payment, and the Maker’s calculation of the per-share market value under subsection (b) above; provided that certificates representing those shares are delivered to Payee within 20 days of the due date of the Scheduled Monthly Payment.

4.      Conversion.

     (a) At any time while any portion of the principal or interest of this Note is outstanding (including during the notice period prior to any optional cash prepayment by the Maker), the Payee may give the Maker written notice (the “Payee’s Notice”) of its intention to convert all or any portion of the outstanding principal and/or accrued but unpaid interest on this Note into shares of the Maker’s Common Stock based on a conversion rate per share computed below (the “Conversion Rate”). Upon receipt of the Payee’s notice, the Maker shall immediately cause certificates representing these shares to be delivered to Payee within 20 days of, and Payment shall be deemed to have been made on, the date of such notice.

     The "Conversion Rate" is the average (rounded to the nearest $.01) of the high closing bid prices of Maker’s Common Stock on the OTC Bulletin Board as reported by bigcharts.com (or if this service is discontinued, such other reporting service acceptable to Payee) for the 30 trading days immediately following the effective date with the SEC of Maker’s Registration Statement on Form S-2, SEC File No. 333-110831 (the “S-2 Registration Statement”). However, the Conversion Rate shall not be lower than $0.35 or higher than $0.65 per share. If by the date of the Payee’s Notice, the SEC has not declared the S-2 Registration Statement effective, then the Conversion Rate is $0.35 per share.

     (b) The Conversion Rate shall be adjusted proportionally for any subsequent stock dividend or split, stock combination or other similar recapitalization, reclassification or reorganization of or affecting Maker’s Common Stock. In case of any consolidation or merger to which the Maker is a party other than a merger or consolidation in which the Maker is the continuing corporation, or in case of any sale or conveyance to another corporation of the property of the Maker as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Maker), then instead of receiving shares of Maker’s Common Stock, Payee shall have the right thereafter to receive the kind and amount of shares of stock and other securities and property which the Payee would have owned or have been entitled to receive immediately after such consolidation, merger, statutory exchange, sale or conveyance had the same portion of this Note been paid or converted immediately prior to the effective date of such consolidation, merger, statutory exchange, sale or conveyance and, in any such case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in this Section with respect to the rights and interests thereafter of the Payee, to the end that the provisions set forth in this Section shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock and other securities and property thereafter deliverable in connection with this Note. The provisions of this subsection shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances.

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     (c) Despite anything above to the contrary, the Payee may not convert this Note into Common Stock under this Section 4 during the time period and to the extent that the shares of Maker’s Common Stock that the Payee could acquire upon the conversion would cause Payee’s Beneficial Ownership of Maker’s Common Stock to exceed 4.99% of Maker’s outstanding Common Stock; provided, however, that the limitations on the right to exercise a warrant for Common Stock being issued to Payee in connection with this Note (the “Warrant”), as provided by such Warrant, shall first reduce Payee’s Beneficial Ownership of Maker’s Common Stock before limitation of Payee’s conversion rights hereunder; and provided further, that the limitation of Payee’s conversion rights hereunder shall first reduce Payee’s Beneficial Ownership before limiting the number of shares that Maker may issue to Payee as payment hereunder pursuant to Section 3(a) above. The Payee will, at the request of Maker, from time to time, notify Maker of Payee’s computation of Payee’s Beneficial Ownership. The parties shall compute Payee’s "Beneficial Ownership" of Maker’s Common Stock in accordance with SEC Rule 13d-3.

     (d) If (but only if) the Common Stock shall be listed for trading on the NASDAQ System during the term of this Note, then, unless the Maker shall have obtained the approval of its voting shareholders to such issuance in accordance with the rules of NASDAQ or such other stock market with which the Maker shall be required to comply (but only to the extent required thereby), the Maker shall not issue shares of Common Stock upon conversion of the Note or in payment of interest on the Note, which when added to the number of shares of Common Stock previously issued by Maker (i) upon conversion of the Note, (ii) upon exercise of the Warrant and (iii) in payment of interest on the Note, would equal or exceed 20% of the number of shares of the Maker’s Common Stock which were issued and outstanding on the date of issuance (the “Maximum Issuance Amount”). In the event that a properly executed conversion notice is received by the Maker which would require the Maker to issue shares of Common Stock equal to or in excess of the Maximum Issuance Amount, the Maker shall honor such conversion request by (i) converting the Note into the number of shares of Common Stock stated in the conversion notice but not in excess of the Maximum Issuance Amount, and (ii) redeeming the number of shares of Common Stock stated in the conversion notice equal to or in excess of the Maximum Issuance Amount in cash at a price equal to the then-current fair market value (i.e., the closing bid price of Maker’s Common Stock on the NASDAQ System, or if not then traded on the NASDAQ System, then on the OTC Bulletin Board as reported by bigcharts.com, or if this service is discontinued, such other reporting service acceptable to Payee) on the date of redemption. In the event that the Maker shall elect to pay interest on this Note in shares of Common Stock which would require the Maker to issue shares of Common Stock equal to or in excess of the Maximum Issuance Amount, the Maker shall pay interest in shares of Common Stock equal to one share less than an amount which would result in the Maker issuing shares equal to the Maximum Issuance Amount, and the balance of the interest payment in cash.

5. Contingent Additional Interest. In the event that Maker fails by the "Registration Deadline" (as that term is defined in Section 5(e) of the Warrant) to obtain effectiveness under the Securities Act of 1933, as amended, and applicable state securities laws of the Registration Statement as required by the terms of a Registration Rights Agreement of this date between Maker and Payee covering all of the shares of Common Stock issuable as payment under or upon conversion of this Note or upon exercise of the Warrant (the “Registration Rights Agreement”), then for each full month thereafter (prorated for partial months) that this failure continues (the “Failure Term”), Maker shall pay in arrears in cash, with the next otherwise Scheduled Monthly Payment under Sections 2(b) or 3(a) above (or if the last Scheduled Monthly Payment has been made, then on the same day of each succeeding month), additional interest (the “Contingent Additional Interest”) equal to the greater of $1,000 or 1% of the outstanding principal balance on this Note as of the last day of the prior month. Despite the foregoing, if the Payee consents (as provided under the Registration Rights Agreement) to an extension of the effective date of the Registration Statement beyond the original Registration Deadline, then the Registration Deadline hereunder shall be extended by a like period.

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6.      Security.      The full and timely payment of this Note (together with the Maker’s obligations under a Purchase Agreement of this date between Maker and Payee) shall be secured by a Security Agreement of this date (the “Security Agreement”) covering all of Maker’s assets, including all of the membership units owned by Maker in Active Hawk Minerals, LLC, a Minnesota limited liability company, and all of the capital stock owned by Maker in Brazmin Ltda., a limited liability company organized under the laws of Brazil. The security interest granted under the Security Agreement shall be a first priority security interest subordinate to no other secured rights.

7.      Optional Prepayments.      The Maker may prepay this Note, in whole or in part, and in cash, without penalty by Maker upon fifteen days written notice to Payee. Prepayments shall be applied first to accrued but unpaid interest and then to principal.

8.      Default.      The occurrence of any one or more of the following events shall constitute an event of default, upon which Payee may declare the entire principal amount of this Note, together with all accrued but unpaid interest, to be immediately due and payable in cash (despite provisions otherwise for payment with Common Stock):

     (a)The Maker shall fail to make any required payment of principal or interest (including Contingent Additional Interest) when due, and in its proper form (i.e., in cash, in stock or by a combination thereof), and such failure shall continue through five days after Payee gives written notice of such failure to Maker.

     (b)The Maker shall be in material default of any term or provision of the Purchase Agreement, the Security Agreement, the Registration Rights Agreement or the Warrant, and such failure shall continue through five days after Payee gives written notice of such default to Maker.

     (c)The Maker shall become insolvent or any bankruptcy, reorganization, debt arrangement or other proceeding under any bankruptcy or insolvency law shall be instituted by or against the Maker.

     (d) Wayne W. Mills shall be in default of any term or provision of the Guaranty Agreement being entered into by him on the date hereof for the benefit of the Payee.

     (e) The Maker shall be in default under a Supplemental Note or Supplemental Warrant, if any, issued by Maker to Payee after the date hereof in connection with a Call and Option Agreement of this date between such parties.

     Without limiting the above, the Maker acknowledges that payments on the various scheduled due dates in Sections 2, 3(c) and 5 are of essence and that any failure to timely pay any installment of principal or interest (whether as permitted by cash, with stock or by a combination thereof and within any permitted grace period above) permits Payee to declare this Note immediately due in cash in its entirety without any prior notice of any kind to Maker, except for the specific notices provided above.

9.      Applicable Law.      THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THE NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.

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10.      Waivers.      The Maker hereby waives presentment for payment, notice of dishonor, protest and notice of payment and all other notices of any kind in connection with the enforcement of this Note.

11.      No Setoffs.      The Maker shall pay principal and interest under the Note without any deduction for any setoff or counterclaim.

12.      Costs of Collection.     If this Note is not paid when due, the Maker shall pay Payee’s reasonable costs of collection, including reasonable attorney’s fees.

WITS BASIN PRECIOUS MINERALS INC.
By	/s/ Mark D. Dacko
	Mark D. Dacko, Chief Financial Officer

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EX-10.3

Exhibit 10.3

REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is entered into as of May 28, 2004, by and among Wits Basin Precious Minerals Inc., a Minnesota corporation (the “Company”), Pandora Select Partners L.P., a British Virgin Islands limited partnership (“Pandora”), Gary S. Kohler (“Kohler”) and Scot W. Malloy (“Malloy;” and with Pandora and Kohler, together referred to as the “Investors”).

R E C I T A L S :

     WHEREAS, the Company has entered into that certain Purchase Agreement, dated as of the date hereof (the “Purchase Agreement”) with Pandora pursuant to which the Company has agreed to issue and sell to Pandora a secured convertible promissory note (the “Note”) and a warrant (the “Warrant”) to purchase shares of the Company’s Common Stock, $0.01 par value per share (the “Common Stock”), and to issue to each of Kohler and Malloy warrants (in form substantially similar to the Warrant) each to purchase 100,000 shares of the Company’s Common Stock (the “Kohler & Malloy Warrants”);

     WHEREAS, conditioned on the Company’s timely satisfaction of particular milestones and conditions as described in a separate letter agreement (the “Call and Option Agreement”), Pandora has agreed to purchase, and the Company has agreed to issue to Pandora, an additional secured convertible promissory note of at least $350,000 (which, at Pandora’s option, may be for up to $850,000 inclusive of the foregoing $350,000) and an additional warrant to purchase Common Stock (respectively, the “Supplemental Note” and the “Supplemental Warrant”);

     WHEREAS, the Company may make certain principal and interest payments on the Note and, if issued, the Supplemental Note, by issuance of additional shares of its Common Stock;

     WHEREAS, the Company has agreed to grant certain registration rights with respect to the shares of the Company’s Common Stock issuable as payments under the Note and Supplemental Note, upon conversion of the Note or Supplemental Note or upon exercise of the Warrant, the Supplemental Warrant or the Kohler & Malloy Warrants;

     NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

ARTICLE 1
DEFINITIONS

     As used herein, the following terms shall have the following respective meanings:

1.1      “Commission” shall mean the U.S. Securities and Exchange Commission or any other successor federal agency at the time administering the Securities Act.

1.2      “Common Stock” shall mean the Company’s common stock, $0.01 par value per share.

1.3      “Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

1.4      “Holders” shall mean and include the Investors and any transferee thereof who holds Registrable Securities of record.

1.5      “Register,”“registered” and “registration” refer to a registration effected by preparing and filing with the Commission a registration statement in compliance with the Securities Act, and the declaration or ordering by the Commission of the effectiveness of such registration statement.

1.6      “Registrable Securities” means any and all shares of Common Stock: (i) issued or issuable as payments under the Note or Supplemental Note, upon conversion of the Note or Supplemental Note or upon exercise of the Warrant, the Supplemental Warrant or the Kohler & Malloy Warrants or (ii) issued or issuable with respect to the Common Stock upon any stock split, stock dividend, recapitalization, reclassification, merger, consolidation or other similar event. The term “Registrable Securities” shall exclude in all cases, however, such shares of Common Stock following sale by a Holder to the public pursuant to a registered offering or pursuant to Rule 144 promulgated under the Securities Act or sold in a private transaction in which the Holder’s registration rights under this Agreement are not assigned.

1.7      “Registration Expenses” shall mean all expenses incurred by the Company in complying with Articles 2 and 3 hereof, including, without limitation, all registration, qualification and Commission, National Association of Securities Dealers, Inc., stock exchange and other filing fees, printing expenses, escrow fees, fees and disbursements of legal counsel for the Company, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company).

1.8      “Securities Act” shall mean the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

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1.9      “Selling Expenses” shall mean all underwriting fees, discounts, selling commissions and stock transfer taxes applicable to the Registrable Securities registered by the Holders and the fees and expenses of any special counsel engaged by the Holders.

1.10      “Underwriter” shall mean (whether or not the term is capitalized) a broker-dealer engaged by the Company to distribute Registrable Securities as principal or agent.

1.11      “Underwriting” or “Underwritten” shall mean (whether or not the term is capitalized) a method of publicly distributing securities through an Underwriter.

ARTICLE 2
REQUIRED REGISTRATION

2.1      Required Registration. Not later than August 28, 2004 (unless a majority in interest of the Holders request a delay of the Company for up to an additional 90 days in writing and in such case, upon expiration of this requested delaying period), the Company will prepare and file with the Commission a registration statement under the Securities Act (currently expected to be on Form S-2 or SB-2) covering all of the Registrable Securities and use its best efforts to obtain the effectiveness of such registration as soon as practicable as would permit or facilitate the original issuance or subsequent resale and distribution of all of such Registrable Securities. Such registration statement shall contain (unless the Holders otherwise direct) substantially the “Plan of Distribution” attached hereto as Annex A. The Company’s failure to obtain effectiveness of this registration statement by November 28, 2004 (subject to an extension of such date to correspond to a filing date extension, if any, granted by the Holders above, and subject to delays incurred by any Holder’s failure to comply with the provisions of Section 5(b) below) will commence the running of the first "Failure Term" as defined in Section 5 of the Note and Supplemental Note and will also constitute an event of default under this Agreement.

2.2      Underwriting.

     (a) The resale distribution of the Registrable Securities covered by the registration statement referred to in Section 2.1 above shall be effected by means of the method of distribution selected by the Holders holding a majority of the Registrable Securities covered by such registration. The Holders holding a majority of the Registrable Securities may also change the resale distribution method from time to time (subject to amendment of the registration statement as required to describe such changes). If such distribution is effected by means of an underwriting, the right of any Holder to registration pursuant to this Article 2 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein.

     (b) If such distribution is effected by means of an underwriting, the Company (together with all Holders proposing to distribute their securities through such underwriting) shall enter into an underwriting agreement in customary form with a managing underwriter of nationally recognized standing selected for such underwriting by a majority in interest of the Holders and approved by the Company, which approval shall not be unreasonably withheld.

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     (c) If any Holder disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the other Holders. The Registrable Securities and/or other securities so withdrawn shall also be withdrawn from registration.

2.3      Inclusion of Shares by the Company. If the resale distribution of Registrable Securities is being effected by means of an underwriting and if the managing underwriter will not limit the number of Registrable Securities to be underwritten, the Company may include securities for its own account or for the account of others in such registration if the managing underwriter so agrees. The inclusion of such shares shall be on the same terms as the registration of shares held by the Holders. In the event that the underwriters exclude some of the securities to be registered, the securities to be sold for the account of the Company and any other holders shall be excluded in their entirety prior to the exclusion of any Registrable Securities.

ARTICLE 3
COMPANY REGISTRATION

3.1      Notice of Registration to Holders. If at any time or from time to time commencing after the date hereof, the Company shall determine to register any of its securities, either for its own account or the account of a security holder or holders, other than (i) a registration relating solely to employee benefit plans on Form S-8 (or any successor form) or (ii) a registration relating solely to a Commission Rule 145 transaction on Form S-4 (or any successor form), the Company will:

     (a) promptly give to each Holder written notice thereof and

     (b) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within 30 days after receipt of such written notice from the Company described in Section 3.1(a), by any Holder or Holders, but only to the extent that (i) if the proposed registration under this Article 3 is not an underwritten offering, the original issuance or resale distribution of such Registrable Securities is not already covered by an effective registration statement under Article 2 above or (ii) if the proposed registration under this Article 3 is an underwritten offering, such Registrable Securities are not then being offered in a separate underwritten offering under Article 2 above.

3.2     Underwriting. If the registration of which the Company gives notice is for an offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 3.1(a). In such event, the right of any Holder to registration pursuant to this Article 3 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company.

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     (a) Notwithstanding any other provision of this Article 3, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may exclude some or all Registrable Securities from such registration and underwriting. The Company shall so advise all Holders of Registrable Securities, and the number of shares of Common Stock to be included in such registration shall be allocated as follows: first, for the account of the Company, all shares of Common Stock proposed to be sold by the Company; and second, for the account of the Holders and any other shareholders of the Company participating in such registration, the number of shares of Common Stock requested to be included in the registration by the Holders and such other shareholders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities that are proposed to be offered and sold by the Holders and such other shareholders of Registrable Securities at the time of filing the registration statement. No Registrable Securities excluded from the underwriting in this Article 3 by reason of the underwriters’ marketing limitation shall be included in such registration.

     (b) The Company shall so advise all Holders and the other holders distributing their securities through such underwriting of any such limitation, and the number of shares of Registrable Securities held by Holders that may be included in the registration. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the managing underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration, but the Holder shall continue to be bound by the terms hereof.

     (c) The Company shall have the right to terminate or withdraw any registration initiated by it under this Article 3 prior to the effectiveness of such registration, whether or not a Holder has elected to include Registrable Securities in such registration.

ARTICLE 4
EXPENSES OF REGISTRATION

     All Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Articles 2 and 3 hereof shall be borne by the Company. All Selling Expenses relating to Registrable Securities registered by the Holders shall be borne by the Holders of such Registrable Securities pro rata on the basis of the number of shares so registered.

ARTICLE 5
REGISTRATION PROCEDURES

     (a) In the case of each registration effected by the Company pursuant to this Agreement, the Company will keep each Holder advised in writing as to the initiation of each registration and as to the completion thereof. The Company agrees to use its best efforts to effect or cause such registration to permit the sale of the Registrable Securities covered thereby by the Holders thereof in accordance with the intended method or methods of distribution thereof described in such registration statement. In connection with any registration of any Registrable Securities, the Company shall, as soon as reasonably possible:

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     (i) prepare and file with the Commission a registration statement with respect to such Registrable Securities and use its efforts to cause such registration statement filed to become effective;

     (ii) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such registration statement as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such registration statement (provided, however, that the Company shall not be obliged to maintain the effectiveness of the registration statement described in Article 2 longer than through the earlier of (A) seven years from the date hereof or, if earlier, the second anniversary of the date on which the last of the Registrable Securities are issued or issuable as payment under the Note or Supplemental Note or upon exercise of the Warrant or Supplemental Warrant, (B) the date on which the Holder may sell all Registrable Securities then held by the Holder, or which may become issuable as payment under the Note or Supplemental Note or upon exercise of the Warrant or Supplemental Warrant, without restriction by the volume limitations of Rule 144(e) of the Securities Act or (C) such time as all Registrable Securities held by such Holder, or which may become issuable as payment under the Note or Supplemental Note or upon exercise of the Warrant or Supplemental Warrant, have been sold pursuant to a registration statement), and furnish to the holders of the Registrable Securities covered thereby copies of any such supplement or amendment prior to this being used and/or filed with the Commission;

     (iii) promptly notify the Holders of Registrable Securities to be included in a registration statement hereunder, the sales or placement agent, if any, therefor and the managing underwriter of the securities being sold, and confirm such advice in writing, (A) when such registration statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such registration statement or any post-effective amendment, when the same has become effective, (B) of the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or the initiation of any proceedings for that purpose, (C) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose or (D) if, to the Company’s knowledge, it shall be the case, at any time when a prospectus is required to be delivered under the Securities Act, that such registration statement or prospectus, or any document incorporated by reference in any of the foregoing, contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

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     (iv) use its best efforts to obtain the withdrawal of any order suspending the effectiveness of such registration statement or any post-effective amendment thereto or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Registrable Securities included in such registration statement for sale in any jurisdiction at the earliest practicable date;

     (v) furnish to each Holder of Registrable Securities to be included in such registration statement hereunder, each placement or sales agent, if any, therefor and each underwriter, if any, thereof a conformed copy of such registration statement, each such amendment and supplement thereto (in each case excluding all exhibits and documents incorporated by reference) and such number of copies of the registration statement (excluding exhibits thereto and documents incorporated by reference therein unless specifically so requested by such holder, agent or underwriter, as the case may be) of the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus), in conformity with the requirements of the Securities Act, as such Holder, agent, if any, and underwriter, if any, may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder sold by such agent or underwritten by such underwriter and to permit such Holder, agent and underwriter to satisfy the prospectus delivery requirements of the Securities Act;

     (vi) if required by applicable law, use its best efforts to (A) register or qualify the Registrable Securities to be included in such registration statement under such other securities laws or blue sky laws of such states of the United States or the District of Columbia to be designated by the Holders of a majority of such Registrable Securities participating in such registration and each placement or sales agent, if any, therefor and underwriter, if any, thereof, as any Holder and each underwriter, if any, of the securities being sold shall reasonably request (provided, that the Company shall not be required to use its best efforts to register or qualify the Registrable Securities in more than 10 such jurisdictions unless the expenses thereof are borne by the Holders requesting such efforts), (B) keep such registrations or qualifications in effect and comply with such laws so as to permit, as to a registration statement filed under Article 2 above, the continuance of offers, sales and dealings therein in such jurisdictions for the same period after the initial effective date of the registration statement filed under the Securities Act as described in Section 5(a)(ii) above or, as to a registration statement filed under Article 3 above, for a period of 90 days after the effective date of the registration statement, or if underwritten, as long as may be necessary to enable the underwriter to complete its distribution of the Registrable Securities pursuant to such registration statement and (C) take any and all such actions as may be reasonably necessary or advisable to enable such Holder, agent, if any, and underwriter to consummate the disposition in such jurisdictions of such Registrable Securities; provided, however, that in order to fulfill the foregoing obligations under this Section 5(a)(vi), the Company shall not (unless otherwise required to do so in any jurisdiction) be required to (1) qualify generally to do business as a foreign company or a broker-dealer, (2) execute a general consent to service of process or (3) subject itself to taxation; and

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     (vii) furnish, at the request of a majority of the Holders participating in the registration, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii) a letter dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and if permitted by applicable accounting standards, to the Holders requesting registration of Registrable Securities.

     (b) The Company may require each Holder of Registrable Securities as to which any registration is being effected to furnish to the Company such information regarding such Holder and such Holder’s method of distribution of such Registrable Securities as the Company may from time to time reasonably request in writing. Each such Holder agrees to notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by such Holder to the Company or of the occurrence of any event in either case as a result of which any prospectus relating to such registration contains or would contain an untrue statement of a material fact regarding such Holder or the distribution of such Registrable Securities or omits to state any material fact regarding such Holder or the distribution of such Registrable Securities required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly to furnish to the Company any additional information required to correct and update any previously furnished information or required so that such prospectus shall not contain, with respect to such Holder or the distribution of such Registrable Securities, an untrue statement or a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing.

     (c) Each of the Holders will comply with the provisions of the Securities Act with respect to disposition of the Registrable Securities to be included in any registration statement filed by the Company.

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ARTICLE 6
INDEMNIFICATION

6.1     The Company will indemnify each Holder, each of its officers, directors and partners, and such Holder’s legal counsel and independent accountants, if any, and each person controlling any such persons within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification or compliance has been effected pursuant to this Agreement, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereof, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act or any state securities laws applicable to the Company and relating to action or inaction by the Company in connection with any such registration, qualification or compliance, and will reimburse each such Holder, each of its officers, directors and partners and such Holder’s legal counsel and independent accountants, and each person controlling any such persons, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by such Holder, officers, directors, partners, legal counsel, accountants, underwriter or controlling persons, and expressly intended for use in such registration statement, prospectus, offering circular or other document, or any amendment or supplement thereof.

6.2      Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers and its legal counsel and independent accountants, each underwriter, if any, of the Company’s securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each other such Holder, each of its officers, directors, partners, legal counsel and independent accountants, if any, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, such directors, officers, partners, legal counsel, independent accountants, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular, other document or amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Holder and expressly intended for use in such registration statement, prospectus, offering circular or other document, or any amendment or supplement thereof; provided, however, that the obligations of each Holder hereunder shall be limited to an amount equal to the proceeds to such Holder of Registrable Securities sold as contemplated herein.

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6.3      Each party entitled to indemnification under this Section 6 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld). The Indemnified Party may participate in such defense at such party’s expense; provided, however, that the Indemnifying Party shall bear the expense of such defense of the Indemnified Party if representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interest. The failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement, unless such failure is prejudicial to the ability of the Indemnifying Party to defend the action. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation.

6.4      If the indemnification provided for in Section 6.1 or 6.2 is unavailable or insufficient to hold harmless an Indemnified Party, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party as a result of the expenses, claims, losses, damages or liabilities (or actions or proceedings in respect thereof) referred to in Section 6.1 or 6.2, in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the sellers of Registrable Securities on the other hand in connection with statements or omissions which resulted in such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) or expenses, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the sellers of Registrable Securities and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and the Holders agree that it would not be just and equitable if contributions pursuant to this Section 6.4 were to be determined by pro rata allocation (even if all Sellers of Registrable Securities were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the first sentence of this Section 6.4. The amount paid by an Indemnified Party as a result of the expenses, claims, losses, damages or liabilities (or actions or proceedings in respect thereof) referred to in the first sentence of this Section 6.4 shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any claim, action or proceeding which is the subject of this Section 6.4. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of sellers of Registrable Securities to contribute pursuant to this Section 6.4 shall be several in proportion to the respective amount of Registrable Securities sold by them pursuant to a registration statement.

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ARTICLE 7
RULE 144 REPORTING

     With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of securities of the Company to the public without registration, the Company agrees to use its best efforts to:

7.1      Make and keep public information available as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the date hereof; and

7.2      File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act.

ARTICLE 8
TRANSFER OF REGISTRATION RIGHTS

     The rights to cause the Company to register Registrable Securities under this Agreement may be assigned by a Holder to Whitebox Advisors, LLC ("Whitebox") or to a transferee or assignee of Registrable Securities that (i) is a subsidiary, parent or affiliated entity, general partner or limited partner, member or retired partner or member of a Holder or of Whitebox, (ii) is an affiliated fund, a follow-on fund or predecessor fund of a Holder or a related fund or of Whitebox, (iii) is a Holder’s family member or trust for the benefit of an individual Holder or (iv) acquires at least 50,000shares of Registrable Securities (as adjusted for stock splits, stock dividends, stock combinations, reclassifications, recapitalizations, mergers, consolidations or other similar events); provided, however, (A) the transferor shall, within ten days before such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned and (B) such transferee shall agree in writing to be subject to all restrictions set forth in this Agreement. In each case, such rights may only be transferred together with the underlying Registrable Securities in a transfer permitted by the Securities Act and applicable state securities laws. Any such transferee or assignee shall be deemed a Holder hereunder.

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ARTICLE 9
LIMITATIONS ON REGISTRATION RIGHTS GRANTED TO OTHER SECURITIES

     From and after the date of this Agreement, the Company shall not without the prior written consent of the holders of a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company providing for the grant to such holder of registration rights superior to those granted herein.

ARTICLE 10
MISCELLANEOUS

10.1      Governing Law. The laws of the state of Minnesota shall govern the interpretation, validity and performance of the terms of this agreement, regardless of the law that might be applied under principles of conflicts of law.

10.2      Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

10.3      Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof.

10.4      Termination. The obligations of the Company to register Registrable Securities under this Agreement shall terminate on the tenth anniversary of the date of this Agreement. In addition, the right of any Holder to request inclusion in any registration under Article 3 shall terminate on the date hereafter when (i) such Holder (together with its affiliates, partners, members and former partners and members) holds less than 1% of the Company’s outstanding Common Stock and (ii) all Registrable Securities held by or issuable to such Holder (and its affiliates, partners, members and former partners and members) as payment under the Note or Supplemental Note or upon exercise of the Warrant or Supplemental Warrant may be sold under Rule 144 during any 90 day period.

10.5      Notices. All notices, requests, consents, and other communications hereunder shall be in writing and shall be deemed effectively given and received when delivered in person or by national overnight courier service or by certified or registered mail, return receipt requested, or by telecopier, addressed as follows:

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(a)	if to the Company, at
	Wits Basin Precious Minerals Inc.
	520 Marquette Avenue, Suite 900
	Minneapolis, Minnesota 55402
	Attention: H. Vance White, Chief Executive Officer
	Facsimile: (612) 371-2077
	with a copy to:
	Maslon Edelman Borman & Brand, LLP
	90 South Seventh Street, Suite 3300
	Minneapolis, Minnesota 55402
	Attention: William M. Mower, Esq.
	Facsimile: (612) 642-8358
(b)	if to the Investors, in care of:
	Whitebox Advisors, LLC
	3033 Excelsior Boulevard, Suite 300
	Minneapolis, Minnesota 55416
	Attention: Jonathan Wood, Chief Financial Officer
	Facsimile: (612) 253-6151
	with a copy to:
	Messerli & Kramer P.A.
	150 South Fifth Street, Suite 1800
	Minneapolis, Minnesota 55402
	Attention: Jeffrey C. Robbins, Esq.
	Facsimile: (612) 672-3777

     (c) if to any other Holder, to the address reflected on the records of the Company, or such other address or addresses as shall have been furnished in writing by such party to the Company and to the other parties to this Agreement.

10.6 Severability. The invalidity, illegality or unenforceability of one or more of the provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of this Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

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10.7 Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

10.8 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together constitute one instrument.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their respective duly authorized officers or representatives as of the date first written above.

WITS BASIN PRECIOUS MINERALS INC.
By	/s/ Mark D. Dacko
	Mark D. Dacko, Chief Financial Officer
PANDORA SELECT PARTNERS L.P.
By
Its
	/s/ Gary S. Kohler
	Gary S. Kohler
	/s/ Scot W. Malloy
	Scot W. Malloy

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ANNEX A

ANNEX A
PLAN OF DISTRIBUTION

     We are registering the shares offered by this prospectus on behalf of the selling shareholders. The selling shareholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling shareholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.

     The selling shareholders may use any one or more of the following methods when disposing of shares or interests therein:

• ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
  
  
• block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;
  
  
• purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
  
  
• an exchange distribution in accordance with the rules of the applicable exchange;
  
  
• privately negotiated transactions;
  
  
• short sales;
  
  
• through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
  
  
• broker-dealers may agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share;
  
  
• a combination of any such methods of sale; and
  
  
• any other method permitted pursuant to applicable law.

     The selling shareholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus. The selling shareholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

ANNEX A

     In connection with the sale of our common stock or interests therein, the selling shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling shareholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

     The aggregate proceeds to the selling shareholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. Each of the selling shareholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering. Upon any exercise of the warrants by payment of cash, however, we will receive the exercise price of the warrants.

     The selling shareholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet the criteria and conform to the requirements of that rule.

     The selling shareholders and any broker-dealers that act in connection with the sale of securities might be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act, and any commissions received by such broker-dealers and any profit on the resale of the securities sold by them while acting as principals might be deemed to be underwriting discounts or commissions under the Securities Act.

     To the extent required, the shares of our common stock to be sold, the names of the selling shareholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.

     In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.

ANNEX A

     We have advised the selling shareholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling shareholders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling shareholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling shareholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.

     We have agreed to indemnify the selling shareholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.

     We have agreed with the selling shareholders to keep the registration statement that includes this prospectus effective until the earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement or (2) the date on which the shares may be sold pursuant to Rule 144(k) of the Securities Act.

EX-10.4

Exhibit 10.4

SECURITY AGREEMENT

     THIS SECURITY AGREEMENT (this “Agreement”) is made as of May 28, 2004, by and between Wits Basin Precious Minerals Inc., a Minnesota corporation ("Wits Basin"), and Pandora Select Partners L.P., a British Virgin Islands limited partnership ("Pandora”).

RECITALS

     A. Wits Basin and Pandora have entered into a Purchase Agreement dated as of this date (the “Purchase Agreement”), pursuant to which Pandora is initially purchasing a $650,000 face amount promissory note (the “Initial Note”) from Wits Basin in consideration of a $650,000 loan (the “Initial Loan”) by Pandora to Wits Basin. Pandora is referred to herein as the “Secured Party.”

     B. Pursuant to the Purchase Agreement, and conditioned on Wits Basin’s timely satisfaction of particular milestones and conditions, Secured Party has agreed to purchase, and Wits Basin has agreed to sell, an additional secured convertible promissory note (the “Supplemental Note”) of at least $350,000 face amount (which, at Secured Party’s option, may be for up to $850,000 face amount inclusive of the foregoing $350,000) in consideration of a like supplemental loan (the “Supplemental Loan;” and together with the Initial Loan, the “Loans”);

     C. As a condition to making the Loans, Wits Basin has agreed to pledge to Secured Party all of Wits Basin’s assets (including the shares of capital stock and membership interests it owns in its subsidiaries), subject to no other security interest.

     NOW, THEREFORE, in consideration of the agreements herein and in reliance upon the representations and warranties set forth herein and therein, the parties agree as follows:

ARTICLE 1.
DEFINED TERMS

     1.1DEFINITIONS. Unless otherwise defined herein or unless the context otherwise requires, terms used in this Agreement, including its preamble and recitals, have the meanings provided in the Uniform Commercial Code in effect in the State of Minnesota (the “UCC”). In addition, the following terms when used in this Agreement, including its preamble and recitals, shall have the following meanings:

          “Loan Documents” means (a) this Agreement, (b) the Note and, if issued, (c) the Supplemental Note, (d) a Warrant of this date being issued, and (e) a Supplemental Warrant that may be issued in the future in connection with the Supplemental Note, each by Wits Basin to Secured Party to purchase particular shares of Wits Basin’s Common Stock, $0.01 par value, and (f) a Registration Rights Agreement and (g) a Call and Option Agreement, each of this date, between Wits Basin and Secured Party and the Purchase Agreement.

          "Obligations” means the payment and other performance obligations under the Loan Documents.

ARTICLE 2.
SECURITY INTEREST

     2.1     GRANT OF SECURITY INTEREST. To secure the timely payment and performance in full of the Obligations, Wits Basin does hereby assign, grant and pledge to Secured Party, subject to no other secured rights, all of the estate, right, title and interest of Wits Basin in and to the Collateral as more fully described on Exhibit A hereto, whether now owned or later acquired or created, and including all proceeds of the Collateral, whether cash or non-cash (the “Collateral”).

     2.2     FINANCING STATEMENTS.

          (a)Wits Basin hereby authorizes Secured Party to file all financing statements, continuation statements, assignments, certificates, and other documents and instruments with respect to the Collateral pursuant to the UCC and otherwise as may be necessary or reasonably requested by Secured Party to perfect or from time to time to publish notice of, or continue or renew the security interests granted hereby (including, such financing statements, continuation statements, certificates, and other documents as may be necessary or reasonably requested to perfect a security interest in any additional property rights hereafter acquired by Wits Basin or in any replacements, products or proceeds thereof), in each case in form and substance satisfactory to Secured Party.

          (b)Secured Party will pay the cost of filing the same in all public offices where filing is necessary or reasonably requested by Secured Party and will pay any and all recording, transfer or filing taxes that may due in connection with any such filing. Wits Basin grants Secured Party the right, at any time and at Secured Party’s option, to file any or all such financing statements, continuation statements, and other documents pursuant to the UCC and otherwise as Secured Party reasonably may deem necessary or desirable.

          (c)Wits Basin hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing statements, or any similar document in any jurisdictions and with any filing offices as Secured Party may reasonably determine are necessary or advisable to perfect the security interests granted to Secured Party. Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as Secured Party may reasonably determine is necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral granted to Secured Party herein.

     2.3     DEBTOR REMAINS LIABLE.

          (a)Anything herein contained to the contrary notwithstanding, Wits Basin shall remain liable under its articles of incorporation, bylaws or other constituent documents (together, the "Constituent Documents”), to perform all of the obligations undertaken by it thereunder, all in accordance with and pursuant to the terms and provisions thereof, and Secured Party shall have no obligations or liabilities under the Constituent Documents by reason of or arising out of this Agreement, nor shall Secured Party be required or obligated in any manner to perform or fulfill any obligations of Wits Basin thereunder or to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by their or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times.

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     (b)If any default by Wits Basin under any of the Constituent Documents shall occur, Secured Party shall, at its option, be permitted (but shall not be obligated) to remedy any such default by giving written notice of such intent to Wits Basin and to the parties to such agreement. Any cure by Secured Party of Wits Basin’s default under a Constituent Document shall not be construed as an assumption by Secured Party of any obligations, covenants or agreements of Wits Basin under the Constituent Documents, and Secured Party shall not incur any liability to Wits Basin or any other person as a result of any actions undertaken by Secured Party in curing or attempting to cure any such default. This Agreement shall not be deemed to release or to affect in any way the obligations of Wits Basin under any of the Constituent Documents.

ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF DEBTOR

     Wits Basin makes the following representations and warranties to and in favor of Secured Party as of the date hereof. All of these representations and warranties shall survive the execution and delivery of this Agreement:

     3.1      ORGANIZATION. Wits Basin:

          (a) is a corporation duly incorporated and validly existing and in good standing under the laws of the State of Minnesota;

          (b) is duly qualified, authorized to do business as a foreign corporation in each U.S. and foreign jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary; and

          (c) has the corporate power (A) to enter into the Loan Documents and to perform its obligations thereunder and to consummate the transactions contemplated thereby, (B) to carry on its business as now being conducted and as proposed to be conducted by it, (C) to execute, deliver and perform this Agreement, (D) to take all action as may be necessary to consummate the transactions contemplated hereunder, and (E) to grant the liens and security interests provided for in this Agreement.

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     3.2     OFFICES, LOCATION OF COLLATERAL. The chief executive office or chief place of business of Wits Basin is located at 520 Marquette Avenue, Suite 900, Minneapolis, Minnesota 55402.

     3.3     TITLE AND LIENS. Wits Basin has good, valid, and marketable title to the Collateral, free from all liens and encumbrances of any kind. As a result of this Agreement, Secured Party will have a security interest in the Collateral, subordinate to no other security interest.

     3.4AUTHORIZATION; NO CONFLICT. Wits Basin has duly authorized, executed and delivered this Agreement, and Wits Basin’s execution and delivery hereof and its consummation of the transactions contemplated hereby and the compliance with the terms thereof:

          (a)does not or will not contravene any legal requirements applicable to or binding on Wits Basin which could reasonably be expected to have a material adverse effect upon the Collateral or Secured Party’s rights therein;

          (b)does not or will not contravene or result in any breach of or constitute any default, or result in or require the creation of any lien upon any of Wits Basin’s property, under any agreement or instrument to which Wits Basin is a party or by which it or any of its properties may be bound or affected; and

          (c)does not or will not require the consent or approval of any third party which has not already been obtained.

     3.5      ENFORCEABILITY. This Agreement is a legal, valid and binding obligation of Secured Party, enforceable against Wits Basin in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights or by the effect of general equitable principles.

     3.6     UCC ARTICLE 8. All membership interests or shares in each Wits Basin subsidiary, including Active Hawk Minerals, LLC, a Minnesota limited liability company, and Brazmin Ltda., a Brazilian limited liability company, that are part of the Collateral are securities governed by Article 8 of the UCC.

ARTICLE 4.
COVENANTS OF DEBTOR

     Wits Basin covenants to and in favor of Secured Party as follows:

     4.1     COMPLIANCE WITH OBLIGATIONS. Wits Basin shall perform and comply in all material respects with all obligations and conditions on its part to be performed with respect to the Collateral.

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     4.2     INFORMATION CONCERNING COLLATERAL. Wits Basin shall, promptly upon request, provide to Secured Party all information and evidence they it reasonably request concerning the Collateral to enable Secured Party to enforce the provisions of this Agreement.

     4.3     DEFENSE OF COLLATERAL. Wits Basin shall defend its title to the Collateral and the interests of Secured Party in the Collateral pledged hereunder against the claims and demands of all third parties whomsoever.

     4.4     MAINTENANCE OF COLLATERAL. Wits Basin shall not (i) fail to deliver to Secured Party a copy of each demand or notice received or given by it relating to any Constituent Document of Wits Basin or to any other Collateral which could reasonably be expected to have a material adverse effect upon the Collateral or Secured Party’s rights therein, or (ii) sell, contract to sell, assign, transfer or dispose of any of the Collateral, except in the ordinary course of business, or with the consent of Secured Party, which consent will not be unreasonably withheld.

     4.5     EVENTS OF DEFAULT. Wits Basin shall give to Secured Party prompt notice of any material default with respect to the Collateral of which Wits Basin has knowledge or has received notice.

     4.6     PRESERVATION OF VALUE; LIMITATION OF LIENS. Wits Basin shall not take any action in connection with the Collateral which would impair in any material respect the interests or rights of Secured Party therein or with respect thereto, except as expressly permitted hereby; provided, however, that nothing in this Agreement shall prevent Wits Basin, prior to the exercise by Secured Party of any rights pursuant to the terms hereof, from undertaking Wits Basin’s operations in the ordinary course of business. Wits Basin shall not directly or indirectly create, incur, assume or suffer to exist any liens on or with respect to all or any part of the Collateral (other than the lien created by this Agreement). Wits Basin shall at its own cost and expense promptly take such action as may be necessary to discharge any such liens.

     4.7NO OTHER FILINGS. Wits Basin shall not file or authorize to be filed in any jurisdiction any financing statements under the UCC or any like statement relating to the Collateral.

     4.8     MAINTENANCE OF RECORDS. Wits Basin shall, at all times, keep accurate and complete records of the Collateral. Wits Basin shall permit representatives of Secured Party, upon reasonable prior notice, at any time during normal business hours of Wits Basin to inspect and make abstracts from Wits Basin’s books and records pertaining to the Collateral. Upon the occurrence and during the continuation of any Event of Default, at Secured Party’s request, Wits Basin shall promptly deliver copies of any and all such records to Secured Party.

     4.9PAYMENT OF TAXES. Wits Basin shall pay or cause to be paid, before any fine, penalty, interest or cost attaches thereto, all taxes, assessments and other governmental or non-governmental charges or levies (other than those taxes that it is contesting in good faith and by appropriate proceedings, and in respect of which it has established adequate reserves for such taxes) now or hereafter assessed or levied against the Collateral pledged by them hereunder and shall retain copies of, and, upon request, permit Secured Party to examine receipts showing payment of any of the foregoing.

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     4.10     NAME; JURISDICTION OF ORGANIZATION. Wits Basin shall give Secured Party at least 30 days prior written notice before Wits Basin changes its name, jurisdiction of organization or entity type and shall at the expense of Wits Basin execute and deliver such instruments and documents as may be required by Secured Party or applicable legal requirements to maintain a first perfected security interest in the Collateral.

     4.11     PROCEEDS OF COLLATERAL. Wits Basin shall, at all times, keep pledged to Secured Party pursuant hereto all Collateral and all dividends, distributions, interest, principal and other proceeds received by Wits Basin with respect thereto, and all other Collateral and other securities, instruments, proceeds and rights from time to time received by or distributable to Wits Basin in respect of any Collateral, and shall not permit any issuer of such Collateral to issue any shares of stock or other equity interests which shall not have been immediately duly pledged to Secured Party hereunder.

ARTICLE 5.
RIGHTS AND REMEDIES

     5.1     EVENT OF DEFAULT DEFINED. Any event of default under the Note or, if issued, under the Supplemental Note (including events of non-compliance with this Agreement, as described in the Note or, if issued, the Supplemental Note) shall constitute an "Event of Default" hereunder.

     5.2REMEDIES UPON EVENT OF DEFAULT.

          (a) During any period during which an Event of Default shall have occurred and be continuing, Secured Party may (but shall be under no obligation to), directly or by using agent or broker:

               (i)proceed to protect and enforce the rights vested in it by this Agreement and under the UCC;

               (ii)cause all moneys and other property pledged as security to be paid and/or delivered directly to it, and demand, sue for, collect and receive any such moneys and property;

               (iii)cause any action at law or suit in equity or other proceeding to be instituted and prosecuted to collect or enforce any Obligations of Wits Basin or rights included in the Collateral, or for specific enforcement of any covenant or agreement contained herein, or in aid of the exercise of any power therein or herein granted, or for any foreclosure hereunder and sale under a judgment or decree in any judicial proceeding, or to enforce any other legal or equitable right vested in it by this Agreement or by law;

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               (iv)foreclose or enforce any other agreement or other instrument by or under or pursuant to which the Obligations of Wits Basin are issued or secured;

               (v)subject to Section 5.2(b), sell, lease or otherwise dispose of any or all of the Collateral, in one or more transactions, at such prices as Secured Party may deem best, and for cash or on credit or for future delivery, without assumption of any credit risk, at any broker’s board or at public or private sale, without demand of performance or notice of intention to sell, lease or otherwise dispose of, or of time or place of disposition (except such notice as is required by applicable statute and cannot be waived), it being agreed that Secured Party may be purchasers or lessees on their own behalf at any such sale and that Secured Party or anyone else who may be the purchaser, lessee or recipient for value of any or all of the Collateral so disposed of shall, upon such disposition, acquire all of Wits Basin’s rights therein. Secured Party may adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the same, and such sale may, without further notice or publication, be made at any time or place to which the same may be so adjourned. If Secured Party sell any of the Collateral upon credit, after reasonable inquiry as to the credit worthiness of the purchaser, Wits Basin will be credited only with payments actually made by the purchaser, received by Secured Party and applied to the indebtedness of the purchaser. In the event the purchaser fails to pay for the Collateral, Secured Party may resell the Collateral and Wits Basin shall be credited with the proceeds of the sale;

               (vi)incur expenses, including reasonable attorneys’ fees, consultants’ fees, and other costs appropriate to the exercise of any right or power under this Agreement;

               (vii)perform any obligation of Wits Basin hereunder and make payments, purchase, contest or compromise any encumbrance, charge, or lien, and pay taxes and expenses;

               (viii)make any reasonable compromise or settlement deemed desirable with respect to any or all of the Collateral and extend the time of payment, arrange for payment installments, or otherwise modify the terms of, any or all of the Collateral;

               (ix)secure the appointment of a receiver of any or all of the Collateral;

               (x)exercise any other or additional rights or remedies granted to Secured Party under any other provision of this Agreement or exercisable by a secured party under the UCC, whether or not the UCC applies to the affected Collateral, or under any other applicable law and take any other action which Secured Party deem necessary or desirable to protect or realize upon their security interests in the Collateral or any part thereof; and/or

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               (xi)appoint a third party (who may be an employee, officer or other representative of Secured Party) to do any of the foregoing, or take any other action permitted hereunder, on behalf of Secured Party.

          (b)If, pursuant to any law, prior notice of any action described in Section 5.2(a) is required to be given to Wits Basin, Wits Basin hereby acknowledges that the minimum time required by such law, or if no minimum is specified, ten days, shall be deemed a reasonable notice period.

          (c)Any action or proceeding to enforce this Agreement may be taken by Secured Party either in Wits Basin’s name or in Secured Party’s name, as Secured Party may deem necessary.

          (d)All rights of marshalling of assets of Wits Basin, including any such right with respect to the Collateral, are hereby waived by Wits Basin.

          (e)Secured Party shall incur no liability as a result of the sale of any or all of the Collateral at any private sale pursuant to Section 5.2(a) conducted in a commercially reasonable manner. Wits Basin hereby waives any claims against Secured Party arising by reason of the fact that the price at which any or all of the Collateral may have been sold at such a private sale was less than the price that might have obtained at a public sale or was less than the aggregate amount of the Obligations, even if Secured Party accept the first offer received and does not offer the Collateral to more than one offeree.

     5.3ATTORNEY-IN-FACT. Upon the occurrence and during the continuation of an Event of Default, Wits Basin hereby irrevocably constitutes and appoints Secured Party as its true and lawful attorney-in-fact to enforce all rights of Wits Basin with respect to the Collateral, including the right to give appropriate receipts, releases and satisfactions for and on behalf of and in the name of Wits Basin or, at the option of Secured Party, in the name of Secured Party, with the same force and effect as Wits Basin could do if this Agreement had not been made. If Secured Party shall so elect after the occurrence and during the continuation of an Event of Default hereunder, Secured Party shall have the right at all times to settle, compromise, adjust, or liquidate all claims or disputes directly with Wits Basin or any obligor of Wits Basin upon such terms and conditions as Secured Party may determine in its sole discretion, and to charge all costs and expenses thereof (including reasonable attorneys’ fees and charges) to Wits Basin’s account and to add them to the Obligations whereupon such costs and expenses shall be and become part of the Obligations. This power of attorney is a power coupled with an interest and shall be irrevocable.

     5.4EXPENSES; INTEREST. All costs and expenses (including reasonable attorneys’ fees and expenses) incurred by Secured Party in connection with exercising any actions taken under Article 5, together with interest thereon (to the extent permitted by law) computed at a rate of 10% per annum (or if less, the maximum rate permitted by law) from the date on which such costs or expenses are invoiced to and become payable by Wits Basin, to the date of payment thereof, shall constitute part of the Obligations secured by this Agreement and shall be paid by Wits Basin to Secured Party within 10 days after written demand.

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     5.5NO IMPAIRMENT OF REMEDIES. If under applicable law, Secured Party proceed by either judicial foreclosure or by non-judicial sale or enforcement, Secured Party may, at its sole option, determine which of its remedies or rights to pursue without affecting any of their rights and remedies under this Agreement. If, by exercising any right and remedy, Secured Party forfeits any of its other rights or remedies, including any right to enter a deficiency judgment against Wits Basin or any third party (whether because of any applicable law pertaining to “election of remedies” or the like), Wits Basin nevertheless hereby consents to such action by Secured Party. To the extent permitted by applicable law, Wits Basin also waives any claim based upon such action, even if such action by Secured Party results in a full or partial loss of any rights of subrogation, indemnification or reimbursement which Wits Basin might otherwise have had but for such action by Secured Party or the terms herein. Any election of remedies which results in the denial or impairment of the right of Secured Party to seek a deficiency judgment against any third party shall not, to the extent permitted by applicable law, impair Wits Basin’s obligations hereunder. If Secured Party bids at any foreclosure or trustee’s sale or at any private sale permitted by law or this Agreement, Secured Party may bid all or less than the amount of the Obligations. To the extent permitted by applicable law, the amount of the successful bid at any such sale, whether Secured Party or any other party is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations.

ARTICLE 6.
CERTAIN WAIVERS

     6.1     MODIFICATION OF OBLIGATIONS. Wits Basin’s liability hereunder shall not be reduced, limited, impaired, discharged or terminated if Secured Party at any time with Wits Basin’s consent (or, to the extent permissible by the terms of the Loan Documents and law, without notice to or demand of Wits Basin):

          (a)renews, extends, accelerates, increases the rate of interest on, or otherwise changes the time, place, manner or terms, or otherwise modifies any of the Obligations (including any payment terms);

          (b)extends or waives the time for Wits Basin’s performance of, or compliance with, any term, covenant or agreement on its part to be performed or observed under the Loan Documents, or waives such performance or compliance or consents to a failure of, or departure from, such performance or compliance;

          (c)settles, compromises, releases or discharges, or accepts or refuses any offer of performance with respect to, or substitutions for, any of the Obligations or any agreement relating thereto and/or subordinates the payment of the same to the payment of any other obligations;

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          (d)requests and accepts other guaranties of any of the Obligations and takes and holds security for the payment hereof or any of the Obligations;

          (e)releases, surrenders, exchanges, substitutes, compromises, settles, rescinds, waives, alters, subordinates or modifies, with or without consideration, any security for payment of any of the Obligations, any other guaranties of any of the Obligations, or any other obligation of any third party with respect to any of the Obligations;

          (f)to the extent permitted by law, enforces and applies any security, if any, now or hereafter held by or for the benefit of Secured Party in respect hereof or any of the Obligations and directs the order or manner of sale thereof, or exercises any other right or remedy that Secured Party may have against any such security, in each case as Secured Party in its discretion may determine, including foreclosure on any collateral pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable; or

          (g)exercises any other rights available to it under any of the Loan Documents, at law or in equity.

     6.2     SECURITY INTERESTS ABSOLUTE. All rights of Secured Party and the security interests hereunder, and all obligations of Wits Basin hereunder, shall be absolute and unconditional irrespective of:

          (a)any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under any Loan Document, at law, in equity or otherwise) with respect to any of the Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of any of the Obligations;

          (b)any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, in any other Loan Document or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for any of the Obligations, in each case, whether or not in accordance with the terms hereof or any other Loan Document or any agreement relating to such other guaranty or security;

          (c)the application of payments received from any source (other than payments received from the proceeds of any security for any of the Obligations, except to the extent such security also serves as collateral for indebtedness other than the Obligations) to the payment of indebtedness of Wits Basin to Secured Party other than the Obligations, even though Secured Party might have elected to apply such payment to any part or all of the Obligations;

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          (d)Secured Party’s consent to the change, reorganization or termination of the corporate structure or existence of Wits Basin and to any corresponding restructuring of any of the Obligations;

          (e)any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of Wits Basin as an obligor in respect of any of the Obligations;

          (f)any Obligations or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect

          (g)any defenses, set-offs or counterclaims which Wits Basin may allege or assert against Secured Party in respect of the Obligations; and

          (h)whether Secured Party makes, or does not or fails to make, any Supplemental Loan to Wits Basin subsequent to the date hereof.

     6.3     CERTAIN WAIVERS. Except as provided in Section 7.16, Wits Basin hereby waives any and all defenses afforded to a surety, including promptness, diligence, notice of acceptance and any other notice with respect to any of the Obligations and this Agreement and any requirement that Secured Party protect, secure, perfect or insure any security interest or lien, or any property subject thereto, or exhaust any right or take any action against Wits Basin or any other third party or entity or any collateral securing any of the Obligations, as the case may be.

     6.4     POSTPONEMENT OF SUBROGATION. Wits Basin agrees that it will not exercise any rights which it may acquire by way of rights of subrogation under this Agreement, by any payment made hereunder or otherwise, while this Agreement is in effect, unless such action is required to stay or prevent the running of any applicable statute of limitations. Any amount paid to Wits Basin on account of any such subrogation rights prior to such time shall be held in trust for Secured Party and shall immediately be paid to Secured Party and credited and applied against the Obligations. Any time after this Agreement has terminated and if Wits Basin has made payment to Secured Party of all of the Obligations, or if an action is required to stay or prevent the running of any applicable statute of limitations, then, at Wits Basin’s request, Secured Party will execute and deliver to Wits Basin appropriate documents (without recourse and without representation or warranty) necessary to evidence the transfer by subrogation to Wits Basin of an interest in the Obligations resulting from such payment by Wits Basin.

ARTICLE 7.
MISCELLANEOUS

     7.1     NOTICES. Any communications, including notices and instructions, between the parties hereto or notices provided herein to be given may be given to the following addresses:

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(a)	if to Wits Basin, at:
	Wits Basin Precious Minerals Inc.
	520 Marquette Avenue, Suite 900
	Minneapolis, Minnesota 55402
	Attention: H. Vance White, Chief Executive Officer
	Facsimile: (612) 371-2077
	with a copy to:
	Maslon Edelman Borman & Brand, LLP
	90 South Seventh Street, Suite 3300
	Minneapolis, Minnesota 55402
	Attention: William M. Mower, Esq.
	Facsimile: (612) 642-8358
(b)	if to the Secured Party, in care of:
	Whitebox Advisors, LLC
	3033 Excelsior Boulevard, Suite 300
	Minneapolis, Minnesota 55416
	Attention: Jonathan Wood, Chief Financial Officer
	Facsimile: (612) 253-6151
	with a copy to:
	Messerli & Kramer P.A.
	150 South Fifth Street, Suite 1800
	Minneapolis, Minnesota 55402
	Attention: Jeffrey C. Robbins, Esq.
	Facsimile: (612) 672-3777.

     All notices or other communications required or permitted to be given hereunder shall be in writing and shall be considered as properly given (a) on the date received in person, (b) on the date received by overnight delivery service (including Federal Express, UPS, ETA, Emery, DHL, AirBorne and other similar overnight delivery services), (c) on the fourth business day following the date mailed by first class United States mail, postage prepaid, registered or certified with return receipt requested, (d) on the next business day after being transmitted by telecopy or by other electronic means (including electronic mail). Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by giving of notice to the other parties in the manner set forth hereinabove.

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     7.2     DELAY AND WAIVER; REMEDIES CUMULATIVE. No failure or delay by Secured Party in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. Any waiver, permit, consent or approval of any kind or character on the part of Secured Party of any breach or default under the Agreement or any waiver on the part of Secured Party of any provision or condition of this Agreement must be in writing and shall be effective only to the extent in such writing specifically set forth. No right, power or remedy herein conferred upon or reserved to Secured Party hereunder is intended to be exclusive of any other right, power or remedy, and every such right, power and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right, power and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Resort to any or all security now or hereafter held by Secured Party may be taken concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken nonjudicial proceedings, or both.

     7.3     ENTIRE AGREEMENT. This Agreement and any agreement, document or instrument referred to herein integrate all the terms and conditions mentioned herein or incidental hereto and supersede all oral negotiations and prior writings in respect of the subject matter hereof.

     7.4     GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota, exclusive of its conflict of laws rules.

     7.5     SEVERABILITY. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

     7.6     HEADINGS. Paragraph headings have been inserted in this Agreement as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Agreement and shall not be used in the interpretation of any provision of this Agreement.

     7.7     WAIVER OF JURY TRIAL. WITS BASIN HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY COURSE OR CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF SECURED PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR SECURED PARTY TO MAKE THE LOANS.

     7.8     CONSENT TO JURISDICTION. Each party hereto agrees that any legal action or proceeding with respect to or arising out of this Agreement may be brought in or removed to the federal or state courts located in Hennepin County, Minnesota, as Secured Party may elect. By execution and delivery of this Agreement, each party hereto accepts, for themselves and in respect of their property, generally and unconditionally, the jurisdiction of the aforesaid courts. Each of the parties hereto irrevocably consents to the service of process out of any of the aforementioned courts in any manner permitted by law. Nothing herein shall affect the right of Secured Party to bring legal action or proceedings in any other competent jurisdiction. Each party hereto hereby waives any right to stay or dismiss any action or proceeding under or in connection with this Agreement brought before the foregoing courts on the basis of forum non-conveniens.

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     7.9     SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

     7.10     COUNTERPARTS. This Agreement may be executed in one or more duplicate counterparts and when signed by all of the parties listed below, shall constitute a single binding agreement. Delivery of an executed signature page of this Agreement by facsimile transmission shall be as effective as delivery of a manually executed counterpart thereof.

     7.11     BENEFIT OF AGREEMENT. Nothing in this Agreement, express or implied, shall give or be construed to give, any person other than the parties hereto and their respective permitted successors, transferees and assigns any legal or equitable right, remedy or claim under this Agreement, or under any covenants and provisions of this Agreement, each such covenant and provision being for the sole benefit of the parties hereto and their respective permitted successors, transferees and assigns.

     7.12     AMENDMENTS AND WAIVERS. No amendment, modification, termination or waiver of any provision of this Agreement or consent to any departure therefrom shall be effective unless the same shall be in writing and signed by each of the parties hereto. Each amendment, modification, termination or waiver shall be effective only in the specific instance and for the specific purpose for which it was given.

     7.13     SURVIVAL OF AGREEMENTS. The provisions regarding the payment of expenses and indemnification obligations shall survive and remain in full force and effect regardless of the termination of this Agreement pursuant to Section 7.14.

     7.14     RELEASE AND SATISFACTION. Upon the indefeasible payment (whether in cash and/or other consideration which is satisfactory to Secured Party in their sole discretion) and performance in full of the Obligations, (i) this Agreement and the security interests created hereby shall terminate and Secured Party will return the Collateral, including all documentation evidencing or affecting the Collateral, and (ii) upon written request of Wits Basin, Secured Party shall execute and deliver to Wits Basin, at Wits Basin’s expense and without representation or warranty by or recourse to Secured Party, releases and satisfactions of all financing statements, mortgages, notices of assignment and other registrations of security.

     7.15     REINSTATEMENT. This Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time any payment pursuant to this Agreement is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, reorganization, liquidation of Wits Basin or upon the dissolution of, or appointment of any intervenor or conservator of, or trustee or similar official for, Wits Basin or any substantial part of Wits Basin’s assets, or otherwise, all as though such payments had not been made.

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     7.16     LIMITATION ON DUTY OF SECURED PARTY WITH RESPECT TO THE COLLATERAL. The powers conferred on Secured Party hereunder are solely to protect its interest in the Collateral and shall not impose any duty on Secured Party or any of its designated agents to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for monies actually received by it hereunder, Secured Party shall have no duty with respect to any Collateral and no implied duties or obligations shall be read into this Agreement against Secured Party. Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment that is substantially equivalent to that which Secured Party accords its own property, it being expressly agreed, to the maximum extent permitted by applicable law, that Secured Party shall have no responsibility for (a) taking any necessary steps to preserve rights against any parties with respect to any Collateral or (b) taking any action to protect against any diminution in value of the Collateral, but, in each case, Secured Party may do so and all expenses reasonably incurred in connection therewith shall be part of the Obligations.

IN WITNESS WHEREOF, the undersigned have hereunto affixed their signatures.

Wits Basin:		Secured Party:
	Wits Basin Precious Minerals Inc.		Pandora Select Partners L.P.
By	/s/ Mark D. Dacko	By
	Mark D. Dacko, Chief Financial Officer
			Its

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EX-99.1

	Exhibit 99.1
Press Release	Source: Wits Basin Precious Minerals Inc.

Wits Basin Announces Completion of Debt Financing, Settlement of Litigation, and Extension of Warrants

Tuesday June 1, 3:15 pm ET

MINNEAPOLIS—(BUSINESS WIRE)—June 1, 2004—Wits Basin Precious Minerals Inc., (OTCBB:WITM -News). Wits Basin Precious Minerals Inc. announced today that it has raised gross proceeds of $650,000 pursuant to the issuance of an 18-month secured convertible promissory note to Pandora Select Partners LP, a Virgin Islands fund. In lieu of cash, the Company may satisfy its repayment obligations under the note by issuing shares of its common stock (providing the shares are then registered for resale under the Securities Act of 1933), at a price equal to the average of the closing bid price of the Company’s common stock during the 30 trading days prior to payment, but in no event less than $0.35 or greater than $0.65 per share. The note is secured by substantially all of the Company’s assets. As further consideration for the financing, the Company issued to Pandora a warrant to purchase up to 928,571 shares of its common stock at a price of $0.40 per share, subject to adjustment. The Company also paid $40,000 in cash and issued warrants to purchase an aggregate of 200,000 shares of its common stock to two affiliates of Pandora as origination fees.

The Company also announced that is has settled its ongoing litigation with Jack Johnson, its former chief executive officer. Using the proceeds from the Pandora financing, the Company paid Mr. Johnson $360,000 in consideration for a complete release of all claims.

Regarding the funding of the gold exploration FSC Project in South Africa, the Company has advanced to Kwagga Gold (Proprietary) Limited $1.95 million to date, with a further $150,000 that was due on May 30, 2004. The Company has paid an additional $75,000 and has been granted a further extension until June 30, 2004 to complete its initial funding of $2.1 million in order to secure a 35% ownership of Kwagga.

The Company has extended the expiration date for the Company’s 690,000 redeemable publicly-traded warrants, which currently trade under the OTC Bulletin Board symbol WITMW (prior to August 20, 2003 under the OTCBB symbol AIQTW). The Company’s board of directors authorized an extension in the expiration date to November 30, 2004 from the previous extended date of May 31, 2004.

About Wits Basin Precious Minerals Inc.

We are a precious minerals exploration company. We currently have interests in three projects: the FSC Project in South Africa (in which we are a passive investor), the Holdsworth Project in Ontario, Canada and the 4 properties of Brazmin located in South America. Our common stock trades on the Over-the-Counter Bulletin Board under the symbol "WITM." Wits Basin is headquartered in Minneapolis, MN with an office in Toronto, ON.

Risk Factors

The risks of an investment in our securities are numerous. Detailed information regarding these risks may be found in filings made by us with the Securities and Exchange Commission, including our most recent annual report on Form 10-K, quarterly reports on Form 10-Q and reports on Form 8-K.

Contact:
     Wits Basin Precious Minerals Inc., Minneapolis
     H. Vance White, 416-214-2250 or 866-214-WITM(9486)
     or
     Mark D. Dacko, 612-349-5277
www.witsbasin.com